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Telia Company

Annual Report Jan 28, 2022

2982_10-k_2022-01-28_f196ac2f-6e49-456c-b4c8-5c07c16e9cd4.pdf

Annual Report

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Year-end Report January-December 2021

Delivering on growth objectives

Fourth quarter summary

  • Net sales decreased 0.4% to SEK 23,380 million (23,464) and like for like3 , net sales increased 3.3%.
  • Service revenues decreased 1.7% to SEK 19,420 million (19,765) and like for like3 , service revenues increased 2.9%.
  • Adjusted EBITDA declined 1.6% to SEK 7,290 million (7,411) and like for like3 , adjusted EBITDA remained unchanged.
  • Total net income amounted to SEK 1,185 million (-24,474).
  • Operational free cash flow decreased to SEK 1,371 million (2,856) and cash flow from operating activities decreased to 7,137 million (7,929).
  • The transaction regarding a sale of 49% of the tower businesses in Finland and Norway to Brookfield and Alecta was completed.
  • After the end of the quarter, an agreement was signed with Brookfield and Alecta for the sale of 49% of the tower business in Sweden. The Board intends to propose to return the net transaction proceeds to shareholders, after the expected completion of the transaction during 2022.
  • For 2021, the Board of Directors proposes to the Annual General Meeting an ordinary dividend of SEK 2.05 per share (2.00).
  • The outlook for 2022: Service revenues and Adjusted EBITDA, like for like, are estimated to grow by low single digit. Cash CAPEX, excluding fees for licenses and spectrum, is estimated to be in the range of SEK 14.0-15.0 billion.

Full year summary

  • Net sales declined 1.0% to SEK 88,343 million (89,191) and like for like3 , net sales increased 3.2%.
  • Service revenues decreased 2.8% to SEK 75,180 million (77,342) and like for like3 , service revenues increased 1.5%.
  • Adjusted EBITDA declined 2.0% to SEK 29,861 million (30,482) and like for like3 , adjusted EBITDA increased 0.4%.
  • Total net income amounted to SEK 11,836 million (-22,837).
  • Operational free cash flow decreased to SEK 10,401 million (12,095) and cash flow from operating activities decreased to SEK 27,376 million (28,604).
  • The divestment of Telia Carrier to Polhem Infra was completed on June 1, 2021.

Highlights

SEK in millions, except key ratios,
per share data and changes
Oct-Dec
2021
Oct-Dec
2020
Chg
%
Jan-Dec
2021
Jan-Dec
2020
Chg
%
Net sales 23,380 23,464 -0.4 88,343 89,191 -1.0
Change (%) like for like1,3 3.3 3.2
of which service revenues (external) 1 19,420 19,765 -1.7 75,180 77,342 -2.8
change (%) like for like1,3 2.9 1.5
Adjusted² EBITDA1,4 7,290 7,411 -1.6 29,861 30,482 -2.0
change (%) like for like1,3 0.0 0.4
Margin (%) 31.2 31.6 33.8 34.2
Adjusted² operating income1,4 2,246 2,573 -12.7 10,033 11,457 -12.4
Operating income4 1,772 -23,037 15,232 -17,850
Income after financial items4 1,181 -24,035 12,598 -21,168
Total net income4 1,185 -24,474 11,836 -22,837
EPS total (SEK) 4 0.27 -5.99 2.86 -5.62
Operational free cash flow1 1,371 2,856 -52.0 10,401 12,095 -14.0
CAPEX excluding fees for licenses, spectrum
and right-of-use assets1,4 5,944 4,104 44.8 15,885 13,421 18.4

1) See Note 15 Alternative Performance Measures and/or section Definitions. 2) Adjustment items, see Note 2. 3) Like for like excludes exchange rate effects and is based on the current group structure, i.e. including the impact of any acquired companies and excluding the impact of any disposed companies, both in the current and in the comparable period. 4) Restated, see Note 1.

7,290 Adjusted EBITDA Q4 2021

(SEK million)

19,420 Service revenues Q4 2021 (SEK million)

1,371 Operational free cash flow Q4 2021 (SEK million)

CEO comment...

"One year after setting out our plan to reinvent Telia and make it better for our customers, our employees, our owners and the societies of the Nordic and Baltic region, we are boldly moving forward. We have returned to growth on both revenue and EBITDA, we have secured our network leadership, we have laid the foundations for a sustainable digital transformation of the whole of Telia, and we remain a sector leader in responsible business. We are also on track to create the region's first meaningful tower company with an enterprise value of EUR 2.6 billion, in partnership with one of the world's largest owners and operators of towers, and we have deleveraged our balance sheet. We are proud that whilst we are in the midst of a comprehensive upgrade of our networks, while simultaneously modernizing and digitizing our many customer experiences, we have delivered on our outlook, and generated operational free cash flow that fully covers both our heightened investments and our progressive dividend.

In the fourth quarter our service revenue grew by 3% driven by Sweden, the Baltics and TV and Media. Structural cost reduction continues, but as we absorb a full quarter of premium sports rights, our EBTIDA remained unchanged. Our core telco business, excluding the TV and Media unit, grew EBITDA by 3%.

Sweden and the Baltics, our market leaders, delivered solid service revenue growth driven by a stable customer base and rising ARPUs in all main segments. I am especially pleased that the core trends in our Swedish business look increasingly solid. Customer intake in both fiber broadband and IPTV have been consistently positive for seven consecutive quarters, and ARPUs are rising with post-paid mobile and broadband both growing 3%, and TV growing 8% in the quarter. Sweden's service revenue growth rate was 1.5% but amounted to 4.2% when excluding the declining copper revenue. EBITDA grew by 6.5% helped by a pension refund of around SEK 160 million and by 2% excluding the refund. Our businesses in Estonia and Lithuania delivered high-single digit growth in service revenue, driven by both mobile and fixed services and in both the consumer and enterprise segments.

Results in our challenger markets were again mixed but with some positive signs. Norway delivered positively with service revenue accelerating to 2.6% growth, despite the drag from our wholesale business, with both the consumer and enterprise segments growing healthily at 3-5%. EBITDA declined by 3.6% but was stable excluding the wholesale business. Finland results are as expected still below last year with service revenue declining 2.8%, but positive trends are starting to materialise. We saw our new value-oriented strategy and 5G migrations enabling a small increase in consumer post-paid ARPU, and a positive shift towards lower cost and digital sales channels. However, rising energy costs offset the benefits from digital transformation initiatives this quarter, as did declining legacy businesses. We are prioritizing longer-term levers over quick fixes and expect the turnaround to take until the second half of 2022, as previously stated. In Denmark trends were similar to the previous quarter with stable service revenue but EBITDA declined mainly on the back of higher energy costs.

TV and Media continued to grow and the number of consumers with access to C More content is now 14% higher than one year ago. Service revenues grew 11% in both our Advertising funded and Pay TV businesses. Advertising revenues were strong on both linear and digital platforms, in both Sweden and Finland. We achieved our highest ever linear share of viewing in Sweden, and we are gaining share in Finland. As we pursue the digital transformation of the leading Nordic media house I am excited to see the 28% growth in digital advertising in Sweden for 2021, driven by TV4 Play. Within Pay TV, we now carry the full quarterly impact of premium sports rights and while the C More subscriber base grew, the higher content investment resulted in a neutral EBITDA contribution from TV and Media in the quarter.

We continue to execute on the strategic roadmap we presented one year ago. Our strategic priority to "Inspire our Customers" is well illustrated by Telia Norway which has taken 5G leadership, created a daring challenger position to the market incumbent, and increased customer loyalty through a combination of appealing family subscriptions, convergent solutions and device offerings, all of which has resulted in a significant 30% reduction in churn, over the past two years. Telia Sweden won the Swedish quality index survey (SKI) customer satisfaction survey in several categories. Furthermore, in a broad international survey of mobile customer experience performed by Tutela, Finnish networks were named the best in the world, and among those, Telia Finland came out as no.1.

Our priority to "Connect Everyone" is manifested by our strong commitment to maintain and build our network leadership position. I am pleased to see that we won the umlaut test for best network again in Sweden, and even increased the margin to other networks. In Finland we launched the first commercially available 5G standalone (SA) core network in the Nordic and Baltic region, creating the opportunity for advanced 5G use cases and a strengthened position in the Enterprise segment. We are also proud that the World Benchmarking Alliance has ranked Telia Company number 11 out of 150 when it comes to digital inclusion and fourth among all the European-headquartered companies, based on our progress on improving access to technology, enhancing digital skills, fostering trustworthy use, and innovating openly and ethically. During the year, we also joined forces with Brookfield and Alecta to create a pan-Nordic tower platform, following the closing of the first tower transaction in Q4 and the expected closing during 2022 of the recently announced transaction comprising our Swedish towers.

As we "Transform to Digital" we have laid further foundations to transform Telia into a more agile, efficient company that serves its customers in a simpler, better way. During the year, we have retired over 20% of our legacy products and tripled the share of products that use a common, more scalable, technology platform to more than 45%, which will ultimately reduce cost, decrease time to market and modernize our product offering. We have saved more than SEK 75 million of IT costs in the quarter, and more than SEK 250 million over the year. These are structural and sustainable reductions generated through the decommissioning of legacy systems and products, as well as through the consolidation of IT vendors.

Finally, we have made progress on our commitment to "Deliver Sustainably" on several fronts. In the quarter we launched Travel Emissions Insights, a product that enables municipalities and regions to determine CO2 emissions from road passenger transport. I am also proud that we have decided to explore the opportunity to improve society's energy security and resilience, while also saving costs, by piloting smart battery storage at selected network sites in 2022. More broadly we are ending the year with more than 1,000 fewer resources and SEK 0.3 billion lower operational expenses, despite higher energy costs. We are also reducing complexity across Telia, having divested small, non-core businesses for more than SEK 0.5 billion in total, in the past 12 months, without any impact on Group EBITDA.

Financially, we end the year with a strong balance sheet and the Board is proposing a 2.5% increase in the dividend, in line with the ambitions of our dividend policy which is one of the sector's most committed and shareholder friendly. Additionally, with the current strong balance sheet position foreseen to be sustained, the Board intends to propose the distribution of the net proceeds from the Swedish tower transaction, which is expected to close during 2022, to the shareholders. Further details on the return mechanism will be provided in due course.

In the year ahead I expect the demands on the communications sector to increase further as customers seek more and more connected services and experiences that rely on safe, reliable and high-speed networks. As the costs to deliver these services face inflationary pressure, it is no longer sustainable for our services to deflate in value. At the end of 2021 consumer prices in our home market of Sweden were climbing at the fastest pace for almost three decades, with similar trends in the rest of our footprint.

Entering 2022 we will execute on two fronts to meet this new environment. Firstly, by offering connectivity, communication and entertainment services that are superior to anything we have offered in the past, and by ensuring the price of these services

reflect the value they bring to our customers. Secondly by transforming our operations to be simpler, and more modern, we will have fewer products, processes, platforms, and partners that enable a much better customer experience at a much lower cost base.

Our 2021-23 ambitions are unchanged, including EBITDA growth of low to mid-single digit and a return of cash CAPEX to 15% of net sales.

For 2022 we target low single digit growth of both service revenue and EBITDA, on a like for like basis. Our telco business is expected to grow its EBITDA contribution by low to mid-single digits, while TV and Media will continue its heightened content investments as it shifts towards digital and OTT platforms and absorbs the full year impact of premium sports rights. The TV and Media unit is therefore expected to contribute a lower EBITDA in 2022 than in 2021.

Cash CAPEX for 2022, excluding licenses and spectrum, is expected to be in the range of SEK 14.0-15.0 billion, similar to 2021.

As we move into the second year of our multiyear journey to reinvent a better Telia, I could not be more proud of everything my Telia colleagues do to keep people and businesses connected, and society open, while still predominately working from their home offices. At the same time, we are executing successfully on a bold digital transformation that will enable sustainable growth, modernize and develop our asset base, reset our cost base, and ultimately reinvent better for our customers, our employees, our owners and the societies we serve in the years to come. With one year under our belt, I remain confident in our ambitions and excited about the role Telia can uniquely play as societies and economies reconnect and rebound, post the pandemic years."

Allison Kirkby President & CEO

In CEO comment, all growth rates disclosed are based on the like for like definition and EBITDA refers to adjusted EBITDA, unless otherwise stated. See definitions for more information.

Outlook for 2022

Service revenues, like for like, are estimated to grow by low single digit.

Adjusted EBITDA, like for like, is estimated to grow by low single digit.

Cash CAPEX, excluding fees for licenses and spectrum, is estimated to be in the range of SEK 14.0-15.0 billion.

Ambition for 2021-2023

Service revenues, like for like, to grow by low single digit.

Adjusted EBITDA, like for like, to grow by low to mid-single digit.

Cash CAPEX, excluding fees for licenses and spectrum, to return to around 15% of net sales by 2023.

Leverage and credit rating target

Telia Company targets a leverage corresponding to Net debt/adjusted EBITDA in the range of 2.0-2.5x and a solid investment grade of A- to BBB+.

Dividend policy

Telia Company intends to follow a progressive dividend policy, with a floor of SEK 2.00 per share and an ambition for low to mid-single digit percentage growth.

The operational free cash flow is expected to cover the minimum level throughout the 2021-2023 period.

The structural part1 of operational free cash flow is expected to cover the minimum level of dividend from 2022.

Ordinary dividend to shareholders

For 2021, the Board of Directors proposes to the Annual General Meeting (AGM) an ordinary dividend of SEK 2.05 per share (2.00), totaling SEK 8.4 billion (8.2). The dividend should be split and distributed into two tranches of SEK 1.00 per share and SEK 1.05 per share, respectively.

First distribution

The Board of Directors proposes that the final day for trading in shares entitling shareholders to dividend be set for April 6, 2022, and that the first day of trading in shares excluding rights to dividend be set for April 7, 2022. The recommended record date at Euroclear Sweden for the right to receive dividend will be April 8, 2022. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on April 13, 2022.

Second distribution

The Board of Directors proposes that the final day for trading in shares entitling shareholders to dividend be set for October 25, 2022, and that the first day of trading in shares excluding rights to dividend be set for October 26, 2022. The recommended record date at Euroclear Sweden for the right to receive dividend will be October 27, 2022. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on November 1, 2022.

Annual general meeting 2022

The Annual General Meeting will be held on April 6, 2022, and notice of the AGM will be posted on www.teliacompany.com and advertised in the newspapers.

1) Telia Company consider the structural part of Operational free cash flow to be Operational free cash flow less contribution from change in working capital.

Review of the group, fourth quarter 2021

Sales and earnings

Net sales decreased by 0.4% to SEK 23,380 million (23,464). Like for like, net sales increased by 3.3%.

