Tele2 — Earnings Release 2015

Jul 21, 2015

Continued strong momentum in mobile services

Q2 2015 HIGHLIGHTS

Strong mobile end-user service revenue for the Group

• In the quarter net sales amounted to SEK 6,611 (6,343) million driven by strong performance in mobile end-user service revenue, which grew by 7 percent and amounted to SEK 3,324 (3,094) million.

EBITDA growth in mobile Tele2 Sweden

• Mobile end-user service revenue in Tele2 Sweden amounted to SEK 1,829 (1,815) million in Q2 2015 and mobile EBITDA increased by 8 percent to SEK 843 (777) million, positively impacted by the dual brand strategy development. Customer net intake amounted to 52,000 (–8,000).

Tele2 Netherlands expanded its customer base for the 15th consecutive quarter

• Tele2 Netherlands continued the expansion of its mobile customer base for the 15th consecutive quarter by adding 7,000 (27,000) customers reaching a total mobile customer base of 841,000 (768,000). Mobile end-user service revenue amounted to SEK 332 (308) million, growing by 8 percent in Q2 2015. Mobile EBITDA amounted to SEK –71 (–23) million, still affected

by higher national roaming costs due to rapidly growing data consumption and further investments to build the new MNO organization.

Strong customer intake for Tele2 Kazakhstan

• Customer net intake in Tele2 Kazakhstan continued its positive momentum amounting to 471,000 (213,000) in Q2 2015. Improved quality of the customer intake and increasing data consumption supported the improved top-line development. As a result, mobile end-user service revenue grew by 65 percent (partially due to FX effects) in Q2 2015, amounting to SEK 371 (225) million despite increased competitive pressure. The EBITDA contribution amounted to SEK 9 (3) million. Improved operational scale and lower interconnect levels were off-set by higher acquisition costs and increased network costs as a result of higher net intake and the subsequent voice and data traffic growth.

Financial Guidance

• The guidance provided by Tele2 in connection with the Q4 2014 report remains unchanged.

Net sales Q2 2015 6,611 SEK million

EBITDA Q2 2015 1,393 SEK million

Key Financial Data

		Q2			H1
SEK million	2015	2014	%	2015	2014	%
Net sales	6,611	6,343	+4	13,122	12,495	+5
Net sales, FX adjusted	6,611	6,504	+2	13,122	12,875	+2
Mobile end-user service revenue	3,324	3,094	+7	6,508	5,998	+9
EBITDA	1,393	1,470	–5	2,821	2,832	–
EBITDA, FX adjusted	1,393	1,490	–7	2,821	2,885	–2
EBIT	593	791	–25	1,295	1,751	–26
EBIT excluding one-off items (Note 2)	664	790	–16	1,380	1,508	–8
Net profit	309	821	–62	826	1,406	–41
Earnings per share, after dilution (SEK)	0.69	1.83	–62	1.84	3.14	–41

The figures presented in this report refer to Q2 2015 and continuing operations unless otherwise stated. The figures shown in parentheses refer to the comparable periods in 2014.

CEO word, Q2 2015

The second quarter once again proved that the strategy to become a value champion is the right way forward. Our customer net intake was strong and we experienced a break-through by having the lowest churn in many quarters. Consideration for the Tele2 brand showed that the company is scoring amongst the highest compared to industry peers. Mobile end-user service revenue grew 7 percent in the quarter, and with data consumption surging, the platform from which to grow and continue to monetize on data, is definitely in place.

In Sweden, we saw a further increase in demand for mobile data and a strong positive net intake in the quarter. The quarter was characterized of a prepaid to postpaid conversion in the Comviq brand and as expected we saw revenue declines in prepaid and mobile broadband segments due to a lower customer stock compared to the same period last year. Mobile EBITDA contribution grew with 8 percent, mainly driven by the Tele2 brand and lower expansion costs. Tele2.0 has continued to perform well resulting in a positive development of customer satisfaction, leading to both lower churn and higher ASPU.

In Netherlands we expanded the coverage area of the new LTE-Advanced 4G-network, reaching 80 percent outdoor population coverage. The pace of transferring existing Tele2 mobile customers onto our new network increased and our residential mobile customer base continued to expand for the 15th consecutive quarter. The surge in data growth coupled with our dependency on an MVNO relationship will however continue to be a drag on EBITDA until full launch. In an effort to improve our fixed broadband business, Tele2 reached an agreement in July with the incumbent enabling us to offer higher fixed broadband speeds and improved services to our customers.

Despite the intense competition, Kazakhstan continued the positive momentum in customer net intake of 471.000 customers, reaching an all-time high customer base, and resulting in a strong mobile end-user service revenue growth compared to last year. Our tariff

"With loyal customers, high consideration, and the increasing data consumption, Tele2 is in a strong position to continue monetizing on data going forward." plans with bundled voice and data offerings are attracting customers and consideration for Tele2 is constantly growing. We also saw a positive increase in EBITDA compared to last year.

The Baltic region and Croatia showed a strong mobile end-user service revenue growth and solid EBITDA contribution in Q2 2015. The network upgrades to LTE/4G in all the Baltic countries are going according to plan and population coverage in Lithuania has now reached more than 80 percent.

Croatia's network swap, announced last quarter, is progressing ahead of plan and the first phase is now complete, resulting in improved quality for our customers.

The Challenger program, which is expected to reap SEK 1 billion in net savings per year starting from 2018, is on track and we have now kicked off more than 30 initiatives. One of the initiatives initiated is the off-shoring of certain back office administrative tasks in both Finance and Customer operations to Riga and India respectively, allowing us to reduce labor costs, achieve scale synergies and make sustainable process improvements.

Being a Challenger defines our actions; we run to succeed, we continuously overcome obstacles in challenging environments, and we learn quickly. Our commercial strategy, Value champion, is yielding results. With loyal customers, high consideration, and the increasing data consumption, Tele2 is in an ever strong position to continue monetizing on data going forward.

Mats Granryd President and CEO

Financial Overview

Tele2's financial performance is driven by a consistent focus on developing mobile services on own infrastructure, complemented in certain countries by fixed broadband services and business-tobusiness offerings. Mobile net sales, which grew compared to the same period last year, combined with greater efforts to develop mobile services on own infrastructure have had a positive impact on Tele2's mobile EBITDA. In addition, the Group will concentrate on maximizing the return from fixed-line services.

Net customer intake amounted to 540,000 (250,000) in Q2 2015. The customer net intake in mobile services amounted to 563,000 (286,000). This development was mainly driven by positive customer intake in Kazakhstan and Sweden. The fixed broadband customer base decreased by –13,000 (–9,000) customers in Q2 2015, primarily attributable to Tele2's operations in the Netherlands, Sweden, and Germany. As expected, the number of fixed telephony customers fell in Q2 2015 by –10,000 (–27,000). On June 30, 2015 the total customer base amounted to 14,341,000 (13,439,000).

Net sales in Q2 2015 amounted to SEK 6,611 (6,343) million. The net sales development was mainly a result of strong usage of mobile data services, leading to a mobile end-user service revenue growth of 7 percent. It was also positively impacted by strong equipment sales in anticipation of our MNO launch in the Netherlands. This positive development was to some extent hampered by negative net sales development within consumer fixed telephony and fixed broadband.

EBITDA in Q2 2015 amounted to SEK 1,393 (1,470) million, equivalent to an EBITDA margin of 21 (23) percent. EBITDA was negatively impacted by declines in our Fixed operations and the further investments to build the new MNO organization ahead of full scale launch in the Netherlands.

EBIT in Q2 2015 amounted to SEK 664 (790) million excluding oneoff items and SEK 593 (791) million including one-off items. EBIT was affected by a one-off item of SEK –71 million related to the Challenger program (Note 2).

Profit before tax in Q2 2015 amounted to SEK 463 (1,030) million. The decrease is partly explained by the revaluation of the Kazakhstan put option last year which resulted in a positive one-off in Q2 last year of SEK 363 million.

Net profit in Q2 2015 amounted to SEK 309 (821) million. Reported tax for Q2 2015 amounted to SEK –154 (–209) million. Tax payment affecting cash flow amounted to SEK –104 (–46) million during the quarter. Deferred tax assets amounted to SEK 2.0 billion at the end of the quarter.

Free cash flow in Q2 2015 amounted to SEK –268 (274) million affected by a decrease in working capital SEK –404 (–11) million due to Tele2.0 launch and further investments in the Netherlands.

CAPEX in Q2 2015 amounted to SEK 1,134 (850) million, driven principally by increased investments in mobile networks in Netherlands, Sweden and Kazakhstan.

Net debt amounted to SEK 11,178 (9,268) million on June 30, 2015, or 1.89 times 12-month rolling EBITDA impacted by dividend payment. Tele2's available liquidity amounted to SEK 8,139 (8,661) million. See Note 3 for further information on financial debt.

EBITDA/EBITDA margin

FINANCIAL SUMMARY

SEK million	Q2 2015	Q2 2014	H1 2015	H1 2014	FY 2014
Mobile1)
Net customer intake (thousands)	563	286	881	340	598
Net sales	5,010	4,629	9,835	9,043	19,075
EBITDA	1,031	1,009	2,053	1,940	4,174
EBIT	526	580	1,059	1,093	2,405
CAPEX	830	586	1,438	1,001	2,365
Fixed broadband1)
Net customer intake (thousands)	–13	–9	–33	–27	–45
Net sales	980	1,038	2,017	2,080	4,171
EBITDA	187	225	412	458	919
EBIT	7	42	56	104	218
CAPEX	156	108	322	239	504
Fixed telephony1)
Net customer intake (thousands)	–10	–27	–73	–71	–156
Net sales	324	391	673	815	1,565
EBITDA	99	179	213	308	572
EBIT	84	154	181	265	491
CAPEX	7	9	19	19	46
Total
Net customer intake (thousands)	540	250	775	242	397
Net sales	6,611	6,343	13,122	12,495	25,955
EBITDA	1,393	1,470	2,821	2,832	5,926
EBIT excluding one-off items (Note 2)	664	790	1,380	1,508	3,216
EBIT	593	791	1,295	1,751	3,490
CAPEX	1,134	850	2,072	1,559	3,450
EBT	463	1,030	1,138	1,847	3,500
Net profit	309	821	826	1,406	2,626
Cash flow from operating activities, continuing operations	744	1,155	1,583	1,862	4,661
Cash flow from operating activities	744	1,306	1,633	1,813	4,578
Free cash flow, continuing operations	–268	309	–399	268	1,162
Free cash flow	–268	274	–364	–281	432

1) Excluding one-off items (Note 2)

Sweden	47%	Austria	4%
Netherlands	21%	Latvia	3%
Kazhakstan	7%	Germany	3%
Lithuania	6%	Estonia	3%
Croatia	5%

Financial guidance

The guidance provided by Tele2 AB in connection with Q4 2014 remains unchanged, and are for 2015 for continuing operations the following:

• Mobile end-user service revenue growth of mid-single digits.
• Net revenue of between SEK 25.5 and 26.5 billion.
• EBITDA of between SEK 5.8 and 6.0 billion.
• CAPEX level of between SEK 3.8 and 4.0 billion.

