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TeliaSonera: Interim Report January-March 2014

Steady margin and cash flow

First quarter summary

· Net sales in local currencies, excluding acquisitions and
disposals, decreased 1.8 percent. In reported currency, net sales
decreased 2.5 percent to SEK 23,972 million (24,582).

· The addressable cost base in local currencies, excluding
acquisitions and disposals, increased 0.1 percent. In reported
currency, the addressable cost base decreased 0.3 percent to SEK
7,010 million (7,029).

· EBITDA, excluding non-recurring items, was unchanged in local
currencies, excluding acquisitions and disposals. In reported
currency, EBITDA, excluding non-recurring items, decreased 1.9
percent to SEK 8,345 million (8,509). The EBITDA margin, excluding
non-recurring items, improved to 34.8 percent (34.6).

· Operating income, excluding non-recurring items, decreased 5.2
percent to SEK 6,286 million (6,628).

· Net income attributable to owners of the parent company decreased
4.0 percent to SEK 3,945 million (4,108).

· Earnings per share amounted to SEK 0.91 (0.95).
· Free cash flow increased to SEK 2,556 million (2,414).
· Group outlook for 2014 is unchanged.

Comments by Johan Dennelind,
President and CEO

"Our markets continue to be characterized by a changing customer
behavior and an evolving convergence trend. We stay focused on
upgrading our customers' internet experience through further
investments in 4G and fiber. In Sweden, our 4G coverage has
approached 90 percent of population and we remain committed to reach
99 percent by the end of this year.

In the first quarter, underlying EBITDA margin improved compared to
last year and reached 34.8 percent, while organic revenues declined
by 1.8 percent due to reduced low margin equipment sales and
continued effects from lower regulated mobile termination rates. Free
cash flow increased by 5.9 percent to SEK 2.6 billion, supported by
positive working capital development.

We continue to perform well in the consumer segment, where average
billed revenue growth in Nordic Mobility Services increased to more
than 3 percent, supported by all countries, as solid demand for data
services compensated for slower growth in voice and messaging. We see
further positive effects from our data-centric price models, which
are now introduced in all Nordic markets. In Swedish Broadband
Services, sales remained flat in the consumer area, as higher
revenues for TV and broadband together with price adjustments
compensated for lower volumes in traditional fixed services. The
enterprise area remains challenging and we work hard to strengthen
our position further by new products and services.

We reached a new milestone in Spain by passing four million
subscriptions in the quarter. Billed revenues remained flat compared
to last year, while total sales growth was impacted by lower handset
sales and reduced interconnect revenues. Higher costs for subscriber
acquisitions pressured profitability, but we foresee a more balanced
development going forward.

On April 1, we implemented a new country based operating model with
strengthened commercial and technology functions on group level. This
will be instrumental for our future strategic agenda and will also
enable further efficiency benefits. Our journey ahead will be based
on three pillars; strengthen and develop our core business in the
Nordic and Baltic region, take Eurasia to the next level by
monetizing on the data opportunity and examine possible income
opportunities in closely related adjacent industries. Geographically,
focus remains on the markets where we are already present, with
strict criteria for return on capital. We have a prudent but
pragmatic approach to M&A and will mainly aim for potential
consolidation opportunities in existing markets.

The Board's review of last years' transactions in Eurasia was
finalized in the quarter. As previously communicated, several of
these transactions have been inconsistent with sound business
practice and our ethical requirements. We continue to fully cooperate
with both Swedish and foreign authorities' requests in this matter.
We have taken, and will continue to take, a number of measures to
transform our internal control systems to make sure we have adequate
processes to identify and manage risk going forward.

In the regulatory area, we are concerned about the recent vote in the
European parliament, particularly related to the area of net
neutrality, as this may limit the possibilities for us to meet demand
from our customers. We stress the importance of operators being able
to run efficient networks and offer differentiated services to
encourage innovation and investments.

We reiterate our full-year outlook regarding organic revenues and
EBITDA margin at approximately last year's level with a
CAPEX-to-sales of 15 percent, although we see slightly increased risk
to reduced revenues related to low margin equipment sales."

Questions regarding the reports
TeliaSonera AB
Investor Relations
SE-106 63 Stockholm, Sweden
Tel. +46 8 504 550 00
Fax +46 8 611 46 42

TeliaSonera AB discloses the information provided herein pursuant to
the Swedish Securities Markets Act and/or the Swedish Financial
Instruments Trading Act. The information was submitted for
publication at 07:00 CET on April 23, 2014.


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