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12/13/2012 Forward in India 14 December 2012 Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (relevant persons). Any person who is not a

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12/13/2012 1

Forward in India

14 December 2012

Disclaimer

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past

  • r the yield on such investments cannot be relied upon as a guide to the future performance of such

investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Telenor Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation contains statements regarding the future in connection with the Telenor Group’s growth initiatives, profit figures, outlook, strategies and objectives. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.

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SLIDE 2

12/13/2012 2

Forward in India

Jon Fredrik Baksaas, CEO of Telenor Group

  • Business update
  • The Indian wireless market
  • Ambition and strategy
  • Business plan and targets
  • Summary

Content

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SLIDE 3

12/13/2012 3

Telenor Group perspective on India

  • Value creation built on growth profile
  • Size and governance to manage new

markets

  • Operational excellence
  • Learnings across the Group

Rational approach to a challenging situation

  • Supreme Court ruling in February to

quash licences awarded in 2008

  • Uncertainty regarding conditions and

timeline for licence quashing and re- auctioning of spectrum

  • Legal disputes with Unitech Ltd
  • Scale-down from 13 to 9 circles in July
  • Establishing a new platform for

continued operations

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SLIDE 4

12/13/2012 4

Secured spectrum in six best-performing circles

  • Acquired spectrum in six circles

– Total population of 600 million – Real penetration of 40%

  • Value driven and circle-by-circle

approach in auction

  • 5 MHz spectrum in 1800 MHz band,

valid for 20 years

  • Winning bid INR 40 bn (NOK 4.2 bn)

From 13 to 6 circles in India

Maharash tra

Gujarat Maharashtra Andhra Pradesh UP West UP East Bihar Population (m) 62 96 86 90 123 139 Operating cash flow (INR billion) Revenues (INR billion)

Declining operating losses

Q211 Q311 Q411 Q112 Q212 Q312 Other 6 circles 8.1 9.5 8.8 8.1 6.9 5.7 Q211 Q311 Q411 Q112 Q212 Q312 Other 6 circles

  • 9.5
  • 8.7
  • 7.7
  • 6.6
  • 5.4
  • 4.1

6 circles Other circles 6 circles Other circles INR/NOK = 0.104 as of 10 December 2012 Operating cash flow defined as EBITDA before other items – capex.

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12/13/2012 5

  • UP East EBITDA breakeven in

November – 3 years after launch

  • 7.3 million subscribers*
  • No 5 position in the circle
  • Cost per minute of INR 0.15
  • Maharashtra and Gujarat expected

to break even in early 2013

*) Source: COAI October 2012

First circle reaching EBITDA breakeven

10

Seamless continuation of operations

  • Reached settlement with Unitech Ltd.
  • Business transfer from Uninor to

Telewings expected in January 2013

  • Transfer of assets at fair market

value

  • Renegotiated contracts with vendors
  • New partner in place, with targeted
  • wnership structure:
  • Telenor 74%
  • Lakshdeep Investments 26%
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SLIDE 6

12/13/2012 6

Forward in India

Sigve Brekke, Managing Director Uninor

  • Business update
  • The Indian wireless market
  • Ambition and strategy
  • Business plan and targets
  • Summary

Content

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SLIDE 7

12/13/2012 7

Gross revenues (INR bn) Subscribers (million)

The Indian wireless market continues to grow

  • Several clean-ups in customer bases

impacting growth in 2H 2012

  • Telecom spending 2.6% of GDP (vs. 4.1%

developing Asia average)

272 302 322 368 397 754 815 853 959 1026 2008 2009 2010 2011 LTM 6 circles Pan-India 133 206 304 370 376 341 521 747 894 907 2008 2009 2010 2011 Q312 6 circles Pan-India +8% +10% CAGR 2008-2012 Source: TRAI (subscribers and revenue), WCIS/EIU (telecom spending and GDP). LTM = Last twelve months Q411-Q312

Large untapped growth potential on voice services

  • 40% real penetration in our 6 circles
  • Data services have not taken off yet
  • Still significant room for growth in

basic voice services

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SLIDE 8

12/13/2012 8

Market concentration lower than in other markets

Source: Local regulators and company estimates “Top 3” revenue market share – 6 circles 69% 66% 75% 71% 68% 68% Andhra Pradesh Bihar Maharashtra Gujarat UP West UP East “Top 3” revenue market share - Asia 70% 81% 92% 99% 99% India Pakistan Bangladesh Thailand Malaysia Revenue market share & rank* Subscriber market share & rank* 2.9 % 4.0 % 4.6 % 4.7 % 5.6 % 7.0 % Andhra Pradesh Bihar Maharashtra Gujarat UP West UP East 5.9 % 8.1 % 7.9 % 7.7 % 9.5 % 10.1 % Andhra Pradesh Bihar Maharashtra Gujarat UP West UP East

Cluster approach providing results at circle level

5 6 7 6 7 7 6 7 6 7 7 8 *) Source: TRAI Quarterly report September 2012 Revenue market share based on gross revenue

40-45% population coverage in these circles Target above 20% subscriber market share in clusters where present

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SLIDE 9

12/13/2012 9

The path to consolidation has started

  • Recent spectrum auction resulted in

fewer players

  • Operators scaling down in

underperforming circles

  • M&A Regulations not defined, future

spectrum outlays hampering M&A

  • Long term: 4-5 players in each circle
  • Pragmatic and value-driven approach to

future consolidation

Regulatory framework becoming clearer, with some uncertainties remaining

  • Auction of unsold spectrum, refarming

and spectrum payment for incumbents

  • Mobile termination rates
  • TRAI recommendation to cut MTR

from INR 0.20 to INR 0.10

  • MVNO and spectrum sharing
  • M&A regulation not defined
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SLIDE 10

