Annual Report 2003

Best year ever. Still hungry...

Annual Report 2003

...HATE FAT CATS!

Tele2 was launched in the United Kingdom in 2003, much to the

delight of our customers. But the historical supplier, British Telecom,

did not appear to be joining in the celebrations. So Bill Butler,

Head of Tele2’s UK operations, was kind enough to explain why he

and the British people prefer Tele2. Mail on Sunday, February 2004

www.tele2.com

PRO

DU

CTIO

N Narva PRINTED BY Sörmlands Grafiska Quebecor, Katrineholm

2004 PHOTO Håkan Flank and Getty Images

Tele2 Annual Report 2003. Best year ever. Still hungry...

CONTENTS TELE2 ANNUAL REPORT 2003

Contents

2 President’s message: Profitability and growth, with satisfied customers at the top of the agenda

4 Mission and values: Tele2 has an important mission6 Our working method: You just have to know this about Tele28 Products and services: What Tele2 offers

9 Board of Directors10 Senior executives

12 The Tele2 share

14 New market organization: New organization for growth in Europe16 Market: Nicely aligned with the customers’ needs18 Competition policies: Everyone wins with more competition

20 The right quality: The customer’s wellbeing – our reward21 Tele2 on each market: Good growth in Tele2’s markets22 Market area Nordic: Cross-selling with Nordic focus 24 Market area Southern Europe: ADSL already a success in France 26 Market area Central Europe: Germany now profitable 28 Market area Baltic and Russia: Strong foothold in

fast-growing countries30 Market area Benelux: The successes continue 32 Market area Services: Growth in smart IT and telecom products

33 Tele2 and the community: Close cooperation34 Employees: Hungry for success

36 Accounts38 Report of the Board of Directors41 Income statement42 Balance sheet44 Cash flow statement45 Changes in shareholders’ equity 46 Notes 68 Audit report69 Definitions and Glossary 70 Addresses72 Annual General Meeting

Financial information

• Quarterly report, January–March April 21, 2004• Annual General Meeting May 12, 2004• Quarterly report, January–June August 2, 2004• Quarterly report, January–September October 20, 2004

Annual General Meeting

For more information about the Annual General Meeting, see page 72.

Tele2 in brief Tele2 is Europe’s leading and profitable alternative telecom operator. With our unique values, we provide cheap and simple telecom for all Europeans every day. We have over 22 million customers in 23 countries. We offer products and services in fixed and mobile telephony, Internet access, data networks, cable TV and content services. Our main competitors are the former government monopolies. Tele2 was founded in 1993 by Jan Stenbeck and has been listed on Stockholmsbörsen since 1996. The share has also been listed on Nasdaq since 1997. In 2003 we had an operating revenue of SEK 36,911 million and reported a profit of SEK 5,710 million (EBITDA). Tele2 always strives to offer the market’s best prices.

2003. President’s message, page 2

You just have to know this about Tele2, page 6

Tele2 has an important mission, page 4

Good growth in Tele2’s markets, page 21

2003 – our best year ever• Operating revenue rose by 18% to SEK 36,911 (2002: 31,282) million

• 5.5 million net intake in 2003; a total of 22.3 million customers at year-end

• Profit after tax increased to SEK 2,396 (2002: 223) million

• Earnings per share after tax and dilution rose to SEK 16.20 (2002: 1.51)

• Cash flow after investments increased by 85% to SEK 3,418 (2002: 1,849) million

Increase in operating revenue

TELE2 ANNUAL REPORT 2003 THE YEAR THAT PASSED 1

Cash flow, operations Cash flow, after investments

Financial summary

MSEK 2003 2002

Operating revenue 36,911 31,282

Operating profit/loss before depreciation, EBITDA 5,710 5,127

Operating profit/loss after depreciation, EBIT 1,884 1,530

Operating profit/loss after financial items, EBT 1,267 796

Profit for the year 2,396 223

Earnings per share, after dilution, SEK 16.20 1.51

Average number of employees 3,274 3,115

TELE2 ANNUAL REPORT 2003 XXXXX SID 3

Profitability and growth, with satisfied customers at the top of the agendaPRESIDENT’S MESSAGE. We have done what no one believed possible. Just over 20 years ago, when Jan Stenbeck planted the seed for what is now Tele2, many people shook their head. How could it be possible to build a profitable company in the telecom sector? Would it really be possible to break the government monopoly, offer customers better services and still make money?

At the time of writing, over 22 million customers in 23 European countries have entrusted us to be their supplier. Although the world’s telecom operators have experienced hard times, Tele2 can report very good results for 2003.

We increased revenue by 18 percent to SEK 36,911 million and operating profit before depreciation (EBITDA) increased by 15 percent, amounting to SEK 5,710 million. We have consolidated our already strong cash position and are well placed for the future.

Tele2 is currently Europe’s leading alternative telecom operator. Our mission is as follows: cheap and simple telecom for all Europeans.

Tele2 strives to offer the market’s best prices. In short, this means that we give our customers real value for their money.

At Tele2, we hate complicated technology. We put our efforts into making our services as simple as possible, and our customers appreciate this. We also make a point of only releasing new services on the market when customers are ready to pay for them. One example is 3G on the Swedish market: we will launch our services only when there are phones to buy. This protects Tele2 from un-necessary market risks and paves the way for future profitability.

Our best year ever There are several important events in 2003 I would like to high-light, starting with our good results. Revenue, profitability, cash flow and customer intake are all factors which experienced positive development during the past year. This would never have been possible without tailoring the Tele2 culture to all 23 countries.

A strong organization enabled us to enter into three new mar-kets: Belgium, the UK and Portugal, where we are already produ-cing promising results.

Later in the annual report (page 21), we describe how the diffe-rent market areas performed during the year. However, France and Germany deserve special mention here.

France has become a pilot market for our sharp ADSL concept. Tele2 has quickly become the fastest growing supplier. At certain periods, we have even surpassed the historical supplier hands down in terms of new intake. We look forward going into other markets with a similar setup.

2 THE PRESIDENT’S MESSAGE TELE2 ANNUAL REPORT 2003

Our target is for each new country of operations to reach an operating profit within three years. Progress in Germany fluctuated a little to start with, basically due to regulatory difficulties, but we are now on the right side of the line. Once again, Tele2 had done what few thought possible.

Our values create resultsOur success is not due to mere chance. Nor does it come from ten-year plans or long workshops.

No, Tele2’s success is based on a unique corporate culture, cen-tral to which is our firm conviction that the customer is king.

Tele2 must always deliver what the customers want. In a mar-ket where trends are fast-moving, we must match the pace. For this reason, we plan the details of our operations in three-month periods. We are constantly helped by our simple targets and strong values.

We also steadfastly believe in delaying investments as long as possible and preferably avoiding them. I have never had anyone come up to me and say, “It’s a crying shame we didn’t buy that a bit earlier.”

If you are not familiar with the expression MVNO, it is the abbreviation for our preferred business model for our mobile ex-pansion. In short, MVNO dispenses with heavy investment in own networks and enables us to own the whole customer relationship. Both ourselves and the network owner providing the call minutes see clear advantages in an MVNO setup.

On page 5, we describe how our values help us satisfy our custo-mers, while also earning money.

“Long-term development is positive and we are achieving good results and an excellent cash flow”

TELE2 ANNUAL REPORT 2003 XXXXX SID 3TELE 2 ANNUAL REPORT 2003 THE PRESIDENT’S MESSAGE 3

Future agendaI see five important items on Tele2’s agenda.

The first is to ensure that our operations in new countries conti-nue to grow, without ever losing sight of profitability. At Tele2, we have a tested model for activating new markets and we know what signs to take a quick look at.

The second is to give Russia, where operations are still in their infancy, the support required. Tele2 has a good intake of new customers, but there is intense price pressure. We are working conscientiously to increase the revenue per customer. Russia has the potential to become an important part of Tele2’s future growth.

The third is new products, such as ADSL in France and Italy, to achieve what we have envisaged. However good our own efforts are, every market has important issues connected with legislation and other regulations.

Despite new EU regulations, many countries are putting off introducing improved competition rules. Correctly implemented, the new competition rules would mean better opportunities to compete on more reasonable terms with the former monopolies, resulting in lower prices for customers.

Fourth on the agenda is cross-selling. When we enter a country, we tend to start by selling fixed telephony. Once we have establis-hed our brand and built a customer base, we launch new services. We can then increase revenue quickly and easily, paving the way for positive results. There are many interesting oppor-tunities in all our countries of operation.

The fifth item on the agenda is particularly important. In the next few years, growth is at the top of the agenda, closely followed by profitability. In the long term, they are both a prerequisite for each other. I have strong support from the Board of Directors and owners regarding continuing expansion. Europe is a large market and contains many potential customers. There are still more than ten European countries in which we are not established, so that should keep Tele2 busy for a long time.

And finallyAs we leave 2003 behind, I will especially remember one thing. Despite doubts from the world at large, we have done what few thought possible. Long-term development is positive and we are achieving good results and an excellent cash flow. Without jeo-pardizing future expansion, the Board of Directors has therefore proposed to the Annual General Meeting that the shareholders be allocated a dividend of SEK 3 per share. This is an acknowledge-ment that our joint efforts have not been in vain.

And as it says on the cover of our annual report: Best year ever – still hungry. At Tele2, we shall continue to follow our own path and work hard to exceed the expectations of the outside world.

Stockholm, February 2004Lars-Johan Jarnheimer

Tele2 has an important mission

4 MISSION AND VALUES TELE2 ANNUAL REPORT 2003

TELE2 ANNUAL REPORT 2003 MISSION AND VALUES 5

Tele2 is Europe’s leading and profitable alternative telecom operator. With our unique values, we provide cheap and simple telecom for all Europeans every day. We currently have over 22 million customers in 23 countries. We offer products and services in fixed telephony, mobile telephony, Internet access, data networks, cable TV and content services. Our main competitors are the former government monopolies. Tele2 was founded in 1993 by Jan Stenbeck and has been listed on Stockholmsbörsen since 1996. The share has also been listed on Nasdaq since 1997. In 2003 we had an operating revenue of SEK 36,911 million and reported a profit of SEK 5,710 million (EBITDA). Tele2 always strives to offer the market’s best prices .

MISSION AND VALUES. Tele2 has an important mission: cheap and simple telecom for all Europeans. Our values are not there just for the sake of it. They are an important support in the day-to-day work in our Group.

Our mission

Cheap and simple telecom for all Europeans

Our work is marked by...Flexibility. Positioned close to the customers’ needs and fast-acting.Openness. Unity, straight answers and a simple organization. Cost-consciousness. Careful with money, investing as late as possible and always questioning costs.

…and we do so byCopying with pride. Making it simple, copying what works and, above all, not changing what is successful. Challenging. Doing the impossible by going our own way. Acting. Focusing on the solutions, not the problems. Reveling in speed and celebrating our successes.

Late 1970sIndustriförvaltnings AB Kinnevik invests in the telecommunications market.

1981Comvik AB launches its own analog network for mobile telephony.

1988Comviq is awarded a GSM license.

1990Tele2 AB is formed. (Now Tele2 Sverige AB).

1992Comviq GSM starts up its own GSM network.

Tele2’s history

We find many names for those we love. NetCom Systems AB, which was established in 1993, changed its name to NetCom AB in 1998. NetCom AB changed its name to Tele2 AB in 2001.

6 OUR WORKING METHOD TELE2 ANNUAL REPORT 2003

You just have to know this about Tele2

1993Tele2 launches fixed telephony. Tele2 is established to develop the Kinnevik Group’s telecom companies in the Nordic Region.

1996The shares in Tele2 are distributed to shareholders in Kinnevik. Meanwhile, Tele2 is listed on the O-List of Stockholmsbörsen.

1997Tele2 is listed on Nasdaqin New York.

1998Operations are extended to Estonia through the acquisition of 48% in the mobile operator Ritabell.

TELE2 ANNUAL REPORT 2003 OUR WORKING METHOD 7

Profitability and growthTele2 is the fastest growing Pan-European telecom operator. The Group holds a leading position among European telecom operators who are challenging the former monopolies.

For us, profitability is a natural part of our growth strategy. In the next few years, we will continue to prioritize rapid growth with our great focus on profitability.

Customers drive our market, not technologyAt Tele2, we love our customers, but detest unnecessary techno-logy. We want to create simple, customer-friendly services. By selling what customers want to buy we can continue to develop our Company and generate long-term earnings for our shareholders.

A customer-focused product portfolioTele2 offers fixed and mobile telephony, Internet services, data net-works, cable TV and content services to over 22 million European customers. Our portfolio takes into account the customers’ needs and willingness to spend rather than leading-edge technology and the latest possibilities.

One European Company in 23 countriesTele2 is a truly European Company, with operations in 23 countries. We use a well-tested model to develop our operations, but adapt it to the unique conditions of each country. And Tele2 promotes en-trepreneurship and inventiveness in local operations by spreading best practice to other markets.

OUR WORKING METHOD. Tele2 is a rapidly-growing, fast-acting Company. This has a great bearing on our working methods and requires us to be close to the market and our customers’ needs at all times. While other companies are busy presenting ten-year planning documents, Tele2 prefers to build a corporate culture for growth and profitability. This means that every employee knows what is required to make Tele2 even more successful.

We are penny-wise, but not to the point of stupidityAt Tele2, we keep a tight hold on our own money and that of our customers. This means that we aim to give customers the lowest prices on the market. To keep our promise to the customers, we have to be price-conscious. This attitude is shared by all our employees and permeates our whole Company. Although we keep a tight hold on money, we are prepared to invest when we know that our investments will produce results.

Speed creates growth opportunitiesCompetition in the telecom market is fierce. Having light baggage means we can quickly adapt our operations to new conditions. We can then launch new services and products on our markets more quickly than our competitors. We avoid investing heavily in own networks, preferring MVNO as a business model for mobile telephony (more on page 17). We use this speed and freedom of action to grow more quickly than our competitors.

Tested model for growthWhen we go into a new country, we usually start by establishing ourselves in the fixed telephony market. The priority is on quickly building a satisfactory customer base in the chosen segment and then cross-selling. This means that we sell more of our services and products to the same customer. Our target is to have achieved profitability with this model within three years. In some cases, we augment organic growth by strategic acquisitions.

1999Tele2 increases its holding in Ritabell to 94.8%, giving it access to a GSM1800 license in Lithuania.

2000Tele2 becomes the first mobile virtual network operator (MVNO) in Denmark. Tele2 acquires Société Européenne de Communication S.A. (SEC). Tele2 is awarded a UMTS license in Sweden. Tele2 acquires Latvia’s second largest mobile operator Baltkom GSM.

2001Acquisition of FORA Telecom (Russia).Joint UMTS company with Telia in Sweden.

2002Comviq sets a new record with more than 2 million prepaid card subscribers.Tele2 is the world’s fourth fastest growing listed telecom/IT company. MVNO launched in the Netherlands and MVNO agreements signed in Norway and Austria. Jan Stenbeck, Tele2’s founder and Chairman, passed away at 59 years of age.

2003Tele2 increases its number of customers by 5.5 million to 22.3 million. Successful ADSL launch in France.Largest customer intake ever in the Baltic and Russia.

What Tele2 offersPRODUCTS & SERVICES. Tele2 offers products and services in fixed and mobile telephony, dial-up Internet, broadband, prepaid calling cards and cable TV.

8 PRODUCTS AND SERVICES TELE2 ANNUAL REPORT 2003

*Tele2 network.

Product area FIXED TELEPHONY MOBILE TELEPHONY DIAL-UP INTERNET BROADBAND CALLING CARDS CABLE TV

Nordic

Sweden ★ ★* ★ ★ ★

Norway ★ ★ ★ ★

Denmark ★ ★ ★ ★

Finland ★ ★ ★ ★

Baltic and Russia

Estonia ★ ★* ★ ★ ★

Latvia ★ ★* Lithuania ★* ★ ★ Russia ★* ★

Central Europe

Germany ★ ★

Austria ★ ★ ★ ★ ★

Poland ★ ★ ★

Czech Republic ★ ★ ★

Southern Europe

France ★ ★ ★ ★

Italy ★ ★ ★ ★

Spain ★ ★ ★

Switzerland ★ ★ ★ ★ ★

Portugal ★ ★ United Kingdom ★ ★

Ireland ★

Benelux

The Netherlands ★ ★ ★ ★

Luxembourg ★ ★* ★

Liechtenstein ★ ★* ★

Belgium ★

TELE2 ANNUAL REPORT 2003 BOARD OF DIRECTORS 9

Board of Directors

From left to right: Cristina Stenbeck, Vigo Carlund, Marc J.A. Beuls, Sven Hagströmer, John Shakeshaft, Lars-Johan Jarnheimer and Håkan Ledin.

Cristina StenbeckBorn 1977. Vice Chairman of the Board of Kinnevik, Invik and Metro. Board member of Millicom, MTG and Transcom. Member of the Board of Tele2 since 2003.

Holding: -

Vigo CarlundBorn 1946. Has worked for Kinnevik companies since 1968. He is President of Industriförvaltnings AB Kinnevik. Chairman of the Board of Metro International S.A., Transcom WW S.A. and Korsnäs AB. Member of the Board of Millicom. Member of the Board of Tele2 since 1995.

Holding: 379 B shares

Marc J.A. BeulsBorn 1956. Holds a B.Sc. in Economics. He has been with Millicom International Cellular S.A. since 1992 and has been President & CEO since January 1998. From 1997 until 2003 he was Managing Director of Banque Invik S.A. Currently he is a member of the Board of directors of Banque Invik S.A. and Tele2 AB. Marc Beuls previously held executive positions at Generale Bank in Belgium. Member of the Board of Tele2 since 1998.

Holding: -

Håkan Ledin1937–2004. It is with great sadness that Tele2 AB announces that its Board Member Håkan Ledin, has passed away in March 2004. He made invaluable contributions during his time with Tele2 and was a strong force behind the Group’s success. He worked for many years at LM Ericsson prior to becoming President of Millicom, where he served as Chairman of the Board from 2002. He served as President of NetCom Systems from 1995 to 1996. He had been a member of the Board of Tele2 since 1994. The memory of the expertise Håkan brought to Tele2 will always burn bright.

AUDITORSPål Wingren AuditorBorn 1949. Authorized Public AccountantÖhrlings PricewaterhouseCoopers

Carl Lindgren AuditorBorn 1959. Authorized Public AccountantKPMG

Mikael Winkvist Deputy AuditorBorn 1962. Authorized Public AccountantÖhrlings PricewaterhouseCoopers

Björn Flink Deputy AuditorBorn 1959. Authorized Public AccountantKPMG

Sven Hagströmer Chairman of the BoardBorn 1943. President and Board Chairman Hagströmer & Qviberg from its inception in 1980 to 1995. Board Chairman of Investment AB Öresund, AB Custos and Avanza AB. Board assignments: AcandoFrontec AB, Bilia AB, LGP Telecom Holding AB and HQ Fonder. Member of the Board of Tele2 since 1997.

Holding: 130,000 B shares

John ShakeshaftBorn 1954. Banker, is Managing Director at Cardona, Lloyd Limited, external member of the Audit Committee of Cambridge University and adviser, Quintain Estates and Development plc. Mr Shakeshaft was previously a partner of Lazard. Member of the Board of Tele2 since 2003.

Holding: -

Lars-Johan Jarnheimer President and CEO (not a member of the Board).Born 1960. MBA. President and CEO of Tele2 AB since March 1999. Mr. Jarnheimer has held various positions at IKEA, Hennes & Mauritz and SARA Hotels, and was President of ZTV for a short time before coming to Comviq as Vice President in 1992. President of Comviq during 1993–97. Member of Group management at Saab Automobiles with responsibility for the Nordic countries, Russia and the Baltic States, and was President of Saab Opel Sverige AB during 1997–98. Board assignments: MTG, Millicom, Invik AB, Arvid Nordquist Handels AB.

Holding: 52,000 B shares and 15,000 options

Senior executives

10 SENIOR EXECUTIVES TELE2 ANNUAL REPORT 2003

1 2 3

5 64

9

87

TELE2 ANNUAL REPORT 2003 SENIOR EXECUTIVES 11

1) relates to incentive program 2002/2007, please see Note 382) relates to incentive program 1997/2006, please see Note 38

Lars-Johan Jarnheimer (1)President and CEO, Tele2 ABBorn 1960MBAEmployed since 1992Holding: 2,000 B sharesand 15,000 options 1)

Holdings through companies: 50,000 B shares 2)

Håkan Zadler (14)CFOBorn 1960MBAEmployed since 2000Holding: 5,000 B sharesand 15,000 options 1)

Holdings through companies: –

Johnny Svedberg (10)Market Area Director, The Baltic and RussiaMarket Area Director, ServicesChief Operating OfficerBorn 1962B.Sc. in Market EconomicsEmployed since 1990Holding: 1 A share, 1,239 B sharesand 15,000 options 1)


Fredrik Berglund (6)Market Area Director, NordicPresident, Tele2 Sverige ABBorn 1961B.Sc. in Market EconomicsEmployed since 1995Holding: 15,000 options 1)


Jean-Louis Constanza (4)Market Area Director, Southern Europe President, Tele2 FranceBorn 1961MBAEmployed since 1998Holding: 15 000 options 1)


Anders Olsson (12)Market Area Director, Central Europe Marketing Coordinator President, Tele2 GermanyMBAEmployed since 1997Holding: 1,056 B shares and15,000 options 1)


Per Borgklint (7)Market Area Director, BeneluxPresident, Tele2 NetherlandsBorn 1972MBAEmployed since 2000Holding: 7,500 options 1)


Jeanette Almberg (2)Director Customer Operation Born 1965MBAEmployed since 1995Holding: 15,000 options 1)


Jan Tjernell (8)Director Legal, Regulatory and Purchasing Born 1963LLBEmployed since 1994Holding: 304 B shares and 7,500 options 1) Holdings through companies: 1,500 B shares 2)

Karl-Johan Nybell (11)Director Product Implementation and New markets Born 1968M.Sc. in EngineeringEmployed since 1995Holding: 15,000 options 1)

Holdings through companies:1,500 B shares 2)

Roger Mobrin (5)Director Billing Operations Born 1968Technical college engineerEmployed since 1995Holding: 50 B shares and15,000 options 1)


Björn Lundström (13)Director Network and Operations Chief Technical OfficerBorn 1965M.Sc. in EngineeringEmployed since 1991Holding: 15,000 options 1)


Ib Andersen (3)Director Carrier Business and Revenue Assurance Born 1955Employed since 2000Holding: 15,000 options 1)


Lars-Erik Svegander (9)Personnel DirectorBorn 1941Employed since 1991Holding: 15,000 options 1)


10 11

14

12 13

Dividend for the first time

Share capitalTele2 has a share capital of SEK 738 million, distributed among 21,689,804 A shares and 125,870,371 B shares, totaling 147,560,175 shares. Series A shares carry ten votes, while B shares carry one vote. All shareholders are equally entitled to a share in the Company’s assets and profit.

ListingTele2’s A and B shares was listed on the O-List of Stockholmbörsen on May 14, 1996 under TEL2A and TEL2B, and on the Nasdaq Stock Exchange in New York on January 22, 1997 under TLTOA and TLTOB.

Price movements and turnoverDuring 2003, Tele2’s share price increased by 67 percent to SEK 384 (230.5) per B share. Affärsvärlden General Index rose by 28 percent.

At year-end, Tele2 had a market value of SEK 56.6 billion. During 2003, B shares were sold for an average of SEK 212 million per business day. On March 1, 2004, the market price was SEK 366 (B share) and the total market value SEK 54 billion.

Debentures and share issues during listingsThis listing of Tele2’s A and B shares on the O-list of

THE TELE2 SHARE. In 2003, the price increase was 67 percent and average daily turnover was SEK 212 million (B share). Total international ownership in Sweden was 27.7 percent. At year-end the market value amounted to SEK 56.6 billion and the number of shareholders was 60,930.

Stockholmbörsen was in conjunction with the distribution of the Company to the shareholders of Industriförvaltnings AB Kin-nevik. Following the distribution, Kinnevik did not own any shares in Tele2, but held a convertible debenture corresponding to 25,555,555 shares. During 1996, Kinnevik sold portions of the debenture, after conversion to shares, to institutions and Invik & Co AB.

To promote interest in the Company’s shares in the USA and to increase liquidity outside Sweden, Tele2 A and B shares were listed on the Nasdaq Stock Exchange in New York in January 1997. A few months later, a new issue of 2,000,000 B shares was imple-mented. With this issue, Tele2 sought to broaden the Company’s international ownership interest and to support the Nasdaq listing. The proceeds from the share issue, which amounted to SEK 220 million, were primarily used for ongoing investment requirements, in particular for the development of Tele2’s Danish and Norwegian operations.

In conjunction with the new share issue, Industriförvaltnings AB Kinnevik sold the majority of its remaining debenture in Tele2, converted to 6,000,000 shares.

During 1997, Invik & Co AB had converted its debenture, corre-sponding to 6,700,000 B shares, thus increasing Tele2’s sharehold-ers’ equity by SEK 335 million. During the second quarter of 1998, all outstanding debentures were converted into 755,555 B shares.

Stockholmsbörsen Nasdaq

12 THE TELE2 SHARE TELE2 ANNUAL REPORT 2003

Sell-side analysts during 2003ABG Securities Henrik Vikström

ABN AMRO Alfred Berg Mikael Rönnblad

Carnegie Fredrik Danielsson

Chevreux Peter Kurt Nielsen

Citigroup Smith Barney Christian Kern

CSFB Ben Spincer

Danske Equities Lars Horslund

Deutsche Bank Peter Irblad

Enskilda Securities Johan Michelsen

EVLI Matti Riikonen

Goldman Sachs Simon Weeden

Hagströmer & Qviberg Sven Sköld

Handelsbanken Andreas Ekström

Kaupthing Håkan Persson

Lehman Brothers James Britton

Morgan Stanley Michael Besley

Natexis Bleichroeder Philip Townsend

Swedbank Henrik Sandell

UBS Warburg Soomit Datta

Öhman Fondkommission Stefan Billing

Published in March 2004

Debentures and share issuesAt the Annual General Meeting in May 2000, the Board of Directors was authorized to settle an option commitment through a new share issue. In October 2000, 200,000 new B series shares were issued, as well as three convertible debentures with detachable warrants with rights to a new subscription totaling 300,000 B shares. These shares were subscribed with 100,000 B shares each year during 2001–2003.

At an Extraordinary General Meeting of Tele2 AB in August 2000, a proposal was approved to issue at most 40,901,585 series A and series B shares in Tele2 to shareholders and holders of depository receipts in Société Européenne de Communication S.A. (SEC), in exchange for shares and depository receipts in SEC.

By the end of the issue period, a total of 40,784,480 shares had

TELE2 ANNUAL REPORT 2003 THE TELE2 SHARE 13

Total Number of Share of Share of A shares B shares A and B shares votes capital. % votes. %

Invik & Co AB 9,891,787 1,900,579 11,792,366 100,818,449 8.0 29.4

Industriförvaltnings AB Kinnevik 6,368,880 23,665,929 30,034,809 87,354,729 20.4 25.5

Emesco 3,205,379 0 3,205,379 32,053,790 2.2 9.4

Stenbeck. Jan (Estate) 914,157 0 914,157 9,141,570 0.6 2.7

SEB 0 7,023,328 7,023,328 7,023,328 4.8 2.1

Nordea 35,250 6,014,170 6,049,420 6,366,670 4.1 1.9

AMF Pension 0 6,285,000 6,285,000 6,285,000 4.3 1.8

ROBUR 0 5,235,933 5,235,933 5,235,933 3.5 1.5

Fidelity 0 4,653,000 4,653,000 4,653,000 3.2 1.4

Handelsbanken 150 4,237,826 4,237,976 4,239,326 2.9 1.2

Total, ten largest shareholders 20,415,603 59,015,765 79,431,368 263,171,795 53.8 76.8

Other shareholders 1,274,201 66,854,606 68,128,807 79,596,616 46.2 23.2

Total 21,689,804 125,870,371 147,560,175 342,768,411 100.0 100.0

Ownership structure, December 31, 2003

Shares per shareholder

Number of shares Number of shareholders Holding (%)

1–100 33,536 1.1

101–500 19,020 3.4

501–1,000 4,280 2.4

1,001–2,000 2,046 2.1

2,001–5,000 1,115 2.5

5,001–10,000 357 1.8

10,001–20,000 203 1.9

20,001– 373 84.9

Total number of shareholders 60,930 100

been issued. At the end of 2001, all shares in FORA Telecom B.V. (the Russian operations) were acquired in exchange for 2,461,449 newly issued Tele2 B shares.

During 2002 8,317,143 A shares were remarked to B shares.

ShareholdersAs of December 31, 2003, Tele2 had a total of about 61,000 (2002: 61,000) shareholders. Tele2’s largest shareholders are Industriför-valtnings AB Kinnevik with 20,4 percent and Invik & Co AB with 8,0 percent of the share capital.

The proportion of institutional owners corresponded to about 89 (2002: 88) percent of the share capital and 92 (2002: 92) percent of the voting rights on December 31, 2003.

DividendFor the financial year 2003, the Board of Directors proposes a di-vidend for the first time in the Company of SEK 3. The proposed dividend is in line with a policy, which reflects the Board’s view that Tele2 is a high growth company. In recommending the dividend a balance is maintained among growth, profitability and available cash flow.

