Telenor ASA — M&A Activity 2014

Dec 3, 2014

Telenor and TeliaSonera to merge Danish operations

Telenor and TeliaSonera to merge Danish operations

On 3 December 2014 Telenor and TeliaSonera entered

into an agreement to merge their Danish operations

into a new joint venture in which the parties will

own 50 percent each. The new joint venture will

create a robust mobile operator which is able to

increase investments in networks to the benefit of

our customers.

The new company will have a combined mobile

subscriber base of around 3.5 million. With a

combined mobile subscriber market share of

approximately 40%, revenues of more than DKK 9

billion and a significant synergy potential, the

transaction creates a robust operator.

The need for consolidation in the Danish telecom

market has been apparent for a while as operators

face continued pressure on revenues and

profitability, limiting the room for investments and

innovation. Telenor and TeliaSonera have since 2012

cooperated in Denmark through their jointly owned

mobile network. The parties now agree that an

independent and full-function joint venture is the

strategically preferred route to capture synergies

and to create value.

Efficiency gains

The merger of the two operations aims at achieving

annual efficiency gains of above DKK 800 million,

with full effect from 2019. The largest areas of

synergies are envisaged for distribution, sales &

marketing and call centers, general & administrative

cost, network and IT. Integration costs are expected

at around DKK 0.8 billion during 2015-2017.

Benefits for customers

The combination of TeliaSonera and Telenor will also

bring substantial benefits to customers in Denmark.

It will provide a larger distribution network as well

as improved network connectivity and performance. In

addition, the merger will put the joint venture into

a better position to invest in attractive and user-

friendly services. Combining the fixed networks and

services of the two companies will create an even

better broadband provider for Danish consumers and

businesses.

"Competition in Denmark is intense and we face

continued pressure on revenue growth and

profitability, making consolidation inevitable. By

combining the assets and customer bases of Telenor

and TeliaSonera in Denmark, the joint venture will

become a robust operator. We will be able to offer

our customers a high-quality network with outstanding

connectivity and the best customer experience in

Denmark," says Kjell Morten Johnsen, EVP and Head of

Telenor Region Europe.

"We are making a necessary and natural move by

forming a joint venture with Telenor building on the

network partnership we already have with them. By

joining forces we can secure investments in Denmark,

to the benefit not only of our customers but to the

Danish society as a whole," said Robert Andersson,

EVP and Head of Region Europe in TeliaSonera.

Governance structure

The Board of the new joint venture company will have

balanced representation from Telenor and TeliaSonera.

The board will have seven members, of which each

party shall appoint three. The Chairman of the Board

shall be appointed unanimously by the parties.

The recruitment process to find a CEO for this joint

venture will commence and the two companies are

confident in finding the right candidate for this job

in due course.

Valuation

Telenor and TeliaSonera have agreed that the

enterprise values of their respective operations are

fairly equal and hence the agreement is based on

equal ownership. Differences in net debt and changes

in working capital from signing to closing will be

settled in cash.

Timeline

Telenor and TeliaSonera have agreed upon the key

transaction terms. The transaction requires approval

from the EU Commission. The parties expect EU

clearance and closing of the transaction during 2015.

The operations remain separate and operate

independently up to the closing of the transaction.

Analyst and media telephone conference at 09.00 am

CET

Telenor and TeliaSonera invite you to a conference

call with Telenor's CFO Richard Olav Aa and

TeliaSonera's CFO Christian Luiga.

The presentation material is available at

http://www.telenor.com/investors/presentations/

Dial-in number: +44 (0) 2071 928000

Access code: 44826589

A replay of the conference will be available until

December 8, 2014.

Replay number: +44 (0) 1452 55 00 00

Access code: 44826589

Press conference in Denmark at 11.30 am CET

Telenor and TeliaSonera invite you to a press

conference with Kjell Morten Johnsen, EVP and Head of

Telenor Region Europe and Robert Andersson, EVP and

Head of Region Europe in TeliaSonera.

Location: Radisson Blu, Amager Boulevard 70,

Copenhagen

Media Contact:

Glenn Mandelid, Head of Media Relations,

glenn.mandelid@telenor.com, +47 926 61 300

Meera Bhatia, Communications Manager,

meera.bhatia@telenor.com, +47 4684 4959

Investor/analyst contact:

Marianne Moe, Head of Investor Relations,

marianne.moe@telenor.com, +47 916 17 631