#1Telia Company YEAR-END REPORT JANUARY - DECEMBER 2019 CHRISTIAN LUIGA PRESIDENT & CEO DOUGLAS LUBBE CFO 24#2CASH FLOW AND EBITDA GROWTH FROM LOWER COST N OPERATIONAL FREE CASH FLOW WE SAID 12-12.5BN 12.6BN* WE DID WE SAID GROUP OPEX REDUCTION ~2% SEK12.2bn adjusted for Q4 pension refund WE DID ~2% Q1 EBITDA DEVELOPMENT WE SAID Q2 Q3 WE SAID Q4 ~3% WE DID SWEDEN OPEX REDUCTION Q1 19 Q2 19 Q3 19 WE DID 4% Q4 19 ~4%* *3% adjusted for pension refund Q4#3IMPROVED SERVICE REVENUE AND EBITDA TRENDS 3 SERVICE REVENUE DEVELOPMENT* Organic & like for like growth, external service revenues Service revenue growth Growth excl. Telia Carrier Growth excl. Telia Carrier & Sweden fiber OTC Q4 2019 ● Q4 18 Q1 19 Q2 19 Q3 19 -0.6% Improved revenue trend excluding fiber OTC ● • Telia Carrier still weights slightly on group -1.5% -1.7% Q4 19 * 2018 based on organic growth (stable FX and M&A excluded) 2019 based on like for like growth (Stable FX and M&A included in current & corresponding period) Not including the segment TV and Media established in Q4 2019 ADJUSTED EBITDA DEVELOPMENT* SEK million in reported currency, organic & like for like growth excl. IFRS 16 ● ● Reported EBITDA Organic/like for like EBITDA growth 6,680 Q4 18 7,413 Q1 19 7,465 Q2 19 8,226 Q3 19 +4% 7,914 Q4 19 Mainly driven by OPEX and COGS reductions Easy comparison and SEK 100 million pension. refund in Sweden - despite this EBITDA is still growing Y/Y and Q/Q 0%#4NEW AND UNIQUE PLAYER IN THE NORDIC MEDIA SPACE 3 SYNERGIES OF SEK 0.6 BILLION BY END 2022 OPERATIONAL FREE CASH FLOW OF SEK 0.5 BILLION 2020 nt#5PROVIDING HIGH QUALITY CONTENT FOR EVERYBODY LO 5 ● COMMITTED TO REACH AND AVAILABILITY 4 44 4 4 4 4 4 4 (mtv) mtv 4 mtv mtv) (mtv mtv mtv mtv) (mtv) mtv mtv mtv CONTINUED FOCUS ON MARKET LEADING REACH CONTENT AVAILABILITY FOR ALL GUARANTEED Despite being offered to distribute at a zero cost in December, Com Hem stopped giving its customers. right to view TV4 and C More on their TV screens We continued to provide TV4 and C More content. through other platforms for all users in Sweden. ● OTT RIGHTS TREATED IN LINE WITH COMMITMENTS NYHETER post NAIN POSTIN ESITYKSET HEIKENTÄISIVÄT TYÖEHTOJA TETA In accordance with our commitments to the EC we will negotiate OTT distribution rights with at least one other player in each market#62019 WAS A RECORD YEAR FOR TV & MEDIA NET SALES & EBITDA (2020 ILLUSTRATIVE) SEK billion in reported currency, external net sales & adjusted EBITDA ● 8.2 8.7 2018 2019 2020e Net sales 1.2 2018 1.5 2019 2020e EBITDA EBITDA growth from strong service revenues, despite the conflict at year-end * PUT=People Using TV, CSOV=Commercial Share Of Viewing ● • Decline in PUT* and implications of the Com Hem dispute will imply some pressure on 2020 KEY OPERATIONAL HIGHLIGHTS 2019 4 C MORE mtv CONTINUED SUCCESSFUL CONTENT STRATEGY ● ● ● SIGNIFICANT GROWTH IN SUBSCRIPTIONS More than 30% OTT subscriber growth due to domestic drama content and added sport rights Gradual NPS improvement ● ● Leading CSOV* position maintained Strong sales execution in ad space PUT* down 8% FY 2019 and 10% Dec 2019** MARKET IMPROVED ALBEIT STILL CHALLENGING Growing in a continuously challenging market Leading CSOV market position maintained ● * In the target group A 15-64 year olds#7SWEDEN B2C MOBILE BACK TO GROWTH 7 POSTPAID ARPU - B2C Postpaid ARPU B2C excluding VAS +4% ● +2% Q4 18 Subscription IDD* Top-ups Other fees • ARPU growth due to rise in subscription