Tele2 expects the restructuring costs to be around SEK 200 million in The Challenger Program in 2015. These will be treated as one-off items, and therefore excluded from the EBITDA guidance indicated above.

The Challenger program

A group-wide program focused on increasing productivity was launched in previous quarter. The program will build over 3 years and is expected to reap full benefits of SEK 1 billion per annum starting in 2018. The investment required will be SEK 1 billion, phased over 3 years. All program investments are, and will be, reported as one-off items, affecting EBIT.

Shareholder remuneration

Tele2 has adopted a progressive ordinary dividend policy which aims to deliver 10 percent growth per annum in the coming 3 years. Authorization to pay extraordinary dividends will be sought

when the company has excess capital.

Pursuant to the approval received at the 2015 AGM, Tele2 has the authorization to repurchase up to 10 percent of its share capital.

Balance sheet

Tele2 believes the financial leverage should be in line with both the industry and the markets in which it operates and reflect the status of its operations, future strategic opportunities and obligations. This would imply a target net debt to EBITDA ratio of 1.5–2.0x over the medium term.

Overview by country

FX-adjusted figures

Net sales less exchange rate fluctuations

Total	6,611	6,343		4% 13,122 12,495		5%
FX effects		–161	2%		–380	3%
Continued operations	6,611	6,504		2% 13,122 12,875		2%
Other	39	37	5%	73	64	14%
Germany	209	232	–10%	433	475	–9%
Austria	297	308	–4%	597	616	–3%
Estonia	164	166	–1%	334	329	2%
Latvia	230	229	–	446	455	–2%
Lithuania	373	340	10%	706	662	7%
Croatia	333	340	–2%	636	655	–3%
Kazakhstan	475	386	23%	874	734	19%
Netherlands	1,390	1,355	3%	2,792	2,753	1%
Sweden	3,101	3,111	–	6,231	6,132	2%
SEK million	2015 Q2	2014	Q2* Growth	2015 YTD	2014	YTD* Growth

* Adjusted for fluctuations in exchange rates

Sweden

Total net sales in Q2 2015 was SEK 3,101 (3,111) million, and EBITDA amounted to SEK 908 (882) million.

The quarter was characterized by a maintained strong demand for mobile data and prepaid to postpaid conversion in the Comviq brand. As expected the company saw revenue declines in the prepaid and mobile broadband segments due to a lower customer stock compared to the same period last year.

The business segment continued to grow in the quarter and data usage continued to increase compared to the same period last year. Customer intake was strong, primarily driven by the Large Enterprise segment where Tele2 Sweden was awarded several large contracts, among others Göteborgs Stad.

Mobile In Q2 2015, net sales amounted to SEK 2,744 (2,724) million and mobile end-user service revenue amounted to SEK 1,829 (1,815) million. The underlying revenue growth was strong in the postpaid segment mainly driven by Comviq, and declined as expected in the prepaid segment. Customer net intake was positive 52,000 (–8,000) driven by both brands and all segments, including mobile broadband. The EBITDA contribution grew by 8 percent, primarily attributable to Tele2, and amounted to SEK 843 (777) million due to lower expansion costs which was partly off set by higher network costs due to geographic expansion.

Our dual brand strategy in the consumer postpaid segment has developed according to plan and the segment showed a continued growth driven by high demand for mobile data. The recently launched larger data buckets are appreciated by the customers and are encouraging increased data usage which further enables Tele2 to monetize on data going forward. Tele2.0 has continued to perform well resulting in both lower churn and higher ASPU. Additional proof points of the value of Tele2.0 is that brand consideration as well as Net Promoter Score have shown a positive development since launch.

Tele2 Sweden's overall sales in digital channels continued to increase and the customer satisfaction in customer service is on a high level with CSAT (Customer Satisfaction) at 83 percent (world class benchmark is 85 percent).

Fixed broadband The EBITDA contribution decreased in Q2 2015 compared to same period previous year and amounted to SEK 18 (25) million.

EBITDA less exchange rate fluctuations

Total	1,393	1,470	5%	2,821	2,832	–
FX effects		–20	2%		–53	2%
Continued operations	1,393	1,490	–7%	2,821	2,885	–2%
Other	–12	–36	67%	–35	–74	53%
Germany	26	32	–19%	58	68	–15%
Austria	43	60	–28%	93	112	–17%
Estonia	36	39	–8%	74	80	–8%
Latvia	70	69	1%	138	135	2%
Lithuania	132	131	1%	257	245	5%
Croatia	34	34	–	55	60	–8%
Kazakhstan	9	4	125%	9	5	80%
Netherlands	147	275	–47%	288	547	–47%
Sweden	908	882	3%	1,884	1,707	10%
SEK million	2015 Q2	2014	Q2* Growth	2015 YTD	2014	YTD* Growth

* Adjusted for fluctuations in exchange rates

Fixed telephony The EBITDA contribution in the quarter amounted to SEK 35 (57) million. Tele2 Sweden saw a continued decrease in demand for fixed telephony as a consequence of the increased demand for mobile bucket price plans.

Netherlands

In the second quarter Tele2 Netherlands rapidly expanded the coverage area of its new LTE-Advanced 4G-network, reaching 80 percent outdoor population coverage. The transferring of the existing mobile customers onto our new network continued during the quarter.

Meanwhile, the consumer mobile customer base continued to grow, expanding for the fifteenth consecutive quarter. In the B2B market, Tele2 continued to be successful in the extensive tender process of the Dutch Government.

Mobile Tele2 Netherlands added 7,000 (27,000) customers, bringing the total mobile customer base to 841,000 (768,000). End-user service revenue grew by 8 percent to SEK 332 (308) million driven by a larger customer base and continuing growth in mobile data usage. EBITDA contribution amounted to SEK –71 (–23) million, impacted negatively by the increasing traffic and costs associated with the MVNO agreement as well as building the MNO organization.

MNO launch Tele2 continued to deliver more key mobile sites in the Randstad area, in combination with building geographic reach across the rest of the country. This resulted in a significant improvement in population coverage and reinforced Tele2 Netherland's expectation to reach nationwide coverage before the end of Q1 2016.

Fixed broadband At the end of the second quarter, the company had a fixed broadband base of 355,000 (367,000) customers. EBITDA contribution declined compared to same quarter last year, due to higher churn and more off-net traffic, and amounted to SEK 140 (169) million. In the B2B market, Tele2 launched a significant campaign offering existing fixed customers the opportunity to consolidate their communications with the converged fixed and mobile services of Tele2.

Kazakhstan

Mobile In Q2 2015, Tele2 Kazakhstan continued its positive momentum with customer net intake of 471,000 (213,000) resulting in a record high customer base of 4,200,000 customers. Despite an intense price competition Tele2's tariff plans with bundled voice and data offerings, are attracting high quality customers. The consideration among customers to purchase Tele2 improved further in the quarter.

Mobile end-user service revenue grew by 65 percent (partially supported by FX), compared to the same quarter previous year, and amounted to SEK 371 (225) million. Mobile data traffic increased by more than 200 percent compared to the same period last year.

The EBITDA increased to SEK 9 (3) million, attributable to improved operational scale and lower interconnect levels. However, the positive development was to some extent off-set by higher customer acquisition costs and increased network costs as a result of higher net intake compared to last year and subsequent voice and data traffic growth. Furthermore, competition in the market continues to be intense.

Tele2 continued to expand geographical coverage, increasing capacity for accommodating higher traffic volumes and improving the quality of customer intake.

Croatia

Mobile In Q2 2015, Tele2 Croatia's customer net intake was positive and amounted to 19,000 (45,000). The decline compared to last year is, as expected, due to the structural decline in the prepaid market, but also due to a focus towards attracting customers that churn less.

Mobile end-user service revenue increased 7 percent compared to last year and amounted to SEK 210 (196) million.

EBITDA contribution amounted to SEK 34 (33) million, corresponding to an EBITDA margin of 10 percent in the quarter. The result is negatively affected by the recently implemented frequency charges in 2015 which in the quarter amounted to SEK 19 million.

The first phase of the network swap, announced last quarter, is now complete and resulted in improved quality.

Lithuania

Mobile Tele2 Lithuania's mobile end-user service revenue grew with 4 percent compared to last year and amounted to SEK 222 (213) million. The customer net intake in the quarter was 0 (–4,000) and a positive MNP (mobile number portability) in the quarter, enabled the company to maintain its market share position.

During the quarter, EBITDA development was positive and amounted to SEK 132 (127) million, mainly driven by higher mobile data usage. Tele2 Lithuania's EBITDA margin was 35 (38) percent.

In Lithuania, Tele2 continued the LTE network rollout and is now covering around 60 major cities and main roads with population coverage above 80 percent. The company has also launched the LTE Advanced network and LTE roaming services. Furthermore, the company continued its focus on selling LTE enabled smart phones, which in the quarter accounted for more than half of total sales of smart phones.

In cooperation with various partners, Tele2 Lithuania continued to offer new products for business and private customers.

Latvia

Mobile Tele2 Latvia's mobile end-user service revenue grew with 8 percent to SEK 145 (134) million, positively impacted by the continued positive trend with growing mobile data usage, value added services and an increasing amount of postpaid subscribers with higher ASPU. Customer net intake was positive 10,000 (1,000) as a result of Tele2 Latvia's increased commercial efforts to attract new customers. The customer satisfaction in the quarter hit an all-time high.

EBITDA contribution was SEK 70 (67) million, leading to an EBITDA margin of 30 (30) percent.

During the quarter Tele2 Latvia focused on strengthening its market position through a clear mobile data position, customer satisfaction and strong emphasis on LTE infrastructure rollout.

Using previously acquired 800 MHz frequency, Tele2 Latvia deployed LTE infrastructure which now serves 90 percent of the population.

Estonia

Mobile Due to a high quality network and strong demand for data services, Tele2 Estonia's mobile end user service revenue grew 6 percent and amounted to SEK 103 (97) million. In the quarter, net customer intake was 0 (–6,000).

EBITDA declined to SEK 30 (32) million mainly due to higher network costs (additional LTE technology) and higher acquisition costs resulting from the strong competitive environment.

Tele2 continued its fast 4G rollout during the quarter. Tele2 Estonia customer satisfaction continued to improve in Q2 2015.

Austria

In the quarter, Tele2 Austria had a negative customer net intake of –5,000 (–6,000) due to market decline within the residential fixed telephony and broadband segments. Net sales amounted to SEK 297 (299) million and EBITDA amounted to SEK 43 (58) million, mainly due to the decline within the residential customer base. Tele2 Austria will continue to focus on retention and selective growth in the residential segment as well as prepare for the launch of the B2B MVNO offering that will take place later this year.