12/13/2012 10

  • Business update
  • The Indian wireless market
  • Ambition and strategy
  • Business plan and targets
  • Summary

Content

Our ambition

Create value by taking a credible mass-market position

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SLIDE 11

12/13/2012 11

Our strategy

  • Best in servicing basics
  • Best in mass market distribution
  • Best in low cost operations

Position brand as best price on local voice

  • “Sabse Sasta” - most affordable
  • Build on-net communities
  • Become preferred second SIM in

cluster

  • Network capacity-based pricing
  • Focus on recharge
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SLIDE 12

12/13/2012 12

Reduce rotational churn and build customer loyalty

ARPU 150-300 ARPU 50 -150 ARPU < 50 Rotational churners Prospects Loyals (1st or 2nd SIM)

Execution Monitoring

  • KPIs up-to smallest units
  • Execute immediately on

micro level

  • Traffic
  • Distribution
  • Customer behaviour

Location Business Intelligence leads to action at micro level

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SLIDE 13

12/13/2012 13

Churn development* ARPU development (INR)*

ARPU discount towards market to narrow

*) 6 circles, on comparable basis

  • Very local traffic patterns – 80% of traffic stays within the local area
  • ARPU 30 – 40% below market, with potential for narrowing the gap

13% 15% 11% 9% 9% 9% Sep'10 Sep'11 Sep'12 87 93 88 Q310 Q311 Q312 Prepaid market average

Excellence in mass market distribution

  • 350,000 outlets
  • 8 million customer

interactions every day

System

DMS

Transformation

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SLIDE 14

12/13/2012 14

Cluster profitability (illustrative)*

Cluster approach

  • Very local traffic patterns –80% of

traffic stays within the local area

  • Build positions in identified intra-circle

clusters

  • Network coverage and capacity
  • Excellence in distribution
  • Affordable prices (on-net focus)
  • Profitability followed up and measured

at cluster (and site) level

Dec 2011 July 2012 Oct 2012 *) Cluster profitability measured on contribution, i.e. revenues minus direct costs Network efficiency (Example UP East) Erlang/Site/MHz vs Indian peers

2 4 6 8 10 12

Best-in-class on spectrum efficiency

  • No new capacity sites in 2011-2012

Feb'12 Jul'12 Nov'12 Network utilisation 78 % 83 % 87 % Erlang/TRX 5.2 5.6 6.0 Erlang/Site/MHz 10.5 12.4 13.6

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12/13/2012 15

Extreme outsourcing enables cost efficient

  • perations from smaller scale

Opex split (2012) Personnel Marketing and Sales Other Network Business Strategy Regulatory Plan Deploy Operating Centre Field Operations Application & Service development Billing Customer Care Sales, Marketing Traditional

In house Outsourced Partially outsourced

  • No legacy and established outsourcing

business model give late entrant advantage

– Creating scale from a small base

Cost per minute already below incumbents

24 15

  • 10

20 30 40 50 60 70 80 Jan Feb March April May June July Aug Sep Oct Nov Dec Jan Feb March April May June July Aug Sep Oct 2011 2012 Uninor UP East cost per minute Q312

Incumbent ~29 paise ~24 paise >150m subs ~41m subs

Source: TRAI and company reportings

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SLIDE 16

12/13/2012 16

  • Business update
  • The Indian wireless market
  • Ambition and strategy
  • Business plan and targets
  • Summary

Content Targeted return on business plan

  • Return on equity on new money

above 25%

  • High regulatory and legal risk
  • Increase non-recourse debt
  • ver time to reduce equity

exposure

Capital employed Capital employed Equity Debt

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12/13/2012 17

Operating cash flow (INR billion)

2013 focus: Operating cash flow breakeven by end of year

  • INR 155 bn peak funding maintained
  • Moderate funding need until

breakeven

  • INR 13 bn upfront part of licence fee to

be offset by ‒ 2008 licence fee of INR 16.6 bn ‒ Tax effect of loss recognition

  • 35
  • 44
  • 36
  • 17

2009 2010 2011 9M 2012 INR/NOK = 0.104 as of 10 December 2012 Monthly churn (%) Subscribers (mill)*

Mid term ambitions

  • Continue subscriber growth to

build scale and market position

  • No 2-3 market position in clusters

where present

  • Reduce rotational churn and

increase customer loyalty

  • Best in low cost operations
  • Consolidation and more rational

pricing behaviour to add further value

23 55 2012 2016 12 8 2012 2016 *) 30 days definition, 2012 figure as of Q3 UP East Q3 2012: 8%

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SLIDE 18

12/13/2012 18

Number of sites (‘1000) *

Low capex requirement going forward

  • Capex-light operating model from

100% tower sharing - no own towers

  • Capex primarily related to

radio network equipment

  • Re-allocation of equipment

from scaled-down circles

  • Long term capex/sales

around 5%

17 26 2012 2016 *) 6 circles

  • Business update
  • The Indian wireless market
  • Ambition and strategy
  • Business plan and targets
  • Summary

Content

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SLIDE 19

12/13/2012 19

Ready to move forward in India

  • Operational focus – execution of

strategy

  • Bring company to operating cash

flow breakeven by end of 2013

  • Value creation potential beyond

2013 Forward in India

14 December 2012

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SLIDE 20

12/13/2012 20

Circle characteristics

Circle category Population (million) GDP per capita (INR) Mobile SIM penetration SIM mkt share Top 3 UP East B 123

39,300

60% 50% UP West B 90 42,200 57% 51% Gujarat A 62 112,300 86% 60% Maharashtra A 96 129,600 72% 57% Bihar C 139 29,400 44% 49% Andhra Pradesh A 86 85,100 79% 53%

Source: TRAI