fees Top-ups headwind faded, pressure from IDD* remained * EU international direct dialing regulation, introduced May 2019 Q4 19 MOBILE SUBSCRIPTION REVENUES - B2C Like for like growth 3% 2% 1% 0% -1% -2% -3% Q4 18 Q1 19 Q2 19 Q3 19 2.0% • Stable churn despite price adjustments ● Q4 19 • Mobile subscription revenues back into positive due to increase in postpaid subscriptions and ARPU growth#8IMPROVED B2B 2019 VS 2018 8 B2B SERVICE REVENUE GROWTH-GROUP/SWEDEN Organic growth 2018 & like for like growth 2019 FY18 -2.3% FY19-1.2% -1.3% * Q2 2019 positively impacted by one-off like revenues in Sweden -2.1% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19* Q3 19 Q4 19 ICT AND IOT INCREASINGLY COMPENSATING LEGACY ICT/IOT REVENUES UP 20% 2019 VS. 2018 FINLAND B2B +1% Q4 DUE TO ICT GROWTH#9FULL YEAR 2019 OPEX TARGET REALIZED OPEX DEVELOPMENT External expenses, like for like, including an estimated 2% cost inflation 2% 0% -2% -4% -6% ● Q4 18 Q1 19 Q2 19 Q3 19 ● T -5% Q4 19 OPEX Q4 down 5 percent largely driven by Sweden • Sweden, CPS and Denmark main contributors full year ● * CPS = Common Products and Services -2% Full year 2019 • Full year target of around -2% on group OPEX realized Continued cost take-out expected 2020 2020 KEY EFFICIENCY DRIVERS ● Efficiency gains in New operating model - pooling effects and synergies 1,700 FROM COUNTRIES MOVED TO Further synergy realization from Get as well as TV & Media NOK 220 MILLION RUN-RATE 3,300 RESOURSES IN CPS NOW 300 RESOURCES END 2018 NOK 350 MILLION END 2022 New ways of working, such as Shared service center in Lithuania 500 RESOURCES END 2019#10PROPOSING A 3.8 PERCENT DIVIDEND INCREASE 10 PROPOSED DIVIDEND EQUALS AN AMOUNT OF SEK 10.0 BILLION VS. SEK 9.8 BILLION 2018 2.00 2016 2.30 2017 2.36 2018 +3.8% 2.45 2019 (PROPOSED) DIVIDEND BASE AND PAY-OUT RATIOS SEK billion and pay-out ratios SEK 12.9 BILLION REPORTED 2019 SEK 12.5 BILLION ADJUSTED FOR PENSION REFUND* 115% 7.5 2016 80% 12.4 2017 84% Adjusted for SEK 0.4 billion pension refund in Q4 2019 11.7 80% 12.5 2018 Dividend from associated companies Operational free cash flow (2019 adjusted for pension*) 2019 0.4 12.2*#11CMD 2019 MESSAGE UPDATE CMD 2019 MESSAGE CURRENT STATUS 11 ● FIGHT FOR GROWTH Convergence Smart pricing Telia global CONVERGENCE CAPABILITIES ENHANCED - READY FOR NEXT STEP ● ● PUSH FOR EFFICIENCY Structural reductions Cost smartness Net OPEX reduction of 2 percent 2019-21 2019 AMBITION REALIZED & 2020- 2021 AMBITIONS UNCHANGED EXECUTION OF M&A Get/TDC NOK 800 million Bonnier Broadcasting SEK 600 million NORWAY COST SYNERGIES REALIZED - REVENUE SYNERGIES UP NEXT WISE INVESTMENTS USING OUR SCALE CAPEX coming down further INCREASED CAPEX AMBITIONS FROM CUSTOMER DRIVEN DEMAND, MOBILE IN FINLAND & GET IN NORWAY ● BEST IN CLASS CASH MANAGEMENT SEK 2.4 billion remaining in working capital efficiencies WELL IN REACH OF THE SEK 6BN AMBITION-WILL BE ABOVE SEK 6BN END 2020#12STAKING OUT OUR ROAD TO ZERO DARING GOALS 12 2030 BY 2022 WE WILL ● ● ● ● 100 percent renewable electricity use 5 percent lower energy consumption per subscription equivalent (baseline 2018) Climate neutral within our own operations (energy and business travel) Engage with all suppliers to have a plan in place by 2022 to reach Zero CO₂ by 2030, including their suppliers Significantly increase reuse of network and B2C/B2B equipment Comprehensive green offerings in all markets Include sustainability in incentives and performance