New organization for growth in Europe

14 NEW MARKET ORGANIZATION TELE2 ANNUAL REPORT 2003

NEW MARKET ORGANIZATION. Tele2 is now working in a new market organization which is better adapted to growth and profitability. We are also changing our financial reporting in conjunction with the change. More information on this can be found later in the Annual Report on page 62 in Note 35.

PREVIOUS ORGANIZATIONNordic: Sweden (incl. Optimal Telecom), Norway, Denmark, Finland, Datametrix, ProcureITright

Eastern Europe and Russia: Estonia, Latvia, Lithuania, Russia, Poland, Czech Republic, X-Source

Central Europe: Germany, Netherlands, Switzerland, Austria, Ireland

Southern Europe: France, Italy, Spain, Portugal

Luxembourg: Luxembourg (incl. Tango), Liechtenstein, Belgium, 3C, Transac

Branded products and services: UK, Calling Card Company (C3), Everyday

NORDIC

• Sweden (incl. Optimal Telecom)• Norway• Denmark• Finland• Datametrix

SOUTHERN EUROPE

• France• Italy• Spain• Switzerland• Portugal• UK• Ireland• Calling Card Company (C3)

CENTRAL EUROPE

• Germany• Austria• Poland• Czech Republic

BALTICAND RUSSIA

• Estonia• Latvia• Lithuania• Russia

SERVICES

• 3C• ProcureITright, PIR• X-Source

BENELUX

• Netherlands• Luxembourg (incl. Tango)• Liechtenstein• Belgium• Transac

TELE2 ANNUAL REPORT 2003 NEW MARKET ORGANIZATION 15

NORDIC• Continuing increase in market shares in Sweden, despite relatively low growth. New subscription forms launched during the year

• Agreement signed with Telenor for resale of monthly charge for fixed telephony in Norway

• Breakthrough for new sales in Denmark

• Operating revenue doubled in Finland despite anti-competitive flaws in deregulation

★★★★★★★★★★★★★★★★★★★★★★★★★★★★

35% of the Group’s operating revenue

BALTIC AND RUSSIA• Sharp upswing in number of new customers in Baltic and Russia

• Tele2 is fastest growing operator in the Baltics and deregulation continues

• Russia is one of the world’s fastest growing markets

★★★★★★★★★★★★★★★★★★★★★★★★★★★★


SERVICES• Market leader in Europe for integrated credit card transactions

• TIME procurement project carried out in 34 countries during the year

• IT outsourcing services grow in the Baltic

★★★★★★★★★★★★★★★★★★★★★★★★★★★★


CENTRAL EUROPE• Germany becomes profitable during the year, with deregulation expected to increase

• Successful year for Austria

• Tele2 is largest alternative operator in Poland and the Czech Republic

★★★★★★★★★★★★★★★★★★★★★★★★★★★★


BENELUX• Tele2 is largest alternative operator throughout Benelux

• Investment in cross-selling in the Netherlands turns out well

• Large proportion of pre-selection customers in the Netherlands and Luxembourg

• New operations in Belgium – already showing strong growth

★★★★★★★★★★★★★★★★★★★★★★★★★★★★


SOUTHERN EUROPE• Tele2 is the third-largest ADSL supplier in France – following launch during the year• Strong growth for Internet in Italy • Spanish advertising campaign helps accelerate growth

• Good growth in Switzerland

• Increase in sales for rechargeablecalling cards

• Successful launch of fixed telephony in the UK

• Operations were launched in Portugal during the year

★★★★★★★★★★★★★★★★★★★★★★★★★★★★


16 MARKET TELE2 ANNUAL REPORT 2003

Nicely aligned with the customers’ needs

Almost half the population of Europe has scarcely a cent to spare at the end of the month. And, using Jan Stenbeck’s words as a star-ting point “Tele2 must do everything differently from the former monopolies, at a lower price and with the same quality”, Tele2 has systematically marketed itself as the price leader in Europe, without compromising quality. It is really quite simple: first build a large customer base in fixed telephony and then sell other services to the same customers.

Europe’s mature marketsIn mature markets, in the sense that consumers are experienced users and competition exists, Tele2 generally aims to cross-sell services and create long-term, stable relationships with customers.

A satisfied customer stays with you; a dissatisfied customer chan-ges operator.

In the mature, fiercely competitive Nordic markets, Tele2 has successfully managed to cross-sell services. Tele2 won market sha-res and reduced customer turnover during 2003.

Unlike in Sweden, Tele2 can offer its Danish and Norwegian customers billing of monthly charges in fixed telephony. Consu-mer surveys show that one of the main reasons customers change operators is that they receive one bill from Tele2 and yet another from the operator which owns the network, and therefore their subscription. The reason for the switch is that it is easier for custo-mers to receive everything on one bill. However, Sweden is also set to change its rules, which will have a positive impact on Tele2’s operations.

The Tele2 markets during 2003 In 2003, the United Kingdom implemented eagerly-awaited pre-selection reforms, which means that Tele2 can now start to com-pete on an equal footing for the business of the country’s 60 million residents. Tele2’s German operations are now showing a profit and the customer base is growing strongly.

In Austria, almost 20 percent of the households are Tele2 custo-mers and 2003 saw the highly successful launch and cross-selling of both ADSL and mobile telephony.

Despite the fact that the Southern European market area is characterized by a trend towards fewer large players and fiercer competition, Tele2 is growing in all its countries. Dial-up Internet and ADSL growth has been even stronger. In 2003, Tele2 success-fully launched its operations in Portugal.

With the establishment of operations in Belgium, Tele2 is now present in all the countries of the Benelux market area. Core opera-

tions are fixed telephony, but Tele2 also offers low-price mobile telephony in the Netherlands, Luxembourg and Liechtenstein.

Europe’s growth marketsCompetition has just begun in the emerging markets, where customers are relatively inexperienced users. Tele2 is concentrating on quickly building a customer base in fixed telephony and then launching other services. Large-scale advertising campaigns and commercials based on price comparisons with the former monopoly are highly effective. The Tele2 brand is held in high regard by the man in the street and is associated with low prices and high quality.

Growth markets, such as Eastern Europe and the Baltic, expan-ded strongly in 2003. Tele2 is the fastest growing operator in the region, and the future looks bright.

With a population of 145 million and a low penetration of mobile telephony, the Russian market holds huge potential. Only one in four Russians has a mobile phone, but in larger cities, such as Moscow and St. Petersburg, just over half of the residents use a cell phone. Tele2 is Russia’s fifth largest multi-regional telephony brand.

Even though Poland and the Czech Republic are in the midst of a deregulation process, Tele2 has still enjoyed excellent success in fixed telephony.

MARKET. Despite fierce competition, 2003 was Tele2’s best year ever. A record number of new customers, strong growth and unparalleled profitability speak for themselves. Mere chance? Not likely! The Tele2 brand continues to grow.

TELE2 ANNUAL REPORT 2003 MARKET 17

This is MVNOTele2 is more interested in customers than technology. The MVNO business

model provides a crystal-clear reflection of this. MVNO is an abbreviation of

mobile virtual network operator. MVNO means that Tele2 purchases radio access from an existing mobile operator, but is free to develop its own services

and payment forms, and direct traffic. However, unlike the network owner,

an MVNO has no control over coverage build-out. The advantages of MVNO

to Tele2 are fundamental. In particular, it creates large growth potential and

requires relatively little capital investment.

Nicely aligned with the customers’ needs

18 COMPETITION POLICIES TELE2 ANNUAL REPORT 2003

Everyone wins with more competition

This is how we rate competition policy in Europe:

Come on, you politicians!Did you know that prices in mobile, national and

international telephony fell by approximately

12–50 percent during the period 1998-2002? Yet fixed

telephony prices rose by 20 percent during the same

period. Guess where the competition is.

Source: The Europe Commission’s 8th implementation report, December 2002

Competition on equal termsTele2 desires one thing: to compete for customers on the same terms as the former monopolies. This may sound obvious, but unfortunately truly open competition is not so easily achieved. Difficulties remain, despite the fact that the EU’s new regulations on electronic communication were due to come into force on July 25, 2003. The Netherlands, France and Germany are examples of countries which are delaying introduction of the new rules. Elsewhere, the former monopolies are abusing their predominant positions, resulting in higher prices for consumers and companies.

The advantages of a telecommunications market open to com-petition are crystal clear. Consumers and companies end up with lower prices and better service, and society is ensured a well func-tioning telecommunications market, which is the foundation for a knowledge-based economy.

There is no lack of explanations for the delay, but the EU com-mission is active and it is only a matter of time before every country will have to implement the EU’s decision. With the new rules in place, Tele2 will have moved a step closer to its goal to compete for customers on the same terms as the former monopolies.

The new rulesCompetition must increase. Some of the most important points in the new rules are described below. • Bureaucratic obstructions to entering a market must be reduced. • Rules on access and interconnection with the old incumbent operators are safeguarded. Access covers all forms of access to net-works and services which are open to the general public. Intercon-

COMPETITION POLICIES. Even though the European telecommunications market is open to competition, there still remains much to be done. Tele2 is encountering opposi-tion from monopolists and politicians who are using every trick in the book to sabotage increasing competition. And the result? Private customers and companies receive needlessly high telephone bills and inferior service.

nection relates to physical and logical interconnecting of networks. Access and interconnection are important points, as these are two areas which need clear rules to ensure that competition is created and maintained.• With the new rules in place, Tele2 will be more able to compete on equal terms. It will become easier to sign MVNO agreements, to compete for fixed telephony subscriptions and pre-selection and to offer ADSL under better commercial conditions.

Monopolists still clinging onThe former monopolies dominate their respective European mar-kets. Tele2 believes that the way the new rules are implemented in the different countries is crucial to achieving the desired effect of increased competition, resulting in lower prices and better services. It is also essential that the regulatory authorities have the inclina-tion and the correct resources to ensure that the rules are followed.

TELE2 ANNUAL REPORT 2003 COMPETITION POLICIES SID 19

1. Subscription for the people

The former monopolies have taken the opportunity

to increase their prices for fixed telephony

subscriptions as there is no competition.

Tele2 believes that one way to put an end to this

cross-subsidization is for the former monopolies to

be forced by legislation to open up subscriptions to

other operators for resale at wholesale prices.

Only when alternative operators can offer fixed

subscription will competition be able to function.

2. Pre-selection for the people

Introduction of pre-selection, involving no need to

dial a prefix when making a call, has accelerated

competition and lowered prices.

Tele2 believes that, if pre-selection is to be

developed, national regulatory authorities must

facilitate pre-selection for customers and keep a

close eye on the former monopolies.

The former monopolies of Europe are often quick

to come up with various pre-selection proposals

which all have one thing in common: they do not

allow simpler and cheaper calling for customers.

3. ADSL for the people

ADSL is the broadband service which has

the greatest potential to reach the majority of

Europeans.

At present, the former monopolies are abusing

their dominant position by keeping prices for

wholesale of ADSL to other operators at an

unreasonably high level.

In order to increase Internet use in Europe,

Tele2 believes that the alternative operators must

have access to ADSL under non-discriminatory

conditions.

TELE2’s REQUIREMENTS LIST FOR POLITICIANS AND MONOPOLISTS★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★

20 THE RIGHT QUALITY TELE2 ANNUAL REPORT 2003

The customer’s wellbeing – our rewardTHE RIGHT QUALITY. Even though we have won the confidence of over 22 million customers, we still work hard to improve our performance even more. Listening to the customers and taking heed of their needs is a clear responsibility which permeates our entire organization. Contact with the customer is crucial – do we really make the grade? Humility towards the customer is an attitude which is shown throughout our entire organization. Partly because this is proper common sense, but also because it represents an essential competitive advantage. We must always be better than our com-petitors at taking care of customers.

The customers’ wishes and interests act as our decision data for new products, services, offers and continuous improvement. Tele2 has well-developed working methods, which draw advantage from the knowledge and experience in our customer service. Reports from customer service are a natural element of management work at all levels in the Group.

At Tele2, we look on a call to customer service as an opportunity

to help the customer and an invaluable source of knowledge about our customers.

Working in customer service is a real vocation. At Tele2, we con-stantly ensure quality in relation to our rapidly growing number of customers. We have decided to outsource the majority of customer contact to a specialist partner. This partner is Transcom, which is one of the largest call-center companies in Europe. It is vitally im-portant to provide an efficient and personal service in our handling of customer calls, letters and e-mails, and to ensure that this is done in a cost-effective way.

Our close partnership gives the customer simple, direct contact with Tele2, while we receive invaluable feedback from our customers. In this way, we really live up to our motto: “The customer is king”.

The Fink family from Düsseldorf, Germany, is the 20 millionth customer choosing Tele2.

Good growth in Tele2’s markets

TELE2 ANNUAL REPORT 2003 TELE2 ON EACH MARKET 21

22 MARKET AREA NORDIC TELE2 ANNUAL REPORT 2003

Cross-selling with Nordic focusNORDIC. During 2003, Tele2, Comviq and Optimal Telecom continued to win market shares despite relatively low growth in the Nordic market. Tele2 is the second largest operator after the former monopolies in Sweden, Norway and Denmark.

SWEDEN Tele2 won market shares in fixed and mobile telephony and dial-up Internet. Private and small business customers are canvassed through 15,000 vendors around the country and larger corporate customers through our own sales force. Telemarketing is an im-portant sales channel in fixed telephony. Tele2 successfully uses a customer care program (CRM) to increase cross-selling and reduce customer turnover.

Fixed and mobile Tele2 improved its position in mobile telephony with a higher market share. To meet customers’ needs and intensify Tele2’s price pressure, new forms of subscription were launched during the year.

In fixed telephony, Tele2 took market shares among private and corporate customers. Tele2 now offers new forms of subscriptions in this area too, which has resulted in a marked increase in cross-selling, particularly to corporate customers.

Dial-up Internet experienced stable development during the year. However, unrealistic pricing from the incumbent operator, means that Tele2 is sadly unable to offer its customers ADSL at lower prices than its competitors.

During 2004, the focus will continue to be on customer care and cross-selling. 3G service will also be launched.

Optimal TelecomOptimal Telecom is a service provider which offers a lowest-price guarantee for fixed telephony, dial-up Internet and prepaid calling cards to Swedish households.

In 2003, the Company enjoyed strong growth and took market shares.

By offering customers pre-selection for fixed telephony via tele-marketing campaigns and effective cross-selling, the Company in-creased its customer intake. The Company strengthened customer loyalty by introducing various initiatives for building long-term customer relationships.

Optimal Telecom’s operations in mobile telephony developed extremely well in 2003. Sales of prepaid calling cards under the Tango brand increased and the Company won market shares through aggressive cross-selling to existing fixed telephony customers. The brand also became stronger among the general public.

It appears the Company can look forward to a bright future. In 2004, more new customers are expected to bring increased profit-ability.

NORWAYIn Norway, Tele2 increased its market shares in mobile telephony. This represents an important stepping stone for increased prof-itability and average revenue per customer. Tele2 is the largest alternative operator in fixed telephony and dial-up Internet.

One of the most important events of the year for Tele2 was the signing of an agreement with Telenor for the resale of monthly charges for fixed telephony. The subscription launch in the middle of October soon attracted customer interest. Its success is due to Tele2’s low prices and the fact that the agreement gives customers flexible invoice management, with one invoice from one operator

The market for dial-up Internet has decreased, to the advantage of ADSL, and Tele2 is currently one of the largest players in the ADSL market.

Simpler for customersDuring the year, Tele2 standardized its product range. The inten-tion was to make it easier for customers to buy Tele2’s services and to communicate more clearly that Tele2 is the price leader. Stand-ardization will continue in 2004, mainly to cut costs in preparation for even tougher competition.

The launch of the MVNO agreement with Telenor and the fixed fee are two important milestones in Tele2’s operations in the Nordic mobile market.

DENMARKTele2 is constantly striving to find alternative ways of attracting new customers. During 2003, Tele2 managed to increase customer

TELE2 ANNUAL REPORT 2003 MARKET AREA NORDIC 23

Nordic Market Positions

2003 2002 Change

Operating revenue1), MSEK 12,942 13,557 –5%EBITDA1), MSEK 3,861 4,805 –20%Number of customers, 000s 6,720 6,252 7%

Position among alternative operators Country Service Launch 2003 2002

Sweden Mobile 1981 Fixed 1993 Internet 1991 Cable 1986

Norway Mobile 2000 Fixed 1998 Internet 1997

Denmark Mobile 2000 Fixed 1996 Internet 1997

Finland Mobile 2004 Fixed 2000 Internet 2001

1 1

1 1

1 1

- -

Sweden

Norway

Denmark

Finland

1) One-off items are shown in Notes 1 and 2

The market area’s shareof the Group’s operating revenue

35%

uptake by successfully using sales personnel in shopping malls, train stations and retail environments.

Increased market shareIn fixed-line telephony, Tele2 succeeded in persuading new and existing customers to choose regular subscriptions leading to more loyal customers and an increase in market share.

Over the past year, Tele2’s ADSL sales have boomed and, already, by the end of 2003 the Company was one of the largest players in the market. Dial-up Internet services continue to make a positive contribution to operations. Competition in mobile telephony is challenging and Tele2 adapted itself quickly to changes in the market resulting in increased turnover for the year. Tele2 is one of the few companies in the Danish market offering a complete range of telephony services. In 2004, the Company will continue to focus on growth, profitability and the challenge of breaking the former monopoly.

FINLANDIn Finland, Tele2 mainly sells international calls in fixed telephony. Deregulation in the Finnish market has major defects, making it impossible for Tele2 to compete for local calls.

Despite the anti-competitive flaws in the rules, Tele2 managed

to double its revenue in 2003. Tele2 also offers Internet, and in February 2004, Tele2 launched mobile telephony under an MVNO agreement with Radiolinja.

DATAMETRIXDatametrix has a strong position as a system integrator in the Nordic market. The Company is characterized by good geographic coverage, flexibility and cost-consciousness.

The telephony market is driven by the following factors:• IP telephony is now a competitive alternative for commercial

applications.• The demand for integrated mobile solutions is increasing.• The demand for call center integration is increasing.Datametrix has a good position and well-developed expertise in

all areas. Like Tele2, Datametrix is a unique total solution provider with a

strong product and service profile.In Sweden, Datametrix is focusing on IP telephony and system

integration of telephony and data. In 2003, there was a sharp in-crease in the number of installed total solutions for IP telephony. In addition, the Company intensified its presence in the broadband/metropolitan area networks with LAN/WAN and VPN solutions.

In Norway, Datametrix is the country’s leading system integrator in networks, telephony and communications. Datametrix is recog-nized as a highly competent provider which focuses on customers and customer benefits. In 2003, Datametrix concentrated on IP telephony, MPLS networks, wireless solutions and security, while also expanding its range of services.

In Denmark, Datametrix has a strong position in advanced call center services and voice recording. Several of Denmark’s largest companies have opted for Datametrix solutions.

Partners Datametrix Norway is a Cisco Gold Partner. From 2004, Datame-trix Sweden will regain its status as an Avaya Gold Partner and certified Ericsson Service and Sales Partner.

24 MARKET AREA SOUTHERN EUROPE TELE2 ANNUAL REPORT 2003

During the year, Tele2 started successful operations in Portugal and launched ADSL in France amid much attention, soon becom-ing the third-largest ADSL supplier. Spanish operations showed very satisfying growth during the last quarter of 2003.

Unfortunately, deregulation in the ADSL market is not reflected in mobile telephony where we continue to see anti-competitive cartel formations. Supported by EU directives, Tele2 is working actively to increase competition.

Tele2 views 2004 with optimism. More customers will mean higher revenues, which in turn will have a positive effect on profit-ability. The concentration on ADSL and dial-up Internet contin-ues, as growth opportunities in these areas appear to be excellent.

FRANCETele2 remains the largest operator after the French monopoly for telephone services to private individuals and small and medium-sized companies. September 2003 saw the launch of Tele2 ADSL, with Tele2 France taking the largest share of growth in the market.

By launching ADSL, Tele2 demonstrated to its existing and future customers in no uncertain terms that the Company is a price leader, always aspiring to offer top-quality products at the lowest prices.

ITALYTele2 offers a full range of products and services and is the second largest alternative operator in Italy. The Company’s growth spi-raled during the year, primarily due to the fantastic success of dial-up Internet, which will provide a good platform for a future ADSL launch. The combination of Tele2’s strong brand and an increased market share makes the future look very bright.

SPAINGrowth for Tele2’s Spanish operations in fixed telephony accelerat-ed rapidly after September 2003. This success can be attributed to Tele2’s improved products, networks and processes, and a success-ful advertising campaign during the year which strengthened the Tele2 brand among the general public and brought new customers. Towards the end of the year dial-up Internet was launched with the lowest prices in Spain.

SWITZERLANDTele2 Switzerland now comes under the Southern Europe market area. However, the Company has had a market presence in Switzer-land for five years. Switzerland has a broad offering of fixed and mobile telephony, Internet and ADSL services.

ADSL already a success in France

In December 2003, Tele2 was awarded a GSM license in Switzer-land.

Although Switzerland is a mature market, Tele2 has achieved its growth targets. New growth has come from ADSL and mobile telephony. In a period of just 10 months, Tele2 has become the second largest player in ADSL.

PORTUGALTele2’s fixed telephony launch in Portugal in September 2003 at-tracted much attention and the addition of Tele2 as a new player

SOUTHERN EUROPE. The Southern Europe market area comprises France, Italy, Spain, Switzerland, Portugal, the UK, Ireland and C3. Operations grew and profitability rose during 2003, despite stiff competition.

TELE2 ANNUAL REPORT 2003 MARKET AREA SOUTHERN EUROPE 25

gave the market an injection of energy. The future looks excep-tionally positive. Tele2 has good opportunities for strong growth, particularly as other competitors have failed to take any major market share from the former monopoly. Since the launch, Tele2’s operations have gone according to plan in terms of the number of new customers and revenue.

UNITED KINGDOMIn October 2003, Tele2 launched fixed telephony in the UK. Suc-cess was not long in coming – by the end of the year Tele2 was already one of the fastest growing operators. The recipe for suc-cess of this ultra-fast, highly productive introduction was the fact that Tele2 used existing, tested business models from other Tele2 companies around Europe and the launch was synchronized with simplifications in pre-selection reform.

FutureAs the market for alternative operators in fixed telephony grows in 2004, Tele2’s main focus is to increase the number of customers. In addition, Ofcom (the UK telecommunications regulator) is likely to introduce a system whereby customers only receive one bill for all their fixed telephony services.

Tele2 can quickly and cheaply launch new Internet services for fixed telephony, resulting in increased revenue, better margins and enhanced customer benefits.

IRELANDTele2 has a fixed telephony license in Ireland.

CALLING CARD COMPANY (C3)C3 sells international calling cards in Ireland, Austria, the UK, France, Germany, Spain, the Netherlands, Switzerland, Poland, Portugal and Italy. Tele2’s rechargeable international calling card can now be used to make calls from 45 countries and C3’s invest-ment in Call Shops has been successful – the service is now availa-ble in many European countries.

Integration of telephone card customers from the Alpha Group, acquired in 2003, has gone smoothly. New sales channels, which included electronic terminals and the Internet, were successfully launched during the year.

In 2004, Tele2’s growth will increase by means of additional focus on new distribution channels, more services and expansion to more countries.

Southern Europe Market Positions

2003 2002 Change

Operating revenue, MSEK 13,859 10,293 35%EBITDA, MSEK 1,096 –48 -Number of customers, 000s 7,487 5,594 34%


France Fixed 1999 Internet 2002

Italy Fixed 1999 Internet 2002

Spain Fixed 2001 Internet 2003

Switzer- Mobile 2000 land Fixed 1998 Internet 2002

Portugal Fixed 2003

UnitedKingdom Fixed 2003

Ireland License for fixed telephony

Tele2 advertising on BT Tower, belonging to British Telecom, in February 2004.

1 1

2 2

4 4

- -Italy

France

Spain

United Kingdom

Switzerland

Portugal

Ireland

2 2

- -The market area’s shareof the Group’s operating revenue

38%

German operations have met the goal of becoming profitable and are now showing very satisfying growth.

The Austrian market is the most mature in the area. Tele2’s strategy is to use its large customer base to cross-sell mobile and Internet services.

Even though Poland and the Czech Republic are in the midst of a large-scale deregulation process, Tele2 has succeeded in beco-ming one of the most important players in fixed telephony in both markets.

GERMANY Tele2 was one of the fastest-growing fixed telephony operators in Germany in 2003 and this fast growth enabled the Company to show a profit in 2003. This success can be attributed to an effective advertising campaign which significantly increased the proportion of pre-selection customers and reduced customer turnover. Now that deregulation of local calls has taken place in 2003, the regulatory situation has been adapted to a similar level to other EU countries. There still remain some steps to be taken, such as a simplified pre-selection process. It is Tele2’s opinion that Germany is gradually conforming to other EU countries and Tele2s’ rapid overall growth is expected to continue in 2004.

Germany now profitable

AUSTRIA Profitability increased and market shares were won in fixed telephony. Tele2 is the largest alternative operator in fixed telephony to focus on the important private market.

In February 2003, Tele2 successfully launched mobile telephony. Approximately 10 percent of Tele2’s fixed telephony customers also had a mobile subscription with Tele2 at the end of the year. The strategy to market the Company as a price reducer for prepaid customers turned out well.

Tests conducted by consumer organizations clearly show that Tele2 has the lowest prices. Tele2 also comes out with top marks in independent customer surveys.

ADSL was introduced in the last quarter of 2003. The strategy for 2004 is continued growth in core operations, while also expand-ing in ADSL and mobile operations.

POLANDIn early 2003, Poland deregulated fixed telephony. Shortly after, in April, Tele2 launched fixed telephony for the private market. The launch was extremely successful and received a highly positive recep-tion from the general public. In the second half of 2003, Tele2 added many new customers and was the fastest growing telecommunica-tions Company.

CENTRAL EUROPE. During the year, Austria launched mobile telephony and ADSL and Germany achieved its profitability goal. Tele2 has successfully joined the ranks of the most important players in the Polish and Czech markets.

26 MARKET AREA CENTRAL EUROPE TELE2 ANNUAL REPORT 2003

Tele2 is the only independent operator targeting the mass mar-ket. The sales channels are telemarketing, partner sales and direct mail advertising. Tele2’s market positioning is as price leader.

Bright futureThe market for calls from the fixed network to mobiles will prob-ably be completely deregulated in 2004. Although there are still inadequacies in the rules, 2004 is expected to be a year in which Tele2 enjoys rapid growth.

CZECH REPUBLIC Towards the end of 2002, Tele2 started offering fixed telephony to private customers. Just one year later, the Company was the largest

alternative operator. Apart from the former monopoly, Tele2 is currently the only Company focusing totally on the mass market.

Innovations during the yearDuring 2003, Tele2 introduced local calls, dial-up Internet and pre-selection. All the services were positively received and the number of customers rose sharply.

Regulations in the telecom sector are in need of improvement. However, the Czech Republic’s EU membership in May 2004 is expected to contribute towards better rules and regulations. As a whole, Tele2 considers the trends to be positive, and believes that strong growth will continue in 2004.

TELE2 ANNUAL REPORT 2003 MARKET AREA CENTRAL EUROPE 27

Central Europe Market Positions

2003 2002 Change

Operating revenue, MSEK 3,441 2,465 40%EBITDA, MSEK –303 –231 -Number of customers, 000s 3,469 1,817 91%


Germany Fixed 1998

Austria Mobile 2003 Fixed 1999 Internet 2003

Poland Fixed 2003 Internet 2000

Czech Fixed 2002 Republic Internet 2000

1 1

1 -

1 1

3 3

Czech Republic

Germany

Austria

Poland


9%

Strong foothold in fast-growing countries

ESTONIA – TELE2 WINS PRESTIGIOUS COMPETITIONTele2’s successes in Estonia also continued in 2003. Last year was the most successful ever. For the third year running, the Company was the fastest growing mobile operator and is now the second largest in Estonia. In addition, for a second year, Tele2 has won the prestigious competition run by the Estonian business daily, Äripäev, which ranks the top 100 companies in Estonia.

In fixed telephony, Tele2 is the first alternative to the Estonian monopoly. The future looks bright – December 2003 saw the

launch of pre-selection, which will bring in new customers who in turn can be developed by cross-selling.

In order to enhance the focus on customer orientation and flex-ibility, a customer care program was introduced during the year.

Tele2 has a broad range of telecommunications services: mobile telephony (subscription and prepaid calling cards), fixed telephony, Internet, content services and cable TV. Tele2 also has a Company which develops software for the Internet.

New supplementary servicesIn order to safeguard Tele2’s position as the price leader, as well as generate new income and create added value for customers, new products, such as GPRS and MMS, were launched during the year. For prepaid customers, international roaming was introduced, along with new ways to recharge calling cards electronically and a new, flexible price list. Tele2 also received a UMTS license. From December 2003, fixed telephony customers have been able to choose Tele2 as pre-selection.

LATVIANot only is Tele2 the leading alternative mobile operator in Latvia, it is also the Company which can demonstrate the fastest growth. The future looks bright and Tele2’s growth is expected to continue. Tele2 holds a strong position among the general public: nine out of ten recognize the Tele2 brand.

