TeliaSonera January-June 2004 -

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 6-K


REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934

July 30, 2004


TeliaSonera
(Exact name of registrant as specified in its charter)

Marbackagatan 11 S-123 86 Farsta, Sweden
(Address of principal executive offices)

0-30340
(Commission File Number)


Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  / x /        Form 40-F  /   /

Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  /   /        No  / x /


   On July 28, 2004 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference

(c)     Exhibit 99.1. Press release dated July 28, 2004


    Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    TeliaSonera
(Registrant)

July 28, 2004
(Date)
  /s/   JAN HENRIK AHRNELL
Jan Henrik Ahrnell
Vice President and General Counsel

EXHIBIT 99.1

TeliaSonera January-June 2004 - Pro Forma 1)

TeliaSonera has, as previously announced, decided to apply IFRS 3 as of January 1, 2004, which means that goodwill amortization is discontinued.


Six-month period

Second quarter

 

Key Figures

In millions, except percentages
and per share data

Apr-Jun
2004
SEK

Apr-Jun
2004
EUR 2)

Apr-Jun
2003
SEK

Jan-Jun
2004
SEK

Jan-Jun
2003
SEK

Net sales

20,589

2,249

20,275

40,535

40,624

EBITDA excl. non-recurring items 3)

7,327

800

8,070

14,527

15,632

Margin (%)

35.6

35.6

39.8

35.8

38.5

Income from associated companies

681

74

-620

1,266

-536

Operating income

5,650

617

2,817

10,833

6,105

Operating income excl. non-recurring items

5,063

553

4,036

9,885

7,324

Income after financial items

5,489

600

3,121

10,384

5,893

Net income

3,148

344

1,544

6,553

3,183

Earnings per share

0.67

0.07

0.33

1.40

0.68

CAPEX

2,625

287

2,059

4,383

3,735

Free cash flow

3,591

392

5,155

5,785

9,052

Legal 1)          
Net sales

20,589

2,249

20,603

40,535

41,277

Net income

3,148

344

2,983

6,553

4,592

Earnings per share

0.67

0.07

0.64

1.40

0.99

1) Pro forma presentation: Excluding Telia’s Finnish mobile operations and Swedish cable TV
operations. Legal presentation: Including these operations through May 31, 2003.
2) Convenience translation only, conversion rate SEK 1 = EUR 0.109233.
3) Non-recurring items, see table on page 29.

Comments from Anders Igel, President and CEO

"We have maintained or improved our market positions and reached an operating income of more than SEK 5 billion in a very competitive market with significant price pressure."

"During the next years, the Nordic and Baltic markets will face a transition period, where migration from fixed to mobile and Internet-based services is expected to accelerate. It is the ambition of TeliaSonera to take the lead in this transition and to handle the necessary changes within the group."

"The Orange deal in Denmark will give us critical mass to become a powerful contender to the two dominating players in the Danish market."

"It is satisfying to see that our strong financial position enables us to give higher returns to our many shareholders."


Dividend Policy and Capital Structure

The Board of Directors has decided on a dividend policy for TeliaSonera to distribute 30-50 percent of net income.

In addition the Board of Directors has evaluated the future cash flows and balance sheet projections. Strong cash flows and the possible foreseeable acquisitions within current market footprint allow the company to return an additional SEK 30 billion to shareholders over the period 2005-2007. In case there are attractive investment opportunities available in addition to the current plan, this figure can be adjusted. The Board of Directors will evaluate the various means to return the money and present a proposal to a shareholders’ meeting.


Outlook

TeliaSonera’s ambition is to strengthen and improve the operations and position within the current footprint and to maintain or increase market shares.

During the next years, the Nordic and Baltic markets are expected to have an overall good volume development in a very competitive environment with continued price pressure. Migration from fixed to mobile and Internet-based services will accelerate. During this transition period, total market sales growth will be limited. Longer term, however, we expect market growth to return to higher levels.

In the important growth operations of Eurasian Fintur, Russian MegaFon and Turkish Turkcell we expect the very strong growth to continue. We will prioritize enhancing value growth in these operations.

The price pressure in the international carrier market has been stronger than previously expected. Positive cash flow defined as EBITDA less CAPEX is not expected to be reached for the full year.

CAPEX for 2004 is expected to increase somewhat in comparison with last year.

 

Second Quarter Review of the Group

Maintained market position in tough competition

SEK in millions

Decided synergies
(yearly run rate by
the end of 2005)

Achieved synergies
(yearly run rate
by the end of Q2 2004)

OPEX    
Product and service development

572

419

IT systems and infrastructure

369

135

Purchasing

342

342

Network operations

542

383

Corporate functions

153

153

Total

1,978

1,432

CAPEX    
Product and service development

36

13

IT systems and infrastructure

26

25

Purchasing

491

491

Network operations

15

10

Total

568

539

 

Acquisition of Orange in Denmark

In the beginning of July, TeliaSonera signed an agreement with France Telecom to acquire its Danish subsidiary Orange A/S with 605,000 mobile customers in Denmark.

TeliaSonera will pay in cash an amount corresponding to an enterprise value of EUR 600 million less Orange Denmark’s net debt on the closing date.

Closing will take place after approval by the European Commission and the Danish National IT and Telecom Agency and other necessary approvals.

Following the acquisition, TeliaSonera will be a powerful contender on the Danish mobile market with approximately 1.1 million mobile customers and a position as the third largest mobile operator.

 

Delisting from Nasdaq

Negligible trading volumes, high costs and limited benefits have led TeliaSonera’s Board of Directors to decide to delist the TeliaSonera share from the Nasdaq Stock Market. It is expected that TeliaSonera’s ADSs will cease to be quoted on Nasdaq as of the close of trading on August 6, 2004. TeliaSonera will, however, continue to be registered with the U.S. Securities and Exchange Commission.

 

 

Second Quarter Review of Profit Centers

Continued aggressive market initiatives
- defended market shares in Sweden

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

10,272

10,748

20,432

21,319

of which external

10,074

10,463

20,068

20,746

EBITDA excl. non-recurring items

4,068

4,850

8,243

9,189

Margin (%)

39.6

45.1

40.3

43.1

Operating income

3,499

2,915

6,506

5,659

Operating income excl. non-recurring items

2,920

3,289

5,927

6,033

CAPEX

1,082

680

1,807

1,296

Mobile communications        
Net sales

3,052

3,118

5,943

5,904

EBITDA excl. non-recurring items

1,230

1,534

2,398

2,769

Margin (%)

40.3

49.2

40.3

46.9

CAPEX

184

91

296

157

Fixed communications        
Net sales

7,220

7,630

14,489

15,415

EBITDA excl. non-recurring items

2,838

3,316

5,845

6,420

Margin (%)

39.3

43.5

40.3

41.6

CAPEX

898

589

1,511

1,139

Mobile communications

Fixed communications

Customer segments

Additional offerings were launched:

Increased sales and maintained profit
on a tough Finnish market

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

4,618

4,368

9,183

8,736

of which external

4,528

4,333

9,008

8,597

EBITDA excl. non-recurring items

1,716

1,689

3,407

3,512

Margin (%)

37.2

38.7

37.1

40.2

Operating income

891

480

1,722

1,170

Operating income excl. non-recurring items

896

495

1,727

1,185

CAPEX

709

600

1,145

991

Mobile communications        
Net sales

2,817

2,723

5,626

5,480

EBITDA excl. non-recurring items

1,322

1,259

2,538

2,652

Margin (%)

46.9

46.2

45.1

48.4

CAPEX

335

266

508

466

Fixed communications        
Net sales

1,801

1,645

3,557

3,256

EBITDA excl. non-recurring items

394

430

869

860

Margin (%)

21.9

26.1

24.4

26.4

CAPEX

374

334

637

525

Mobile communications

Fixed communications

Customer segments

Further initiatives were taken during the second quarter.

