Telia : Full Q4 Report

Q4

Year-end report January - December 2022

Telia Company Year-end report January - December 2022	Q4

Staying the course in challenging times

Fourth quarter summary

• Net sales increased 3.8% to SEK 24,261 million (23,380) and like for like, net sales increased 0.5%.
• Service revenues increased 3.9% to SEK 20,174 million (19,420) and like for like, service revenues increased 0.7%. For the Core Telco business service revenues increased 1.2% on a like for like basis.
• Adjusted EBITDA increased 1.2% to SEK 7,374 million (7,290) and like for like, adjusted EBITDA decreased 2.0%. For the Core Telco business, adjusted EBITDA decreased 0.6% on a like for like basis.
• Operating income decreased to SEK -17,874 million (1,772) impacted by non-cash impairments totaling SEK -19,838 million. See Note 13.
• Total net income amounted to SEK -18,818 million (1,185).
• Operational free cash flow decreased to SEK 381 million (1,371) and cash flow from operating activities decreased to SEK 6,307 million (7,137).
• The leverage ratio was 2.35x at the end of the quarter.
• Outlook 2023: Service revenues, like for like, are estimated to grow by low single digit, adjusted EBITDA, like for like, is estimated to be flat to grow by low single digit, CAPEX, excluding fees for licenses and spectrum and right of use assets, is estimated to be in the range of SEK 13.0-14.0 billion and the structural part of Operational free cash flow is estimated to be in the range of SEK 7.0-9.0 billion. See page 5.

Service

revenues

20,174

+0.7%, like for like

(SEK million)

Adjusted

EBITDA

7,374

-2.0% like for like

(SEK million)

• For 2022, the Board of Directors proposes to the Annual General Meeting an ordinary dividend of SEK 2.00 per share (2.05). See page 5.

Full year summary

• Net sales increased 2.8% to SEK 90,827 million (88,343) and like for like, net sales increased 1.8%.
• Service revenues increased 2.6% to SEK 77,126 million (75,180) and like for like, service revenues increased 2.1%. For the Core Telco business service revenues increased 2.3% on a like for like basis.
• Adjusted EBITDA increased 1.6% to SEK 30,328 million (29,861) and like for like, adjusted EBITDA remained unchanged. For the Core Telco business adjusted EBITDA increased 2.1% on a like for like basis.
• Operating income decreased to SEK -9,417 million (15,232) impacted by non-cash impairments. See Note 13.

Highlights

Operational

free cash

flow

381

(SEK million)

SEK in millions, except key ratios,	Oct-Dec	Oct-Dec	Chg	Jan-Dec	Jan-Dec	Chg
per share data and changes	2022	2021	%	2022	2021	%

Net sales

Change (%) like for like1,3

of which service revenues (external) 1 change (%) like for like1,3

Adjusted² EBITDA1 change (%) like for like1,3

Margin (%)

Adjusted² operating income1 Operating income Income after financial items Total net income

EPS total (SEK) Operational free cash flow1

CAPEX excluding fees for licenses, spectrum and right-of-use assets1

24,261	23,380	3.8	90,827	88,343	2.8
0.5			1.8
20,174	19,420	3.9	77,126	75,180	2.6
0.7			2.1
7,374	7,290	1.2	30,328	29,861	1.6
-2.0			0.0
30.4	31.2		33.4	33.8
2,322	2,246	3.4	11,332	10,033	12.9
-17,874	1,772		-9,417	15,232
-18,715	1,181		-12,783	12,598
-18,818	1,185		-14,165	11,836
-4.78	0.27		-3.63	2.86
381	1,371		5,723	10,401	-45.0
5,022	5,944	-15.5	15,959	15,885	0.5

1. See Note 15 Alternative Performance Measures and/or section Definitions. 2) Adjustment items, see Note 2. 3) Like for like excludes exchange rate effects and is based on the current group structure, i.e. including the impact of any acquired operations and excluding the impact of any disposed operations, both in the current and in the comparable period.

2

Telia Company Year-end report January - December 2022	Q4

CEO comment...

"In 2022, service revenues increased by 2.1% driven by positive development across all units and we continue to see solid momentum in our transformation. At the same time, it has been a challenging year with significant macro headwinds. While we have taken steps to strengthen our strategy to mitigate the headwinds, we are not yet able to offset them fully. As we move into 2023, we are stepping up the pace of execution in our transformation agenda.

In the quarter, we saw continued growth in service revenues and continued cost improvements, although at more modest rates compared with previous quarters. EBITDA declined by 2%, with increased energy costs impacting by SEK 280 million.

With supply-chain constraints easing we accelerated our transformation and network build-out, and our full-year operational free cash flow of SEK 5.7 billion included around SEK 1 billion of preponed CAPEX and elevated inventory in Q4, which is expected to reverse in 2023. In addition, a SEK 19.8 billion non- cash impairment has been recorded, mainly because of higher market interest rates.

