Notes to parent company financial statements

CONTENTS

Note

  1. Basis of preparation

    General

    The parent company Telia Company AB’s financial statements have been prepared in accordance with the Swedish Annual Reports Act, other Swedish legislation, and standard RFR 2 “Accounting for Legal Entities” and other statements issued by the Swedish Financial Reporting Board. The standard is applicable to Swedish legal entities whose equities at the end of the reporting period are listed on a Swedish stock exchange or authorized equity market place. In their consolidated financial statements such companies have to comply with the EU regulation on international accounting standards, while they still have to comply with the Annual Reports Act in their separate financial statements. RFR 2 states that as a main rule listed parent companies should apply IFRSs and specifies exceptions and additions, caused by legal provisions or by the connection between accounting and taxation in Sweden.

    Measurement bases and significant accounting principles

    With the few exceptions below, Telia Company AB applies the same measurement bases and accounting principles as described in Notes to consolidated financial statements, Note C3.

    Item

    Note

    Accounting treatment

    Group contributions

    P6

    Under certain conditions, it is possible to transfer profits through group contributions between Swedish companies in a group. A group contribution is normally a deductible expense for the contributor and a taxable income for the recipient. Group contributions are recognized as appropriations in the income statement.

    Borrowing costs

    P5, P8, P9

    Borrowing costs directly attributable to the acquisition, construction or production of an asset are not capitalized as part of the cost of that asset.

    Investments in subsidiaries and associated companies

    P5, P10

    Shares in subsidiaries and associated companies are recognized at cost less any impairment. Dividends received are brought to income while repayment of certain contributed capital reduces the carrying value.

    Provisions for pensions and employment contracts

    P5, P14

    Pension obligations and pension expenses are recognized in accordance with the simplification rule for pensions in RFR 2 “Accounting for legal entities.”

    Untaxed reserves and appropriations

    P6

    Untaxed reserves and appropriations are reported gross excluding deferred tax liabilities related to the temporary differences.

    Capitalized development expenses

    P8

    The corresponding amount that has been capitalized as development expenses in the balance sheet as intangible assets have been recognized in the reserve for capitalized development expenses in equity.

    Leasing agreements

    P21

    All leasing agreements are accounted for as operating leases.

    Amounts and dates

    Unless otherwise specified, all amounts are in millions of Swedish kronor (SEK million) or other currency specified and are based on the twelve-month period ended December 31 for income statement and cash flow statement items, and as of December 31, for balance sheet items, respectively.

    Recently issued accounting standards

    For information relevant to Telia Company AB, see Note C1.

    IFRS 9 “Financial Instruments”

    As of January 1, 2018, IFRS 9 “Financial instruments” will replace IAS 39 “Financial instruments: Recognition and Measurement” as the standard on reporting for financial instruments in IFRS. In accordance with IFRS 9, a company that is preparing the financial statements in accordance with RFR 2 “Accounting for Legal Entities” is allowed to choose to apply IFRS 9 or not. Telia Company AB has chosen to apply IFRS 9 in the legal entity as of 1 January, 2018. The standard’s three main projects have been classification and measurement, impairment and hedge accounting. See Note C1 for further information regarding IFRS 9. During 2017 Telia Company has performed a review and an assessment of the transition effects on the financial assets and financial liabilities. Based on the conclusions from the review and the assessment, Telia Company will have a transition effect from impairment for intra-group receivables of SEK 150 million. The amount will be recorded as per January 1, 2018, as a decrease in Trade and Other Receivables and a decrease in Equity.

    IFRS 15 “Revenue from contracts with customers”

    The new revenue standard will have no material impact on the financial statements of the parent company in the period of initial application.

    Judgments and key sources of estimation uncertainty

    For information relevant to Telia Company AB, see Note C2.

  2. Net sales

    Net sales were mainly related to group common services to subsidiaries and were distributed among individually material countries as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Sweden

    194

    250

    Finland

    73

    97

    Netherlands

    49

    Norway

    38

    47

    Denmark

    29

    36

    Other countries

    29

    39

    Total

    413

    469

  3. Expenses by nature

    Operating expenses are presented on the face of the income statement using a classification based on the functions “Cost of production,” “Selling and marketing expenses” and “Administrative expenses.” Total expenses by function were distributed by nature as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Other network expenses

    -11

    -5

    Personnel expenses (see also Note P25)

    -777

    -821

    Rent and leasing fees

    -36

    -34

    Consultants’ services

    -174

    -209

    IT expenses

    -10

    29

    Other expenses and net of intra group invoicing

    -118

    -178

    Amortization, depreciation and impairment losses

    -4

    -4

    Total

    -1,130

    -1,222

    Amortization, depreciation and impairment losses were distributed by function as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Administrative expenses

    -4

    -4

    Total

    -4

    -4

  4. Other operating income and expenses

    Other operating income and expenses were distributed as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Other operating income

       

    Reversal of provisions

    6,807

    of which adjustment of provision for the global  settlement with the authorities regarding the Uzbekistan investigations

    4,293

    of which transfer of parts of the original provision regarding the Uzbekistan investigation to other group companies

    2,514

    Initial discount effect on outstanding provision related to the Uzbekistan investigations

    66

    Exchange rate gains

    161

    9

    Total other operating income

    7,034

    9

    Impairment of intra group receivables

    -341

    Exchange rate losses

    -30

    -16

    Capital losses

    -6

    Unwinding of provision discount

    -9

    Restructuring costs

    -14

    -57

    Other operating expenses

    -318

    -13,483

    Total other operating expenses

    -719

    -13,556

    of which amortization, depreciation and impairment losses

    -341

    Net effect on income

    6,314

    -13,547

    of which net exchange rate gains/losses on derivative instruments held-for-trading

    On September 21, 2017, Telia Company announced that it had reached a global settlement with the US and Dutch authorities regarding the Uzbekistan investigations. Other operating expenses 2016 include the income effect of the provision for settlement amount proposed by the US and Dutch authorities. For more information see Note C34.

  5. Finance income and finance costs

    Finance income and finance costs were distributed as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Finance income

       

    Dividends from subsidiaries

    12,916

    21,796

    Capital gains from subsidiaries

    1,098

    152

    Dividends from associated companies

    0

    0

    Interest from subsidiaries

    330

    400

    Other interest income

    75

    75

    Exchange rate gains

    5

    255

    Dividens from equity holdings

    6

    Other financial rervenues

    14

    Total finance income

    14,437

    22,684

    Finance costs

       

    Impairment losses from subsidiaries

    -7,837

    -2,671

    Capital losses from subsidiaries

    -38

    -25

    Capital losses from associated companies

    -15

    Impairment losses from other financial investments

    -11

    -202

    Other interest expenses

    -2,981

    -2,611

    Interest component of pension expenses

    -17

    -18

    Exchange rate losses

    -1,461

    -2,930

    Other financial expenses

    0

    Total finance costs

    -12,344

    -8,472

    Net effect on income

    2,093

    14,212

    For more information regarding Impairment losses from subsidiaries see Note P10.

