1

JOHAN DENNELIND,

PRESIDENT & CEO

INTERIM REPORT

JANUARY – JUNE 2016 Q1Q2

SOLID Q2 - STRONG FIRST HALF

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S E R V I C E R E V E N U E G R O W T H

E B I T D A * G R O W T H

F R E E C A S H F L O W

Reported -1.2%Organic -0.2%

Reported +4.1%Organic +5.1%

SEK 1.8 billion

*Excluding non-recurring itemsContinuing operations

Reported -0.9%Organic -0.6%

Reported +7.1%Organic +7.6%

SEK 3.9 billion

Q2 2016 H1 2016

2

SERVICE REVENUESOrganic growth, external service revenues

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

Sweden Europe Continuing operations

-0.2%-0.2%

-0.2%-0.2%

+0.9%+0.9%2.0%

7.4%5.1%

Q215

Q216

Q215

Q216

Q215

Q216

CONTINUED EBITDA GROWTH - REVENUES STABLE

3

EBITDAOrganic growth, excluding non-recurring items

• Region Europe supported by growing mobile service revenues in almost all markets

• Sweden impacted by lower fixed telephony revenues and pressure in B2B large segment

• Lower EBITDA growth in Sweden, mainly due to less favourable y-o-y comparable

• EBITDA growth in 6 of 7 markets in region Europe supported by mobile service revenue growth and cost control

Continuing

operationsEuropeSweden

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

Telia passed, not connectedCommunication operatorTelia connected (MDUs + SDUs)

MIXED REVENUE DEVELOPMENT IN SWEDEN

Q2 15 Q2 16

+1.6%+1.6%

-5.0%-5.0%

+4.0%+4.0%

B2B

B2C

Excl. fiber installation revenues

Incl. fiber installation revenues

1.4 million1.4 million

TELIA FIBER HOUSEHOLDSSERVICE REVENUES BY SEGMENTOrganic growth, external service revenues

• B2C segment supported by revenue growth in broadband, TV and fiber installations

• Still pressure in B2B despite positive development in SME/SoHo

• 42,000 new connections in Q2 of which around 50 percent SDUs

• SDUs passed now exceeds 550,000 of which close to 50 percent are connected

1.2 million1.2 million

4

3

VALUE LOADING IN SWEDEN

5

1.3%2.5%

13.3%

Q215

Q216

Q215

Q216

Q215

Q216

TV

TOTAL ARPU DEVELOPMENTGrowth y-o-y, B2C and B2B

• Positive growth trend in B2C mobile ARPU offset by pressure in B2B

• Price increases support TV ARPU

• Broadband ARPU increase mainly driven by speed migration

Fixed broadbandMobile

B2C PRODUCT MONETIZATION% of total subscription base

Q2 15base

Q2 16base

12 GB or >

Other

Q2 15base

Q2 16base

60 Mbit

30 Mbit

10 Mbit

Q2 15base

Q2 16base

100 Mbit or >

10 Mbit

Q2 15base

Q2 16base

Large

Mid

Start &other

MobileMobile TVTV

DSLDSL FiberFiber

3.8%

0.8%

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

Mobile billed service revenues Total mobile service revenues2,769 2,739

Q2 15 Q2 16

-0.8%-0.8%

HIGHER EARNINGS IN FINLAND

6 * External service revenues **Excluding non-recurring items

Service revenues EBITDA

= Organic growth

SERVICE REVENUES* & EBITDA**SEK million, reported currency

MOBILE SERVICE REVENUES*Organic growth

• Lower interconnect and fixed broadband revenues behind revenue decline

• Growth in mobile billed service revenues and cost control contribute to EBITDA growth

• Price increases and good data monetization in B2C support mobile billed service revenues

• Network quality stabilized

978 987

Q2 15 Q2 16

+1.9%+1.9%

4

SOLID PERFORMANCE IN NORWAY

7

731 705

Q2 15 Q2 16

+5.0%+5.0%

Service revenues EBITDA

SERVICE REVENUES* & EBITDA**SEK million, reported currency

• Positive growth in mobile billed service revenues was offset by lower interconnect revenues

• Improved SARC spend and overall good cost control behind EBITDA improvement

* External service revenues **Excluding non-recurring items = Organic growth

3.8%

1.3%

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

Mobile billed service revenues Total mobile service revenues

MOBILE SERVICE REVENUES*Organic growth

• Higher mobile billed service revenues following successful upsell activities

• Telia awarded best 4G network in Norway’s biggest independent test

1,978 1,807

Q2 15 Q2 16

-0.4%-0.4%

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195 205

247281

134 135

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

Estonia Lithuania Latvia

Q2 15 Q2 16Lithuania

Q2 15 Q2 16Latvia

+13.9%+13.9%

Q2 15 Q2 16Estonia

EARNINGS GROWTH IN THE BALTICS

+3.6%+3.6%

+0.8%+0.8%

-3.2%-3.2%

+4.6%+4.6%

+0.5%+0.5%

SERVICE REVENUES*Organic growth

EBITDA**SEK million

• Growing demand for mobile data partly offset by lower roaming revenues

• Challenging B2B segment in Latvia

• Service revenue growth and cost control in Estonia and Lithuania behind improved EBITDA