We continue to execute on the strategic roadmap we launched two years ago, and here are some of the highlights across our four priority areas:

Within "Inspiring our customers", we continue to launch converged propositions that encourage loyalty and drive customer lifetime value. In Sweden, we launched a new Premium Unlimited mobile service that aggregates C More, HBO, Netflix, Telia Cloud and 5G+. By "Connecting everyone" to the most trusted, modern networks, we have not only improved connectivity but also added layers of robust security when and where society needs it the most. In the fourth quarter, network modernization accelerated, with Telia 5G now available to more than 70% of the Nordic/Baltic population. In Sweden we launched a new portfolio of mission-critical services that are vital for societies in times of distress and crisis. By "Transforming to digital" we are progressively becoming simpler, faster and more data-driven while reducing our structural cost base. Since embarking on our transformation, we have reduced the number of legacy products by more than 40%, decommissioned nearly half of our legacy IT platforms, and reduced our operational expenses by 5%, keeping us on track for the SEK 2 billion cost takeout ambition by the end of 2023.

Finally, within "Delivering sustainably" our resilience is being put to the test by rising interest rates, rising energy costs and general inflation. Despite this, we returned to growth in all business units this past year. Adjusted for energy cost increases, our full-year EBITDA would have grown 2.6%, in line with our mid-term guidance. To mitigate heightened energy costs we are accelerating the implementation of new, energy-saving technologies, the dismantling of legacy networks and moving towards new battery technologies. In 2022 we also reached several sustainability milestones in our prioritized areas of Climate, Digital inclusion and Privacy and Security.

Looking into our markets, Sweden marked a sixth year of success in umlaut's nationwide mobile network assessment and continued to grow in all of the main segments - mobile, broadband and TV. However, the temporary loss of Viaplay, before the new distribution agreement was struck in early December, impacted revenue in the quarter and slowed our ability to adjust prices. This and some phasing of business solutions resulted in a 1% service revenue decline this quarter. Despite this dip in the fourth quarter, our range of critical services that support a more secure, digital society returned our Swedish Enterprise business to growth this year, for the first time in almost two decades. Looking at EBITDA, the softer revenue combined with higher energy costs and a lower pension refund resulted in a 3.4% decline in this quarter.

Finland continued its turnaround plan. Mobile service revenue growth improved again, for the seventh consecutive quarter, to 3.8%, underpinned by improved mobile brand consideration. The fixed-line business remains challenging, but overall Finland reverted to service revenue growth of 2.2%. EBITDA declined by 5.5% but was broadly flat excluding the increased energy costs.

Norway continued to grow in both mobile and fixed services, albeit at a slower rate due to Q4 being a less roaming-intensive quarter. We continue to be a leader in 5G, with population coverage increasing further to 84%. EBITDA grew by 2.5% despite higher energy costs. In December, Telia was chosen by Fjordkraft, Norway's largest independent mobile service provider without its own network, to host their 143,000 mobile customers under a five-year wholesale agreement. Customers will move to Telia's network in the second quarter and Telia will also buy a minority stake in Fjordkraft Mobile.

Lithuania, Estonia and Denmark all demonstrated strong growth momentum, with EBITDA growing faster than service

3

Telia Company Year-end report January - December 2022	Q4

revenue this quarter, despite the heightened inflationary pressure.

In Lithuania, 5G continued to develop positively following its nation-wide launch in the previous quarter and carries a clear price premium versus 4G. In Estonia, our leading market position was verified in a customer survey of brand reputation, in which Telia shared the no. 1 spot nationwide. Telia Denmark came out in a top position in umlaut's audit report on network quality in Denmark's 4 largest cities, a very tangible result of our ongoing network renewal and transformation.

TV and Media advertising revenue flattened out, as expected, given the softening macroeconomic environment. However, in Sweden, centered around TV4 Play, we continued to take digital advertising market share from the main competing global platforms and digital ad revenue grew by 17% allowing TV4 to record its most profitable year ever. However, lower Pay TV revenue and slightly higher content costs resulted in a decline in EBITDA for TV and Media as a whole. The Pay TV environment remains challenging and, hence, our new organizational setup, which builds on our strength in linear and digital advertising and aiming to fully merge C More into TV4 by the end of 2023 is a key priority. The new leadership team for TV & Media was set up in the quarter and consolidation is proceeding at full speed.

Looking into our outlook for 2023, we aim to grow service revenue by low single digits, and EBITDA to be in the flat to low single digit range, reflecting the macro-economic uncertainty. Energy market rates for 2023 have subsided somewhat and we now expect energy costs to increase by around SEK 300 million, down from SEK 600 million estimated three months ago. The structural part of operational free cash flow is estimated to be in the range of SEK 7-9 billion, with improvements expected to come from already initiated pricing initiatives, continued benefits from transformation as well as lower investment levels, as we have now passed the peak of our network modernization. In addition, there is potential to reduce our currently elevated inventory levels.