    Details on other interest expenses, net exchange rate gains and losses and other interest income related to hedging activities, loan receivables, bonds and borrowings were as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Jan–Dec 2017

    Jan–Dec 2016

    Jan–Dec 2017

    Jan–Dec 2016

    Other interest expenses

    Net exchange rate
    gains and losses

    Other interest income

    Fair value hedge derivatives

    76

    387

    -50

    119

    Cash flow hedge derivatives

    95

    10

    -131

    -457

    Derivatives held-for-trading

    145

    695

    -186

    125

    Loans and receivables

    -1,486

    1,379

    20

    14

    Bonds available-for-sale

    55

    61

    Borrowings in fair value hedge relationships

    -1,906

    -1,415

    -832

    -3,190

    Borrowings and other financial liabilities at amortized cost

    -1,279

    -2,201

    1,229

    -652

    Other

    -111

    -87

    Total

    -2,981

    -2,611

    -1,456

    -2,675

    75

    75

    Borrowings at amortized cost include items in cash flow hedge relationships as well as unhedged items.

  6. Income taxes

    Tax items recognized in comprehensive income

    Tax items recognized in comprehensive income were distributed as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Tax items recognized in net income

       

    Current tax

    -533

    -1,057

    Adjustment of current tax related to prior years

    -1

    -1

    Deferred tax

    -2

    -54

    Total tax expense recognized in net income

    -536

    -1,113

    Tax items recognized in other comprehensive income

       

    Current tax

    2

    -29

    Deferred tax

    32

    28

    Total tax recognized in other comprehensive income

    34

    -1

         

    Tax items recognized directly in equity

       

    Deferred tax

    37

    Total tax recognized directly in equity

    37

    Pre-tax income was SEK 14,689 million in 2017 (11,479). The difference between the nominal Swedish income tax rate and the effective tax rate comprise the following components.

    Percent

    Jan–Dec 2017

    Jan–Dec 2016

    Swedish income tax rate

    22.0

    22.0

    Underprovided or overprovided current tax expense in prior years

    0.0

    0.0

    Non-deductible expenses

    12.4

    29.8

    Tax-exempt income

    -30.8

    -42.1

    Effective tax rate in net income

    3.6

    9.7

    Non-deductible expenses in 2016 consist mainly of the provision for settlement amount proposed by US and Dutch authorities. The reversal of part of the provision is treated as a tax exempt income 2017. In addition tax-exempt income 2017 and 2016 consisted primarily of dividends from subsidiaries.

    SEK in millions

    2017

    Opening

    balance

    Recognized
    in Income

    Statement

    Recognized in Other Comprehen­sive income

    Recognized
    in equity

    Closing

    balance

    Gross deferred tax assets

             

    Non-current assets

    2

    0

    0

    2

    Delayed expenses for provisions

    99

    -1

    37

    134

    Subtotal

    101

    -2

    37

    136

    Offset deferred tax liabilities/assets

    -101

    2

    -5

    -105

    Total deferred tax assets

    32

    32

    Deferred tax liabilities

             

    Fair value adjustments, cash-flow hedges and assets available-for-sale

    137

    -32

    105

    Subtotal

    137

    -32

    105

    Offset deferred tax assets/liabilities

    -101

    2

    -5

    -105

    Total deferred tax liabilities

    36

    2

    -37

    Net deferred tax assets (+)/liabilities (-)

    -36

    -2

    37

    SEK in millions

    2016

    Opening

    balance

    Recognized
    in Income

    Statement

    Recognized in Other Comprehen­sive income

    Recognized
    in equity

    Closing

    balance

    Gross deferred tax assets

             

    Non-current assets

    2

    0

    2

    Delayed expenses for provisions

    153

    -54

    99

    Subtotal

    155

    -54

    101

    Offset deferred tax liabilities/assets

    -155

    54

    -101

    Total deferred tax assets

    Deferred tax liabilities

             

    Fair value adjustments, cash-flow hedges and assets available-for-sale

    165

    -28

    137

    Subtotal

    165

    -28

    137

    Offset deferred tax assets/liabilities

    -155

    54

    -101

    Total deferred tax liabilities

    10

    54

    -28

    36

    Net deferred tax assets (+)/liabilities (-)

    -10

    -54

    28

    -36

    In 2017 and 2016, there were no accumulated non-expiring tax loss carry-forwards or unrecognized deferred tax assets. As of December 31, 2017, the unrecognized deferred tax liability in untaxed reserves amounted to SEK 1,766 million (1,933).

    Untaxed reserves and appropriations

    As of December 31, 2016 and 2015, untaxed reserves in the balance sheet consisted of profit equalization reserves totaling SEK 8,029 million and SEK 12,786 million, respectively.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Change in profit equalization reserves

    757

    3,880

    Group contributions received

    6,711

    8,297

    Group contributions paid

    -468

    -609

    Net effect on income

    7,000

    11,568

  7. Other comprehensive income

    Other comprehensive income was distributed as follows.

    SEK in millions

    Equity component

    Jan–Dec 2017

    Jan–Dec 2016

    Cash flow hedges

         

    Net changes in fair value

    Fair value reserve

    -180

    214

    Transferred to finance costs in net income

    Fair value reserve

    33

    -343

    Income tax effect

    Fair value reserve

    32

    28

    Total cash flow hedges

     

    -115

    -100

    Available-for-sale financial instruments

         

    Net changes in fair value

    Fair value reserve

    729

    134

    Transferred to finance costs in net income

    Fair value reserve

    0

    Tax effect

    Fair value reserve

    2

    -29

    Total available-for-sale financial instruments

     

    731

    105

    Total other comprehensive income

     

    615

    5

    of which total income tax effects (see also Note P6)

     

    34

    -1

  8. Intangible assets

    The total carrying value was distributed and changed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Accumulated cost

    39

    68

    Accumulated amortization

    -30

    -57

    Carrying value

    9

    11

    of which work in progress

    2

    7

    Carrying value, opening balance

    11

    7

    Investments

    0

    7

    Disposals

    0

    Amortization for the year

    -3

    -3

    Carrying value, closing balance

    9

    11

    No general changes of useful lives were made during the year. For useful lives applied, see Notes to consolidated financial statements (corresponding section in Note C2). In the income statement, amortization and impairment losses are, if applicable, included in all expense line items by function as well as in line item Other operating expenses. Accelerated amortization, to the extent allowed by Swedish tax legislation, is recorded as untaxed reserves and appropriations, see this section in Note P6 “Income taxes.”

    The carrying value of intangible assets was distributed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Capitalized development expenses

    7

    4

    Work in progress

    2

    7

    Total carrying value

    9

    11

  9. Property, plant and equipment

    The total carrying value was distributed and changed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Dec 31, 2017

    Dec 31, 2016

    Dec 31, 2017

    Dec 31, 2016

    Plant and machinery

    Equipment, tools
    and installations

    Total

    Accumulated cost

    6

    6

    17

    17

    23

    24

    Accumulated depreciation

    -6

    -4

    -17

    -17

    -23

    -22

    Carrying value

    1

    2

    0

    1

    2

    Carrying value, opening balance

    2

    3

    0

    0

    2

    3

    Depreciation for the year

    -1

    -1

    0

    0

    -1

    -1

    Carrying value, closing balance

    1

    2

    0

    1

    2

    No general changes of useful lives were made in 2017.
    For useful lives applied, see Notes to consolidated financial statements (corresponding section in Note C2). In the income statement, depreciation and impairment losses are, if applicable, included in all expense line items by function as well as in line item Other operating expenses. Accelerated depreciation, to the extent allowed by Swedish tax legislation, is recorded as untaxed reserves and appropriations, see this section in Note P6 “Income taxes.”