Service revenues decreased 1.7% to SEK 19,420 million (19,765). Like for like, service revenues increased 2.9% driven mainly by the TV and Media unit and Sweden, although also partly from growth in most other operations.

Adjusted EBITDA declined 1.6% to SEK 7,290 million (7,411) and the adjusted EBITDA margin declined to 31.2% (31.6). Like for like, adjusted EBITDA remained unchanged as decreased adjusted EBITDA generation for the TV and Media unit and Finland, was offset by a positive development for mainly Sweden and Other operations.

Adjustment items affecting operating income amounted to SEK -475 million (-25,610). The corresponding quarter last year contained a negative impact from an impairment related to goodwill in Finland and a capital loss from the disposal of Turkcell mainly related to reclassified accumulated foreign exchange losses. See Note 2.

Adjusted operating income declined to SEK 2,246 million (2,573).

Financial items totaled SEK -590 million (-998) of which SEK -600 million (-927) related to net interest expenses. 2020 was impacted by higher costs mainly related to buy-backs of issued debt.

Income taxes amounted to SEK 4 million (-358). The effective tax rate was -0.3 % (-1.5). The effective tax rate was mainly impacted by change in deferred taxes related to temporary legislation regarding tax reduction for certain investments within property, plant and equipment, whilst comparative figures were mainly impacted by a non-deductible capital loss related to the disposal of Turkcell and non-deductible impairment in Finland.

Total net income amounted to SEK 1,185 million (-24,474). The corresponding quarter last year contained a negative impact from an impairment related to goodwill in Finland and a capital loss from the disposal of Turkcell mainly related to reclassified accumulated foreign exchange losses. See Note 2.

Other comprehensive income decreased to SEK 2,904 million (11,455). 2021 was impacted by positive translation differences related to NOK and positive remeasurements of defined benefit pension plans. The corresponding quarter last year was impacted by reclassified accumulated foreign exchange losses from disposal of Turkcell, partly offset by negative remeasurements of defined benefit pension plans.

Cash flow

Cash flow from operating activities decreased to SEK 7,137 million (7,929) mainly impacted by lower contribution from working capital partly offset by compensation from the pension fund. Free cash flow decreased to 1,655 million (3,789) and was in addition also negatively impacted by increased cash CAPEX.

Operational free cash flow, from continuing operations, decreased to SEK 1,371 million (2,856).

Cash flow from investing activities amounted to SEK -4,730 million (-489). 2020 was impacted by the disposal of Turkcell while 2021 was impacted by higher cash capex which was more than offset by net divestments of short-term investments.

Cash flow from financing activities amounted to SEK -2,026 million (-11,757) mainly impacted by the partial disposal of the tower businesses in Finland and Norway as well as lower paid dividend.

Financial position

CAPEX excluding right-of-use assets, increased to SEK 5,935 million (4,103). CAPEX excluding fees for licenses, spectrum and right-of-use assets, increased to SEK 5,944 million (4,104). Cash CAPEX increased to SEK 5,481 million (4,140).

Net debt was SEK 63,133 million at the end of the fourth quarter (66,400 at the end of the third quarter of 2021). The net debt/adjusted EBITDA ratio was 2.14x.

COVID-19 impact

Due to the COVID-19 pandemic roaming revenues were around SEK 300 million lower for the first half of 2021 compared to the corresponding period last year. In the second half there was no adverse impact from COVID-19 on roaming revenues compared to the corresponding period last year, however, the uncertainty surrounding COVID-19 implies a risk also going forward. This, as well as mitigating activities, are reflected in the outlook, see page 5.

Financial markets are now in a normal state after a strong rebound and with support from central banks from lows during the COVID-19 shock in the second quarter 2020. Telia Company's financial risk management is in all material aspects unchanged. Also, the debt capital market has recovered to pre COVID-19 spread levels for the Telia Company credit. The general credit risk increase in 2020 has decreased and there has been no need for any significant increases in Telia Company's allowances for expected credit losses in the fourth quarter 2021. For more information on risks related to COVID-19, see "Risks and uncertainties" in the Annual and sustainability report 2020.

Review of the group, full year 2021

Sales and earnings

Net sales decreased by 1.0% to SEK 88,343 million (89,191). Like for like, net sales increased 3.2%.

Service revenues decreased 2.8% to SEK 75,180 million (77,342). Like for like, service revenues increased 1.5% due to a positive development for the TV and Media unit as well as for the Baltic operations which more than compensated for lower service revenues in the Nordic operations.

Adjusted EBITDA declined 2.0% to SEK 29,861 million (30,482) and the adjusted EBITDA margin decreased to 33.8% (34.2). Like for like, adjusted EBITDA increased 0.4% as a positive development for primarily the TV and Media unit, Norway as well as for Other operations more than compensated for declining adjusted EBITDA in mainly Finland and Denmark.

Adjustment items affecting operating income amounted to SEK 5,198 million (-29,307). 2021 was mainly impacted by a capital gain from the disposal of Telia Carrier, see Note 12. 2020 was impacted by an impairment related to goodwill in Finland and a net impairment as well as a capital loss from the disposal of Turkcell mainly related to reclassified accumulated foreign exchange losses. See Note 2.

Adjusted operating income declined to SEK 10,033 million (11,457).

Financial items totaled SEK -2,634 million (-3,318) of which SEK -2,625 million (-3,161) related to net interest expenses. 2020 was impacted by higher costs mainly related to buy-backs of issued debt whilst 2021 was impacted by refinanced debt at lower interest rates.

Income taxes amounted to SEK -937 million (-1,390). The effective tax rate was 7.4 % (-6.6). The effective tax rate was mainly impacted by a non-taxable capital gain related to the disposal of Telia Carrier, whilst comparative figures were mainly impacted by a nondeductible capital loss related to the disposal of Turkcell and nondeductible impairment related to goodwill in Finland.

Total net income amounted to SEK 11,836 million (-22,837). 2020 contained a negative impact from an impairment related to goodwill in Finland and a net impairment as well as a capital loss from the disposal of Turkcell mainly related to reclassified accumulated foreign exchange losses. See Note 2.

Other comprehensive income increased to SEK 8,666 million (5,433). 2021 was impacted by positive remeasurements of defined benefit pension plans and positive translation differences related to NOK and EUR and no TRY impact. 2020 was impacted by reclassified accumulated foreign exchange losses from disposal of Turkcell, partly offset by negative translation differences related to EUR and NOK as well as negative remeasurements of defined benefit pension plans.

Cash flow

Cash flow from operating activities decreased to SEK 27,376 million (28,604) mainly impacted by lower adjusted EBITDA partly due to the deconsolidation of Telia Carrier and higher paid taxes offset by

higher compensation from the pension fund. Free cash flow decreased to 11,729 million (15,114) and was in addition also negatively impacted by increased cash CAPEX. Operational free cash flow, from continuing operations, decreased to SEK 10,401 million (12,095).

Cash flow from investing activities amounted to SEK -10,908 million (-3,247). 2021 was mainly impacted by net investments in short term investments and higher Cash CAPEX partly offset by the disposal of Telia Carrier. 2020 was impacted by net divestments of short-term investments and the disposal of Turkcell.

Cash flow from financing activities amounted to SEK -10,600 million (-23,098) positively impacted by the partial disposal of the tower businesses in Finland and Norway as well as lower paid dividend and lower impact from repurchased treasury shares.

Financial position

CAPEX excluding right-of-use assets, increased to SEK 18,001 million (13,563). CAPEX excluding fees for licenses, spectrum and right-ofuse assets, increased to SEK 15,885 million (13,421). Cash CAPEX increased to SEK 15,647 million (13,485).

Goodwill and other intangible assets increased to SEK 89,943 million (85,942), mainly due to foreign exchange rate effects and investments in frequencies in Norway.

Long-term interest-bearing receivables decreased to SEK 9,244 million (11,233), mainly due to a change in derivatives. Short-term interest-bearing receivables increased to SEK 8,841 million (5,486), mainly due to investment in investment bonds.

Assets classified as held for sale decreased to SEK 0 million (4,957) due to the disposal of Telia Carrier, also affecting Liabilities directly associated with assets classified as held for sale.

Long-term borrowings decreased to SEK 91,637 million (100,239) mainly due to a reclassification to short-term borrowings, but also due to a change in derivatives.

Provisions for pensions and other long-term provisions decreased to SEK 7,001 million (11,787) mainly due to remeasurements of defined benefit pension plans.

Other long-term liabilities increased to SEK 1,914 million (757), mainly due to increased long-term frequency liabilities in Norway.

Short-term borrowings increased to SEK 10,017 million (8,345) due to a reclassification from long-term borrowings, partly off-set by repayment of matured debt.

COVID-19 impact

For information on COVID-19, see "Review of the Group, fourth quarter 2021".

Significant events in the first quarter

  • On January 19, 2021, it was announced that Telia Company secured a 120 MHz frequency block in the 3.5 GHz band in Sweden for EUR 75 million (approximately SEK 757 million).
  • On February 11, 2021, it was announced that the Nomination Committee had been informed by Mr Olaf Swantee that he was not available for re-election to the Telia Company Board.
  • On March 11, 2021, Telia Company published its Annual and Sustainability Report for 2020.
  • On March 26, 2021, Telia Company announced the investment of SEK 100 million in a Sustainable Development Bond recently launched by the World Bank.

Significant events in the second quarter

  • On April 1, 2021, Telia Company completed the sale of its alarm communication business Alerta in Finland. See Note 12.
  • On April 12, 2021, Telia Company announced the resolutions passed at the Annual General Meeting, including the appointment of the new board. Further the Annual General Meeting approved implementation of a long-term incentive program 2021/2024.
  • On April 20, 2021, Telia Company launched new goals to boost sustainable growth. The aim is to empower societies in the Nordics and Baltics to achieve zero CO2 and waste by 2030, reach one million people through digital inclusion initiatives by 2025 and implement winning privacy and security strategies by 2023 to gain and maintain customers' trust.
  • On April 21, 2021, the Danish multiband auction was concluded and Telia Denmark secured via the joint operation TT-Netværket spectrum in the 1,500 MHz, 2,100 MHz, 3,600 MHz as well as in the 26 GHz band, for a total price of DKK 741 million (approximately SEK 1 000 million).
  • On May 3, 2021, Telia Company announced that the Board of Directors has decided to exercise the mandate for buy-back of shares to cover commitments under Telia Company's "Long Term Incentive Program 2018/2021". See Note 6.
  • On June 1, 2021, the divestment of Telia Carrier to Polhem Infra was completed. See Note 12.
  • On June 4, 2021, Telia Company announced that Cecilia Lundin, Executive Vice President, Head of People Experience & Culture, will be leaving Telia Company.
  • On June 30, 2021, Telia Company signed an agreement to dispose 49% of the tower businesses in Finland and Norway to Brookfield and Alecta, at a price corresponding to an enterprise value for 100% of EUR 1,524 million (approximately SEK 15.4 billion) on a cash and debt free basis. The transaction is subject to customary regulatory approvals and closing is expected take place in the fourth quarter of 2021. See Note 12.

Significant events in the third quarter

  • On July 12, 2021, Telia Company announced the appointment of Stefan Backman as EVP, Group General Counsel, Head of Corporate Affairs, to succeed Jonas Bengtsson who has decided to leave the company at the end of 2021.
  • On September 6, 2021, Telia Company announced the appointment of Maria Romberg Ewerth as Senior Vice President, Chief People Officer.
  • On September 20, 2021, it was announced that the Nomination Committee of Telia Company AB for the Annual General Meeting 2022 had been appointed.
  • On September 30, 2021, the Norwegian frequency auction was completed and Telia secured frequencies in both the 2.6 GHz as well as in the 3.6 GHz band for a total price of NOK 1,070 million (approximately SEK 1,068 million).

Significant events in the fourth quarter

  • In October 2021, SIA Latvijas Mobilais Telefons (LMT) in Latvia acquired 100% of the Baltic data transmission network and IT security solutions enterprise group, Santa Monica Networks from Livonia Partners at a price of EUR 36 million (approximately SEK 364 million), see Note 13.
  • On November 3, 2021, Telia Company announced that the new mobile phone Eco Rating scheme launched across Europe earlier this year was set to expand globally after the five operators behind the initiative expanded their initial agreement to encourage operators worldwide to participate.
  • On November 10, 2021, Telia Company announced the launch of a 5G standalone (SA) core network in Finland – the first commercially available 5G SA network in the Nordic and Baltic regions.
  • On December 29, 2021, Telia Company announced the completion of the sale of a minority stake in its Norwegian and Finnish tower businesses to Brookfield and Alecta. See Note 12.

Significant events after the end of the fourth quarter

  • On January 4, 2022, Telia Company announced the divestment of SIA Telia Latvija to SIA Tet for an enterprise value of EUR 10.75 million (approximately SEK 110 million) on a cash and debt free basis. The transaction is expected to be closed during the second quarter of 2022. See Note 12.
  • On January 27, 2022, Telia Company announced the launch of a pilot in partnership with the energy storage solution provider Polarium to develop energy optimization.
  • On January 27, 2022, Telia Company announced a divestment of a 49% stake in its Swedish tower business to Brookfield and Alecta. The transaction price corresponds to an enterprise value for 100 percent of SEK 11,224 million on a cash and debt free basis. The transaction is subject to customary regulatory approvals and closing is expected in the third quarter of 2022. See Note 12.

Sweden

  • Sweden displayed both service revenue and adjusted EBITDA growth for the first time since the fourth quarter of 2015.
  • For the fifth consecutive year Telia won the award for best mobile network according to the independent benchmarking company umlaut. Like last year Telia secured the top position in all three measurement categories - voice, data and crowd-source quality.
  • Telia continued to have the most satisfied customers in most key categories according to the yearly Swedish quality index survey (SKI). In the enterprise segment Telia had the most satisfied mobile as well as fixed broadband customers and in the consumer segment Telia had the most satisfied TV customers as well as mobile customers via the Halebop brand.
  • Telia in collaboration with several industrial partners, showcased the world's first remote-controlled High-lift wheel loader using 5G technology. The aim of the project is to analyze how 5G can be part of enabling timber terminals across Sweden to use remotecontrolled wheel loaders to develop safer and more efficient handling processes as well as explore 5G's potential as an overall enabler for automation.
  • Telia launched the service Travel Emission Insights which allows for municipalities and regions to access a detailed overview of the release of greenhouse gas emissions from personal transportation. And by that facilitate for improved decision making around measures that could contribute to reduced emissions.