 

Strong customer growth despite intense
competition in Norway

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

1,571

1,561

3,013

3,076

of which external

1,538

1,542

2,942

3,038

EBITDA excl. non-recurring items

456

681

982

1,327

Margin (%)

29.0

43.6

32.6

43.1

Operating income

258

174

601

255

Operating income excl. non-recurring items

258

203

601

284

CAPEX

94

190

227

351

 

Strong sales and positive earnings trend
in Denmark

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

983

690

1,916

1,407

of which external

951

671

1,863

1,367

EBITDA excl. non-recurring items

72

-45

137

-72

Margin (%)

7.3

-6.5

7.2

-5.1

Operating income

-74

-198

-139

-400

Operating income excl. non-recurring items

-74

-198

-139

-400

CAPEX

81

69

128

143

Mobile communications        
Net sales

488

350

938

686

EBITDA excl. non-recurring items

4

-102

19

-106

CAPEX

42

18

60

43

Fixed communications excl. Stofa        
External net sales

297

236

594

498

EBITDA excl. non-recurring items

14

19

18

-34

CAPEX

26

28

44

61

Stofa        
External net sales

186

160

368

305

EBITDA excl. non-recurring items

54

38

100

68

CAPEX

13

23

24

39

*) External mobile interconnect revenues were previously reported net, but a transition was made to reporting gross in the fourth quarter of 2003.

Mobile communications

Fixed communications

 

Baltic Countries

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

1,468

1,470

2,871

2,883

of which external

1,454

1,451

2,846

2,853

EBITDA excl. non-recurring items

716

730

1,381

1,435

Margin (%)

48.8

49.7

48.1

49.8

Income from associated companies

45

8

180

118

Operating income

408

207

853

482

Operating income excl. non-recurring items

408

207

853

482

CAPEX

164

243

307

375

 

Strong mobile and broadband customer growth in Lithuania

Mobile communications

Fixed communications


Strong mobile growth in Latvia

Mobile communications

Fixed communications

 

Good development in both mobile and fixed in Estonia

Mobile communications

Fixed communications

 

Continued strong customer growth and
strong margins in Eurasia

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

986

626

1,780

1,184

of which external

985

626

1,779

1,184

EBITDA excl. non-recurring items

571

357

1,015

637

Margin (%)

57.9

57.0

57.0

53.8

Operating income

444

212

773

345

Operating income excl. non-recurring items

444

212

773

345

CAPEX

439

154

651

379


Over 1.4 million new customers in Russia

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Share of net income

62

218

228

308

Amortization of goodwill

-47

-103

Income from associated companies

62

171

228

205


Strong development in Turkey

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Share of net income (US GAAP)

356

-39

318

69

IFRS/IAS adjustments

58

261

346

415

Amortization of goodwill

-131

-246

Amortization of fair value adjustments

-50

-36

-86

-67

Income from associated companies

364

55

578

171

 

Continued price pressure and low volume growth on the international carrier market

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

1,018

1,284

1,953

2,776

of which external

717

979

1,328

2,136

EBITDA excl. non-recurring items

10

35

1

-10

Margin (%)

1.0

2.7

0.1

-0.4

Operating income

-104

-28

-298

-227

Operating income excl. non-recurring items

-118

-94

-245

-293

CAPEX

47

65

87

92

 

TeliaSonera Holding

SEK in millions, except
percentages

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

398

327

813

707

of which external

342

280

701

624

EBITDA excl. non-recurring items

-10

-37

-48

-44

Margin (%)

-2.5

-11.3

-5.9

-6.2

Income from associated companies

192

-879

242

-1,037

Operating income

165

-989

585

-1,225

Operating income excl. non-recurring items

165

-122

157

-357

CAPEX

9

55

28

101

 

Stockholm, July 28, 2004

Anders Igel
President and CEO

Auditors’ Review Report

We have made a review of this interim report in accordance with recommendations issued by the Swedish Institute of Authorized Public Accountants. A review is substantially limited in scope in comparison to an audit. Nothing has come to our attention that indicates that this interim report fails to comply with the requirements of the Swedish Securities Exchange Act and International Financial Reporting Standards (IFRS/IAS).

 

Stockholm, July 28, 2004

PricewaterhouseCoopers AB Peter Bladh
  Authorized Public Accountant
Göran Tidström  
Authorized Public Accountant  

 

 

Financial Information
Interim Report January-September 2004 October 27, 2004
Year-End Report January-December 2004 February 11, 2005

 

Questions regarding content:
TeliaSonera AB
Investor Relations
SE–106 63 Stockholm,
Sweden
Tel. +46 8 504 550 00
Fax +46 8 611 46 42
www.teliasonera.com/ir
 
Ordering of individual printed reports:
Tel. +46 372 851 42
Fax +46 372 843 56
www.teliasonera.com/ir
Shareholders with questions regarding the distribution of financial reports or for change of address:
Tel. +46 8 449 88 16
Fax +46 8 449 88 10
E-mail:
teliasonera@strd.se

 

Condensed Consolidated Income Statements

In millions, except per share data and no. of shares

Apr-Jun
2004
SEK

Apr-Jun
2004
EUR

Apr-Jun
2003
SEK

Jan-Jun
2004
SEK

Jan-Jun
2003
SEK

Net sales

20,589

2,249

20,275

40,535

40,624

Operating expenses

-12,651

-1,382

-12,528

-25,006

-25,315

EBITDA

7,938

867

7,747

15,529

15,309

Depreciation, amortization and write-downs

-2,969

-324

-4,310

-5,962

-8,668

Income from associated companies

681

74

-620

1,266

-536

Operating income

5,650

617

2,817

10,833

6,105

Net financial revenues and expenses

-161

-17

304

-449

-212

Income after financial items

5,489

600

3,121

10,384

5,893

Income taxes

-2,022

-221

-1,313

-3,268

-2,251

Minority interests

-319

-35

-264

-563

-459

Net income

3,148

344

1,544

6,553

3,183

Earnings per share          
Basic

0.67

0.07

0.33

1.40

0.68

Diluted

0.67

0.07

0.33

1.40

0.68

Weighted average no. of shares (thousands)          
Basic

4,675,232

4,675,232

4,675,232

4,675,232

4,675,232

Diluted

4,675,232

4,675,232

4,675,940

4,675,232

4,675,930

           
EBITDA excl. non-recurring items

7,327

800

8,070

14,527

15,632

Operating income excl. non-recurring items

5,063

553

4,036

9,885

7,324


Condensed Consolidated Balance Sheets

In millions

June 30,
2004
SEK

June 30,
2004
EUR

Dec 31,
2003
SEK

Assets      
Intangible fixed assets

61,984

6,771

61,820

Tangible fixed assets

48,442

5,292

49,161

Financial fixed assets

39,871

4,355

42,061

Total fixed assets

150,297

16,418

153,042

Inventories, etc.