  10. Other financial assets

    The total carrying value changed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Dec 31, 2017

    Dec 31, 2016

    Dec 31, 2017

    Dec 31, 2016

    Dec 31, 2017

    Dec 31, 2016

    Investments in
    associated companies and joint ventures

    Investments in other equity instruments

    Investments in
    subsidiaries and
    other non-current
    financial assets

    Total

    Carrying value, opening balance

    54

    267

    1,186

    1,077

    161,031

    161,346

    162,273

    162,690

    New share issues and shareholder contributions

    4

    122

    1,359

    126

    1,359

    Repayment of capital

    -2

    -2

    -219

    -501

    -221

    -503

    Repayment of borrowings and interest

    -3

    -3

    Additions

    20

    1

    112

    13,578

    9,977

    13,599

    10,089

    Disposals

    -15

    -5,936

    -9,309

    -5,936

    -9,324

    Impairment losses

    -6

    -197

    -5

    -5

    -7,830

    -2,623

    -7,843

    -2,825

    Reclassifications to short-term investments

    0

    -6,184

    851

    -6,184

    851

    Changes in fair value

    0

    738

    3

    -65

    738

    -62

    Carrying value, closing balance

    72

    54

    1,917

    1,186

    154,562

    161,031

    156,551

    162,273

    For other financial assets, fair values equal carrying values. Impairment losses were mainly related to Skanova AB in 2017 and 2016. For more information regarding Equity instruments available-for-sale see Note C25. The total carrying values of other financial assets were distributed as follows.

    SEK in millions

    Carrying value

    Dec 31, 2017

    Dec 31, 2016

    Investments in other equity instruments available-for-sale

    1,898

    1,160

    Investments in other equity instruments held-for-trading

    19

    26

    Bonds available-for-sale

    12,084

    10,185

    Interest rate and cross currency interest rate swaps at fair value

    2,977

    4,453

    of which designated as fair value hedges

    719

    1,039

    of which held-for-trading

    1,268

    2,116

    of which designated as cash flow hedges

    990

    1,298

    Derivatives held-for-trading

    Currency swaps and forward exchange contracts held-for-trading

    Subtotal (see Fair value hierarchy levels – Note P19)

    16,978

    15,823

    Loans and receivables at amortized cost

    10

    54

    Subtotal (see Categories – Note P19 and Credit risk – Note P20)

    16,989

    15,877

    Investments in subsidiaries

    134,963

    139,239

    Receivables from subsidiaries

    4,528

    7,103

    Investments in associated companies

    72

    54

    Total other financial assets

    156,551

    162,273

    of which interest-bearing

    19,599

    21,793

    of which non-interest-bearing

    136,952

    139,294

    For Loans and receivables (including claims on associated companies), fair value is estimated at the present value of future cash flows discounted by applying market interest rates at the end of the reporting period.

    For more information on financial instruments by category/fair value hierarchy level and exposed to credit risk, refer to Note P19 and section “Credit risk management” in Note P20, respectively. Conventional commercial terms apply for receivables from subsidiaries.

    Investments in subsidiaries are specified below, while corresponding information on associated companies and other equity instruments is presented in Notes C14 and C15.

    Subsidiary,

    Corp. reg. no., registered office

    Participation
    (%)

    Number of shares

    Carrying value (SEK in millions)

    Dec 31, 2017

    Dec 31, 2016

    Swedish companies

           

    Skanova AB, 556446-3734, Solna

    100

    1,000,000

    18,531

    25,616

    Telia Sverige AB, 556430-0142, Stockholm

    100

    3,000,000

    4,376

    4,376

    Telia Nättjänster Norden AB, 556459-3076, Stockholm

    100

    68,512

    3,146

    3,146

    TeliaSonera Mobile Networks AB, 556025-7932, Stockholm

    100

    550,000

    663

    1,343

    Cygate AB, 556549-8952, Solna

    100

    61,000

    659

    659

    Telia Finance AB, 556404-6661, Solna

    100

    45,000

    541

    481

    Telia Carrier AB, 556583-2226, Stockholm

    100

    1,000,000

    453

    453

    Telia Mobile Holding AB, 556855-9040, Stockholm

    100

    50,000

    476

    476

    Zitius Service Delivery AB, 556642-8339, Gothenburg

    100

    2,079,000

    353

    353

    Telia Försäkring AB, 516401-8490, Stockholm

    100

    2,000,000

    200

    200

    Telia Sverige Net Fastigheter AB, 556368-4801, Stockholm

    100

    5,000

    169

    169

    Fält Communications AB, 556556-1999, Umeå

    100

    31,857,538

    158

    C-Sam AB, 556628-1498, Gnesta

    100

    1,000

    94

    Svenska Stadsnät AB, 556577-9195, Lund

    100

    100,000

    70

    70

    Humany AB, 556569-7314, Stockholm

    100

    62,161,368

    69

    SalaNet AB, 556612-1686, Sala

    100

    40,000

    43

    Rätt Internet Kapacitet i Sverige AB, 556669-1704, Umeå

    100

    8,500

    31

    31

    Telia Asset Finance AB, 556599-4729, Solna

    100

    1,000

    22

    22

    TV-Net i Löddeköpinge AB, 556419-9908, Löddeköpinge

    100

    1,000

    21

    Quadracom Networks AB, 556606-6055, Gothenburg

    100

    10,000

    9

    9

    Svenska Stadsnät Transit AB, 556333-0934, Täby

    100

    1,000

    8

    8

    Telia Network Sales AB, 556458-0040, Stockholm

    100

    10,000

    7

    7

    Svenska Stadsnät Perspektiv AB, 559028-4153, Stockholm

    100

    500

    4

    4

    We Care and Repair Nordic AB, 556989-3679, Stockholm

    100

    500

    2

    2

    Växjö Support Center Försäljnings AB, 556663-4514, Växjö

    100

    1,000

    1

    1

    Sergel Kredittjänster AB, 556264-8310, Stockholm

    100

    5,000

    8

    Sergel Finans AB, 559067-6416, Stockholm

    100

    50,000

    0

    Other operating, dormant and divested companies

       

    0

    0

    Subsidiary,

    Corp. reg. no., registered office

    Participation
    (%)

    Number of shares

    Carrying value (SEK in millions)

    Dec 31, 2017

    Dec 31, 2016

    Non-Swedish companies

           

