Elisa Oyj

Earnings Release • Jul 12, 2013

Second Quarter Results 2013

12 July 2013

ELISA STOCK EXCHANGE RELEASE 12 JULY 2013 AT 8:30am ELISA'S INTERIM REPORT JANUARY - JUNE 2013

Second quarter 2013

• PPO companies consolidated as of 1 May 2013
• Revenue amounted to EUR 390 million (389)
• EBITDA was EUR 122 million (122) and EBIT was EUR 69 million (72)
• Profit before tax was EUR 63 million (66)
• Earnings per share was EUR 0.30 (0.32)
• Cash flow after investments was EUR -30 million (47), excluding PPO acquisition EUR 54 million
• Mobile ARPU was EUR 16.2 (15.4 in previous quarter)
• Mobile churn was 17.7 per cent (20.0 in previous quarter)
• The number of Elisa's mobile subscriptions increased by 19,700 during the quarter
• The number of fixed broadband subscriptions increased by 58,300 on the previous quarter
• Net debt / EBITDA was 2.1 (1.7 end 2012) and gearing 137 per cent (99 end 2012)

January – June 2013

• Revenue was EUR 751 million (771)
• EBITDA was EUR 231 million (243), EBIT EUR 128 million (140)
• Cash flow after investments was EUR 7 million (85), excluding acquisitions EUR 95 million

Key indicators:

	2nd Quarter		Year-to-date
EUR million	2013	2012	2013	2012
Revenue	390	389	751	771
EBITDA	122	122	231	243
EBIT	69	72	128	140
Profit before tax	63	66	117	127
Earnings per share, EUR	0.30	0.32	0.56	0.63
Capital expenditures	47	51	94	92

Financial position and cash flow:

EUR million	30.6.2013	30.6.2012	End 2012
Net debt	1,042	909	839
Net debt / EBITDA1)	2.1	1.8	1.7
Gearing ratio, %	136.6	123.6	99.3
Equity ratio, %	35.5	38.0	42.3

	2nd Quarter		Year-to-date
EUR million	2013	2012	2013	2012
Cash flow after investments	-30	47	7	85

1) (interest-bearing debt – financial assets) / (four previous quarters' EBITDA exclusive of non-recurring items)

Additional information regarding the Key Performance Indicators is available at www.elisa.com/investors Elisa Operational Data.xls.

CEO Veli-Matti Mattila:

"Elisa's result at last year's level

Elisa's result and revenue continued at the same level even though the competitive situation remained intense during the second quarter of the year. Insecurity regarding the general economic situation was reflected in the cautiousness of companies and consumers. However, the demand for new services continued strong. Revenue was negatively affected by the drop in the interconnection fees. Revenue was positively affected by the acquisition of PPO's business operations and the abatement of the most aggressive price campaigns, which occurred at the turn of the year.

Our mobile subscription base grew by 19,700 during the second quarter of the year. The number of fixed network broadband subscriptions increased by more than 58,300 with the acquisition of PPO. The use of smartphones and USB modems further increased the growth in mobile data services among both consumers and corporate customers.

A number of new service features were developed for consumers. It will now be possible to watch HBO's quality TV series via the Elisa Viihde service immediately after the show premieres in the United States. New payment methods are now incorporated in Elisa Lompakko, the first mobile payment service in the Nordic Countries. For example, it will be possible to use Elisa Rahaviesti to send payments to all mobile phone numbers in the future, which will facilitate the transfer and repayment of small amounts. In addition, we launched an extension to our data security service for consumers. In the future, consumers will be able to do secure online banking not only on the computer but also with any mobile device.

Corporate customers' interest in ICT services increased in both the public and private sectors. A recent study shows that municipalities have significant needs for reform in service solutions and the renewal of the tools of mobile personnel, to which Elisa's services can respond.

In the first quarter of the year, we began new measures to improve profitability in this challenging environment. Our measures with regard to the areas in question, such as streamlining product selections and IT systems, enhancing the efficiency of customer service and sales, and cutting administrative costs, will accelerate further in the second half of the year.

We have further refined our strategy. Our focus areas are to bring added value to customers through the use of data, accelerate new service businesses, and improve performance through increased customer understanding, quality, and cost-efficiency. Improving our productivity, developing new services for our customers, and maintaining our strong investment capabilities provide a solid foundation for competitive operations in the future."

ELISA CORPORATION

INTERIM REPORT JANUARY - JUNE 2013

The Interim report has been prepared in accordance with the IAS 34 standard. The information presented in this interim report is unaudited.

Market situation

The competitive environment has been intense during the first half of the year. The subscription base and use of data services continued to evolve favourably. The mobile smartphone market is growing rapidly. Over 80 per cent of the mobile handsets sold are smartphones, which further increases the use of mobile data services. Another factor contributing to the mobile market growth has been the increased coverage of new 4G speeds. The number and usage of traditional fixed network subscriptions decreased.

The market for new visual communications (videoconferencing), IT outsourcing and IPTV entertainment services have continued to develop favourably. The demand for other new consumer online services is also growing.

