Telia Lietuva

Earnings Release • Apr 28, 2017

THE STORY OF TWO COMPANIES' INTEGRATION

Telia Lietuva Group results for the year 2016 (approved by AGM)

Teo acquired a 100% stake in Omnitel and started integration of two companies

TEO & OMNITEL INTEGRATION JOURNEY

2017 FEBRUARY 1

Teo, Omnitel & Baltic Data Center united their efforts and became Telia Lietuva, AB #visakotinklas

TELIA LIETUVA PROVIDES TELECOMMUNICATION, IT & TV SERVICES IN LITHUANIA FROM A SINGLE POINT

TELIA LIETUVA IS –

Wide range of services

The most developed networks

Modern data centres

Everything from a single point

Customer care 24/7/365

IT Management and Information Security Management ISO certificates

Team of more than 3,000 professionals

Sustainable and responsible business

WE ARE PART OF TELIA COMPANY GROUP

OUR PURPOSE: BRINGING THE WORLD CLOSER – ON THE CUSTOMER'S TERMS

• innovate
• lead
• speak-up

We dare to: We care for: We simplify:

• our customers
• each other

• our world

• execution

• teamwork
• our operations

TELIA LIETUVA GROUP

• On 1 February 2017, subsidiaries AB Omnitel and AB Baltic Data Center were merged into TEO LT, AB and TEO LT, AB changed the name into Telia Lietuva, AB, while subsidiary UAB Lintel changed to Telia Customer Service LT, UAB.

WIDE RANGE OF SERVICES

THE BEST DEVELOPED NETWORK

of households are home passed by FTTH network

of populated territory is covered by 4G network

data centers

IMPLEMENTING THE LATEST TECHNOLOGIES

OPERATING FIGURES

NUMBER OF EMPLOYEES

ELECTRONIC COMMUNICATIONS MARKET OF LITHUANIA

WE ARE OPERATING IN GROWING TELCO MARKET (EUR MILLION)

SEGMENTS: WE HAVE 1/3 OR MORE OF THE MARKET

Teo + Omnitel market shares in terms of revenue (%)

BREAKDOWN OF THE TELECOMMUNICATIONS MARKET REVENUE IN 2016 BY OPERATORS

FAST GROWING USAGE OF DATA

(170 min/month per SIM card)

mobile data

(uploaded/downloaded 22.2 thousand TB of data per quarter)

(accounts for 29% of all pay-TV

service users)

MARKET PENETRATION PER 100 INHABITANTS

mobile communications subscribers

fixed telephony lines

broadband Internet access

pay-TV subscribers (households)

OPERATING AND FINANCIAL RESULTS

IN 2016 WE OFFERED NEW SERVICES

"Roam like home" while travelling in Scandinavian and Baltic Countries

"Antivirus plus" protects from viruses and spam up to several devices

"Home Connect" – unlimited mobile Internet at home

"Children' Corner" on IPTV platform was created following the parents and children wishes

IN 2016 WE IMPROVED OUR SERVICES

The speed of mobile Internet was increased while price of data was reduced

The speed of broadband Internet for business customers was increased and Internet could be installed in one day

Internet payment plans for business customers were enhanced with special IT security packages

IN 2016 WE IMPLEMENTED SOME EXCEPTION PROJECTS

IT infrastructure of Lithuanian Insurance and PZU subsidiaries in Baltic States was migrated into data centers of the Company

Internet of Thing contract with ESO for provision of data communication and data management of smart electricity meters

IT systems supervision and telecommunications service agreement with Coca-Cola HBC Baltic (in partnership with Telia companies in Estonia and Latvia)

IN 2016 WE INVESTED INTO DEVELOPMENT

Installed more than 600 new LTE 4G base stations

Invested EUR 13.5 million

Opened a new TIER III security certified data center

Invested EUR 3 million

telephony network digitalization

Completed voice

Invested EUR 6 million

Optimized digital terrestrial TV (DVB-T) re-broadcasting network

THE FASTEST GROWTH IN NUMBER OF IPTV AND FTTH USERS

³⁸ 31-12-2015 31-03-2016 30-06-2016 30-09-2016 31-12-2016 DVB-T IPTV In total -18.7% +8.1% +15.8%