Tele2’s services consist of mobile subscriptions and prepaid call-ing cards. The calling cards are marketed under the Zelta Zivtina brand and the subscriptions under Tele2. Tele2 also received a license to run fixed telephony during the year, but due to unsatis-factory rules decided to put off the launch until 2004. When opera-tions are up and running there is expected to be a sharp increase in the customer base and revenue.

Tele2 has one of two UMTS licenses. According to the license conditions, UMTS will be launched commercially during 2004.

LITHUANIADespite fierce competition in the Lithuanian market, Tele2 managed to strengthen its position and is now the second largest mobile operator. During the year, Tele2’s market share increased substantially. More and more Lithuanians are acquiring mobile phones, which means a bigger customer base.

BALTIC AND RUSSIA. 2003 was an even more successful year in Baltic and Russia. During the year, Tele2 consolidated its position in the Baltics and is the fastest growing operator in the region. Tele2 launched GSM in the Russian market, which means it is now competing for customers in one of the world’s fastest growing markets.

28 MARKET AREA BALTIC AND RUSSIA TELE2 ANNUAL REPORT 2003

The number of mobile users increased by almost 30 percent in 2003. Tele2 is increasing its focus on customer benefits, which strengthens the perception of the Company as consumer-friendly and reliable, qualities which are vital for future expansion.

Deregulation in fixed telephony continues and interconnection rates were defined during the last quarter of 2003. For this reason, Tele2 plans to offer international calls and calls between fixed and mobile networks during the first quarter of 2004, and also to launch Internet services in the same quarter.

Good growth opportunities, a strong customer base and new cross-selling opportunities point to a bright 2004 for Tele2.

RUSSIATele2 has a license for mobile telephony in eleven regions of Russia with a total population of 31 million, which corresponds to around 20 percent of Russia’s population. At year-end 2003 operations are up and running in seven of the regions, and in the first half of

2004 mobile telephony will be launched in the other four. Tele2’s position in the different regions is constantly strengthening. The Russian mobile telephony market rose sharply in 2003, and there is huge growth potential, even though the market is tough. As the first mobile telephony operator, Tele2 launched subsidized phones with a certain commitment period during 2003.

Tele2’s strategy is to offer the lowest possible price to the grow-ing mass market. This strategy is supported by campaigns in which Tele2 guarantees that it has the lowest prices.

In Russia, only the state monopoly offers residential fixed te-lephony at present.

In 2003, Tele2 increased its holdings in five local mobile te-lephony companies. In August, a GSM license was also obtained in Izhevsk. During the year Tele2 launched mobile telephony under the Tele2 brand. Most companies had previously operated under the FORA brand.

TELE2 ANNUAL REPORT 2003 MARKET AREA BALTIC AND RUSSIA 29

Baltic and Russia Market Positions

2003 2002 Change

Operating revenue, MSEK 2,724 2,177 25%EBITDA, MSEK 800 602 33%Number of customers, 000s 2,327 1,491 56%

Position among alternative operators Country Service Launch1) 2003 2002

Estonia Mobile 1998 Fixed 1998 Internet 2000 Cable 1998

Latvia Mobile 1999

Lithuania Mobile 1999

Russia Mobile 20012)

1) Year of launch, under Tele2’s management2) Tele2 acquires FORA Telecom

1 1

1 1

1 2

5 7

Russia

Estonia

LatviaLithuania


7%

The successes continueBENELUX. In 2003, Tele2 launched its operations in Belgium, which were marked by strong growth from day one. In the Netherlands, profitability rose and new customers streamed in. In Luxembourg, call traffic increased significantly.

THE NETHERLANDSTele2’s success in the Netherlands continues. After a profitable 2003 and a strategic concentration on pre-selection customers, Tele2 is now the largest alternative fixed telephony operator. Eight out of ten customers now have pre-selection. Furthermore, Tele2 is rapidly taking market shares in mobile telephony and is now the fastest growing operator.

Mobile telephony continued to experience strong growth in 2003. Customer loyalty increased and the concentration on cross-selling turned out extremely well.

Lower costsDuring the year Tele2 reduced its costs significantly, mainly due to lower interconnection rates. The cost quantity also reduced as a result of synergies from cross-selling.

Tele2’s products are associated with low prices, high quality and user-friendliness. In 2003, parliament’s lower house approved a

new telecommunications bill to promote better competition, which will benefit Tele2.

LUXEMBOURGIn fixed telephony, Tele2 is by far the biggest competitor to the former monopoly. Almost half of Tele2’s customer base consists of pre-selection customers. Tele2 has offered fixed telephony since 1999 and from 2000 also Internet services.

Mobile telephonyThe Tango brand is popular in Luxembourg and is currently the only competitor to the former monopoly. Tango has a license for GSM 900 and GSM 1800. Mobile traffic increased by 14 percent during the year, and Tango has a strong market position, with al-most 50 percent of active customers. In May 2003, Tango received a UMTS-license and schedules a commercial launch during 2004. The competition for mobile telephony customers will grow when a

30 MARKET AREA BENELUX TELE2 ANNUAL REPORT 2003

new rival operator launches its operations. Number portability will be introduced during 2004.

LIECHTENSTEINTele2 has a very strong position in Liechtenstein, with the Tango brand making it the largest alternative operator. Mobile traffic increased by 13 percent during the year. A UMTS license was received in 2002. Fixed telephony and Internet have been offered under the Tele2 brand since 2000.

BELGIUMEven though Tele2 only launched fixed telephony in July 2003, the Company is soon expected to become the largest alternative opera-tor. The brand is strong – seven out of ten Belgians recognize the Company and Tele2 is perceived as a Company with low prices.

Tele2 has a complete range of fixed telephony services, mainly intended for private customers and small business owners.

TELE2 ANNUAL REPORT 2003 MARKET AREA BENELUX 31

Benelux Market Positions

2003 2002 Change

Operating revenue, MSEK 3,704 2,669 39%EBITDA, MSEK 223 –11 -Number of customers, 000s 2,303 1,610 43%


Netherlands Mobil 2001 Fixed 1997 Internet 2003

Luxembourg Mobil 1998 Fixed 1999 Internet 2000

Liechten- Mobile 2000 stein Fixed 2000 Internet 2000

Belgium Fixed 2003

1 1

1 1

1 1

2 -

Netherlands

Luxembourg

Liechtenstein

Belgium


10%

32 MARKET AREA SERVICES TELE2 ANNUAL REPORT 2003

Growth in smart IT and telecom products

3C3C offers integrated solutions for processing credit card transac-tions via terminals, the Internet and public credit card telephones. The Company has a presence in 20 countries, with a customer base consisting of 650 hotels, 350 restaurants and 550 parking com-panies, which makes 3C a European market leader in integrated credit card transactions. 3C also has credit card phones at more than 1,000 locations in Europe’s largest cities and airports.

3C’s excellent performance can be attributed to the successful launch of parking services in the Scandinavian market, good sales growth and a successful expansion to new countries in the hotel and restaurant segment. In 2003, 3C introduced new software for terminals and also produced new integrated chip and pin solutions, which have been highly effective.

ProcureITrightProcureITright (PIR) is a procurement consultant which targets the TIME segment (telecom, information, media and entertain-ment). The Company focuses on strategic procurement and pro-curement of technically complex products and services.

PIR offers a complete range of procurement services which enable the customer to outsource procurement. The market for outsourcing procurement services is expected to grow in 2004.

PIR works globally and has completed a number of projects in 34 countries in Europe, Asia, Latin America and Africa. Its head office is located in Stockholm.

Proceedo Solutions AB is a subsidi-ary of PIR. The Company is the Nor-dic Region’s leader in e-procurement solutions, which include marketplace and electronic billing solutions.

X-SOURCEDuring 2003, X-Source grew by over 25 percent in both revenue and personnel. The Company merged with its Danish fellow subsidiary UNI2 and will during 2004 change its name to UNI2.

X-Source is an IT outsourcing supplier with operations in Swe-den, Denmark, the UK, Luxembourg, Estonia, Latvia and Lithua-nia. The Company, with around one hundred employees, takes responsibility for all or part of the customer’s IT environment. X-Source goes one step further than many of its rivals by offering functional responsibility, which means the Company guarantees that a particular IT function is working.

X-Source has three different areas of service: operation of PC workplaces, servers and shared customer applications. Security is an important aspect of all the solutions. The target group is primarily small and medium-sized companies.

Lower IT costsThe Company works to standardize and streamline the customers’ business operations. Using centralized automated functions and re-mote access, X-Source can reduce the customer’s overall IT costs.

SERVICES. Market leader in Europe for integrated credit card transactions. Increase in net sales for IT outsourcing services with focus on reducing the customer’s overall IT costs.

Services

2003 2002 Change

Operating revenue, MSEK 241 121 99%EBITDA, MSEK 33 10 230%


1%

Close cooperation

Tele2 does not lay claim to broad social responsibility; others are entrusted with these responsibilities. However, we believe in our Company’s capacity to play an important role in the countries in which we operate.

We achieve this by fulfilling our mission with sensitivity and in accordance with the law. We contribute what we know best by facilitating communication between people.

Tele2 has a clearly defined mission as well as a clear under-standing of our broader responsibilities and the desire to provide something extra for our customers.

Access to communication resource has become a prerequisite in the information society for positive development and successful customer relationships. The idea of facilitating communication between people is therefore common to all the socially-oriented projects in which Tele2 is engaged. One example of this commit-ment is The Glocal Forum.

The Glocal ForumGood communication enables positive interaction between local and global players. In order to encourage this communication, Tele2 joined with Metro, MTG, Millicom and ambassador and peace negotiator Uri Savir to establish The Glocal Forum. The Glocal Forum brings together politicians, mayors, institutions and companies from around the world to discuss and initiate sustai-nable development programmes. In close cooperation with local organizations and individuals, The Glocal Forum runs information technology, sports, culture and youth activity projects. The aim of all the projects is to promote peace, development and under-standing between people. In 2003, the projects focused mainly on helping children and young people in conflict and post-conflict regions.

“We are the future”We are proud of our part in The Glocal Forum’s establishment of training and telecommunications centres in conflict and post-con-flict zones. The Glocal Forum’s “We are the future” programme is working to offer children and young people in these areas the opportunity to create a brighter future. Young people receive training including IT and how to set up and run a small business. The purpose is to support local ideas and capacity in order to make sustainable development possible. “We are the future” centres will initially be set up in six towns and cities: Kigali, Freetown, Addis

Ababa, Asmara, Nablus and Kabul. The centre is already up and running in Kigali.

A world of vision and opportunityInspired by its customers and in cooperation with The Glocal Forum, Tele2 has initiated the building and financing of a training centre in Dakar in Senegal. Close cooperation with the local authorities in Da-kar means that the centre’s future is assured and costs are controlled.

The centre will offer education, computers and Internet access for Senegalese children.

French children were asked to send in pictures of what their schools and towns might look in 2020. Their ideas will be posted on Tele2’s web site alongside drawings by children in Senegal. Some of the young artists will be invited to The Glocal Forum Conference in May 2004 to share their vision of the future.

TELE2 AND THE COMMUNITY. Tele2’s mission is to offer cheap and simple telecom for all Europeans. The growth of businesses and the economy should positively affect the wider community. The concept of promoting increased communication for everyone is a common theme that runs throughout Tele2’s socially-oriented initiatives.

A few examplesTele2 also participates in other projects in the countries in which we operate. Here are a few examples:

Latvia: Tele2 runs projects to encourage young people to take part in sports activities in order to enhance their leisure time. Tele2 has arranged a large number of events in children’s homes with the help of Olympic silver medalist Aigars Fadejevs.

Poland: Tele2 has supported a school for deaf children for the last few years by providing Internet access to open up an important channel for the children to access information and communicate via email.

Sweden: Tele2 supported Fryhuset in 2003, which runs youth projects designed to increase integration and communication between different groups in the community.

Russia and Lithuania: Tele2 has participated in telecommunications projects for people with disabilities in Russia and Lithuania.

TELE2 ANNUAL REPORT 2003 TELE2 AND THE COMMUNITY 33

Hungry for success

34 EMPLOYEES TELE2 ANNUAL REPORT 2003

Employees are our strengthTele2 had an average number of 3,274 (3,115) employees during 2003. The emplyees are in 23 countries, and 29 percent of them are women. Employee turnover is very low, at around 6 percent, and most employees work in sales and marketing. Employee recruitment is at the local level, and all the country managers are responsible for their own recruitment.

Grassroots, close-to-the-customer leadershipOur informal, grassroots leadership has one common thread: customer focus. Having the right attitude and totally sharing the Company’s values are essential to successful employment with Tele2. Our success is due to the quality of never giving up, being satisfied or shifting the focus too far away from core operations, which produce our revenue. Leadership is about not losing contact with the customer and the market, even though the organization is growing. It involves teaching and sharing with others, setting a good example in your role as manager, and not changing yourself or your values no matter where you happen to be in your career.

Tele2’s brand is something in which our employees can truly take pride. Planning is short, with constantly fast and flexible adaptation.

Tele2’s valuesTele2’s values are flexibility, openness and cost-consciousness. These values strengthen our business concept of offering cheap and simple telecom to all Europeans. The strategy for living up to these values is to copy with pride, to challenge and to act, and constantly to check that the old still stands up to the new. And we do this in a quick and simple way. 2004 will see the group-wide launch of a program based on Tele2’s values. The aim is to provide a uniform vision of leadership, anchor the corporate culture and simplify everything that Tele2 does in all its countries.

The customer is kingTele2 has many programs and training schemes for employees. There are also personal development plans. All programs and training schemes are based on teaching about Tele2’s sales organi-zation, customer service and philosophy that the customer is king.

All employees must gain practical experience in customer service at least once a year, and managers twice a year. By selling, tak-ing orders, dealing with billing matters, claims, and complaints, and having other direct contact with the customer, all employees become more resolute in their focus: the customer is king.

EMPLOYEES. Never giving up, becoming satisfied or losing focus on our core business is all part of Tele2’s corporate culture. A large part of our success is due to the drive and enthusiasm of our employees.

Employees’ goals and resultsIn their personal development plans, employees have follow-ups with their managers. Monthly follow-ups deal with results, input and skills. Annual follow-ups take the form of a more thorough employee interview, dealing with target fulfillment, goal planning, future input and training.

TELE2 ANNUAL REPORT 2003 EMPLOYEES 35

Accounts

36 ACCOUNTS TELE2 ANNUAL REPORT 2003

38 Report of the Board of Directors Five year summary

41 Income statement 42 Balance sheet 44 Cash flow statement 45 Changes in shareholders’ equity 46 Notes General accounting principles

Note 1. Operating revenue

Note 2. Depreciation/amortization for the year and operating profit

Note 3. Other operating revenue

Note 4. Other operating expenses

Note 5. Result from shares in associated companies

Note 6. Sales of associated companies

Note 7. Result from other securities and receivables classified as fixed assets

Note 8. Other interest revenue and similar income

Note 9. Interest expenses and similar costs

Note 10. Tax on profit/loss for the year and deferred tax liability/receivable

Note 11. Intangible assets

Note 12. Tangible assets

Note 13. Shares in Group companies

Note 14. Receivables from Group companies

Note 15. Shares in associated companies

Note 16. Receivables from associated companies

Note 17. Other long-term holdings of securities

Note 18. Other long-term receivables

Note 19. Accounts receivable, trade

Note 20. Other current receivables

Note 21. Prepaid expenses and accrued income

Note 22. Cash and cash equivalents and overdraft facilities

Note 23. Exchange rate effects

Note 24. Number of shares

Note 25. Liabilities to financial institutions

Note 26. Other interest-bearing liabilities

Note 27. Other short-term liabilities

Note 28. Accrued expenses and deferred income

Note 29. Pledged assets

Note 30. Contingent liabilities and other commitments

Note 31. Supplementary cash flow information

Note 32. Market areas

Note 33. Business areas

Note 34. Financial items

Note 35. Changed reporting structure

Note 36. Customers

Note 37. Number of employees

Note 38. Personnel costs

Note 39. Remuneration to Auditors

Note 40. Transactions with related parties

Note 41. United States generally accepted accounting principles (US GAAP)

68 Audit report 69 Definitions and Glossary

TELE2 ANNUAL REPORT 2003 ACCOUNTS 37

38 REPORT OF THE BOARD OF DIRECTORS TELE2 ANNUAL REPORT 2003

Tele2 AB’s share is listed on Stockholmsbörsen under the abbreviations TEL2A and TEL2B, and Nasdaq under the abbreviations TLTOA and TLTOB.

The ten largest shareholders at December 31, 2003 held shares corresponding to 54% (2002: 60%) of the capital and 77% (2002: 80%) of the voting rights, of which Invik & Co AB, Industriförvaltnings AB Kinnevik and Emesco own 8%, 20% and 2%, respectively, of the capital, and 29%, 26% and 9% of the voting rights.

Operations Tele2 AB, formed in 1993, is the leading and profitable, alternative pan-European telecommunications company offering fixed and mobile telephony, as well as data network and Internet services under the brands Tele2, Tango and Comviq to more than 22.3 million customers in 23 countries. Tele2 operates Datametrix, which specializes in systems integration; 3C Communications, which operates Internet payments, credit card transactions and public pay telephones; Transac, which operates data processing of credit card transactions and billing; C3, which is active in prepaid calling cards for fixed telephony; and Optimal Telecom, which offers households low price guarantees for telephony services. The Group also offers cable TV services and jointly owns the Internet portal Everyday.com with MTG.

During 2003, the Tele2 Group invested a net of SEK 1,890 million (2002:

SEK 1,890 million) in intangible and tangible fixed assets (Note 31). In 2003, investments in shares in companies, after deductions for cash in these companies, amounted to SEK 800 million (2002: SEK 663 million) and sales of shares amounted to SEK 21 million (2002: SEK 40 million).

Tele2 had a total of 22.3 (2002: 16.8) million customers at December 31, 2003, (Note 36). Net customer intake for 2003 as a whole increased by 33% corresponding to 5.5 million customers. Tele2’s operating revenue for 2003 amounted to SEK 36,911 million (2002: SEK 31,282 million), an increase of 18%.

EBITDA amounted to SEK 5,710 million (2002: SEK 5,127 million), with an EBITDA margin of 15% (2002: 16%). EBIT totaled SEK 1,884 million (2002: SEK 1,530 million) with an EBIT margin of 5% (2002: 5%).

Net interest expense and other financial items totaled SEK –599 million (2002: SEK –698 million). The average interest rate on outstanding liabilities was 5.0% (2002: 6.4%) in 2003. Net profit after financial items, EBT, amounted to SEK 1,267 million (2002: 796 million).

During the year, one-off items totaling SEK –848 million (2002: SEK –249 million) were charged against profit before tax (Note 1-2, 7 and 12).

Tax on net profit for the year amounted to SEK 1,092 million (2002: SEK –574 million), which was positively affected by SEK 2,011 million (2002: SEK 576 million) in respect of a valuation of loss carry-forwards in a number of

Report of the Board of DirectorsThe Board of Directors herewith presents the annual report for Tele2 AB (publ), company registration number 556410-8917, for the fiscal year 2003.

Five year summary

SEK million Note 2003 2002 2001 2000 1999

Income statement and balance sheet items:Operating revenue 36,911 31,282 25,085 12,440 8,171EBITDA 5,710 5,127 1,698 1,820 2,060EBIT 1,884 1,530 –1,356 420 1,152EBT 1,267 796 –1,944 165 4,184Profit/loss for the year 2,396 223 392 –396 3,768Shareholders’ equity 30,360 28,728 29,517 26,539 6,659Shareholders’ equity, after dilution 30,487 28,870 29,547 26,584 6,659Total assets 47,970 46,872 49,258 42,397 14,408Cash flow from operating activities 5,974 4,365 413 883 1,753Liquidity 22 3,444 2,332 1,625 1,304 1,123Net borrowing 4,427 7,729 9,286 7,095 4,605Investments in intangible and tangible fixed assets, CAPEX 31 1,895 1,956 2,162 1,514 1,165Investments in shares and long-term receivables 767 626 304 20,512 4,051

Key ratio:Solidity, % 63 61 60 63 46Debt/equity ratio 0.15 0.27 0.31 0.27 0.69EBITDA margin, % 15.5 16.4 6.8 14.6 25.2EBIT margin, % 5.1 4.9 –5.4 3.4 14.1Return on shareholders’ equity, % 8.1 0.8 1.4 –2.4 78.6Return on shareholders’ equity, after dilution, % 8.1 0.8 1.4 –2.4 78.6Return on capital employed, % 5.0 3.9 –3.3 1.9 45.2Average interest rate, % 5.0 6.4 6.3 4.8 4.8

Value per share, SEK: Profit/loss after tax 16.25 1.51 2.70 –3.47 36.28Profit/loss after tax, after dilution 16.20 1.51 2.70 –3.47 36.28Shareholders’ equity 205.88 194.95 203.56 232.62 64.12Shareholders’ equity, after dilution 206.17 195.55 203.46 232.74 64.12Cash flow from operating activities 40.51 29.62 2.85 7.74 16.88Proposed dividend 3.00 – – – –Market value on closing day 384.00 230.50 378.00 392.00 598.00

TELE2 ANNUAL REPORT 2003 REPORT OF THE BOARD OF DIRECTORS 39

European companies, as a consequence of improved results in continental Europe. Profit after tax was SEK 2,396 million (2002: SEK 223 million). Earnings per share were SEK 16.20 (2002: SEK 1.51) after full dilution.

In 2003, cash flow from operating activities amounted to SEK 5,974 million (2002: SEK 4,365 million) and cash flow after investments to SEK 3,418 million (2002: 1,849 million).

Nordic SwedenThe Nordic market area mainly comprises Tele2 operations in Sweden (including Optimal Telecom), Norway, Denmark and Finland, as well as Datametrix operations.

Mobile telephony operations in Sweden reported 3.3 million customers at the end of 2003, a rise of 10%. The monthly average revenue per user (ARPU) in mobile telephony, including prepaid calling card customers, amounted to SEK 171 (2002: SEK 189) in 2003 and the monthly mobile minutes per user (MOU) amounted to 87 (2002: 92) minutes. Prepaid calling card customers accounted for 76% of the total customer base in mobile telephony.

Dial-up Internet services showed stable growth during the year. The fixed telephony and Internet operations in Sweden saw a degree of price pressure during the fourth quarter, pending Tele2’s decision to introduce further reductions in subscription charges, which should have a positive effect on operations as has already been seen in Denmark.

Svenska UMTS-Nät AB, which holds a 3G license in which Tele2 has a share of 50%, plans to acquire the fourth Swedish 3G license which will produce increased capacity at a low price, thereby making it possible for Tele2 to consolidate its position as the price-leading operator in mobile communications. During the year, an agreement was made with a banking consortium to reduce the total loan facility for Svenska UMTS-Nät AB from SEK 11 billion to SEK 7 billion. This reduction was made possible by cost-cutting measures in infrastructure through the use of new technological solutions. The loan, following the reduction, will cover the expansion of the jointly-owned UMTS network. The facility will be available until December 31, 2006.

Norway, Denmark and FinlandOperations in Norway, Denmark and Finland are primarily involved in fixed telephony and Internet. Tele2 is the leading alternative operator in Norway and Denmark.

In Norway,Tele2 successfully launched the resale of fixed telephony subscription fee at the end of 2003. This will strengthen operations in Norway, although the launch will also incur costs. In addition, at the end of the year, an MVNO (Mobile Virtual Network Operator) agreement was launched in Norway. During the year, Tele2 decided to end sales of data network services in Norway, which is included in fixed telephony and Internet.

In Denmark, Tele2 is now billing its customers for subscription fees. This is a significant development which has led to a reduction in customer turnover. Trends in Denmark continue to be positive.

In May, Tele2 acquired the remaining shares in the Finnish company Suomen 3G Oy for SEK 74 million which corresponds to the acquired share of the company’s cash. 3G Oy already has 3G networks in nine Finnish towns. In accordance with the license conditions, the aim of the company is to expand its 3G network to 18 Finnish towns, but there is a possibility that these conditions will be changed. In February 2004, Tele2 launched mobile telephony operations in Finland under an MVNO agreement with Radiolinja.

Eastern Europe & RussiaEastern Europe & Russia comprises Tele2 operations in the Baltic countries (Estonia, Latvia and Lithuania), Poland, Czech Republic and Russia as well as X-Source operations.

In August, Tele2 Estonia was awarded a 3G license which will be valid until August 5, 2014, launched mobile Internet and MMS (Multi Media Services) in November and carrier pre-selection for fixed telephony in December.

In Latvia and Lithuania, the markets for fixed telephony were opened in

January 2003. Tele2 Lithuania has signed an interconnect agreement for fixed telephony with the local incumbent and is planning to launch services in February 2004. Tele2 will continue to monitor developments in deregulation and will launch fixed telephony services when competitive conditions are more favorable.

Operations in Russia are developing extremely well. Tele2 has now launched seven GSM networks, Irkutsk and Rostov in April, St. Petersburg in June, Kemerovo in July, Omsk in August, Izhevsk in September and Smolensk at the end of the year. As a consequence, Tele2’s GSM network will reach 10 million people in seven different regions.

In Poland, services in fixed telephony that Tele2 launched at the beginning of the year have developed better than expected, despite the difficult regulatory situation.

In Czech Republic, dial-up Internet services were launched at the end of 2003, and local carrier pre-selection was introduced in the fourth quarter of the year.

Central EuropeCentral Europe comprises Tele2 operations in Germany, the Netherlands, Switzerland and Austria.

Tele2’s operations in Central Europe displayed robust growth during the year while rising EBITDA margins were reported. The market area’s ARPU in fixed telephony and Internet was SEK 160 (2002: SEK 153) for 2003.

In the fall, Tele2 continued with its marketing campaigns in Germany following the introduction of carrier pre-selection numbers for local calls at the end of April and local carrier pre-selection in July. The prospects in Germany continue to improve as operating revenue has increased appreciably, the margins have developed positively and customer churn continues to fall.

In the Netherlands, market shares and margins continue to rise and MVNO operations are developing satisfactorily.

Tele2 successfully launched mobile telephony services in Austria in the first quarter of 2003 and launched ADSL in the fall.

Switzerland has a broad range of fixed telephony, mobile telephony, Internet and ADSL. In December 2003, Tele2 was awarded a GSM license in Switzerland.

Southern Europe Southern Europe comprises Tele2 operations in France, Italy, Spain and Portugal.

Southern Europe continued to report strong growth in customers with a record customer intake of 1,857,000 customers in 2003. ADSL customers formed a large proportion of the customer intake during the year. ARPU of SEK 146 (2002: SEK 149) was attained in fixed telephony and Internet services in Southern Europe. Tele2 is still seeking an MVNO agreement in Southern Europe and is optimistic that an agreement will be achieved in at least one of the countries in 2004.

In France, ADSL services continued to grow at a satisfactory pace following its launch in May 2003. Tele2 France confirmed its position as the leading alternative operator and maintained its stable growth despite increased activity from the incumbent.

Tele2 Italy continues to report strong net customer intake and to add new services, such as the recently launched dial-up Internet service.

In Spain, Tele2 introduced local carrier pre-selection in June 2002, which has increased call traffic considerably. In addition to a dramatic increase in revenue, Tele2’s operating margin improved significantly as a consequence of modest reductions in interconnect charges and a steep decline in fees for rented capacity.

Tele2 successfully launched its services in Portugal in the third quarter of 2003.

40 REPORT OF THE BOARD OF DIRECTORS TELE2 ANNUAL REPORT 2003

LuxembourgThe Luxembourg market area comprises Tele2 operations in Luxembourg (including Tango), Liechtenstein and Belgium as well as 3C’s operations and Transac.

The successful launch of fixed telephony in Brussels in the first quarter and the rest of Belgium in the third quarter has continued to force the pace of steady growth. This investment in new customers has affected the EBITDA margin. In Luxembourg, including Tango, stable growth continued.

Tele2 has been awarded UMTS licenses in Luxembourg and Liechtenstein. Tango, Tele2’s mobile operator in Luxembourg, launched its 3G network which covers 90% of the population and 70% of the land surface at the end of April. The cautious launch means that Tele2 can use Luxembourg as a test market for its other 3G operations.

Branded products & servicesBranded products & services comprise Tele2 operations in the UK, Alpha Telecom in the UK, C3 operations, Everyday operations and IntelliNet operations.

At the end of 2003,Tele2 increased its presence in the UK through the successful launch of full-scale fixed telephony in the private market. Our experience in establishing operations in markets of approximately the same size as that of the UK, indicates that a successful launch would initially require market investments of approximately SEK 500 million in the first year of operation.

Acquisitions and divestmentsOn February 17, 2003, Alpha Telecom was acquired for SEK 704 million net, including an anticipated supplementary purchase price based on the company’s profit. Alpha Telecom is the leading UK-operator in prepaid fixed telephony for private individuals and the market leader in prepaid calling cards for fixed telephony.

In May 2003, Tele2 acquired the remaining shares, 72.6%, in Suomen 3G Oy, a company with 3G networks in nine Finnish towns.