530

58

501

Receivables

20,795

2,271

24,170

Short-term investments

10,896

1,190

8,658

Cash and bank

3,036

332

3,689

Total current assets

35,257

3,851

37,018

Total assets

185,554

20,269

190,060

       
Shareholders’ equity and liabilities      
Shareholders’ equity

117,424

12,827

112,393

Minority interests

3,720

407

3,441

Provisions for pensions and
employee contracts

566

62

522

Deferred tax liability, other provisions

14,130

1,543

14,775

Total provisions

14,696

1,605

15,297

Long-term loans

15,125

1,652

25,867

Short-term loans

9,469

1,034

4,687

Non-interest bearing liabilities

25,120

2,744

28,375

Total liabilities

49,714

5,430

58,929

Total shareholders’ equity
and liabilities

185,554

20,269

190,060

 

Condensed Consolidated Cash Flow Statements

In millions

Apr-Jun
2004
SEK

Apr-Jun
2004
EUR

Apr-Jun
2003
SEK

Jan-Jun
2004
SEK

Jan-Jun
2003
SEK

Cash flow from
operating activities

6,246

682

7,736

10,230

13,322

Intangible and tangible assets acquired
(cash CAPEX)

-2,655

-290

-2,581

-4,445

-4,270

Free cash flow

3,591

392

5,155

5,785

9,052

Cash flow from other investing activities

288

31

996

6,754

1,400

Total cash flow from investing activities

-2,367

-259

-1,585

2,309

-2,870

Cash flow before financing activities

3,879

423

6,151

12,539

10,452

Cash flow from
financing activities

-8,418

-919

-660

-10,990

-6,061

Cash flow for the period

-4,539

-496

5,491

1,549

4,391

 

Segment Information

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales 1)        
Sweden

10,272

10,748

20,432

21,319

Mobile

3,052

3,118

5,943

5,904

Fixed 2)

7,220

7,630

14,489

15,415

Finland

4,618

4,368

9,183

8,736

Mobile

2,817

2,723

5,626

5,480

Fixed 2)

1,801

1,645

3,557

3,256

Norway - mobile

1,571

1,561

3,013

3,076

Denmark

983

690

1,916

1,407

Mobile

488

350

938

686

Fixed 2)

495

340

978

721

Baltic countries

1,468

1,470

2,871

2,883

Lithuania – mobile

537

539

1,045

978

Lithuania – fixed

470

556

958

1,076

Latvia – mobile

513

463

970

894

Other

-52

-88

-102

-65

Eurasia - mobile

986

626

1,780

1,184

Russia

0

0

0

0

International Carrier

1,018

1,284

1,953

2,776

Holding

398

327

813

707

Corporate

0

1

1

2

Eliminations

-725

-800

-1,427

-1,466

The Group

20,589

20,275

40,535

40,624

1) For information about external net sales per product area: www.teliasonera.com/ir
2) Including eliminations between fixed and mobile communications

 

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

EBITDA        
Sweden

4,646

4,476

8,821

8,815

Mobile

1,230

1,534

2,398

2,769

Fixed

3,416

2,942

6,423

6,046

Finland

1,711

1,674

3,402

3,497

Mobile

1,322

1,259

2,538

2,652

Fixed

389

415

864

845

Norway - mobile

456

681

982

1,327

Denmark

72

-45

137

-72

Mobile

4

-102

19

-106

Fixed

68

57

118

34

Baltic countries

716

730

1,381

1,435

Lithuania – mobile

233

243

459

463

Lithuania – fixed

230

241

457

518

Latvia – mobile

264

249

516

474

Other

-11

-3

-51

-20

Eurasia - mobile

571

357

1,015

637

Russia

0

2

0

0

Turkey

0

1

0

0

International Carrier

49

101

3

56

Holding

-10

-37

381

-44

Corporate

-241

-225

-471

-401

Eliminations

-32

32

-122

59

The Group

7,938

7,747

15,529

15,309

 

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

EBITDA excl. non-recurring items        
Sweden

4,068

4,850

8,243

9,189

Mobile

1,230

1,534

2,398

2,769

Fixed

2,838

3,316

5,845

6,420

Finland

1,716

1,689

3,407

3,512

Mobile

1,322

1,259

2,538

2,652

Fixed

394

430

869

860

Norway - mobile

456

681

982

1,327

Denmark

72

-45

137

-72

Mobile

4

-102

19

-106

Fixed

68

57

118

34

Baltic countries

716

730

1,381

1,435

Lithuania – mobile

233

243

459

463

Lithuania – fixed

230

241

457

518

Latvia – mobile

264

249

516

474

Other

-11

-3

-51

-20

Eurasia - mobile

571

357

1,015

637

Russia

0

2

0

0

Turkey

0

1

0

0

International Carrier

10

35

1

-10

Holding

-10

-37

-48

-44

Corporate

-239

-225

-469

-401

Eliminations

-33

32

-122

59

The Group

7,327

8,070

14,527

15,632

 

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Depreciation, amortization and write-downs        
Sweden

-1,169

-1,560

-2,353

-3,154

of which amortization of goodwill

0

-1

Finland

-816

-1,202

-1,678

-2,335

of which amortization of goodwill

-370

-701

of which amortization of fair value adjustments

-180

-190

-400

-378

Norway

-198

-507

-381

-1,072

of which amortization of goodwill

-317

-652

Denmark

-146

-151

-277

-327

of which amortization of goodwill

-5

-11

Baltic countries

-351

-530

-707

-1,071

of which amortization of goodwill

-134

-269

of which amortization of fair value adjustments

-9

-10

-12

-21

Eurasia

-126

-145

-242

-292

of which amortization of goodwill

-41

-83

of which amortization of fair value adjustments

-2

-2

-4

-4

International Carrier

-153

-128

-300

-282

of which amortization of goodwill

-1

-1

Holding

-17

-73

-38

-143

of which amortization of goodwill

-1

-2

of which amortization of fair value adjustments

-3

2

-13

5

Corporate

-4

-6

-7

-12

Eliminations

11

-8

21

20

The Group

-2,969

-4,310

-5,962

-8,668

of which amortization of goodwill

-869

-1,720

of which amortization of fair value adjustments

-194

-200

-429

-398

 

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Income from associated companies        
Sweden

22

-1

38

-2

Finland

-4

9

-1

9

Denmark

0

0

1

0

Baltic countries

45

8

180

118

Latvia – fixed

65

31

120

83

Share of net income

45

31

80

41

Amortization of fair value adjustments

20

0

40

42

Estonia – mobile

-16

-14

39

30

Share of net income

-12

8

47

73

Amortization of goodwill

-19

-37

Amortization of fair value adjustments

-4

-3

-8

-6

Estonia – fixed

-4

-9

21

5

Share of net income

-2

3

24

29

Amortization of goodwill

-10

-20

Amortization of fair value adjustments

-2

-2

-3

-4

Eurasia

Russia

62

171

228

205

Share of net income

62

218

228

308

Amortization of goodwill

-47

-103

Turkey

364

55

578

171

Share of net income (U.S. GAAP)