Highlights

SEK in millions, except margins, Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg
operational data and changes 2021 2020 % 2021 2020 %
Net sales1 9,133 8,857 3.1 34,451 33,732 2.1
Change (%) like for like 3.1 2.1
of which service revenues (external) 7,677 7,544 1.8 29,582 29,734 -0.5
change (%) like for like 1.5 -0.6
Adjusted EBITDA1 3,541 3,326 6.4 13,359 13,418 -0.4
Margin (%) 38.8 37.6 38.8 39.8
change (%) like for like 6.5 -0.4
Adjusted operating income1 1,672 1,706 -2.0 5,833 6,768 -13.8
Operating income1 1,637 1,831 -10.6 5,588 6,758 -17.3
CAPEX excluding fees for licenses,
spectrum and right-of-use assets 1,716 866 98.1 3,685 2,806 31.3
Subscriptions, (thousands)
Mobile 6,914 6,246 10.7 6,914 6,246 10.7
of which machine to machine
(postpaid) 2,120 1,306 62.3 2,120 1,306 62.3
Fixed telephony 509 665 -23.5 509 665 -23.5
Broadband 1,248 1,242 0.5 1,248 1,242 0.5
TV 997 929 7.3 997 929 7.3
Employees1 4,352 4,508 -3.5 4,352 4,508 -3.5

1) Restated, see Note 1.

Net sales increased 3.1% to SEK 9,133 million (8,857) and like for like, net sales increased 3.1% driven by both service revenue growth as well as higher sale of equipment.

Service revenues, like for like, increased by 1.5% as mobile service revenues increased 1.4% and fixed service revenues increased by 1.7%. The latter driven predominately by increased TV and fixed broadband revenues, which more than compensated for a continued decline for fixed telephony revenues.

Adjusted EBITDA increased 6.4% to SEK 3,541 million (3,326) and adjusted EBITDA margin increased to 38.8% (37.6). Adjusted EBITDA like for like increased 6.5% because of the increased service revenues and lower operational expenses related primarily to marketing as well as resources. The latter primarily driven by a positive impact from a pension refund of around SEK 160 million.

CAPEX excluding fees for licenses, spectrum and right-of-use assets, increased 98.1% to SEK 1,716 million (866) due to mainly investments associated with upgrading the mobile network as well as roll-out of 5G.

Mobile subscriptions grew by 225,000 in the quarter driven by an addition of 286,000 postpaid subscriptions used for machine-tomachine related services. TV subscriptions increased by 22,000 and fixed broadband subscriptions increased by 4,000 in the quarter.

Finland

  • In a study regarding overall mobile customer experience performed by Tutela, covering some 800 million mobile users, Telia's network score was ranked best in Finland and as number 6 in an international context.
  • Telia launched a 5G standalone (SA) core network in Finland, which was the first commercially available 5G SA network in the Nordic and Baltic region. Allowing amongst other for the creation of private networks and further industry automation. Telia will also use the 5G SA core network to offer its consumer customers broadband connections with guaranteed speeds.
  • Telia signed a comprehensive multiyear IoT service agreement with the building performance specialist company Caverion. Under the agreement Telia will provide Caverion with measurement and monitoring services, such as indoor climate monitoring to realize efficiencies and environmental gains from the use of remote monitoring.
  • Telia and the traffic management company Fintraffic launched a research project with the aim to develop next generation traffic analysis, to improve road development and maintenance, and to over time build a tool for more efficient travel planning that will lead to reduced CO2 emissions.

Highlights

SEK in millions, except margins,
operational data and changes
Oct-Dec
2021
Oct-Dec
2020
Chg
%
Jan-Dec
2021
Jan-Dec
2020
Chg
%
Net sales 3,801 3,977 -4.4 14,504 15,260 -5.0
Change (%) like for like -2.9 -1.5
of which service revenues (external) 3,110 3,231 -3.7 12,125 12,851 -5.6
change (%) like for like -2.8 -2.5
Adjusted EBITDA1 1,042 1,146 -9.1 4,322 4,789 -9.7
Margin (%) 27.4 28.8 29.8 31.4
change (%) like for like -7.5 -6.1
Adjusted operating income1 232 356 -34.9 1,069 1,599 -33.1
Operating income1 233 -7,417 1,354 -6,320
CAPEX excluding fees for licenses,
spectrum and right-of-use assets 622 463 34.3 1,833 1,689 8.6
Subscriptions, (thousands)
Mobile 3,234 3,165 2.2 3,234 3,165 2.2
of which machine to machine
(postpaid) 309 277 11.6 309 277 11.6
Fixed telephony 17 20 -15.0 17 20 -15.0
Broadband 474 462 2.6 474 462 2.6
TV 552 558 -1.1 552 558 -1.1
Employees1 2,860 3,023 -5.4 2,860 3,023 -5.4

1) Restated, see Note 1.

Net sales declined 4.4% to SEK 3,801 million (3,977) and like for like, net sales declined 2.9% driven mainly by decreased service revenues. The effect of exchange rate fluctuations was negative by 1.4%.

Service revenues, like for like, declined 2.8% as mobile service revenues remained fairly unchanged at the same time as fixed service revenues decreased by 5.5% driven predominately by lower revenues from business solutions and fixed broadband.

Adjusted EBITDA declined 9.1% to SEK 1,042 million (1,146) and adjusted EBITDA margin decreased to 27.4% (28.8). Adjusted EBITDA like for like declined 7.5% driven by the decline in service revenues which more than offset a positive impact from lower operational expenses.

CAPEX excluding fees for licenses, spectrum and right-of-use assets, increased 34.3% to SEK 622 million (463).

Mobile subscriptions increased by 18,000 driven by the addition of 23,000 postpaid subscriptions. TV subscriptions as well as fixed broadband subscriptions both increased by 2,000 in the quarter.

Norway

  • Telia continued to roll out 5G at a high pace throughout the country and currently more than 40% of Norwegians have access to Telia's 5G network where they live. In parallel Telia continued to modernize the entire mobile network, delivering significantly more capacity, better coverage and higher speeds.
  • After 16 years of service Telia's 3G network was switched off and replaced by 4G and 5G. This will provide a significantly better customer experience thanks to the excellent capacity, speed and coverage of 4G and 5G.
  • In the latest EPSI ranking Telia's OneCall brand remained the favorite within the consumer segment, while Phonero and Telia conquered the two top positions in the enterprise segment. Great proof points that the significant efforts and dedicated long-term work towards constantly improving the customer experience, is developing positively.
  • In the quarter Telia renewed its flagship mobile subscription Telia X by introducing three speed-based tariffs. As a result, Telia X customers can enjoy unlimited data at the speed that best suits their individual needs, whether it be for streaming, gaming or mobile data sharing.

Highlights

SEK in millions, except margins, Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg
operational data and changes 2021 2020 % 2021 2020 %
Net sales 3,658 3,357 9.0 13,788 13,373 3.1
Change (%) like for like 2.8 1.1
of which service revenues (external) 3,014 2,763 9.1 11,510 11,338 1.5
change (%) like for like 2.6 -0.5
Adjusted EBITDA1 1,556 1,502 3.6 6,240 5,971 4.5
Margin (%) 42.5 44.7 45.3 44.6
change (%) like for like -3.6 1.7
Adjusted operating income1 606 378 60.2 2,351 1,593 47.6
Operating income1 537 332 61.7 2,192 1,432 53.1
CAPEX excluding fees for licenses,
spectrum and right-of-use assets 1,043 883 18.2 3,043 2,441 24.6
Subscriptions, (thousands)
Mobile 2,289 2,247 1.9 2,289 2,247 1.9
of which machine to machine
(postpaid) 125 107 17.2 125 107 17.2
Fixed telephony 32 40 -20.0 32 40 -20.0
Broadband 492 469 4.9 492 469 4.9
TV 477 469 1.7 477 469 1.7
Employees 1,412 1,633 -13.5 1,412 1,633 -13.5

1) Restated, see Note 1.

Net sales increased 9.0% to SEK 3,658 million (3,357) and like for like, net sales increased 2.8% due to increased service revenues. The effect of exchange rate fluctuations was positive by 6.3%.

Service revenues, like for like, increased 2.6% due to growth for both mobile as well as fixed service revenues. For mobile service revenues the growth of 2.9% was the result from increased subscription revenues which more than compensated for lower wholesale revenues. For fixed service revenues the growth of 1.5% was due to a 10.7% increase for fixed broadband revenues which more than compensated for lower fixed telephony, TV and business solutions revenues.

Adjusted EBITDA increased 3.6% to SEK 1,556 million (1,502) and adjusted EBITDA margin declined to 42.5% (44.7). Adjusted EBITDA like for like declined 3.6% as higher costs more than offset the positive impact from the service revenue growth.

CAPEX excluding fees for licenses, spectrum and right-of-use assets, increased 18.2% to SEK 1,043 million (883).

Mobile subscriptions decreased by 3,000 in the quarter driven by the loss of 6,000 prepaid subscription. TV subscriptions remained unchanged and fixed broadband subscriptions increased by 2,000 in the quarter.

Denmark

  • The process of upgrading and modernizing the existing 4G network and roll-out of 5G continued in Denmark's larger cities, including Copenhagen, whereby year end Telia was able to cover the vast majority of the city with 5G.
  • As part of the strategy to enhance the customer experience by bundling connectivity and content, Telia introduced Netflix as part of two of its mobile offerings, ONE Netflix and Smart Netflix.
  • Following Telia's ambition to be the preferred provider of mobile, internet, TV and streaming services amongst Danish families, Telia entered a new collaboration with the electronic chain POWER. The collaboration will make Telia's mobile services available in almost 50 Power and Expert stores across the country, and over time also broadband and other services will also be made available.

Highlights

SEK in millions, except margins, Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg
operational data and changes 2021 2020 % 2021 2020 %
Net sales 1,403 1,403 0.0 5,214 5,464 -4.6
Change (%) like for like 1.4 -1.6
of which service revenues (external) 968 965 0.4 3,807 3,976 -4.2
change (%) like for like 0.7 -1.7
Adjusted EBITDA1 242 265 -8.7 906 1,015 -10.7
Margin (%) 17.2 18.9 17.4 18.6
change (%) like for like -7.0 -7.0
Adjusted operating income1 6 -19 -67 -17
Operating income1 -193 -23 -299 -34
CAPEX excluding fees for licenses,
spectrum and right-of-use assets 200 79 151.3 462 288 60.5
Subscriptions, (thousands)
Mobile 1,620 1,494 8.4 1,620 1,494 8.4
of which machine to machine
(postpaid) 254 113 123.5 254 113 123.5
Fixed telephony 62 66 -6.1 62 66 -6.1
Broadband 66 68 -2.9 66 68 -2.9
TV 24 29 -17.2 24 29 -17.2
Employees 690 731 -5.6 690 731 -5.6

1) Restated, see Note 1.

Net sales remained unchanged at SEK 1,403 million (1,403) and like for like, net sales increased 1.4% due to increased service revenues we well as increased equipment sales. The effect of exchange rate fluctuations was negative by 1.4%.

Service revenues, like for like, increased 0.7% as mobile service revenue growth of 4.0% driven largely by higher interconnect revenues, more than compensated for a 7.0% decline in fixed service revenues driven by declining revenues from business solutions.

Adjusted EBITDA declined 8.7% to SEK 242 million (265) and adjusted EBITDA margin decreased to 17.2% (18.9). Adjusted EBITDA like for like declined 7.0% as increased operational expenses more than offset the positive impact from the slight growth in service revenues.

CAPEX excluding fees for licenses, spectrum and right-of-use assets, increased 151.3% to SEK 200 million (79) due to mainly investments associated with upgrading the mobile network as well as roll-out of 5G.

Mobile subscriptions increased by 16,000 in the quarter driven by the addition of 11,000 postpaid subscriptions used for machine-to-machine related services. Fixed broadband subscriptions increased by 4,000 and TV subscriptions declined by 2,000 in the quarter.

Lithuania

  • After achieving an average mobile network speed of 104.5 Mbit per second according to the Communications Regulatory Authority's 2021 measurements, Telia cemented its number one position and further widened the gap to competition.
  • An important customer experience milestone was reached when every second call in Telia's mobile network was made using Voice over LTE (VoLTE) technology. A technology that in addition to provide a better quality of sound also connects calls up to three times faster and better facilitates for calls during large events as the technology makes more efficient use of the radio frequencies.
  • Supported by a solid demand from enterprises and public sector customers regarding IT services, Telia initiated plans to build a new and sustainable data center near Vilnius. The new data center will be connected to Telia's already existing data centers via a fiber-optic cable ring which will enable Telia to offer customers highly secure and unique IT solutions.

Highlights

SEK in millions, except margins, Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg
operational data and changes 2021 2020 % 2021 2020 %
Net sales 1,169 1,076 8.7 4,320 4,151 4.1
Change (%) like for like 10.3 7.6
of which service revenues (external) 841 788 6.8 3,272 3,167 3.3
change (%) like for like 7.0 6.0
Adjusted EBITDA 370 370 0.1 1,511 1,497 0.9
Margin (%) 31.7 34.4 35.0 36.1
change (%) like for like 1.5 4.3
Adjusted operating income 180 111 62.3 756 776 -2.5
Operating income 171 107 59.4 752 756 -0.6
CAPEX excluding fees for licenses,
spectrum and right-of-use assets1 334 107 213.2 669 383 74.9
Subscriptions, (thousands)
Mobile 1,518 1,398 8.6 1,518 1,398 8.6
of which machine to machine
(postpaid) 309 204 51.2 309 204 51.2
Fixed telephony 201 230 -12.6 201 230 -12.6
Broadband 421 417 1.0 421 417 1.0
TV 255 253 0.8 255 253 0.8
Employees1 1,599 1,614 -0.9 1,599 1,614 -0.9

1) Restated, see Note 1.

Net sales increased 8.7% to SEK 1,169 million (1,076) and like for like, net sales increased 10.3% driven fairly even by higher equipment sales and increased service revenues. The effect of exchange rate fluctuations was negative by 1.6%.

Service revenues, like for like, increased 7.0% driven by both mobile and fixed service revenues. For mobile service revenues that increased 7.2% the growth was the result from an increased number of subscriptions as well as higher ARPU. For fixed service revenues, which increased 7.6%, the growth was driven by a positive development for fixed broadband, TV and business solution revenues, which more than compensated for a continued decline for fixed telephony revenues.

Adjusted EBITDA increased 0.1% to SEK 370 million (370) and adjusted EBITDA margin decreased to 31.7% (34.4). Adjusted EBITDA like for like increased 1.5% because of the increase in service revenues.

CAPEX excluding fees for licenses, spectrum and right-of-use assets, increased 213.2% to SEK 334 million (107) due to mainly investments associated with upgrading the mobile network as well as roll-out of 5G.