* External service revenues = Organic growth ** Excluding non-recurring items

5

FOCUSING ON STRENTHENING POSITION IN THE NORDICS & BALTICSEXITING NON-CORE BUSINESSES

NEW GROUP STRUCTURE TAKING SHAPE

9

• Divested to MÁSMÓVIL

• Closing estimated in Q3

• Divested to Marginalen

• Closing estimated before year-end 2016

• Divested to Axiata, transaction closed in Q2

• Q2 impacted by FX and closing adjustments

• Enhanced ICT capabilities needed to broaden the enterprise proposition

• Ambition to further strengthen convergent position

• Telia X established for accelerating new initiatives

SUMMARY Q2

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EB ITDA GROWTH IN 7 OF 8 MARKETS

STABLE SERV ICE REVENUE DEVELOPMENT

EXECUTING ON STRATEGY– PORTFOLIO OPTIMIZAT ION

6

11

CHRISTIAN LUIGA,

SENIOR VICE PRESIDENT & CFO

INTERIM REPORT

JANUARY – JUNE 2016 Q1Q2Q2

12

STABLE SERVICE REVENUES - LOWER EQUIPMENT SALES

SERVICE REVENUESOrganic growth, external service revenues

NET SALESOrganic growth

-0.2%-0.2%

Q2 16Inter-connect

&Carrier

Q2 16Otherservice

revenues

Fixedexcl.

Carrier

Mobileexcl.

interconnect

Q2 15

• Lower interconnect and low-margin voice revenues in Carrier behind decline in service revenues

• Excluding interconnect, 6 of 8 markets displayed mobile service revenue growth

• Decline in net sales due to lower equipment sales in Europe, mainly Finland

+0.6%+0.6%

Equipment Sweden

Service revenues

Q2 15

-1.0%

Q2 16Equipment Europe

7

13

EBITDA GROWTH BUT AT A SLOWER PACE

EBITDAOrganic growth, excluding non-recurring items

EBITDAOrganic growth, excluding non-recurring items

Other Q2 16Europe

+5.1%+5.1%

SwedenQ2 15

5.1%

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

• Growth in mobile service revenues and good cost control support EBITDA

• Europe supported by strong growth in Spain

• Lower growth in Q2 primarily due to tougher comparisons in Sweden

MOBILE GROWTH AND SOLID COST CONTROL IN EUROPE

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EBITDAOrganic growth, excluding non-recurring items

+7.4%+7.4%

Q2 16SPAQ2 15 LATESTLITDENNORFIN

• Growth supported by price adjustments and higher data consumption

• Mobil service revenue growth in 6 of 7 markets

MOBILE SERVICE REVENUESOrganic growth, external service revenues

Denmark

Norway

Finland

Q2 15

+2.3%+2.3%

Q2 16

Spain

Latvia

Estonia

Lithuania

• Improved service revenue mix and lower operating expenses

• EBITDA growth in 6 of 7 markets

8

15

NCELL DECONSOLIDATION & FX IMPACT IN EURASIA

SERVICE REVENUES*SEK billion, reported currency, discontinued operations

EBITDA**SEK billion, reported currency, discontinued operations

• Organic service revenues remained unchanged

• Reported revenues significantly impacted by deconsolidation of Ncell and FX

• Reported EBITDA impacted by:

• Organic development

• Negative FX impact, mainly Kazakh Tenge

• Ncell deconsolidated end of April

OrganicQ2 15

3.1

1.4

-54.4%-54.4%

Q2 16FX Ncell deconsolidation

** Excluding non-recurring items

FXQ2 15

5.4

Organic Ncell deconsolidation

3.3

Q2 16

-39.2%-39.2%

* External service revenues

-0.1 p.p.

-24.2 p.p.

-14.9 p.p.

-16.2 p.p.

-19.4 p.p.

-18.8 p.p.

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PRESSURE IN KAZAKHSTAN AND AZERBAIJAN

SERVICE REVENUES* Q2Organic growth, discontinued operations

EBITDA** Q2Organic growth, discontinued operations

-15.2%

-9.5%

19.7%

-0.2%

Kazakhstan Azerbaijan Uzbekistan TotalEurasia

• Mixed service revenue development

• Negative development in Kazakhstan Q2 but some early signs of market repair

• EBITDA impacted by revenue pressure in Kazakhstan and Azerbaijan together with operational FX impact and higher operational tax costs in the region

-34.0%

-27.9%

0.6%

-21.0%

Kazakhstan Azerbaijan Uzbekistan TotalEurasia

** Excluding non-recurring items* External service revenues

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2015 H1 2016 2016 2017

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INVEST-TO-SAVE AND COST DEVELOPMENT ON TRACK

• Invest-to-save on track and slightly improved run-rate since year-end

INVEST TO SAVE PHASINGSEK billion, savings run-rate at period/year-end

0.60.8

1.1

2.0

• OPEX decline for three consecutive quarters

• Comparable numbers on cost will be more challenging during second half of 2016

-4%

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

OPEX DEVELOPMENT*Organic growth, excl. Norway

* Norway excluded for comparison reasons due to theTele2 acquisition

14.9

0

5

10

15

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

1.6 1.7

1.4 1.3

0.7 0.8

0.0

1.0

2.0

3.0

4.0

Q2 15 Q2 16

Other operations

Europe

Sweden

SWEDEN FIBER ROLL-OUT DRIVES CAPEX

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= In relation to reported service revenues