Revenue, earnings and financial position

Revenue and earnings:

	2nd Quarter		Year-to-date
EUR million	2013	2012	2013	2012
Revenue	390	389	751	771
EBITDA	122	122	231	243
EBITDA-%	31.2	31.3	30,7	31.5
EBIT	69	72	128	140
EBIT-%	17.7	18.5	17.1	18.2

Revenue and earnings

Second quarter 2013

Revenue was at the previous year's level. Positive contributors to revenue included: acquisition of regional fixed network operator, PPO, increased usage of mobile data and Corporate Customers' ICT services, such as video- conferencing, as well as Consumer Customers' online services like the Elisa Viihde IPTV service. Lower mobile interconnection fees both in Finland and Estonia, as well as the decrease in usage and subscriptions of traditional fixed telecoms services in both segments affected negatively to revenue.

EBITDA and the EBITDA margin remained at the previous year's level.

Financial income and expenses totalled EUR -6 million (-7). Income taxes in the income statement amounted to EUR -16 million (-15). Elisa's net profit was EUR 48 million (50). Earnings per share (EPS) were EUR 0.30 (0.32).

January -June 2013

Revenue fell by 3 per cent on last year. The decrease was mainly due to lower mobile interconnection fees both in Finland and Estonia, as well as reduced usage and campaign prices in the mobile business. The decrease in usage and subscriptions of traditional fixed telecoms services in both segments also affected revenue negatively. Increased equipment sales,

especially smartphones, as well as Corporate Customers' ICT services, such as videoconferencing, and Consumer Customers' online services like the Elisa Viihde IPTV service, affected revenue positively. Acquisition of regional fixed network operator, PPO, increased revenue by EUR 15 million.

EBITDA decreased by 5 per cent on the previous year mainly due to lower revenue. The EBITDA margin was negatively affected by the increase in lower margin equipment sales and in ICT and online services.

Financial income and expenses totalled EUR -12 million (-13). Income taxes in the income statement amounted to EUR -29 million (-28). Elisa's net profit was EUR 88 million (98). Earnings per share (EPS) amounted to EUR 0.56 (0.63).

Financial position

EUR million	30.6.2013	30.6.2012	31.12 2012
Net debt	1,042	909	839
Net debt / EBITDA 1)	2.1	1.8	1.7
Gearing ratio, %	136.6	123.6	99.3
Equity ratio, %	35.5	38.0	42.3

	2nd Quarter		Year-to-date
EUR million	2013	2012	2013	2012
Cash flow after investments	-30	47	7	85

1) (interest-bearing debt – financial assets) / (four previous quarters' EBITDA exclusive of non-recurring items)

Second quarter

Cash flow after investments was EUR -30 million (47). Excluding the investments in shares for the PPO acquisition however, cash flow after investments was EUR 54 million.

January – June

Cash flow after investments was EUR 7 million (85). Excluding the investments in PPO and Sulake shares, cash flow after investments was EUR 95 million.

The financial and liquidity positions are good. During the first half of 2012, net debt increased to EUR 1,042 million mainly as a result of the dividend payment of EUR 204 million and PPO acquisition purchase price payment of EUR 101 million in April 2013. Cash and undrawn committed credit lines totalled EUR 171 million at the end of the first half.

Changes in corporate structure

On 25 April, the Finnish Competition and Consumer Authority approved the transaction, in which Elisa acquires the entire share capital of a company containing fixed-line operator PPO'S Telecom and IT operations. The acquisition also includes the PPO's holdings of Kymen Puhelin Oy and Telekarelia Oy. The transaction was completed by 30 April 2013 and acquired companies were consolidated into Elisa's financial statements effective 1 May 2013.

On 6 June 2013, Elisa and PPO-Yhtiöt Oy signed a subsidiary merger plan. The estimated registration date for merger is 31 December and no merger consideration will be paid.

On 10 June 2013, Elisa and Kymen Puhelin Oy signed a merger plan that Kymen Puhelin Oy will merge into Elisa. The estimated registration date for merger is 31 December 2013.

On 10 June 2013, Elisa and Telekarelia Oy signed a merger plan that Telekarelia Oy will merge into Elisa. The estimated registration date for merger is 31 December 2013.

	2nd Quarter		Year-to-date
EUR million	2013	2012	2013	2012
Revenue	239	239	459	471
EBITDA	74	74	137	148
EBITDA-%	31.0	31.0	29.9	31.4
EBIT	44	46	79	89
CAPEX	25	30	52	54

Consumer Customers business

Second quarter 2013

The Consumer Customers business revenue was at the previous year's level. The decrease in traditional fixed network usage and subscriptions as well as lower interconnection fees both in Finland and Estonia affected revenue negatively. New online services, mobile data and PPO acquisition contributed positively to revenue. EBITDA was also at the previous year's level.

January – June 2013

Revenue decreased by 3 per cent, mainly due to lower usage and campaign prices in the mobile business, and lower interconnection fees both in Finland and Estonia. The decrease in traditional fixed network usage and subscriptions also affected revenue negatively. New online services, mobile data and increased equipment sales contributed positively to revenue. EBITDA decreased by 7 per cent attributed mainly to lower revenue.

Corporate Customers business

	2nd Quarter				Year-to-date
EUR million	2013	2012	2013	2012
Revenue	151	150	293	300
EBITDA	48	48	94	95
EBITDA-%	31.6	31.8	32.0	31.7
EBIT	25	26	50	51
CAPEX	22	21	42	38

Second quarter 2013

Corporate Customers business revenue increased by 1 per cent. The PPO acquisition, ICT services and mobile data affected revenue positively. The decline in usage and subscriptions in traditional fixed telecom services, lower mobile voice prices, as well as lower mobile interconnection fees and roaming decreased revenue. EBITDA was at the previous year's level.