Mobile subscriptions increased by 70,000 in the quarter driven by 64,000 postpaid subscriptions used for machine-to-machine related services. Fixed broadband subscriptions increased by 2,000 and TV subscriptions increased by 1,000 in the quarter.

Estonia

  • After activating the first 5G base station in November 2020, Telia's 5G network has been significantly expanded and currently reaches almost 150 locations across most cities in Estonia. And in parallel with the network expansion, the number of customers who use the 5G network on a daily basis has also grown constantly and is approaching 50,000.
  • Over the past year, the average download speed in Telia's 4G network has increased by 60% to more than 90 Mbit per second according to a study performed by the international consulting firm Omnitele. In addition, Telia's network also achieved the highest download speed, reaching over 700 Mbit per second.
  • Telia took another important step related to its environmental commitments in the fourth quarter of 2020 when solar panels were installed next to Telia's largest data center in Laagri, near Tallinn. Telia's operations already used 100% renewable electricity but through the solar panels Telia has supported the increase of renewable electricity in the overall energy system and by so reduced emissions by more than 160 tons over the year.

Highlights

SEK in millions, except margins, Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg
operational data and changes 2021 2020 % 2021 2020 %
Net sales1 891 854 4.3 3,331 3,276 1.7
Change (%) like for like 5.9 5.1
of which service revenues (external) 698 643 8.5 2,689 2,627 2.4
change (%) like for like 8.4 5.0
Adjusted EBITDA 292 281 4.1 1,196 1,153 3.7
Margin (%) 32.8 32.8 35.9 35.2
change (%) like for like 5.4 7.2
Adjusted operating income 120 108 11.5 542 453 19.6
Operating income 120 106 13.4 536 446 20.0
CAPEX excluding fees for licenses,
spectrum and right-of-use assets1
Subscriptions, (thousands)
197 117 69.3 417 374 11.6
Mobile 1,191 1,112 7.1 1,191 1,112 7.1
of which machine to machine
(postpaid)
Fixed telephony
396
209
353
226
12.1
-7.5
396
209
353
226
12.1
-7.5
Broadband 243 242 0.4 243 242 0.4
TV 207 208 -0.5 207 208 -0.5
Employees1 1,306 1,359 -3.9 1,306 1,359 -3.9

1) Restated, see Note 1..

Net sales increased 4.3% to SEK 891 million (854) and like for like, net sales increased 5.9% driven by increased service revenues. The effect of exchange rate fluctuations was negative by 1.6%.

Service revenues, like for like, increased 8.4% from mobile service revenues increasing by 7.1% driven by subscription base expansion and ARPU growth, and fixed service revenues growing by 8.9% driven by a positive development for most services.

Adjusted EBITDA increased 4.1% to SEK 292 million (281) and adjusted EBITDA margin remained unchanged at 32.8% (32.8). Adjusted EBITDA like for like increased 5.4% driven by the service revenue increase.

CAPEX excluding fees for licenses, spectrum and right-of-use assets, increased 69.3% to SEK 197 million (117).

Mobile subscriptions increased by 6,000 in the quarter. Fixed broadband subscriptions increased by 1,000 and TV subscriptions remained unchanged in the quarter.

TV and Media

  • Telia's TV and Media unit further strengthened its market position in the quarter, with both linear viewing and digital consumption developing positively. TV4's linear channels increased share of viewing amongst 15-64 year olds to 36.3% compared to 35.2% in the corresponding quarter last year and time spent on TV4 Play increased 30%.
  • C More and BritBox International entered a new Nordic partnership, enabling C More's customers will have access to the largest and most comprehensive collection of British entertainment, containing more than 3,000 hours of both new original series and classic British viewer favorites.
  • In Finland, like elsewhere across Telia's footprint, the demand for streaming services has grown dramatically in recent years and according to Telia's Home and Media survey, C More was the most popular domestic streaming service in Finland. And in contest with all available streaming services C More came out as the runner up, beaten only by Netflix.

Highlights

SEK in millions, except margins, Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg
operational data and changes 2021 2020 % 2021 2020 %
Net sales 2,594 2,340 10.9 8,648 7,429 16.4
Change (%) like for like 11.3 17.3
of which service revenues (external) 2,594 2,340 10.9 8,647 7,429 16.4
change (%) like for like 11.3 17.3
Adjusted EBITDA -7 200 878 758 15.9
Margin (%) -0.3 8.6 10.2 10.2
change (%) like for like -102.5 16.1
Adjusted operating income -174 -21 99 -55
Operating income -183 -43 13 -120
CAPEX excluding fees for licenses,
spectrum and right-of-use assets1
Subscriptions, (thousands)
64 82 -22.2 263 333 -21.0
TV (SVOD) 865 789 9.6 865 789 9.6
Employees1 1,378 1,427 -3.4 1,378 1,427 -3.4

1) Restated, see Note 1.

Net sales increased 10.9% to SEK 2,594 million (2,340) and like for like, net sales increased 11.3% driven by increased service revenues. The effect of exchange rate fluctuations was negative by 0.4%.

Service revenues, like for like, increased 11.3% explained by a 11.3% increase in TV revenues and a 11.6% increase in advertising revenues. The growth in TV revenues was explained by an increased number of TV subscriptions, whereas the growth for advertising revenues was the result from successful work on capitalizing on a growing demand for tvadvertising in combination with a market leading total-tv reach.

Adjusted EBITDA decreased to SEK -7 million (200) and adjusted EBITDA margin decreased to -0.3% (8.6). Adjusted EBITDA like for like decreased to SEK -5 million as the service revenue growth was more than offset by mainly higher content related costs.

CAPEX excluding fees for licenses, spectrum and right-of-use assets, decreased 22.2% to SEK 64 million (82).

Direct subscriptions video-on-demand (SVOD) increased by 30,000 in the quarter.

Other operations

Highlights

SEK in millions, except margins, Oct-Dec Oct-Dec Chg Jan-Dec Jan-Dec Chg
operational data and changes 2021 2020 % 2021 2020 %
Net sales 1,046 2,175 -51.9 5,723 8,715 -34.3
Change (%) like for like 5.7 12.1
of which Telia Carrier 1,270 -100.0 1,944 5,235 -62.9
of which Latvia 719 611 17.7 2,562 2,381 7.6
Adjusted EBITDA 254 321 -20.9 1,449 1,881 -23.0
of which Telia Carrier 225 -100.0 371 909 -59.3
of which Latvia 241 201 20.0 840 778 8.0
Margin (%) 24.3 14.8 25.3 21.6
Income from associated companies 23 -17,920 97 -20,073
of which Turkey -17,955 -100.0 -20,246 -100.0
of which Latvia 28 37 -24.1 112 179 -37.4
Adjusted operating income -397 -48 -551 340
Operating income -549 -17,930 -96.9 5,096 -20,770
CAPEX excluding fees for licenses,
spectrum and right-of-use assets1
Subscriptions, (thousands)
1,770 1,504 17.7 5,512 5,104 8.0
Mobile Latvia 1,347 1,307 3.1 1,347 1,307 3.1
of which machine to machine
(postpaid)
380 341 11.4 380 341 11.4
Employees1 5,969 6,446 -7.4 5,969 6,446 -7.4

1) Restated, see Note 1.

In the fourth quarter of 2020 an agreement was signed to divest Telia Carrier to Polhem Infra and the transaction was closed on June 1, 2021. As the Telia Carrier business was divested on June 1, 2021, the reported figures of Telia Carrier for 2021 therefore only represent January-May. See Note 12.

In the fourth quarter of 2021 SIA Latvijas Mobilais Telefons (LMT) in Latvia acquired 100% of Santa Monica Networks which was consolidated from October 2021. See Note 13.

After the end of the fourth quarter 2021 an agreement was signed regarding a divestment of SIA Telia Latvija, a leading B2B telecom services provider and consolidated in Latvia. The transaction is expected to be closed during the second quarter of 2022. See Note 12.

Net sales declined 51.9% to SEK 1,046 million (2,175) due to the divestment of Telia Carrier. Like for like, net sales increased 5.7%. The effect of exchange rate fluctuations was negative by 0.4%.

Adjusted EBITDA declined 20.9% to SEK 254 million (321) and adjusted EBITDA margin increased to 24.3% (14.8) due to the divestment of Telia Carrier. Adjusted EBITDA like for like increased 143.2% due to lower operational expenses related mainly to IT and resources. The latter partly driven by a positive impact of SEK 40 million from a pension refund.

In Latvia, net sales increased 17.7% to SEK 719 million (611) and like for like, net sales increased 8.2% driven by both increased service revenues as well as increased equipment sales. The effect of exchange rate fluctuations was negative by 1.7%. Adjusted EBITDA increased 20.0% to SEK 241 million (201) and the adjusted EBITDA margin increased to 33.5% (32.9). Adjusted EBITDA like for like increased 16.2% driven by the service revenue growth. The number of mobile subscriptions increased by 9,000 in the quarter.

Income from associated companies increased to SEK 23 million (-17,920) as the corresponding quarter of last year was impacted by a capital loss of SEK -17,955 million from the divestment of Turkcell Holding.

Condensed consolidated statements of comprehensive income

SEK in millions, except per share data and Oct-Dec Oct-Dec Jan-Dec Jan-Dec
number of shares
Note
2021 20201 2021 20201
Continuing operations
Net sales
3, 4
23,380 23,464 88,343 89,191
Cost of sales -15,989 -15,431 -58,311 -57,138
Gross profit 7,391 8,033 30,031 32,053
Selling, administration and R&D expenses -5,475 -5,627 -20,844 -21,701
Other operating income and expenses, net -173 -7,524 5,940 -8,122
Income from associated companies and joint ventures 28 -17,919 104 -20,080
Operating income
3
1,772 -23,037 15,232 -17,850
Financial items, net -590 -998 -2,634 -3,318
Income after financial items
3
1,181 -24,035 12,598 -21,168
Income taxes 4 -358 -937 -1,390
Net income from continuing operations 1,185 -24,393 11,661 -22,558
Discontinued operations
Net income from discontinued operations
12
-80 176 -279
Total net income
1,185 -24,474 11,836 -22,837
Items that may be reclassified to net income:
Foreign currency translation differences from continuing operations
Foreign currency translation differences from discontinued operations 1,024 16,055 3,030 10,947
433
Other comprehensive income from associated companies and joint
ventures
-111
Cash flow hedges 108 -134 61 14
Cost of hedging -9 -75 143 -100
Debt instruments at fair value through OCI -2 -5 -40 32
Income taxes relating to items that may be reclassified 1 -170 52 -125
Items that will not be reclassified to net income:
Equity instruments at fair value through OCI 54 126 63
Remeasurements of defined benefit pension plans 2,243 -5,358 6,654 -7,166
Income taxes relating to items that will not be reclassified -462 1,088 -1,360 1,457
Associates' remeasurements of defined benefit pension plans -12
Other comprehensive income
Total comprehensive income 2,904 11,455 8,666 5,433
4,089 -13,019 20,502 -17,405
Total net income attributable to:
Owners of the parent
1,122 -24,517 11,680 -22,993
Non-controlling interests 63 43 156 156
Total comprehensive income attributable to:
Owners of the parent 4,018 -13,007 20,321 -17,307
Non-controlling interests 71 -12 181 -99
Earnings per share (SEK), basic and diluted 0.27 -5.99 2.86 -5.62
of which continuing operations 0.27 -5.98 2.81 -5.55
Number of shares (thousands)
Outstanding at period-end
6
4,089,632 4,089,632 4,089,632 4,089,632
Weighted average, basic and diluted 4,089,632 4,089,632 4,089,632 4,090,367
EBITDA from continuing operations
15
6,890 7,556 35,151 29,974
Adjusted EBITDA from continuing operations
2, 15
7,290 7,411 29,861 30,482
Depreciation, amortization and impairment losses from
continuing operations
-5,146 -12,674 -20,023 -27,744
Adjusted operating income from continuing operations
2, 15
2,246 2,573 10,033 11,457

1) Restated, see Note 1.

Condensed consolidated statements of financial position

SEK in millions Note Dec 31,
2021
Dec 31,
20201
Assets
Goodwill and other intangible assets 5 89,943 85,942
Property, plant and equipment 5 72,741 70,893
Film and program rights, non-current 1,416 1,312
Right-of-use assets 5 15,485 14,814
Investments in associated companies and joint ventures, pension obligation assets and
other non-current assets
9 4,749 3,445
Deferred tax assets 1,302 1,449
Long-term interest-bearing receivables 7, 9 9,244 11,233
Total non-current assets 194,879 189,088
Film and program rights, current 3,005 2,706
Inventories 2,040 1,918
Trade and other receivables and current tax receivables 9 13,902 13,815
Short-term interest-bearing receivables 7, 9 8,841 5,486
Cash and cash equivalents 7 14,358 8,133
Assets classified as held for sale 7, 12 4,957
Total current assets 42,146 37,014
Total assets 237,025 226,103
Equity and liabilities
Equity attributable to owners of the parent 80,731 62,378
Equity attributable to non-controlling interests 2,812 1,118
Total equity 83,544 63,496
Long-term borrowings 7, 9 91,637 100,239
Deferred tax liabilities 10,185 9,723
Provisions for pensions and other long-term provisions 7,001 11,787
Other long-term liabilities 1,914 757
Total non-current liabilities 110,736 122,505
Short-term borrowings 7, 9 10,017 8,345
Trade payables and other current liabilities, current tax payables and short-term
provisions
32,729 28,430
Liabilities directly associated with assets classified as held for sale 7, 12 3,325
Total current liabilities 42,746 40,101
Total equity and liabilities 237,025 226,103

1) Restated, see Note 1.

