[PPT] - JANUARY September 2019 Q3 interim REPORT CHRISTIAN LUIGA PowerPoint Presentation

SLIDE 1

CHRISTIAN LUIGA

president & CEO

Douglas lubbe

CFO

interim REPORT JANUARY – September 2019 Q3

SLIDE 2

TRENDS AS EXPECTED

SER ERVICE E REV EVEN ENUE D E DEC ECLINE E SOFTEN ENING STRONG OPERATIONAL FREE CASH FLOW EBIT BITDA DA IN IN POSIT ITIV IVE g growth T h TERRIT ITORY * Like for like, Adjusted EBITDA excluding IFRS 16 impact 2

2.6%
1.4%
1.3%

Q1 19 Q2 19 Q3 19

4%
2%

1% Q1 19 Q2 19 Q3 19 YoY growth* YoY growth*

11.6BN

YTD Q3 2019 OPEX R REDU DUCED D IN IN q q3 V VS IN INCREAS ASED IN D IN h1 h1 (+1% h1 2019) (SEK 9.4bn YTD Q3 2018)

4%

Q3 2019

SLIDE 3

Share buy-back program TO END SPRING 2020

3 RE RECENT S SHARE REHOL OLDER R RE REMUN UNERA RATION ON SEK in billions Rat atio ional al 4 8 12 16 2016 2017 2018 Ordinary dividend Share buy-backs SEK 2 PER SHARE SEK 2.30 PER SHARE SEK 2.36 PER SHARE

The 2018 share buy-back decision based on

strong balance sheet and model being flexible

Carried out as long as credit targets are not

breached and strategy allows for it

In total SEK 10 billion, about 6% of shares to be

bought back until AGM 2020

Current pro forma leverage* of 2.7x
Credit rating target A-/BBB+
Slower overall economic outlook
Positive EBITDA trend but below internal plans
Sustain flexibility going forward

DECISION TAKEN by the Board not to execute

n the remaining SEK 5 billion of the three-

year share buy-back program ambition * Based on Q3 2019 leverage and including second 2019 dividend tranche and remaining share buy-backs until AGM 2020

SLIDE 4 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Service revenue growth Service revenue growth excl. Telia Carrier

1.3%
0.9%

COST DRIVEN EBITDA RECOVERY

Unchanged sequential trend
Loss of low-margin revenues in Telia Carrier still

weights on group

4 SER ERVICE E REV EVEN ENUE D E DEV EVEL ELOPMEN ENT* Organic & like for like growth, external service revenues * 2018 based on the previous organic growth definition (stable FX and M&A excluded) 2019 based on the new definition “like for like growth” (Stable FX and M&A included in current & corresponding period) 6,977 6,735 7,468 7,520 8,268 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Reported EBITDA Organic/like for like EBITDA growth

EBITDA turned positive driven mainly by sequential

improvements in Sweden and Norway

Lower costs in central functions also contributed

Adj Adjusted E d EBIT BITDA DA DE DEVELO LOPME MENT* SEK million in reported currency, organic & like for like growth excl. IFRS 16 +1% 0%

SLIDE 5

ACCELERATE EXECUTION

5 Strong customer position in core DRIVE LOYALTY FURTHER Grow Arpa and add services CPS Hub to digital experiences in homes and offices Digitalization partner of choice Cost leadership through scale and synergies

Indu dust stry y le lead ader in digi gital al impac act through gh UN’s ’s Su Sust stai ainab able le De Develo lopment Go Goals als 5G

FWA OCN Fiber

ICT

Drive loyalty & protect core revenues Monetize digitalization growth Strong position in core services Drive loyalty

5G

Utilize network superiority New operating model b2c b2b effic fficie iency

SLIDE 6 1 2 3

MINOR PART OF BASE MIGRATED – 3% arpu GROWTH

6 Postpaid aid ar arpu - B2C Postpaid ARPU B2C excluding VAS New mo w mobile bile portfo folio lio mig migrat atio ion o

vervie

iew Postpaid B2C subscriptions in million

IDD* and top-ups temporary burden

IDD* Other Q3 18 Subscription fee Top-ups Q3 19

1%

+3%

Subscriptions in scope migrated Q3 2019

delivered a +3% ARPU impact

Gradual impact over the coming ~20 months

subscriptions Not in scope for CURRENT migration * EU international direct dialing regulation, introduced May 2019 Telia subscriptions migrated in Q3 2019 Telia subscriptions to be migrated

SLIDE 7

Again #1 on quality in sweden

7

Telia had the Most satisfied B2B & b2C customers*

#1 also in 2019 on the back of superior product quality, especially relating to

Coverage Speed Reliability

* According to SKI (Svenskt Kvalitetsindex, English: Swedish quality index)

B2B (Telia) B2c (halebop)