20.2%20.2% 20.9%20.9%

CAPEX EXCLUDING LICENSESSEK billion, continuing operations

CAPEX EXCLUDING LICENSESSEK billion, continuing operations, rolling twelve months

• Fiber accounts for around 50 percent of CAPEX in Sweden

• CAPEX in Europe mainly related to 4G roll-out in Norway and Finland

• CAPEX run-rate approaching the high endof full-year guidance range

10

0.27

-0.25

0.23

-0.13

-0.32

19

EPS IMPACTED BY DISCONTINUED OPERATIONS

0.75 0.05

0.15

0.33

-0.42-0.42

Q2 16

Dis

cont

inue

dop

erat

ions

-0.59

Oth

er

-0.03

Ass

ocia

tes

Ope

ratin

gin

com

e*Q2 15

EPS - TOTALSEK

EPS - DISCONTINUED OPERATIONSSEK

• Higher EPS in continuing operations more than offset by lower EPS in discontinued operations

• Discontinued operations impacted by Ncell deconsolidation, Ncell capital loss (owners of the parent), impairment charges and lower results

-0.21

D&Aand

other

Impair-ments

EBITDAexcl.Ncell

-0.23

Q2 15

-0.59-0.59

Q2 16Ncell decons.

+0.17+0.17

Continuing operations

Ncellcapital

loss

* Excluding income from associates and non-recurring items

LOWER FREE CASH FLOW

FREE CASH FLOW

- CONTINUING OPERATIONSSEK billion, continuing operations

• Cash flow Q2 2015 positively impacted by Turkcell dividend of SEK 4.7 billion net of tax

• Working capital improvement in primarily Sweden

* Excluding non-recurring items ** Excluding tax on dividends from associates *** Net of tax

-3.2-3.2

Q2 16

1.8

Dividends from

associates***

-4.7

Other

0.2

Workingcapital

1.0

Tax**

0.1

EBITDA*

0.3

Q2 15

5.0

0

4

8

12

16

20

Q2 15 Q3 15 Q4 15 Q1 16 Q2 16

Discontinued operations Dividends from associates net of taxes Continuing operations excl. associates Continuing operations incl. associates

20

FREE CASH FLOW

- GROUP SEK billion, rolling twelve months

11.4

16.016.615.5

17.2

8.9

11

21

LEVERAGE REMAINS LOW

NET DEBT/EBITDA*

1.60

1.00

1.25

1.50

1.75

2.00

FY 12 FY 13 FY 14 FY 15 Q2 16

* Net debt to rolling twelve months EBITDA excl. non-recurring items

(Continuing and discontinued operations)

1.60

• Leverage in the low-end of target (2.0x +/- 0.5)

• First dividend tranche of SEK 6.5 billion paid in April 2016

• Second dividend tranche of SEK 6.5 billion to be paid in October 2016

OUTLOOK 2016 – UNCHANGED

* Excluding non-recurring items, in local currencies, excluding acquisitions and disposals** Excluding license and spectrum fees, currency fluctuations may impact the reported number in Swedish krona

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In line or slightly above the level in 2015EB ITDA *

SEK 14-15 billion

> 80% of free cash flow - at least SEK 2 per share

CAPEX * *

DIV IDEND

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Q&A

DEBT MATURITY SCHEDULEMMO

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Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-76

May-17

Jun-17

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2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064

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DEBT MATURING NEXT 12 MONTHSSEK billion

DEBT PORTFOLIO MATURITY SCHEDULE – 2016 AND ONWARDSSEK billion

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FINANCIAL SUMMARY Q2 2016

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* Excluding non-recurring items

Q2 2016 Q2 2015 CHANGE (%)

Net sales (SEK million) 21,130 21,558 -2.0

Change local organic (%) -1.0

Service revenues (SEK million) 18,075 18,289 -1.2

Change local organic (%) -0.2

EBITDA* (SEK million) 6,389 6,136 +4.1

Change local organic (%) +5.1

EBITDA* Margin (%) 30.2 28.5 +1.7p.p.

Total EPS (SEK) 0.33 0.75 -55.8

Total free cash flow (SEK million) 1,698 6,307 -73.1

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JUN 30, 2016 DEC 31, 2015

Return on equity*, % 7.4 9.3

Return on capital employed*, % 9.3 8.9

Equity/assets ratio, % 36.7 35.1

Net debt/equity ratio, % 54.9 62.5

Net debt/EBITDA** ratio, multiple 1.60 1.53

Net debt/assets ratio, % 20.2 21.9

* Rolling 12 months ** Rolling 12 months, excluding non-recurring items

FINANCIAL KEY RATIOS Q2 2016

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FORWARD-LOOKING STATEMENTS

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.

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