As part of the company’s strategy in the mobile telephony operation in Russia, Tele2 acquired 62.5% of Radio Components Sweden AB in September 2003. One of Radio Components’ products is an antenna solution for GSM 1800 which reduces the need for base stations by three to four times. By investing, Tele2 has secured cost-effective expansion in Russia and in other areas where mobile networks may be built.

During the year, Tele2 also increased its holdings in several of the Russian operations.

Tax issues concerning SECIn December 2003,Tele2 reported that the tax authorities’ review of Tele2’s financial accounts for 2001 had been completed and that the tax authorities wished to change Tele2’s taxation. In 2000, Tele2 acquired the remaining majority in the listed company SEC SA. In connection with the fact that the operation was restructured, an external valuation was carried out which indicated a fall in value, and the operations in SEC SA were then transferred at this value. Tele2 has claimed a deduction for this realized loss (Note 10).

Change-over to international IAS/IFRS accounting standardsFrom January 1, 2005, Tele2 will change over to reporting in accordance with the international IAS/IFRS (International Financial Reporting Standards) accounting standards. A gradual change-over has already taken place in Sweden, conducted over a number of years, involving, by and large, the adaptation of the recommendations of the Swedish Financial Accounting Standards Council to comply with the international regulations. Tele2 is already following the recommendations issued by the Swedish Financial Accounting Standards Council and has therefore already been largely adapted to comply with the international regulations. As a consequence of this gradual transition, Tele2 expects no major changes to be made in its reports up to and including 2005.

The most significant difference between Tele2’s current accounting principles and the future IFRS principles is expected to be the fact

that goodwill will no longer be amortized in a straight line but based on an annual assessment of write-down requirements. (Note 2).

Tele2 is continually following changes in this area, making plans and working to reach a stage where the company will be able to submit its quarterly report on March 31, 2005, including comparative figures, in accordance with IAS/IFRS, as well as review reporting procedures so that the required data can be collected for the financial statements for 2005.

Work of the Board of DirectorsThe Board of Directors of Tele2 is composed in such a manner that it can effectively support and manage the work of the senior executives. At the Annual General Meeting in May 2003, John Shakeshaft and Cristina Stenbeck were appointed new members. Lars Wohlin and Pelle Törnberg left the Board while other members were re-elected. At the Board meeting following the Annual General Meeting, Sven Hagströmer was elected Chairman of the Board. In August 2003, Bruce Grant left the Board.

During the year, the Board held 8 meetings. The Board has adopted a specific work procedure that provides guidelines for the work of the Board and establishes the division of duties between the Board and the CEO. Among other things, the work procedure regulates which matters are to be discussed at ordinary Board meetings, how the basis for decision making sent to the Board in advance should be formulated, and the number of ordinary Board meetings to be held. Matters placed before the Board are dealt with by the entire Board. Each year, the company’s auditors report to the Board the result of their examination. During the year the Board of Directors appointed an audit committee, that has held informal preparational meetings during the year.

In December 2003, the nomination group, consisting of representatives of the three owner families Stenbeck, Klingspor and von Horn as well as the presidents of the shareholders Industriförvaltnings AB Kinnevik and Invik & Co. AB, announced that the nomination process before the Annual General Meeting in 2004 will be chaired by Cristina Stenbeck as Chairman of the nomination committee.

Parent CompanyThe Parent Company performs functions and conducts certain development projects common to the Group.

A convertible debenture was converted to 100,000 B shares on December 31, 2003, which affected shareholders’ equity by SEK 15 million. The Parent Company has received group contributions totaling SEK 1,730 (2002: SEK 3,035) million.

Proposed appropriation of profitThe Group’s non-restricted reserves amount to SEK 5,916 million. No allocation to restricted reserves is proposed for companies within the Group.

The Board of Directors and President propose that of the total amount, SEK 3,662,853,918, at the disposal of the Annual General Meeting, SEK 442,680,525 be paid in dividends to shareholders and SEK 3,220,173,393, be carried forward to a new account.

TELE2 ANNUAL REPORT 2003 INCOME STATEMENT 41

Income statement Group Parent Company

SEK million Note 2003 2002 2003 2002

Operating revenue 1 36,911 31,282 17 16 Cost of services sold –23,109 –19,890 – –

Gross profit 13,802 11,392 17 16 Selling expenses –8,820 –7,279 – –Administrative expenses 39 –3,110 –2,571 –106 –101Other operating revenues 3 78 50 63 12Other operating expenses 4 –66 –62 – –

Operating profit/loss 2, 38 1,884 1,530 –26 –73 Profit/loss from associated companies: Result from shares in associated companies 5 –18 –41 – –Sale of associated companies 6 – 5 – – Profit/loss from financial investments: Result from other securities and receivables classified as fixed assets 7 –70 –84 295 182Other interest revenue and similar income 8 106 165 – –Interest expenses and similar costs 9 –635 –779 –7 –5

Profit/loss after financial items 1,267 796 262 104 Taxes 10 1,092 –574 –98 –35Minority interest 37 1

Profit/loss for the year 32–33 2,396 223 164 69

Earnings/loss per share 24 SEK 16.25 SEK 1.51Earnings/loss per share after full dilution 24 SEK 16.20 SEK 1.51 Number of shares 24 147,560,175 147,460,175Average number of shares 24 147,460,175 147,360,175Number of shares after dilution 24 148,203,675 148,223,175Average number of shares after dilution 24 147,869,175 147,634,293

Balance sheet

42 BALANCE SHEET TELE2 ANNUAL REPORT 2003

Group Parent Company

SEK million Note Dec. 31, 2003 Dec. 31, 2002 Dec. 31, 2003 Dec. 31, 2002

ASSETS Fixed assets Intangible assets: Licenses and rights of use 11 480 509 – –Goodwill 11 23,076 24,587 – –

Total intangible assets 23,556 25,096 – – Tangible assets: Land and buildings 12 108 115 – –Machinery and technical plant 12 8,334 8,334 – –Equipment, tools and installations 12 301 575 – –Fixed plant under construction 12 293 233 – –

Total tangible assets 9,036 9,257 – – Financial fixed assets: Shares in group companies 13 2,686 2,686Receivables from group companies 14 17,381 15,353Shares in associated companies 15 514 542 – –Receivables from associated companies 16 – 19 – 19Other long-term holdings of securities 17 36 139 – 28Other long-term receivables 18 48 74 – –Deferred tax receivable 10 2,459 1,246 1,188 1,771

Total financial fixed assets 3,057 2,020 21,255 19,857

Total fixed assets 35,649 36,373 21,255 19,857 Current assets Materials and supplies 350 353 – – Current receivables: Accounts receivable 19 5,569 4,373 – –Current tax receivable 2 1 – –Receivables from group companies 56 7Other receivables 20 308 250 – –Prepaid expenses and accrued income 21 3,319 3,049 3 1

Total current receivables 9,198 7,673 59 8 Cash and cash equivalents 22 2,773 2,473 1 10

Total current assets 12,321 10,499 60 18

TOTAL ASSETS 32–33 47,970 46,872 21,315 19,875

TELE2 ANNUAL REPORT 2003 BALANCE SHEET 43


SEK million Note Dec. 31, 2003 Dec. 31, 2002 Dec. 31, 2003 Dec. 31, 2002

EQUITY AND LIABILITIESShareholders’ equity 23 Restricted equity Share capital 24 738 737 738 737Restricted reserves 23,706 24,401 16,577 16,562

Total restricted equity 24,444 25,138 17,315 17,299 Unrestricted reserves Unrestricted reserves 3,520 3,367 3,499 2,185Profit/loss for the year 2,396 223 164 69

Total unrestricted reserves 5,916 3,590 3,663 2,254

Total shareholders’ equity 30,360 28,728 20,978 19,553

Minority Interests 7 22

ProvisionsShares in associated companies 15 6 28 – –Other provisions 20 – – –

Total provisions 26 28 – – Long-term liabilitiesInterest-bearing Liabilities to financial institutions 25 4,752 7,876 – –Liabilities to group companies 309 303Other liabilities 26 23 23 – –

Total long-term liabilities 4,775 7,899 309 303 Short-term liabilitiesInterest-bearing Liabilities to financial institutions 25 2,449 2,377 – –Other liabilities 26 12 5 – –

Total interest-bearing 2,461 2,382 – – Non-interest-bearingAccounts payable 4,486 3,542 6 6Current tax liabilities 83 57 – –Other liabilities 27 598 441 13 5Accrued expenses and deferred income 28 5,174 3,773 9 8

Total non-interest-bearing 10,341 7,813 28 19

Total short-term liabilities 12,802 10,195 28 19

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 32–33 47,970 46,872 21,315 19,875

PLEDGED ASSETS AND CONTINGENT LIABILITIES Pledged assets 29 12,921 11,735 None NoneContingent liabilities 30 363 None 14,308 12,825

44 CASH FLOW STATEMENT TELE2 ANNUAL REPORT 2003

Cash flow statement Group Parent Company

SEK million Note 2003 2002 2003 2002

Operating activities Operating profit/loss 1,884 1,530 –26 –73Adjustments for non-cash operating activities: Depreciation and amortization 3,826 3,597 – – Capital gain/loss on sale of machinery and technical plant 27 9 – – Financial leases –32 –20 – –Exchange rate differences –15 63 – –Interest received 124 157 – 2Interest paid –532 –619 – –Financial expenses paid –118 –104 –1 –Tax paid –102 –49 – –

5,062 4,564 –27 –71Changes in working capital: Materials and supplies –7 –12 – – Accounts receivable –1,250 –815 – – Other current receivables 37 167 – 2 Prepaid expenses and accrued income –274 –185 –2 – Intra-group transactions (current) –49 –4 Accounts payable 1,038 236 – –4 Other current liabilities 12 123 9 3 Accrued expenses and deferred income 1,361 287 1 1 Provisions –5 – – –

912 –199 –41 –2

Cash flow from operating activities 5,974 4,365 –68 –73

Investing activities Acquisition of intangible fixed assets –102 –208 – –Acquisition of tangible fixed assets –1,809 –1,699 – 1Sale of tangible fixed assets 21 17 – –Acquisition of shares in group companies (excluding cash) 13 –699 –346 – –299Acquisition of other long-term securities – –317 –74 –23Sale of other long-term securities 21 40 – –Lending to group companies –16 –128Repayments from group companies 137 414Other long-term lending –64 –12 –3 –7Other repayments from long-term lending 76 9 – 102

Cash flow from investing activities –2,556 –2,516 44 60

Financing activities Loans from credit institutions 1,399 528 – –Repayment of loans from credit institutions –4,327 –1,744 – –Other interest-bearing liabilities – 12 – –Repayment of other interest-bearing liabilities –27 –209 – –New share issues 15 15 15 15

Cash flow from financing activities –2,940 –1,398 15 15

Net change in cash 478 451 –9 2

Cash at beginning of year 22 2,473 2,275 10 8Exchange rate differences in cash 22 –178 –253 – –

Cash at end of year* 22 2,773 2,473 1 10

*Of which, restricted funds 22 830 870 – –For additional cash flow information, please refer to: 31

TELE2 ANNUAL REPORT 2003 CHANGES IN SHAREHOLDERS’ EQUITY 45

Changes in shareholders’ equity Group

Note Share Restricted Unrestricted Total share-SEK million capital reserves reserves holders’ equity

Opening shareholders’ equity, January 1, 2002 737 35,741 –6,961 29,517

Items reported directly against shareholders’ equity: Exchange rate differences 23 – –868 –158 –1,026

Total items reported directly against shareholders’ equity – –868 –158 –1,026

Other changes in shareholders’ equity: Utilization of share premium reserve – –7,387 7,387 –New share issue – 14 – 14Transfers within shareholders’ equity – –3,099 3,099 –Net profit/loss for the year – – 223 223

Closing shareholders’ equity, December 31, 2002 737 24,401 3,590 28,728 Opening shareholders’ equity, January 1, 2003 737 24,401 3,590 28,728

Items reported directly against shareholders’ equity: Exchange rate differences 23 – –865 85 –780

Total items reported directly against shareholders’ equity – –865 85 –780

Other changes in shareholders’ equity: New share issue 1 15 – 16Transfers within shareholders’ equity – 155 –155 –Net profit/loss for the year – – 2,396 2,396

Closing shareholders’ equity, December 31, 2003 738 23,706 5,916 30,360

Parent Company

Restricted Unrestricted Total share-

SEK million Share capital Reserves reserves holders’ equity

Opening shareholders’ equity, January 1, 2002 737 23,935 –7,387 17,285

Items reported directly against shareholders’ equity: Group contribution, received – – 3,035 3,035Group contribution, tax effect – – –850 –850

Total items reported directly against shareholders’ equity – – 2,185 2,185

Other changes in shareholders’ equity: Utilization of share premium reserve – –7,387 7,387 –New share issue – 14 – 14Net profit/loss for the year – – 69 69


Opening shareholders’ equity, January 1, 2003 737 16,562 2,254 19,553

Items reported directly against shareholders’ equity: Group contribution, received – – 1,730 1,730Group contribution, tax effect – – –485 –485

Total items reported directly against shareholders’ equity – – 1,245 1,245

Other changes in shareholders’ equity: New share issue 1 15 – 16Net profit/loss for the year – – 164 164


46 NOTES TELE2 ANNUAL REPORT 2003

The annual report has been prepared in accordance with the Annual Accounts Act, recommendations of the Swedish Financial Accounting Standards Council’s Emerging Issues Task Force and the Swedish Financial Accounting Standards Council’s recommendations RR1:00-RR29, of which RR29 was applied before it came into force.

In 2003, Tele2 modified its accounting principles to conform to recommendation RR29 – Employee Benefits. Previously, Tele2 reported defined-benefit pension plans in line with local rules and regulations in each country. The application of RR29 means that all the Group’s subsidiaries are now reported on the basis of uniform principles. Since the Group has largely had defined-contribution plans, the introduction of RR29 has not had any significant impact on Tele2’s earnings and financial position (Note 38).

Critical accounting principlesAssets and liabilities have been valued at their acquisition value unless otherwise stated.

The consolidated financial statements are, in part, based on assumptions and estimates in conjunction with the preparation of the consolidated accounts. The estimates and approximations are based on historical experience and a number of other assumptions, which result in a decision regarding the value of assets or liabilities which cannot be determined in any other way. The actual outcome may vary from these estimates and approximations.

The explanation below presents the accounting principles that involve the most significant judgement and estimates used in preparing the Group’s financial statements.• Depreciation and amortization according to plan is based on the acquisition

value and estimated utilization period of fixed assets. The utilization period for technical plant and machinery is estimated to amount to between 2–25 years. All depreciation is straight-line over the utilization period (Note 2).

Amortization periods for goodwill are determined on the basis of each acquisition date and the acquisition’s estimated long-term, strategic significance. An amortization period of 20 years applies to corporate acquisitions in new markets. This means that goodwill arising from all strategic acquisitions in recent years (i.e., acquisitions in the Baltic States, Continental Europe and Russia) is amortized over a period of 20 years. Tele2’s management conducts regular evaluations to confirm that these assumptions remain reasonable.

If technology develops more quickly than expected or competition, regulatory requirements or market conditions develop differently than expected, this may affect the Company’s future assessment of utilization periods. Changes to the assessments may in turn affect operating profit/loss.

• Tele2’s management regularly makes assessments of the sustained value of intangible and tangible fixed assets. If management identifies factors which involve a risk of reduced value of the particular asset, a revaluation of the asset is conducted by comparing the sum of future discounted cash flows with the asset’s book value. In cases in which the book value exceeds future discounted cash flows, a write-down requirement emerges. The assessment of whether factors indicate an asset is vulnerable to a fall in value, the estimate of future cash flows (including discounting factors), and the final decision regarding the fair value of the asset make it necessary for management to conduct critical estimates and approximations. If the actual outcome varies from these estimates, or if Tele2 changes these estimates in the future, this may have considerable impact on the results (Notes 11-12).

• The calculation of deferred taxes takes into consideration temporary differences, including a valuation of unutilized loss carry-forwards. Deferred tax assets are reported only for loss carry-forwards to the extent that the loss-carry forwards will be utilized in the near future. Tele2’s management conducts regular appraisals to confirm that previous assessments are reasonable. The valuation of deferred tax assets is based on expectations about future results and market conditions, which is by nature subjective. Utilization of deferred tax assets may therefore differ from the present estimates, which may affect future results (Note 10).

• Receivables are valued regularly and reported in the amounts expected to be paid. Reserves for doubtful receivables are based on various assumptions and historical experience. Payment received for doubtful receivables may vary from the amounts which have been reported in the financial statements (Note 19).

NotesConsolidated accountsThe consolidated financial statements include the accounts of the Parent Company and all companies in which the Parent Company, directly or indirectly, holds more than 50% of the voting rights, or in some other aspect has a controlling interest.

The consolidated accounts were prepared using the purchase method, which means that the Group’s shareholders’ equity includes only that part of each subsidiary’s equity which has been earned after the acquisition.

The difference between the acquisition value of shares in a subsidiary and the market value of that subsidiary’s net assets at the time of acquisition is allocated to the subsidiary’s identifiable assets. Remaining amounts are reported as goodwill.

The current method is used to translate the accounts of foreign subsidiaries. Consequently, the exchange rate on the closing date is used to translate items in the balance sheet, while items in the income statement are translated using the average exchange rate for the year.

All non-Swedish companies in the Tele2 Group are regarded as independent foreign operations as they conduct independent business activities and transactions in local currencies, so that exchange rate differences arising from translations are charged directly to shareholders’ equity.

When an independent foreign operation is divested, the accumulated exchange rate differences attributable to the divested operation are reported in “Net assets in Group companies divested” in the income statement.

The Group hedges some net investments in foreign subsidiaries by means of foreign-currency loans. All foreign exchange gains and losses, net of taxes, relating to the translation of a loan which hedges such an investment is reported directly against shareholders’ equity.

Accounting for associated companies and joint venturesCompanies in which the shareholding is regarded as long term, and in which the Company has a significant influence by means of voting rights amounting to a minimum of 20% and a maximum of 50% are treated as associated companies. Companies in which the owners have equal control pursuant to an agreement are regarded as joint ventures.

Associated companies and joint ventures (“associated companies”) are reported in accordance with the equity method. The book value of the shares in the associated company which is reported in the consolidated financial statements corresponds to the Group’s share in the equity of the associated company and any residual value of consolidated surplus values after adjustment to the consolidated accounting principles. Participation in earnings after net financial items of the associated company is reported in the income statement under the item “Result from shares in associated companies” along with amortization of acquired surplus values. The portion of associated companies’ tax expense and deferred tax income/expense is reported in the income statement under the item “Tax on profit for the year”. Tax receivables/liabilities is reported in the balance sheet as “Shares in associated companies”. Earnings accrued in associated companies arising after the acquisition date, and which have not yet materialized through dividends, are allocated to the equity method reserve, which comprises part of restricted shareholders’ equity in the Group. The equity share reduces unrestricted shareholders’ equity in the event of losses.

In the event of an increase or decrease in the Group’s equity share in associated companies through share issues, the gain or loss is reported in the consolidated income statement under the item “Return on shares in associated companies”.

In the event of negative shareholders’ equity in associated companies in which the company has pledged to contribute additional capital, the negative portion is reported as a provision.

Group surplus values relating to foreign associated companies are reported as assets in foreign currencies. These values are translated in accordance with the same principles as the income statements and balance sheets for associated companies.

Minority interestThe minority share in net profit/loss and shareholders’ equity is reported as a minority interest.

Financial itemsAcquisition and sale of investments is reported on the trading day, which is the date on which the Group has an undertaking to purchase or sell the asset. Investments are initially reported at the acquisition value, including transaction

(SEK million)

General accounting principles

TELE2 ANNUAL REPORT 2003 NOTES 47

costs. Financial assets, both current and fixed are reported at the lower of cost or market value.

Receivables from/liabilities to Group companies and associated companies are based on commercial terms and conditions. Financial loan receivables and loan liabilities are reported in accordance with the original amount. In the event of any deviation between the market rate and the interest rate agreed at the time of the loan, the loan amount is discounted to the fair value. Financing costs relating to the raising of loans are reported under prepaid expenses and expensed for the duration of the agreement in relation to the size of the loan (Note 34).

Receivables and liabilities of Swedish and non-Swedish Group companies denominated in foreign currencies.Receivables and liabilities of Group companies denominated in foreign currencies have been converted into Swedish kronor applying the year-end rate.

Gains or losses on foreign exchange in international transactions related to regular operations are included in the income statement under “Other operating revenues” and “Other operating expenses” respectively, while differences in financial receivables and liabilities are reported within financial items. Note 23 summarizes the exchange rate differences charged directly to shareholders’ equity and the differences which affected profit/loss for the year.

Long-term lending to/borrowing from Tele2’s foreign operations is regarded as a permanent part of the Parent Company’s financing of/borrowing from foreign operations, and thus as an expansion/reduction of the Parent Company’s investment in the independent foreign operation. This lending/borrowing is translated at the historical rate of exchange if the borrowing is denominated in the foreign company’s currency. This means that exchange rate fluctuations in intra-Group transactions in the consolidated accounts are reported directly against shareholders’ equity.

Fixed assets Intangible (Note 11) and tangible (Note 12) fixed assets are reported net after deductions for accumulated depreciation and amortization according to plan. Depreciation according to plan is based on the acquisition value and estimated utilization period of fixed assets. Note 2 presents depreciation and amortization schedules for fixed assets and reasons for amortizing certain intangible assets over a utilization period longer than five years.

If there is an indication that a tangible or intangible asset has declined in value, an estimate is made of its recovery value. If the calculated recovery value is less than the reported value, a write-down is made to the asset’s recovery value.

Intangible assets Tele2 holds a number of licenses issued by the Swedish National Post and Telecom Agency and the equivalent licensing authority in other countries. Capitalized expenses for these rights are amortized on a straight-line basis over the duration of the contract.

Goodwill is defined as the difference between the purchase cost of shares or assets acquired and the market value of net assets.

Tangible assets Land and buildings relates to fixed assets intended for use in actual operations. Buildings are written off on a straight-line basis over the utilization period. Acquisition value includes direct costs attributable to the building.

Machinery and technical plant includes equipment and machinery intended for use in operations, such as network installations. The asset is depreciated on a straight-line basis over the utilization period. The acquisition value includes direct expenses attributable to the construction and installation of networks. Interest directly relating to acquisition, construction or production of an asset which necessarily requires considerable time to complete for the intended application is included in the acquisition value of the asset.

Additional expenses for extensions and improvements which increase value are capitalized, while additional expenses for repairs and maintenance are regularly charged to income during the period in which they arise.

Equipment, tools and installations comprise assets used in administration, sales and operations.

Dismantling costsTele2 has a number of antennas and masts, which would involve costs if a decision were made to dismantle them. Tele2 expenses maintenance of antennas as it arises.

As Tele2 believe it is unlikely that antennas will be dismantled in the foreseeable future, no provision has been made for dismantling costs. Tele2 also believes that these potential dismantling costs do not represent a substantial amount.

Development workTele2 capitalizes some direct development expenses relating to software for internal use. These are written off over the utilization period, which begins when the asset is ready for use. Project-planning costs and maintenance and training costs are expensed as they arise.

Other development work is expensed as it arises when it does not satisfy the criteria for reporting as an asset as defined in RR15 – Intangible assets.

LeasingLeases are classified as financial or operating leases. A lease is considered financial if all economic risks and benefits associated with ownership of the asset have been transferred, to a material degree, to the lessee; otherwise, the lease is an operating lease. In the case of financial leases as reported in the consolidated financial statements, each asset is entered as a tangible fixed asset, and a corresponding amount is entered as a loan on the liability side of the balance sheet. In the income statement, the cost of the lease is divided into a depreciation portion and an item in interest expense. The asset is depreciated on a straight-line basis over the utilization period (Notes 12 and 25).

Agreements covering financial leases before January 1, 1997 have been reported as operational leases in line with a transitional rule.

Materials and suppliesInventories of materials and supplies are valued in accordance with the first-in, first-out principle at the lower of acquisition value and market value. Tele2’s inventories essentially consist of finished products and goods for resale. There is no further specification in the notes, as long as the total value of inventories is of a relatively insignificant value.

Receivables Receivables are reported in the invoiced amounts less the reserve for doubtful debts. The reserve for doubtful receivables is reported as soon as it is likely the Group will not receive the balance outstanding in accordance with the original billing terms (Note 19).

Credit risk means the accounting loss which would be reported at year-end if the other parties completely failed to fulfill their payment obligations under the agreement.

Cash and cash equivalentsCash and cash equivalents consist of cash and bank balances as well as current investments with a maturity of a maximum three months. Cash and cash equivalents according to the cash flow statement and balance sheet include restricted funds (Note 22).

Shareholders’ equityShareholders’ equity consists of registered share capital, reserves which are not available for distribution (statutory reserve, share premium reserve and other restricted reserves) and disposable earnings/accumulated losses, net profit/loss and shares in losses of associated companies.

The share premium reserve applies to surplus portions when a company’s shares are issued at a price that exceeds the nominal value. The equity reserve pertains to positive earnings of associated companies received after the acquisition date. According to the Swedish Companies Act, a provision must be made each year to the statutory reserve in a minimum amount corresponding to 10% of that portion of net profit for the year which is not used to cover retained losses until the statutory reserve and the share premium reserve, combined, correspond to 20% of the share capital. Restricted reserves in Tele2 AB and the Swedish group companies may be used to increase share capital in order to cover accumulated losses, under certain conditions. Other restricted reserves pertain to the equity share of untaxed reserves.

According to the Swedish Companies Act, Tele2 AB’s disposable earnings after the requisite provision to the statutory reserve, and after covering accumulated losses for previous years, are available for distribution to shareholders. The legal limit for distributable funds is represented by rules to the effect that dividends may not threaten the company’s liquidity or overall position or exceed unrestricted

shareholders’ equity in the Group. The dividend is determined by shareholders at the Annual General Meeting and, generally, may not exceed the dividend proposed by the Board.

Additional direct costs relating to the issuance of new shares, except when in connection with company acquisitions, are reported directly to shareholders’ equity as a reduction, net after tax, of proceeds from the share issue. Share issue expenses relating to company acquisitions are included in the acquisition price.

ProvisionsProvisions are reported when a company has a legal or constructive obligation in which it is probable that payments will be required to fulfill the commitment, and where it is possible to make a reliable estimate of the amount to be paid.

Revenue recognitionSales are reported net of VAT, discounts and exchange rate differences for sales in foreign currency.

Revenue from mobile telephony services consists mainly of monthly fees from subscription customers. This revenue is recognized at the time the mobile service is provided to the customer. Unbilled subscription charges for the period from the last billing date to the end of the reporting period are shown as accrued income, and billed subscription charges for periods after the end of the reporting period are reported as deferred income. Revenue from the sale of prepaid calling cards is reported as deferred income and is recognized as the customer uses the card.

Revenue from fixed telephony services consists mainly of call time. This revenue is recognized at the time the service is provided. Revenue from international telephony traffic also consists of revenue from foreign telecommunications companies for traffic which goes through Tele2’s network. Unbilled revenue from fixed telephony services to customers and from foreign telecommunications companies from the last billing date to the end of the period is reported as accrued income.

Revenue from cable TV and other products and services is recognized at the time the product or service is supplied to the customer.

Marketing expenses Expenditures for advertising and other marketing activities are charged on an ongoing basis.

Corporate income taxConsolidated profit or loss for the year is charged with the tax on taxable income for the year (“Current tax”) and with estimated tax charges or credits for temporary differences (“Deferred tax”). A temporary difference is an item which merely alters the time when an item is considered taxable or entitles the company to a deduction.

The calculation of deferred tax receivables takes into account the company’s loss carry-forwards to the extent that it is expected they can be used against future profits. In cases where a company reports losses, an assessment is made of whether there are any convincing factors to indicate that there will be sufficient future profits. One example of such a factor is if a company’s forecasts show a positive earnings trend and forecasts have proven to be historically reliable (Note 10). Tax receivable and deferred tax payable are netted only among units with the same domicile for tax purposes.

When an acquired company has loss carry-forwards and Tele2, at the time of acquisition, has made an assessment that tax receivables are not to be reported at any value, but a subsequent assessment results in tax receivables being valued and reported in the income statement as tax revenue, an amount corresponding to the reported value of the original loss carry-forward (adjusted to the remaining depreciation period of the acquisition’s goodwill item) will reduce the book value of goodwill by means of depreciation in the income statement.

The tax effects of Group contributions paid and received are reported in the individual companies as tax expense or tax revenue in the income statement (“Current tax”) and charged to retained earnings.

Earnings per shareEarnings per share after dilution (Note 24) is calculated according to a method in which the present value of the exercise price of the option is assumed to be used to acquire shares at the average market value during the accounting period.

Number of employees, salary and remunerationThe average number of employees (Note 37) as well as salaries and remuneration (Note 38) for each year in acquired companies is reported in relation to the length of time the company has been part of the Tele2 Group.

The number of employees as well as salaries and remuneration is not reported by country but are grouped and presented by market area for the sake of clarity and to give a truer picture which is in keeping with other parts of the annual report, thereby allowing comparison of operating revenue and other income statement items.

PensionsIn the case of defined-benefit plans, Tele2 has the risk and obligation at the time of the pension payment. In the case of defined-contribution plans, Tele2 does not bear the risk at the time of the pension payment.