January – June 2013

Revenue decreased by 3 per cent. The PPO acquisition, ICT services and mobile data affected revenue positively. The decline in usage and subscriptions in traditional fixed telecom services,

lower mobile voice prices as well as lower mobile interconnection fees and roaming decreased revenue. EBITDA fell by 2 per cent mainly due to decreased revenue.

Personnel

In January - June, the average number of personnel at Elisa was 4,255 (3,974). Personnel by segment at the end of the period were as follows:

	30.6.2013	30.6.2012	End 2012
Consumer Customers	2,622	2,355	2,182
Corporate Customers	1,884	1,671	1,681
Total	4,506	4,026	3,863

Total personnel increased by 460, mainly in connection with the PPO and Sulake acquisitions.

Investments

	2nd Quarter		Year-to-date
EUR million	2013	2012	2013	2012
Capital expenditures, of which	47	51	94	92
- Consumer Customers	25	30	52	54
- Corporate Customers	22	21	42	38
Shares	103	0	109	0
Total	149	51	202	92

The main capital expenditures relate to the capacity and coverage increase of the 3G and 4G networks, as well as to other network and IT investments. Share investments relate to the PPO acquisition in the second quarter and Sulake acquisition in the first quarter of 2013.

Financing arrangements and ratings

In May, Elisa agreed with four banks to extend its EUR 170 million Revolving Credit Facility by two years to June 2018.

Valid financing arrangements

		In use on
EUR million	Maximum amount	30.6.2013
Committed credit limits	300	171
Commercial paper programme ¹)	250	204
EMTN programme ²)	1,000	462

1) The programme is not committed

2) European Medium Term Note programme, not committed

Long-term credit ratings

Credit rating agency	Rating	Outlook
Moody's Investor Services	Baa2	Stable
Standard & Poor's	BBB	Stable

Share

Share trading volumes and closing prices are based on the trades made in NASDAQ OMX Helsinki.

	2nd Quarter			Year-to-date
Trading of shares	2013	2012	2013	2012
Shares traded, millions	39.7	37.8	79.9	68.7
Volume, EUR million	575.4	824.8	1,231.6	1,134.1
% of shares	24	23	48	41
Shares and market values	30.6.2013		30.6.2012	31.12.2012
Total number of shares	167, 504, 660	166,932,020		167,167,782
Treasury shares	9,985,475		10,283,624	10,288,116
Outstanding shares	157,519,185	156,648,396		156,879,666
Closing price, EUR	15.01		15.88	16.73
Market capitalisation, EUR million	2,364		2,488	2,625
Treasury shares, %	5.96		6.16	6.15

Elisa shares are also traded in alternative marketplaces. According to the Fidessa Fragmentation report, the trading volumes in these markets during the second quarter were approximately 93 (99) per cent of the NASDAQ OMX Helsinki. Total trading volume in all marketplaces represents approximately 46 (45) per cent of outstanding shares.

Number of shares	Total number of	Treasury shares	Outstanding
	shares		shares
Shares at 31.3.2013	167,174,182	10,288,562	156,885,620
Subscription 19.6.20131)	330,478		330,478
2) Share issue		-303,599	303,599
3) Returned shares		512	-512
Shares as 30.6.2013	167,504,660	9,985,475	157,519,185

1) Stock exchange bulletin 19.6.2013, 2) Stock exchange bulletin 25.4.2013, 3) Shares returned from share incentive programmes

Options	2007A	2007B	2007C	Total
Total number of options	850,000	850,000	850,000	2,550,000
Held by Elisa or not distributed	0	0	0	0
Used in share subscription	12,375	581,999	603,700	1,198,074
Terminated	837,625	268,001	246,300	1,351,926
Outstanding	0	0	0	0
Subscription price, € as 31.5.2013	-	-	8,67
Subscription period	1.12.2009-	1.12.2010-	1.12.2011-
	31.5.2011	31.5.2012	31.5.2013

The last tranche of the 2007 option programme expired on 31 May 2013. There are no outstanding options left.

The Board of Directors' authorisations

The Annual General Meeting 2013 decided on the authorization to repurchase or accept as pledge the company's own shares. The repurchase may be directed. The amount of shares

under this authorization is 5 million shares at maximum. The authorization is effective until 30 June 2014.

Significant legal and regulatory issues

On 24 April 2013, the Finnish Competition and Consumer Authority (FCCA) approved the transaction, in which Elisa acquires the entire share capital of a company comprised of fixed-line operator PPO'S Telecom and IT operations. The acquisition also includes PPO's holdings of Kymen Puhelin Oy and Telekarelia Oy.

The transaction was completed by 30 April 2013 and the acquired companies were consolidated into Elisa's financial statements effective 1 May 2013.

As a condition for the acquisition, FCCA ruled that the overlapping consumer business broadband networks and fiber-optic connections, as well as the approximately 3,000 related customer agreements in Joensuu, Kontiolahti and Outokumpu in eastern Finland be divested.

FCCA announced that it took Elisa's paper invoice pricing practise for consumer customers' telephone subscriptions to the Market Court.

