Definitions

Concepts and key ratios

Acquisitions and other investments

Investments in goodwill, intangible and tangible non-current assets acquired in business combinations, shares and participations, and asset retirement obligations.

Adjusted EBITDA

EBITDA adjusted for adjustment items within EBITDA.

Adjusted EBITDA margin

Adjusted EBITDA in relation to net sales.

Adjusted equity

Reported equity attributable to owners of the parent less the (proposed) dividend. For the parent company also including untaxed reserves net of tax.

Adjusted operating income

Operating income adjusted for adjustment items within operating income.

Adjustment items

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

ARPU

Average monthly revenue per user.

Blended churn

The number of lost subscriptions (postpaid and prepaid) expressed as a percentage of the average number of subscriptions (postpaid and prepaid).

Cash CAPEX

CAPEX with addition/deduction of net of paid investments and additional payments from previous periods.

CAPEX

An abbreviation of “Capital Expenditure.” Investments in intangible and tangible non-current assets but excluding goodwill, intangible and tangible non-current assets acquired in business combinations and asset retirement obligations.

CAPEX excluding license and spectrum fees

CAPEX deducted with license and spectrum fees.

Capital employed

Total assets less non-interest-bearing liabilities and non-
interest-bearing provisions, and the (proposed) dividend.

Change local organic (%)

The change in Net sales/External service revenues/Adjusted EBITDA, excluding effects from changes in currency rates compared to the group’s reporting currency (SEK) and acquisitions/disposals, compared to the same period previous year.

Earnings and equity per share

Earnings per share are based on the weighted average number of shares before and after dilution with potential ordinary shares, while equity per share is based on the number of shares at the end of the period. Earnings equal net income attributable to owners of the parent and equity is equity attributable to owners of the parent.

EBITDA

An abbreviation of “Earnings Before Interest, Tax, Depreciation and Amortization.” Equals operating income before depreciation amortization and impairment losses, and before income from associated companies and joint ventures.

EBITDA margin

EBITDA expressed as a percentage of net sales.

Equity/assets ratio

Adjusted equity and equity attributable to non-controlling interests expressed as a percentage of total assets.

Free cash flow

The total of cash flow from operating activities and cash CAPEX.

Interest coverage ratio

Operating income plus financial revenues divided by financial expenses.

Mobile billed revenues

Voice, messaging, data and content.

Net debt

Interest-bearing liabilities less derivatives recognized as financial assets (and hedging long-term and short-term borrowings) and related credit support annex (CSA), less 50 percent of hybrid capital (which, consistent with market practice for the type of instrument, is treated as equity), less short-term investments, long-term bonds available for sale and cash/cash equivalents.

Net debt/assets ratio

Net debt expressed as a percentage of total assets.

Net debt/adjusted EBITDA ratio (multiple)

Net debt divided by adjusted EBITDA rolling 12 months and excluding disposed operations.

Net debt/equity ratio

Net debt expressed as a percentage of adjusted equity and equity attributable to non-controlling interests.

Net interest-bearing liability

Interest-bearing liabilities and provisions less interest-
bearing assets but including investments in associated companies and joint ventures.

Operating capital

Non-interest-bearing assets less non-interest-bearing liabilities, including the (proposed) dividend, and non-­interest-bearing provisions.

Operational free cash flow

Free cash flow from continuing operations excluding cash CAPEX for licenses and dividends from associated companies net of taxes.

Operating margin

Operating income expressed as a percentage of net sales.

Pay-out ratio

For 2013-2015 dividend per share divided by basic total earnings per share. For 2016 and 2017 proposed dividend divided by free cash flow excluding licenses.

Return on assets

Operating income plus financial revenues expressed as a percentage of average total assets.

Return on capital employed

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

Return on equity

Net income attributable to owners of the parent expressed as a percentage of average adjusted equity.

Return on sales

Net income expressed as a percentage of net sales.

Segment assets and liabilities (Segment operating capital)

As Operating capital, but assets and liabilities excluding items related to foreign currency derivatives and accrued interest as well as to deferred and current tax, respectively, and liabilities excluding the (proposed) dividend.

Self-financing rate

Cash flow from operating activities divided by gross investments.

Service revenues (external)

External net sales excluding equipment sales.

Total asset turnover

Net sales divided by average total assets.

Turnover of capital employed

Net sales divided by the average capital employed.

Notation conventions

In conformity with international standards, this report applies the following currency notations:

SEK

Swedish krona

GBP

Pound sterling

TRY

Turkish lira

AZN

Azerbaijan manat

JPY

Japanese yen

USD

US dollar

DKK

Danish krone

NOK

Norwegian krone

UZS

Uzbek som

EUR

European euro

RUB

Russian ruble