There are a number of pension plans in the Group, but the majority are defined-contribution plans (Note 38) for which the Group makes payments to public and private pension institutions. The regular payments represent the pension expenses for the year and are included in personnel costs. The Group’s outgoing payments for defined-contribution pension plans are reported as an expense during the period in which the employees performed the services to which the contribution relates.

The provision for defined-benefit plans is made up of the present value of the defined-benefit commitment minus the fair value of plan assets and an adjustment for actuarial gains and losses and costs for service in previous years. Actuaries calculate the defined-benefit commitment and also revalue the pension plan’s commitment each year using the Projected Unit Credit Method. These commitments are valued at the present value of expected future payments using a discount rate which corresponds to the rate for high-grade corporate bonds or government bonds with a remaining maturity which is more or less the same as the current commitment. Actuarial gains and losses outside the 10 percent corridor are distributed over the employees’ remaining period of service.

Remuneration to AuditorsAuditing assignments consist of the auditing of the annual accounts, accounting records and administration of the Board and President. All else comes under other assignments (Note 39).

Transactions with related parties Transactions with other related parties are listed in Note 40.

United States generally accepted accounting principles (US GAAP)The consolidated balance sheets and income statements are drawn up in accordance with Swedish accounting principles. These differ in certain aspects from generally accepted accounting principles in the United States (US GAAP). Note 41 shows the adjustments required for compliance with US GAAP.

Other information Tele2 is a limited company and has its registered office in Stockholm. The Head Office (phone +46 8 5620 0060) is located at Skeppsbron 18, PO Box 2094, SE-103 13 Stockholm, Sweden.

The balance sheets and income statements will be adopted at the Annual General Meeting on May 12, 2004.



Note 1. Operating revenueOperating revenue by market area:

Group Operating Revenue 2003 2002 ChangeNordic: Mobile telephony 7,330 6,872 7%Fixed telephony and Internet 6,310 6,557 –4%Cable TV 207 222 –7%Other operations 346 342 1%Adjustment, mobile Sweden –374 237 –258%Intra-Group sales –849 –664 28%Total, Nordic 12,970 13,566 -4% Of which: Tele2 in Sweden, mobile telephony 6,626 6,374 4% Tele2 in Sweden, fixed telephony 3,793 3,925 –3% Tele2 in Sweden, cable TV 191 205 –7% Adjustment, mobile –374 237 –258% Total for Tele2 in Sweden 10,236 10,741 –5%

Eastern Europe & Russia: Mobile telephony 2,600 2,068 26%Fixed telephony and Internet 348 198 76%Cable TV 26 26 0%Other operations 99 77 29%Intra-Group sales –67 –49 37%Total, Eastern Europe & Russia 3,006 2,320 30%

Central Europe: Mobile telephony 432 145 198%Fixed telephony and Internet 7,645 5,922 29%Intra-Group sales –575 –378 52%Total, Central Europe 7,502 5,689 32%

Southern Europe:Fixed telephony and Internet 10,578 8,415 26%Intra-Group sales –345 –310 11%Total, Southern Europe 10,233 8,105 26%

Luxembourg:Mobile telephony 601 535 12%Fixed telephony and Internet 314 209 50%Cable TV 11 2 450%Other operations 101 124 –19%Intra-Group sales –110 –116 –5%Total, Luxembourg 917 754 22%

Branded Products & Services:Fixed telephony and Internet 2,608 1,004 160%Other operations 14 – –Intra-Group sales –339 –156 117%Total Branded Products & Services 2,283 848 169%

Total by market 36,911 31,282 18%

Group Operating Revenue 2003 2002 ChangeMobile telephony 10,963 9,620 14%Fixed telephony and Internet 27,803 22,305 25%Cable TV 244 250 –2%Other operations 560 543 3%Adjustment, mobile Sweden –374 237 –258%Intra-Group sales –2,285 –1,673 37%Total by business area 36,911 31,282 18%

Telephony revenue is reported at the time the customers make calls. As such, prepaid calling cards which have been sold but not yet utilized are not included in revenue. To account for this, revenue has been recognized according to a model which has been applied in Sweden since prepaid calling cards were introduced in 1997, in the absence of a system which could measure the value of cards sold but not yet utilized. Such a system was introduced by Comviq towards the end of 2003 and it was established that the value of sold but unutilized cards was underestimated by a total of SEK –374 million for the period 1997 to September 30, 2003. Of this amount, SEK –95 million relates to 2003.

In 2002, Tele2 won a lawsuit in the County Administrative Court against Telia regarding principles of payment of interconnection charges. The result of the ruling is that Telia is responsible for payment regarding traffic transited via its network (Cascade accounting) at certain tariffs rates. An amount of SEK 237 million has been included in the operating revenue for 2002, thereby recognizing the receivable in its entirety in 2002. On June 26, 2003, the Stockholm Court of Appeal ruled that Telia is responsible for payment.

In intra-Group sales, no sales were made to companies in the Tele2 Group. Internal sales in the market areas and additional information about segments are shown in Note 32 (Market areas) and Note 33 (Business areas).

Sales of telephones, which amounted to SEK 387 million (2002: SEK 453 million), are included in operating revenue for the year.

Numbers of customers by market area and business area are shown in Note 36.The entire operating revenue of the Parent Company relates to sales to other companies in

the Group.

Note 2. Depreciation/amortization for the year and operating profitOperating revenue by market area: Group

EBITDA* Depreciation/amortization EBIT** 2003 2002 2003 2002 2003 2002Nordic:Mobile telephony 3,299 3,339 –424 –791 2,875 2,548Fixed telephony and Internet 899 1,192 –498 –472 401 720Cable TV 40 32 –61 –64 –21 –32Other operations 9 14 –9 –8 – 6Adjustment, mobile Sweden –374 237 – – –374 237Total, Nordic 3,873 4,814 –992 –1,335 2,881 3,479 Of which: Tele2 in Sweden, mobile telephony 3,325 3,409 –413 –388 2,912 3,021 Tele2 in Sweden, fixed telephony 714 879 –406 –356 308 523 Tele2 in Sweden, cable TV 35 32 –58 –61 –23 –29 Adjustment, mobile –374 237 – – –374 237 Total for Tele2 in Sweden 3,700 4,557 –877 –805 2,823 3,752

Eastern Europe & Russia: Mobile telephony 809 611 –355 –339 454 272Fixed telephony and Internet –224 –76 –28 –29 –252 –105Cable TV –1 –1 –9 –12 –10 –13Other operations 15 7 –12 –10 3 –3Total, Eastern Europe & Russia 599 541 –404 –390 195 151

Central Europe:Mobile telephone –124 –186 –27 –17 –151 –203Fixed telephony and Internet 307 105 –165 –116 142 –11Total, Central Europe 183 –81 –192 –133 –9 –214

Southern Europe:Fixed telephony and Internet 1,024 –101 –106 –129 918 –230Total, Southern Europe 1,024 –101 –106 –129 918 –230

Luxembourg:Mobile telephony 220 161 –73 –65 147 96Fixed telephony and Internet –124 6 –95 –18 –219 –12Cable TV –9 –29 –6 –5 –15 –34Other operations –7 –12 –13 –4 –20 –16Total, Luxembourg 80 126 –187 –92 –107 34

Branded Products & Services:Fixed telephony and Internet –43 –172 –56 –12 –99 –184Other operations –6 – –1 – –7 –Total Branded Products & Services –49 –172 –57 –12 –106 –184

Group depreciation/amortization –1,888 –1,506 –1,888 –1,506Total by market 5,710 5,127 –3,826 –3,597 1,884 1,530

Group

EBITDA* Depreciation/amortization EBIT** 2003 2002 2003 2002 2003 2002Mobile telephony 4,204 3,925 –879 –1,212 3,325 2,713Fixed telephony and Internet 1,839 954 –948 –776 891 178Cable TV 30 2 –76 –81 –46 –79Other operations 11 9 –35 –22 –24 –13Adjustment, mobile Sweden –374 237 – – –374 237Group depreciation/amortization –1,888 –1,506 –1,888 –1,506Total by business area 5,710 5,127 –3,826 –3,597 1,884 1,530

* EBITDA = Operating profit before depreciation/amortization

** EBIT = Operating profit after depreciation/amortization

Group

EBITDA margin EBIT margin 2003 2002 2003 2002Nordic 30% 35% 22% 26% Of which: Tele2 in Sweden, mobile telephony 50% 53% 44% 47% Tele2 in Sweden, Mobile telephony 19% 22% 8% 13% Tele2 in Sweden, Cable TV 18% 16% –12% –14% Tele2 in Sweden, Total 36% 42% 28% 35% Eastern Europe & Russia 20% 23% 6% 7%Central Europe 2% –1% –0% –4%Southern Europe 10% –1% 9% –3%Luxembourg 9% 17% –12% 5%Branded Products & Services –2% –20% –5% –22%Total by business area 15% 16% 5% 5%


The item Adjustment, mobile Sweden of SEK –374 million (2002: SEK 237 million) relates to operating revenue and is described in Note 1.

Some of the tax effect of the year’s valued loss carry-forwards relates to acquired loss carry-forwards which at the time of acquisition were valued at zero. This value, adjusted to the remaining depreciation period of the acquisition’s goodwill, has reduced the book value of goodwill through Group depreciation/amortization of SEK –322 million in the income statement (Note 10).

Write-downs of fixed assets amounted to SEK –172 million and relates to an Atlantic undersea cable, in which Tele2 invested in the late 1990s. They are expensed as a result of Tele2’s assessment of continued excess supply of capacity.

Internal sales to other companies in the Tele2 Group are not included in the figures above. Profit/loss including internal sales, depreciation by segment and additional information about segments is shown in Note 32 (Market areas) and Note 33 (Business areas).

Sales of telephones are included in operating expenses for the year at SEK –432 million (2002: SEK –573 million).

Depreciation/amortization by function: Group Parent Company

2003 2002 2003 2002Cost of services sold –3,413 –3,264 – –Selling expenses –55 –83 – –Administrative expenses –358 –250 – –Depreciation/amortization for the year by function –3,826 –3,597 – –

Depreciation/amortization by asset type: Group Parent Company

2003 2002 2003 2002Licenses and rights of use –85 –339 – –Goodwill –1,906 –1,512 – –Buildings –24 –19 – –Machinery and technical plant –1,652 –1,350 – –Equipment, tools and installations –159 –240 – –Plant under construction – –137 – –Total depreciation/amortization for the year by type of asset –3,826 –3,597 – –

Estimated utilization period: Group Parent Company

Intangible fixed assets: Licenses and rights of use 1 – 23 years –Goodwill 3 – 20 years –Tangible fixed assets: Buildings 5 – 40 years –Machinery and technical plant 2 – 25 years –Equipment, tools and installations 2 – 10 years –

Depreciation/amortization according to plan is based on the acquisition value and estimated utilization period of fixed assets. All depreciation is straight-line over the utilization period.

Goodwill arising from the original acquisition of Comviq GSM AB and Tele2 Sverige AB and other acquisitions before 1996, in addition to acquisition of Alpha during 2003, is amortized over ten years. The goodwill arising in 1996 in conjunction with the acquisition of the outstanding minority shareholding in Tele2 Sverige AB and outstanding options in Comviq GSM AB, is amortized over 20 years. Goodwill arising from the acquisition of Datametrix, Tele2 Eesti, SIA Tele2, SEC, Tele2 Russia and Tele2 OU (Levicom Broadband) is amortized over a period of 20 years. Amortization periods are set on the basis of each acquisition date and the acquisition’s estimated long-term, strategic significance. An amortization period of 20 years applies to corporate acquisitions in new markets. Other goodwill is amortized over five years.

Note 3. Other operating revenue Group Parent Company

2003 2002 2003 2002Exchange gains from operations 38 24 1 1Disposal of fixed assets 2 9 – –Other revenue, external 38 17 – –Other revenue, Group 62 11Total other operating revenue 78 50 63 12

Note 4. Other operating expenses Group Parent Company

2003 2002 2003 2002Exchange loss from operations –30 –35 – –Sale/scrapping of other fixed assets –29 –18 – –Other costs –7 –9 – –Total other operating expenses –66 –62 – –

Note 5. Result from shares in associated companies Group Parent Company

2003 2002 2003 2002 Participation in profit/loss of associated companies –18 –41 – –Total result from associated companies –18 –41 – –

Holding Group Parent Company

12/31/03 12/31/02 2003 2002 2003 2002Svenska UMTS–Nät AB 50% 50% –9 –1 – –Other associated companies Note 15 Note 15 –9 –40 – –Total result from associated companies –18 –41 – –

Profit/loss in associated companies: 2003 2002 Sv UMTS–nät Other Sv UMTS–nät OtherProfit/loss in each associated company –17 –2 –2 –108Holding 50% 20%-50% 50% 20%-50%

Share of profit/loss –8 –5 –1 –39Change in share of profit/loss from preceding year –1 –4 – –1Total profit/loss from associated companies –9 –9 –1 –40

Extracts from the balance sheets and income statements of each associated company:

2003 2002 Sv UMTS–nät Other Sv UMTS–nät OtherIncome statement: Revenue – 45 – 70EBIT –19 –2 –20 –86Profit/loss for the year –17 –2 –2 –108

Dec. 31, 2003 Dec. 31, 2002 Sv UMTS–nät Other Sv UMTS–nät OtherBalance sheet:Tangible assets 1,574 – 468 –Intangible and financial assets 1 22 – 33Current assets 307 42 545 80Total assets 1,882 64 1,013 113

Shareholders’ equity 977 24 995 –8Long-term liabilities 725 – – 37Current liabilities 180 40 18 84Total shareholders’ equity and liabilities 1,882 64 1,013 113

Note 6. Sales of associated companies Group Parent Company

2003 2002 2003 2002Sale of Moscow Cellular Communication – 5 – –Total sales of associated companies – 5 – –

Note 7. Result from other securities and receivables classified as fixed assets Group Parent Company

2003 2002 2003 2002Interest, Group 299 180Interest, external receivables 5 2 – 2Write-down of shares in Travellink AB –75 – – – Write-down of shares in Modern Holdings Inc – –86 – –Exchange-rate difference on receivables from Group companies – – –4 –Total result from other securities and receivables classified as fixed assets –70 –84 295 182


Note 8. Other interest revenue and similar income Group Parent Company

2003 2002 2003 2002Interest, bank balances 90 111 – –Interest, penalty interest etc. 28 47 – –Exchange rate difference on financial current assets –12 7 – –Total other interest revenue and similar income 106 165 – –

Note 9. Interest expenses and similar costs Group Parent Company

2003 2002 2003 2002Interest, loans –479 –679 – –Interest, financial leasing –11 –13 – –Interest, penalty interest –24 –30 – –Interest, Group –6 –5Exchange-rate difference on financial liabilities –3 57 – –Other financial expense –118 –114 –1 –Total interest expenses and similar costs –635 –779 –7 –5

Other financial expense relates primarily to financing costs involved in the raising of the five-year loan facility. These are expensed during the period of agreement in proportion to the size of the loan amount.

Note 10. Tax on profit/loss for the year and deferred tax liability/receivable

Tax expense/income for the year: Group Parent Company

2003 2002 2003 2002Current tax expense:Eastern Europe & Russia –73 –45 – –Central Europe – –4 – –Southern Europe –31 – – – –104 –49 – –

Deferred tax expense, as a result of temporary differences:Nordic –604 –835 –98 –35Eastern Europe & Russia –1 22 – –Central Europe 317 116 – –Southern Europe 101 127 – –Luxembourg 1,239 30 – –Branded Products & Services 144 15 – – 1,196 –525 –98 –35

Total tax expense (–)/tax income (+) on profit for the year 1,092 –574 –98 –35

Profit/(loss) before tax and minority share:

Group

2003 2002Sweden 3,473 2,532Other countries –2,206 –1,736 Total profit/loss before tax and minority share 1,267 796

Theoretical tax expense: The difference between the booked tax expense for the Group and the tax expense based on prevailing tax rates in each country consists of the following components:

Group

2003 2002 Profit/loss before tax and minority share 1,267 796

Tax according to prevailing tax rate in:Tax effect according to tax rate in Sweden –355 –28% –223 –28%Effect of foreign tax rates 66 135 –289 –88Tax effect of: Non-tax affecting items, goodwill amortization –522 –41.2% –418 –52.5%Non-tax affecting items, other Group adjustments –9 –0.7% 18 2.3%Write-downs of shares in other securities –21 –1.7% –24 –3.0%Write-downs of shares in Group companies, deductible 483 38.1% – –Other non-deductible expenses/taxable revenue 52 4.1% –57 –7.2%Loss carry-forwards: - Valuation of loss carry-forwards in previous years 1,700 134.2% 576 72.4% - Non-assessed additional loss carry-forwards –302 –23.8% –581 –73.0%Tax expense/income and effective tax rate 1,092 86.2% –574 –72.1%

Parent Company

2003 2002 Profit/loss before tax and minority share 262 104

Tax effect according to tax rate in Sweden –73 –28% –29 –28%

Tax effect of: Other non-deductible expenses/taxable revenue –25 –9.5% –6 –5.8%Tax expense/income and effective tax rate –98 –37.4% –35 –33.7%

Deferred tax asset:Deferred tax asset is attributable to the following items:

Group

Dec 31, 03 Dec 31, 02

Long-term receivables – –3Machinery and technical plant –1,005 –1,019Value of unutilized loss carry-forwards 3,464 2,268Total deferred tax asset (+) / tax liability (–) 2,459 1,246

Group

Dec 31, 03 Dec 31, 02

Deferred tax asset:Nordic 1,365 1,937Eastern Europe & Russia 41 35Central Europe 429 117Southern Europe 227 128Luxembourg 1,270 36Branded Products & Services 159 15 3,491 2,268Deferred tax liability: Nordic –1,005 –1,022Eastern Europe & Russia –27 – –1,032 –1,022

Total deferred tax asset (+) / tax liability (–) 2,459 1,246

Loss carry-forwards:At December 31, 2003, the Tele2 Group had loss carry-forwards totaling SEK 18,486 million (2002: SEK 19,173 million), of which SEK 881 million (2002: SEK 1,744 million) expires within five years and the remaining amount, SEK 17,605 million (2002: SEK 17,429 million), expires after five years or may continue to apply in perpetuity.

Deferred tax asset are reported for loss carry-forwards only to the extent that the loss-carry forwards can be utilized against future profits. Due to the improved results in Continental Europe, the tax effect of deferred tax asset totaling SEK 2,011 million (2002: SEK 576 million) has been recognized in the income statement. Total losses carried forward for the Group at December 31, 2003 amounted to SEK 18,486 million (2002: SEK 19,173 million), of which SEK 11,575 million (2002: SEK 7,881 million) has been utilized for deferred tax accounting and the remainder, SEK 6,911 million (2002: SEK 11,292 million), is valued at zero.

Some of the tax effect of the year’s valued loss carry-forwards relates to acquired loss carry-forwards which at the time of acquisition were valued at zero. This value, adjusted to the remaining depreciation period of the acquisition’s goodwill, has reduced the book value of goodwill through depreciation of SEK –322 million in the income statement. Remaining acquired unvalued loss carry-forwards amount to SEK 1,241 million with a tax effect of SEK 558 million.

In December 2003, Tele2 announced that the tax authorities’ review of Tele2’s financial accounts for 2001 had been completed and that the authorities wished to change Tele2’s taxation. In 2000, Tele2 acquired the remaining majority in the listed company SEC SA. In connection with the fact that the operation was restructured, an external valuation was carried out which indicated a fall in value, and the operations in SEC SA were then transferred for this value. Tele2 has claimed a deduction for this realized loss. We are convinced that we have fulfilled all possible requirements for submission of evidence and that the deduction claimed will be approved. We shall either request a reconsideration of the decision or lodge an appeal. As our request for deferment of the tax payment has been granted, there is no effect on the cash flow or income statement. The tax authorities have questioned loss carry-forwards relating to this in Tele2 AB, which correspond to a tax effect of SEK 3,910 million, of which SEK 2,888 million had been utilized at December 31, 2003. Other disputes in Tele2 amount to SEK 184 million (2002: SEK 176 million). We are convinced that the disputes will be settled in Tele2’s favor, which is why the loss carry-forwards have been valued at their full fiscal value.


Note 11. Intangible assets Dec. 31, 2003 Group P. Comp.

Licenses Licenses and rights & rights of use Goodwill Total of use

Acquisition value: Acquisition value at Jan. 1 822 28,746 29,568 1Valuation of acquired loss carry-forwards – –391 –391 – Investments for the year 78 913 991 – Sales and scrapping –24 – –24 – Reclassification 10 – 10 – Translation differences for the year –48 –591 –639 – Total acquisition value 838 28,677 29,515 1

Accumulated depreciation/amortization: Accumulated depreciation/amortization at Jan. 1 –313 –4,159 –4,472 –1Valuation of acquired loss carry-forwards – 391 391 – Depreciation according to plan –85 –1,906 –1,991 – Sales and scrapping 24 – 24 – Reclassification –8 – –8 – Translation differences for the year 24 73 97 – Total accumulated depreciation/amortization –358 –5,601 –5,959 –1

Total intangible assets 480 23,076 23,556 –

Investments for the year in goodwill relate essentially to the acquisition of the Alpha Group (SEK 813 million). Other acquisitions in the year included Radio Components Sweden AB, the remaining shares in Suomen 3G OY and additional shares in the Russian companies.

The valuation of acquired loss carry-forwards relates to an adjustment of the acquisition value and accumulated amortization of goodwill relating to acquired loss carry-forwards, which at the time of acquisition were valued at zero but during 2003 were valued and recognized as tax income. In addition, this value, adjusted to the remaining amortization period at the time of the original acquisition, has been reported as amortization of SEK -322 million in the income statement.

Note 12. Tangible assets Dec. 31, 2003 Group P. Comp.

Fixed assets Land & Machinery & Equip- under buildings tech. plant ment construction Total Equip.

Acquisition value: Acquisition value at Jan. 1 182 15,244 1,378 233 17,037 1Acquisition value in acquired companies 11 77 11 1 100 – Investments for the year 11 1,117 122 565 1,815 – Sales and scrapping –6 –475 –77 –8 –566 – Reclassification 1 703 –269 –445 –10 – Translation differences for the year –11 –282 –60 –53 –406 – Total acquisition value 188 16,384 1,105 293 17,970 1

Accumulated depreciation: Accumulated depreciation at Jan. 1 –67 –6,910 –803 – –7,780 –1Accumulated depreciation in acquired companies – –30 –6 – –36 – Depreciation according to plan –24 –1,480 –159 – –1,663 – Sales and scrapping 6 453 63 – 522 – Reclassification – –56 64 – 8 – Translation differences for the year 5 145 37 – 187 – Total accumulated depreciation –80 –7,878 –804 – –8,762 –1

Accumulated write-downs: Write-downs for the year – –172 – – –172 – Total accumulated write-downs – –172 – – –172 –

Total tangible assets 108 8,334 301 293 9,036 – Write-downs of fixed assets relates to an Atlantic undersea cable, in which Tele2 invested in the late 1990s. These are expensed as a result of Tele2’s assessment of continued excess supply of capacity.

Fixed assets under construction relates mainly to investments in Russia.


Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Total capitalized interest expense in fixed assets 5 5 – –

Financial leases:All fixed assets utilized through financial leasing have been included in the consolidated accounts as fixed assets and loan liabilities, with the exception, however, of contracts signed before 1997. The effects of these being included in the consolidated balance sheet are shown below and in Note 25.

Group

Booked assets Assets not booked Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Machinery and technical plant: Acquisition value 299 298 155 155Accumulated depreciation –75 –57 –56 –49Book value 224 241 99 106

Financial leasing relates mainly to the extension of transmission capacity in Sweden through Svenska Kraftnät Vattenfall.

Note 13. Shares in Group companies

Parent Company

Dec 31, 03 Dec 31, 02

Acquisition value: Acquisition value at Jan. 1 2,686 1,987Investments 1,150 699Sales –1,150 – Total shares in Group companies 2,686 2,686 In an Intra-Group transaction during 2003, the Parent Company sold shares in Tele2 Russia BV to a wholly-owned Group company for SEK 1,150 million and provided a shareholder contribution of the same amount.

In February 2003, Tele2 acquired Alpha Telecom, the leading prepaid fixed telephony operator in the UK for private individuals and the market leader in prepaid cards for fixed telephony. In May 2003, Tele2 acquired the remaining shares (72.6%) in Suomen 3G Oy, a company with a 3G network in nine Finnish cities. As part of the Group’s mobile strategy in Russia, Tele2 acquired 62.5% of Radio Components Sweden AB in September. One of Radio Components’ products is an antenna solution for GSM 1800, which reduces the need for base stations by three to four times. The investment has provided Tele2 with cost-effective expansion in Russia and in other areas in which mobile networks may be built. In the fall of 2003, Tele2 increased its holdings in five of its Russian mobile operations.

Effect on cash of corporate acquisitions and divestments during the year:The Group’s book value of acquired/divested assets and liabilities in acquired/divested companies was: Group

Acquired Divested 2003 2002 2003 2002Intangible fixed assets –945 –351 – – Tangible fixed assets –150 –2 – – Financial fixed assets – –1 – – Materials and supplies –9 – – – Current receivables –346 –9 – – Current investments and cash –211 –4 – – Long-term liabilities 209 5 – – Current liabilities 441 12 – – Purchase sum –1,011 –350 – –

Additional earn-out payments, restricted funds 68 – – – Paid through loans from the seller 33 – – – Paid purchase sums –910 –350 – –

Cash in acquired companies 211 4 – – Effect on Group cash –699 –346 – –


Legal structure of the Tele2 group*:* including associated companies and other investments

Parent Company Number Total Holding Book valueCompany, reg. no., reg’d office of shares par value (capital/votes) Dec. 31, 2003 Dec. 31, 2002NETCOM LUXEMBOURG SA, RC B73.796 Luxembourg 1,000 tEURO 35 100% 2,686 1,536 TELE2 HOLDING AB, 556579-7700, Stockholm, Sweden 100% Tele2 Sverige AB, 556267-5164, Stockholm, Sweden 100% Tele2 Sweden SA, RC B73.802, Luxembourg 100% X-Source Holding AB, 556580-2682, Stockholm, Sweden 100% X-Source AB, 556290-2238, Stockholm, Sweden 100% Uni2 Denmark, 26904056 Copenhagen, Denmark 100% X-Source Ltd 4381179 London, UK 100% X-Source SA, 20022211618, Luxembourg 100% Optimal Telecom Holding AB, 556580-7855, Stockholm, Sweden 100% Optimal Telecom Sverige AB, 556440-1924, Stockholm, Sweden 100% Datametrix Sverige Holding AB, 556580-7871, Stockholm, Sweden 100% Datametrix AB, 556539-4870, Stockholm, Sweden 100% Tele2 Norge Holding AB, 556580-8143, Stockholm, Sweden 100% Tele2 Norge AS, 974534703, Oslo, Norway 100% Tele2 Danmark Holding AB, 556580-8028, Stockholm, Sweden 100% Tele2 Denmark A/S, 221234, Copenhagen, Denmark 100% In2Loop A/S, 25 48 43 47, Copenhagen, Denmark 100% Svenska UMTS-licens Holding AB, 556606-7764, Stockholm, Sweden, dormant 100% Svenska UMTS-nät Holding AB, 556606-7988, Stockholm, Sweden 100% Svenska UMTS-nät AB, 556606-7996, Stockholm, Sweden Note 15 50% Svenska UMTS licens AB, 556606-7772, Stockholm, Sweden 100% Everyday Holding AB, 556579-7718, Stockholm, Sweden 100% Stenblocket i Fruängen AB, 556058-8500, Stockholm, Sweden 100% 4 T Solutions Holding AB, 556580-2690, Stockholm, Sweden 100% Modern Holdings Inc, 133799783, Delaware, USA Note 17 11.88% In2loop Polska Sp. So.o, 54380, Warsaw, Poland 90% Web Communication BV, 34112460, Amsterdam, Netherlands 100% Tele2 Polska Sp, 57496, Warsaw, Poland 100% Tele2 Holding AS, 10262238, Tallin, Estonia 90% Tele2 Eesti AS, 10069046, Tallin, Estonia 52% UAB Tele2, 1147164, Vilnius, Latvia 100% UAB Levi & Kuto Kaunas, 1149679, Kaunas, Latvia, dormant 100% UAB Levi & Kuto Klaipeda, 1150061, Klaipeda, Lithuania, dormant 100% Levi & Kuto Latvia SIA, 000307707, Riga, Latvia, dormant 100% Belmus BV, 33261289, Amsterdam, Netherlands 100% Tele2 Eesti AS, 10069046, Tallin, Estonia 48% Tele2 Holding SIA, 000351206, Riga, Latvia 100% SIA Tele2, 000327285, Riga, Latvia 100% SIA Tele2 Telecom Latvia, 000361693, Riga, Latvia 100% Tele2 OU, 10309744, Tallin, Estonia 100% UAB Tele2 Fiksuotas Rysys, 1179374, Vilnius, Lithuania 100% UAB KRT, 2304688, Vilnius, Lithuania 100% UAB C-Gates, 2424016, Vilnius, Lithuania 100% UAB Trigeris, 2123967, Vilnius, Lithuania 100% AS Levi Kaabel, 10417072, Tallinn, Estonia 100% AS Telset Telecommunications Group, 10673906,Tallinn, Estonia 100% Tallinna Kaabeltelevisiooni AS, 10375439,Tallinn, Estonia 100% OU Trigger Software, 10687966, Tallinn, Estonia 100% SIA Levicom Broadband, 000353597, Riga, Latvia, dormant 100% Montalto Investments BV, 33135957,Amsterdam, Netherlands, dormant 100% Tele2 S:t Pet Holding AB, 556636-7362, Stockholm, Sweden 100% St Petersburg Telecom, no AO-3177, St Petersburg, Russia 25.4% Oblcom, no P-7180.16, St Petersburg, Russia 36.4% Corporation Severnaya Korona, no P-6117.16, Irkutsk, Russia 100% St Petersburg Telecom, no AO-3177, St Petersburg, Russia 60.6% Oblcom, no P-7180.16, St Petersburg, Russia 60.6% Tele2 Russia Telecom BV, 33287334, Rotterdam, Netherlands 100% – 1,150 Tele2 Russia International Holding BV, Nr 33221654, Amsterdam, Netherlands 100% Tele2 Russia International Cellular BV, Nr 33227655, Amsterdam, Netherlands 100% Tele2 Russia Telecom Services BV, 33.287.334, Amsterdam, Netherlands 100% PSNR Personal System Networks in region, 1025202610157, Niznhy Novgorod, Russia 100% Tele2 Russia VOL Holding GmbH, FN 131602 h, Vienna, Austria 100% Kursk Cellular Communications, no P-16792.17, Kursk, Russia 100% Smolensk Cellular Communications, no P-2581.16, Smolensk, Russia 60% Belgorod Cellular Communications, no P-2586.16, Belgorod, Russia 65% Kemerovo Mobile Communications, no P-13742.17, Kemerovo, Russia 100% Rostov Cellular Communications, no P-1790.16, Rostov, Russia 87.5% Udmurtiya Cellular Communications, no P-5818.16, Izhevsk, Russia 77.5% Siberian Cellular Communications, no P-4458.16, Omsk, Russia 60% Chelyabinsk Cellular Network, no P-3656.15, Chelyabinsk, Russia 100% Tele2 Russia EKA Holding GmbH, FN 131600 f, Vienna, Austria 100% Fora Telecom M, no P-12721.17, Moscow, Russia 100% Tele2 Russia MAC Holding GmbH, FN 132666 y, Vienna, Austria 100% CISC Cellular, no P-8068.17, Moscow, Russia, dormant 100% Millicom New Tech. in Communications, no P-9894.17, Moscow, Russia 100% Oy Finland Tele2 AB, 1482343-8, Helsinki, Finland 100% Suomen 3G Oy, 502981, Helsinki, Finland 100% Datametrix Norge AS, 975993108, Oslo, Norway 100% 2,686 2,686