Germany

Net sales in the quarter amounted to SEK 209 (226) million and EBITDA to SEK 26 (31) million. Planned changes in the provisioning of new mobile customers, and a focused shift to an improved customer value, explains the moderate net intake of mobile customers which was 4,000 (18,000). Mobile end-user service revenue grew 6 percent compared to same period last year and amounted to SEK 112 (106) million. Residential and Business broadband customer base declined. Fixed line business continues to deliver good profitability and the company is focusing on retaining the current customer base.

Consistent with our corporate strategy, restructuring initiatives under the Challenger program is initiated in Tele2 Germany.

Other items

Risks and uncertainty factors

Tele2's operations are affected by a number of external factors. The risk factors considered to be most significant to Tele2's future development are operating risks, such as the availability of frequencies and telecom licenses, integration of new business models, changes in regulatory legislation, data privacy, dependency on suppliers and business partners, operation in Kazakhstan, geopolitical risks, and financial risks such as currency risk, interest risk, liquidity risk and credit risk. In addition, to the risks described in Tele2's annual report for 2014 (see Directors' report and Note 2 of the report for a detailed description of Tele2's risk exposure and risk management), no additional significant risks are estimated to have developed.

Company disclosure

Other

Tele2 will release its financial and operating results for the period ending September 30, 2015 on October 21, 2015.

The Board of Directors and CEO declare that the six-month interim report provides a fair overview of the parent company's and Group's operations, their financial position and performance, and describes material risks and uncertainties facing the parent company and other companies in the Group.

Stockholm, July 21, 2015 Tele2 AB

Mike Parton, Chairman

Lorenzo Grabau Irina Hemmers

Erik Mitteregger Carla Smits-Nusteling Eamonn Ohare Mario Zanotti

Mats Granryd President and CEO

Auditors' review report

Introduction

We have reviewed the interim report for Tele2 AB (publ.) for the period January 1 – June 30, 2015. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level

of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, July 21, 2015 Deloitte AB

Thomas Strömberg Authorized Public Accountant

Q2 2015 PRESENTATION

Tele2 will host a presentation with the possibility to join through a conference call, for the global financial community at 10:45 am CEST (09:45 am BST/04:45 am EDT) on Tuesday, July 21, 2015. The presentation will be held in English and also made available as a webcast on Tele2's website: www.tele2.com.

Dial-in information

To ensure that you are connected to the conference call, please dial in a few minutes before the start of the conference call to register your attendance.

Dial-in numbers

Sweden: +46 8 505 564 74 UK: +44 203 364 5374 US: +1 855 753 2230

Louise Tjeder Head of IR Telephone: + 46 (0) 70 426 46 52

Lars Torstensson

EVP, Group Communication & Strategy Telephone: +46 (0) 702 73 48 79

Tele2 AB

Company registration nr: 556410-8917 Skeppsbron 18 P.O. Box 2094 SE-103 13 Stockholm Sweden Tel + 46 (0)8 5620 0060 www.tele2.com

VISIT OUR WEBSITE: www.tele2.com

CONTACTS APPENDICES

Income statement Comprehensive income Balance sheet Cash flow statement Change in equity Numbers of customers Net sales Mobile external net sales split EBITDA EBIT CAPEX Five-year summary Parent company Notes

TELE2 IS ONE OF EUROPE'S FASTEST GROWING TELECOM OPERATORS, ALWAYS PROVIDING CUSTOMERS WITH WHAT THEY NEED FOR LESS.

We have 14 million customers in 9 countries. Tele2 offers mobile services, fixed broadband and fixed telephony, data network services, and content services. Ever since Jan Stenbeck founded the company in 1993, it has been a tough challenger to the former government monopolies and other established providers. Tele2 has been listed on the NASDAQ OMX Stockholm since 1996. In 2014, we had net sales of SEK 26 billion and reported an operating profit (EBITDA) of SEK 5.9 billion.

Income statement

SEK million	Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2014 Q2
CONTINUING OPERATIONS
Net sales	1	13,122	12,495	25,955	6,611	6,343
Cost of services provided	2	–8,007	–7,187	–15,054	–4,067	–3,636
Gross profit		5,115	5,308	10,901	2,544	2,707
Selling expenses	2	–2,560	–2,667	–5,298	–1,300	–1,343
Administrative expenses	2	–1,342	–1,196	–2,518	–696	–610
Result from shares in joint ventures and associated companies	10	–5	–6	–14	–5	–3
Other operating income	2	161	441	647	75	93
Other operating expenses	2	–74	–129	–228	–25	–53
Operating profit, EBIT		1,295	1,751	3,490	593	791
Interest income/costs	3	–186	–185	–378	–86	–95
Other financial items	4	29	281	388	–44	334
Profit after financial items, EBT		1,138	1,847	3,500	463	1,030
Income tax	5	–312	–441	–874	–154	–209
NET PROFIT FROM CONTINUING OPERATIONS		826	1,406	2,626	309	821
DISCONTINUED OPERATIONS
Net profit/loss from discontinued operations	10	1,718	–227	–415	1	–117
NET PROFIT		2,544	1,179	2,211	310	704
ATTRIBUTABLE TO
Equity holders of the parent company		2,544	1,179	2,211	310	704
Earnings per share (SEK)	9	5.71	2.65	4.96	0.70	1.58
Earnings per share, after dilution (SEK)	9	5.67	2.63	4.93	0.69	1.57
FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO
Equity holders of the parent company		826	1,406	2,626	309	821
Earnings per share (SEK)	9	1.86	3.16	5.89	0.70	1.84
Earnings per share, after dilution (SEK)	9	1.84	3.14	5.86	0.69	1.83

Comprehensive income

SEK million	Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2014 Q2
NET PROFIT		2,544	1,179	2,211	310	704
OTHER COMPREHENSIVE INCOME
COMPONENTS NOT TO BE RECLASSIFIED TO NET PROFIT
Pensions, actuarial gains/losses		40	–15	–82	40	–14
Pensions, actuarial gains/losses, tax effect		–9	3	18	–9	3
Components not to be reclassified to net profit		31	–12	–64	31	–11
COMPONENTS THAT MAY BE RECLASSIFIED TO NET PROFIT
Exchange rate differences
Translation differences in foreign operations	2, 4	–403	446	1,137	–213	495
Tax effect on above		–86	–53	–179	58	–39
Reversed cumulative translation differences from divested companies	10	18	–3	–3	–	–
Translation differences		–471	390	955	–155	456
Hedge of net investments in foreign operations		–78	–101	4	24	–90
Tax effect on above		17	22	–1	–5	20
Reversed cumulative hedge from divested companies	10	–107	–	–	–	–
Hedge of net investments		–168	–79	3	19	–70
Exchange rate differences		–639	311	958	–136	386
Cash flow hedges
Gain/loss arising on changes in fair value of hedging instruments		–21	–102	–172	7	–53
Reclassified cumulative loss to income statement		39	29	61	20	15
Tax effect on cash flow hedges		–4	16	25	–6	8
Cash flow hedges		14	–57	–86	21	–30
Components that may be reclassified to net profit		–625	254	872	–115	356
OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX		–594	242	808	–84	345
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		1,950	1,421	3,019	226	1,049
ATTRIBUTABLE TO
Equity holders of the parent company		1,950	1,421	3,019	226	1,049

Balance sheet

SEK million Note	Jun 30, 2015	Jun 30, 2014	Dec 31, 2014
ASSETS
NON-CURRENT ASSETS
Goodwill	9,293	9,133	9,503
Other intangible assets	4,742	4,811	4,913
Intangible assets	14,035	13,944	14,416
Tangible assets	11,714	10,006	11,138
Financial assets 3	543	307	531
Deferred tax assets 5	2,039	2,246	2,062
NON-CURRENT ASSETS	28,331	26,503	28,147
CURRENT ASSETS
Inventories	552	602	500
Current receivables	7,180	6,800	7,179
Current investments	36	41	38
Cash and cash equivalents 6	309	526	151
CURRENT ASSETS	8,077	7,969	7,868
ASSETS CLASSIFIED AS HELD FOR SALE 10	–	4,092	3,833
ASSETS	36,408	38,564	39,848
EQUITY AND LIABILITIES
EQUITY
Attributable to equity holders of the parent company	18,029	21,062	22,680
Non-controlling interests	–	2	2
EQUITY 9	18,029	21,064	22,682
NON-CURRENT LIABILITIES
Interest-bearing liabilities 3	5,381	5,177	5,353
Non-interest-bearing liabilities 5	688	395	358
NON-CURRENT LIABILITIES	6,069	5,572	5,711
CURRENT LIABILITIES
Interest-bearing liabilities 3	6,152	4,573	3,837
Non-interest-bearing liabilities	6,158	6,463	6,869
CURRENT LIABILITIES	12,310	11,036	10,706
LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS CLASSIFIED AS HELD FOR SALE 10	–	892	749
EQUITY AND LIABILITIES	36,408	38,564	39,848

Cash flow statement

(Total operations)

SEK million	Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
OPERATING ACTIVITIES
Operating profit from continuing operations		1,295	1,751	3,490	593	702	735	1,004	791	960
Operating profit from discontinued operations		1,702	–218	–388	1	1,701	–72	–98	–112	–106
Operating profit		2,997	1,533	3,102	594	2,403	663	906	679	854
Adjustments for non-cash items in operating profit		–243	1,324	2,909	734	–977	773	812	806	518
Financial items paid/received	4	–279	–163	–246	–76	–203	37	–120	–122	–41
Taxes paid		–219	–171	–327	–104	–115	–93	–63	–46	–125
Cash flow from operations before changes in working capital		2,256	2,523	5,438	1,148	1,108	1,380	1,535	1,317	1,206
Changes in working capital		–623	–710	–860	–404	–219	–58	–92	–11	–699
CASH FLOW FROM OPERATING ACTIVITIES		1,633	1,813	4,578	744	889	1,322	1,443	1,306	507
INVESTING ACTIVITIES
CAPEX paid	7	–1,997	–2,094	–4,146	–1,012	–985	–1,084	–968	–1,032	–1,062
Free cash flow		–364	–281	432	–268	–96	238	475	274	–555
Acquisition and sale of shares and participations	2, 10	4,886	710	674	–5	4,891	–18	–18	–39	749
Other financial assets		1	17	–235	1	–	–252	–	3	14
Cash flow from investing activities		2,890	–1,367	–3,707	–1,016	3,906	–1,354	–986	–1,068	–299
CASH FLOW AFTER INVESTING ACTIVITIES		4,523	446	871	–272	4,795	–32	457	238	208
FINANCING ACTIVITIES
Change of loans, net	3	2,305	654	–200	4,303	–1,998	–308	–546	1,640	–986
Dividends	9	–6,626	–1,960	–1,960	–6,626	–	–	–	–1,960	–
Other financing activities	9	–2	–	–	–2	–	–	–	–	–
Cash flow from financing activities		–4,323	–1,306	–2,160	–2,325	–1,998	–308	–546	–320	–986
NET CHANGE IN CASH AND CASH EQUIVALENTS		200	–860	–1,289	–2,597	2,797	–340	–89	–82	–778
Cash and cash equivalents at beginning of period		151	1,348	1,348	2,886	151	418	526	593	1,348
Exchange rate differences in cash and cash equivalents		–42	38	92	20	–62	73	–19	15	23
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	6	309	526	151	309	2,886	151	418	526	593

