MegaFon contributed to record-high free cash flow in 2012
Fourth quarter

  ·
Net sales in local currencies and excluding acquisitions increased 1.8
percent.
In reported currency, net sales decreased 0.7 percent to SEK 27,069
million
(27,259).
  · The addressable cost base in local currencies and excluding
acquisitions
decreased 0.8 percent. In reported currency, the addressable cost
base decreased
3.2 percent to SEK 7,399 million (7,646).
  · EBITDA, excluding
non-recurring items, decreased 0.6 percent in local
currencies and excluding
acquisitions. In reported currency, EBITDA, excluding
non-recurring items,
decreased 3.2 percent to SEK 8,974 million (9,269). The
EBITDA margin,
excluding non-recurring items, decreased to 33.2 percent (34.0).
  · Operating
income, excluding non-recurring items, decreased 0.8 percent to
SEK 7,608
million (7,671).
  · Net income attributable to the owners of the parent
company increased 34.9
percent to SEK 6,880 million (5,100) and earnings per
share to SEK 1.59 (1.18).
  · Free cash flow increased to SEK 2,934 million
(552), mainly due to lower
cash CAPEX and changes in working capital.
  ·
During the quarter the number of subscriptions grew by 1.7 million in
the
consolidated operations and by 2.3 million in the associated companies.
The
total number of subscriptions was 183.0 million.

Full year

  · Net sales
in local currencies and excluding acquisitions increased 1.2
percent. In
reported currency, net sales were unchanged at SEK 104,898 million
(104,804).
 
· Net income attributable to owners of the parent company increased 8.1
percent
to SEK 19,886 million (18,388) and earnings per share to SEK 4.59
(4.21).
  ·
Free cash flow increased to SEK 23,740 million (9,415), including a
dividend
from MegaFon of SEK 11,726 million net of taxes.
  · The Board of
Directors proposes an ordinary dividend of SEK 2.85 per share
(2.85), totaling
SEK 12.3 billion (12.3), or 62 percent (68) of net income
attributable to
owners of the parent company.

Comments by Lars Nyberg, President and
CEO

“Trends improved in the fourth quarter which resulted in a revenue growth
of 1.2
percent in local currencies for the full year, slightly ahead of our
guidance.
All countries in Eurasia are again delivering positive revenue growth
in the
fourth quarter, resulting in a total growth of more than 16 percent.
Mobility
Services saw higher equipment sales but also better trends in service
revenues
in several markets. Within Broadband Services, the growth of our fiber
customer
base accelerated towards the end of the year and we saw an
encouraging
improvement in our customer operations with a significant reduction
of unwanted
calls.

During 2012, we delivered the second highest net earnings
since the merger
between Telia and Sonera in 2002. Albeit some was attributable
to positive one
-off items, we kept a healthy balance between growth in net
sales and costs. In
order to maintain our profitability we are determined to
fundamentally change
our business and simplify our way of working. We have
already started
implementing measures that will lead to a cost reduction of SEK
2 billion net
over the coming two years, including personnel reductions net of
2,000 employees
as announced in October. In the fourth quarter, 300 jobs in
Sweden and Finland
were effected by these measures. During 2013, 1,800
employees in the Nordics and
Baltics will be effected and the total cost for
these reductions is estimated to
SEK 1.7 billion. At the same time, we see a
need to recruit new competence.

In the fourth quarter, and in a relatively
tough stock market, we were able to
successfully complete the initial public
offerings of both MegaFon and Kcell as
well as divesting NextGenTel in Norway.
After several years of ownership
disputes in MegaFon, we settled the
differences between the shareholders and
reached our goal of having a
transparent, liquid and direct ownership in
Russia’s second largest mobile
operator. It is amazing that our investment of a
mere SEK 1.2 billion since the
company’s inception in 1994 has grown to around
SEK 55 billion including
dividends, sale of shares and the value of our
remaining 25 percent
ownership.

The result of the IPO’s of MegaFon and Kcell led to that we are now
comfortably
within our debt target. While several of our peers in the sector
have cut or
even removed their dividends due to macroeconomic and industrial
challenges, the
Board of Directors has proposed to keep the ordinary dividend
unchanged at SEK
2.85 per share based on our solid financial position.

In the
autumn of 2012, we faced severe media allegations of corruption and
money
laundering, related to our investments in Uzbekistan, dating back to
2007.
Although we are confident that the allegations are legally unfounded, we
took
these allegations seriously and the Board initiated an external review by
one of
Sweden’s most well-renowned law firms. The Swedish Prosecuting
Authorities
initiated a separate investigation of the matter, which may take
one to two
years to complete.

Sustainability is becoming more and more
important to all industries and
companies. In 2012, TeliaSonera partnered with
the Danish Institute for Human
Rights (DIHR) to define and support an internal
assessment of risks that could
potentially lead to involvement in human rights
violations. DIHR will provide an
independent expert review of the analysis and
also assess the first stages of
implementation of TeliaSonera’s consequent
mitigation plan. In particular,
freedom of expression and privacy are growing
in importance for companies across
the ICT sector. TeliaSonera, as a founding
member of the “Industry Dialogue”,
counting ten leading telecom companies, has
actively participated in the
definition of common principles for the
telecommunication sector. These
principles will shortly be signed off by the
participants and pave the way for
other companies to join the
initiative.

Looking ahead, we believe our revenues in local currencies in 2013
will be at
the same level as last year and the EBITDA margin, excluding
non-recurring
items, to increase somewhat.”



Questions regarding the
reports:
TeliaSonera AB
Investor Relations
SE–106 63 Stockholm, Sweden
Tel. +46
8 504 550 00
Fax +46 8 611 46 42
www.teliasonera.com

TeliaSonera AB discloses
the information provided herein pursuant to the Swedish
Securities Markets Act
and/or the Swedish Financial Instruments Trading Act. The
information was
submitted for publication at 07:00 CET on January 31, 2013.