SLIDE 8

0.8%

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19* Q3 19

Improved long-term b2b trend

8 B2B 2B ser ervice e rev even enue GR e GROWTH – all mar all markets Organic growth 2018 & like for like growth 2019

Gradually improving last two quarters in B2B from increased

customer relevance

Main drivers are the large and public segments in Sweden and

Norway

Sweden B2B NPS trending upwards
Significant improvement in Norway the last two quarters
IoT growth YTD Q3 >20%
Sizable deal with E.ON in Sweden on smart electricity meters

secured in Q3 (totaling ~1m SIMs over time)

Good traction in Crowd Insights with two strategic wins in the

public transportation space in Q3

* Q2 2019 positively impacted by one-off like revenues in Sweden

SLIDE 9

OPEX STARTED TO COME DOWN

9 OPEX EX d dev evel elopmen ent* External expenses, like for like

4%
6%
4%
2%

0% 2% Q3 18 Q4 18 Q1 19 Q2 19 Q3 19

Decrease in Q3 mainly driven by lower resource and

marketing costs in Sweden & Norway

Sweden reduced by 5%
Norway reduced by 10%
Positive development estimated to continue also in Q4 from
Synergy realization in Norway
New operating model (Finland enrolled from October)
Easier comparisons
Other efficiencies
Full year target of around -2% on OPEX remains

* Including an estimated 2% cost inflation

SLIDE 10

Sta tayin ing g in in the the fron

nt

t of

f digita

igitaliz ization tion via via 5 5g

10

5G

EUR 49.90/Month

Swede den Fin Finlan land

Network upgrade and 5G roll-
ut over 4 years
Target to fully cover Norway
Strong FWA business case
5G devices and price

plans now available

Initial roll-out program to

cover the 7 largest cities

1,000 MBIT Norway way

The world’s first 5G network

underground launched

Sweden’s first 5G network

for remote steering of construction equipment

SLIDE 11

Full year cash flow outlook unchanged

11

O P E R A T A T I O I O N A L A L F F R E E C A C A S H F F L O L O W S E S E K 1 1 2 - 1 2 . 5 B B I L L I L L I O N U N U N C H A H A N G E D E D

Full year outlook reiterated with outcome likely in the lower

end of the range

EBITDA and CAPEX YTD Q3 combined below internal

expectations whereas WC and other items are ahead

Composition and run-rate into 2020 slightly different vs.

view at the beginning of the year

Currently there is a higher uncertainty on the operational

free cash flow level for 2020

SLIDE 12

Douglas lubbe

CFO

interim REPORT JANUARY – September 2019 Q3

SLIDE 13

LOWER COSTS COMPENSATED FOR REVENUE DECLINE

Pressure on legacy, mobile and fiber installation

revenues in Sweden

Copper dismantling and legacy pressure in Finland
Norway flat driven by one-off revenues
Loss of low-margin revenues in Telia Carrier

Q3 18 SWE DEN FIN NOR LIT EST LAT Telia Carrier Other Q3 19

1.3%

13 SWE Q3 18 FIN NOR DEN LIT EST LAT Telia Carrier Other Q3 19 +1%

Sweden rather neutral given cost reduction
Service revenue loss and lower equipment margin

in Finland

Synergies, one-offs and lower marketing in Norway
Solid cost control in central functions

SER ERVICE E REV EVEN ENUE D E DEV EVEL ELOPMEN ENT Like for like growth, external service revenues EBIT BITDA DE DA DEVELO LOPME MENT Like for like growth, excluding adjustment items and IFRS 16

SLIDE 14

B2C improved and B2b normalized vs STRONG q2

Price adjustments made continued to yield in B2C
B2B came back down after being impacted by
ne-off like mobile revenues in Q2

B2B

14

B2C

SER ERVICE E REV EVEN ENUE D E DEV EVEL ELOPMEN ENT Reported currency, external service revenues Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 B2C excl. fiber OTC B2B B2C

1.1%
0.9%
1.9%
12%
10%
8%
6%
4%
2%

0% Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Adj Adjusted E d EBIT BITDA DA DE DEVELO LOPME MENT* Organic & like for like growth excl. IFRS 16 * 2018 based on the previous organic growth definition (stable FX and M&A excluded) 2019 based on the new definition “like for like growth” (Stable FX and M&A included in current & corresponding period)

Positive trend continued driven primarily by lower

OPEX and easy COGS comparisons

SLIDE 15

Changing revenue mix puts pressure on margin

3,258 3,315 1,291 1,366 Q3 18 Q3 19 Q3 18 Q3 19 Service revenues EBITDA

1.8%
Stable on mobile subscription revenues but loss
f interconnect revenues
Fixed telephony fell from network dismantling
Pressure on the equipment margin

= Like for like growth excl. IFRS 16 * External service revenues ** Excluding adjustment items 15 SER ERVICE E REV EVEN ENUES ES* & EB EBITDA** SEK million in reported currency & like for like growth excl. IFRS 16