    Telia Finland Oyj,  1475607-9, Helsinki

    100

    1,417,360,515

    74,863

    74,863

    Nebula Top Oy, 2546028-1, Helsinki

    100

    46,921,852

    1,117

    Cygate Oy, 0752421-0, Helsinki

    100

    1,500,000

    252

    246

    Telia Carrier Finland Oy, 1649304-9, Helsinki

    100

    100

    98

    98

    Propentus Oy, 1841830-9, Kouvola

    100

    720

    79

    Bemecon Solutions Oy,  2442892-5, Esbo

    100

    10,000

    6

    Sergel Oy, 1571416-1, Helsinki

    100

    267,966,000

    149

    Telia Norge AS, 981929055, Oslo

    100

    30,000

    12,786

    12,786

    Phonero AS, 992984856, Kristiansand

    100

    41,315

    2,382

    Sergel Norge AS, 984272170, Sandefjord

    100

    227,247

    143

    Telia Carrier Denmark A/S, 24210413, Copenhagen

    100

    1,000

    172

    172

    TeliaSonera Danmark A/S, 18530740, Copenhagen

    100

    14,500

    19

    19

    Argon A/S, 36462272, Copenhagen

    100

    500,000

    1

    1

    Sergel A/S, 35481036, Copenhagen

    100

    500,000

    1

    Telia Lietuva, AB, 121215434, Vilnius

    88.2

    513,594,774

    4,144

    4,144

    UAB Sergel, 125026242, Vilnius

    100

    10,850

    7

    SIA Telia Latvija, 000305757, Riga

    100

    353,500

    24

    29

    Telia Carrier Latvia SIA, 000325135, Riga

    100

    108,542

    7

    13

    Latvijas Mobilais Telefons SIA, 50003050931, Riga

    24.5

    200,165

    2

    2

    SIA Sergel, 010318318, Riga

    100

    3,507

    4

    Telia Eesti AS, 10234957, Tallinn

    100

    137,954,528

    5,690

    5,686

    Telia Carrier Estonia OÜ, 12606073, Tallinn

    100

    1

    11

    11

    Telia Carrier France S.A.S., B421204793, Paris

    100

    1,366,667

    482

    681

    Telia Carrier UK Ltd, 02796345, London

    100

    1,010,000

    268

    268

    Telia Carrier Germany GmbH, HRB50081, Frankfurt am Main

    100

    0

    249

    249

    AO Telia Carrier Russia, 1027809197327, Moscow

    100

    220,807,825

    200

    200

    Telia Carrier U.S. Inc., 541837195, Herndon, VA

    100

    3,000,100

    136

    136

    Telia Carrier Czech Republic a.s., 26207842, Prague

    100

    20,000

    126

    118

    Telia Carrier Austria GmbH, FN191783i, Vienna

    100

    0

    118

    118

    Telia Carrier Netherlands B.V., 34128048, Amsterdam

    100

    910

    59

    59

    Telia Carrier Switzerland AG, CHE-105.398.242, Zürich

    100

    1,000

    54

    54

    Telia Frankfurt Property GmbH, HRB98956, Frankfurt am Main

    100

    0

    49

    49

    Telia Carrier Poland Sp.z.o.o., KRS0000018616, Warsaw

    100

    22,500

    37

    37

    Telia Carrier Italy S.p.A., 07893960018, Turin

    100

    530,211

    17

    17

    Telia Carrier Bulgaria EOOD, 175215740, Sofia

    100

    29,210

    14

    14

    Telia Carrier Hungary Kft, 01-09-688192, Budapest

    100

    0

    13

    19

    Telia Carrier Turkey Telekomunikasyon L.S., 609188, Istanbul

    99.5

    55,919

    8

    8

    Telia Carrier Ireland Ltd., 347074, Dublin

    100

    27

    6

    6

    TOV Telia Carrier Ukraine, 34716440, Kyiv

    100

    0

    6

    6

    Telia Carrier Romania S.R.L., 20974985, Bukarest

    100

    10,001

    3

    5

    Telia Carrier Slovakia s.r.o., 36709913, Bratislava

    100

    0

    3

    7

    Telia Carrier Belgium S.A., 0469422293, Brussels

    100

    50,620

    3

    3

    Telia Carrier Canada Inc., BC0968600, Vancouver, British Columbia

    100

    100

    1

    1

    Telia Carrier Singapore Pte. Ltd., 200005728N, Singapore

    100

    1,200,002

    1

    1

    Telia Carrier Croatia d.o.o., 081061252, Zagreb

    100

    112,500

    0

    0

    TeliaSonera Kazakhstan Holding B.V., 6547289, Rotterdam

    100

    10

    1,355

    1,355

    TeliaSonera Telekomünikasyon Hizmetleri A.S., 381395, Istanbul

    99.0

    79,193

    10

    10

    TeliaSonera Assignments B.V., 24300363, Rotterdam

    100

    1,810,719,000

    0

    0

    Other operating, dormant and divested companies

       

    1

    1

    Total

       

    134,963

    139,239

    In 2017, the carrying value of Skanova AB was written down to reflect the operational performance and capital structure. Sergel was during the year disposed to Marginalen Bank. The disposal included two Swedish companies and four non Swedish companies.

    For information regarding acqusitions see Note C33 .

    Telia Danmark is a branch of Telia Nättjänster Norden AB. Telia Company’s stakes in the networksharing operations in Sweden and Denmark are held through Telia Sverige AB and Telia Mobile Holding AB, respectively. Another 24.5 percent of the shares in Latvijas Mobilais Telefons SIA are owned by a subsidiary. Telia Company has a board majority in Latvijas Mobilais Telefons SIA. TeliaSonera Telekomünikasyon Hizmetleri A.S. is owned by Telia Finland Oyj which also indirectly controls Fintur Holdings B.V. and TeliaSonera UTA Holding B.V.

    Equity participation corresponds to voting rights participation in all companies.

    Other operating and dormant companies do not control group assets of significant value. In addition to companies mentioned above, Telia Company AB indirectly controls a number of operating and dormant subsidaries of subsidiaries.

  11. Trade and other receivables

    The carrying value of trade and other receivables were distributed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Interest rate and cross currency interest rate swaps designated as fair value hedges

    301

    Currency swaps and forward exchange contracts held for trading

    240

    942

    Subtotal (see Fair value hierarchy levels – Note P19)

    240

    1,243

    Accounts receivable at amortized cost

    20

    Loans and receivables at amortized cost

    2

    0

    Subtotal (see Categories – Note P19 and Credit risk – Note P20)

    261

    1,243

    Receivables from subsidiaries

    38,706

    33,407

    of which cash-pool balances and short-term deposits

    31,923

    25,234

    of which trade and other receivables

    6,783

    8,173

    Other current receivables

    200

    369

    Deferred expenses

    32

    25

    Total trade and other receivables

    39,200

    35,043

    of which interest-bearing

    32,106

    26,197

    of which non-interest-bearing

    7,094

    8,846

    For Accounts receivable and Loans and receivables, the carrying values equal fair value as the impact of discounting is insignificant. For Accounts receivable and Loans and receivables (including receivables from associated companies and joint ventures), at the end of the reporting period, concentration of credit risk by geographical area and by customer segment was as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Geographical area

       

    Sweden

    2

    0

    Other countries

    20

    Total carrying value

    22

    0

    Customer segment

       

    Other customers

    22

    0

    Total carrying value

    22

    0

    For more information on financial instruments by category/fair value hierarchy level and exposed to credit risk, refer to Note P19 and section “Credit risk management” in Note P20, respectively. Conventional commercial terms apply for receivables from subsidiaries.