Number of TV service users (thousands)

NUMBER OF MOBILE POST-PAID SERVICE USERS IS GROWING

^{351 306 976} 1,012 1,327 1,318 0 200 400 600 800 1,000 1,200 1,400 31-12-2015 31-03-2016 30-06-2016 30-09-2016 31-12-2016 Pre-paid (active) services users Post-paid services users In total -12.8% -0.7% +3.7%

Mobile communication users (thousands)

Number of fixed telephone lines (thousands)

REVENUE, EBITDA & NET PROFIT (EUR millions)

Note. The comparable combined data for 2015 is a data combined by simple aggregation after elimination of intragroup transactions as if Omnitel was the then a part of Teo Group.

DYNAMICS OF THE COMPANY' MAIN FINANCIAL INDICATORS (EUR million)

Note. The comparable combined data for 2015 is a data combined by simple aggregation after elimination of intragroup transactions as if Omnitel was the then a part of Teo Group.

2016 REVENUE BREAKDOWN

REVENUE BY SERVICES (EUR million)

Note. The comparable combined data for 2015 is a data combined by simple aggregation after elimination of intragroup transactions as if Omnitel was the then a part of Teo Group.

OPERATING EXPENSES (EUR million)

Note. The comparable combined data for 2015 is a data combined by simple aggregation after elimination of intragroup transactions as if Omnitel was the then a part of Teo Group.

Property, plant and equipment Other non-current assets Cash and investments Other current assets

• Assets increased by more than 2 times due to acquisition of Omnitel
• Non-current assets amounted to 72.5% of total assets (31-12-2016)
• Cash alone amounted to 9.6%
• Return on capital employed: 10.2%
• Return on average assets: 8.6%

EQUITY AND LIABILITIES (EUR million)

Share capital

Retained earnings Legal reserve

• Shareholders' equity amounted to 45.8% of the total assets (31-12-2016)
• To finance Omnitel acquisition the Company took a long-term loan of EUR 150 million
• At acquisition Omnitel had outstanding loans amounting to EUR 77 million
• Total borrowings amounted to EUR 227 million (31-12-2016)
• Gearing ration: 63%
• Debt to equity: 84%
• Return on equity: 16.1%
• On 26 April 2016 shareholders decided to allocate the profit for the year 2015: EUR 5.8 million was allocated for dividends and EUR 34 million as not distributed profit was carried forwards to the next financial year

(thousand EUR)	2016	2015
Net cash from operating activities	112,429	62,408
Net cash used in investing activities	(197,790)	(31,449)
Net cash used in financing activities	129,113	(34,923)
Increase in cash and cash equivalents	43,752	(3,964)

• Free Cash Flow during 2016 was EUR 44.2 million or by 1.5 times higher than a year ago
• Investments during 2016 amounted to EUR 57.7 million (EUR 50.8 million a year ago)
• EUR 26.6 million went to expansion of the core and fiber-optic access network
• EUR 13.5 million invested into development of mobile network and EUR 16.7 million into IT systems
• In January 2016, the Company took a long-term loan of EUR 150 million to finance acquisition of Omnitel's shares

DIVIDENDS

• Earnings and dividends till 2014 are allocated to 776,817,518 shares, from 2014 – to 582,613,138 shares
• On 17 November 2014 shareholders got 0.072 euro per share payment due to reduction of authorized capital
• In 2017, the Board approved dividend policy which provides that the Company shall to maintain the net debt to EBITDA ratio not higher than 1.5 and to pay out up to 80 per cent of free cash flow as dividend.
• On 27 April 2017, the Annual General Meeting of shareholders decided to allocate EUR 17.5 million or EUR 0.03 dividend per share for the year 2016, and to carry to the next financial year EUR 50.6 million as undistributed profit