5%
Stable subscription base development
ARPU uplift driven by both B2C and B2B

15 16 17 18 19 20 3,000 3,100 3,200 3,300 3,400 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Subscriptions ARPU +2.4% = ARPU growth y-o-y MO MOBILE BILE SUBS BSCRIP IPTIO IONS AN AND D AR ARPU Total subscription base in 000’, blended ARPU in local currency

SLIDE 16 2,303 3,348 1,126 1,794 Q3 18 Q3 19 Q3 18 Q3 19

NORWAY BENEFITED FROM SYNERGIES AND ONE-OFFS

+9% +0.1%

Mobile and fixed broadband compensated for

pressure on fixed telephony, TV and business solutions

Synergies supported EBITDA but also a few

special items

Growth in Get from broadband
B2B segment growth driven by mobile

16 SER ERVICE E REV EVEN ENUES ES* & EB EBITDA** SEK million in reported currency & like for like growth excl. IFRS 16 ser ervice e REV EVen enues es - BB/TV & f full B2B s segment nt SEK million, like for like, external service revenues = Like for like growth excl. IFRS 16 * External service revenues ** Excluding adjustment items Service revenues EBITDA 300 600 900 Q3 18 Q3 19 TV Broadband +1.2% +4% Underlying 200 400 600 800 Q3 18 Q3 19 B2B +2.7%

SLIDE 17 361 364 282 311 202 288 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Estonia Lithuania Denmark Q3 18 Q3 19 Estonia Q3 18 Q3 19 Denmark +2% Q3 18 Q3 19 Lithuania

Solid estonia & further danish cost control

7%

+1%

6.0%

+5.0% +1.7%

Another solid quarter for Estonia
Lithuania back to growth due to less pressure on fixed
Denmark remains challenging on both mobile & fixed
Lithuania burdened by higher resource costs
Estonia benefited from good revenue development
Solid work on costs in Denmark

17 SER ERVICE E REV EVEN ENUE D E DEV EVEL ELOPMEN ENT Like for like growth, external service revenues Adj Adjusted E d EBIT BITDA DA DE DEVELO LOPME MENT SEK million in reported currency & like for like growth excl. IFRS 16 = Like for like growth excl. IFRS 16

SLIDE 18

Step up in operational free Cash flow

18 2 4 6 8 10 12 14 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 OPERAT ATIO IONAL FR AL FREE C CAS ASH H FLO FLOW dev evel elopmen ent SEK billion, rolling twelve months SEK 13.0 billion OPERAT ATIO IONAL FR AL FREE C CAS ASH H FLO FLOW br bridg idge SEK billion, rolling twelve months

Full year likely at the lower part of the SEK 12-12.5

billion range due to:

Seasonality
WC reversal

WC 1.6 FY 2018 1.2 EBITDA less leasing*

0.9

CAPEX ex. licenses 0.3 Other R12 Q3 2019 10.8 13.0

WC tailwind of SEK 0.3 billion YTD Q3 from

new handset financing program in Norway

CAPEX decline in Sweden more than offset by

increase in Norway (Get consolidation and the handset financing program “Svitsj”)

* Repayment of lease liabilities

SLIDE 19

net debt and leverage fell in the quarter

Net debt down Q3 driven by strong cash flow

from operations

Leverage also down but still not enjoying the full

run-rate contribution to EBITDA from IFRS 16

Second dividend tranche of SEK 5 billion to be

paid Q4 (pro forma leverage impact of 0.16x)

Share buy-backs of around SEK 2.5 billion left

to do until the AGM 2020 (pro forma leverage impact of 0.08x)

19 3.3 1.4 1.6 77.7 Q2 19

8.6

Operations Cash CAPEX Buy-backs Other 75. 75.4 Q3 19 2.65x 2.50x = Leverage ratio (multiple, rolling 12 months including a full 12 months of Get/TDC Norway) NET ET D DEB EBT DEV EVEL ELOPMEN ENT Continuing and discontinued operations, SEK billion, and leverage ratio

SLIDE 20

Q&A

SLIDE 21

REPORTED EBITDA POST IFRS 16 IMPLEMENTATION Q3

Re Report rted d sek ek Illustrative graph Like ke for

r l

like ke gr grow

wth

th Illustrative graph Like ke for

r l

like ke gr grow

wth

th ex. If Ifrs 16 i 16 impact Illustrative graph 21 2019 Q3 2018 Q3 2018 Q3 2019 Q3

Growth in the existing business

including/excluding any acquired or disposed businesses in current and corresponding period, as well as including the positive impact from IFRS16

At stable FX

2019 Q3 2018 Q3

Based on like for like growth but 2018

adjusted as if IFRS16 would have been implemented

At stable FX
Reported numbers in SEK including

impact from M&A and changes in FX as well as the positive impact from IFRS16 FX Numbers incl. IFRS 16 M&A Numbers incl. IFRS 16 M&A

+18.5% +11.0% +1%

M&A IFRS16 est. adj. Numbers incl. IFRS 16

SLIDE 22

DISCLAIMER & 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.