Consumer fixed market in Sweden 26 June 2014

Mats Lundquist, Head of Broadband & TV, Telenor Sweden

Agenda

• Introduction

• Market overview

• Strategic focus

Focus areas Telenor

Sweden

• Improve customer experience

• Monetize mobile data

• Strengthen fixed 3-play position

• Continue operational excellence

improvement

3

Stable financial development despite competitive market

4

• Fixed decline in DSL and voice

• Fixed growth in 3-play over fibre

• Mobile revenue growth affected by lower

handset sales

2009 2010 2011 2012 2013

Fixed Mobile

3.4 3.0

3.1 2.9 2.9

7.6 8.3

8.9 9.4 9.2 22% 24% 24%

25%

30%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

0

500

1000

1500

2000

2500

3000

3500

4000

2009 2010 2011 2012 2013

EBITDA EBITDA %

• Cost efficiency program

• Mobile contribution

• Turnaround fixed

2.4 2.7 2.9

3.1

3.6

Telenor Sweden revenues (SEK bn) EBITDA (SEK bn) and EBITDA margin

Second largest operator with solid market positions

5

0.7m fixed BB subscriptions 23% revenue market share

1.8m subscriptions 19% revenue market share

0.7m subscriptions 22% revenue market share

Consumer mobile Business mobile Consumer fixed broadband*

*Incl. a

cquis

itio

n o

f T

ele

2’s

fib

er

and c

able

busin

ess

Telenor Telia “3” Tele2 Comhem Other

Overview of fixed in Telenor Sweden

6

340

521

675

Voice

TV

Broadband

+20

* Tele2 acquisition included from Q1 2014

Q1 2014: Revenues SEK 853 million (+27% YoY)*

Customers as of Q1 2014 (k)

vs Q1 2013*

+133

+231

Agenda

• Introduction

• Market overview

• Strategic focus

Market trends

1. Fibre growth with SDU as the next arena

after a period of consolidation

2. Continued shift from closed to open

business models

3. Major shift in TV Market – driven by OTT

and bundling of 3 play

4. Early signals of possible quad play

based on improved customer experience

of broadband, mobile and content

8

Fixed consumer decline explained primarily by voice

and DSL

9

0

5,000

10,000

15,000

20,000

25,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Fixed Broadband - Fibre Fixed Broadband - Cable TV with Telecom OperatorsTV with other operators Fixed Broadband - xDSL Fixed Voice

Source: PTS

Swedish broadband development driven by fiber access*

10

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Fibre share of households Cable share of households

xDSL share of households Consumer Mobile Broadband "Household Penetration"

Other accesses (not paid for/dial-up) share of households

* Subscribers

** Homes connected with fibre out of 2.5 million MDUs and 2 million SDUs

Fibre household

penetration **

~50%

- MDU 75%

- SDU 15%

Source: PTS and Telenor analysis

Fibre growth in open networks

11

• Model established by public owned REOs

and metro networks. Followed by Telia

Open Fibre

• In MDUs, landlord makes investment in

in-house LAN and leases to

communication operator (CO) which

installs active equipment.

• CO runs and maintains network and signs

SPs.

• SPs offer a variety of products to the end

user. Few 3-play offerings.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2008 2009 2010 2011 2012 2013 2014

Closed Open Share open

Swedish fibre market (connections)

Source: PTS and Telenor analysis

12

Consumer fibre customer base and growth in 2013

0

200

400

600

800

1,000

1,200

2012 2013

Telenor 280k (+24)

Telia 329k (+66)

Tele2 117k (+14)*

Bahnhof 69k (+5)

Bredband2 89k (+6)

Alltele 67k (+2)

Other 154k (+25)

Comhem 35k (+27)

* Owned by Telenor since January 2014

Source: PTS

Fixed revenue growth

13

0.9%

-4.5% -7.1% -7.6%

-1.8%

-5.3%

-0.9% -0.3%

-24%

-20%

-16%

-12%

-8%

-4%

0%

4%

8%

12%

16%

2007 2008 2009 2010 2011 2012 2013 LTM Q114

Telia Tele2 Telenor Comhem

Telia reports strong customer numbers all over (broadband, TV and telephony)

Tele2 revenue decrease accelerates

Telenor has turned negative trend

Comhem is growing on revenues again after another strong customer growth quarter

*Telenor revenues include acquisitions retroactively.

Comments Q1 2014

Source: Annual reports

Agenda

• Introduction

• Market overview

• Strategic focus

Bredbandsbolaget’s brand position

15

Bredbandsbolaget is the main brand with a clear position

as a premium brand with strong customer experience.

Ownit brand used as an attacker brand for take over market.

Fastest

broadband

Most satisfied

customers

First with the

latest

Experience More

Brand Target Group: Maximalists

Increased scale in fibre and TV through acquisitions and

organic sales

16

395 385

544 580

730

25% 22%

29% 28% 34%

0%

25%

50%

75%

100%

0

100

200

300

400

500

600

700

800

900

1,000

2010 2011 2012 2013 2014

Telenor Fiber Universe (hc)

Telenor Fiber Universe Market share(%)

* Homes connected

** Including Canal Digital DTH

Source: PTS and Telenor analysis

Telenor fibre universe 2010-2014

Consumer fibre market share*

27%

34% 4%

35%

Telia Telenor Com Hem Other

Customer market share TV**

14%

18%

40%

28%

Telia Telenor Com Hem Other

Telenor #1 position within fibre

Telenor #2 position within TV

Telenor fibre universe (hc)

Telenor fibre universe market share (%)

Main strategic areas 2014

17

Brand preference consumer” Brand preference consumer”

Loved by customers Efficient operations

Internet for all - Home

• Increase penetration and ARPU

• Improve TV-offering

• Implement NPS

• Increase speed

• Integrate Tele2

• Improve delivery process

• Expand in open networks

• Develop SDU offer

Ambition to strengthen 3-play position

Improved TV-offering:

• New packaging in 2013

• Basic, Flex and Large through

own content agreements

• Premium packages through C

More and Viasat

• New IPTV platform in H2 2014

• Multiscreen in 2015

• SVOD in 2015

18

1-play 2-play 3-play

Fibre ARPU - Bredbandsbolaget

Distribution of fibre customer base

1 play

2 play

3 play

Focus areas Telenor

Sweden

• Improve customer experience

• Monetize mobile data

• Strengthen fixed 3-play position

• Continue operational excellence

improvement

19

Consumer fixed market in Sweden 26 June 2014

Mats Lundquist, Head of Broadband & TV, Telenor Sweden