Condensed consolidated statements of cash flows

SEK in millions Note Oct-Dec
2021
Oct-Dec
20202
Jan-Dec
2021
Jan-Dec
20202
Cash flow before change in working capital 8,073 6,967 29,333 29,488
Increase/decrease Film and program right assets and
liabilities1
512 -207 310 -1,148
Increase/decrease other operating receivables, liabilities
and inventory
459 2,503 2,710 4,322
Change in working capital 972 2,297 3,020 3,173
Amortization and impairment of Film and program rights1 -1,908 -1,334 -4,977 -4,057
Cash flow from operating activities 7,137 7,929 27,376 28,604
of which from continuing operations 7,137 7,929 27,507 28,583
of which from discontinued operations -131 22
Cash CAPEX 15 -5,481 -4,140 -15,647 -13,490
Free cash flow 15 1,655 3,789 11,729 15,114
of which from continuing operations 1,655 3,789 11,861 15,097
of which from discontinued operations -131 17
Cash flow from other investing activities 751 3,650 4,739 10,243
Total cash flow from investing activities -4,730 -489 -10,908 -3,247
of which from continuing operations -4,730 -489 -10,908 -3,242
of which from discontinued operations -5
Cash flow before financing activities 2,406 7,439 16,468 25,358
Cash flow from financing activities -2,026 -11,757 -10,600 -23,098
of which from continuing operations -2,026 -11,757 -10,600 -23,096
of which from discontinued operations -2
Cash flow for the period 380 -4,317 5,868 2,259
of which from continuing operations 380 -4,317 6,000 2,244
of which from discontinued operations -131 15
Cash and cash equivalents, opening balance 14,047 12,940 8,332 6,210
Cash flow for the period 380 -4,317 5,868 2,259
Exchange rate differences in cash and cash equivalents -70 -291 157 -137
Cash and cash equivalents, closing balance 14,358 8,332 14,358 8,332
of which from continuing operations 14,358 8,332 14,358 8,332
of which from discontinued operations

See Note 15 section Operational free cash flow for further information.

1) Total cash out flow from acquired Film and program rights is the total of Increase/decrease Film and program right assets and liabilities and Amortization and impairment of Film and program rights. 2) Restated, see Note 1.

Condensed consolidated statements of changes in equity

SEK in millions Owners of the Non-controlling Total
parent interests equity
Opening balance, January 1, 2020 91,047 1,409 92,455
Change in accounting principles in associated companies -12 -12
Change in accounting principles1 -388 -388
Adjusted opening balance, January 1, 2020 90,646 1,409 92,055
Dividends -10,020 -192 -10,212
Share-based payments 16 16
Acquisition and transfer of treasury shares -956 -956
Cancellation of treasury shares, net effect
Bonus issue, net effect
Reclassification of Inflation reserve
Total transactions with owners -10,959 -192 -11,151
Total comprehensive income1 -17,307 -99 -17,405
Effect of equity transactions in associated companies -2 -2
Closing balance, December 31, 2020 62,378 1,118 63,496
Dividends -8,179 -178 -8,357
Share-based payments 13 13
Repurchased treasury shares -21 -21
Change in non-controlling interests2 6,219 1,691 7,910
Total transactions with owners -1,968 1,513 -455
Total comprehensive income 20,321 181 20,502
Closing balance, December 31, 2021 80,731 2,812 83,544

1) Restated, see Note 1. 2) For information on partial disposal of tower businesses in Finland and Norway, see Note 12.

Note 1. Basis of preparation

General

The Telia Company group applies International Financial Reporting Standards (IFRSs) as adopted by the European Union. The parent company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act as well as standard RFR 2 Accounting for Legal Entities and other statements issued by the Swedish Financial Reporting Board. For the group this Interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and for the parent company in accordance with the Swedish Annual Accounts Act. The accounting policies adopted, and computation methods used are consistent with those followed in the Annual and Sustainability Report 2020. All amounts in this report are presented in SEK millions, unless otherwise stated. Rounding differences may occur.

For more information regarding:

  • Sales and earnings, Cash flow and Financial position, see pages 6- 7.
  • Significant events in the first, second, third and fourth quarter, see page 8.
  • Significant events after the end of the fourth quarter, see page 8.
  • Risks and uncertainties, see page 40.

Changes in estimates

Accelerated depreciations

In the fourth quarter 2020 Telia Company entered into strategic partnership agreements with Ericsson and Nokia related to radio access network technology (RAN) to base stations in order to modernize Telia Company's 4G networks and upgrade them to 5G in Sweden, Finland, Lithuania, and Estonia. In connection with this modernization existing RAN assets will be replaced during the years 2021-2025. Telia Company has therefore changed the estimate of the depreciation period for the existing RAN assets in order to correspond with the time plan for the replacements. The change led to increased depreciations for existing assets of approximately SEK 180 million for the fourth quarter 2021. The full year increases for 2021 were SEK 700 million and for 2022 they are estimated to be approximately SEK 350 million. The change is expected to result in lower depreciations of existing assets during the years 2023 to 2030.

Reclassification of liquidity portfolio

Telia Company's business model for the liquidity portfolio of long- and short-term bonds and short-term debt instruments has in the past been assessed to be both to collect contractual cash flows and sell financial assets (i.e. the "mixed model"). Consequently, the portfolio has been measured at fair value through other comprehensive income (OCI).

From January 1, 2021 this liquidity portfolio has been reclassified to be measured at fair value through profit and loss (income statement). The reclassification is based on a reassessment of the business model for the portfolio following the major changes of Telia Company (divestment of Eurasia, settlement with the US and Dutch authorities, acquisition of GET/TDC and Bonnier Broadcasting and new senior management) which have had an impact on portfolio management. A new ambition for total liquidity has been implemented and since the volatility in liquidity of the group has decreased there is more focus on generating yield on the long-term liquidity back-up. The liquidity management has shifted focus from preserving cash at a low cost to optimizing the size of the portfolio and maximizing yield given the decided risk appetite.

The carrying value of the reclassified portfolio amounted to SEK 7,707 million as of January 1, 2021, whereof SEK 5,086 million was recognized as long-term interest-bearing receivables, SEK 2,235 million as shortterm interest-bearing receivables and SEK 385 million as cash equivalents. The amount was categorized in the fair value hierarchy as SEK 6,457 million in level 1 and SEK 1,250 million in level 2. As a consequence of the change in business model for the portfolio, the cumulative gain of SEK 35 million that was previously recognized in the fair value reserve was reclassified to the income statement and reported in the finance net for the first quarter 2021. The reclassified gain and negative fair value changes of the portfolio of SEK 51 million resulted in a total negative impact of SEK 16 million on finance net in the first quarter 2021. The negative fair value changes in the finance net for the second, third and fourth quarter of total SEK 30 million were partly offset by derivatives hedging the liquidity portfolio from the second quarter.

Denmark balance sheet adjustments

Following a balance sheet review in Denmark, a reassessment has been made of certain assets and liabilities which resulted in increased costs of SEK 186 million in the fourth quarter 2021, whereof SEK 111 million mainly related to changes in estimated amounts for accounts receivables, inventories and accounts payables and SEK 75 million related to impairment of property, plant and equipment and intangible assets. The major part of the balances originates from previous years. The increased costs are classified as adjustment items, see Note 2.

Changes in accounting principles

Cloud computing costs

In April 2021, International Financial Reporting Interpretations Committee published an agenda decision on accounting for cloud computing costs. The new guidance addresses configuration and customization costs on a supplier's application in a cloud arrangement. The guidance should be applied retrospectively and implies that depending on facts and circumstances, some costs should be recognized as operating expenses when the work is performed. Telia Company has applied the new guidance from the fourth quarter 2021 and has concluded that some of the related costs in previous periods have been recognized as intangible assets and the comparative figures has therefore been restated. The restatement effects for the fourth quarter and for the twelve-month period ended December 31, 2020, are presented in the restatement tables below.

Restatement effects on Condensed consolidated statements of comprehensive income

Oct-Dec 2020 Jan-Dec 2020
SEK in millions, except per share data and
number of shares
Cloud
computing
Cloud
computing
Reported costs Restated Reported costs Restated
Continuing operations
Net sales 23,464 23,464 89,191 89,191
Cost of sales -15,395 -36 -15,431 -57,035 -103 -57,138
Gross profit 8,069 -36 8,033 32,156 -103 32,053
Selling, admin. and R&D expenses -5,627 -5,627 -21,701 -21,701
Other operating income and expenses, net -7,524 -7,524 -8,122 -8,122
Income from associated companies and joint ventures -17,919 -17,919 -20,080 -20,080
Operating income -23,001 -36 -23,037 -17,747 -103 -17,850
Financial items, net -998 -998 -3,318 -3,318
Income after financial items -23,999 -36 -24,035 -21,065 -103 -21,168
Income taxes -366 8 -358 -1,412 22 -1,390
Net income from continuing operations -24,365 -29 -24,393 -22,477 -81 -22,558
Discontinued operations
Net income from discontinued operations -80 -80 -279 -279
Total net income -24,445 -29 -24,474 -22,756 -81 -22,837
Other comprehensive income 11,452 3 11,455 5,422 11 5,433
Of which foreign currency translation differences from continuing
operations 16,052 3 16,055 10,936 11 10,947
Total comprehensive income -12,993 -26 -13,019 -17,335 -70 -17,405
Total net income attributable to:
Owners of the parent
Non-controlling interests -24,488 -29 -24,517 -22,912 -81 -22,993
43 43 156 156
Total comprehensive income attributable to:
Owners of the parent -12,981 -26 -13,007 -17,237 -70 -17,307
Non-controlling interests -12 -12 -99 -99
Earnings per share (SEK), basic and diluted
of which from continuing operations, basic and diluted -5.99 -0.01 -5.99 -5.60 -0.02 -5.62
-5.97 -0.01 -5.98 -5.53 -0.02 -5.55
EBITDA from continuing operations 7,622 -66 7,556 30,194 -220 29,974
Adjusted EBITDA from continuing operations 7,477 -66 7,411 30,702 -220 30,482
Depreciation, amortization and impairment losses from
continuing operations
-12,704 30 -12,674 -27,861 117 -27,744
Adjusted operating income from continuing operations 2,609 -36 2,573 11,560 -103 11,457

Restatement effects on Condensed consolidated statements of financial position

Change in
SEK in millions accounting
principles in
Cloud Reported Cloud Restated
Reported associated computing Restated Dec 31, computing Dec 31,
Dec 31, 2019 companies costs Jan 1, 2020 2020 costs 2020
Assets
Goodwill and other intangible assets 101,938 -491 101,447 86,521 -580 85,942
Investments in associates and joint ventures, pension
obligation assets and other non-current assets 14,567 -12 14,555 3,445 3,445
Other non-current assets 107,584 107,584 99,701 99,701
Total non-current assets 224,088 -12 -491 223,585 189,668 -580 189,088
Total current assets 39,984 39,984 37,014 37,014
Total assets 264,072 -12 -491 263,568 226,683 -580 226,103
Equity and liabilities
Equity attributable to owners of the parent 91,047 -12 -388 90,646 62,836 -458 62,378
Equity attributable to non-controlling interests 1,409 1,409 1,118 1,118
Total equity 92,455 -12 -388 92,055 63,954 -458 63,496
Deferred tax liabilities 11,647 -103 11,544 9,845 -122 9,723
Other non-current liabilities 109,683 109,683 112,782 112,782
Total non-current liabilities 121,330 -103 121,227 122,627 -122 122,505
Total current liabilities 50,287 50,287 40,101 40,101
Total equity and liabilities 264,072 -12 -491 263,568 226,683 -580 226,103

Restatement effects on Condensed consolidated statements of cash flows

Oct-Dec 2020 Jan-Dec 2020
SEK in millions Reported Cloud
computing
costs
Restated Reported Cloud
computing
costs
Restated
Cash flow before change in working capital 7,032 -66 6,967 29,707 -220 29,488
Change in working capital 2,297 2,297 3,173 3,173
Amortization and impairment of Film and program
rights
-1,334 -1,334 -4,057 -4,057
Cash flow from operating activities 7,995 -66 7,929 28,824 -220 28,604
of which from continuing operations 7,995 -66 7,929 28,802 -220 28,583
Cash CAPEX1 -4,206 66 -4,140 -13,710 220 -13,490
Free cash flow 3,789 3,789 15,114 15,114
Cash flow from other investing activities 3,651 3,651 10,243 10,243
Total cash flow from investing activities -555 66 -489 -3,466 220 -3,247
of which from continuing operations -555 66 -489 -3,462 220 -3,242
Cash flow from financing activities -11,757 -11,757 -23,098 -23,098
Cash flow for the period -4,317 -4,317 2,259 2,259

1) For Cloud computing costs restatement of Cash CAPEX is equal to CAPEX.

Other restatements of financial and operational data

As a result of various organizational changes, Net sales, CAPEX excl. fees for licenses and spectrum and right-of-use assets, employees and operating assets and liabilities have been restated for comparability as presented in the table below.

In addition, prior periods have been restated to reflect certain errors related to segment liabilities between Sweden and Other operations. Furthermore, disaggregation of revenue has been restated for comparability for segment Sweden, Norway and Lithuania between the lines, leaving the total service revenues unchanged. Restatements relating to Cloud computing costs are not included in the below section.

Amounts in SEK millions except TV and Other Elimina
employees Sweden Finland Norway Denmark Lithuania Estonia Media operations -tions Group
CAPEX excluding fees for licenses,
spectrum and right-of-use assets, fourth
quarter 2020
5 2 -7
CAPEX excluding fees for licenses,
spectrum and right-of-use assets, Jan
Dec 2020
15 8 -22
Employees, Dec 31, 2020 4 95 16 -104 -57 46
Internal Net Sales, fourth quarter 2020
Reorganization Sweden – Other
operations
-2 2
Reorganization Finland - Estonia -11 11
Internal Net Sales, Jan-Dec 2020
Reorganization Sweden – Other
operations
-8 8
Reorganization Finland - Estonia -45 45
Disaggregation of revenues, fourth
quarter 2020 Reclassification Sweden
Business solutions -15 -15
Other fixed service revenues 15 15
Disaggregation of revenues, fourth
quarter 2020 Lithuania bundle split
Fixed telephony -4 -4
Broadband 1 1
TV 3 3
Business solutions 0 0
Disaggregation of revenues, fourth
quarter 2020 Reclassification Norway
Broadband -9 -9
Other fixed service revenues 9 9
Disaggregation of revenues, Jan-Dec
2020 Reclassification Sweden
Business solutions -61 -61
Other fixed service revenues 61 61
Disaggregation of revenues, Jan-Dec
2020 Lithuania bundle split
Fixed telephony -15 -15
Broadband 2 2
TV 13 13
Business solutions 0 0
Disaggregation of revenues, Jan-Dec
2020 Reclassification Norway
Broadband 0 0
Other fixed service revenues 0 0
Segment assets, Dec 31, 2020 34 3 -37
Segment liabilities, Dec 31, 2020 396 31 132 11 -355 -215

Note 2. Adjustment items

Adjustment items within operating income, continuing operations

SEK in millions Oct-Dec
2021
Oct-Dec
2020
Jan-Dec
2021
Jan-Dec
2020
Total within EBITDA -399 145 5,290 -508
Restructuring charges, synergy implementation costs, costs related
to historical legal disputes, regulatory charges and taxes etc.:
Sweden -18 124 -227 -10
Finland -23 -2 -48 -37
Norway -22 -46 -112 -161
Denmark -130 -4 -163 -17
Lithuania -9 -4 -18 -13
Estonia -1 -2 -6 -7
TV and Media -9 -23 -86 -64
Other operations -109 73 -722 -164
Sub total -321 117 -1,383 -473
whereof personnel redundancy restructuring costs -59 -47 -561 -399
whereof transformation and integration consultant costs -75 -29 -376 -109
whereof other -187 193 -446 35
Capital gains/losses1 -79 28 6,673 -35
Within Depreciation, amortization and impairment losses2 -75 -7,800 -91 -7,910
Within Income from associated companies and joint ventures3 -17,955 -20,889
Total adjustment items within operating income, continuing
operations
-475 -25,610 5,198 -29,307

1) Full year 2021 includes a capital gain from the disposal of Telia Carrier and a capital gain from the disposal of the Alerta business, see Note 12. 2) Fourth quarter 2020 includes an impairment of SEK -7,800 million related to goodwill in Finland. Full year 2020 also includes an impairment of SEK -110 million relating to remeasurement of the Finnish real estate companies disposed in 2020. 3) Fourth quarter 2020 includes a capital loss of SEK -17,955 million from the disposal of Turkcell mainly related to reclassified accumulated foreign exchange losses. Full year 2020 also includes a net impairment of SEK -2,928 million related to the holding in Turkcell.