    As of the end of the reporting period, allowance for doubtful and ageing of Accounts receivable, respectively, were as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Accounts receivable invoiced

    20

    Allowance for doubtful accounts receivable

    Total accounts receivable

    20

    Accounts receivable not due

    20

    Accounts receivable past due but not impaired

    of which 30–180 days

    of which more than 180 days

    Total accounts receivable

    20

    As of the end of the reporting period, ageing of Loans and receivables (including receivables from associated companies) were as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Loans and receivables not due

    2

    Total loans and receivables

    2

    There were no bad debt expenses and no recovered accounts receivable in 2017 and in 2016.

  12. Short-term investments, cash and cash equivalents

    Short-term investments, cash and cash equivalents were as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Short term investments with maturities longer than 3 months

    13,563

    5,043

    of which bonds available for sale

    8,651

    4,564

    Short-term investments with maturities up to and including 3 months

    2,394

    8,656

    of which bonds available for sale

    1,411

    3,810

    of which bank deposits at amortized cost

    982

    4,846

    Total short-term investments

    15,957

    13,699

    Cash and bank

    12,024

    3,576

    Total (see Categories – Note P19 and Credit risk – Note P20)

    27,981

    17,275

    of which cash and cash equivalents

    14,418

    12,232

    Cash and cash equivalents are defined as the sum of Short-term investments with maturities up to and including 3 months and the balance sheet item Cash and bank. The carrying values are assumed to approximate fair values as the risk of changes in value is insignificant. As of December 31, 2017, there were no blocked funds in Telia Company AB’s bank accounts. For more information on financial instruments by category and exposed to credit risk, refer to Note P19 and section “Credit risk management” in Note P20, respectively.

  13. Shareholders’ equity

    Share capital, treasury shares, earnings per share and dividends

    See Notes to consolidated financial statements (corresponding sections in Note C19).

    At the disposal of the Annual General Meeting (AGM):

     

    SEK

    Retained earnings

    56,534,464,757

    Net income

    14,152,801,703

    Total

    70,687,266,460

    The Board proposes that this sum be appropriated as follows:

     

    SEK

    SEK 2.30 per share ordinary dividend to the shareholders

    9,959,194,996

    To be carried forward

    60,728,071,464

    Total

    70,687,266,460

    The dividend should be split and distributed into two equal tranches of SEK 1.15 each, one in April 2018 and one in October 2018.

    The Board of Directors has, according to Chapter 18 Section 4 of the Swedish Companies Act, assessed whether the proposed dividend is justified. The Board of Directors assesses that:

    The parent company’s restricted equity and the group’s total equity attributable to the shareholders of the parent company, after the distribution of profits in accordance with the proposal, will be sufficient in relation to the scope of the parent company’s and the group’s business.

    The proposed dividend does not jeopardize the parent company’s or the group’s ability to make the investments that are considered necessary. The proposal is consistent with the established cash flow forecast under which the parent company and the group are expected to manage unexpected events and temporary variations in cash flows to a reasonable extent.

    The full statement by the Board of Directors on the same will be included in the AGM documentations.

  14. Provisions for pensions and employment contracts

    Pension obligations and pension expenses

    The vast majority of employees in Telia Company AB are covered by a defined benefit pension plan (the ITP-Tele plan and ITP2 plan) which means that the individual is guaranteed a pension equal to a certain percentage of his or her salary. The pension plan mainly includes retirement pension, disability pension and family pension. All employees born in 1979 or later are covered by a defined contribution pension plan (the ITP1 plan).

    Most pension obligations are secured by Telia Pension Fund. Certain commitments, such as certain supplementary individual pension benefits and a right under the employment contracts for certain categories of personnel to retire at age 55, 60, or 63, are provided for by taxed reserves in the balance sheet.

    Pension obligations are calculated annually, as of the end of the reporting period, based on actuarial principles.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Opening balance, pension obligations covered by plan assets

    1,568

    1,569

    Opening balance, pension obligations not covered by plan assets

    432

    436

    Opening balance, total pension obligations

    2,001

    2,005

    Current service cost

    38

    21

    Interest cost, paid-up policy indexation

    72

    125

    Benefits paid

    -120

    -131

    Divested operations

    0

    0

    Other changes in valuation of pension obligations

    -27

    -22

    Termination benefits

    2

    Closing balance, pension obligations covered by plan assets

    1,547

    1,568

    Closing balance, pension obligations not covered by plan assets

    417

    432

    Closing balance, total pension obligations

    1,964

    2,001

    of which PRI Pensionsgaranti pensions

    1,330

    1,343

    The fair value of plan assets changed as follows.

    SEK in millions, except percentages

    Dec 31, 2017

    Dec 31, 2016

    Opening balance, plan assets

    2,555

    2,421

    Actual return

    135

    133

    Closing balance, plan assets

    2,690

    2,555

    Actual return on plan assets (%)

    5.3

    5.5

    Provisions for pension obligations were recognized in the balance sheet as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Present value of pension obligations

    1,964

    2,001

    Fair value of plan assets

    -2,690

    -2,555

    Surplus capital in pension fund

    1,143

    987

    Provisions for pension obligations

    417

    432

     

    Total pension expenses (+)/income (-) were distributed as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Current service cost

    38

    21

    Interest cost, paid-up policy indexation

    72

    125

    Less interest expenses recognized as financial expenses

    -17

    -18

    Actual return on plan assets

    -135

    -133

    Divested operations, pension obligations

    0

    0

    Other changes in valuation of pension obligations

    -27

    -22

    Termination benefits

    2

    Pension expenses (+)/income (-), defined benefit pension plans

    -69

    -25

    Pension premiums, defined benefit/defined contribution pension plans and other pension costs

    82

    85

    Pension-related social charges and taxes

    48

    52

    Less termination benefits (incl. premiums and pension-related social charges) reported as restructuring cost

    -5

    -10

    Pension expenses (+)/income (-)

    125

    127

    Decrease (-)/Increase (+) of surplus capital in pension fund

    156

    135

    Recognized pension expenses (+)/income (-)

    212

    237

    of which pension premiums paid to the ITP pension plan

    5

    6

    Principal actuarial assumptions

    The actuarial calculation of pension obligations and pension expenses is based on principles set by PRI Pensions-garanti and the Swedish Financial Supervisory Authority, respectively.

    The principal calculation assumption is the discount rate which, as a weighted average for the different pension plans and, as applicable, net of calculated yield tax, was 3.0 percent in 2017 (3.0). Obligations were calculated based on the salary levels prevailing at December 31, 2017 and 2016, respectively.

    Plan-asset allocation

    At the end of the reporting period, plan assets were allocated as follows.

    Asset category

    Dec 31, 2017

    Dec 31, 2016

    SEK in millions

    Percent

    SEK in millions

    Percent

    Fixed income instruments, liquidity

    1,138

    42.3

    1,244

    48.9

    Shares and other investments

    1,552

    57.7

    1,310

    51.1

    Total

    2,690

    100.0

    2,555

    100.0

    of which shares in Telia Company AB

    Future contributions and pension payments

    As of December 31, 2017, the fair value of plan assets exceeded the present value of pension obligations. Unless the fair value of plan assets during 2018 should fall short of the present value of pension obligations, Telia Company AB has no intention to make any contribution to the pension fund.