Change in equity

			Jun 30, 2015			Jun 30, 2014
		Attributable to				Attributable to			Attributable to
SEK million	Note	equity holders of the parent company	non controlling interests	Total equity	equity holders of the parent company	non controlling interests	Total equity	equity holders of the parent company	non controlling interests	Total equity
Equity, January 1		22,680	2	22,682	21,589	2	21,591	21,589	2	21,591
Net profit for the period		2,544	–	2,544	1,179	–	1,179	2,211	–	2,211
Other comprehensive income for the period, net of tax		–594	–	–594	242	–	242	808	–	808
Total comprehensive income for the period		1,950	–	1,950	1,421	–	1,421	3,019	–	3,019
OTHER CHANGES IN EQUITY
Share-based payments	9	25	–	25	13	–	13	29	–	29
Share-based payments, tax effect	9	–	–	–	–1	–	–1	3	–	3
Dividends	9	–6,626	–	–6,626	–1,960	–	–1,960	–1,960	–	–1,960
Sale of non-controlling interests		–	–2	–2	–	–	–	–	–	–
EQUITY, END OF THE PERIOD		18,029	–	18,029	21,062	2	21,064	22,680	2	22,682

Number of customers

	Net intake
		customers 2015	2014	2015	2014	2014	2015	2015	2014	2014	2014	2014
by thousands	Note	Jun 30	Jun 30	Jan 1–Jun 30	Jan 1–Jun 30	Full year	Q2	Q1	Q4	Q3	Q2	Q1
Sweden
Mobile		3,630	3,717	9	–21	–51	52	–43	–58	28	–8	–13
Fixed broadband		75	68	–10	–12	–23	–5	–5	–7	–4	–6	–6
Fixed telephony		221	252	–21	–21	–41	–11	–10	–11	–9	–12	–9
		3,926	4,037	–22	–54	–115	36	–58	–76	15	–26	–28
Netherlands
Mobile		841	768	28	74	119	7	21	22	23	27	47
Fixed broadband		355	367	–14	–7	–5	–5	–9	1	1	–1	–6
Fixed telephony		64	90	–11	–17	–32	–5	–6	–10	–5	–7	–10
		1,260	1,225	3	50	82	–3	6	13	19	19	31
Kazakhstan
Mobile		4,196	2,984	899	233	546	471	428	205	108	213	20
		4,196	2,984	899	233	546	471	428	205	108	213	20
Croatia
Mobile		818	844	–5	51	30	19	–24	–54	33	45	6
		818	844	–5	51	30	19	–24	–54	33	45	6
Lithuania
Mobile		1,763	1,865	–47	14	–41	–	–47	–40	–15	–4	18
		1,763	1,865	–47	14	–41	–	–47	–40	–15	–4	18
Latvia
Mobile		974	993	–1	–38	–56	10	–11	–28	10	1	–39
		974	993	–1	–38	–56	10	–11	–28	10	1	–39
Estonia
Mobile		484	492	–4	–11	–15	–	–4	–6	2	–6	–5
Fixed telephony		3	4	–	–	–1	–	–	–	–1	–1	1
		487	496	–4	–11	–16	–	–4	–6	1	–7	–4
Austria
Fixed broadband		106	114	–2	–4	–10	–1	–1	–2	–4	–1	–3
Fixed telephony		137	156	–11	–11	–19	–4	–7	–4	–4	–5	–6
		243	270	–13	–15	–29	–5	–8	–6	–8	–6	–9
Germany
Mobile		244	214	2	38	66	4	–2	9	19	18	20
Fixed broadband		57	67	–7	–4	–7	–2	–5	–2	–1	–1	–3
Fixed telephony		373	444	–30	–22	–63	10	–40	–26	–15	–2	–20
		674	725	–35	12	–4	12	–47	–19	3	15	–3
TOTAL
Mobile		12,950	11,877	881	340	598	563	318	50	208	286	54
Fixed broadband		593	616	–33	–27	–45	–13	–20	–10	–8	–9	–18
Fixed telephony		798	946	–73	–71	–156	–10	–63	–51	–34	–27	–44
TOTAL NUMBER OF
CUSTOMERS AND NET INTAKE		14,341	13,439	775	242	397	540	235	–11	166	250	–8
Divested companies	1			–	–385	–385	–	–	–	–	–	–385
Changed method of
calculation	1			–28	–	–	–28	–	–	–	–	–
TOTAL NUMBER OF
CUSTOMERS
AND NET CHANGE		14,341	13,439	747	–143	12	512	235	–11	166	250	–393

Net sales

SEK million	Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
Sweden
Mobile	1	5,511	5,352	11,113	2,744	2,767	3,006	2,755	2,726	2,626
Fixed broadband	1	364	365	728	176	188	187	176	185	180
Fixed telephony		285	349	660	139	146	153	158	168	181
Other operations		72	69	140	42	30	35	36	34	35
		6,232	6,135	12,641	3,101	3,131	3,381	3,125	3,113	3,022
Netherlands
Mobile		1,145	893	1,957	592	553	567	497	458	435
Fixed broadband		1,193	1,243	2,496	578	615	626	627	617	626
Fixed telephony		176	220	421	84	92	97	104	103	117
Other operations		279	283	567	137	142	143	141	141	142
		2,793	2,639	5,441	1,391	1,402	1,433	1,369	1,319	1,320
Kazakhstan
Mobile		874	603	1,334	475	399	382	349	309	294
		874	603	1,334	475	399	382	349	309	294
Croatia
Mobile		636	628	1,390	333	303	372	390	329	299
		636	628	1,390	333	303	372	390	329	299
Lithuania
Mobile	1	717	638	1,375	381	336	358	379	332	306
		717	638	1,375	381	336	358	379	332	306
Latvia
Mobile		450	441	916	232	218	238	237	226	215
		450	441	916	232	218	238	237	226	215
Estonia
Mobile		294	288	582	152	142	142	152	148	140
Fixed telephony		3	4	7	2	1	2	1	2	2
Other operations		39	23	45	11	28	10	12	11	12
		336	315	634	165	171	154	165	161	154
Austria
Fixed broadband		387	388	783	192	195	199	196	195	193
Fixed telephony		75	83	165	36	39	41	41	41	42
Other operations		135	119	261	69	66	71	71	63	56
		597	590	1,209	297	300	311	308	299	291
Germany
Mobile		226	212	440	112	114	116	112	108	104
Fixed broadband		73	84	164	34	39	39	41	41	43
Fixed telephony		134	159	312	63	71	74	79	77	82
		433	455	916	209	224	229	232	226	229
Other
Other operations		76	66	135	40	36	33	36	38	28
		76	66	135	40	36	33	36	38	28
TOTAL
Mobile		9,853	9,055	19,107	5,021	4,832	5,181	4,871	4,636	4,419
Fixed broadband		2,017	2,080	4,171	980	1,037	1,051	1,040	1,038	1,042
Fixed telephony		673	815	1,565	324	349	367	383	391	424
Other operations		601	560	1,148	299	302	292	296	287	273
		13,144	12,510	25,991	6,624	6,520	6,891	6,590	6,352	6,158
Internal sales, elimination		–22	–15	–36	–13	–9	–15	–6	–9	–6
Sweden, mobile		–1	–3	–12	–	–1	–8	–1	–2	–1
Lithuania, mobile		–11	–4	–11	–8	–3	–3	–4	–2	–2
Latvia, mobile		–4	–5	–9	–2	–2	–2	–2	–3	–2
Estonia, mobile		–2	–	–	–1	–1	–	–	–	–
Netherlands, other operations		–1	–1	–2	–1	–	–1	–	–1	–
Other, other operations		–3	–2	–2	–1	–2	–1	1	–1	–1
TOTAL		13,122	12,495	25,955	6,611	6,511	6,876	6,584	6,343	6,152

Mobile external net sales split

SEK million	Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
Sweden, mobile
End-user service revenue		3,638	3,531	7,252	1,829	1,809	1,856	1,865	1,815	1,716
Operator revenue	1	465	508	955	254	211	225	222	224	284
Service revenue		4,103	4,039	8,207	2,083	2,020	2,081	2,087	2,039	2,000
Equipment revenue	1	1,084	994	2,258	500	584	759	505	527	467
Other revenue		323 5,510	316 5,349	636 11,101	161 2,744	162 2,766	158 2,998	162 2,754	158 2,724	158 2,625
Netherlands, mobile
End-user service revenue		637	581	1,203	332	305	301	321	308	273
Operator revenue		83	73	149	43	40	38	38	39	34
Service revenue		720	654	1,352	375	345	339	359	347	307
Equipment revenue		425	239	605	217	208	228	138	111	128
		1,145	893	1,957	592	553	567	497	458	435
Kazakhstan, mobile
End-user service revenue		686	441	978	371	315	280	257	225	216
Operator revenue		179	152	338	99	80	98	88	80	72
Service revenue		865	593	1,316	470	395	378	345	305	288
Equipment revenue		9	10	18	5	4	4	4	4	6
		874	603	1,334	475	399	382	349	309	294
Croatia, mobile
End-user service revenue		407	378	803	210	197	205	220	196	182
Operator revenue		98	120	274	55	43	66	88	66	54
Service revenue		505	498	1,077	265	240	271	308	262	236
Equipment revenue		131	130	313	68	63	101	82	67	63
		636	628	1,390	333	303	372	390	329	299
Lithuania, mobile
End-user service revenue	1	432	409	847	222	210	207	231	213	196
Operator revenue		97	84	183	51	46	50	49	44	40
Service revenue		529	493	1,030	273	256	257	280	257	236
Equipment revenue		177	141	334	100	77	98	95	73	68
		706	634	1,364	373	333	355	375	330	304
Latvia, mobile
End-user service revenue		282	262	551	145	137	144	145	134	128
Operator revenue		92	111	203	46	46	46	46	55	56
Service revenue		374	373	754	191	183	190	191	189	184
Equipment revenue		72	63	153	39	33	46	44	34	29
		446	436	907	230	216	236	235	223	213
Estonia, mobile
End-user service revenue		200	188	382	103	97	96	98	97	91
Operator revenue		35	32	64	18	17	13	19	17	15
Service revenue		235	220	446	121	114	109	117	114	106
Equipment revenue		57	68	136	30	27	33	35	34	34
		292	288	582	151	141	142	152	148	140
Germany, mobile
End-user service revenue		226	208	439	112	114	116	115	106	102
Equipment revenue		–	4	1	–	–	–	–3	2	2
		226	212	440	112	114	116	112	108	104
TOTAL, MOBILE
End-user service revenue		6,508	5,998	12,455	3,324	3,184	3,205	3,252	3,094	2,904
Operator revenue		1,049	1,080	2,166	566	483	536	550	525	555
Service revenue		7,557	7,078	14,621	3,890	3,667	3,741	3,802	3,619	3,459
Equipment revenue		1,955	1,649	3,818	959	996	1,269	900	852	797
Other revenue		323	316	636	161	162	158	162	158	158
TOTAL, MOBILE		9,835	9,043	19,075	5,010	4,825	5,168	4,864	4,629	4,414