Cont. Note 13

Parent Company Number Total Holding Book valueCompany, reg. no., reg’d office of shares par value (capital/votes) Dec. 31, 2003 Dec. 31, 2002 trsp 2,686 2,686 Datametrix Danmark A/S, 39419, Copenhagen, Denmark 100% ProcureITright AB, 556600-9436, Stockholm, Sweden 100% Proceedo Solution AB, 556599-5049, Stockholm, Sweden 100% Radio Components Sweden AB, 556573-3846, Stockholm, Sweden 70% Everyday Webguide AB, 556182-6016, Stockholm, Sweden Note 15 50% NetCom GSM Sverige AB, 556304-7025, Stockholm, Sweden 100% Hallstahammar Kabelvision KB, 916580-7912, Västerås, Sweden 90% Kopparstaden Kabelvision KB, 916583-0564, Västerås, Sweden 80% Nelab Kabelvision KB, 916597-8983, Västerås, Sweden 80% Kabelvision KB, 916836-8828, Sweden, dormant 100% Härnösand Kabelvision KB, 916589-2481, Sweden, dormant 80% KB June Kabelvision, 916702-4836, Sweden, dormant 65% KB Lidingö Kabelvision, 916631-3289, Sweden, dormant 80% Älmhults Kabelvison KB, 916525-1043, Sweden, dormant 80% Kabelvision Sverige AB, 556650-2455, Stockholm, Sweden 100% Åkersberga KV AB, 556326-3192, Österåker, Sweden 100% Halmstads KV AB, 556380-6115, Halmstad, Sweden 100% Skaraborgs Kabelvision AB, 556483-6467, Mariestad, Sweden 60% Datametrix OY, 378548, Helsinki, Finland, dormant 100% Tele1 AS, 955780132, Norway, dormant 100% Tele3 Norge AS, 932100975, Norway, dormant 100% Interloop AB, 556284-7565, Stockholm, Sweden, dormant 100% Trade2 (Sweden) AB, 556469-7836, Sweden, dormant 100% Comviq Broadband AB, 556405-6678, Sweden, dormant 100% SCD AB, 556353-6829, Sweden, dormant 100% Call2Web AB, 556403-7983, Sweden, dormant 100% NIU Nätteknik, Installation och Underhåll AB, 556041-1307, Sweden, dormant 100% Kalmar Kabelvision AB, 556244-2466, Sweden, dormant 100% Comviq GSM AB, 556450-2606, Sweden, dormant 100% Swipnet AB, 556411-9401, Sweden, dormant 100% NetCom Luxembourg Holding AB, 556580-7905, Sweden, dormant 100% SNPAC Swedish Nr Portability Adm.Centre AB, 556595-2925, Sweden Note 15 20% TravelLink AB, 556596-2650, Stockholm, Sweden Note 17 15% Tele2 Europe SA, R.C.B56944, Luxembourg 100% Tele2 Telecommunication Services GmbH, FN178222t, Vienna, Austria 100% Tele2 Belgium SA, 609392, Zellik, Belgium 100% Télé2 France SA, B409914058, Velizy, France 100% Tele2 Telecommunication Services GmbH, 36232, Düsseldorf, Germany 100% Tele2 Italia Spa, Ml-1998-247322, Segrate, Italy 100% Tele2 AG, H.1045/80, Liechstenstein 100% Tele2 Luxembourg SA, R.C.B65774, Luxembourg 100% Tele2 (Netherlands) BV, BV 291906, Amsterdam, Netherlands 100% Tele2 Telecommunication Services S.L, B82051913, Madrid, Spain 100% Tele2 Telecommunication Services AG, CH-020390 55 969, Zürich, Switzerland 100% Tele2 Communications Services Ltd, 3565220, London, England 100% Telemilenio, Telecomunicacoes, Sociedade Unipessoal, 10468, Lissabon, Portugal 100% Tele2 /Slovakia/ s.r.o., 35806486, Bratislava, Slovakia 100% Tele2 Magyarorszag Kft., 12634402-2-41, Budapest, Hungary 100% Tango SA, RC.B59560, Luxembourg 100% Transac SA, RC.B49487, Luxembourg 100% Everyday Media SA, R.C. B 78.227, Luxembourg 100% Everyday Prod. SA, R.C.B69802, Luxembourg 100% 3C Communications International SA, RC B 29697, Luxembourg 100% 3C Communications GmbH, FN695021, Vienna, Austria 100% 3C Communications BVBA, 514 274, Brussels, Belgium 99% 3C Communications SPA Italy, 28894/7359/14, Segrate, Italy 91% 3C Communications Czech s-r-s, Czech Republic, dormant 100% 3C Communications A/S,184462, Ballerup, Denmark 100% 3C Communications OY, 585632, Finland 100% 3C Communications SA, 345 343 396 00023 Orleans, France 99% 3C Communications GmbH, HRB 24104, Germany 100% 3C Communications Luxembourg SA, B39690, Luxembourg 100% 3C Kommunikacios Szolgaltato Kft, Budapest, Hungary, dormant 90% 3C Communications BV, 14630454, Amsterdam, Netherlands 99% 3C Communications A/S, Oslo, Norway 100% 3C Communicacoes Ltda, Domingos de Rana, Portugal 95% 3C Communications Espana SA, Madrid, Spain 99% 3C Communications AB, 556332-6346, Stockholm, Sweden 97% 3C Transac AB Sweden,556057-2116, Stockhom, Sweden 100% 3C Communications Ltd, 2343138, UK 96% 3C Transac Ltd, Kingston-upon-Thames, UK 100% Comviq Holding BV, 14630454, Amsterdam, Netherlands 100% 3C Communications Equipment SA, B25465, Luxembourg 100% 3C Communications BVBA, 514 274, Brussels, Belgium 1% 3C Communications SPA Italy, 28894/7359/14, Segrate, Italy 9% 3C Communications SA, 345 343 396 00023 Orleans, France 1% 3C Kommunikacios Szolgaltato Kft, Budapest, Hungary, dormant 10% 3C Communications BV, Amsterdam, 14630454, Netherlands 1% 3C Communicacoes Ltda, Domingos de Rana, Portugal 5% 3C Communications Espana SA, Madrid, Spain 1% 2,686 2,686


Note 14. Receivables from Group companies Parent Company

Dec 31, 03 Dec 31, 02 Acquisition value at Jan. 1 15,353 12,526Lending 2,187 3,337Amortization and additions granted –159 –510Total receivables from Group companies 17,381 15,353

Note 15. Shares in associated companies Group

Number of Total par Book value Company, reg. no., reg’d office shares value Holding Dec 31, 03 Dec 31, 02

Svenska UMTS-nät AB, 556606-7996, Stockholm, Sweden 501,000 tSEK 50,100 50% 489 498Managest Media SA, RCB87091, Luxembourg 12,000 B tEURO 120 40% 22 44SNPAC Swedish Number Portability Administrative Centre AB, 556595-2925, Stockholm, Sweden 400 tSEK 40 20% 3 – Total shares in associated companies 514 542

Everyday Webguide AB, 556182-6016, Stockholm, Sweden 1,750 tSEK 175 50% –6 –28Total provisions in associated companies –6 –28

Contribution of each associated company to Group equity: 2003 2002 Sv UMTS-nät Other Sv UMTS-nät OtherEquity share: Equity share, Jan. 1 498 16 249 –25Share of capital contributions and new share issues – 34 250 147Repayment of capital employed – –22 – – Share of profit/loss –9 –9 –1 –40Divestments during the year – – – –66Total shares in associated companies 489 19 498 16

Parent Company Number Total Holding Book valueCompany, reg. no., reg’d office of shares par value (capital/votes) Dec. 31, 2003 Dec. 31, 2002 trsp 2,686 2,686 3C Communications AB, 556332-6346, Stockholm, Sweden 3% 3C Communications Ltd, 2343138, UK 4% CCC Holding BV, 33 269 398, Amsterdam, Netherlands 100% Calling Card Company Limited, 3794813, UK 100% Calling Card Company Germany GmbH, HRB 40498, Germany 100% C3 Calling Card Company Limited, 309745, Ireland 100% Calling Card Company SA, B424906618, Paris, France 100% Calling Card Company Italy SpA, 233372, Milano, Italy 100% Tele2 International Card Company S.A., RC 64 902, Luxembourg 100% Calling Card Company Netherlands BV, BV 82334, Amsterdam, Netherlands 100% Calling Card Company Spain, S.A. A-62426457, Spain 100% Calling Card Company Telecommunication Services GmbH, FN 215362i, Austria 100% Calling Card Company (UK) Ltd, 3812138, London, England 100% SEC Everyday Europe BV, 341124357, Amsterdam, Netherlands 100% Everyday.com Switzerland AG, CHF-0203023164-4, Zürich, Switzerland, dormant 100% Everyday.com Germany GmbH, HR B 36232, Germany, dormant 100% Everyday.com Italia S.R.L, R.C. 1605497, Italia Srl, Italy, dormant 100% Everyday.com Netherlands BV, 34125168, Amsterdam, Netherlands, dormant 100% IntelliNet Holding BV, 34126307, Amsterdam, Netherlands 100% Intellinet Telecommunication GmbH, HRB 48344, Frankfurt, Germany, dormant 100% IntelliNet S.p.A, R.C. 1615155, Segrate, Italy 99% IntelliNet BV, 34120156, Amsterdam, Netherlands, dormant 100% INT IntelliNet Telecommunications Services AG, CH02030215188, Zürich, Switzerland 100% IntelliNet S.p.A, R.C. 1615155, Segrate, Italy 1% Tele2 Marketing Dynamics AS, 932100975, Norway, dormant 100% Tele2 Telecommunications Services Ltd, 292887, Dublin, Ireland, dormant 100% Societe Europeenne de Communication (Irland) Ltd, 316848, Dublin, Ireland, dormant 100% Fagersta AB, 556238-4171, Stockholm, Sweden 100% Transcom Holding AB, 556468-0857, Sweden, dormant 100% 3C Holding AB, 556491-9503, Sweden, dormant 100% S.E.C. Luxembourg S.A., R.C. B-84.649, Luxembourg 100% Tele2 s.r.o., 25650009, Prague, Czech Republic 100% Managest Media SA, RCB87091, Luxembourg Note 15 40% Managest Media Spa, Italy 100% SEC Holding BV, 33141829, Rotterdam, Netherlands 100% Tele2 Services Luxembourg SA, RCB70203, Luxembourg 100% 3C Communications (Irland) Ltd, 164025, Ireland, dormant 100% Tele2 Communication Europe Ltd, 379462, Dublin, Ireland, dormant 100% Tele2 (UK) Ltd, 4940295, London, England 100% Bethany Group Ltd, 390385, Virgin Islands, UK 100% Alpha Telecom s.r.l, 252675/1999, Italy, dormant 100% Alpha Int. Overseas Telecomm. Services Ltd, 359452, Virgin Islands, UK 100% Alpha Int. Overseas Telecomm. Services Ltd, 06521/030616, Madeira, Portugal 100% Wiasing Consultores E Servicos Lda, 06521/030616, Madeira, Portugal 100% Alpha Telecom Communications Ltd, 4028792, London, England 100% Alpha Prepaid Ltd, 4270679, London, England, dormant 100% Prepaid Telecom Ltd, 4560605, London, England, dormant 100% SHARED SERVICES SA, B-97776, Luxembourg Note 17 14.3% SCD INVEST AB, 556353-6753, Sweden Note 17 9.1% / 49.9% Total shares in Group companies 2,686 2,686


Note 19. Accounts receivable, trade Group

Accounts receivable, trade Dec 31, 03 Dec 31, 02

Accounts receivable, trade 6,975 5,656Reserve for doubtful receivables –1,406 –1,283Total accounts receivable, trade 5,569 4,373

Group

Reserve for doubtful debts Dec 31, 03 Dec 31, 02

Reserve for doubtful receivables at Jan. 1 1,283 918Reserves in companies acquired during the year 10 – Net increase in reserves 305 415Recovery of previous write-downs –163 –30Translation difference in opening balance –29 –20Total reserve for doubtful receivables 1,406 1,283

Note 20. Other current receivables Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

VAT receivable 220 174 – – Receivable from Svenska UMTS-nät 45 32 – – Receivable from suppliers 27 13 – – Other 16 31 – – Total other current receivables 308 250 – –

Note 21. Prepaid expenses and accrued income Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Telephony revenue, other telecom operators 774 934 – –Telephony revenue, customers 1,793 1,525 – –Interest revenue 48 24 – –Accrued income, other 46 3 – –Financing fees 95 170 – –Rental costs 31 10 3 1ADSL costs 63 – – –Prepaid expenses, other 469 383 – –Total prepaid expenses and accrued income 3,319 3,049 3 1

Note 22. Cash and cash equivalents and overdraft facilitiesLiquidity: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Cash and bank balances 2,773 2,473 1 10Restricted funds –830 –870 – –Unutilized overdraft facilities and credit lines 1,501 729 – –Liquidity 3,444 2,332 1 10

Overdraft facilities: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Overdraft facilities granted 231 19 – –Overdraft facilities utilized – – – –Total unutilized overdraft facilities 231 19 – – Unutilized credit lines 1,270 710 – –Unutilized overdraft facilities and credit lines 1,501 729 – –

No specific collateral is provided for overdraft facilities, as these come under the loan facilities for which collateral is provided and is listed in Note 25.

Exchange rate difference in cash and cash equivalents: Group

Dec 31, 03 Dec 31, 02

Cash and cash equivalents at Jan. 1 –122 –185Cash flow for the year –56 –68Total exchange rate difference in cash and cash equivalents –178 –253

Note 16. Receivables from associated companies Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Acquisition value at Jan. 1 19 115 19 115Converted to shareholder contribution –22 –102 – –102Lending 3 6 3 6Divestment of receivables to Group companies –22 – Total receivables from associated companies – 19 – 19

Note 17. Other long-term holdings of securities

Group

Number Total Holding Book value Company, reg. no., reg’d office of shares par value capital vot. rights Dec 31, 03 Dec 31, 02

Parent Comapny:Suomen 3G Oy, 502981, Helsinki, Finland 1,924 tFIM 1,924 100% 100% – 28SCD Invest AB, 556353– 6753, Stockholm 1,058,425 tSEK 5,292 91% 49.6% – – Shared Service S.A., B-97776, Luxembuorg 100 tEURO 4.5 14.3% 14.3% – – – 28Other, Group: Modern Holdings Inc, USA 1,806,575 tUSD 18 11.88% 11.88% 36 36Travellink AB, 556596-2650, Stockholm 15,000 tSEK 1,500 15% 15% – 75Total other long-term holdings of securities 36 139


Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Acquisition value:Acquisition value at Jan. 1 568 545 371 348Investments for the year 74 23 74 23Sales for the year –102 – –102 – Total acquisition value 540 568 343 371

Write-downs: Accumulated write-downs at Jan. 1 –429 –343 –343 –343Write-downs during the year –75 –86 – – Total accumulated write-downs –504 –429 –343 –343

Total other long-term holdings of securities 36 139 – 28 In May 2003, Tele2 acquired the remaining shares (72.6%) in Suomen 3G Oy and the holding was thereafter reported as a Group company. The shares in TravelLink AB were written down by SEK 75 million in 2003.

As the holding in SCD Invest AB is only temporary and Tele2 intends to sell the shares, the holding was reported under other securities.

Note 18. Other long-term receivables Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Acquisition value at Jan. 1 74 85 – – Lending 61 8 – – Amortization –87 –11 – – Reclassification – –7 – – Translation difference – –1 – – Total other long-term receivables 48 74 – –


Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Receivables from Finvision 16 39 – – Receivables from Modern Holdings Inc 14 20 – – Receivables from Travellink 6 – – – Receivables from Alecta 3 6 – – Other 9 9 – – Total other long-term receivables 48 74 – –


Note 24. Number of sharesThe share capital in Tele2 AB is divided into two share classes, namely, Series A and Series B shares. Both types of shares have a par value of SEK 5 per share and offer equal participation in the company’s net assets and earnings. Series A shares, however, entitle the holder to 10 voting rights per share and Series B shares to one voting right per share

Number of shares:

A shares B shares Total Par value Share capital Change Total Change Total number per share (SEK) (SEK millions)

December 31, 2000 30,006,947 114,791,779 144,798,726 SEK 5 724New share issue, acquisition of Tele2 Russia 30,006,947 2,461,449 117,253,228 147,260,175 SEK 5 736New share issue, convertibles 30,006,947 100,000 117,353,228 147,360,175 SEK 5 737December 31, 2001 30,006,947 117,353,228 147,360,175 SEK 5 737

Restamping of A shares to B shares –8,317,143 21,689,804 8,317,143 125,670,371 147,360,175 SEK 5 737New share issue, convertibles 21,689,804 100,000 125,770,371 147,460,175 SEK 5 737December 31, 2002 21,689,804 125,770,371 147,460,175 SEK 5 737

New share issue, convertibles 21,689,804 100,000 125,870,371 147,560,175 SEK 5 738December 31, 2003 21,689,804 125,870,371 147,560,175 SEK 5 738

Outstanding convertibles and warrants:

Dec 31, 2003 Dec 31, 2002

Antal utestående aktier 147,560,175 147,460,175

Convertibles, 2000–2003 – 100,000Warrants, 2002–2007 643,500 663,000Total number of outstanding convertibles and warrants 643,500 763,000

Total number of shares after full dilution 148,203,675 148,223,175

Convertibles and warrants: In October 2000, three convertible debenture loans were issued at a par value of SEK 1, each with preferential rights to subscribe for 100,000 B shares in Tele2 AB at a subscription price of SEK 150 per share, and maturing in 2001, 2002 and 2003. On December 31, 2003 the last of these debenture loans had been converted.

The outstanding warrants at Dec. 31, 2003 correspond to 643,500 B shares (2002: 663,000) in Tele2 AB, at a subscription price of SEK 191 per share and a subscription period from 2005 to 2007. See Note 38 for further information.

Earnings per share: Group

Earnings per share Earnings per share, after full dilution

2003 2002 2003 2002Net profit/loss for the year 2,396 223 2,396 223Reversal: Interest for the year after tax on outstanding convertibles – –Adjusted profit/loss for the year after full dilution 2,396 223

Weighted average number of shares 147,460,175 147,360,175 147,460,175 147,360,175Convertibles 100,000 200,000Warrants 309,000 74,118Weighted average number of outstanding shares after full dilution 147,869,175 147,634,293

Earnings per share SEK 16.25 SEK 1.51 SEK 16.20 SEK 1.51

Dividend per share:The Board recommends to the Annual General Meeting that Tele2 pay a dividend of SEK 3 (2002: 0) per share for the financial year 2003.

Note 23. Exchange rate effectsExchange rate difference in shareholders’ equity: Group

2003 2002

Other Un- Other Un- restricted restricted restricted restricted reserves reserves Total reserves reserves Total

Opening in shareholders’ equity, 1 Jan. 2,025 –588 1,437 2,893 –430 2,463

Change during the year –865 32 –833 –868 –156 –1,024Tax effect this year, net – 53 53 – –2 –2Total change during the year –865 85 –780 –868 –158 –1,026

Closing in shareholders’ equity, Dec. 31 1,160 –503 657 2,025 –588 1,437

Exchange rate difference in income statement:Exchange rate differences which arise in operations are reported in the income statements and amount to: Group Parent Company

2003 2002 2003 2002Other operating revenue 38 24 1 1Other operating expenses –30 –35 – –Result from other securities and receivables classified as fixed assets – – –4 –Other interest revenue and similar income –12 7 – –Interest expenses and similar costs –3 57 – –Exchange rate differences in income statement –7 53 –3 1

The consolidated balance sheet and income statement are affected by fluctuations in subsidiaries’ currencies vis-à-vis the Swedish krona. Group operating revenue and EBITDA are distributed among the following currencies:

Operating revenue EBITDA 2003 2002 2003 2002SEK 9,688 26% 10,337 33% 3,681 65% 4,516 88%EURO 18,188 49% 13,523 43% 1,162 20% –355 –7%Other 9,035 25% 7,422 24% 867 15% 966 19%Total 36,911 100% 31,282 100% 5,710 100% 5,127 100%

A 1% currency movement against the Swedish krona affects the Group’s operating revenue and EBITDA on an annual basis by SEK 272 million (2002: SEK 209 million) and SEK 20 million (2002: SEK 6 million), respectively. In 2003, Tele2’s results were mainly affected by fluctuations in GBP, USD, NOK and LVL. Operating revenue and EBITDA were negatively affected by SEK –627 million (2002: SEK –57 million) and SEK –17 million (2002: SEK 1 million) in 2003 (compared to results measured at stable exchange rates during the year).

The charge rates used to translate income statements and balance sheets to SEK are shown below:

Income statement Balance sheet 2003 2002 Dec 31, 03 Dec 31, 02

GBP 13.1946 14.6394 12.9125 14.1475USD 8.0894 9.82870 7.2750 8.825EURO 9.1250 9.1698 9.0940 9.1925CHF 6.0043 6.2494 5.8285 6.3235DKK 1.2280 1.2340 1.2215 1.2375NOK 1.1418 1.2150 1.0805 1.2595EEK 0.5832 0.5860 0.5810 0.5875LVL 14.2559 15.8860 13.6000 15.0200LTL 2.6431 2.6490 2.6300 2.6600PLN 2.0787 2.4076 1.9400 2.3000CZK 0.2866 0.2971 0.2795 0.2933HUF 0.0360 0.0377 0.0348 0.0390

Currency risksIn telephony operations a currency risk arises in connection with international call traffic as a liability or a receivable is created between Tele2 companies and foreign operators. In mobile telephony, these transactions are calculated in SDRs (Special Drawing Rights) but are invoiced and paid in EUR.

Currency risks in our international operations are limited by denominating loans to group companies in the subsidiary’s local currency.

The five-year loan facility is denominated partly in EUR. The exchange rate difference which regularly arises in translating the loan liability is offset against the exchange rate differences which arise in the corresponding net investment in subsidiaries. No hedging is undertaken against other types of currency risk. At December 31, 2003, exchange rate differences after tax of SEK 7 million (2002: SEK 40 million) relating to loan liabilities were booked directly to shareholders’ equity.


Note 25. Liabilities to financial institutionsShort-term liabilities: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Five-year loan facility 2,340 2,344 – –Ericson S.A./N.V. 72 – – – (collateral: guarantee from Tele2 AB and Tele2 Sverige AB) SEB 11 – – –Alfa bank / Omskpromstoy Bank 1 3 – – (collateral: chattel mortgage in Siberian Cellular Comm., Omsk Russia) Financial leases 25 30 – –Total short-term interest-bearing loans 2,449 2,377 – – Long-term liabilities: Group

Creditors (collateral provided) Interest rate terms Maturity date Dec 31, 03 Dec 31, 02

Five-year loan facility EURIBOR/LIBOR + 0.75–2.25% 2003–2006 3,812 6,954 (collateral: shares in Tele2 Holding AB as well as certain

shares in its Group companies. Guarantees from Tele2 AB

and cross-guarantees among certain Group companies.

Also, collateral provided in the form of receivables from

certain Group companies and limitations in repayment

potential of internal loans from Tele2 AB) Banque Invik marginal: 0.5%–1% 2004–2005 681 755 (collateral: Restricted funds in Tele2 Russia Telecom BV)

SEB EURIBOR + 0.75–3.00% 2004–2010 115 – (collateral: guarantee from Tele2 Sverige AB) Merita-Nordbanken variable rate 2004 – 1Financial leasing for machinery & technical plant 144 166Total long-term interest-bearing loans 4,752 7,876

During 2001, Tele2 Sverige AB signed a five-year bank finance facility for SEK 10.8 billion, guaranteed by ABN Amro, CIBC World Markets, ING Bank, Nordea, The Royal Bank of Scotland and West LB. The loan is partly denominated in SEK and partly in EUR. The five-year bank financing facility with amortization is divided into three tranches. The SEK 9.4 billion agreed in Tranche A is to be repaid in seven repayments, and each amortization amounts to between 5% and 15% of the original loan amount. The remaining 17.5% of the loan, minus any voluntary repayments, is to be repaid by June 30, 2006. During 2003, repayment of Tranche A was made in the amount of SEK 2,746 million. The potential to borrow under Tranche B is limited to SEK 1.1 billion and is to be repaid by June 30, 2006.

The five-year loan facility is based on requirements involving the fulfillment of certain financial key ratios. Tele2 expects to fulfill these requirements. The loan liability carries a rate of interest corresponding to Euribor and Libor, plus an interest margin. The interest margin, which is based on indebtedness in relation to EBITDA, starts at 2.25% and is reduced in line with the improvement in EBITDA. At December 31, 2002, Tele2 attained the minimum interest differential of 0.75%, with effect from February 2003. The five-year facility entails a certain curtailment of Tele2 Group’s potential to raise other external loans and the potential to provide assets as collateral.

The loan in Banque Invik pertains to the loan to Russian operations. Tele2 has deposited the corresponding amount with Banque Invik. The interest margin is 0.5%–1%.

The average rate of interest on loan liabilities during the year was 5.0% (2002: 6.4%).

Collateral provided: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Chattel mortgages 3 11 – –Net assets in subsidiaries 12,072 10,835 Bank deposits 744 841 – –Total collateral provided for own liabilities to financial institutions 12,819 11,687 – –

Pledged shares are reported in the Group at an amount which corresponds to the book value of the net assets which each subsidiary represents in the consolidated balance sheet.

Loan liability matures: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Within 1 year 2,449 2,377 – –1-2 years 3,309 3,070 – –2-3 years 1,280 2,646 – –3-4 years 39 2,049 – –4-5 years 26 16 – –5-10 years 93 75 – –10-15 years 5 20 – –Total loans to financial institutions 7,201 10,253 – –

Interest rate risk: Of the total loan liability to financial institutions and other interest-bearing liabilities at December 31, 2003, SEK 6,555 million, corresponding to 91% (2002: SEK 9,527 million, 93%), carried a variable rate of interest. An increase in interest rates of 100 basic points would entail an additional interest expense of SEK 66 million, calculated on the basis of variable interest-bearing liabilities at December 31, 2003. However, Tele2 is monitoring trends in interest-rate markets and decisions regarding interest-rate fixing strategy are assessed regularly.

Interest-bearing liabilities with variable interest rates mature for payment:

Within 1 year 1-2 years 2–3 years 3–4 years 4–5 years 5–15 years TotalInterest-bearing liabilities with variable interest rates 2,461 2,640 1,291 39 26 98 6,555

Financial leasing: All fixed assets utilized through financial leasing have been included in the consolidated accounts as fixed assets and loan liabilities, with the exception, however, of contracts signed before 1997. The effects of these being included in the consolidated balance sheet are shown below and in Note 12.