evaluation. ZERO CO₂ ZERO WASTE 100% ACTION#13OUTLOOK FOR 2020 OPERATIONAL FCF* ADJUSTED EBITDA* 13 SEK 10.5-11.5 BILLION TO GROW BETWEEN 2-5% COMPARED TO 2019 *Based on the Group structure at year-end 2019 (i.e. including the segment TV and Media established in December 2019). Adjusted EBITDA in stable FX#14Telia Company YEAR-END REPORT JANUARY - DECEMBER 2019 DOUGLAS LUBBE CFO Q4#15EBITDA GROWTH DESPITE REVENUE PRESSURE 15 SERVICE REVENUE DEVELOPMENT Like for like growth, external service revenues -1.7% Q4 18 SWE FIN NOR DEN LIT EST LAT Telia Other Q4 Carrier 2019 • Sweden down due to PSTN and fiber OTC Pressure on PSTN in Finland and interconnect Norway decline related to B2C mobile. ● EBITDA DEVELOPMENT Like for like growth, excluding adjustment items and IFRS 16 Q4 18 SWE FIN NOR DEN LIT EST LAT Telia Other Q4 Carrier 2019 ● ● +4% ● Strong Sweden due to lower OPEX Norway impacted by one-off items Revenue mix and lack of efficiencies in Finland.#16GROWTH IN B2C EXCLUDING FIBER OTC 16 SERVICE REVENUE DEVELOPMENT Reported currency, external service revenues B2C ● B2B B2C excl. fiber OTC B2B ● B2C +1.3% -2.1% -2.5% Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Significant impact on B2C from lower fiber OTC Excl. fiber OTC B2C grew due to strong mobile and fixed broadband B2B down from deterioration in mobile revenues * 2018 based on organic growth definition (stable FX and M&A excluded) 2019 based on like for like growth (Stable FX and M&A included in current & corresponding period) ADJUSTED EBITDA DEVELOPMENT* Organic & like for like growth excl. IFRS 16 ● Q4 18 PENSION REFUND AND EASY COMPARISON ● Q1 19 Q2 19 Q3 19 9% 6% 3% Q4 19 Significant growth Q4 driven by lower costs. • Efficiencies realized • Pension refund contributed by SEK 100 million. Easy comparison figure#17REVENUE MIX PRESSURING EBITDA DEVELOPMENT 17 SERVICE REVENUES & ADJUSTED EBITDA SEK million in reported currency & like for like growth excl. IFRS 16 -1.4% ● 3,324 3,412 Q4 18 Q4 19 Service revenues 1,136 -3% = Like for like growth excl. IFRS 16 1,254 Q4 18 EBITDA Q4 19 • PSTN and interconnect burden service revenues Fixed legacy in B2B compensated by ICT • Revenues mix and limited cost reduction in PSTN explain EBITDA decline MOBILE SUBSCRIPTIONS AND POSTPAID ARPU Total subscription base in 000', postpaid ARPU in local currency 3,400 3,300 3,200 3,100 3,000 2,900 2,800 ● ● Subscriptions ● H Q4 18 Q1 19 Q2 19 Postpaid ARPU = ARPU growth y-o-y Q3 19 +3.4% Continued strong ARPU development Smart pricing and low margin VAS • Ex. VAS ARPU grew by 1.8 percent ● Subscription erosion within both B2B and B2C Q4 19 22 21 20 19 18 17#18REVENUE PRESSURE NOT OFFSET BY LOWER COSTS 18 SERVICE REVENUES & ADJUSTED EBITDA SEK million in reported currency & like for like growth excl. IFRS 16 ● 3,063 ● -1.8% 3,120 Q4 18 Q4 19 Service revenues 1,371 -1% = Like for like growth excl. IFRS 16 1,505 Q4 18 EBITDA • Mobile decline due to subscriber loss in B2C Underlying EBITDA development around 2 percent Synergy execution as planned Q4 19 SERVICE REVENUES - BB/TV & FULL B2B SEGMENT SEK million, like for like, external service revenues 900 600 300 0r TV Broadband +1.0% Q4 18 -5% Y-O-Y +10% Y-O-Y Q4 19 800 600 400 200 0r B2B -2.3% Q4 18 Q4 19 • Stable low single-digit growth in Get • Pressure on traditional fixed B2B telco services ● B2B mobile still growing#19STRONG BALTICS WHILST DENMARK CONTRACTED 19 SERVICE REVENUE DEVELOPMENT Like for like