356

-39

318

69

IFRS/IAS adjustments

58

261

346

415

Amortization of goodwill

-131

-246

Amortization of fair value adjustments

-50

-36

-86

-67

Holding

192

-879

242

-1,037

Share of net income

163

-23

257

-161

Capital gains/losses

29

372

52

350

Write-downs

0

-1,233

-67

-1,231

Amortization of goodwill

3

5

Amortization of fair value adjustments

0

2

0

0

Corporate

0

0

0

0

Eliminations

0

17

0

0

The Group

681

-620

1,266

-536

 

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Operating income        
Sweden

3,499

2,915

6,506

5,659

Finland

891

480

1,722

1 170

Norway

258

174

601

255

Denmark

-74

-198

-139

-400

Baltic countries

408

207

853

482

Eurasia

444

212

773

345

Russia

62

173

228

205

Turkey

364

56

578

171

International Carrier

-104

-28

-298

-227

Holding

165

-989

585

-1,224

Corporate

-244

-232

-478

-414

Eliminations

-19

47

-98

83

The Group

5,650

2,817

10,833

6,105

 

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Operating income excl.
non-recurring items
       
Sweden

2,920

3,289

5,927

6,033

Finland

896

495

1,727

1,185

Norway

258

203

601

284

Denmark

-74

-198

-139

-400

Baltic countries

408

207

853

482

Eurasia

444

212

773

345

Russia

62

173

228

205

Turkey

364

56

578

171

International Carrier

-118

-94

-245

-293

Holding

165

-122

157

-357

Corporate

-242

-232

-476

-414

Eliminations

-20

47

-99

83

The Group

5,063

4,036

9,885

7,324

 

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

CAPEX        
Sweden

1,082

680

1,807

1,296

Finland

709

600

1,145

991

Norway

94

190

227

351

Denmark

81

69

128

143

Baltic countries

164

243

307

375

Eurasia

439

154

651

379

International Carrier

47

65

87

92

Holding

9

55

28

101

Corporate

0

3

3

7

Eliminations

0

0

0

0

The Group

2,625

2,059

4,383

3,735

 

 

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Number of employees        
Sweden        
At the end of the period

10,972

11,258

10,972

11,258

Average for the period

10,413

10,787

10,374

10,843

Finland        
At the end of the period

7,016

6,411

7,016

6,411

Average for the period

6,500

5,878

6,438

5,816

Norway        
At the end of the period

709

735

709

735

Average for the period

715

738

718

735

Denmark        
At the end of the period

1,031

1,038

1,031

1,038

Average for the period

1,012

1,010

1,011

1,025

Baltic countries        
At the end of the period

4,361

5,244

4,361

5,244

Average for the period

4,227

5,438

4,351

5,409

Eurasia        
At the end of the period

1,130

980

1,130

980

Average for the period

1,104

937

1,073

924

Russia        
At the end of the period

1

1

1

1

Average for the period

1

1

1

1

Turkey        
At the end of the period

3

3

3

3

Average for the period

3

3

3

3

International Carrier        
At the end of the period

539

673

539

673

Average for the period

535

707

545

762

Holding        
At the end of the period

514

948

514

948

Average for the period

604

940

651

1,008

Corporate        
At the end of the period

296

279

296

279

Average for the period

289

245

283

226

The Group        
At the end of the period

26,572

27,570

26,572

27,570

Average for the period

25,403

26,684

25,448

26,752

 

Quarterly Data

SEK in millions, except per share data

Apr-Jun
2004

Jan-Mar
2004
*)

Oct-Dec
2003

Jul-Sep
2003
*)

Apr-Jun
2003
*)

Net sales

20,589

19,946

21,054

20,094

20,275

EBITDA

7,938

7,591

7,442

7,571

7,747

Depreciation, amortization and write-downs

-2,969

-2,993

-4,559

-4,337

-4,310

Income from associated companies

681

585

499

419

-620

Operating income

5,650

5,183

3,382

3,653

2,817

Income after financial items

5,489

4,895

3,100

3,353

3,121

Net income

3,148

3,405

2,696

1,792

1,544

Earnings per share          
Basic (SEK)

0.67

0.73

0.58

0.38

0.33

Diluted (SEK)

0.67

0.73

0.58

0.38

0.33

Investments

2,684

2,051

4,474

1,899

2,121

of which CAPEX

2,625

1,758

3,336

1,889

2,059

Cash flow from operating activities

6,246

3,984

6,651

6,581

7,736

Free cash flow

3,591

2,194

3,309

5,138

5,155

           
EBITDA excl. non-recurring items

7,327

7,200

7,143

7,915

8,070

Operating income excl. non-recurring items

5,063

4,822

3,330

4,177

4,036

*) Restated


Non-Recurring Items

SEK in millions

Apr-Jun

2004

Apr-Jun

2003

Jan-Jun

2004

Jan-Jun

2003

Within EBITDA

611

-323

1,003

-323

Restructuring charges, synergy implementation costs, etc.:
Sweden

-14

-374

-14

-374

Finland

-5

-15

-5

-15

International Carrier

26

21

Corporate

-2

-2

Revised treatment of certain pension-related costs:
Sweden

593

593

Provisions (FX rate effect):
International Carrier

13

66

-19

66

Capital gains:
Telia Finans

429

Within Depreciation, amortization and write-downs

-24

-29

-55

-29

Accelerated depreciation:
International Carrier

-24

-50

Write-downs:
International Carrier

-5

Other

-29

-29

Within Income from associated companies

-867

-867

Capital gains/losses:
Bharti Mobile

341

341

Write-downs:
Metro One

-110

-110

Infonet

-1,028

-1,028

Provisions and other:
INGROUP, etc.

-70

-70

Within Financial revenues and expenses

420

-111

222

Capital gains/losses:
Netia

583

583

Write-downs:
Xfera (3G Spain)

-111

Other financial investments

-163

-361

Total

587

-799

837

-997

 

Number of Customers 1)

In thousands

Jun 30,
2004

Mar 31,
2004

Dec 31,
2003

Sep 30,
2003

Jun 30,
2003

Consolidated operations          
Mobile

12,891

12,397

11,957

11,491

11,109

Sweden

4,115

4,008

3,838

3,760

3,692

Finland

2,266

2,321

2,428

2,441

2,471

Norway

1,239

1,190

1,195

1,191

1,181

Denmark

556

544

525

504

484

Lithuania

1,139

1,101

1,052

965

905

Latvia

575

554

534

507

491

Eurasia

3,001

2,679

2,385

2,123

1,885

           
Internet

1,759

1,738

1,686

1,605

1,559

Sweden

1,245

1,239

1,222

1,185

1,155

of which broadband

440

423

399

380

365

Finland

323

314

299

274

265

of which broadband

189

174

150

119

103

Denmark, broadband

117

113

104

96

91

Lithuania

74

72

61

50

48

of which broadband

34

31

25

18

15

           
Cable TV, Denmark

196

196

195

192

191

           
Fixed voice

8,000

8,042

8,087

8,027

8,094

Sweden

6,209

6,248

6,283

6,330

6,356

Finland

779

790

804

691

702

Denmark

188

179

172

170

177

Lithuania

824

825

828

836

859

           
Associated companies          
Mobile

29,277

27,089

24,867

22,982

20,995

Estonia

531

502

492

464

439

Russia

9,046

7,587

6,175

5,318

4,256

Turkey 2)