Following a balance sheet review in Denmark, a reassessment has been made of certain assets and liabilities which resulted in increased costs of SEK 186 million in the fourth quarter 2021, whereof SEK 111 had a negative impact on EBITDA and SEK 75 million had an additional negative impact on operating income. These costs have been classified as adjustments items. The reassessment was mainly related to changes in estimated amounts for accounts receivables, inventories and accounts payables as well as impairment of property, plant and equipment and intangible assets. The major part of the balances originates from previous years.

Costs for major group wide business transformations have been added to the definition of Adjustment items from the first quarter 2021. Management believe that this change results in reliable and more relevant information on the financial performance of the group as these transformation costs are not considered being part of the underlying financial performance of the business over time. See Definitions.

Note 3. Segment information

SEK in millions Oct-Dec Oct-Dec Jan-Dec Jan-Dec
Net sales 2021 2020 2021 2020
Sweden1 9,133 8,857 34,451 33,732
of which external 9,111 8,831 34,316 33,581
Finland 3,801 3,977 14,504 15,260
of which external 3,758 3,911 14,316 15,026
Norway 3,658 3,357 13,788 13,373
of which external 3,654 3,354 13,771 13,356
Denmark 1,403 1,403 5,214 5,464
of which external 1,386 1,385 5,150 5,385
Lithuania 1,169 1,076 4,320 4,151
of which external 1,164 1,056 4,286 4,089
Estonia1 891 854 3,331 3,276
of which external 888 841 3,299 3,223
TV and Media 2,594 2,340 8,648 7,429
of which external 2,594 2,340 8,647 7,429
Other operations 1,046 2,175 5,723 8,715
Total segments1 23,696 24,040 89,977 91,401
Eliminations1 -316 -575 -1,635 -2,211
Group 23,380 23,464 88,343 89,191
Adjusted EBITDA
Sweden1 3,541 3,326 13,359 13,418
Finland1 1,042 1,146 4,322 4,789
Norway1 1,556 1,502 6,240 5,971
Denmark1 242 265 906 1,015
Lithuania 370 370 1,511 1,497
Estonia 292 281 1,196 1,153
TV and Media -7 200 878 758
Other operations 254 321 1,449 1,881
Total segments1 7,290 7,411 29,861 30,482
Eliminations
Group1 7,290 7,411 29,861 30,482
Operating income
Sweden1 1,637 1,831 5,588 6,758
Finland1 233 -7,417 1,354 -6,320
Norway1 537 332 2,192 1,432
Denmark1 -193 -23 -299 -34
Lithuania 171 107 752 756
Estonia 120 106 536 446
TV and Media -183 -43 13 -120
Other operations -549 -17,930 5,096 -20,770
Total segments1 1,772 -23,037 15,232 -17,851
Eliminations
Group1 1,772 -23,037 15,232 -17,850
Financial items, net -590 -998 -2,634 -3,318
Income after financial items1 1,181 -24,035 12,598 -21,168

1) Restated, see Note 1.

SEK in millions Dec 31, 2021
Segment
assets
Dec 31, 2021
Segment
liabilities
Dec 31, 20201
Segment
assets
Dec 31, 20201
Segment
liabilities
Sweden 46,398 12,486 46,824 12,668
Finland 44,796 5,494 44,248 4,815
Norway 56,779 7,400 51,770 5,259
Denmark 7,470 2,474 7,504 1,882
Lithuania 6,674 2,072 6,459 1,330
Estonia 5,682 1,303 5,487 971
TV and Media 13,032 2,638 13,241 1,545
Other operations 24,612 6,706 23,232 6,237
Total segments 205,444 40,573 198,764 34,707
Unallocated 31,581 112,910 22,383 124,575
Assets and liabilities held for sale 4,957 3,325
Total assets/liabilities, group 237,025 153,482 226,103 162,606

1) Restated, see Note 1.

Note 4. Net sales

Oct-Dec 2021
SEK in millions TV and Other Elimina
Sweden Finland Norway Denmark Lithuania Estonia Media operations tions Total
Mobile subscription revenues 3,187 1,539 1,771 610 322 244 344 8,018
Interconnect 126 93 112 80 34 19 18 481
Other mobile service revenues 154 163 167 91 9 4 4 591
Total mobile service revenues 3,467 1,795 2,050 780 364 267 367 9,091
Telephony 370 16 25 46 44 25 0 527
Broadband 1,211 162 365 53 160 149 3 1 2,105
TV 549 142 402 18 100 73 780 2,063
Business solutions 727 585 108 31 73 75 1 1,600
Other fixed service revenues 1,063 354 22 16 97 107 14 1,674
Total fixed service revenues 3,921 1,259 922 165 474 427 783 16 7,967
Advertising revenues 1,773 1,773
Other service revenues 289 56 42 23 3 3 38 135 589
Total service revenues1 7,677 3,110 3,014 968 841 698 2,594 517 19,420
Total equipment revenues1 1,434 647 640 418 323 191 308 3,960
Total external net sales 9,111 3,758 3,654 1,386 1,164 888 2,594 825 23,380
Internal net sales 23 44 4 18 5 3 0 221 -316 0
Total net sales 9,133 3,801 3,658 1,403 1,169 891 2,594 1,046 -316 23,380

1) In all material aspects, equipment revenues are recognized at a point in time and service revenues over time.

Oct-Dec 2020
SEK in millions Den TV and Other Elimina
Sweden2 Finland Norway2 mark Lithuania2 Estonia2 Media operations tions2 Total2
Mobile subscription revenues 3,158 1,576 1,567 627 290 228 311 7,756
Interconnect 129 101 98 57 45 18 13 461
Other mobile service 130 139 209 73 8 3 13 575
revenues
Total mobile service 3,417 1,816 1,874 757 343 249 337 8,792
revenues
Telephony 450 22 29 45 50 27 0 623
Broadband 1,178 177 312 47 145 145 1 2 2,006
TV 475 147 388 16 93 70 703 1,892
Business solutions 726 651 109 54 60 64 21 1,685
Other fixed service revenues 1,013 348 17 12 92 86 -0 1,021 2,590
Total fixed service revenues 3,842 1,344 856 174 440 392 704 1,044 8,795
Advertising revenues 0 1,595 1,595
Other service revenues 286 71 33 34 5 2 41 110 582
Total service revenues1 7,544 3,231 2,763 965 788 643 2,340 1,491 19,765
Total equipment revenues1 1,287 680 591 421 269 198 255 3,699
Total external net sales 8,831 3,911 3,354 1,385 1,056 841 2,340 1,746 23,464
Internal net sales 26 66 3 18 19 13 0 429 -575 0
Total net sales 8,857 3,977 3,357 1,403 1,076 854 2,340 2,175 -575 23,464

1) In all material aspects, equipment revenues are recognized at a point in time and service revenues over time. 2) Restated, see Note 1.

Jan-Dec 2021
SEK in millions Sweden Finland Norway Denmark Lithuania Estonia TV and
Media
Other
operations
Elimina
tions
Total
Mobile subscription revenues 12,556 6,106 6,688 2,470 1,232 943 1,333 31,329
Interconnect 492 376 416 264 139 78 117 1,883
Other mobile service revenues 532 587 628 347 36 14 26 2,170
Total mobile service revenues 13,580 7,070 7,732 3,081 1,407 1,035 1,476 35,381
Telephony 1,583 64 102 178 181 105 1 2,215
Broadband 4,726 653 1,413 192 619 585 3 10 8,202
TV 2,034 541 1,594 70 396 287 2,992 -0 7,913
Business solutions 2,754 2,369 417 144 274 271 36 6,264
Other fixed service revenues 3,829 1,190 94 48 380 391 0 1,583 7,516
Total fixed service revenues 14,926 4,816 3,620 633 1,849 1,641 2,995 1,629 32,109
Advertising revenues 5,530 - 5,530
Other service revenues 1,076 240 158 93 16 13 122 441 2,159
Total service revenues1 29,582 12,125 11,510 3,807 3,272 2,689 8,647 3,546 75,180
Total equipment revenues1 4,734 2,191 2,261 1,343 1,014 610 1,010 13,162
Total external net sales 34,316 14,316 13,771 5,150 4,286 3,299 8,647 4,556 88,342
Internal net sales 134 188 17 64 33 32 0 1,166 -1,635 0
Total net sales 34,451 14,504 13,788 5,214 4,320 3,331 8,648 5,723 -1,635 88,343

1) In all material aspects, equipment revenues are recognized at a point in time and service revenues over time.

Jan-Dec 2020
SEK in millions TV and Other Elimina
Sweden2 Finland Norway2 Denmark Lithuania2 Estonia2 Media operations tions2 Total2
Mobile subscription revenues 12,600 6,408 6,367 2,586 1,151 946 1,267 31,325
Interconnect 520 411 406 225 169 72 121 1,924
Other mobile service revenues 522 569 884 335 39 11 43 2,403
Total mobile service revenues 13,643 7,388 7,656 3,146 1,359 1,030 1,430 35,652
Telephony 1,927 102 138 191 214 115 2 2,687
Broadband 4,704 706 1,259 208 574 583 4 11 8,049
TV 1,810 555 1,613 82 377 281 2,460 7,178
Business solutions 2,813 2,579 439 192 235 249 87 6,594
Other fixed service revenues 3,761 1,248 75 47 386 356 1 4,277 10,150
Total fixed service revenues 15,015 5,190 3,524 719 1,786 1,585 2,464 4,375 34,659
Advertising revenues 2 4,822 4,825
Other service revenues 1,075 271 159 110 21 13 142 415 2,206
Total service revenues1 29,734 12,851 11,338 3,976 3,167 2,627 7,429 6,221 77,342
Total equipment revenues1 3,848 2,175 2,017 1,409 922 596 882 11,848
Total external net sales 33,581 15,026 13,356 5,385 4,089 3,223 7,429 7,103 89,190
Internal net sales 151 234 18 80 63 53 0 1,612 -2,211 0
Total net sales 33,732 15,260 13,373 5,464 4,151 3,276 7,429 8,715 -2,211 89,191

1) In all material aspects, equipment revenues are recognized at a point in time and service revenues over time. 2) Restated, see Note 1.

Note 5. Investments

SEK in millions Oct-Dec
2021
Oct-Dec
20201
Jan-Dec
2021
Jan-Dec
20201
CAPEX 7,647 6,397 22,441 18,137
Intangible assets 855 750 5,008 2,692
Property, plant and equipment 5,079 3,353 12,993 10,871
Right-of-use assets 1,713 2,294 4,440 4,573
Acquisitions and other investments 497 560 639 641
Asset retirement obligations 81 524 162 537
Goodwill, intangible and tangible non-current assets acquired in business
combinations
416 416
Equity instruments 36 61 104
Total continuing operations including assets held for sale 8,144 6,957 23,080 18,778
Total discontinued operations 12
of which CAPEX 11
Total investments 8,144 6,957 23,080 18,789
of which CAPEX 7,647 6,397 22,441 18,147

1) Restated, see Note 1.

Note 6. Treasury shares

During the second quarter 2021 Telia Company transferred 595,632 shares to the participants in the "Long Term Incentive program 2018/2021" (LTI program) at an average price of SEK 35.32 per share. The total cost for the transferred shares was SEK 21 million and transaction costs, net of tax, amounted to SEK 0 million. No transfers were made in the fourth quarter 2021. The transfer of shares under the LTI program reduced other contributed capital within parent shareholder's equity by SEK 21 million during the twelve-months period ended December 31, 2021 (SEK 12 million during the twelve-months period ended December 31, 2020). No Telia Company shares were held by the company or by its subsidiaries as of December 31, 2021 or as of December 31, 2020. The total number of issued and outstanding shares was 4,089,631,702.

Note 7. Net debt

SEK in millions Dec 31,
20212
Dec 31,
20202
Long-term borrowings 91,634 100,655
of which lease liabilities, non-current 12,859 12,600
Less 50% of hybrid capital1 -10,428 -10,267
Short-term borrowings 10,017 8,620
of which lease liabilities, current 2,872 2,946
Less derivatives recognized as financial assets and hedging long-term
and short-term borrowings and related credit support annex (CSA)
-1,705 -4,205
Less long-term bonds at fair value through income statement and OCI -5,931 -5,297
Less short-term investments -6,097 -2,832
Less cash and cash equivalents -14,358 -8,332
Net debt 63,133 78,343

1) 50% of hybrid capital is treated as equity, consistent with market practice for this type of instrument, and reduces net debt. 2) Net debt is based on the total Telia Company group including net debt related to discontinued operations and assets held for sale.

Derivatives recognized as financial assets and hedging long-term and short-term borrowings and related credit support annex (CSA) are part of the balance sheet line items Long-term interest-bearing receivables and Short-term interest-bearing receivables. Hybrid capital is part of the balance sheet line-item Long-term borrowings. Long-term bonds at fair value through income statement and OCI are part of the balance sheet line-item Long-term interest-bearing receivables. Short-term investments are part of the balance sheet line-item Short-term interestbearing receivables.

Note 8. Loan financing and credit rating

During 2021 outstanding Telia bonds denominated in SEK were bought back at a total nominal amount of SEK 728 million and Telia bonds denominated in EUR matured at a nominal amount of EUR 504 million (SEK 5,051 million). No major funding transactions were executed during 2021. The credit rating of Telia Company remained unchanged during 2021. Moody's rating for long-term borrowings is Baa1 with a stable outlook. The Standard & Poor long-term rating is BBB+ and the short-term rating is A-2, both with a stable outlook.