growth, external service revenues ● Estonia Q4 18 Lithuania Q1 19 Q2 19 Denmark Q3 19 +8.9% +6.0% Significant growth in Lithuania largely driven by transit revenues -6.4% Q4 19 • Another great quarter for Estonia in all key areas • Denmark continued to struggle on mobile ● ADJUSTED EBITDA DEVELOPMENT SEK million in reported currency & like for like growth excl. IFRS 16 ● +6% 324 379 Q4 18 Q4 19 Lithuania +9% 233 280 Q4 18 Q4 19 Estonia -8% 237 ● • Both revenue growth and cost control supported EBITDA in Lithuania 295 Q4 18 Q4 19 Denmark = Like for like growth excl. IFRS 16 Revenue driven EBITDA growth in Estonia Despite working on costs, Denmark unable to offset. revenue decline +#20OPERATIONAL FREE CASH FLOW GREW 16 PERCENT 2019 20 OPERATIONAL FREE CASH FLOW DEVELOPMENT SEK billion, rolling twelve months 14 12 10 8 6 4 2 0 * SEK 12.6 BILLION Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 • As expected operational free cash flow came down Q4 as WC swung back Repayment of lease liabilities OPERATIONAL FREE CASH FLOW 2019 SEK billion, rolling twelve months 10.8 2018 ● ● 1.8 EBITDA less leasing* -0.1 WC +16% -0.4 0.4 12.6 CAPEX Other 2019 ex. licenses EBITDA growth mainly due to FX and Norway M&A Neutral NWC impact due to Q4 swing back and higher cash CAPEX • Other items rose driven mainly by higher pension. refund#21NET DEBT UP DUE TO DIVIDEND AND M&A 21 NET DEBT DEVELOPMENT Continuing and discontinued operations, SEK billion, and leverage ratio 2.50x 75.4 -5.6 3.9 1.5 4.9 9.2 -1.2 = Leverage ratio (multiple, rolling 12 months including a full 12 months of Get/TDC Norway and Bonnier Broadcasting) 2.71x 88.1 Q3 19 Operations Cash Buy- Dividend Bonnier Other Q4 19 CAPEX backs Broadcasting ● Net debt increased driven mainly by the Bonnier Broadcasting acquisition and payment of the second dividend tranche Share buy-backs of around SEK 0.9 billion left to do until the AGM 2020 ● • Bonnier Broadcasting earn-out of around SEK 0.8 billion ● The remaining 50% equals to SEK 0.2 billion in dividend from Turkcell to be received H1 2020 • Pro forma leverage of 2.76x#22OPERATIONAL FREE CASH FLOW OUTLOOK 2020 22 OPERATIONAL FREE CASH FLOW 2020 Å SEK 10.5-11.5 BILLION • EBITDA, cash CAPEX and NWC expected to be rather neutral ● • Other items to reduce operational free cash flow driven by ● • Paid taxes and interest to increase by c. SEK 1 billion. • Less support from the pension refund.#23Telia Company Q&A#24DISCLAIMER & FORWARD-LOOKING STATEMENTS This document contains the use of alternative performance measures (APM's) to provide readers with additional financial information that is regularly reviewed by management, such as adjusted EBITDA, CAPEX and operational free cash flow. These APM's should not be viewed as a substitute for Telia Company's IFRS based figures, but as a complement. APM definitions can be found in Telia Company's interims reports and Annual and Sustainability Report 2018 and may be defined differently by other companies and are therefore not always comparable to similar measures used by other companies. Telia Company's management considers these APM's combined with IFRS performance measures and in conjunction with each other, the most appropriate way to measure the performance of Telia Company. Statements made in this document relating to future status or circumstances, including future performance and other trend projections are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Telia Company. 24