Substantial risks and uncertainties associated with Elisa's operations

Risk management is part of Elisa's internal control system. It aims to ensure that risks affecting the company's business are identified, influenced and monitored. The company classifies risks into strategic, operational, hazard and financial risks.

Strategic and operational risks:

The telecommunications industry is under intense competition in Elisa's main market areas, which may have an impact on Elisa's business. The telecommunications industry is subject to heavy regulation. Elisa and its businesses are monitored and regulated by several public authorities. This regulation also affects the price level of some products and services offered by Elisa. Regulation may also require investments which have long pay-back times.

The rapid developments in telecommunications technology may have a significant impact on Elisa's business.

Elisa's main market is Finland, where the number of mobile phones per inhabitant is among the highest in the world, and growth in subscriptions is thus limited. Furthermore, the volume of phone traffic on Elisa's fixed network has decreased during the last few years. These factors may limit opportunities for growth.

Hazard risks:

The company's core operations are covered by insurance against damage and interruptions caused by accidents and disasters. Accident risks also include litigation and claims.

Financial risks:

In order to manage the interest rate risk, the Group's loans and investments are diversified in fixed- and variable-rate instruments. Interest rate swaps can be used to manage the interest rate risk.

As most of Elisa's operations and cash flow are denominated in euro, the exchange rate risk is minor.

The objective of liquidity risk management is to ensure the Group's financing in all circumstances. Elisa has cash reserves, committed credit facilities and a sustainable cash flow to cover its foreseeable financing needs.

Liquid assets are invested within confirmed limits in financially solid banks, domestic companies and institutions. Credit risk concentrations in accounts receivable are minor as the customer base is wide.

A detailed description of the financial risk management can be found in Note 34 of the Annual Report 2012.

Events after the financial period

There were no major events after the financial period.

Reviewed strategy

Elisa has further reviewed its strategy. Focus areas are to bring added value to customers through the use of data, accelerate new service businesses, and improve performance through increased customer understanding, quality, and cost-efficiency.

Outlook for 2013

The macroeconomic environment in Finland is still expected to be weak in 2013. Competition in the Finnish telecommunications market also remains challenging.

Full year revenue is estimated to be at the same level or slightly higher than in the previous year. Mobile data, ICT and new online services as well as completed acquisitions are expected to increase revenue. Full year EBITDA, excluding non-recurring items, is anticipated to be at the same level as in 2012. As a result of the PPO consolidation, full–year capital expenditure is expected to be approximately 13 per cent of revenue. The mid-term target of maximum 12 per cent is still valid. Elisa's financial position and liquidity are good.

In order to secure good results in a more challenging environment, Elisa is continuing its accelerated cost efficiency measures, in the areas of streamlining product portfolio and IT systems, increasing customer service and sales efficiency, as well as reducing general administration costs.

Elisa's transformation into a provider of new, exciting and relevant services for its customers continues. Long-term growth and profitability improvement will derive from mobile data market growth, as well as new online and ICT services.

BOARD OF DIRECTORS

Consolidated Income Statement

		4-6	4-6	1-6	1-6	1-12
EUR million	Note	2013	2012	2013	2012	2012
Revenue	1	390,1	389,4	751,4	770,9	1 553,4
Other operating income		0,7	1,2	1,0	2,0	4,7
Materials and services		-155,5	-163,7	-301,0	-321,9	-655,6
Employee expenses		-65,7	-61,2	-130,2	-122,4	-237,0
Other operating expenses		-47,7	-43,9	-90,6	-85,7	-164,5
EBITDA	1	121,8	121,8	230,6	243,0	501,1
Depreciation and amortisation		-52,7	-49,7	-102,4	-102,9	-202,1
EBIT	1	69,1	72,2	128,2	140,1	298,9
Financial income		2,5	2,7	5,1	5,0	9,4
Financial expense		-8,4	-9,2	-16,9	-18,4	-39,5
Share of associated companies' profit		0,0	0,0	0,0	0,0	0,1
Profit before tax		63,2	65,7	116,5	126,7	268,9
Income taxes		-15,6	-15,2	-28,8	-28,5	-60,4
Profit for the period		47,7	50,5	87,7	98,3	208,5
Attributable to:
Owners of the parent		47,3	50,7	87,4	98,7	208,7
Non-controlling interests		0,4	-0,2	0,3	-0,4	-0,2
		47,7	50,5	87,7	98,3	208,5
Earnings per share (EUR)
Basic		0,30	0,32	0,56	0,63	1,33
Diluted		0,30	0,32	0,56	0,63	1,33
Average number of outstanding shares (1000 shares)
Basic		156 926	156 481	156 903	156 379	156 548
Diluted		156 927	156 694	156 904	156 593	156 685

Consolidated Statement of Comprehensive Income

Profit for the period	47,7	50,5	87,7	98,3	208,5
Other comprehensive income, net of tax
Items which may be reclassified subsequently to profit or loss:
Translation difference	-0,1	0,0	0,0	0,0	0,0
Available-for-sale investments	0,7	-2,3	0,7	-1,1	-1,3
	0,6	-2,3	0,7	-1,1	-1,3
Items which are not reclassified subsequently to profit or loss:
Actuarial gains and losses	0,0	0,0	-0,1	0,0	-4,5
Total comprehensive income	48,3	48,2	88,4	97,1	202,7
Total comprehensive income attributable to:
Owners of the parent	47,9	48,4	88,1	97,5	202,9
Non-controlling interest	0,4	-0,2	0,3	-0,4	-0,2
	48,3	48,2	88,4	97,1	202,7

