Comments by the CEO:

The journey continues. Please join us!

The past year has been very important in our transition from old Telia to the new, from fragmented to focused, from uncertainty to more comfort, from a weak balance sheet to a strong one and, most importantly, from question marks to exclamation marks in our strategy execution.

At Telia Company, we are proud of our services and we are pleased with the recognition we receive from others. Over the past year, we have got confirmation that our networks maintain a higher standard than our competitors in five of seven markets. Keeping the highest quality in everything we do is becoming even more important.

As digitalization transforms our society, our customers become more and more dependent on their connection having high availability without interruption. The digitalization has many possibilities, and we have an important role and responsibility in it.

In recent years, we have invested heavily and thanks to this we are well equipped. Together with our new and more efficient investing model we can look forward to a lower investment pace going forward. This does not mean that we will neglect development, the opposite. Telia Company will always strive to have the best networks and offer the most up-to-date services.

We are simplifying

Equally important as offering the best product is to do it the best way. In an industry with low growth, efficiency is crucial to meeting expectations of customers and shareholders. Just as we digitalize our customers, we now digitalize ourselves. In Sweden, for example, we are implementing a comprehensive transformation to future- proof the company. Old products and IT systems can be removed when we implement new platforms enabling us to offer something better to our customers, while reducing our structural costs. Before we get the full impact of these investments, we'll continue with other savings. In 2017, a lot of work was initiated to reduce our costs. In 2018 we will continue to turn every stone to increase our long-term competitiveness with the aim to lower costs in the group by SEK 1.1 billion net.

We also continue to dispose operations outside the core. During the year we disposed Sergel, Tcell, MegaFon and reduced our ownership in Turkcell equivalent to SEK 22.5 billion. In line with our strategy we also continue to acquire companies and competencies in the Nordics and Baltics. During the year we acquired companies for SEK 4.5 billion. We welcomed Fältcom, Humany, Nebula, Phonero and Propentus to the Telia Company family.

New technology - new possibilities

Now, a global race is going on to be the first with 5G. Telia Company intends to be early out with the technology. Together with our customers who have the ideas and benefits of the new technology, we will explore new business opportunities, create jobs and strengthen the region's ability to lead digitalization into the next developmental leap. However, we will not be able to roll out the new technology if the business conditions are lacking. The expansion of new technology will depend on customer demand and the ability to create a profitable business as well as get access to the frequencies needed. Here governments and authorities in our countries have a decisive role.

A strategy in the forefront

The strategy we pursue aims at creating the new generation telco using the strength of our networks to develop existing business, while strengthening customer loyalty and willingness to pay through innovative services. As we develop our customer offering, we meet the industry's strong price pressure by value added and overall flexible solutions that make it even easier to be a customer. This strategy also allows us to continue the necessary development of digital infrastructure in our markets. It would be extremely unfortunate if the trend of restrictive regulations that we see in the EU and in many of our markets continues. The telecom industry has been a strong contributor to the fact that the Nordics and Baltics score so high in different digitalization indices. Political initiatives and governmental regulations must, in my opinion, be aimed at simplifying and enabling investment in the digital infrastructure. By that the region can continue to be in the top.

Sustainable business - a prerequisite

We have now reached a legal settlement that ends the processes following the company's incorrect conduct in Uzbekistan. It became an expensive lesson that shows that it is expensive to make mistakes but the experience has also made us better. In recent years, we have invested significant amounts of effort to correct historical errors and ensure that we have what it takes to drive the company in a responsible manner. But let me repeat, we will never be able to eliminate the risk of mistakes, we can only say with conviction that we have reduced it and that we will continue to reduce it.

We took further steps to align our strategy with our commitment to the UN’s sustainable development goals. We firmly believe that contributing to society will also create shareholder value. Innovation and partnerships in diverse areas from remote mining to health care allow us to find new business while creating positive societal impact. Part of the commitment is the launch of the Younite employee volunteering program, where every employee has a chance to contribute also on a personal level by spending their work day on activities such as educating kids on safety online, helping the elderly with their first uneasy steps with tablets, and similar activities. Doing so reduces the digital divide while creating pride among our people.

THE OUTCOME OF HARD WORK

Knowing that our business contributes to solving problems for individuals as well as for humanity is extremely satisfying. In addition, while doing business with a profitable and financially stable company, we can make our contribution long-term and sustainable in all aspects. There is no contradiction between the interests of the owner, the employee, the customer or the broader society. In the long run, everyone benefits from a long-term sustainable business.

It is with pride and humility that I summarize a year when we once again lived up to our ambition for a maintained EBITDA and delivered a significantly better cash flow than expected of SEK 9.7 billion. This allows us to propose a dividend of SEK 2.30 per share, which is an increase by 15 percent. I am more convinced than ever that Telia Company will be able to achieve a better total return for our owners in the future than we have achieved in recent years.

This year we will increase the pace and continue our journey. We would be happy if you joined!


Stockholm, March 7, 2018

Johan Dennelind

President and CEO