EBITDA

Sweden Mobile 1–2 1,736 1,522 3,224 843 893 792 910 777 745 Fixed broadband 1–2 51 35 85 18 33 16 34 25 10 Fixed telephony 2 76 100 195 35 41 44 51 57 43 Other operations 21 50 108 12 9 28 30 23 27 1,884 1,707 3,612 908 976 880 1,025 882 825 Netherlands Mobile –177 –59 –182 –71 –106 –78 –45 –23 –36 Fixed broadband 301 361 693 140 161 169 163 169 192 Fixed telephony 2 31 93 142 13 18 20 29 63 30 Other operations 133 129 250 65 68 62 59 58 71 288 524 903 147 141 173 206 267 257 Kazakhstan Mobile 9 4 43 9 – 17 22 3 1 9 4 43 9 – 17 22 3 1 Croatia Mobile 55 58 169 34 21 39 72 33 25 55 58 169 34 21 39 72 33 25 Lithuania Mobile 1 257 235 506 132 125 128 143 127 108 257 235 506 132 125 128 143 127 108 Latvia Mobile 138 129 294 70 68 82 83 67 62 138 129 294 70 68 82 83 67 62 Estonia Mobile 2 59 65 149 30 29 49 35 32 33 Fixed telephony 2 1 4 1 1 1 2 – 1 Other operations 13 11 20 5 8 5 4 6 5 74 77 173 36 38 55 41 38 39 Austria Mobile –10 – –2 –7 –3 –2 – – – Fixed broadband 50 52 119 24 26 33 34 28 24 Fixed telephony 42 45 95 20 22 26 24 24 21 Other operations 11 10 19 6 5 5 4 6 4 93 107 231 43 50 62 62 58 49 Germany Mobile –14 –14 –27 –9 –5 –10 –3 –7 –7 Fixed broadband 10 10 22 5 5 6 6 3 7 Fixed telephony 62 69 136 30 32 35 32 35 34 58 65 131 26 32 31 35 31 34 Other Other operations –35 –74 –136 –12 –23 –55 –7 –36 –38 –35 –74 –136 –12 –23 –55 –7 –36 –38 TOTAL Mobile 2,053 1,940 4,174 1,031 1,022 1,017 1,217 1,009 931 Fixed broadband 412 458 919 187 225 224 237 225 233 Fixed telephony 213 308 572 99 114 126 138 179 129 Other operations 143 126 261 76 67 45 90 57 69 TOTAL 2,821 2,832 5,926 1,393 1,428 1,412 1,682 1,470 1,362	SEK million	Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1

EBIT

Sweden Mobile 1–2 1,244 995 2,139 597 647 515 629 513 482 Fixed broadband 1–2 4 –15 –13 –7 11 –8 10 –1 –14 Fixed telephony 2 66 91 178 31 35 40 47 51 40 Other operations 8 29 67 4 4 18 20 12 17 1,322 1,100 2,371 625 697 565 706 575 525 Netherlands Mobile –292 –82 –244 –137 –155 –109 –53 –37 –45 Fixed broadband 42 100 178 12 30 46 32 34 66 Fixed telephony 2 20 86 126 7 13 16 24 60 26 Other operations 100 93 177 48 52 45 39 40 53 –130 197 237 –70 –60 –2 42 97 100 Kazakhstan Mobile –150 –96 –178 –61 –89 –53 –29 –46 –50 –150 –96 –178 –61 –89 –53 –29 –46 –50 Croatia Mobile –17 20 87 –10 –7 16 51 14 6 –17 20 87 –10 –7 16 51 14 6 Lithuania Mobile 1 216 198 430 110 106 112 120 108 90 216 198 430 110 106 112 120 108 90 Latvia Mobile 80 82 187 37 43 54 51 45 37 80 82 187 37 43 54 51 45 37 Estonia Mobile 2 9 10 47 8 1 24 13 4 6 Fixed telephony 2 1 3 1 1 1 1 1 Other operations 5 4 5 1 4 – 1 2 16 15 55 10 6 25 15 7 Austria Mobile –10 – –2 –7 –3 –2 – – Fixed broadband 2 13 37 –2 4 11 13 8 Fixed telephony 33 29 61 17 16 16 16 17 12 Other operations 3 –1 –2 1 2 – –1 –1 28 41 94 9 19 25 28 24 Germany	SEK million Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
										–
										2
										8
										–
										5
										–
										17
Mobile –21 –34 –61 –11 –10 –19 –8 –21										–13
Fixed broadband 8 6 16 4 4 6 4 1										5
Fixed telephony 60 58 123 28 32 33 32 25										33
47 30 78 21 26 20 28 5										25
Other
Other operations –32 –79 –145 –7 –25 –58 –8 –39										–40
–32 –79 –145 –7 –25 –58 –8 –39										–40
TOTAL
Mobile 1,059 1,093 2,405 526 533 538 774 580										513
Fixed broadband 56 104 218 7 49 55 59 42										62
Fixed telephony 181 265 491 84 97 106 120 154										111
Other operations 84 46 102 47 37 5 51 14										32
1,380 1,508 3,216 664 716 704 1,004 790										718
One-off items 2 –85 243 274 –71 –14 31 – 1										242
TOTAL 1,295 1,751 3,490 593 702 735 1,004 791										960

CAPEX

SEK million Note	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
Sweden
Mobile	344	218	553	215	129	220	115	133	85
Fixed broadband	29	26	46	20	9	8	12	13	13
Fixed telephony	5	5	8	3	2	2	1	3	2
Other operations	6	6	15	4	2	3	6	3	3
	384	255	622	242	142	233	134	152	103
Netherlands
Mobile	563	409	1,042	327	236	313	320	272	137
Fixed broadband	263	201	426	124	139	118	107	90	111
Fixed telephony	8	4	15	4	4	7	4	2	2
Other operations	44	17	44	22	22	13	14	8	9
	878	631	1,527	477	401	451	445	372	259
Kazakhstan
Mobile	255	151	319	136	119	78	90	85	66
	255	151	319	136	119	78	90	85	66
Croatia
Mobile	105	33	116	81	24	70	13	24	9
	105	33	116	81	24	70	13	24	9
Lithuania
Mobile	64	46	107	26	38	27	34	26	20
	64	46	107	26	38	27	34	26	20
Latvia
Mobile	42	38	82	19	23	34	10	27	11
	42	38	82	19	23	34	10	27	11
Estonia
Mobile 7	41	96	133	15	26	11	26	15	81
Other operations	5	4	5	3	2	–	1	4	–
Austria	46	100	138	18	28	11	27	19	81
Mobile	22	–	–	11	11	–	–	–	–
Fixed broadband	29	12	30	12	17	12	6	5	7
Fixed telephony	6	10	23	–	6	7	6	4	6
Other operations	5	4	9	–	5	4	1	2	2
	62	26	62	23	39	23	13	11	15
Germany
Mobile	2	10	13	–	2	1	2	4	6
Fixed broadband	1	–	2	–	1	–	2	–	–
	3	10	15	–	3	1	4	4	6
Other
Other operations	233	269	462	112	121	102	91	130	139
	233	269	462	112	121	102	91	130	139
TOTAL
Mobile	1,438	1,001	2,365	830	608	754	610	586	415
Fixed broadband	322	239	504	156	166	138	127	108	131
Fixed telephony	19	19	46	7	12	16	11	9	10
Other operations	293	300	535	141	152	122	113	147	153
TOTAL 7	2,072	1,559	3,450	1,134	938	1,030	861	850	709

Five-year summary

SEK million	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014	2013	2012	2011
CONTINUING OPERATIONS
Net sales	13,122	12,495	25,955	25,757	25,993	26,219
Numbers of customers (by thousands)	14,341	13,439	13,594	13,582	14,229	12,392
EBITDA	2,821	2,832	5,926	5,891	6,040	6,755
EBIT	1,295	1,751	3,490	2,548	2,190	3,613
EBT	1,138	1,847	3,500	1,997	1,668	3,074
Net profit	826	1,406	2,626	968	1,158	2,169
Key ratios
EBITDA margin, %	21.5	22.7	22.8	22.9	23.2	25.8
EBIT margin, %	9.9	14.0	13.4	9.9	8.4	13.8
Value per share (SEK)
Net profit	1.86	3.16	5.89	2.17	2.61	4.88
Net profit after dilution	1.84	3.14	5.86	2.15	2.59	4.85
TOTAL
Equity	18,029	21,064	22,682	21,591	20,429	21,452
Total assets	36,408	38,564	39,848	39,855	49,189	46,864
Cash flow from operating activities	1,633	1,813	4,578	5,813	8,679	9,690
Cash flow after CAPEX	–364	–281	432	572	4,070	4,118
Available liquidity	8,139	8,661	8,224	9,306	12,933	9,986
Net debt	11,178	9,268	9,061	8,007	15,745	13,518
Investments in intangible and tangible assets, CAPEX	2,085	1,974	3,976	5,534	5,294	6,095
Investments/divestments in shares and other financial assets	–4,887	–727	–439	–17,235	215	1,563
Key ratios
Equity/assets ratio, %	50	55	57	54	42	46
Debt/equity ratio, multiple	0.62	0.44	0.40	0.37	0.77	0.63
Return on equity, %	16.5	11.1	10.0	69.5	15.6	18.9
ROCE, return on capital employed, %	14.3	10.2	10.1	48.0	15.4	20.5
Average interest rate, %	4.9	5.3	5.0	5.2	6.7	6.2
Value per share (SEK)
Net profit	5.71	2.65	4.96	32.77	7.34	10.69
Net profit after dilution	5.67	2.63	4.93	32.55	7.30	10.63
Equity	40.44	47.28	50.90	48.49	45.95	48.33
Cash flow from operating activities	3.66	4.07	10.27	13.06	19.53	21.83
Dividend, ordinary	–	–	4.85	4.40	7.10	6.50
Extraordinary dividend	–	–	10.00	–	–	6.50
Redemption	–	–	–	28.00	–	–
Market price at closing day	96.40	78.70	94.95	72.85	117.10	133.90

Parent company

Income statement

	2015	2014	2014
SEK million	Jan 1–Jun 30	Jan 1–Jun 30	Full year
Net sales	26	35	55
Administrative expenses	–60	–70	–122
Operating loss, EBIT	–34	–35	–67
Dividend from group company	–	967	967
Exchange rate difference on financial items	12	–70	–35
Net interest expenses and other financial items	–134	–120	–268
Profit/loss after financial items, EBT	–156	742	597
Appropriations, group contribution	–	–	372
Tax on profit/loss	39	50	–
NET PROFIT/LOSS	–117	792	969

Balance sheet

SEK million	Note	Jun 30, 2015	Dec 31, 2014
ASSETS
NON-CURRENT ASSETS
Tangible assets		2	2
Financial assets		13,612	13,617
NON-CURRENT ASSETS		13,614	13,619
CURRENT ASSETS
Current receivables		5,995	10,407
Cash and cash equivalents		107	3
CURRENT ASSETS		6,102	10,410
ASSETS		19,716	24,029
EQUITY AND LIABILITIES
EQUITY
Restricted equity	9	5,546	5,546
Unrestricted equity	9	5,373	12,077
EQUITY		10,919	17,623
NON-CURRENT LIABILITIES
Interest-bearing liabilities	3	4,284	4,305
NON-CURRENT LIABILITIES		4,284	4,305
CURRENT LIABILITIES
Interest-bearing liabilities	3	4,493	2,018
Non-interest-bearing liabilities		20	83
CURRENT LIABILITIES		4,513	2,101
EQUITY AND LIABILITIES		19,716	24,029

ACCOUNTING PRINCIPLES AND DEFINITIONS

The interim report for the Group has been prepared in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the parent company in accordance with the Swedish Annual Accounts Act and RFR 2 Reporting for legal entities and other statements issued by the Swedish Financial Reporting Board.