19,700

19,000

18,200

17,200

16,300

           
Internet

91

86

76

66

63

Latvia, broadband

25

23

19

15

14

Estonia

66

63

57

51

49

           
Fixed voice

1,076

1,089

1,099

1,103

1,121

Latvia

644

652

654

657

671

Estonia

432

437

445

446

450

  1. For further operational data: www.teliasonera.com/ir
  2. Turkcell figures are reported with a one-quarter lag


TeliaSonera January-June 2004 – Legal 1)

Condensed Consolidated Income Statements

SEK in millions, except per
share data and number of shares

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net sales

20,589

20,603

40,535

41,277

Costs of production

-10,797

-11,139

-21,032

-23,075

Gross income

9,792

9,464

19,503

18,202

Selling, admin., and R&D expenses

-4,955

-5,873

-10,497

-11,435

Other operating revenues and expenses, net

132

1,432

561

1,444

Income from associated companies

681

-620

1,266

-536

Operating income

5,650

4,403

10,833

7,675

Net financial revenues and expenses

-161

301

-449

-229

Income after financial items

5,489

4,704

10,384

7,446

Income taxes

-2,022

-1,457

-3,268

-2,395

Minority interests

-319

-264

-563

-459

Net income

3,148

2,983

6,553

4,592

Earnings per share (SEK)        
Basic

0.67

0.64

1.40

0.99

Diluted

0.67

0.64

1.40

0.99

Weighted average number of shares (thousands)        
Basic

4,675,232

4,675,232

4,675,232

4,659,878

Diluted

4,675,232

4,675,940

4,675,232

4,660,576

1) Including Telia’s Finnish mobile operations and Swedish cable TV operations through May 31, 2003.

Condensed Consolidated Balance Sheets

SEK in millions

June 30,
2004

Dec 31,
2003

Assets    
Intangible fixed assets

61,984

61,820

Tangible fixed assets

48,442

49,161

Financial fixed assets

39,871

42,061

Total fixed assets

150,297

153,042

Inventories, etc.

530

501

Receivables

20,795

24,170

Short-term investments

10,896

8,658

Cash and bank

3,036

3,689

Total current assets

35,257

37,018

Total assets

185,554

190,060

     
Shareholders’ equity and liabilities    
Shareholders’ equity

117,424

112,393

Minority interests

3,720

3,441

Provisions for pensions and employee contracts

566

522

Deferred tax liability, other provisions

14,130

14,775

Total provisions

14,696

15,297

Long-term loans

15,125

25,867

Short-term loans

9,469

4,687

Non-interest-bearing liabilities

25,120

28,375

Total liabilities

49,714

58,929

Total equity and liabilities

185,554

190,060

 

Condensed Consolidated Cash Flow Statements

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Cash flow before change in working capital

6,689

8,858

11,198

15,405

Change in working capital

-443

-1,264

-968

-2,194

Cash flow from operating
activities

6,246

7,594

10,230

13,211

Intangible and tangible fixed assets acquired (cash CAPEX)

-2,655

-2,581

-4,445

-4,307

Free cash flow

3,591

5,013

5,785

8,904

Cash flow from other investing activities

288

3,380

6,754

3,715

Total cash flow from investing activities

-2,367

799

2,309

-592

Cash flow before financing activities

3,879

8,393

12,539

12,619

Cash flow from financing
activities

-8,418

-2,983

-10,990

-8,311

Cash flow for the period

-4,539

5,410

1,549

4,308

         
Cash and cash equivalents, opening balance

18,252

4,333

12,069

5,465

of which short-term investments up to and including three months

14,537

578

8,380

2,634

of which cash and bank

3,715

3,755

3,689

2,831

Cash flow for the period

-4,539

5,410

1,549

4,308

Exchange rate differences in cash and cash equivalents

-44

-25

51

-55

Cash and cash equivalents, closing balance

13,669

9,718

13,669

9,718

of which short-term investments up to and including three months

10,633

6,239

10,633

6,239

of which cash and bank

3,036

3,479

3,036

3,479

         
Net interest-bearing liability, opening balance

7,088

22,213

8,847

25,034

Change in net borrowings

1,244

-5,044

-605

-7,746

Change in pension provisions

-46

-10

44

-129

Net interest-bearing liability, closing balance

8,286

17,159

8,286

17,159

 

Condensed Consolidated Statements of Changes in Shareholders’ Equity

SEK in millions

June 30,
2004

Dec 31,
2003

Opening balance

112,393

108,829

Transactions with outside parties

-4

-13

Differences arising from translation of foreign operations

1,538

-8,101

Inflation adjustments

1,610

2,427

Fair value measurement of securities available for sale

23

Gains/losses on instruments used to hedge cash flow

-14

-10

Dividend

-4,675

-1,870

New share issue

2,051

Net income for the period

6,553

9,080

Closing balance

117,424

112,393

 

Long-Lived Assets

 

Goodwill

Other
intangibles

Tangibles

SEK in millions

June 30,
2004

Dec 31,
2003

June 30,
2004

Dec 31,
2003

June 30,
2004

Dec 31,
2003

Opening balance

52,922

58,584

8,898

9,522

49,161

56,172

Purchases

58

1,902

333

1,292

4,105

8,446

Operations acquired

30

249

255

Dismantling/restoration

106

Sales/discards

-28

-131

-67

-356

Operations divested

-1

-5

-177

-1,420

Reclassifications

14

-458

251

432

-274

-455

Amortization, depreciation

-3,450

-888

-1,686

-5,068

-11,872

Write-downs, reversals of write-downs

-9

-38

-11

-301

-9

-332

CAPEX contribution from CATV customers

74

Advances

-7

0

59

49

Inflation adjustments

-7

Exchange rate differences

323

-3,618

129

-255

463

-1,499

Closing balance

53,308

52,922

8,676

8,898

48,442

49,161

 


Investments

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

CAPEX

2,625

1,995

4,383

4,148

Intangible fixed assets

199

117

292

633

Tangible fixed assets

2,426

1,878

4,091

3,515

Acquisitions

58

236

351

1,458

Goodwill and other fair value adjustments

40

103

176

1,256

Shares and participations

18

133

175

202

Total

2,683

2,231

4,734

5,606

 

Net Interest-Bearing Liability

SEK in millions

June 30,
2004

Dec 31,
2003

Long-term and short-term loans

24,594

30,554

Less:
Short-term investments,
cash and bank

-13,932

-12,347

Net debt

10,662

18,207

Less: Interest-bearing financial assets

-2,110

-6,112

Interest-bearing receivables

-832

-3,770

Total net borrowings

7,720

8,325

Provisions for pensions

566

522

Total net interest-bearing liability

8,286

8,847

 