Consolidated Statement of Financial Position

	30.6.	31.12.
EUR million	2013	2012
Non-current assets
Property, plant and equipment	709,3	616,1
Goodwill	821,8	797,1
Other intangible assets	110,2	101,3
Investments in associated companies	7,5	6,5
Available-for-sale investments	23,8	19,9
Receivables	53,0	45,1
Deferred tax assets	18,3	12,1
	1 743,9	1 598,1
Current assets
Inventories	58,6	59,4
Trade and other receivables	308,8	310,0
Tax receivables	2,7	1,4
Cash and cash equivalents	48,1	39,8
	418,2	410,6
Total assets	2 162,0	2 008,7
Equity attributable to owners of the parent	735,9	842,1
Non-controlling interests	27,0	2,8
Total equity	762,9	844,9
Non-current liabilities
Deferred tax liabilities	26,3	16,9
Pension obligations	7,5	7,1
Provisions	4,0	3,3
Financial liabilities	547,0	702,8
Other non-current liabilities	16,5	13,7
	601,2	743,8
Current liabilities
Trade and other payables	248,7	243,3
Tax liabilities	1,9	0,8
Provisions	3,8	0,3
Financial liabilities	543,5	175,6
	797,9	419,9
Total equity and liabilities	2 162,0	2 008,7

Condensed Consolidated Statement of Cash Flows

	1-6	1-6	1-12
EUR million	2013	2012	2012
Cash flow from operating activities
Profit before tax	116,5	126,7	268,9
Adjustments
Depreciation and amortisation	102,4	102,9	202,1
Other adjustments	7,4	11,0	23,3
	109,8	113,9	225,4
Change in working capital
Change in trade and other receivables	11,1	23,6	-14,2
Change in inventories	4,5	-7,2	-19,2
Change in trade and other payables	-6,7	-25,0	-16,1
	8,9	-8,6	-49,5
Financial items, net	-13,1	-20,8	-30,1
Taxes paid	-31,8	-37,0	-72,3
Net cash flow from operating activities	190,3	174,2	342,5
Cash flow from investing activities
Capital expenditure	-95,3	-90,7	-188,9
Investments in shares	-88,1	-0,7	-0,7
Proceeds from asset disposal	0,2	1,8	1,9
Net cash used in investing activities	-183,2	-89,6	-187,7
Cash flow before financing activities	7,0	84,6	154,7
Cash flow from financing activities
Proceeds from long-term borrowings			150,9
Repayment of long-term borrowings	-75,4	-0,1	-0,3
Change in short-term borrowings	275,1	97,5	-119,6
Repayment of finance lease liabilities	-2,6	-3,1	-6,0
Proceeds from increase in reserve for invested non-restricted equity	2,9	2,1	4,4
Proceeds from the sale of treasury shares	4,6
Dividends paid and capital repayment	-203,5	-202,8	-203,5
Net cash used in financing activities	1,3	-106,5	-174,0
Change in cash and cash equivalents	8,3	-21,9	-19,2
Cash and cash equivalents at beginning of period	39,8	59,0	59,0
Cash and cash equivalents at end of period	48,1	37,1	39,8

Statement of Changes in Equity

				Reserve for
				invested
				non-		Non
	Share	Treasury	Other	restricted		Retained controlling	Total
EUR million	capital	shares	reserves	equity	earnings	interests	equity
Balance at 1 January 2012	83,0	-197,0	392,3	48,3	510,3	3,5	840,3
Adoption of IAS 19R					-2,0		-2,0
Balance at 1 January 2012	83,0	-197,0	392,3	48,3	508,4	3,5	838,5
Profit for the period					98,7	-0,4	98,3
Translation differences					0,0		0,0
Available-for-sale investments			-1,1				-1,1
Total comprehensive income			-1,1		98,7	-0,4	97,1
Dividends					-203,4	-0,5	-204,0
Share-based compensation		3,0			1,8		4,8
Stock options exercised				2,1			2,1
Other changes					-3,0		-3,0
Balance at 30 June 2012	83,0	-194,0	391,1	50,3	402,4	2,6	735,3
EUR million
Balance at 1 January 2013	83,0	-194,1	391,0	52,7	516,1	2,8	851,4
Adoption of IAS 19R			-4,5		-2,0		-6,5
Balance at 1 January 2013	83,0	-194,1	386,4	52,7	514,2	2,8	844,9
Profit for the period					87,4	0,3	87,7
Translation differences					0,0		0,0
Available-for-sale investments			0,7				0,7
Actuarial gains and losses			-0,1				-0,1
Total comprehensive income			0,6		87,4	0,3	88,4
Dividends					-204,0	-0,6	-204,6
Share-based compensation					1,6		1,6
Disposal of treasury shares		6,0			-1,4		4,6
Acquisition of subsidiary with
non-controlling interests						25,6	25,6
Acquisition of non-controlling interests
without a change in control					0,6	-1,1	-0,4
Stock options exercised				2,9			2,9
Balance at 30 June 2013	83,0	-188,1	387,0	55,6	398,4	27,0	762,9

Notes

ACCOUNTING PRINCIPLES

The Interim consolidated financial statements are in compliance with IAS 34 Interim Financial Reporting. The information has been prepared in accordance with International Financial Reporting Standards (IFRS) effective at the time of preparation and adopted for use by the European Union. Apart from the changes in accounting principles stated below, the accounting principles applied in the interim report are the same as in the financial statements at 31 December 2012.