With the structural part of Operational free cash flow expected to grow in 2023 and the impact from macro headwinds expected to be increasingly mitigated, our financial framework remains. The leverage target range of 2.0-2.5x is unchanged and remains the key priority, and since macro headwinds have had a negative impact also on our leverage during 2022, by around +0.2x, deleveraging will be a natural priority going forward. Our dividend policy is also unchanged, and the Board of Directors proposes a SEK 2.00 dividend per share for 2022.

We are transforming a large, complex business in a challenging market and there are no shortcuts to success. We have known from the start that achieving our ambitious goals demands focus, discipline and perseverance and today is a reminder of that. However, having returned the company to growth, expanded our 5G networks, passed our investment peak, and built the foundations for better operational momentum and cash conversion going forward, I remain confident we are on the right track. The fundamentals of our strategy and our transformation are right and so we must not waver from the course we have set in this current turbulent macro environment. We are building a more agile and resilient business that will further reinforce our position as the most trusted and secure digital infrastructure and service provider in the region. I therefore want to thank every Telia colleague and partner for their continued hard work and commitment as we together build a Better Telia."

Allison Kirkby

President & CEO

In CEO comment, all growth rates disclosed are based on the "like for like" definition and EBITDA refers to adjusted EBITDA, unless otherwise stated. See definitions for more information.

4

Telia Company Year-end report January - December 2022	Q4

Outlook for 2023

Service revenues, like for like, are estimated to grow by low single digit.

Adjusted EBITDA, like for like, is estimated to be flat to grow by low single digit.

CAPEX, excluding fees for licenses and spectrum and right of use assets, is estimated to be in the range of SEK 13.0-14.0 billion.

The structural part of Operational free cash flow1 is estimated to be in the range of SEK 7.0-9.0 billion.

Leverage and credit rating target

Telia Company targets a leverage corresponding to Net debt/adjusted EBITDA in the range of 2.0-2.5x and a solid investment grade of A- to BBB+.

Dividend policy

Telia Company intends to follow a progressive dividend policy, with a floor of SEK 2.00 per share and an ambition for low to mid-single digit percentage growth.

Ordinary dividend to shareholders

For 2022, the Board of Directors proposes to the Annal General Meeting (AGM) an ordinary dividend of SEK 2.00 per share (2.05), totaling SEK 7.9 billion (8.3). The dividend should be split and distributed in four tranches of SEK 0.50 per share.

First distribution

The Board of Directors proposes that the final day for trading in shares entitling shareholders to dividend be set for April 5, 2023, and that the first day of trading in shares excluding rights to dividend be set for April 6, 2023. The recommended record date at Euroclear Sweden for the right to receive dividend will be April 11, 2023. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on April 14, 2023.

Second distribution

The Board of Directors proposes that the final day for trading in shares entitling shareholders to dividend be set for July 27, 2023, and that the first day of trading in shares excluding rights to dividend be set for July 28, 2023. The recommended record date at Euroclear Sweden for the right to receive dividend will be July 31, 2023. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on August 3, 2023.

1. Telia Company consider the structural part of Operational free cash flow to be Operational free cash flow less contribution from change in working capital.

Third distribution

The Board of Directors proposes that the final day for trading in shares entitling shareholders to dividend be set for October 24, 2023, and that the first day of trading in shares excluding rights to dividend be set for October 25, 2023. The recommended record date at Euroclear Sweden for the right to receive dividend will be October 26, 2023. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on October 31, 2023.

Fourth distribution

The Board of Directors proposes that the final day for trading in shares entitling shareholders to dividend be set for February 1, 2024, and that the first day of trading in shares excluding rights to dividend be set for February 2, 2024. The recommended record date at Euroclear Sweden for the right to receive dividend will be February 5, 2024. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on February 8, 2024.

Share buy-back program

The Board of Directors announced, in connection with Telia Company's interim report January-March 2022, its intention to transfer the net proceeds from the Swedish tower transaction to the shareholders, by means of share buy-backs or an extraordinary dividend.

The Swedish tower transaction was completed on June 1, 2022, and on the same date it was announced that the Board of Directors had decided to initiate a share buy-back program for a total amount of SEK

5.4 billion corresponding to the transaction proceeds less transaction costs.

The buy-back program was completed on November 15, 2022.

The buy-back program was carried out in accordance with the Market Abuse Regulation (EU) No 596/2014 ("MAR") and the Commission Delegated Regulation (EU) No 2016/1052 (the "Safe Harbour Regulation"). The buy-back program was managed by Goldman Sachs Bank Europe SE that made its trading decisions regarding the timing of the buy-backs of Telia Company's shares independently of Telia Company. See Note 6.

5