Changes in Share Capital


Number of shares

Par value,
SEK/share

Share capital,
SEK thousand

Share capital, Dec 31, 2000

3,001,200,000

3.20

9,603,840

Share capital, Dec 31, 2001

3,001,200,000

3.20

9,603,840

New share issue, Dec 3, 2002

1,604,556,725

3.20

5,134,582

Share capital, Dec 31, 2002

4,605,756,725

3.20

14,738,422

New share issue, Feb 10, 2003

69,475,344

3.20

222,321

Share capital, Dec 31, 2003

4,675,232,069

3.20

14,960,743

Share capital, June 30, 2004

4,675,232,069

3.20

14,960,743

 

Financial Instruments

 

June 30,
2004

June 30,
2004

Dec 31,
2003

Dec 31,
2003

SEK in millions

Book
value

Fair
value

Book
value

Fair
value

Equity participations in associated companies

23,406

27,455

20,401

23,315

Other holdings of securities

456

456

558

558

Other long- and short-term receivables

1,947

1,947

8,824

8,736

Short-term investments

263

263

278

278

Interest rate swaps received

5,740

5,740

2,178

2,178

Interest rate swaps paid

-5,600

-5,600

-2,084

-2,084

FX interest rate swaps received

5,747

5,747

5,989

5,989

FX interest rate swaps paid

-5,348

-5,348

-5,583

-5,583

Other currency derivatives

33

33

84

84

Total assets

26,644

30,693

30,645

33,471

Provisions for pensions

566

566

522

522

Long-term loans

15,248

15,476

25,940

27,023

Short-term loans

9,450

9,780

4,686

4,710

Interest rate swaps received

-1,313

-1,313

-1,314

-1,314

Interest rate swaps paid

1,483

1,483

1,442

1,442

FX interest rate swaps received

-1,588

-1,588

-1,795

-1,795

FX interest rate swaps paid

1,693

1,693

1,927

1,927

Other currency derivatives

64

64

85

85

Total liabilities

25,603

26,161

31,493

32,600

Less book value of:        
- pensions

-566

 

-522

 
- accrued interest

-379

 

-332

 
- other currency derivatives

-64

 

-85

 
Book value of interest-bearing liabilities

24,594

 

30,554

 
         
FX swaps/forward contracts (portfolio)        
Purchases of foreign currency

10,886

10,886

15,030

15,030

Sales of foreign currency

3,307

3,307

5,075

5,075

 

Deferred Tax

SEK in millions

June 30,
2004

Dec 31,
2003

Deferred tax liability

8,452

8,537

Deferred tax asset (incl. valuation reserve)

-13,161

-14,960

Net deferred tax asset (-)/liability (+)

-4,709

-6,423

 

Contingent Assets and Contingent Liabilities

SEK in millions

June 30,
2004

Dec 31,
2003

Contingent assets

     
Collateral pledged    
Real estate mortgages

20

20

Chattel mortgages

262

Shares in subsidiaries

570

Shares in associated companies

525

642

Current receivables

39

36

Blocked funds in bank accounts

1,278

1,259

Total

1,862

2,789

     
Contingent liabilities    
Credit guarantees, associated companies

954

726

Performance guarantees, associated
companies and other minority holdings

1,367

1,159

Other guarantees, etc.

815

1,038

FPG/PRI, other pension guarantees

176

176

Total

3,312

3,099

TeliaSonera has a dispute with Tele2 and Vodafone concerning interconnect
prices in Sweden. TeliaSonera believes that it has recorded sufficient provisions.

 

Contractual Obligations

SEK in millions

June 30,
2004

Dec 31,
2003

Intangible fixed assets

25

40

Tangible fixed assets

2,839

2,140

Indefeasible Rights of Use (IRU)

3

Associated companies and other minority holdings

3,379

3,093

Total

6,246

5,273

 

Exchange Rates

Average SEK rate against

Jan-Jun
2004

Jan-Jun
2003

EUR

9.165202

9.160918

NOK

1.085647

1.181076

DKK

1.231254

1.233329

LVL

13.878648

14.459014

LTL

2.654408

2.653407

USD

7.468036

8.302945

TRL 1,000,000

5.365971

5.241557

 

Basis for Presentation

General. As in the annual accounts for 2003, TeliaSonera’s consolidated financial statements for the three-month and the six-month period ended June 30, 2004, have been prepared in accordance with International Financial Reporting Standards (IFRS/IAS). The parent company TeliaSonera AB’s financial statements have been prepared in accordance with the Annual Accounts Act and other Swedish regulations. This report has been prepared in accordance with IAS 34 "Interim Financial Reporting."

Amounts and dates. Unless otherwise specified, all amounts are in millions of Swedish kronor (SEK) or other currency specified and are based on the three-month and the six-month period ended June 30, 2004 for income statement items and as of June 30, 2004 for balance sheet items, respectively.

New accounting standards. On December 17, 2003, revisions to IAS 32 "Financial Instruments: Disclosure and Presentation" and IAS 39 "Financial Instruments: Recognition and Measurement" were published. A further amendment to IAS 39, incorporating new provisions that permit, in certain cases, fair value hedge accounting for a portfolio hedge of interest rate risk (macro hedging), was published on March 31, 2004. The revised IAS 39 must be applied for annual periods beginning on or after January 1, 2005. Earlier application is permitted only if the revised IAS 32 is also early applied.

On December 18, 2003, IAS 15 "Information Reflecting the Effects of Changing Prices" was withdrawn and revisions were published to IAS 1 "Presentation of Financial Statements," IAS 2 "Inventories," IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors," IAS 10 "Events after the Balance Sheet Date," IAS 16 "Property, Plant and Equipment," IAS 17 "Leases," IAS 21 "The Effects of Changes in Foreign Exchange Rates," IAS 24 "Related Party Disclosures," IAS 27 "Consolidated and Separate Financial Statements," IAS 28 "Investments in Associates," IAS 31 "Interests in Joint Ventures," IAS 33 "Earnings per Share," and IAS 40 "Investment Property." The effective date for all revised standards is January 1, 2005. Earlier application is encouraged. The revised standards also superseded a number of SICs (see details in the Q1 Interim Report).

IFRS 2 "Share-based Payment" (also replacing certain disclosure requirements in IAS 19 "Employee Benefits") was published on February 19, 2004. IFRS 2 is effective for annual periods beginning on or after January 1, 2005. Earlier application is encouraged. On March 31, 2004, IFRS 3 "Business Combinations" (superseding IAS 22 "Business Combinations"), IFRS 4 "Insurance Contracts" and IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" (superseding IAS 35 "Discontinuing Operations") were published. Revisions to IAS 36 "Impairment of Assets" and IAS 38 "Intangible Assets," in both cases related to IFRS 3, were also published on March 31, 2004.

Generally, IFRS 3 became effective for business combinations agreed to on or after March 31, 2004. Special transitional provisions apply to previously recognized goodwill, negative goodwill, intangible assets, and equity accounted investments. IFRS 4 is effective for annual periods beginning on or after January 1, 2005. Earlier application is encouraged. IFRS 5 must be applied prospectively for annual periods beginning on or after January 1, 2005. Earlier application is permitted if sufficient information is available. The effective date of the revisions to IAS 36 and IAS 38 is April 1, 2004 (or date of adoption of IFRS 3 for intangible assets acquired in a business combination).

IFRIC 1 "Changes in Existing Decommissioning, Restoration and Similar Liabilities" was published on May 27, 2004.