Changes in the accounting principles

The Group adopted the following standards, amendments to standards and interpretations effective 1 January 2013:

• -Amended IAS 19 Employee Benefits
• Amended IAS 1 Presentation of Financial Statements
• IFRS 13 Fair Value Measurement
• Annual Improvements of IFRS standards

As a result of the adoption of the amended IAS 19 Employee Benefits standard, actuarial gains and losses are recorded directly in the consolidated statement of comprehensive income . The impact of the adoption on 31 December 2012 was a reduction of EUR 6.5 million in group equity and an increase of post-employee liabilities to EUR 5.9 million. The reduction in the Group's total comprehensive income in 2012 was EUR 4.5 million. The comparative financial information for 2012 has been revised in accordance with the amended accounting standard.

1. Segment Information

4-6/2013	Consumer	CorporateUnallocated		Group
EUR million	Customers	Customers	Items	Total
Revenue	238,8	151,3		390,1
EBITDA	74,1	47,7		121,8
Depreciation and amortisation	-29,8	-22,9		-52,7
EBIT	44,3	24,8		69,1
Financial income			2,5	2,5
Financial expense			-8,4	-8,4
Share of associated companies' profit			0,0	0,0
Profit before tax				63,2
Investments	24,9	21,7		46,7
4-6/2012	Consumer	CorporateUnallocated		Group
EUR million	Customers	Customers	Items	Total
Revenue	239,3	150,1		389,4
EBITDA	74,1	47,7		121,8
Depreciation and amortisation	-28,3	-21,4		-49,7
EBIT	45,9	26,3		72,2
Financial income			2,7	2,7
Financial expense			-9,2	-9,2
Share of associated companies' profit			0,0	0,0
Profit before tax				65,7

1-6/2013	Consumer		Corporate Unallocated	Group
EUR million	Customers	Customers	Items	Total
Revenue	458,6	292,8		751,4
EBITDA	137,0	93,6		230,6
Depreciation and amortisation	-58,3	-44,1		-102,4
EBIT	78,7	49,5		128,2
Financial income			5,1	5,1
Financial expense			-16,9	-16,9
Share of associated companies' profit			0,0	0,0
Profit before tax				116,5
Investments	51,7	42,0		93,7
1-6/2012	Consumer		Corporate Unallocated	Group
EUR million	Customers	Customers	Items	Total
Revenue	470,6	300,4		770,9
EBITDA	147,8	95,2		243,0
Depreciation and amortisation	-58,8	-44,1		-102,9
EBIT	89,0	51,1		140,1
Financial income			5,0	5,0
Financial expense			-18,4	-18,4
Share of associated companies' profit			0,0	0,0
Profit before tax				126,7
Investments	53,8	38,3		92,1
1-12/2012	Consumer		Corporate Unallocated	Group
EUR million	Customers	Customers	Items	Total
Revenue	962,4	591,1		1 553,4
EBITDA	307,0	194,1		501,1
Depreciation and amortisation	-115,0	-87,1		-202,1
EBIT	191,9	107,0		298,9
Financial income			9,4	9,4
Financial expense			-39,5	-39,5
Share of associated companies' profit			0,1	0,1
Profit before tax				268,9
Investments	113,6	79,9		193,4
Total assets	1 145,7	760,3	102,7	2 008,7

2. Acquisitions and disposals

There were no disposals during 1 January - 30 June 2013.

The settlement of Appelsiini Finland Oy contingent consideration

On 4 November 2010 Elisa acquired all of the issued shares of Appelsiini Finland Oy. The acquisition cost of EUR 19.7 million included contingent consideration of EUR 2.6 million, which was based on the combined service revenue of the acquired entity for 2011-2012. Upon the settlement of the contingent consideration during the period, the Group recorded an expense of EUR 0.8 million.

Acquisition of Sulake Corporation Oy

On 15 February, Elisa increased its ownership in Sulake Corporation from 24 per cent to 100 per cent by purchasing shares from other principal shareholders.

Sulake creates social meeting places and games on the Internet. The best-known Sulake service is Habbo Hotel, which is targeted at teenagers. Sulake's global client base, brand, community platform and business competence, combined with Elisa's expertise, provide interesting new opportunities.

The purchase price was EUR 6.2 million. The fair value of the previously held share in the acquired entity at the time of acquisition was EUR 6.4 million. Combined these resulted in goodwill of EUR 15.0 million. The goodwill is based on a positive future outlook for new services and is not tax deductible.

Sulake was consolidated effective 1 March 2013. Revenue after the acquisition was EUR 5.2 million and profit for the period EUR -1.7 million. Had the acquisition been made as of the beginning of the year, the impact on Group revenue and profit for the period would have been EUR 7.5 million and EUR -2.2 million respectively.

The transactions between the Group and the acquired company at the time of acquisition have been taken into account in the consolidation of the business operations.