Group

Booked Not booked Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Short-term 25 30 8 8Long-term 144 166 76 84Total loans for financial leasing objects 169 196 84 92 Financial leasing relates mainly to the extension of transmission capacity in Sweden through Svenska Kraftnät Vattenfall.

Loan liability matures: Group

Dec 31, 2003 Booked Not bookedWithin 1 year 34 111-2 years 25 112–3 years 21 113–4 years 20 114–5 years 20 105–10 years 77 4110–15 years 6 4Total loan liability and interest 203 99Less interest portion: –34 –15Total loans for financial leasing objects 169 84

Note 26. Other interest-bearing liabilities Short-term liabilities: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Modern Holdings Inc – 5 – –Digitel Com Ltd 11 – – –Other 1 – – –Total other short-term interest-bearing liabilities 12 5 – –

Long-term liabilities: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

SCD Finans AB 1 23 – –Digitel Com Ltd 22 – – –Total other long-term interest-bearing liabilities 23 23 – –

Collateral provided:No collateral has been provided for other interest-bearing liabilities.

Loan liability matures: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Within 1 year 12 5 – –1-2 years 12 23 – –2-3 years 11 – – –Total other interest-bearing liabilities 35 28 – –


Note 27. Other short-term liabilities Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

VAT liability 331 276 9 –Tax at source, personnel 36 27 1 –Other taxes 78 59 – –Additional earn-out payment for Alpha 68 – – –Customer deposits 26 26 – –Other 59 53 3 5Total other short-term liabilities 598 441 13 5

Note 28. Accrued expenses and deferred income Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Personnel-related costs 204 168 5 4Interest expenses 107 212 – –Telephony expenses to other telecom operators 2,071 1,701 – –Expenses for vendors 17 14 – –ADSL 55 – – –Leasing and rental expenses 152 24 – –Program expenses 28 33 – –External services expenses 769 715 4 4Deferred income 1,516 702 – –Other 255 204 – –Total accrued expenses and deferred income 5,174 3,773 9 8

Note 29. Pledged assets Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Chattel mortgages 3 11 – –Net assets in Group companies 12,072 10,835 Material and supplies 16 19 – –Bank bills 830 870 – –Total pledged assets for own liabilities 12,921 11,735 – –

The above information shows the book value of assets pledged as collateral for external loans (as in Note 25), overdraft facilities and restricted bank funds (as in Note 22) and other liabilities (as in Note 26). Pledged shares are reported in the Group in an amount corresponding to the book value of the net assets represented by each subsidiary in the consolidated balance sheet.

Note 30. Contingent liabilities and other commitments Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Surety bonds benefiting Group companies 13,945 12,825Surety bonds benefiting associated companies 363 – 363 –Total contingent liabilities 363 – 14,308 12,825

SEK 6,152 million (2002: SEK 9,298 million) of the contingent liabilities in the Parent Company relates to a guarantee for the five-year loan facility.

Svenska UMTS-nät AB, an associated company of Tele2, has an approved loan facility of SEK 7 billion (2002: SEK 11 billion), whereby Tele2 guarantees utilized amounts up to 50 percent or a maximum of SEK 3.5 billion (2002: 5.5 billion). At December 31, 2003, Tele2’s guarantee amounted to SEK 363 million (2003: 0).

Operational leasing: Annual fees: Group Parent Company

2003 2002 2003 2002

Annual fees for operating leases 957 752 – –

Future fees due for payment: Group Parent Company

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Within 1 year 572 621 – –1–2 years 261 279 – –2–3 years 204 197 – –3–4 years 165 158 – –4–5 years 114 135 – –5–10 years 333 354 – –10–15 years 197 201 – –More than 15 years 182 204 – –Total future fees for operating leases 2,028 2,149 – –

Contractual commitments/commercial pledges: Group

Dec. 31, 2003 Within 1 year 1-3 years 3-5 years After 5 years Total

Liabilities to financial institutions 2,449 4,589 65 98 7,201Other interest-bearing liabilities 12 23 – – 35Financial leasing, agreements signed before 1997 8 16 16 44 84Operational leasing 572 465 279 712 2,028Tot. contractual commitments/commercial pledges 3,041 5,093 360 854 9,348

Note 31. Supplementary cash flow information Non-cash transactions:In addition to the reported investing and financing activities, as shown in the cash flow statement, the following transactions occurred which did not affect cash.

Group:In addition to investments and loan liabilities reported in the cash flow, investments and loan financing through financial leasing in the Group amounted to SEK 5 million (2002: SEK 66 million), as well as amortization of loans through financial leasing in the amount of SEK –32 million (2002: SEK –20 million).

In addition to investments and loan liabilities reported in the cash flow, Tele2 acquired shares in Russian companies in 2003 through loan financing from Digitel Com Ltd amounting to SEK 33 million.

Parent Company:In 2003, the Parent Company had interest revenues from other Group companies of SEK 299 million (2002: SEK 179 million) and interest expenses from other Group companies of SEK –6 million (2002: SEK –5 million), which were capitalized on the loan amount.

In addition to the sale of shares reported in the cash flow, the Parent Company sold its shares in Tele2 Russia for SEK 1,150 million to Tele2 Sverige AB. In addition, promissory notes of SEK 22 million in the associated company Everyday Webguide AB were transferred to Group companies.

During 2003, the Parent Company received a Group contribution from Tele2 Sverige AB amounting to SEK 1,730 million (2002: SEK 3,035 million) and provided a shareholder contribution of SEK 1,150 million (2002: SEK 400 million), which has not been reported in the cash flow statement.

Cash flow statement based on net profit/loss: Group

2003 2002Current operationsProfit/loss for the year 2,396 223

Adjustments for non-cash operating activities: Depreciation/amortization 3,826 3,597 Minority interest –37 –1 Result from shares in associated companies 18 36 Deferred tax expense –1,196 525 Financial leasing –31 –9 Unpaid interest –18 107 Unpaid tax 2 – Write-down of shares 75 86 Write-down of fixed assets 27 – 5,062 4,564

Change in working capital 912 –199Cash flow from operating activities 5,974 4,365

Investments according to the cash flow statement by market and business area: Group

2003 2002Nordic 454 902Eastern Europe & Russia 987 594Central Europe 186 135Southern Europe 118 142Luxembourg 130 94Branded Products & Services 15 23Investments in intangible and tangible assets 1,890 1,890

Additional investments, not affecting cash flow: Financial leasing 5 66Total, CAPEX 1,895 1,956

Group

2003 2002Mobile telephony 1,250 998Fixed telephony and Internet 545 794Cable TV 32 85Data processing 63 13Investments in intangible and tangible assets 1,890 1,890

Additional information on segments is presented in Note 33.


Note 32. Market areasThe Group’s operations are primarily divided among six market areas: Nordic, Eastern Europe & Russia, Central Europe, Southern Europe, Luxembourg and Branded products & services. This reflects internal reporting to the Board and senior executives and the division of responsibility and organization within the Group. Market control and prioritization are largely undertaken jointly for continental Europe. Thus goodwill and depreciation/amortization attributable to the acquisition of the SEC Group is not broken down across the market areas Central Europe, Southern Europe, Luxembourg and Branded products & services.

The Nordic market area is acting within a more mature market, while continental Europe reflects companies which have not operated for an equally long period. The Eastern Europe and Russia market area is yet another market with its own particular risks and possibilities. The division is based on the geographical location of operations, which also reflects where customers are located. Relations between companies within the Group are based on commercial terms, conditions and pricing.

The Nordic market area encompasses of Tele2 operations in Sweden (including Optimal Telecom), Norway, Denmark and Finland, as well as Datametrix operations and ProcureITright. The Eastern Europe & Russia market area encompasses Tele2 operations in the Baltic States

(Estonia, Latvia and Lithuania), Poland, the Czech Republic and Russia, as well as X-Source operations. The Central Europe market area encompasses Tele2 operations in Germany, the Netherlands, Switzerland and Austria. The Southern Europe market area encompasses Tele2 operations in France, Italy, Spain and Portugal. The Luxembourg market area encompasses Tele2 operations in Luxembourg (including Tango), Liechtenstein and Belgium, as well as 3C operations and Transac. The Branded Products & Services market area comprises Tele2 operations in the UK, Alpha Telecom in the UK, C3-operations, Everyday operations and IntelliNet operations.

Operating revenue, EBITDA, EBIT and investments for the operating areas in each market area are presented in Note 1, Note 2 and Note 31.

In September 2003, Tele2 decided to report its results in line with a new market structure, beginning with the first interim report for 2004. All previous reporting, including the year-end accounts for 2003, follows the original market structure. The original six market areas form the basis of the new market structure. The new structure is the result of new internal reporting to the Board and senior executives and the division of responsibility and organization within the Group. The most important changes are described in Note 35.

Group

2003

Eastern Branded Non distributed Europe Central Southern Products and internal Nordic & Russia Europe Europe Luxembourg & Services elimination Total

Income Statement Operating revenue External 12,970 3,006 7,502 10,233 917 2,283 – 36,911 Internal, other Group 167 57 458 321 24 111 –1,138 – Internal, market area 682 10 117 24 86 228 –1,147 –Operating revenue, total 13,819 3,073 8,077 10,578 1,027 2,622 –2,285 36,911

Depreciation/amortization –1,073 –586 –192 –106 –187 –154 –1,528 –3,826Operating expenses, other –10,062 –2,417 –8,185 –9,554 –961 –2,621 2,587 –31,213Other operating revenue 132 23 293 – 17 357 –744 78Other operating expenses –16 –80 –2 – –3 –407 442 –66Operating profit/loss 2,800 13 –9 918 –107 –203 –1,528 1,884

Result from shares in associated companies –18 – – – – – – –18Result from other securities and receivables classified as fixed assets –75 5 –70Other interest revenue and similar income 106 106Interest expenses and similar costs –635 –635Profit/loss after financial items 2,782 –62 –9 918 –107 –203 –2,052 1,267

Taxes 1,092 1,092Minority interest 37 37Profit/loss for the year 2,782 –62 –9 918 –107 –203 –923 2,396 Miscellaneous Investments, intangible assets 14 61 – – 3 – 78Investments, tangible assets 464 892 201 144 128 20 –34 1,815Non-cash operating items: Capital gain/loss of fixed assets –15 –13 – – – 1 – –27 Financial leases 26 2 – – 4 – – 32

Group

December 31, 2003


Balance Sheet ASSETS Intangible fixed assets 937 3,092 41 2 158 703 18,623 23,556Tangible fixed assets 5,512 1,730 626 563 506 99 – 9,036Shares in associated companies 492 – – – 22 – – 514Other long-term holdings of securities – 36 – – – – – 36Other financial fixed assets 9,076 374 646 1,616 5,438 202 –14,845 2,507 16,017 5,232 1,313 2,181 6,124 1,004 3,778 35,649

Current assets 6,332 1,051 2,017 16,923 2,075 691 –16,768 12,321Total assets 22,349 6,283 3,330 19,104 8,199 1,695 –12,990 47,970

LIABILITIES Provisions 6 – – – – 20 – 26Interest-bearing liabilities 8,690 4,303 1,603 39 5,904 978 –14,281 7,236Long-term liabilities, other – 1 – 745 1 1 –748 –Short-term liabilities, other 19,777 853 2,838 3,137 436 847 –17,547 10,341Total liabilities 28,473 5,157 4,441 3,921 6,341 1,846 –32,576 17,603


Group

2002


Income Statement Operating revenue External 13,566 2,320 5,689 8,105 754 848 – 31,282 Internal, other Group 79 41 265 263 29 95 –772 – Internal, market area 585 8 113 47 87 61 –901 –Operating revenue, total 14,230 2,369 6,067 8,415 870 1,004 –1,673 31,282

Depreciation/amortization –1,435 –577 –133 –129 –92 –12 –1,219 –3,597Operating expenses, other –9,410 –1,877 –6,348 –8,514 –747 –1,181 1,934 –26,143Other operating revenue 37 33 204 1 6 5 –236 50Other operating expenses –43 16 –4 –3 –3 – –25 –62Operating profit/loss 3,379 –36 –214 –230 34 –184 –1,219 1,530

Result from shares in associated companies –31 –4 – – –1 – – –36Result from other securities and receivables classified as fixed assets –86 2 –84Other interest revenue and similar income 165 165Interest expenses and similar costs –779 –779Profit/loss after financial items 3,348 –126 –214 –230 33 –184 –1,831 796

Taxes –574 –574Minority interest 1 1Profit/loss for the year 3,348 –126 –214 –230 33 –184 –2,404 223 Miscellaneous Investments, intangible assets 23 124 – – – – 147Investments, tangible assets 885 504 339 142 95 19 –219 1,765Non-cash operating items: Capital gain/loss of fixed assets –7 1 – –2 –1 – – –9 Financial leases 20 – – – – – – 20

Group

December 31, 2002


Balance Sheet ASSETS Intangible fixed assets 1,025 3,491 46 2 177 4 20,351 25,096Tangible fixed assets 6,055 1,399 616 557 569 61 – 9,257Shares in associated companies 498 – – – 44 – – 542Other long-term holdings of securities 103 36 – – – – – 139Other financial fixed assets 9,318 326 180 129 3,426 16 –12,056 1,339 16,999 5,252 842 688 4,216 81 8,295 36,373

Current assets 5,008 813 1,591 2,074 1,806 313 –1,106 10,499Total assets 22,007 6,065 2,433 2,762 6,022 394 7,189 46,872

LIABILITIES Provisions 28 – – – – – – 28Interest-bearing liabilities 9,931 4,140 1,523 680 5,195 976 –12,164 10,281Long-term liabilities, other – 1 – 142 1 12 –156 –Short-term liabilities, other 3,274 651 2,402 2,297 637 422 –1,870 7,813Total liabilities 13,233 4,792 3,925 3,119 5,833 1,410 –14,190 18,122


Note 33. Business areasA secondary division of operations takes the form of a grouping into four business areas: Mobile telephony, Fixed telephony & Internet, Cable TV and Other Operations. These are based on services and products which differ from each other in terms of risks and possibilities.

The Fixed telephony & Internet business area includes fixed telephony, dial-up data network services and other broadband services. The Cable TV business area encompasses Cable TV and Tango TV. Other Operations includes: IT-outsourcing via X-Source; system integration through Datametrix; Internet payments, credit card transactions and call phone services via 3C; processing of card transactions and invoicing through Transac; cash cards for fixed telephony through C3; and the Internet portal, Everyday.

It is not possible to distribute financial fixed assets and current assets by business area. Operating revenue, EBITDA, EBIT and investments for the business areas in each market area are presented in Note 1, Note 2 and Note 31. Group

2003

Fixed Other Non distr. Mobile telephony opera- and internal telephony & Internet Cable TV tions elimination Total

Income Statement Operating revenue from external customers 10,421 25,887 224 379 – 36,911

Other Investments in intangible assets 66 2 – 10 – 78Investments in tangible assets 1,184 575 34 22 – 1,815

Group

December 31, 2003


Balance Sheet Intangible fixed assets 3,237 1,581 3 112 18,623 23,556Tangible fixed assets 4,757 3,466 708 105 – 9,036Financial fixed assets 3,057 3,057Current assets 12 321 12 321Total assets 7,994 5,047 711 217 34,001 47,970

Group

2002


Income Statement Operating revenue from external customers 9,819 20,843 298 322 – 31,282

Other Investments in intangible assets 121 26 – – – 147Investments in tangible assets 901 763 88 13 – 1,765

Group

December 31, 2002


Balance Sheet Intangible fixed assets 3,687 1,014 3 41 20,351 25,096Tangible fixed assets 4,232 4,226 736 63 – 9,257Financial fixed assets 2,020 2,020Current assets 10,499 10,499Total assets 7,919 5,240 739 104 32,870 46,872

Note 34. Financial itemsAs Tele2’s receivables and liabilities are normally of a short-term nature, the book value and real value usually tally. The real value of financial receivables and financial loan liabilities is calculated by means of discounting at the current market rate. Our assessment is that the calculation of theoretical market value deviates from the book value only slightly.

The Group has limited its credit risk in respect of receivables by continually conducting credit assessments of the customer base. Since the Group has a highly varied customer base which covers individuals as well as companies, this means that the credit risk is limited. The Group makes provisions for credit losses, and these have remained within management’s expectations.

Note 35. Changed reporting structureIn September 2003, Tele2 decided to report in accordance with a new market structure, beginning with the first interim report for 2004. All previous reporting, including the year-end accounts for 2003, is in accordance with the original market structure. The original six market areas form the basis of the new market structure. The new structure is the result of new internal reporting to the Board and senior executives and the division of responsibilities and organization within the Group. The most important changes are listed below.

• ProcureITright/Proceedo moves from Nordic to Services.• Poland and the Czech Republic move from Eastern Europe & Russia to Central Europe. • The Netherlands and Switzerland move from Central Europe to Benelux and Southern Europe respectively.• Tele2 UK, Alpha and C3 operations move from Branded Products & Services to Southern Europe.• 3C operations move from Luxembourg to Services. • X-Source operations move from Eastern Europe & Russia to Services.• Everyday and Intellinet operations move from Branded Products & Services to Central Europe, Southern Europe and Benelux.

Operating revenue, EBITDA and number of customers before and after the reorganization are shown below. Group

Operating revenue New structure Original structure 2003 2002 change 2003 2002 changeNordic 12,942 13,557 –5% 12,970 13,566 –4%Baltic & Russia (formerly Eastern Europe & Russia) 2,724 2,177 25% 3,006 2,320 30%Central Europe 3,441 2,465 40% 7,502 5,689 32%Southern Europe 13,859 10,293 35% 10,233 8,105 26%Benelux (formerly Luxembourg) 3,704 2,669 39% 917 754 22%Services (formerly Branded Products & Services) 241 121 99% 2,283 848 169%Total operating revenue 36,911 31,282 18% 36,911 31,282 18%

Group

EBITDA New structure Original structure 2003 2002 change 2003 2002 changeNordic 3,861 4,805 –20% 3,873 4,814 –20%Baltic & Russia (formerly Eastern Europe & Russia) 800 602 33% 599 541 11%Central Europe –303 –231 183 –81 Southern Europe 1,096 –48 1,024 –101 Benelux (formerly Luxembourg) 223 –11 80 126 –37%Services (formerly Branded Products & Services) 33 10 230% –49 –172 Total EBITDA 5,710 5,127 11% 5,710 5,127 11%

Group

Number of customers New structure Original structure(thousands) 2003 2002 change 2003 2002 changeNordic 6,720 6,252 7% 6,720 6,252 7%Baltic & Russia (formerly Eastern Europe & Russia) 2,327 1,491 56% 3,077 1,574 95%Central Europe 3,469 1,817 91% 5,081 3,587 42%Southern Europe 7,487 5,594 34% 6,986 5,129 36%Benelux (formerly Luxembourg) 2,303 1,610 43% 442 222 99%Total number of customers 22,306 16,764 33% 22,306 16,764 33%


Note 36. Customers Operating area by market area: Group

Number of customers Net customer intake

(thousands) Dec 31, 03 Dec 31, 02 change 2003 2002Nordic:Mobile telephony 3,600 3,221 12% 379 579Fixed telephony & Internet 2,942 2,822 4% 120 –810Cable TV 178 209 –15% –31 209Total, Nordic 6,720 6,252 7% 468 –22

Eastern Europe & Russia:Mobile telephony 2,204 1,366 61% 838 513Fixed telephony & Internet 807 144 460% 663 67Kabel-TV 66 64 3% 2 –2Total, Eastern Europe & Russia 3,077 1,574 95% 1,503 578

Centraleuropa:Mobile telephony 422 271 56% 151 223Fixed telephony & Internet 4,659 3,316 41% 1,343 173Total, Central Europe 5,081 3,587 42% 1,494 396

Sydeuropa:Fixed telephony & Internet 6,986 5,129 36% 1,857 843Total, Southern Europe 6,986 5,129 36% 1,857 843

Luxemburg:Mobile telephony 196 181 8% 15 14Fixed telephony & Internet 246 41 500% 205 –3Total Luxembourg 442 222 99% 220 11

Total by market 22,306 16,764 33% 5,542 1,806

Group

Number of customers Net customer intake

(thousands) Dec 31, 03 Dec 31, 02 change 2003 2002Mobile telephony 6,422 5,039 27% 1,383 1,329 including prepaid cards 4,598 3,363 37% 1,235 1,184Fixed telephony & Internet 15,640 11,452 37% 4,188 270Cable TV 244 273 –11% –29 207Total by business area 22,306 16,764 33% 5,542 1,806

Net customer intake in 2003 amounted to 33%, corresponding to 5,542,000 customers (2002: 15%, 2,195,000 customers, before adjustment to comply with the Group’s definition of an active customer in Sweden and Denmark, and additional Optimal Telecom and Cable TV customers in 2002).

Note 37. Number of employees Group

Average number of employees 2003 2002 Total Men Total MenNordic 1,219 70% 1,169 70%Eastern Europe & Russia 1,449 50% 1,456 52%Central Europe 166 70% 116 59%Southern Europe 114 66% 95 65%Luxembourg 160 76% 231 68%Branded Products & Services 166 74% 48 83%Total by market 3,274 61% 3,115 61%

The average number of employees in the Parent Company is 2 (2002: 3) people, all of whom are male. Group

2003 Women MenNumber of Board members in all Group companies 7% 93%Number of other Senior Executives in all Group companies 16% 84%Total number of Board members and other senior executives 11% 89%

Note 38. Personnel costs Group

Salaries and remuneration 2003 2002 Board and of which other Board and of which other President bonus employees President bonus employees

Nordic 35 6 549 27 3 573 Eastern Europe & Russia 19 2 157 21 2 150Central Europe 7 3 112 7 1 73Southern Europe 6 1 67 4 1 54Luxembourg 4 – 98 1 – 112Branded products and services 13 1 108 7 1 33Total per market 84 13 1,091 67 8 995

In 2003, provision of SEK 15 million (2002: SEK 16 million) was made for bonuses to key personnel in the Group plus social security expenses of SEK 5 million (2002: SEK 5 million). Distribution of the amount will be decided in 2004.

Group

2003 2002

Salaries Social Salaries Social and remu- security of which and remu- security of which neration expenses pension neration expenses pension

Board and President 84 23 5 67 20 5Other employees 1,091 342 75 995 303 59Total personnel costs 1,175 365 80 1,062 323 64

Parent Company

2003 2002

Salaries Social Salaries Social and remu- security of which and remu- security of which neration expenses pension neration expenses pension

Board and President 14 7 2 13 6 1Other employees 3 1 – 4 1 1Total personnel costs 17 8 2 17 7 2

Commitments concerning defined-benefit pension plans:Balance sheet: Group

Dec 31, 03

Present value of funded commitment –13Investment assets real value 13Net –Unrealized actuarial gains/losses 2Net receivables (+) / payables (–) in balance sheet 2 of which assets 2 of which liabilities –

Group

Dec 31, 03

Net receivables (+) / payables (–) at beginning of year 4Net costs reported in income statement –3Payments 1Net receivables (+) / payables (–) in balance sheet at year-end 2

Income statement: Group

2003Costs in respect of service during current year –3Interest on commitments –1Anticipated return on investment assets 1Net costs reported in income statement –3

Important actuarial assumptions (weighted average): Group

2003Discount rate 4–6%Anticipated return on investment assets 4–7%Future annual salary increases 2–3%Future annual pension increases 3%

The Group’s pension commitments also comprise pension plans in Swedish companies insured in Skandia (somewhat similar to ITP, supplementary pensions for salaried employees), and Alecta (ITP). These commitments are, to some extent, defined-benefit pension plans, but due to equalization in the insurance companies, these pension plans constitute the type of plan that includes several employers (multi-employer plans). At present, there is insufficient information available from the insurers to be able to report the commitments as defined-benefit commitments. These plans have, therefore, been reported as if they were defined-contribution plans. The degree of funding in both insurance companies is considered to be such that accounting of the commitments concerned as defined-benefit would only involve marginal liability and asset effects for Tele2 compared with the accounts as they have now been drawn up.

Pension expenses Group Parent Company

2003 2002 2003 2002Defined-benefit pension plans 24 20 – –Defined-contribution pension plans 56 44 2 2Total pension expenses 80 64 2 2


31, 2003, Tele2 had outstanding warrants corresponding to 643,500 (2002: 663,000) shares. All of these had a redemption price of SEK 191. In addition, allotments corresponding to 153,700 shares were implemented in 2002 to a wholly-owned Group company to secure the future cash flow for social insurance costs.

Note 39. Remuneration to Auditors


2003 2002 2003 2002 Other Other Other Other PWC auditors PWC auditors PWC auditors PWC auditors

Audit assignments 17 2 17 4 2 – 1 –Other assignments: Audit-related 1 1 1 1 – – – – Taxes 14 3 11 1 7 – 5 – Other 2 2 1 2 – – 1 – 34 8 30 8 9 – 7 –

Total 42 38 9 7

Note 40. Transactions with related parties

As a result of substantial direct and indirect shareholdings by the Jan Hugo Stenbeck estate in the Tele2 Group, Invik Group, Kinnevik Group, Transcom Worldwide Group, Millicom Group, Modern Holdings Inc. Group, MTG Group, Metro Group, Viking Telecom Group and other companies, said estate has the potential to exert considerable influence in terms of financial and operational decisions regarding activities by these companies. Tele2’s associated companies (listed in Note 15) and the above companies are regarded as related parties to Tele2. Business relations between Tele2 and all closely related parties are subject to commercial terms and conditions.

Significant transactions in recent years:• At year-end 1998, Tele2 acquired 48% of Tele2 Eesti (formerly Ritabell AS), with mobile

operations in Estonia, from Millicom.• In November 1999, Tele2 sold its holding (24.8%) in the associated company Netcom ASA,

a mobile telephony company in Norway, to SEC in return for 17.8% in SEC. SEC gradually divested Netcom ASA during 1999 and 2000.

• In August 2000, Tele2 acquired from Millicom an additional 81.9% of SEC via a limited share issue corresponding to SEK 19,773 million. SEC pursues fixed telephony operations in continental Europe and mobile telephony operations in Luxembourg, etc.

• During 2000, Tele2 divested its holding in 4T Solutions, with billing systems operations, to Modern Holdings Inc. (formerly XSource Corp) in return for 11.88% of Modern Holdings Inc.

• In January 2001, Tele2 Group divested its 37.45% holding in the associated company Transcom Worldwide to Industriförvaltings AB Kinnevik. Transcom Worldwide is one of Europe’s largest customer service companies. The purchase price was based on the market share price 60 trading days after Transcom Worldwide was listed on the Stockholm Stock Exchange.

• In December 2001, Tele2 Group acquired all the shares in Tele2 Russia Telecom BV (formerly Fora Telecom) from Millicom through a limited share issue corresponding to a value of SEK 849 million. Tele2 Russia Group conducts mobile operations in Russia.

• In October 2002, the Tele2 Group acquired all the shares in the ProcureITright Group, a supplier of procurement function services and WEB-based procurement systems, from Modern Holdings Inc. Group for SEK 42 million.

Transactions in 2003:• There were no significant transactions with related parties in 2003.

Operational agreements between Tele2 and related parties:Tele2 supplies telephony and data services on commercial terms to closely related parties. Tele2 is also one of two turnkey contractors for planning, expansion and operation in the associated company Svenska UMTS-nät AB’s 3G-network.

Invik Group:• Tele2 Group’s telephony operations are, with the exception of Russian operations, insured

by Moderna Försäkringar AB.• Banque Invik conducts certain financial services for the Tele2 Group. Banque Invik is also a

credit card supplier and conducts credit transactions using the equipment of 3C-operations.

Kinnevik Group:• Collect Sweden AB is a company which managed a fidelity program and provided multi-

bonus cards. The company was also in charge of marketing and managing benefits and offers within the framework of the Collect multi-bonus program. Collect was wound up during the year.

Transcom Worldwide Group:• Transcom provides customer services and telemarketing for Tele2.• CIS Collection AB provides debt collection services for Tele2.

Millicom Group:• Millicom Group purchases certain consulting services from ProcureITright, a Tele2

company.

Remuneration of senior executives:The Group Other senior executives consists of 13 people (2002: 13 people). In addition to the costs below, Tele2 also incurred costs relating to social security expenses.

2003

Basic salary/ Variable Other Total board remu- remu- Options- Other remu- Pension remuneration neration program benefits neration costs neration

Chairman of the Board:Sven Hagströmer / Bruce Grant 0.4 – 0.4Group President and CEO:Lars-Johan Jarnheimer 10.4 2.0 – 0.0 – 2.0 14.4Other senior executives 23.4 4.3 – 0.7 – 1.4 29.8 34.2 6.3 – 0.7 – 3.4 44.6

2003

Previous years Allocation for the year Total

Warrants Warrants program 2002/2007

Market value on Acquisition- Number Number issuance price Benefit Number

Group President and CEO 15,000 pcs. – – – – 15,000 pcs.Other senior executives 180,000 pcs. – – – – 180,000 pcs. 195,000 pcs. – – – – 195,000 pcs. In 2003, the warrants previously allotted changed by –15,000 pcs.