  15. Other provisions

    Changes in other provisions were as follows.

    SEK in millions

    December 31, 2017

    Payroll taxes
    on future pen-
    sion payments

    Restructuring provisions

    Other
    provisions

    Damages and court cases

    Insurance
    provisions

    Total

    Opening balance

    16

    42

    10

    13,204

    23

    13,294

    of which financial liabilities at amortized cost

    Provisions for the period

    33

    14

    26

    73

    Utilized provisions

    -2

    -48

    -2

    -3,539

    -2

    -3,592

    Reversal of provisions

    -6,807

    -6,807

    Exchange rate differences

    -1,151

    -1,151

    Discount effect, net

    -56

    -56

    Closing balance

    48

    8

    35

    1,650

    21

    1,761

    of which non-current portion

    48

    0

    16

    1,650

    21

    1,736

    of which current portion

    0

    8

    19

    0

    0

    26

    For financial liabilities, the carrying value equals fair value as provisions are discounted to present value. Refer to Note P19 for more information on financial instruments classified by category.

    Restructuring provisions mainly refer to staff redundancy costs related to cost saving programs. The remaining provision as of December 31, 2017, is expected to be fully utilized in 2018-2019. Provisions for damages and court cases comprises of the provision for settlement amount with the US and Dutch authorities. For more information see Note C34. Full utilization of payroll taxes on future pension payments, damages and court cases, and insurance provisions is expected in the period 2018-2025.

    The provisions represent the present value of management’s best estimate of the amounts required to settle the liabilities. The estimates may vary mostly as a result of changes in actual pension payments, changes in the actual number of months an employee is staying in redeployment before leaving, changes in tax and other legislation and changes in the actual outcome of negotiations with lessors, sub-contractors and other external counterparts as well as the timing of such changes.

  16. Long-term and short-term borrowings

    Open-market financing programs

    For information on Telia Company AB’s open-market financing programs, see Note C20.

    Borrowings

    Long-term and short-term borrowings were distributed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Carrying value

    Fair value

    Carrying value

    Fair value

    Long-term borrowings

           

    Open-market financing program borrowings in fair value hedge relationships

    44,918

    54,965

    37,189

    46,135

    Interest rate swaps at fair value

    276

    276

    37

    37

    of which designated as hedging instruments

    276

    276

    18

    18

    of which held-for-trading

    18

    18

    Cross currency interest rate swaps at fair value

    1,990

    1,990

    2,648

    2,648

    of which hedging net investments

    1,417

    1,417

    1,778

    1,778

    of which designated as hedging instruments

    381

    381

    549

    549

    of which held-for-trading

    192

    192

    320

    320

    Subtotal (see Fair value hierarchy levels – Note P19)

    47,184

    57,231

    39,873

    48,819

    Open-market financing program borrowings at amortized cost

    38,254

    43,268

    41,334

    45,209

    Subtotal (see Categories – Note P19)

    85,437

    100,499

    81,207

    94,028

    Borrowings from subsidiaries

     

     

    of which other borrowings

     

     

    Total long-term borrowings

    85,437

     

    81,207

     

    Short-term borrowings

           

    Open-market financing program borrowings in fair value hedge relationships

    729

    735

    7,486

    7,551

    Interest rate swaps designated as held-for trading

    4

    4

    3

    3

    Cross currency interest rate swaps designated as ahedging instrument

    106

    106

    Cross currency interest rate swaps as held-for trading

    93

    93

    191

    191

    Subtotal (see Fair value hierarchy levels – Note P19)

    932

    937

    7,679

    7,744

    Open-market financing program borrowings at amortized cost

    1,460

    1,462

    2,258

    2,265

    of which hedging net investments

    983

    984

    of which at amortized cost

    477

    477

    2,258

    2,265

    Repurchase agreement liabilities

    664

    664

    559

    559

    Other borrowings at amortized cost

    Subtotal (see Categories – Note P19)

    3,056

    3,063

    10,496

    10,567

    Borrowings from subsidiaries

    37,793

     

    19,146

     

    of which cash pool balances

    36,718

     

    9,229

     

    of which other borrowings

    1,074

     

    9,917

     

    Total short-term borrowings

    40,849

     

    29,642

     

    As of December 31, 2017, fully unutilized bank overdraft facilities had a total limit of SEK 1,246 million (1,342).

    For additional information on financial instruments classified by category/fair value hierarchy level, refer to Note P19, and for information on maturities and liquidity risks, refer to section “Liquidity risk management” in Note P20. Refer to Note C20 for further information on borrowings and the swap portfolio. Conventional commercial terms apply for borrowings from subsidiaries, which comprise cash-pool balances and other borrowings.

  17. Long-term liabilities

    The carrying value of long-term liabilities were distributed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Liabilities to subsidiaries

    0

    Other liabilities

    13

    9

    Total long-term liabilities

    13

    9

    For the years 2017 and 2016, no long-term liabilities fell due more than 5 years after the end of the reporting period.

  18. Short-term provisions, trade payables and other current liabilities

    Short-term provisions, trade payables and other current liabilities were distributed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Currency swaps, forward exchange contracts and currency options held-for-trading

    225

    694

    Subtotal (see Fair value hierarchy levels – Note P19)

    225

    694

    Accounts payable at amortized cost

    82

    86

    Current liabilities at amortized cost

    89

    7

    Subtotal (see Categories – Note P19)

    396

    788

    Liabilities to subsidiaries

    731

    497

    Other current liabilities

    140

    13,450

    Total short-term provisions, trade payables and other current liabilities

    1,267

    14,735

    For Accounts payable and Current liabilities, the carrying value equals fair value as the impact of discounting is insignificant. Other current liabilities 2016 mainly comprised of the provision for settlement amount proposed by the US and Dutch authorities at that point in time. For more information see Note C34. For additional information on financial instruments classified by category/fair value hierarchy level and on liquidity risks, refer to Note P19 and section “Liquidity risk management” in Note P20. As of December 31, 2017, contractual cash flows for liabilities at amortized cost represented the following expected maturities.

    Expected maturity
    SEK in millions

    Jan–Mar 2018

    Apr–Jun 2018

    Jul–Sep 2018

    Oct–Dec 2018

    Total

    Liabilities at amortized cost

    171

    0

    0

    0

    171

    Corresponding information for currency derivatives held-for-trading is presented in section “Liquidity risk management” to Note P20.

    Conventional commercial terms apply for trading with subsidiaries.

  19. Financial assets and liabilities by category and level

    Categories

    Carrying values of classes of financial assets and liabilities were distributed by category as follows. Financial assets and liabilities relating to subsidiaries are not included. Excluded are also investments in associated companies and joint ventures as discussed in Note P10 and pension obligations as discussed in Note P14.