The amended IFRS standards and new IFRIC interpretations (IAS 19 and IFRIC 21), which became effective January 1, 2015, have had no material effect on the consolidated financial statements.

In all other respects, Tele2 has presented this interim report in accordance with the accounting principles and calculation methods used in the 2014 Annual Report. The description of these principles and definitions is found in the 2014 Annual Report.

NOTE 1NET SALES AND CUSTOMERS Net sales

Equipment revenue in Sweden was positively impacted by sale to other than end-users as presented below.

SEK million	2015	2014	2014	2015	2014
	Jan 1–Jun 30	Jan 1–Jun 30	Full year	Q2	Q2
Sweden	114	155	445	25	125

In Q3 2014, the net sales in Lithuania was positively impacted by SEK 15 million as a result of expired prepaid balances.

In Q1 2014, the net sales in Sweden was positively impacted by SEK 73 million as a result of decisions by the Swedish Post and Telecom Authority (PTS) regarding termination rates for previous periods, of which mobile amounted to SEK 78 million and fixed broadband to SEK –5 million. The effect on EBITDA is stated in Note 2.

Customers

In Q2 2015, customer stock in Sweden decreased with –28,000 customers in connection with a change-over to a new IT system and changed principle for twin cards.

In Q1 2014, the fixed broadband customer stock in Sweden decreased with –385,000 customers as a result of the sale of the Swedish residential cable and fiber operations.

NOTE 2OPERATING EXPENSES EBITDA

In Q4 2014, the EBITDA for mobile in Estonia was positively impacted by SEK 20 million as a result of the sales of a mobile license in the 2600 MHz frequency band.

In Q2 2014, the EBITDA for fixed telephony in Netherlands was positively impacted by SEK 48 million as a result of settled disputes regarding wholesale line rental.

In Q1 2014, the EBITDA in Sweden was positively impacted by SEK 8 million as a result of decisions by PTS, as stated in Note 1, regarding termination rates for previous periods, of which mobile amounted to SEK 35 million, fixed broadband to SEK –15 million and fixed telephony to SEK –12 million.

Bridge from EBITDA to EBIT

	2015	2014	2014	2015	2014
SEK million	Jan 1–Jun 30	Jan 1–Jun 30	Full year	Q2	Q2
EBITDA	2,821	2,832	5,926	1,393	1,470
Sale of operations	–	261	261	–	1
Challenger program	–85	–	–10	–71	–
Other one-off items	–	–18	23	–	–
Total one-off items	–85	243	274	–71	1
Depreciation/amortization and other impairment	–1,436	–1,318	–2,696	–724	–677
Result from shares in joint ventures and associated
companies	–5	–6	–14	–5	–3
EBIT	1,295	1,751	3,490	593	791

One-off items in segment reporting Sale of operations

The sale of the Swedish residential cable and fiber operations was completed in Q1 2014 and the capital gain amounted to SEK 258 million.

Challenger program: restructuring costs

In 2014, Tele2 announced its Challenger program, which is a program to step change productivity in the Tele2 Group. The program will strengthen the organization further and enable it to continue to challenge the industry. The costs associated with the program amounted in Q2 2015 to SEK –71 million and refer mainly to employee redundancy costs and external consultancy project costs.

The costs associated with the program are reported in the income statement on the following items.

Total Challenger program costs	–85	–	–10	–71	–
Administrative expenses	–62	–	–9	–52	–
Selling expenses	–15	–	–	–15	–
Cost of service provided	–8	–	–1	–4	–
SEK million	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2014 Q2

Other one-off items

In Q4 2014, Sweden has been positively affected by SEK 41 million, due to the counterparty withdrew its claim concerning the ruling from the Administrative Court of Appeal in June 2010 regarding price on whole and split copper cable.

In Q1 2014, other operating expenses was negatively affected by SEK 18 million, related to the devaluation in Kazakhstan. The total foreign exchange rate effect of assets and liabilities in Kazakhstan was reported in other comprehensive income and amounted in Q1 2014 to SEK –117 million. Please refer to Note 4 regarding effects on change in fair value of put option Kazakhstan.

NOTE 3FINANCIAL ASSETS AND LIABILITIES Financing

		Interest-bearing liabilities
		Jun 30, 2015		Dec 31, 2014
SEK million		Current Non-current		Current Non-current
Bonds NOK, Sweden	–	1,0411)	315	1,049
Bonds SEK, Sweden	500	2,547	1,250	2,547
Commercial papers, Sweden	3,773	–	215	–
Financial institutions	566	654	715	667
	4,839	4,242	2,495	4,263
Put option, Kazakhstan (Note 4)	887	–	887	–
Other liabilities	426	1,139	455	1,090
	6,152	5,381	3,837	5,353
Total interest-bearing liabilities		11,533		9,190

1) The bonds in NOK are hedged for currency exposure via currency swaps.

Classification and fair values

Tele2's financial assets consist mainly of receivables from end customers, other operators and resellers as well as cash and cash equivalents. Tele2's financial liabilities consist mainly of loans, bonds and accounts payables. Classification of financial assets and liabilities including their fair value is presented below. During the first six months 2015, compared to year-end 2014, no transfers were made between the different levels in the fair value hierarchy and no significant changes were made to valuation techniques, inputs used or assumptions.

The valuation of the put option for Tele2 Kazakhstan held by the non-controlling shareholder amounting to SEK 887 (887) million was based on the net present value of future cash flows per Tele2's business plan for Tele2 Kazakhstan. The valuation is sensitive to changes in projected revenue growth, profit margins, investment levels and discount rates. The present valuation also considers the risk for a devaluation of the Kazakh tenge.

The Group has derivative contracts which are covered by master netting agreements. That means a right exists to set off assets and liabilities with the same party, which is not reflected in the accounting where gross accounting is applied. The value of these derivatives at June 30, 2015 amounted on the asset side to SEK 10 (47) million and on the liabilities side to SEK 229 (294) million of which SEK 4 (28) million can be netted against the asset side.

			Jun 30 2015
	Assets and liabilities at fair value through	Loans and	Derivative instruments designated for hedge	Financial liabilities at amor	Total reported
SEK million	profit/loss	receivables	accounting	tized cost		value Fair value
Other financial assets	8	448	–	–	456	456
Accounts receivables	–	2,221	–	–	2,221	2,221
Other current receivables	–	530	10	–	540	540
Current investments	–	36	–	–	36	36
Cash and cash equivalents	–	309	–	–	309	309
Total financial assets	8	3,544	10	–	3,562	3,562
Liabilities to financial institutions and similar liabilities	–	–	–	9,081	9,081	9,352
Other interest-bearing liabilities	887	–	229	485	1,601	1,530
Accounts payable	–	–	–	2,401	2,401	2,401
Other current liabilities	–	–	–	440	440	440
Total financial liabilities	887	–	229	12,407	13,523	13,723

	Dec 31, 2014
	Assets and		Derivative
	liabilities at		instruments	Financial
	fair value		designated	liabilities	Total
	through	Loans and	for hedge	at amor	reported
SEK million	profit/loss	receivables	accounting	tized cost		value Fair value
Other financial assets	8	465	–	–	473	473
Accounts receivables	–	2,480	–	–	2,480	2,480
Other current receivables	–	375	47	–	422	422
Current investments	–	38	–	–	38	38
Cash and cash equivalents	–	151	–	–	151	151
Assets classified as held for sale	1	337	–	–	338	338
Total financial assets	9	3,846	47	–	3,902	3,902
Liabilities to financial institutions and similar
liabilities	–	–	–	6,758	6,758	7,085
Other interest-bearing liabilities	887	–	294	444	1,625	1,553
Accounts payable	–	–	–	2,848	2,848	2,848
Other current liabilities	–	–	–	467	467	467
Liabilities directly associated with assets
classified as held for sale	–	–	–	249	249	249
Total financial liabilities	887	–	294	10,766		11,947 12,202

NOTE 4OTHER FINANCIAL ITEMS

In Q1 2015, the cash flow was negatively affected by SEK 130 million related to currency derivatives designated for hedge accounting.

Other financial items in the income statement consist of the following items.

SEK million	2015 Jan 1– Jun 30	2014 Jan 1– Jun 30	2014 Full year	2015 Q2	2014 Q2
Exchange rate differences	3	–23	–27	1	–1
Change in fair value, put option Kazakhstan	30	295	427	–43	330
EUR net investment hedge, interest component	–	6	9	–1	3
NOK net investment hedge, interest component	–1	5	–11	–	3
Other financial expenses	–3	–2	–10	–1	–1
Total other financial items	29	281	388	–44	334

In Q2 2014, financial items in the income statement was positively affected by SEK 363 million, due to a revaluation of the put option of the business in Kazakhstan. The change was related to the devaluation of the Kazakhstan currency as well as increased financing provided by Tele2.

NOTE 5TAXES

During the first six months 2015, the effective tax rate was mainly affected by below stated items, indicating an underlying effective tax rate of 21 (23) percent. The decrease on the previous year's figure was mainly due to the fact that countries with a higher tax rate, such as Netherlands, having relatively lower impact on the result than countries with lower tax rate, such as Sweden.

	2015		2014		2014
SEK million	Jan 1–Jun 30		Jan 1–Jun 30		Full year
Profit before tax	1,138		1,847		3,500
Income tax	–312	27.4%	–441	23.9%	–874	25.0%
Tax effect of:
Sale of operations	–	–	–95	5.2%	–96	2.7%
Expired tax loss carry-forwards	–	–	–	–	36	–1.0%
Result from JV and associated
companies	–1	0.1%	1	–	3	–0.1%
Not valued tax loss-carry forwards	58	–5.1%	–8	0.4%	148	–4.2%
Non-deductible expenses	39	–3.4%	90	–4.9%	23	–0.6%
Adjustment due to changed tax rate	–	–	–	–	–5	0.1%
Adjustment of taxes from previous
years	–27	2.4%	29	–1.6%	–33	0.9%
Adjusted tax expense and
effective tax rate	–243	21.4%	–424	23.0%	–798	22.8%

NOTE 6RELATED PARTIES

Tele2's share of cash and cash equivalents in joint operations, for which Tele2 has limited disposal rights was included in the Group's cash and cash equivalents and amounted at each closing date to the sums stated below.