Note 9. Financial instruments – fair values

Dec 31, 2021 Dec 31, 2020
Long-term and short-term borrowings1
SEK in millions
Carrying Fair Carrying Fair
value value value value
Long-term borrowings
Interest rate derivatives at fair value 771 771 134 134
Cross-currency interest rate derivatives at fair value 800 800 3,907 3,907
Subtotal 1,570 1,570 4,041 4,041
Open-market financing borrowings in fair value hedge relationships 53,451 59,477 51,628 55,249
Open-market financing borrowings at amortized cost 23,215 28,084 31,345 41,992
Other borrowings at amortized cost 541 541 1,042 1,042
Lease liabilities at amortized cost 12,859 12,183
Total long-term borrowings 91,637 100,239
Short-term borrowings
Interest rate derivatives at fair value 92 92 8 8
Cross-currency interest rate derivatives at fair value 223 223 143 143
Subtotal 315 315 151 151
Utilized bank overdraft and short-term credit facilities at amortized cost 6 6 213 213
Open-market financing borrowings in fair value hedge relationships 6,001 6,037 5,131 5,317
Other borrowings at amortized cost 823 823 179 179
Lease liabilities at amortized cost 2,872 2,671
Total short-term borrowings 10,017 8,345

1) For financial assets the carrying amount is a reasonable approximation of fair value. For information on fair value estimation, see the Annual and Sustainability Report 2020, Note C3 to the consolidated financial statements.

Dec 31, 2021 Dec 31, 2020
Financial assets and liabilities by
fair value hierarchy level1
of which of which
SEK in millions Carrying Level Level Level Carrying Level Level Level
value 1 2 3 value 1 2 3
Financial assets at fair value
Equity instruments at fair value through OCI 576 576 473 473
Equity instruments at fair value through income statement 18 18 18 18
Long- and short-term bonds at fair value through OCI2 830 830 8,513 7,263 1,250
Long- and short-term bonds at fair value through income
statement2 11,578 9,883 1,695
Derivatives designated as hedging instruments 1,034 1,034 3,129 3,129
Derivatives at fair value through income statement 462 462 1,049 1,049
Total financial assets at fair value by level 14,497 10,713 3,191 594 13,181 7,263 5,427 491
Financial liabilities at fair value
Derivatives designated as hedging instruments 1,734 1,734 3,802 3,802
Derivatives at fair value through income statement 166 166 917 917
Total financial liabilities at fair value by level 1,900 1,900 4,719 4,719

1) For information on fair value hierarchy levels and fair value estimation, see the Annual and Sustainability Report 2020, Note C3 to the consolidated financial statements and the section below. 2) From January 1, 2021, Telia Company changed its business model for the liquidity portfolio. The portfolio was previously measured at fair value through OCI but is from January 1, 2021, measured at fair value through income statement., see Note 1.

Fair value measurement of Level 3 financial instruments

Investments classified within Level 3 make use of significant unobservable inputs in deriving fair value, as they trade infrequently. As observable prices are not available for these equity instruments, Telia Company has a market approach to derive the fair value. Telia Company's primary valuation technique used for estimating the fair value of unlisted equity instruments in Level 3 is based on the most recent transaction for the specific company if such transaction has been recently done.

If there have been significant changes in circumstances between the transaction date and the balance sheet date that, in the assessment of Telia Company, would have a material impact on the fair value, the carrying value is adjusted to reflect the changes.

Assets,
Jan-Dec 2021
Liabilities,
Jan-Dec 2021
Movements within Level 3, fair value hierarchy SEK in millions Equity
instruments at
fair value
through OCI
Equity instruments at fair
value through income
statement
Total Contingent
considerations
Level 3, opening balance 473 18 491
Changes in fair value 126 126
of which recognized in other comprehensive income 126 126
Purchases/capital contributions 50 50
Disposals -71 -71
Settlements -2 -2
Exchange rate differences 1 1
Level 3, closing balance 576 18 594
Assets,
Jan-Dec 2020
Liabilities,
Jan-Dec 2020
Movements within Level 3, fair value hierarchy SEK in millions Equity
instruments at
fair value
through OCI
Equity instruments at fair
value through income
statement
Total Contingent
considerations
Level 3, opening balance 319 13 332 41
Changes in fair value 63 63
of which recognized in other comprehensive income 63 63
Purchases/capital contributions 99 5 104
Settlements -7 -7 -41
Exchange rate differences -2 -2
Level 3, closing balance 473 18 491

Note 10. Contingent liabilities, collateral pledged and litigations

SEK in millions Dec 31,
2021
Dec 31,
2020
Issued financial guarantees 288 311
of which referred to guarantees for pension obligations 287 295
Collateral pledged 38 43
Total contingent liabilities and collateral pledged 326 354

The arbitration proceedings against Telia Company and Turkcell under the Share Purchase Agreement related to the divestment of the subsidiary Kcell in Kazakhstan in 2018 was settled during the second quarter 2021. As part of the settlement Telia Company paid SEK 131 million (equivalent to USD 16 million) and consequently all related provisions were released. The gain from net changes in provisions is recognized within discontinued operations (Note 12). Further, the Norwegian Tax Administration (NTA) is performing a VAT audit investigating the treatment of the supply of electronic News services during the years 2016-2018 in GET AS, which was acquired by Telia Company in 2018. Based on the latest communication with the NTA, it is deemed likely that Telia Company will be required to pay an amount of approximately SEK 0.3 billion before the end of 2022. However, no material provision has been recognized since it is deemed probable that the amount will be repaid. For other ongoing legal proceedings, see Note C30 in the Annual and Sustainability Report 2020.

Note 11. Contractual obligations and commitments

SEK in millions Dec 31,
2021
Dec 31,
2020
Contractual obligations and commitments 20,399 21,765
of which film and program rights 14,556 15,728
Total contractual obligations and commitments 20,399 21,765

Note 12. Assets held for sale, discontinued operations and disposals

Net income from discontinued operations (region Eurasia)

SEK in millions, except per share data Oct-Dec
2021
Oct-Dec
2020
Jan-Dec
2021
Jan-Dec
2020
Net sales 96
Expenses and other operating income, net -79
Operating income 16
Financial items, net -22
Income after financial items -6
Income taxes
Net income before remeasurement and gain/loss on disposal -6
Loss on disposal of Moldcell in Moldova (including cumulative
Moldcell exchange loss in equity reclassified to net income of SEK -
172 million)1
-193
Gain/loss from net changes in provisions for transaction warranties -80 176 -80
Net income from discontinued operations -80 176 -279
EPS from discontinued operations (SEK) -0.02 0.04 -0.07
Adjusted EBITDA 30

1) Non-taxable loss from the disposal of Moldcell in Moldova on March 24, 2020.

Assets classified as held for sale

SEK in millions Telia Carrier
Dec 31, 2021
Telia Carrier
Dec 31, 2020
Goodwill and other intangible assets 86
Property, plant and equipment 2,148
Right-of-use assets 1,097
Other non-current assets 534
Other current assets 891
Cash and cash equivalents 199
Assets classified as held for sale 4,957
Long-term borrowings 416
Long-term provisions 848
Other long-term liabilities 620
Short-term borrowings 275
Other current liabilities 1,166
Liabilities associated with assets classified as held for sale 3,325
Net assets classified as held for sale 1,631

Disposals

Telia Carrier

On October 5, 2020, Telia Company signed an agreement to sell its international carrier business, Telia Carrier, to Polhem Infra for a value of SEK 9,450 million on a cash and debt free basis. Telia Carrier was classified as held for sale since September 30, 2020. The transaction was subject to regulatory approvals (relating to e.g., competition and foreign direct investments) in, inter alia, the EU and the US and was closed on June 1, 2021. The disposal resulted in a capital gain of SEK 6,428 million for the group in the second quarter 2021, whereof accumulated foreign exchange losses reclassified from equity to net income of SEK 353 million. The reclassification of accumulated exchange losses had no effect on total equity. The transaction had a positive cash flow effect for the group in the second quarter 2021 of SEK 8,609 million (price received less cash and cash equivalents in the entities sold). In the fourth quarter a final purchase price adjustment was settled whereby Telia Company repaid SEK 20 million to Polhem Infra. The adjustment resulted in a total capital gain of SEK 6,408 million and a total cash flow of SEK 8,589 million in 2021 from the Telia Carrier disposal. The capital gain was recognized within Other operating income.

Alerta

On April 1, 2021, Telia Company disposed its Finnish alarm communication business Alerta for a price of EUR 32 million. The disposal resulted in a capital gain of SEK 309 million for the group in the second quarter 2021. The capital gain is recognized within Other operating income. The transaction had a positive cash flow effect for the group in the second quarter 2021 of SEK 329 million.

Partial disposal

Tower businesses in Finland and Norway

On June 30, 2021, Telia Company signed an agreement to dispose 49% of the tower businesses in Finland and Norway to Brookfield and Alecta, at a price corresponding to an enterprise value for 100% of EUR 1,524 million (approximately SEK 15.5 billion) on a cash and debt free basis. The transaction was subject to regulatory approvals and was closed on

December 29, 2021. The transaction resulted in an increase of equity attributable to owners of the parent of SEK 6,221 million and an increase of equity attributable to non-controlling interests of SEK 1,640 million. The disposal had a positive cash flow effect for the group in the fourth quarter 2021 of SEK 7,861 million and was recognized within financing activities. If, and when, there is a transfer of the tower assets from their respective business units, there will likely be a need for a review of the remaining carrying values of the business units.

Transactions after the reporting period

SIA Telia Latija

On January 4, 2022, Telia Company signed an agreement to divest its 100% ownership in SIA Telia Latvija to Telia Company's associated company SIA Tet at a price corresponding to an enterprise value of EUR 10.75 million (approximately SEK 110 million) on a cash and debt free basis. The price represents a FY 2021 (estimated) EV/EBITDA multiple of 10x. The transaction is subject to customary regulatory approvals and is expected to close during the second quarter of 2022. The net assets in SIA Telia Latvija have not been recognized as asset classified as held for sale based on materiality.

Tower business in Sweden

On January 27, 2022, Telia Company signed an agreement to divest a 49% stake in its Swedish tower business to Brookfield and Alecta. The transaction price corresponds to an enterprise value for 100 percent of SEK 11,224 million on a cash and debt free basis. The transaction is subject to customary regulatory approvals and closing is expected in the third quarter of 2022.

Note 13. Business combinations

On October 8, 2021, SIA Latvijas Mobilais Telefons (LMT) in Latvia acquired 100% of the Baltic data transmission network and IT security solutions enterprise group, Santa Monica Networks from Livonia Partners at a price of EUR 36 million (SEK 366 million). The company's portfolio of services includes the development of innovative solutions, design, technical solution, installation, maintenance and management of data transmission networks, cloud computing and IT security systems. The acquisition will enable Telia Company to introduce fifth generation network solutions faster and more efficiently in the region. The cost of the combination, the preliminary fair values of net assets acquired and preliminary goodwill for the combination is presented in the table below.

Santa Monica
SEK in millions Networks
Cost of combination 366
Fair value of net assets acquired
Non-current assets 9
Other current assets 136
Cash and cash equivalents 21
Current assets 158
Total assets acquired 166
Non-current liabilities 30
Current liabilities 178
Total liabilities assumed 208
Total fair value of net assets acquired -42
Goodwill 408

The net cash flow effect from the business combination was SEK 345 million in the fourth quarter 2021 (cash consideration SEK 366 million paid at closing less cash and cash equivalents SEK 21 million). The fair values of assets and liabilities have been determined provisionally, as they are based on preliminary appraisals and subject to confirmation of certain facts. Thus, the purchase price accounting is subject to adjustments. Goodwill mainly refers to knowledge of transferred personnel, customer service capability, market position and buyer specific synergies. From the acquisition date, revenues of SEK 70 million and net income of SEK 8 million are included in the condensed consolidated statements of comprehensive income. If Santa Monica Networks had been acquired at the beginning of 2021, revenues and total net income for Telia Company for 2021 had been approximately SEK 88.5 billion and SEK 11.9 billion, respectively.

Note 14. Financial key ratios

The key ratios presented in the table below are based on the total Telia Company group including both continuing and discontinued operations.

Dec 31,
2021
Dec 31,
2020
Return on equity (%, rolling 12 months)1 18.5 neg.
Return on capital employed (%, rolling 12 months)1 9.1 neg.
Equity/assets ratio (%)1, 2 31.7 24.5
Net debt/adjusted EBITDA ratio (multiple, rolling 12 months) 2 2.14 2.57
Parent owners' equity per share (SEK)1 19.74 15.36

1) Equity is adjusted by weighted ordinary dividend, see the Annual and Sustainability Report 2020 section Definitions for key ratio definitions. 2) Restated, see Note 1.

Note 15. Alternative performance measurement

In addition to financial performance measures prepared in accordance with IFRS, Telia Company presents non-IFRS financial performance measures. These alternative measures are considered to be important performance indicators for investors and other users of the Interim report. The alternative performance measures should be considered as a complement to, but not a substitute for, the information prepared in accordance with IFRS. Telia Company's definitions of these non-IFRS measures are described in the Annual and Sustainability Report 2020. These terms may be defined differently by other companies and are therefore not always comparable to similar measures used by other companies.

Service revenues

SEK in millions Oct-Dec
2021
Oct-Dec
2020
Jan-Dec
2021
Jan-Dec
2020
Net sales 23,380 23,464 88,343 89,191
Excluded: Equipment revenues -3,960 -3,699 -13,162 -11,848
Service revenues (external) 19,421 19,765 75,180 77,343
Excluded: Telia Carrier external service revenues -1,043 -1,597 -4,352
Excluded: Effects from changes in foreign exchange rates1 126 207 626 0
Service revenues, in constant currency and excluding Telia Carrier 19,547 18,928 74,209 72,991

1) Changes in foreign exchange rates refers to full year average rates prior year.

EBITDA and adjusted EBITDA

SEK in millions Oct-Dec
2021
Oct-Dec
20203
Jan-Dec
2021
Jan-Dec
20203
Operating income 1,772 -23,037 15,232 -17,850
Income from associated companies and joint ventures -28 17,919 -104 20,080
Total depreciation/amortization/write-down 5,146 12,674 20,023 27,744
EBITDA 6,890 7,556 35,151 29,974
Adjustment items within EBITDA (Note 2)1 399 -145 -5,290 508
Adjusted EBITDA 7,290 7,411 29,861 30 482
Excluded: Telia Carrier adjusted EBITDA -225 -371 -909
Excluded: Effects from changes in foreign exchange rates2 26 89 190 0
Adjusted EBITDA in constant currency and excluding Telia Carrier 7,316 7,275 29,681 29,573

1) Definition for Adjustment items has been changed, see Note 2 and Definitions. 2) Changes in foreign exchange rates refers to full year average rates prior year. 3) Restated, see Note 1.