Consideration transferred

EUR million
Cash paid	6,2
Previous ownership	6,4
Settlement of pre-existing relationship	2,3
Total cost of acquisition	15,0
Analysis of net assets acquired
EUR million	Carrying amount
Intangible assets	4,0
Tangible assets	0,3
Trade and other current receivables	2,9
Cash and cash equivalents	1,6
Financial liabilities	-4,1
Trade payables and other current liabilities	-4,7
	0,0
Effects of acquisition on cash flow
EUR million
Purchase price paid in cash	-6,2
Cash and cash equivalents of the acquired entity	1,6
	-4,6
Goodwill arising from business combination EUR million
Consideration transferred (including earlier ownership)	15,0

Net asset acquired 0,0 Goodwill 15,0

No expenses related to the acquisition have been recorded in the consolidated statement of comprehensive income.

Acquisition of PPO-Yhtiöt Oy

On 30 April 2013, Elisa acquired all the shares of fixed network operator PPO-Yhtiöt Oy and 11 per cent of Telekarelia Oy's share capital. With the acquisition the Group's ownership in Telekarelia Oy is 67 per cent and in Kymen Puhelin Oy 46 per cent. Kymen Puhelin Oy is consolidated to the Group based on de facto control. Elisa also acquired 3 per cent of Kymen Puhelin Oy's outstanding share capital during the period for EUR 1.4 million thus increasing the ownership interest to 49 per cent.

Through this acquisition Elisa strengthens its market position in the regions where PPO-Yhtiöt and its subsidiaries operate.

The purchase price was EUR 101.1 million. EUR 5.7 million of the acquisition cost was allocated to the customer base, which is amortised over five years. The acquisition resulted in EUR 9.7 million of goodwill relating to market access in the regions where the purchased entities operate. Goodwill is not tax deductible.

Companies are consolidated from 1 May 2013 onwards. Revenue after the acquisition was EUR 15.0 million and profit for the period EUR 1.1 million. Had the acquisition been made as of the beginning of the year, the impact on Group revenue and profit for the period would have been EUR 45.1 million and EUR -1.7 million respectively.

There were no pre-existing relationships between the Group and the acquired company at the time of the acquisition that should be taken into account in the consolidation of the business operations.

The transaction included a share in a company which has been classified as held for sale at the time of acquisition. The fair value less cost to sell of the asset is zero.

Consideration transferred

EUR million
Cash paid	101,1
Total cost of acquisition	101,1
Analysis of net assets acquired
EUR million	Carrying amount
Customer base	5,7
Other intangible assets	4,1
Tangible assets	96,8
Equity investments and funds	11,4
Deferred tax assets	4,4
Inventories	3,7
Trade and other receivables	12,2
Cash and cash equivalents	19,1
Deferred tax liabilities	-10,0
Provisions	-3,2
Financial liabilities	-8,8
Trade payables and other liabilities	-17,7
	117,6

Effects of acquisition on cash flow

EUR million
Purchase price paid in cash	-101,1
Cash and cash equivalents of the acquired entity	19,1

Goodwill arising from business combination

EUR million
Consideration transferred	101,1
Non controlling interest measured based on proportionate share in the recognised amounts
of the identifiable net assets	26,2
Net asset acquired	117,6
Goodwill	9,7

Expenses related to the acquisition of EUR 1.5 million (EUR 0.3 million) were recorded in other operating expenses in the consolidated statement of comprehensive income. The expenses relate mainly to indirect taxes. After the transaction the seller acquired Elisa Oyj shares. The transaction is presented as proceeds from the sale of treasury shares in the consolidated cash flow statement.

-82,0

3. Property, plant and equipment and intangible assets

	Property		Other
	plant and		intangible
EUR million	equipment	Goodwill	assets
Cost at 1 January 2013	2 869,1	797,1	471,7
Additions	76,5		17,1
Disposal of subsidiaries	97,0	24,7	14,0
Disposals	-1,5		-1,0
Reclassifications	0,6		0,2
30 June 2013	3 041,7	821,8	502,0
Accumulated depreciation/amortisation at 1 January 2013	2 253,1		370,4
Depreciation for the period	80,7		21,8
Disposals and reclassifications	-1,3		-0,4
30 June 2013	2 332,4		391,8
	0,0	0,0	0,0
Net carrying amounts:
1 January 2013	616,0	797,1	101,3
30 June 2013	709,3	821,8	110,2

Commitments to purchase property, plant and equipment and intangible assets amounts to EUR 47.3 million at 30 June 2013.

4. Carrying amounts of financial assets and liabilities by category

			Financial
			assets/
			liabilities	Financial
	Financial		recognised at	liabilities
	assets		fair value	measured at
30 June 2013	available-	Loans and	through profit	amortised	Book	Fair
EUR million	for-sale	receivables	or loss (1	cost	values	values
Non-current financial assets
Financial assets available-for-sale	23,8				23,8	23,8
Receivables		52,7	0,3		53,0	53,0
Current financial assets
Trade and other receivables		308,8			308,8	308,8
	23,8	361,5	0,3		385,6	385,6
Non-current financial liabilities
Financial liabilities				547,0	547,0	548,3
Other liabilities (2				8,1	8,1	8,1
Current financial liabilities
Financial liabilities				543,5	543,5	548,0
Trade and other payables (2				242,1	242,1	242,1
				1 340,7	1 340,7	1 346,5

1) Assets classified as such at initial recognition

2) Excluding advances received

Equity investments are classified as financial assets available-for-sale and are generally measured at fair value. Equity investments for which values cannot be measured reliably are reported at cost less impairment.