    SEK in millions

    Note

    Dec 31, 2017

    Dec 31, 2016

    Financial assets

         

    Derivatives designated as hedging instruments

    P10, P11

    1,708

    2,637

    Financial assets at fair value through profit and loss

     

    1,527

    3,084

    Derivatives not designated as hedging instruments

    P10, P11

    1,508

    3,058

    Held-for-trading investments

    P10

    19

    26

    Long- and short-term bonds available-for-sale

    P10, P12

    22,146

    18,560

    Loans and receivables

    P10, P11P12

    43,466

    40,933

    Available-for-sale financial assets

    P10P12

    1,898

    1,160

    Total financial assets by category

     

    70,745

    66,374

    Financial liabilities

         

    Derivatives designated as hedging instruments

    P16

    2,180

    2,346

    Derivatives not designated as hedging instruments

    P16, P18

    514

    1,226

    Financial liabilities measured at amortized cost

    P16P18

    124,720

    108,562

    Total financial liabilities by category

     

    127,414

    112,133

    Fair value hierarchy levels

    The carrying values of classes of financial assets and liabilities were distributed by fair value hierarchy level as follows.

    SEK in millions

    Note

    December 31, 2017

    December 31, 2016

    Fair

    value

    of which

    Fair

    value

    of which

    Level 1

    Level 2

    Level 3

    Level 1

    Level 2

    Level 3

    Financial assets at fair value

                     

    Equity instruments available-for-sale

    P10

    1,898

    1,898

    1,160

    1,160

    Equity instruments held-for-trading

    P10

    19

    19

    26

    26

    Long-and short-term bonds available-for-sale

    P10P12

    22,148

    17,438

    4,709

    18,560

    11,907

    6,653

    Derivatives designated as hedging instruments

    P10P11

    1,709

    1,709

    2,637

    2,637

    Derivatives held-for-trading

    P10P11

    1,508

    1,508

    3,058

    3,058

    Total financial assets at fair value by level

     

    27,282

    17,438

    7,926

    1,917

    25,442

    11,907

    12,348

    1,186

    Financial liabilities at fair value

                     

    Derivatives designated as hedging instruments

    P16

    2,180

    2,180

    2,346

    2,346

    Derivatives held-for-trading

    P16P18

    514

    514

    1,226

    1,226

    Total financial liabilities at fair value by level

     

    2,693

    2,693

    3,572

    3,572

    Comparative figures for Long- and short-term bonds available-for-sale have been adjusted with SEK 6,653 million from Level 1 to Level 2.

    There were no transfers between Level 1 and 2 in 2017 and 2016.

    Level 3 financial assets changed as follows.

    SEK in millions

     

    December 31, 2017

     

    December 31, 2016

    Equity instruments available-for-sale

    Investments in other equity instruments
    held-for-trading

    Derivatives held-for-trading

    Total

    Equity instruments available-for-sale

    Investments in other equity instruments
    held-for-trading

    Derivatives held-for-trading

    Total

    Level 3, opening balance

    1,160

    26

    1,186

    1,052

    25

    65

    1,142

    Changes in fair value

    738

    -7

    731

    -4

    -4

    of which recognized in net income

    -7

    -7

    -4

    -4

    of which recognized in other comprehensive income

    738

    738

    Purchases/capital contributions

    48

    1

    49

    Exercise of warrants

    65

    -65

    0

    Level 3, closing balance

    1,897

    19

    1,917

    1,160

    26

    0

    1,186

    The investment in Spotify was remeasured in the third and fourth quarter of 2017 based on the share price in the most recent transactions made for Spotify during September and December 2017, respectively. Changes in fair value recognized in net income are included in line item Financial income and expenses. For more information see Note P5 and Note C25.

  20. Financial risk management

    Principles, capital management and management of financial risks

    For information relevant to Telia Company AB, see Notes to consolidated financial statements (Note C26).

    Credit risk management

    Telia Company’s exposure to credit risk arises from default of counterparts (including price risks as regards investments in equity instruments), with a maximum exposure equal to the carrying amount of these instruments (detailed in the respective Note and excluding receivables from subsidiaries), as follows.

    SEK in millions

    Note

    Dec 31, 2017

    Dec 31, 2016

    Other financial assets excluding investments and receivables on subsidiaries and associated ­companies and investments in other equity instruments

    P10

    15,072

    14,692

    Trade and other receivables

    P11

    262

    1,244

    Short-term investments, cash and cash equivalents

    P12

    27,981

    17,275

    Total

     

    43,315

    33,211

    For information on credit risk management relevant to Telia Company AB, see Note C26.

    Liquidity risk management

    Liquidity risk is the risk that Telia Company AB will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. For information on liquidity risk management relevant to Telia Company AB, see Note C26.

    As of December 31, 2017, contractual undiscounted cash flows for interest-bearing borrowings and non-interest-bearing currency derivatives (excluding intra-group derivatives) represented the following expected maturities, including installments and estimated interest payments. The balances due within 12 months equal their carrying values as the impact of discounting is insignificant.

    Expected maturity
    SEK in millions

    Jan–Mar 2018

    Apr–Jun 2018

    Jul–Sep 2018

    Oct–Dec 2018

    2019

    2020

    2021

    2022

    Later years

    Total

    Utilizied bank overdraft facilities

    185

    185

    Open-market financing program borrowings

    9,164

    57

    351

    1,792

    4,453

    11,267

    10,513

    11,489

    59,088

    108,175

    Cross currency interest rate swaps and
    interest rate swaps

                       

    Payables

    23,829

    3,039

    1,995

    430

    29,293

    Receivables

    -23,658

    -3,154

    -2,002

    -426

    -29,240

    Currency swaps and forward exchange contracts

                       

    Payables

    2,713

    211

    1,022

    12,692

    11,863

    8,339

    3,328

    82,057

    122,225

    Receivables

    -2,864

    -248

    -838

    -13,119

    -12,397

    -8,300

    -3,283

    -84,304

    -125,353

    Total, net

    9,184

    90

    528

    1,369

    4,453

    10,733

    10,552

    11,534

    56,841

    105,285

    Expected maturities for and additional information on non-interest-bearing liabilities, guarantees and other contractual obligations are presented in Notes P15, P18 and P23, respectively.

  21. Operating lease agreements

    Telia Company AB leases primarily office premises. Most of the leases are from outside parties. The leases are on commercial terms with respect to prices and duration.

    Future minimum leasing fees under operating lease agreements in effect as of December 31, 2017, that could not be canceled in advance and were in excess of one year were as follows.

    Expected maturity
    SEK in millions

    Jan–Mar 2018

    Apr–Jun 2018

    Jul–Sep 2018

    Oct–Dec 2018

    2019

    2020

    2021

    2022

    Later years

    Total

    Future minimum leasing fees

    9

    9

    9

    9

    35

    34

    22

    127

    In 2017 total rent and leasing fees paid were SEK 39 million (43).

  22. Related party transactions

    General

    Conventional commercial terms apply for the supply of goods and services to and from subsidiaries, associated companies and joint ventures.

    Subsidiaries

    In 2017 sales to subsidiaries totaled SEK 406 million (467), while purchases from subsidiaries totaled SEK -27 million and (-122).

    Commitments on behalf of related parties

    Telia Company AB has made certain commitments on behalf of group companies and joint ventures. See Note P23 for further details.

    Other transactions

    For descriptions of certain other transactions with related parties, see Note C28.