Telia Company defines its Telco business as Total Group less the TV and Media segment. For 2021 adjusted EBITDA, like for like, in the Telco business amounted to SEK 28,834 million. Adjusted EBITDA, like for like, 2021 in the TV and Media segment amounted to SEK 880 million.

Adjusted operating income

SEK in millions Oct-Dec
2021
Oct-Dec
20202
Jan-Dec
2021
Jan-Dec
20202
Operating income 1,772 -23,037 15,232 -17,850
Adjustment items within Operating income (Note 2)1 475 25,610 -5,198 29,307
Adjusted operating income 2,246 2,573 10,033 11,457

1) Definition for Adjustment items has been changed, see Note 2 and Definitions. 2) Restated, see Note 1.

CAPEX, Cash CAPEX and Cash CAPEX to net sales (continuing operations)

SEK in millions Oct-Dec
2021
Oct-Dec
20201
Jan-Dec
2021
Jan-Dec
20201
Investments in intangible assets 855 750 5,008 2,692
Investments in property, plant and equipment 5,079 3,353 12,993 10,871
CAPEX excluding right of use assets 5,935 4,103 18,001 13,563
Investments in right-of-use assets 1,713 2,294 4,440 4,573
CAPEX 7,647 6,397 22,441 18,137
Excluded: investments in license and spectrum fees 9 1 -2,116 -142
CAPEX excluding fees for licenses and spectrum 7,656 6,398 20,325 17,995
Excluded: investments in right-of-use assets -1,713 -2,294 -4,440 -4,573
CAPEX excluding fees for licenses and spectrum and right of use
assets
5,944 4,104 15,885 13,421
SEK in millions, except ratio Oct-Dec
2021
Oct-Dec
20201
Jan-Dec
2021
Jan-Dec
20201
CAPEX 7,647 6,397 22,441 18,137
Excluded: investments in right-of-use assets -1,713 -2,294 -4,440 -4,573
Net of not paid investments and additional payments from previous
periods
-453 37 -2,354 -77
Cash CAPEX 5,481 4,140 15,647 13,485
Excluded: Cash CAPEX for licenses and spectrum fees -331 -46 -1,266 -172
Excluded: Telia Carrier Cash CAPEX excluding fees for licenses and
spectrum
-134 -182 -493
Cash CAPEX, excluding Telia Carrier and fees for licenses and
spectrum
5,150 3,960 14,198 12,820
Net sales 23,380 23,464 88,343 89,191
Excluded: Net sales Telia Carrier (external) -1,043 -1,597 -4,352
Net sales excluding Telia Carrier 23,380 22,421 86,746 84,839
Cash CAPEX to net sales, excluding Telia Carrier and fees for
licenses and spectrum (%)
22.0 17.7 16.4 15.1

1) Restated, see Note 1

Free cash flow (continuing and discontinued operations)

SEK in millions Oct-Dec
2021
Oct-Dec
20201
Jan-Dec
2021
Jan-Dec
20201
Cash flow from operating activities 7,137 7,929 27,376 28,604
Cash CAPEX (paid intangible and tangible assets) -5,481 -4,140 -15,647 -13,490
Free cash flow, continuing and discontinued operations 1,655 3,789 11,729 15,114

1) Restated, see Note 1.

Operational free cash flow

SEK in millions Oct-Dec
2021
Oct-Dec
20201
Jan-Dec
2021
Jan-Dec
20201
Cash flow from operating activities from continuing operations 7,137 7,929 27,507 28,583
Cash CAPEX from continuing operations -5,481 -4,140 -15,647 -13,485
Free cash flow, continuing operations 1,655 3,789 11,861 15,097
Excluded: Cash CAPEX for licenses and spectrum fees from
continuing operations
331 46 1,266 172
Excluded: Dividends from associates from continuing operations -41 -152 -218
Excluded: Taxes paid on dividends from associates from continuing
operations
Repayments of lease liabilities -616 -938 -2,574 -2,955
Operational free cash flow 1,371 2,856 10,401 12,095
Excluded: Changes in working capital -972 -2,297 -3,020 -3,173
Structural part of Operational free cash flow 399 559 7,381 8,922

1) Restated, see Note 1.

Net debt and Net debt/Adjusted EBITDA ratio (multiple, rolling 12 months)

SEK in millions, except for multiple Dec 31,
2021
Dec 31,
20201
Net debt 63,133 78,343
Adjusted EBITDA continuing operations accumulated current year 29,861 30,482
Adjusted EBITDA continuing operations previous year
Adjusted EBITDA discontinued operations accumulated current year 30
Excluding: Disposed operations -371 -30
Adjusted EBITDA rolling 12 months excluding disposed operations 29,491 30,482
Net debt/adjusted EBITDA ratio (multiple) 2.14x 2.57x

1) Restated, see Note 1.

Adjusted EBITDA margin

SEK in millions, except ratio Oct-Dec
2021
Oct-Dec
20201
Jan-Dec
2021
Jan-Dec
20201
Net sales 23,380 23,464 88,343 89,191
Adjusted EBITDA 7,290 7,411 29,861 30,482
Adjusted EBITDA margin (%) 31.2 31.6 33.8 34.2

1) Restated, see Note 1.

Parent company

Condensed income statements

SEK in millions Oct-Dec
2021
Oct-Dec
2020
Jan-Dec
2021
Jan-Dec
2020
Net sales 472 180 982 564
Cost of sales -365 -487
Gross income 107 180 495 564
Operating expenses and other operating income, net -38 -346 -1,063 -1,071
Operating income 69 -166 -568 -507
Financial income and expenses 4,489 -7,256 13,708 -8,634
Income after financial items 4,558 -7,422 13,140 -9,140
Appropriations 1,642 861 5,663 3,670
Income before taxes 6,200 -6,561 18,804 -5,470
Income taxes -313 -338 -926 -706
Net income 5,888 -6,898 17,877 -6,176

Net sales and Cost of sales in the fourth quarter 2021 increased to SEK 472 million (180) and SEK -365 million (-) respectively mainly due to increased Net sales and Cost of sales related to film and program rights.

Operating expenses and other operating income, net in the fourth quarter 2021 decreased to SEK -38 million (-346) mainly due to a received compensation from the pension fund.

Financial income and expenses in the fourth quarter 2021 increased to SEK 4,489 million (-7,256) positively impacted by a capital gain from the disposal of 49% of Telia Towers AB amounting to SEK 4,610 million. Financial income and expenses in the fourth quarter 2020 were impacted by an impairment related to Telia Finland Oyj amounting to SEK 8,300 million.

In the fourth quarter appropriations increased to SEK 1,642 million (861) due to higher group contributions from the subsidiaries and reduced net provision of the equalization reserve.

Net sales and Cost of sales for the full year 2021 increased to SEK 982 million (564) and SEK -487 million (-) respectively due to increased Net sales and Cost of sales mainly related to film and program rights.

Financial income and expenses for the full year 2021 increased to SEK 13,708 million (-8,634) mainly impacted by the capital gains from the disposals of 49% in Telia Towers AB amounting to SEK 4,610 million and the Telia Carrier subsidiaries amounting to SEK 6,258 million, increased dividends from subsidiaries amounting to SEK 8,084 million (6,269) and reduced impairments of the subsidiary Telia Finland Oyj amounting to SEK 4,500 million (14,955).

For the full year appropriations increased to SEK 5,663 million (3,670) due to higher group contributions from the subsidiaries and a higher net reversal of the equalization reserve.

Condensed balance sheets

SEK in millions Dec 31,
2021
Dec 31,
2020
Assets
Non-current assets 163,412 178,700
Current assets 43,865 36,111
Total assets 207,277 214,811
Equity and liabilities
Restricted shareholders' equity 15,712 15,712
Non-restricted shareholders' equity 69,722 59,775
Total shareholders' equity 85,434 75,487
Untaxed reserves 6,707 7,002
Provisions 441 557
Long-term liabilities 78,240 87,018
Short-term liabilities and short-term provisions 36,455 44,747
Total equity and liabilities 207,277 214,811

Non-current assets decreased to SEK 163,412 million (178,700), mainly impacted by an impairment of the subsidiary Telia Finland Oyj, disposals of the Telia Carrier subsidiaries and 49% of Telia Towers AB as well as decreased other long interest-bearing receivables.

Current assets increased to SEK 43,865 million (36,111) due to increased cash and short-term bonds impacted by proceeds from the disposals of the Telia Carrier subsidiaries and 49% of Telia Towers AB.

Equity increased to SEK 85,434 million (75,487) impacted by a positive Net income partly offset by distributed dividends.

Long-term liabilities decreased to SEK 78,240 million (87,018) mainly impacted by reclassification of long-term borrowings to short-term borrowings.

Short-term liabilities and short-term provisions decreased to SEK 36,445 million (44,747) mainly due to reduced intragroup current interest-bearing liabilities and matured short-term borrowings partly offset by a reclassification from long-term borrowings.

During 2021 Telia Company AB issued guarantees on behalf of subsidiaries amounting to SEK 1,538 million (EUR 150 million). For other financial guarantees see Note P24 in the Annual and Sustainability Report 2020.

Risks and uncertainties

Telia Company operates in a broad range of geographical product and service markets in the highly competitive and regulated telecommunications industry. Telia Company has defined risk as anything that could have a material adverse effect on the achievement of Telia Company's goals. Risks can be threats, uncertainties or lost opportunities relating to Telia Company's current or future operations or activities. Telia Company has an established risk management framework in place to regularly identify, analyze, assess, and report business, financial as well as ethics and sustainability risks and uncertainties, and to mitigate such risks when appropriate. Telia Company's risk universe consists of four categories and over thirty risk areas used to aggregate and categorize risks identified across the organization within the risk management framework, see below.

For further information regarding details on risk exposure and risk management, see the Annual and Sustainability Report 2020, Directors Report, section Risk and uncertainties.

Strategic risks

Risks that can have a material impact on the strategic objectives arising from internal or external factors

Telia Company's risk universe

Financial

risks Risks that can cause unexpected variability or volatility in net sales, margins, earnings per share, returns or market capitalization

Operational

risks Risks that may affect or compromise execution of business functions or have an impact on society

Legal &

regulatory risks Risks related to legal or governmental actions that can have a material impact on the achievement of business objectives

Stockholm, January 28, 2022

Allison Kirkby President and CEO

This report has not been subject to review by Telia Company´s auditors.

Forward-looking statements

This report contains statements concerning, among other things, Telia Company's financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent Telia Company's future expectations. Telia Company believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions; however, forwardlooking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. Such important factors include but may not be limited to: Telia Company's market position; growth in the telecommunications industry; and the effects of competition and other economic, business, competitive and/or regulatory factors affecting the business of Telia Company, its associated companies and joint ventures, and the telecommunications industry in general. Forward-looking statements speak only as of the date they were made, and, other than as required by applicable law, Telia Company undertakes no obligation to update any of them in the light of new information or future events.

Definitions

Adjustment items: comprise of capital gains and losses, impairment losses, restructuring programs (costs for phasing out operations and personnel redundancy costs and costs for major group wide business transformations*) or other costs with the character of not being part of normal daily operations.

Advertising revenues: External net sales related to linear and digital/AVoD media, sponsorships and other types of advertising.

Broadband revenues: External net sales related to fixed broadband services.

Business solutions: External net sales related to fixed business networking and communication solutions.

CAPEX: An abbreviation of "Capital Expenditure". Investments in intangible and tangible non-current assets and right-of-use assets, but excluding goodwill, intangible and tangible non-current assets and right-of-use assets acquired in business combinations, film and program rights and asset retirement obligations.

CAPEX excluding right-of-use assets: CAPEX excluding right-of-use assets.

EBITDA: An abbreviation of "Earnings before Interest, Tax, Depreciation and Amortization." Equals operating income before depreciation, amortization and impairment losses and before income from associated companies and joint ventures but including amortization and impairment of film and program rights.

Employees: Total headcount excluding hourly paid employees.

Free cash flow: The total cash flow from operating activities and cash CAPEX.

Interconnect revenues: External net sales related to mobile termination.

Internal net sales: Group internal net sales.

Like for like (%): The change in net sales, external service revenues and adjusted EBITDA, excluding exchange rate effects and based on the current group structure, i.e. including the impact of any acquired companies and excluding the impact of any disposed companies, both in the current and in the comparable period.

Mobile subscription revenues: External net sales related to voice, messaging, data and content (including machine to machine).

Net debt: Interest-bearing liabilities less derivatives recognized as financial assets (and hedging long-term and short-term borrowings) and related credit support annex (CSA), less 50% of hybrid capital (which, consistent with market practice

for the type of instrument, is treated as equity), less short-term investments, long-term bonds at fair value through income statement and OCI and cash/cash equivalents.

Net debt/adjusted EBITDA ratio (multiple): Net debt divided by adjusted EBITDA rolling 12 months and excluding disposed operations.

Operational free cash flow: Free cash flow from continuing operations excluding cash CAPEX for licenses and spectrum fees, dividends from associated companies net of taxes and including repayment of lease liabilities.

Other fixed service revenues: External net sales of fixed services including fiber installation, wholesale and other infrastructure services.

Other mobile service revenues: External net sales related to visitors' roaming, wholesale and other services.

Return on capital employed: Operating income, including impairments and gains/losses on disposals, plus financial revenues excluding foreign exchange gains expressed as a percentage of average capital employed.

Structural part of Operational free cash flow: Operational free cash flow less contribution from change in working capital.

Telephony revenues: External net sales related to fixed telephony services.

Total equipment revenues: External equipment net sales.

Total service revenues: External net sales excluding equipment sales.

TV revenues: External net sales related to TV services.

In this report, comparable figures are provided in parentheses and refer to the same item in the corresponding period last year, unless otherwise stated.

*Costs for major group wide business transformations were added to the definition of Adjustment items in Q1 2021, see Note 2.

Financial calendar

Annual and Sustainability report January-December 2021 March 11, 2022

Annual general meeting 2022 April 6, 2022

Interim Report January-March 2022 April 27, 2022

Interim Report January-June 2022 July 20, 2022

Interim Report January-September 2022 October 21, 2022

This information is information that Telia Company AB is obliged to make public pursuant to the EU Market Abuse Regulation and Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07.00 CET on January 28, 2022.

Telia Company AB (publ) Corporate Reg. No. 556103-4249 Registered office: Stockholm Tel. +46 8 504 550 00 www.teliacompany.com

Telia Company Year-end Report January – December 2021 Q4

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