Loans and receivables are valued at amortised cost less impairment loss.

Derivatives are recognised at cost on the date of acquisition and are subsequently re-measured at fair value. They are classified as financial assets or liabilities recognised at fair value through profit or loss.

Financial liabilities are initially recognised at fair value equalling the net proceeds received and are subsequently measured at amortised cost by using the effective interest method.

The classification and measurement of each financial asset and liability item are presented in more detail under the financial statements accounting principles at 31 December 2012.

5. Financial assets recognised at fair value

EUR million	30.6.2013	Level 1	Level 2
Financial assets recognised at fair value (1	0,3		0,3
Financial assets available-for-sale (2	6,4	6,4
	6,7	6,4	0,3

Level 1 includes instruments with quoted prices in active markets. Level 2 includes instruments with observable prices based on market data.

1) Interest rate swap. The fair value is expected to approximate the quoted market price or, if this is not available it is estimated using commonly used valuation methods.

2) Publicly listed equity investments and funds. Fair values are measured by using quoted marked rates.

6. Financial assets available-for-sale

EUR million	30.6.2013	31.12.2012
Publicly listed equity investments and funds	6,4	5,7
Unlisted equity investments and funds	17,3	14,2
	23,8	19,9

The most significant unlisted equity investments

EUR million
Anvia Oyj	8,6	8,6
Datawell Oy	2,1	2,1
	10,7	10,7

The unlisted equity investments are recognised at acquisition cost less possible impairment, because the fair value of the equity investment cannot be determined reliably. Listed shares are measured at fair value.

7. Inventories

Write-down of inventories of EUR 1.7 million was recorded during the accounting period.

8. Equity

	Number of	Treasury
	shares	shares	Holding, % of
	pcs	pcs	shares and votes
Shares at 31 December 2012	167 167 782	10 288 116
Subscription rights used	336 878
Number of returned share awards		958
Sale of treasury shares		-303 599
Shares at 30 June 2013	167 504 660	9 985 475	5,96 %

Dividend

On 25 March 2013 Elisa's Annual General Meeting decided on a dividend of 1.30 euros per share. The total dividend amounts to EUR 204.0 million and payment started on 9 April 2013.

9. Issuances and repayment of debt

matured in March. No Elisa Group company has issued bonds during 1 January - 30 June 2013. Elisa Corporation repaid a 75 million bond which

The unused portion of the EUR 1,000 million EMTN Programme is EUR 538 million as of 30 June 2013. The base prospectus for the Programme has been updated on 14 May 2013.

	30.6.	31.12.
EUR million	2013	2012
Issued commercial papers	203,5	95,5
Withdrawn committed credit lines	171,0	0,0

10. Provisions

Termination
EUR million	benefits	Other	Total
1 January 2013	1,2	2,4	3,6
Increases in provisions	2,8	3,2	6,0
Utilised provisions	-1,7	-0,1	-1,8
30 June 2013	2,2	5,5	7,8

11. Related party transactions

Elisa Group's related parties include the parent company, subsidiaries, associates, joint ventures and key management.

Key management consists of Elisa's Board of Directors, the CEO and the Executive Board.

Following acquisitions have taken place during the period:

Sulake Corporation Oy	additional purchase	100 %
PPO-Yhtiöt Oy		100 %
Telekarelia Oy		67 %
Kymen Puhelin Oy		49 %

All above entities are sub-groups.

Related party transactions with associated companies	1-6/2013 1-6/2012
Purchases	0,6	0,3
Receivables	0,2

Management remuneration will be announced in the Annual financial statements.

12. Operating Lease Commitments

Due within 1 year	30,1	30,2
Due after 1 year but within 5 years	35,4	38,0
Due after 5 years	6,8	7,0
Total	72,4	75,3

13. Contingent Liabilities

	30.6.	31.12.
EUR million	2013	2012
For our own commitments
Mortgages	15,4	4,8
Pledged securities	2,9
Deposits	1,3	0,9
Guarantees	1,1
On behalf of associated companies
Guarantees	0,5
Other	0,1
On behalf of others
Guarantees	0,6	0,5
Total	21,8	6,2
Other contractual obligations
Repurchase obligations	0,1	0,0
Letter of credit	0,4
14. Derivative Instruments
EUR million	30.6. 2013	31.12. 2012
Interest rate swaps
Nominal value	154,5	150,0

Key Figures

	1-6	1-6	1-12
EUR million	2013	2012	2012
Shareholders' equity per share, EUR	4,68	4,68	5,37
Interest bearing net debt	1 042,4	909,1	838,6
Gearing	136,6 %	123,6 %	99,3 %
Equity ratio	35,5 %	38,0 %	42,3 %
Return on investment (ROI) *)	16,2 %	18,1 %	17,4 %
Gross investments in fixed assets	93,6	92,1	193,4
of which finance lease investments	0,3	3,0	3,1
Gross investments as % of revenue	12,5 %	11,9 %	12,5 %
Investments in shares	108,8	0,0	0,0
Average number of employees	4 255	3 974	3 973

*) rolling 12 months profit preceding the reporting date

Financial Calendar

Q3 2013 Interim report 17 October2013

Contact Information

Investor Relations: investor.relations@elisa.fi

Press: communications@elisa.fi

Elisa website: www.elisa.com