  23. Contingencies, other contractual obligations and litigation

    Contingent assets and financial guarantees

    As of the end of the reporting period, Telia Company AB had no contingent assets, while financial guarantees reported as contingent liabilities were distributed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Guarantees on behalf of subsidiaries

    10,762

    11,752

    Guarantees for pension obligations

    38

    39

    Guarantees for pension obligations on behalf of former subsidiaries

    67

    Total financial guarantees

    10,867

    11,791

    Some loan covenants agreed limit the scope for divesting or pledging certain assets. For information on change-of-control provisions included in some of Telia Company AB’s more recent bond issuances, see Notes to consolidated financial statements (corresponding section in Note C30).For all financial guarantees issued, stated amounts equal the maximum potential future payments that Telia Company AB could be required to make under the respective guarantee. Guarantees on behalf of subsidiaries include SEK 8,183 million to TeliaSonera UTA Holding B.V. and Sonera Holding B.V. to support the companies financially if they can not meet their payment obligations until March 2018. The guarantee was necessary for the companies to distribute dividends within the Group. Guarantees on behalf of subsidiaries also include SEK 509 million related to Swedish pension obligations and SEK 1,475 million related to vendor financing. In addition to financial guarantees indicated above, guarantees for fulfillment of contractual undertakings are granted by Telia Company AB on behalf of subsidiaries, as part of the Group’s normal course of business. At the end of the reporting period, there was no indication that payment will be required in connection with any such contractual guarantee.

    Collateral pledged

    As of the end of the reporting period, collateral pledged was distributed as follows.

    SEK in millions

    Dec 31, 2017

    Dec 31, 2016

    Investment bonds pledged under repurchase agreements

    664

    559

    Total collateral pledged

    664

    559

    Other unrecognized contractual obligations

    As of December 31, 2017, unrecognized contractual obligations regarding future acquisitions (or equivalent) of non-current assets represented the following expected maturities.

    Expected maturity
    SEK in millions

    Jan–Mar 2018

    Apr–Jun 2018

    Jul–Sep 2018

    Oct-Dec 2018

    2019

    2020

    2021

    2022

    Later years

    Total

    Other holdings

    1

    1

    1

    1

    2

    5

    Total (see Liquidity risk – Note P20)

    1

    1

    1

    1

    2

    5

    Reported obligations refer to licenses for and adaption of business support systems.

    Legal and administrative proceedings

    For additional information relevant to Telia Company AB, see Note C29.

  24. Cash flow information

    Non-cash transactions

    No non-cash transactions were performed during 2017 or 2016.

    Liabilities and cash flows arising from financing activities

    SEK in millions

    Dec 31, 2016

    Cash
    flows

    Non-cash changes

    Dec 31, 2017

    Foreign exchange movements

    Fair value changes

    Other
    changes¹

    Long-term borrowings

    81,207

    4,111

    1,113

    -772

    -221

    85,437

    Long-term borrowings (excluding borrowings from subsidiaries)

    81,207

    4,111

    1,113

    -772

    -221

    85,437

    of which derivatives held to hedge long-term borrowings

    2,684

    -951

    -504

    1,037

    2,266

    Short-term borrowings

    29,642

    -8,852

    21

    -27

    20,065

    40,849

    Short-term borrowings (excluding borrowings from subsidiaries)

    10,496

    -8,852

    21

    -27

    1,418

    3,056

    of which derivatives held to hedge short-term borrowings

    193

    -52

    61

    203

    Change in borrowings from subsidiaries

    19,146

    18,647

    37,793

    Total liabilities from financing activities

    110,849

    -4,741

    1,133

    -799

    19,844

    126,286

    1) Other changes mainly refer to reclassification due to maturity from long to short term.

    SEK in millions

    Dec 31, 2015

    Cash
    flows

    Non-cash changes

    Dec 31, 2016

    Foreign exchange movements

    Fair value changes

    Other
    changes¹

    Long-term borrowings

    87,896

    -5,876

    2,488

    539

    -3,840

    81,207

    Long-term borrowings (excluding borrowings from subsidiaries)

    87,896

    -5,876

    2,488

    539

    -3,840

    81,207

    of which assets held to hedge long-term borrowings

    2,316

    1,303

    -182

    -753

    2,684

    Short-term borrowings

    37,537

    -2,926

    644

    27

    -5,640

    29,642

    Short-term borrowings (excluding borrowings from subsidiaries)

    9,031

    -2,926

    644

    27

    3,720

    10,496

    of which assets held to hedge short-term borrowings

    72

    107

    15

    193

    Change in borrowings from subsidiaries

    28,506

    -9,360

    19,146

    Total liabilities from financing activities

    125,433

    -8,802

    3,132

    566

    -9,480

    110,849

    1) Other changes mainly refer to reclassification due to maturity from long to short term.

  25. Human resources

    The number of employees was 332 at December 31, 2017 (273). The average number of full-time employees was as follows.

    Country

    Jan–Dec 2017

    Jan–Dec 2016

    Total
    (number)

    of whom
    men (%)

    Total
    (number)

    of whom
    men (%)

    Sweden

    262

    50

    286

    51

    Total

    262

    50

    286

    51

    The share of female and male Corporate Officers was as follows. Corporate Officers include all members of the Board of Directors, the President and the 8 other members (10) of Group Executive Management employed by the parent company.

    Percent

    Dec 31, 2017

    Dec 31, 2016

    Board of Directors

    Other
    Corporate Officers

    Board of Directors

    Other
    Corporate Officers

    Women

    41.7

    44.4

    45.5

    33.3

    Men

    58.3

    55.6

    54.5

    66.7

    Total

    100.0

    100.0

    100.0

    100.0

    Total personnel expenses were distributed by nature as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Salaries and other remuneration

    405

    418

    of which performance share programs

    10

    8

    Social security expenses

       

    Employer’s social security contributions

    122

    131

    of which performance share programs

    3

    3

    Pension expenses

    213

    237

    Total social security expenses

    335

    368

    Other personnel expenses

    36

    32

    Total personnel expenses recognized by nature

    777

    818

    Salaries and other remuneration were divided between Corporate Officers and other employees as follows.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Corporate Officers
    (of which variable pay)

    Other
    employees

    Corporate Officers
    (of which variable pay)

    Other
    employees

    Salaries and other remuneration

    65 (−)

    340

    67 (−)

    351

    Corporate Officers include members of the Board of Directors and, as applicable, former Board members (but exclude employee representatives); the President and, as aplicable, former Presidents and Executive Vice Presidents; and the 8 other members (9) of Group Executive Management employed by the parent company.

    Pension expenses and outstanding pension commitments for Corporate Officers were as follows. There are no pension benefit arrangements for external members of the Board of Directors.

    SEK in millions

    January–December
    or December 31,

    2017

    2016

    Pension expenses

    21

    20

    Outstanding pension commitments

    167

    171

    For additional information, see sections “Performance share programs” and “Remuneration to corporate officers” in Note C31.

  26. Remuneration to audit firms

    Remuneration expensed by audit firms was as follows. See additional information in Note C32.

    SEK in millions

    Jan–Dec 2017

    Jan–Dec 2016

    Remuneration

       

    Deloitte

       

    Audit

    8

    9

    Audit-related services

    0

    0

    Tax services

    0

    All other services

    14

    6

    Total

    22

    15