	2015	2015	2014	2014	2014	2014
SEK million	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31
Cash and cash equivalents
in joint operations	11	33	4	133	58	42

In 2015, additional sites were transferred from Tele2 and Telenor to their joint operation Net4Mobility. The transfers did not have any material effect on Tele2's financial statements. Apart from transactions with joint operations, no other significant related party transactions were carried out during 2015. Related parties are presented in Note 37 of the Annual Report 2014.

NOTE 7CAPEX

In Q1 2014, Tele2 Estonia acquired two mobile licenses in the 800 MHz and 2100 MHz frequency bands for SEK 54 million and in Q4 2014, Tele2 Estonia sold a mobile license in the 2600 MHz frequency band for SEK 24 million.

Bridge from CAPEX to paid CAPEX

	2015	2014
	Jan 1-	Jan 1-	2014	2015	2014
SEK million	Jun 30	Jun 30	Full year	Q2	Q2
CAPEX, continued operations	–2,072	–1,559	–3,450	–1,134	–850
CAPEX, discontinued operations	–13	–415	–526	–	–161
CAPEX, total operation	–2,085	–1,974	–3,976	–1,134	–1,011
This year's unpaid CAPEX and paid CAPEX from previous year	81	–143	–226	119	–32
Received payment of sold non-current assets	7	23	56	3	11
Paid CAPEX	–1,997	–2,094	–4,146	–1,012	–1,032

NOTE 8CONTINGENT LIABILITIES

SEK million	Jun 30, 2015	Dec 31, 2014
Asset dismantling obligation	134	137
Dispute KPN, Netherlands	80	83
Tax dispute, Russia	100	90
Total contingent liabilities	314	310

Tele2 has obligations to dismantle assets and restore premises within fixed telephony and fixed broadband in the Netherlands as well as in Austria. Tele2 assesses such dismantling as unlikely and consequently only reported this obligation as contingent liabilities.

Tele2 Netherlands is, in the ordinary course of its business, involved in several regulatory complaints and disputes pending with the appropriate governmental authorities. In a specific case regarding the rental fees of copper lines, which Tele2 Netherlands uses as part of its fixed operations, the regulator (ACM) has determined that the rental fees are to be adjusted with retroactive effect from 2009. This has resulted in a claim from KPN amounting to EUR 8.7 million (SEK 80 million) and is subject to pending appeals and court cases. Our assessment is that it is unlikely that Tele2 will have to pay these fees and consequently no provision has been made. We expect the Administrative Court to give its ruling in Q4 2015 or later.

The tax authorities in Russia are currently performing tax audits on several of Tele2's former subsidiaries in Russia. Per the sales agreement with the VTB-Group Tele2 is liable for any additional taxes payable as result of the tax audits. On June 30, 2015 Tele2 has won tax disputes of SEK 236 million, of which the Russian tax authorities has appealed SEK 122 million. In addition, Tele2 has lost tax disputes of SEK –12 million, of which Tele2 has appealed SEK –8 million. A decrease from last quarter as Tele2 has won several tax disputes in Russian courts. In Q1 2015, Tele2 made an additional provision for one tax dispute of SEK 6 million. On June 30, 2015 total provisions for Russian tax disputes amounted to SEK 11 million. Even though it cannot be ruled out that Tele2 may be liable to certain costs, Tele2 assesses that it is not likely that any additional taxes need to be paid and consequently no additional provisions have been made.

Additional contractual commitments are stated in Note 30 in the Annual Report 2014.

NOTE 9EQUITY AND NUMBER OF SHARES

	Jun 30, 2015	Dec 31, 2014
Number of shares
Outstanding	446,188,367	445,722,973
In own custody	2,594,972	3,060,366
Weighted average	445,877,615	445,594,010
After dilution	449,521,002	448,799,576
Weighted average, after dilution	448,563,027	448,606,438

As a result of share rights in the LTI 2011 being exercised during Q1 and Q2 2015, Tele2 delivered 26,032 and 8,307 B-shares respectively, in own custody to the participants in the Plan. As a result of share rights in the LTI 2012 being exercised during Q2 2015, Tele2 delivered an additional 431,055 B-shares in own custody to the participants in the Plan.

In Q1 2015, 1,700,000 class C shares in own custody were reclassified into class B shares in own custody.

Dividend

In Q2 2015, Tele2 paid to its shareholders a dividend for 2014 of SEK 4.85 (4.40) per share and an extraordinary dividend of SEK 10.00 per share. This corresponded to a total of SEK 6,626 (1,960) million.

Long-term incentive program (LTI)

Additional information related to LTI programs is presented in Note 34 of the Annual Report 2014.

LTI 2015

Total outstanding share rights	1,239,935
Allocated June 8, 2015	1,239,935
Number of share rights	2015 Jan 1–Jun 30

During the Annual General Meeting held on May 19, 2015, the shareholders approved a retention and performance-based incentive program (the Plan) for senior executives and other key employees in the Tele2 Group. The Plan has the same structure as last year's incentive program.

The objective of the Plan is to create conditions for retaining competent employees in the Tele2 Group. The Plan has been designed based on the view that it is desirable that senior executives and other key employees within the Group are shareholders in Tele2 AB. By offering an allotment of retention rights and performance rights which are based on profits and other retention and performance-based conditions, the participants are rewarded for increasing shareholder value. Furthermore, the Plan rewards employees' loyalty and long-term growth in the Group. In that context, the Board of Directors is of the opinion that the Plan will have a positive effect on the future development of the Tele2 Group and thus be beneficial to both the company and its shareholders.

The incentive program included a total of 197 senior executives and other key employees within the Tele2 Group. In general, the participants in the Plan are required to own shares in Tele2. Thereafter, the participants were granted retention rights and performance rights free of charge. In the event delivery of shares under the plan cannot be achieved at reasonable costs, with reasonable administrative efforts or due to market conditions, participants may instead be offered a cash-based settlement. Outstanding share rights that will be settled in cash are remeasured to fair value in each period and the obligation is reported as a liability.

Subject to the fulfilment of certain retention and performance-based conditions during the period April 1, 2015 - March 31, 2018 (the measurement period), the participant maintaining employment within the Tele2 Group at the release of the interim report January - March 2018 and subject to the participant maintaining the invested shares (where applicable) during the vesting period, each right entitles the employee to receive one Class B share in the company. Dividends paid on the underlying share will increase the number of shares that each retention and performance right entitles to in order to treat the shareholders and the participants equally.

The rights are divided into Series A (retention rights) and Series B and C (performance rights). The number of shares the participant will receive depends on which category the participant belongs to and on the fulfilment of the following defined conditions:

• Series A Tele2's total shareholder return on the Tele2 shares (TSR) during the measure period exceeding 0 percent as entry level.
• Series B Tele2's average normalized return of capital employed (ROCE) during the measurement period being at least 9 percent as entry level and at least 12 percent as the stretch target.
• Series C Tele2's total shareholder return on the Tele2 shares (TSR) during the measure period being equal to the average TSR for a peer Group including Elisa, Iliad, Millicom International Cellular, TalkTalk Telecom Group, Telenor, TeliaSonera and TDC as entry level, and exceeding the average TSR for the peer Group with 10 percentage points as the stretch target.

The determined levels of the conditions include an entry level and a stretch target with a linear interpolation applied between those levels as regards the number of rights that vests. The entry level constitutes the minimum level which must be reached in order to enable the vesting of the rights in that series. If the entry level is reached, the number of rights that vests is 100 percent for Series A and 20 percent for Series B and C. If the entry level is not reached, all rights to retention and performance shares (as applicable) in that series lapse. If a stretch target is met, all retention rights or performance rights (as applicable) vest in that series.

The Plan comprised a total number of 271,107 shares. In total this resulted in an allotment of 1,239,935 share rights, of which 271,107 Series A, 484,414 Series B and 484,414 Series C. The participants were divided into different categories and were granted the following number of share rights for the different categories:

				Share right
	No of partici	Maximum no of		per Series			Total
At grant date	pants	shares	A	B	C	Tot	allotment
CEO	1	8,500	1	3.5	3.5	8	68,000
Other senior executives and other key employees	9	4,500	1	3	3	7	283,500
Category 1	40	2,000	1	1.5	1.5	4	280,845
Category 2	52	1,500	1	1.5	1.5	4	278,722
Category 3	95	1,000	1	1.5	1.5	4	328,868
Total	197						1,239,935

Total costs before tax for outstanding rights in the incentive program are expensed over the three-year vesting period, and these costs are expected to amount to SEK 83 million, of which social security costs amount to SEK 28 million.

The participant's maximum profit per share right in the Plan is limited to SEK 329, four times the average closing share price of the Tele2 Class B shares during February 2015 with deduction for the dividend paid in May 2015.

The estimated average fair value of the granted rights was SEK 71 on the grant date, June 8, 2015. The calculation of the fair value was carried out by an external expert. The following variables were used:

	Series A	Series B	Series C
Expected annual turnover of personnel	7.0%	7.0%	7.0%
Weighted average share price	101.42	101.42	101.42
Expected life	2.87 years	2.87 years	2.87 years
Expected value reduction parameter market condition	75%	–	35%
Estimated fair value	76.10	101.40	35.50

To ensure the delivery of Class B shares under the Plan, the Annual General Meeting decided to authorise the Board of Directors to resolve on a directed issue of a maximum of 2,300,000 Class C shares and subsequently to repurchase the Class C shares. The Class C shares will then be held by the company during the vesting period, after which the appropriate number of Class C shares will be reclassified into Class B shares and delivered to the participants under the Plan. The Board of Directors has not yet used the mandate.