SHARES AND SHAREHOLDERS

SHAREHOLDERS

• Telia Company AB (till 13 April 2016 called TeliaSonera AB) (Sweden) is the largest shareholder of Telia Lietuva, AB
• The Company's share capital consist of 582,613,138 ordinary registered shares of EUR 0.29 nominal value each
• On 24 October 2014, authorized capital was reduced by LTL 194 million and accordingly number of voting shares was reduced from 776,817,518 to 582,613,138

Shareholders as of 31-12-2016

	Part of shares and votes
Telia Company AB	88.15%
Other	11.85%

SHARES

• Since June 2000, the Company's shares are listed on Nasdaq Vilnius stock exchange (ticker: TEL1L)
• Since January 2011, the Company's shares were included into the trading lists of a few German stock exchanges (ticker: ZWS)
• Turnover on Nasdaq Vilnius stock exchange during January-December 2016: 5.7 million of shares or EUR 5.4 million
• Share price on Nasdaq Vilnius:

	EUR
01-01-2016	1.010
High	1.030
Low	0.875
31-12-2016	0.933

Market capitalization (EUR million)

TRADING IN THE COMPANY'S SHARES ON NASDAQ VILNIUS STOCK EXCHANGE IN 2016

THE COMPANY SHARE PRICE AND NASDAQ VILNIUS INDEXES COMPARISON

CORPORATE GOVERNANCE

GOVERNING BODIES

• The Annual General Meeting of Shareholders was held on 27 2017
• The Board consist of 6 members elected for the 2 year term
• Upon termination of the current term of the Board the shareholders re-elected Stefan Block, Claes Nycander, Inga Skisaker and Rolandas Viršilas (the last both as independent member of the Board) and elect new members of the Board – Henriette Wendt and Ole Stenkil
• 3 members of the Board comprise Audit and Remuneration Committees
• UAB Deloitte Lietuva elected as the Company's independent auditor for the year 2017
• The Board elects and recalls CEO

BOARD ELECTED ON 27 APRIL 2017

Henriette Wendt (born in 1969), Member of the Board, represents Telia Company AB

Ole Stenkil (born in 1973) Member of the Board, represents Telia Company AB

Stefan Block (born in 1967), Member of the Board, represents Telia Company AB, Chairman of the Audit Committee

Inga Skisaker (born in 1971), Independent member of the Board, Member of the Audit Committee

Claes Nycander (born in 1963), Member of the Board, represents Telia Company AB, Member of the Audit Committee

Rolandas Viršilas (born in 1963) Independent member of the Board, Member of the Remuneration Committee

• Rolandas Viršilas has 75,000 shares of Telia Lietuva, other members of the Board have no direct interest in the share capital of Telia Lietuva

GOVERNING STRUCTURE FROM 1 JANUARY 2016

CEO

Business to Business (B2B)

Business to Consumer (B2C)

Technology

Finance

Human Resources

Legal

Corporate Affairs

Business Development

Competitive Customer Operations

Risk

MANAGEMENT TEAM

• Norbertas Žioba owns 3,601, Andrius Šemeškevičius 8,761 shares of Telia Lietuva. Other managers do not own any shares of the Company
• In April 2017, Mindaugas Ubartas took the position of Head of B2B

On the picture from left to the right: Laimonas Devyžis, Head of Finance Giedrė Kaminskaitė-Salters, Head of Legal Mantas Goštautas, Head of Business Development Kęstutis Šliužas, CEO Andrius Šemeškevičius, Head of Technology Ramūnas Bagdonas, Head of Human Resources Vytautas Bučinskas, Head of Risk Audronė Mažeikaitė, Head of Corporate Affairs Andrius Byčkovas, Head of Competitive Customer Operations Norbertas Žioba, Head of B2C

#VISAKOTINKLAS