TeliaSonera’s future adoption of IFRS 4, IFRS 5 and of the revisions to IAS 2, IAS 8, IAS 10, IAS 16, IAS 17, IAS 21, IAS 24, IAS 28, IAS 31, IAS 32, IAS 33 and IAS 39, as well as the adoption of IFRIC 1, will not entail any restatements of comparative figures. When adopting IAS 1 and IAS 27, TeliaSonera will have to recognize the share of equity owned by external shareholders not as a separate line item on the face of the balance sheet but as a separate component within shareholders’ equity. Likewise, the minority share of income will not be recognized as a separate line item on the face of the income statement but as a disclosure on the face of the income statement of the allocation of profit or loss for the period. TeliaSonera does not own assets of the type regulated by IAS 40.

Adoption of IFRS 2 entails, among other things, recognizing share-based payments to employees, suppliers, creditors and others at fair value on the date of grant. TeliaSonera is evaluating what effects, if any, IFRS 2 will have on its consolidated financial statements. Adoption of IFRS 3 and of the revisions to IAS 36 and IAS 38 involves, among other things, that goodwill and other intangible assets with indefinite useful life will no longer be amortized but tested for impairment at least annually and that the minority interest should include minority shareholders’ part of the fair value of assets acquired and liabilities assumed. TeliaSonera has decided to adopt IFRS 3 as of January 1, 2004 (see "Restated quarterly data" below).

Change in estimates. Effective January 1, 2004, the depreciation rate for copper cables in the fixed local access network in Sweden has been changed from 8 years to 20 years and for switching equipment for ADSL customers from 3 years to 10 years.

Restated segment reporting. Some adjustments of TeliaSonera’s business organization were implemented in the first half of 2004. Hence, segment information in this report has been restated.

Restated quarterly data. In the fourth quarter of 2003, TeliaSonera finalized the allocation of goodwill to the various businesses acquired directly and indirectly in the merger with Sonera. The final allocation resulted, among others, in a reduction of goodwill related to the Turkcell shares, increasing operating income in 2003 by SEK 291 million. The adjustments were retroactively reflected in all quarters as follows.

 

SEK in millions

Jan-Dec
2003

Oct-Dec
2003

Jul-Sep
2003

Apr-Jun
2003

Jan-Mar
2003

Income from associated companies

291

64

93

73

61

Operating income

291

64

93

73

61

Income after financial items

291

64

93

73

61

Income taxes

-113

-25

-36

-28

-24

Net income

178

39

57

45

37

In the second quarter of 2004, TeliaSonera decided to retrospectively adopt IFRS 3 as of January 1, 2004. The adoption impacted the first quarter results for 2004 as follows.

SEK in millions

Jan-Mar
2004

Depreciation, amortization and write-downs

830

Income from associated companies

231

Operating income

1,061

Income after financial items

1,061

Net income

1,061


Changes in Group Composition

Metro One. On January 14, 2004, TeliaSonera sold its remaining shareholding in Metro One Telecommunications, Inc.

INGROUP. At year-end 2003, the shareholders of INGROUP Holding AB, including TeliaSonera holding a 37 percent share, signed an agreement to sell all of their shares to Manpower. After approval by relevant competition authorities, the divesture was completed on February 20, 2004.

Sonera Zed. On January 13, 2004, Yahoo!, with reference to an existing put option, sold back its 16 percent holding in Sonera Zed Oy to TeliaSonera, whereby Sonera Zed became a wholly owned subsidiary of TeliaSonera.

Telia Finans. On January 15, 2004, TeliaSonera signed an agreement to sell its wholly owned subsidiary, the Swedish leasing company Telia Finans AB, to De Lage Landen International B.V. After approval by the Swedish Financial Supervisory Authority, the sale was completed on March 1, 2004.

Eutelsat. TeliaSonera’s minority holding in the satellite company Eutelsat S.A. was sold in February 2004.

Sturenportti. On February 27, 2004, TeliaSonera purchased all shares in the real estate company Kiinteistö Oy Sturenportti from Sonera Pension Fund.

Orange Denmark. On July 8, 2004, TeliaSonera announced the signing of an agreement with France Telecom to acquire France Telecom’s Danish subsidiary Orange A/S. Closing will take place after approval by the EU Commission and the Danish National IT and Telecom Agency and other necessary approvals.

 

Related Party Transactions
The Swedish and the Finnish States. The TeliaSonera Group’s services and products are offered to the Swedish and the Finnish states, their agencies, and state-owned companies in competition with other operators and on conventional commercial terms. Certain state-owned companies run businesses that compete with TeliaSonera. Likewise, TeliaSonera buys services from state-owned companies at market prices and on otherwise conventional commercial terms. Neither the Swedish and Finnish states and their agencies, nor state-owned companies represent a significant share of TeliaSonera’s net sales or earnings.

Svenska UMTS-nät. TeliaSonera owns 50 percent of Svenska UMTS-nät AB. In the six-month period ended June 30, 2004, TeliaSonera sold services and products to Svenska UMTS-nät worth SEK 86 million and purchased services and products worth SEK 18 million. As security for certain amounts borrowed by Svenska UMTS-nät under a third-party credit facility, TeliaSonera had, as of June 30, 2004, issued a guarantee of a maximum of SEK 3,500 million to the lenders and granted pledges of its shares in Svenska UMTS-nät.

Lattelekom. TeliaSonera holds a participating interest in the Latvian fixed-line operator Lattelekom SIA. In the three-month period ended June 30, 2004, TeliaSonera sold services and products to Lattelekom worth SEK 29 million and purchased services and products worth SEK 19 million. In the six-month period ended June 30, 2004, TeliaSonera sold services and products worth SEK 57 million and purchased services and products worth SEK 35 million.

MegaFon. TeliaSonera holds a participating interest in the Russian mobile operator OAO MegaFon. As of June 30, 2004, TeliaSonera had interest-bearing and non-interest-bearing claims on MegaFon of SEK 366 million.

Infonet. TeliaSonera owns a participating interest in the American company Infonet Services Corp. In the three-month period ended June 30, 2004, TeliaSonera sold services and products to Infonet worth SEK 5 million and purchased services and products worth SEK 37 million. In the six-month period ended June 30, 2004, TeliaSonera sold services and products worth SEK 15 million and purchased services and products worth SEK 75 million.

Telefos. TeliaSonera owns 49 percent of the shares in Telefos AB. As of June 30, 2004, TeliaSonera had interest-bearing claims on the Telefos Group of SEK 174 million and had signed guarantees of SEK 100 million for commitments made by Telefos companies. In the three-month period ended June 30, 2004, TeliaSonera sold services and products worth SEK 30 million to the Telefos Group and purchased services and products worth SEK 488 million. In the six-month period ended June 30, 2004, TeliaSonera sold services and products worth SEK 51 million and purchased services and products worth SEK 1,037 million. Some of the services purchased by TeliaSonera referred to construction of fixed assets.

Other relationships. In addition to those specified, TeliaSonera buys and sells services and products to a limited extent from these and other associated companies, in all cases on market terms.

 

Loan Financing and Credit Rating
The positive cash-flow generation continued also during the second quarter of 2004, allowing further amortization of the external debt.