LTI 2014

Number of share rights	2015 Jan 1–Jun 30	Cumulative from start
Allocated June 2, 2014		1,180,268
Outstanding as of January 1, 2015	1,117,168
Allocated, compensation for dividend	109,288	109,288
Forfeited	–82,564	–145,664
Performance conditions not reached, Norway	–43,665	–43,665
Exercised, cash settled, Norway	–1,732	–1,732
Total outstanding share rights	1,098,495	1,098,495
of which will be settled in cash	13,305	13,305

LTI 2013

Number of share rights	2015 Jan 1–Jun 30	Cumulative from start
Allocated June 4, 2013		1,204,128
Outstanding as of January 1, 2015	1,029,026
Allocated, compensation for dividend	99,212	139,134
Forfeited	–77,984	–293,008
Performance conditions not reached, Norway	–41,260	–41,260
Exercised, cash settled, Norway	–14,789	–14,789
Total outstanding share rights	994,205	994,205
of which will be settled in cash	12,972	12,972

LTI 2012

	2015	Cumulative
Number of share rights	Jan 1–Jun 30	from start
Allocated June 15, 2012		1,132,186
Outstanding as of January 1, 2015	896,070
Allocated, compensation for dividend	–	274,177
Forfeited	–11,924	–358,557
Performance conditions not reached, Russia	–	–163,660
Performance conditions not reached, Norway	–18,188	–18,188
Performance conditions not reached, other	–416,701	–416,701
Exercised, cash settled, Norway	–16,439	–16,439
Exercised, cash settled, other	–3,175	–3,175
Exercised, equity settled, other	–429,643	–429,643
Total outstanding share rights	–	–

The exercise of the share rights in LTI 2012 was conditional upon the fulfilment of certain retention and performance based conditions, measured from April 1, 2012 until March 31, 2015. The outcome of these performance conditions was in accordance with below and the outstanding share rights has been exchanged for shares in Tele2 or cash during Q2 2015. Weighted average share price for share rights in LTI 2012 at date of exercise amounted to SEK 109.65 during 2015 and SEK 109.07 for all exercised LTI programs during the year.

Retention and performance based conditions	Minimum hurdle (20%)	Stretch target (100%)	Performance outcome	Allotment
Series A Total Shareholder Return Tele2 (TSR)		≥ 0%	26.0%	100%
Series B Average normalised Return on Capital Employed (ROCE)1)	19%/8%	23%/ 12.5%	18.2%/ 11.2%	51.3%
Series C Total Shareholder Return Tele2 (TSR) compared to a peer group	> 0%	≥ 10%	0.4%	23.2%

1) The targets are split into two parts; before and after the divestment of Tele2 Russia

LTI 2011

	2015	Cumulative
Number of share rights	Jan 1–Jun 30	from start
Allocated June 17, 2011		1,056,436
Outstanding as of January 1, 2015	34,339
Allocated, compensation for dividend	–	294,579
Forfeited	–	–351,296
Performance conditions not reached, Russia	–	–92,041
Performance conditions not reached, other	–	–602,796
Exercised, cash settled, Russia	–	–44,156
Exercised, cash settled, other	–	–1,014
Exercised, share settled	–34,339	–259,712
Total outstanding share rights	–	–

Weighted average share price for share rights at date of exercise amounted to SEK 101.77 during 2015.

NOTE 10 BUSINESS ACQUISITIONS AND DIVESTMENTS

Acquisitions and divestments of shares and participations affecting cash flow were as follows:

SEK million	2015 Jan 1–Jun 30	2015 Q2
Acquisitions
Capital contribution to joint ventures	–3	–
Total acquisition of shares and participations	–3	–
Divestments
Norway	4,897	–
Residential cable and fiber operations, Sweden	–4	–2
Transaction costs, Russia	–4	–3
Total sale of shares and participations	4,889	–5
TOTAL CASH FLOW EFFECT	4,886	–5

Divestments

4T Sverige (WyWallet), Sweden

On April 30, 2015 Tele2 announced, together with Telia, Telenor and Tre, the sale of its Swedish joint venture 4T Sverige AB to PayEx. The sales price for Tele2's 25 percent of ownership amounted to SEK 1 and the capital loss amounted to SEK –5 million. 4T Sverige AB offers payment services through WyWallet and in connection with the sale an agreement was made to continue to offer WyWallets services via the mobile operators' invoices. WyWallet has had no significant impact on Tele2's income statement during the periods presented.

Discontinued operations

On February 5, 2015 the Norwegian competition authorities announced that they have approved Tele2's divestment of its Norwegian operations to TeliaSonera announced in July 2014. The Norwegian operations were sold for SEK 5.1 billion and resulted in a capital gain in Q1 2015 of SEK 1.7 billion, including transaction costs and costs for central support system for the Norwegian operation. The capital gain include a positive effect of SEK 89 million related to exchange rate differences previously reported in other comprehensive income which have been recycled over the income statement but with no effect on total equity.

On April 4, 2013 Tele2 completed the divestment of the Russian operation.

The divested operations, including capital gain, has been reported separately under discontinued operations in the income statement, with a retrospective effect on previous periods.

Net assets at the time of divestment

Assets, liabilities and contingent liabilities included in the divested operations are stated below.

SEK million	Norway
Goodwill	497
Other intangible assets	318
Tangible assets	2,113
Financial assets	22
Deferred tax assets	315
Inventories	5
Current receivables	869
Current investments	–
Cash and cash equivalents	209
Exchange rate difference	–2
Non-current provisions	–108
Current provisions	–10
Current non-interest-bearing liabilities	–810
Divested net assets	3,418
Capital gain	1,651
Sales price, net sales costs	5,069
Sales costs etc, non-cash	37
Less: cash in divested operations	–209
TOTAL CASH FLOW EFFECT	4,897

The Norwegian and Russian operations reported as discontinued operations are stated below.

Income statement

SEK million	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
Net sales	311	1,980	4,009	2	309	970	1,059	1,024	956
Cost of services provided	–249	–1,551	–3,115	–2	–247	–731	–833	–797	–754
Gross profit	62	429	894	–	62	239	226	227	202
Selling expenses	–64	–486	–932	–	–64	–202	–244	–254	–232
Administrative expenses	–32	–161	–332	–	–32	–90	–81	–84	–77
Result from shares in joint ventures	–	–	–1	–	–	–1	–	–1	1
Sale of operations, profit	1,735	–	–17	1	1,734	–17	–	–	–
Other operating income	1	1	3	–	1	1	1	–	1
Other operating expenses	–	–1	–3	–	–	–2	–	–	–1
EBIT	1,702	–218	–388	1	1,701	–72	–98	–112	–106
Interest income/costs	1	2	4	–	1	1	1	1	1
EBT	1,703	–216	–384	1	1,702	–71	–97	–111	–105
Income tax	15	–11	–31	–	15	–14	–6	–6	–5
of which from the operation	–3	–11	–31	–	–3	–14	–6	–6	–5
of which from the capital gain	18	–	–	–	18	–	–	–	–
NET PROFIT/LOSS	1,718	–227	–415	1	1,717	–85	–103	–117	–110
Earnings per share (SEK)	3.85	–0.51	–0.93	–	3.85	–0.19	–0.23	–0.26	–0.25
Earnings per share, after dilution (SEK)	3.83	–0.51	–0.93	–	3.83	–0.19	–0.23	–0.26	–0.25

Cash flow statement

2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
1,702	–218	–388	1	1,701	–72	–98	–112	–106
–1,713	244	444	–1	–1,712	77	123	119	125
–	3	7	–	–	1	3	2	1
–11	29	63	–	–11	6	28	9	20
61	–78	–146	–	61	–1	–67	142	–220
50	–49	–83	–	50	5	–39	151	–200
–15	–500	–647	–	–15	–40	–107	–186	–314
35	–549	–730	–	35	–35	–146	–35	–514
4,893	–25	–32	–3	4,896	–1	–6	–21	–4
–	13	13	–	–	–	–	2	11
4,878	–512	–666	–3	4,881	–41	–113	–205	–307
4,928	–561	–749	–3	4,931	–36	–152	–54	–507

Additional information

		Numbers of customers				Net intake
	2015	2014	2014	2015	2015	2014	2014	2014	2014
Thousands Mobile	Jun 30 –	Jun 30 1,161	Dec 31 1,125	Q2 –	Q1 –19	Q4 –33	Q3 –3	Q2 28	Q1 14
Fixed telephony	–	57	51	–	–1	–3	–3	–3	–3
Numbers of customers and net intake	–	1,218	1,176	–	–20	–36	–6	25	11
Divested companies				–	–1,156	–	–	–	–
Numbers of customers and net change	–	1,218	1,176	–	–1,176	–36	–6	25	11
					Net sales
SEK million	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
Mobile	298	1,888	3,832	2	296	929	1,015	980	908
Fixed telephony	15	102	198	–	15	46	50	51	51
Other operations	–	–	–	–	–	–	–	–1	1
	313	1,990	4,030	2	311	975	1,065	1,030	960
Internal sales, elimination	–2	–10	–21	–	–2	–5	–6	–6	–4
Net sales	311	1,980	4,009	2	309	970	1,059	1,024	956
	2015	2014	2014	2015	EBITDA 2015	2014	2014	2014	2014
SEK million	Jan 1–Jun 30	Jan 1–Jun 30	Full year	Q2	Q1	Q4	Q3	Q2	Q1
Mobile	–12	13	36	–	–12	3	20	3	10
Fixed telephony	2	20	40	–	2	10	10	10	10
Other operations	–1	–7	–20	–	–1	–8	–5	–6	–1
EBITDA	–11	26	56	–	–11	5	25	7	19
	EBIT
	2015	2014	2014	2015	2015	2014	2014	2014	2014
SEK million	Jan 1–Jun 30	Jan 1–Jun 30	Full year	Q2	Q1	Q4	Q3	Q2	Q1
Mobile	–34	–235	–402	–	–34	–61	–106	–119	–116
Fixed telephony	1	17	32	–	1	7	8	8	9
Other operations	–	–	–1	–	–	–1	–	–1	1
	–33	–218	–371	–	–33	–55	–98	–112	–106
Sale of operations EBIT	1,735 1,702	– –218	–17 –388	1 1	1,734 1,701	–17 –72	– –98	– –112	– –106
	Specification of items between EBITDA and EBIT
SEK million	2015 Jan 1–Jun 30	2014 Jan 1–Jun 30	2014 Full year	2015 Q2	2015 Q1	2014 Q4	2014 Q3	2014 Q2	2014 Q1
EBITDA	–11	26	56	–	–11	5	25	7	19
Sale of operations	1,735	–	–17	1	1,734	–17	–	–	–
Depreciation/amortization and other impairment	–22	–244	–426	–	–22	–59	–123	–118	–126
Result from shares in joint ventures	–	–	–1	–	–	–1	–	–1	1
EBIT	1,702	–218	–388	1	1,701	–72	–98	–112	–106
	2015	2014	2014	2015	CAPEX 2015	2014	2014	2014	2014
SEK million	Jan 1–Jun 30	Jan 1–Jun 30	Full year	Q2	Q1	Q4	Q3	Q2	Q1
Mobile	13	405	513	–	13	21	87	156	249
Fixed telephony	–	10	13	–	–	–	3	5	5
CAPEX	13	415	526	–	13	21	90	161	254
					Additional cash flow information
	2015	2014	2014	2015	2015	2014	2014	2014	2014
SEK million	Jan 1–Jun 30	Jan 1–Jun 30	Full year	Q2	Q1	Q4	Q3	Q2	Q1
CAPEX	–13	–415	–526	–	–13	–21	–90	–161	–254
This year unpaid CAPEX and paid CAPEX from previous year	–2	–85	–121	–	–2	–19	–17	–25	–60
Paid CAPEX	–15	–500	–647	–	–15	–40	–107	–186	–314