In June, a EUR 300 million Bond issued by TeliaSonera Finland Oyj (former Sonera Oyj) was repaid in line with TeliaSonera AB’s approach to refinance outstanding TeliaSonera Finland debt as it matures, as well as make new financing required for the Finnish operations.

In May, Moody’s Investors Service revised its "Outlook" on TeliaSonera AB’s long-term credit rating, which is A2, from "Negative" to "Positive."


Dividend
The year 2003 dividend of SEK 1.00 per share, totaling SEK 4,675 million, was paid out on May 6, 2004.

 

Non-Cash Transactions
Vehicles. TeliaSonera leases vehicles through financial leasing. New acquisitions in the three-month period and the six-month period ended June 30, 2004 entailed non-cash investments of SEK 14 million and SEK 22 million, respectively.

 

Stock Option Schemes
At General Meetings of shareholders of TeliaSonera AB, a number of stock option schemes have been adopted. Summarized information about warrants outstanding as of June 30, 2004 by exercise price is as follows.

 

Outstanding

Of which exercisable

Exercise
price (SEK)

Number of
warrants

Remaining
contractual
life (in years)

Number of
warrants

Remaining
contractual
life (in years)

69.00

12,302,000

0.92

12,302,000

0.92

70.62

5,956,650

1.00

5,956,650

1.00

On June 30, 2004, the closing price for the TeliaSonera share on Stockholmsbörsen was SEK 31.90. Detailed information regarding the stock option schemes is presented in TeliaSonera’s Annual Report for 2003. By Board decisions in February and March 2004, all warrants of series 2002/2008:A-F and 2002/2010:A-F were cancelled, due to non-fulfillment of certain exercise criteria. According to the terms, the exercise price of the 2002/2005:A series of warrants was adjusted with the 2003 dividend per share. If fully exercised, the outstanding stock options will entail an increase in share capital of approximately SEK 68 million, equal to a 0.5 percent increase in the number of shares.

 

Swedish GAAP
Differences in principles. TeliaSonera’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS/IAS). Effective January 1, 2004, IFRS/IAS deviates from Swedish GAAP, relevant to TeliaSonera, with respect to goodwill amortization, write-ups of tangible fixed assets and certain Swedish taxes imposed on pension costs and pension liabilities.

Translation into Swedish GAAP. Application of Swedish GAAP affects consolidated net income and shareholders’ equity as follows.

SEK in millions

Apr-Jun
2004

Apr-Jun
2003

Jan-Jun
2004

Jan-Jun
2003

Net income under IFRS/IAS

3,148

2,983

6,553

4,592

Goodwill amortization

-899

-1,729

Write-up of tangible fixed assets

-199

-399

Goodwill amortization, associated companies

-280

-511

Pension-related taxes

-593

-593

Deferred tax

222

278

Net income under Swedish GAAP

1,399

2,983

3,599

4,592

 

SEK in millions

June 30,
2004

Dec 31,
2003

Shareholders’ equity under IFRS/IAS

117,424

112,393

Goodwill amortization

-1,727

Write-up of tangible fixed assets

4,550

4,949

Goodwill amortization, associated companies

-511

Pension-related taxes

-593

Deferred tax

-1,108

-1,386

Exchange rate difference

-1

Shareholders’ equity under Swedish GAAP

118,034

115,956


Finnish GAAP
The following information is provided pursuant to the Finnish Financial Supervision Authority decision no. 28/269/2002.

This interim report has been prepared in accordance with chapter 2, section 5 of the Finnish Securities Markets Act. TeliaSonera prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS/IAS). The main differences between Finnish Accounting Standards (Finnish GAAP) and IFRS/IAS, relevant to TeliaSonera, are described in TeliaSonera’s Annual Report for 2003. As discussed above, TeliaSonera has decided to adopt IFRS 3 as of January 1, 2004, involving among other things that goodwill is no longer amortized. Finnish GAAP require amortization of goodwill. Otherwise, there were no material changes in the first half of 2004.

Parent Company

The parent company TeliaSonera AB, which is domiciled in Stockholm, comprises the Group’s Swedish activities in development and operation of fixed networks and basic production of network services. The parent company also includes Group management functions and the Group’s internal banking operations.

Net sales for the first half were SEK 10,641 million (10,872), of which SEK 8,281 million (8,566) was billed to subsidiaries. Earnings before appropriations and taxes ended higher, at SEK 3,654 million (3,095), due to improved operating income. Earnings after appropriations and taxes were SEK 2,693 million (1,655).

Shareholders’ equity decreased to SEK 94,213 million (96,269 at year-end). Retained earnings amounted to SEK 21,514 million (23,209).

The balance sheet total decreased to SEK 135,656 million (137,112 at year-end). Cash flow from operating activities improved to SEK 4,438 million (4,120) and cash flow before financing activities to SEK 8,060 million (7,491). Net borrowings increased to SEK 5,611 million (3,196 at year-end). Cash and cash equivalents totaled SEK 10,968 million (8,809).

The equity/assets ratio (including the equity component of untaxed reserves) was 75.4 percent (74.2 at year-end).

Total investments for the first half amounted to SEK 1,646 million (3,863), including SEK 1,254 million (983) in tangible fixed assets, primarily fixed-line installations. Other investments totaling SEK 392 million (2,880, of which SEK 2,581 million reflected the purchase price consideration for Sonera) were primarily attributable to capital infusions in subsidiaries and associated companies. Of the capital infusions to subsidiaries, SEK 2 million (46) was provided through debt conversion.

Due to operations acquired in the second quarter, the number of employees as of June 30, 2004 was 3,875 compared to 2,982 at year-end.


Financial Information/"Underlying" Measures of Results of Operations
This interim report includes information on "underlying" measures of TeliaSonera’s results of operations, such as "EBITDA excluding non-recurring items" and "Operating income excluding non-recurring items." EBITDA equals operating income before depreciation, amortization and write-downs, excluding income from associated companies. Non-recurring items include write-downs, capital gains/losses, restructuring/phase-out of operations and personnel redundancy costs. TeliaSonera’s management uses operating income excluding non-recurring items as the principal measure for monitoring profitability in internal reporting. Management believes that, besides operating income, EBITDA excluding non-recurring items and operating income excluding non-recurring items are also measures commonly reported and widely used by analysts, investors and other interested parties in the telecommunications industry. Accordingly, these "underlying" measures are presented to enhance the understanding of TeliaSonera’s historical operating performance.

These "underlying" measures, however, should not be considered as alternatives to operating income as indicators of our operating performance. Similarly, EBITDA excluding non-recurring items should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA excluding non-recurring items and operating income excluding non-recurring items are not measures of consolidated financial performance under IFRS/IAS or U.S. GAAP and may not be comparable to other similarly titled measures for other companies. These "underlying" measures are not meant to be predictive of potential future results.


Forward-Looking Statements
This interim report contains statements concerning, among other things, TeliaSonera’s financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent TeliaSonera’s future expectations. TeliaSonera believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions; however, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement, including TeliaSonera’s market position, growth in the telecommunications industry in Europe, the effects of competition and other economic, business, competitive and/or regulatory factors affecting the business of TeliaSonera and the telecommunications industry in general. Forward-looking statements speak only as of the date they were made, and, other than as required by applicable law, TeliaSonera undertakes no obligation to update any of them in light of new information or future events.