2002

Basic salary/ Variable Other Total board remu- remu- Options- Other remu- Pension remuneration neration program benefits neration costs neration

Board Chairman:Jan H. Stenbeck / Bruce Grant 0.3 6.8 7.1Group President and CEO: Lars-Johan Jarnheimer 10.0 1.5 1.0 0.0 – 1.9 14.4Other senior executives 21.8 10.3 13.5 1.3 – 1.3 48.2 32.1 11.8 14.5 1.3 6.8 3.2 69.7

Board of Directors:Total Board fees of SEK 1.9 million were paid in 2003 compared with SEK 2.2 million decided at the Annual General Meeting of shareholders.

President and CEO:In addition to a fixed salary, Lars-Johan Jarnheimer, President and CEO of Tele2 AB received a bonus of SEK 2.0 million (2002: SEK1.5 million). The bonus is based on individualized goals. The pension premium, which is defined-contribution, is paid in the form of 20% of the fixed basic salary. The pension age is 65. The period of notice when served by the company is a minimum of 12 and maximum of 18 months in the case of the President of Tele2 AB. Salary during a period of notification of 12 months is paid to the President if he serves notice of termination of employment to the company. Salary and remuneration for the President are determined annually by the Board of Directors following proposals by the Chairman of the Board.

Other senior executives:Variable salary paid to other senior executives includes a bonus of 0%–35% based on profit benchmarks, with the remainder being based on individualized goals. Other benefits pertain primarily to car benefits. Pensions are paid in accordance with the public pension plan, of which SEK 1.1 million (2002: SEK 1.1 million) represents a defined-contribution plan and SEK 0.3 million (2002: SEK 0.2 million) a defined-benefit plan. The pension age is 65. The period of notice when served by the company is a minimum 6 and maximum 12 months. Salary during a period of notification of six months is received if the person serves notice of termination of employment to the company. No other remuneration is paid.

Incentive program 1997/2006At the Annual General Meeting in 1997, it was decided to undertake an incentive program for a number of senior management employed at that time and future senior management in the Group. Through a company established for this purpose, NC Intressenter AB, these persons were provided with the opportunity to acquire 100,000 shares per year during 1999 - 2003 up to a maximum total amount of 500,000 Series B shares. In October 2000, 200,000 shares were issued and three convertible debenture notes corresponding to 300,000 shares were issued to NC Intressenter AB to fulfill the offer. At December 31, 2003, NC Intressenter AB held 500,000 Series B shares. The premium for the option amounted to SEK 7 million in 1997. This was based on a Black-Schole evaluation with an exercise price of SEK 150 per share. In their turn, all partners in NC Intressenter AB made payments to NC Intressenter AB based on the Black-Schole evaluations.

Incentive program 2002/2007At the Annual General Meeting in 2002, it was decided to undertake an incentive program corresponding to a maximum of 1,055,000 Series B shares for current and future key employees of the Group. These persons are to be offered the opportunity, via warrants, to subscribe for Series B shares during a period of three to five years after allotment, at a price totaling the market value of the Series B share plus +10% at the time of allotment, on condition that they remain employed by the Group. No premium is to be paid. At December


Modern Holdings Inc. Group:• The Basset Group provides an operator settlement and anti-fraud system for Tele2.• NetCom Consultants AB provides Tele2 with consulting services in telecommunications and

data communications.

MTG Group:• Tele2 buys advertising time on radio and TV channels owned by MTG.• Tele2 Sverige AB purchases cable TV programs from TV1000 Sverige AB.

Viking Telecom Group:• Viking Telecom provides Tele2 with most of the line routers which Tele2 supplies to its end

customers.

Transactions between Tele2 and related parties: Group

Operating revenue Operating costs 2003 2002 2003 2002Invik Group 14 – 28 124Kinnevik Group 2 11 31 132Transcom Worldwide Group 37 23 2,049 1,860Millicom Group 11 17 13 14Modern Holdings Inc. Group 2 7 129 266MTG, Modern Times Group 27 28 73 108Metro International Group – 3 17 4Viking Telecom Group –4 3 111 2Associated companies 54 – – –Other related companies 10 2 47 100Total 153 94 2,498 2,610

Group

Interest revenue Interest costs 2003 2002 2003 2002Invik Group 52 100 –56 –128Total 52 100 –56 –128

Group

Restricted cash Dec 31, 03 Dec 31, 02

Invik Group 744 841Total 744 841

Group

Other Interest-bearing receivables receivables

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Invik Group 39 – – –Kinnevik Group 2 9 – –Transcom Worldwide Group 7 2 – –Millicom Group 4 8 – –Modern Holdings Inc. Group 1 2 14 20MTG, Modern Times Group 14 53 – –Viking Telecom Group – 4 – –Associated companies 45 32 – 19Other related companies – 4 16 39Total 112 114 30 78

Group

Non-interest-bearing Interest-bearing liabilities liabilities

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Invik Group 96 124 681 755Kinnevik Group 1 23 1 –Transcom Worldwide Group 244 188 – –Millicom Group 43 – – –Modern Holdings Inc Group 27 39 – 5MTG, Modern Times Group 12 17 2 –Metro International Group 2 2 – –Viking Telecom Group 2 62 – –Other related companies 4 1 1 23Total 431 456 685 783

Note 41. United States generally accepted accounting principles (US GAAP)The consolidated balance sheets and income statements are drawn up in accordance with Swedish accounting principles. These differ in certain respects from generally accepted accounting principles in the United States (US GAAP).

The following adjustments are required for reporting profit for the year and shareholders’ equity in line with US GAAP.

Profit for the year: Group

2003 2002 2001Profit for the year according to Swedish accounting principles 2,396 223 392

Adjustments required for compliance with US GAAP:a) Transactions between companies under common control 6 21 21b) Valuation of acquired loss carry-forwards –69 – –c) Amortization of goodwill 1,577 1,500 –d) Tangible fixed assets 21 –81 9e) Lease agreements 1 1 2f) Accounting for acquisitions through non-cash issue – 25 –367g) Accounting for step acquisitions 1 –1 –8h) Accounting for surplus value of acquisitions –42 – –i) Stock options 4 9 5j) Connection charge –113 – –k) Deferred tax liability – – 828l) Changes in accounting principles – – –156m) Other 14 2 –2Net adjustment 1,400 1,476 332

Deferred tax effect on above, US GAAP adjustments 61 –7 39Profit for the year according to US GAAP 3,857 1,692 763

Earnings per share: Group

2003 2002 2001Profit for the year according to US GAAP 3,857 1,692 763Number of shares, weighted average 147,460,175 147,360,175 145,003,847Earnings per share SEK 26.16 SEK 11.48 SEK 5.26

Group

2003 2002 2001Profit for the year according to US GAAP 3,857 1,692 763Reversal: Interest after tax on outstanding convertibles during the year – – –Adjusted profit/loss for the year after full dilution 3,857 1,692 763

Number of outstanding shares after full dilution, weighted average*) 147,795,748 147,596,866 145,215,999Earnings per share, after full dilution SEK 26.10 SEK 11.46 SEK 5.25

Adjusted profit for the year:When Tele2 began to apply FAS 142 on January 1, 2002, it ceased to amortize goodwill and began instead to testing goodwill for imparement. In accordance with US GAAP, this impairment testing takes place at a level which is referred to as a reporting unit. This testing revealed that there was no write-down requirement for 2002 and 2003. For comparative purposes, profit/loss for the year and earnings per share have been adjusted in the tables below to show how the year 2001 would have appeared had no goodwill amortization taken place in 2001.

Group

2003 2002 2001Profit for the year according to US GAAP 3,857 1,692 763Reversal: amortization of goodwill – – 1,845Adjusted profit for the year according to US GAAP 3,857 1,692 2,608

Adjusted earnings per share: Group

2003 2002 2001Profit for the year according to US GAAP 3,857 1,692 763Reversal: amortization of goodwill – – 1,845Adjusted profit 3,857 1,692 2,608

Number of shares, weighted average 147,460,175 147,360,175 145,003,847Adjusted earnings per share SEK 26.16 SEK 11.48 SEK 17.99

Group

2003 2002 2001Profit/loss for the year according to US GAAP 3,857 1,692 763Reversal: Interest after tax on outstanding convertibles during the year – – –Reversal: amortization of goodwill – – 1,845Adjusted profit/loss for the year after full dilution 3,857 1,692 2,608

Number of outstanding shares after full dilution, weighted average*) 147,795,748 147,596,866 145,215,999Adjusted earnings per share, after full dilution SEK 26.10 SEK 11.46 SEK 17.96

*) In contrast to Swedish accounting principles, US GAAP does not calculate earnings per share after dilution at the

present value of the exercise price for the options.

b) Valuation of acquired loss carry-forwardsAccording to Swedish accounting principles, an amount representing acquired loss carry-forwards, which on the date of acquisition is valued at zero, but which in subsequent years is valued and recognized as tax income, is reported as amortization of goodwill in the income statements after an adjustment for the remaining amortization period of the original acquisition. According to US GAAP, acquired loss carry-forwards are not reported as tax income, but reduce goodwill.

c) Amortization of goodwillAccording to Swedish accounting principles, all intangible fixed assets, including goodwill, must be amortized. Amortization rates are based on the acquisition value of the assets and the estimated utilization period. According to US GAAP, with effect from 2002, goodwill and certain other intangible assets need not be amortized but may instead be tested, at least annually, to identify any impairment loss. In this test, the book value of a reporting unit is compared with its real value. If the book value is lower than the real value, a write-down of goodwill is reported equivalent to the difference between the book value of goodwill and the estimated goodwill of the reporting unit. This estimated goodwill is the difference between the reporting unit’s real value and the real value of the unit’s reported and non-reported assets and liabilities. Accordingly, this year’s amortization of such assets under Swedish accounting principles is reversed and a potential write-down based on the completed impairment test is recognized.

d) Tangible fixed assets Certain expenditure which has been capitalized according to Swedish accounting principles must be expensed according to US GAAP. US GAAP requires certain costs relating to installation of networks to be capitalized and not expensed.

e) Lease agreementsThe Group has certain leasing transactions which, according to generally accepted accounting principles in Sweden, have been treated as operating leases, but which, according to US GAAP, are viewed as finance leases.

f) Accounting for acquisitions through non-cash issueSociété Européenne de Communication SA (SEC) was acquired in 2000 by means of a non-cash issue, in which newly issued shares in Tele2 were offered in exchange for the remaining shares in SEC. In accordance with Swedish accounting principles, the acquisition price is calculated at a value corresponding to Tele2’s market price on the transaction date. In US GAAP, the acquisition price is defined as the market price at the time when the offer is made public. There are also some differences between acquired net assets in accordance with US GAAP and Swedish accounting principles.

g) Accounting for step acquisitionsThe gradual acquisition of OU Levicom Broadband and Société Européene de Communications S.A. during 1999–2001 has, according to Swedish accounting principles, resulted in a restatement of adjustment to shareholders’ equity. This corresponds to shares in the profit of the holdings from the original acquisition date, based on the equity method rather than historical acquisition values. According to US GAAP, not only should shareholders’ equity be adjusted against the share in profit/loss, but goodwill and depreciation should also be taken into account from the original acquisition date.

h) Purchase price allocationUnder US GAAP, certain identifiable intangible assets are valued in the event of a company acquisition. Only the remainder is reported as goodwill and therefore is not subject to amortization. Swedish accounting principles require the whole amount to be reported as goodwill. The goodwill which, using Swedish accounting principles, arose upon the acquisition of Alpha in 2003 has, according to US GAAP, been divided into brands and interconnection traffic. These intangible assets are amortized over five years.

i) Stock optionsAccording to US GAAP, as a result of the conditions of the 1997 option program, a liability is calculated based on the market value of the underlying shares and the commitment to employees does not cease. The commitment to parties other than employees is valued at the value of the option at the time the decision was made for settlement by a new share issue, and is reported directly against shareholders’ equity. From 2003, there were no differences from US GAAP.

j) Connection chargeAccording to US GAAP, connection charges are recognized as revenue over the period in which there is a customer relationship, and direct charges are expensed immediately. The estimated customer relationship period for which connection charges are recognized as revenue is approximately three years. According to Swedish accounting principles, these charges are recognized as revenue and direct charges are expensed at the time when the service is provided.

k) Deferred tax liabilityAccording to US GAAP, deferred taxes must be reported for all temporary differences apart from certain exceptions. The reversal of deferred tax liabilities as a result of changes in circumstances is done restrictively. According to Swedish accounting principles, changes in circumstances can be taken into account in the assessment. In conjunction with the liquidation of Société Européene de Communications S.A. in 2001, there were no longer any differences vis-à-vis US GAAP.

l) Changes in accounting principlesAccording to Swedish accounting principles, changes in accounting principles are reported through a recalculation of the opening shareholders’ equity as if the new principles were already in force when the transaction arose. According to US GAAP, the change is reported across the income statement when changes in principles are made.

m) OtherOther relates primarily to social security charges on options.


Shareholders’ equity: Group

Dec 31, 03 Dec 31, 02 Dec 31, 01

Shareholders’ equity according to Swedish accounting principles 30,360 28,728 29,517

Adjustments required for compliance with US GAAP:a) Transactions between companies under common control – –6 –27b) Valuation of acquired loss carry-forwards –69 – –c) Amortization of goodwill 3,077 1,500 –d) Tangible fixed assets – –21 60e) Lease agreements 15 14 13f) Accounting for acquisitions through non-cash issue 6,431 6,500 6,630g) Accounting for step acquisitions –102 –103 –102h) Accounting for surplus value of acquisitions –42 – –i) Stock options – –4 –25j) Connection charge –113 – –m) Other 7 –7 –9Net adjustment 9,204 7,873 6,540

Deferred tax effect on above, US GAAP adjustments 38 –23 –16Shareholders’ equity according to US GAAP 39,602 36,578 36,041

Change in Shareholders’ Equity: Group

Dec 31, 03 Dec 31, 02 Dec 31, 01

Opening shareholders’ equity, Jan. 1, according to US GAAP 36,578 36,041 32,289

Items reported directly against shareholders’ equityStep acquisitions – – –8Exchange rate difference, according to US GAAP –849 –1,181 2,144Total items reported directly against shareholders’ equity –849 –1,181 2,136

Other changes in shareholders’ equity New share issue, acquisition of Tele2 Russia, according to US GAAP – – 838New share issue, convertibles, according to US GAAP 16 26 15Profit/loss for the year according to US GAAP 3,857 1,692 763Closing shareholders’ equity, Dec. 31, according to US GAAP 39,602 36,578 36,041

Items which are reported directly against shareholders’ equity and which do not represent transactions with the owners (Comprehensive income) include the profit/loss for the year and changes in translation differences. .

Group

2003 2002 2001Comprehensive Income:Profit/loss for the year according to US GAAP 3,857 1,692 763Change in translation differences according to US GAAP –849 –1,181 2,144Comprehensive Income according to US GAAP 3,008 511 2,907

Group

Dec 31, 03 Dec 31, 02 Dec 31, 01

Accumulated Comprehensive Income: Cum. Comprehensive Income according to US GAAP, Jan. 1 1,726 2,907 763Change in translation differences according to US GAAP –849 –1,181 2,144Cum. Comprehensive Income according to US GAAP, Dec. 31 877 1,726 2,907

Extract from consolidated balance sheet: Group

Sweden accounting principles Adjustment items US GAAP

Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02 Dec 31, 03 Dec 31, 02

Fixed assets 35,649 36,373 9,431 7,952 45,080 44,325Current assets 12,321 10,499 –3 – 12,318 10,499Total assets 47,970 46,872 9,428 7,952 57,398 54,824

Shareholders’ equity 30,360 28,728 9,242 7,850 39,602 36,578Minority interest 7 22 – – 7 22Long-term liabilities 4,801 7,927 79 97 4,880 8,024Short-term liabilities 12,802 10,195 107 5 12,909 10,200Tot. shareholders’ equity and liabilities 47,970 46,872 9,428 7,952 57,398 54,824

Explanation of differences between Swedish accounting principles and US GAAPThe account below presents a description of the adjustments which must be made to report Tele2 Group’s profit/loss for 2001, 2002 and 2003 and shareholders’ equity as of December 31, 2001, 2002 and 2003 in accordance with US GAAP.

a) Transactions between companies under common controlIn 1993 and 1994, the company acquired shares in formerly Tele2 AB and Comviq AB (today are these operations a part of Tele2 Sverige AB) from the Industriförvaltnings AB Kinnevik Group. The acquisition method was used to report the transactions. Accordingly, the difference between the acquisition value and market value of net assets was reported as goodwill. According to US GAAP, acquisitions of operations from “companies under common control” should be conducted at historical values. Thus, as a US GAAP adjustment, all revaluations of plants, inventories, goodwill, etc. which arise on the transaction date are eliminated and the resulting depreciation/amortization is reversed. From 2003, there is no difference between US GAAP and the book value in accordance with Swedish accounting principles.

Stockholm, February 24, 2004

Sven Hagströmer Chairman

Lars-Johan Jarnheimer Marc Beuls Vigo Carlund President and CEO

John Shakeshaft Cristina Stenbeck

Our auditors’ report was submitted on March 3, 2004

Pål Wingren Carl Lindgren Authorized Public Accountant Authorized Public Accountant


Group

2003 2002Change in cash and cash equivalents according to Swedish accounting principles 300 198Change in restricted funds 40 27Change in liquid funds in the cash flow statement according to Swedish accounting principles 340 225

Critical accounting principles according to US GAAP:The presentation below shows the accounting principles which are based on the most critical assessments and estimates used in preparing the accounts in line with US GAAP, and which differ from the preparation of financial statements in accordance with Swedish accounting principles.• When assessing imparement of intangible and tangible fixed assets, and to calculate any

write-down amount, Swedish accounting principles mandate that a future discounted cash flow be calculated and compared with the book value. According to US GAAP, a non-discounted cash flow is calculated to assess the need for any imparement write-down, while, as with Swedish accounting principles, a discounted cash flow is used to calculate any write-down amounts.

• Swedish accounting principles stipulate the application of amortization of goodwill and other intangible assets. According to US GAAP, there is no amortization of goodwill and other intangible assets with an indefinite life from and including 2002. These assets instead undergo testing to determine whether imparement exist. The test is based on expected future cash flow of the reporting unit to which goodwill is attributable. Expected cash flow is based on the management’s best estimate but has an inherent uncertainty. Different estimates about the future may result in another valuation of goodwill.

Effects of new US GAAP accounting recommendations:In January 2003, the Emerging Issues Task Force issued EITF 00-21 “Accounting for Revenue Arrangements with Multiple Deliverables”. EITF 00-21 requires transactions with several components to have more than one reporting unit and deals with how payment is to be measured and distributed to the transaction’s different reporting units. EITF 00-21 must be applied to transactions arising in the period after the financial year beginning on June 15, 2003.

In January 2003, FASB issued FIN 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB 51”.

FIN 46 deals with consolidation of companies for which control has been gained in a manner other than voting rights (“Variable interest entities or “VIE”).

FIN 46 clarifies the application of ARB 51 for entities in which equity investors lack essential characteristics of a controlling financial interest in the company or do not have sufficient equity to finance activities without additional subordinated financial support provided by other parties. FIN 46 provides guidance on how to define when and which company is to consolidate a VIE. In addition, FIN 46 requires the party which has the primary advantage from the investment (“primary beneficiary”) and all other companies with a considerable variable investment (“variable interest”) in a VIE to provide additional information. FIN 46 must be applied immediately to all VIEs created after January 31, 2003. Listed companies with a VIE established before February 1, 2003 must apply FIN 46 to this VIE for the first time in the financial year beginning after June 15, 2003. Tele2 does not believe that the new rules will have any substantial effect on its reporting.

In Dec 2003, FASB issued Interpretation 46 (R), Consolidation of Variable Interest Entities. FIN 46 (R) replaces FIN 46 and clarifies the procedure for accounting of interests in variable interest entities. From January 1, 2004 the Company will begin to apply FIN 46 (R) for entities deemed to be variable interest entities, which arose before January 31, 2003. Tele2 does not believe that the new rules will have any substantial effect on its reporting.

On December 17, 2003, Staff Accounting Bulletin No. 104 (SAB 104), Revenue Recognition, was issued by the Securities and Exchange Commission. This replaces SAB 101, Revenue Recognition in Financial Statements. The main purpose of SAB 104 is to rescind the accounting guidelines in SAB 101 for agreements containing several components as a result of the publication of EITF 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.” The principles of revenue recognition in SAB 101 remain largely unchanged despite the issuance of SAB 104. The application of SAB 104 is not expected to affect Tele2’s consolidated income statement and balance sheet.

Expected amortization of intangible assetsEstimated amortization of intangible assets according to US GAAP for the next five years:

Group

1 year –1271–2 year –1272–3 year –1273–4 year –1274–5 year –127

Deferred tax liability/receivable: Group

2003 2002Deferred tax liability/receivable according to Swedish accounting principles 2,459 1,246Deferred tax, US GAAP adjustment 38 –23Total deferred tax liability (–) / receivable (+) according to US GAAP 2,497 1,223

Stock options:In accordance with Swedish accounting principles, the option liability for the 1997 incentive program was dissolved in its entirety in 2000 as a result of the decision to settle the option through an issue of convertibles. According to US GAAP, depending on the conditions of the option program, a liability should be calculated based on the difference between the market value of the underlying shares and the exercise price.

During 2002, stock options were issued as part of a new incentive program. This program is not reported as an expense in the income statement. A valuation in accordance with the Black-Scholes option model would have the following effect on profit/loss according to US GAAP. The calculation is based on a risk-free rate of interest of 4.7%, no dividend, volatility of 57.9% and an options expiration date of September 1, 2005.

Group

2003 2002 2001Profit/loss for the year, reported as above 3,857 1,692 763Adjusted earnings per share, after full dilution 26.10 kr 11.46 kr 5.25 krProfit/loss for the year, pro forma 3,842 1,687 760Adjusted earnings per share, after full dilution 26.00 kr 11.43 kr 5.23 kr

Advertising expenses:Total advertising expenses for the year amount to SEK 1,186 million (2002: 979 million and 2001: 1,031 million).

Market area reportingBoth Swedish accounting principles and US GAAP require a company to divide its operations into different market areas on the basis of how operations are run. According to US GAAP, additional information for each market area is submitted for the operating profit/loss (EBIT) earnings measure. However, in Notes 1, 2 and 31, Tele2 has also provided additional information by market area for earnings measures which are not required by US GAAP.

ClassificationsTele2 uses the equity method for reporting associated companies. According to Swedish accounting principles, profit/loss from shares in associated companies is divided into profit/loss before tax and tax. Under US GAAP, profit/loss from shares in associated companies is reported after tax. In the last three years, no tax has been booked to Tele2’s shares in associated companies.

The cash flow statement according to Swedish accounting principles is in line with US GAAP, with the exception that restricted funds are included in cash and cash equivalents. According to US GAAP, restricted funds are reported as an investing activity in the change of cash flow during the year. The difference is shown in the table below. Group

2003 2002Liquid funds in the cash flow statement according to US GAAP 1,943 1,603Restricted funds 830 870Liquid funds in the cash flow statement acc. to Swedish accounting principles 2,773 2,473

68 AUDIT REPORT TELE2 ANNUAL REPORT 2003

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of Tele2 AB (publ) for the financial year 2003. These accounts and the administration of the Company are the responsibility of the Board of Directors and the President. Our responsibility is to express an opinion on the annual accounts, consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President, as well as evaluating the overall presentation of information in the annual accounts and consolidated accounts. As a basis for our opinion concerning discharge from liability, we have examined significant decisions, actions

taken and circumstances of the Company in order to determine the liability, if any, to the Company of any member of the Board or the President. We have also conducted examinations to establish whether any member of the Board or the President has in any other way acted in contravention of the Swedish Companies Act, the Annual Accounts Act, or the Company’s Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts and consolidated financial statements have been prepared in accordance with the Annual Accounts Act and thus provide a true and fair view of the Company’s and the Group’s financial position and results of operations in accordance with generally accepted auditing principles in Sweden.

We recommend that the Annual General Meeting adopt the Income Statements and Balance Sheets of the Parent Company and the Group, that the profit in the Parent Company be dealt with in accordance with the proposal in the Board of Directors’ Report, and that the members of the Board and the President be discharged from liability for the financial year.

Stockholm, March 3, 2004

Pål Wingren Carl Lindgren Authorized Public Accountant Authorized Public Accountant

Audit reportTo the Annual General Meeting of the shareholders of Tele2 AB (publ), corporate registration no. 556410-8917

Definitions

LiquidityCash and cash equivalents, including unutilizedcredit facilities granted.

InvestmentsAcquisition and divestment of fixed assets, includinginvestments through financial leases and non-cash investments.

Solidity Shareholders’ equity (including convertibledebentures) divided by total assets.

Debt/equity ratioInterest-bearing net debt divided by shareholders’equity at the end of the period.

Return on shareholders’ equityProfit/loss after tax less items affecting comparability,minority interests after tax deductions (and interest expense for convertible debentures after tax deductions) divided by average equity (including convertible debentures).

Capital employedTotal assets less provisions, minority interests and non-interest bearing liabilities.

Return on capital employedProfit/loss after financial items less items affecting comparability and financial costs (less interest expense for convertible debentures) divided by average capital employed.

Average interest rateInterest expense (less interest expense for convertibledebentures) divided by average interestbearing liabilities (less convertible debentures).

Earnings per shareProfit/loss for the period (less interest expense on convertible debentures, and less tax deductions) divided by the weighted average number of shares outstanding during the fiscal year (that would result from full conversion of convertible debentures).

Shareholders’ equity per shareShareholders’ equity (including convertibledebentures) less minority interests, divided by the weighted average number of shares outstandingduring the fiscal year (that would result from full conversion of convertible debentures).

ARPUAverage monthly revenue per customer.

MoUMinutes of monthly usage per customer.

GlossaryCRM – Customer Relationship Management,often supported by computer-based systems.

DSL - Digital Subscriber Line.Generic name covering several different technologiesfor datatransmission over fixed phone lines.

GPRS – General Packet Radio Service.A technology that permits high-capacity datatransmission using mobile phones.

GSM – Global System of Mobile.Communications or Groupe Spécial Mobile.2nd-generation mobile telephony system.Digital, as opposed to analog NMT.

IP – Internet Protocol.A series of rules for communication amongcomputers over the Internet.

LAN – Local Area Network.Local network of computers, often in the sameroom or building.

MMS – Multimedia Messaging Services. A service that makes it possible to send text, videoand audio messages between mobile phones orbetween Internet-connected computers and amobile telephone.

MVNO – Mobile Virtual Network Operator.MVNO’s have greater network resources thanService Providers with which to offer their owntelecom services to subscribers. But they donot have radio access network capacity, whichmust be purchased from a network operator.

NMT – Nordic Mobile Telephone.Ordinarily identified as the 1st-generationmobile telephony. An analog technologydeveloped in the Nordic region.

SMS – Short Message Service.Enables the transmission of short text messagesbetween mobile phones or between a computerthat is connected to the Internet and a mobilephone.

SP – Service Provider.A company that purchases capacity from networkoperators with which it can sell telecomservices to its subscribers.

UMTS – Universal Mobile TelecommunicationsSystem. A technology for 3rd-generation mobile telephony intended to handle, text, images, andvideo. UMTS has greater capacity than GSM.

VOIP – Voice Over Internet Protocol.Telephony that uses Internet Protocol.

VPN – Virtual Private Network.A service that links a company’s local and telecomnetworks with the computers and phones of employees who work remotely, forming a telecom or data communications network that looks to users like a single business network.

WAN – Wide Area Network.A network of computers on different locations.Often consists of several LANs linked together.

WAP – Wireless Application Protocol.An industrial standard for Internet-based data communications over mobile networks. Developed by the WAP Forum, consisting of big corporations like Ericsson, IBM, Motorola and Nokia.

WLL – Wireless Local Loop.Wireless broadband access via radio networks.

TELE2 ANNUAL REPORT 2003 DEFINITIONS AND GLOSSARY 69

★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★★

(Text in parentheses refers to financial ratios after full conversion.)

Sweden

Tele2 Sverige AB

Borgarfjordsgatan 16

P. O. Box 62

SE-164 94 Kista, Sweden

Phone: +46 8 5626 4000

Fax: +46 8 5626 4200

Customer Service:

0200-25 25 25 (Internet)

0200-25 25 25 (fixed telephony)

0200-22 20 40 (mobile telephony)

www.tele2.se

Comviq

P. O. Box 62


Phone: +46 8 5626 4000

Fax: +46 5865 3444

Customer Service:

0200-22 20 40 (private customers)

0200-22 40 50 (corporate customers)

www.comviq.se

Kabelvision

P. O. Box 62


Phone: +46 8 5626 4352

Fax: +46 8 5865 4840

Customer Service:

0200-22 55 00

www.kabelvision.se

Optimal Telecom AB

P. O. Box 62


Phone: +46 8 5626 2500

Fax: +46 8 5626 2525

www.optimaltelecom.se

Datametrix AB

P. O. Box 20078

SE-161 02 Bromma, Sweden

Phone: +46 8 5220 0200

Fax: +46 8 5220 0290

www.datametrix.se

Norway

Tele2 Norge AS

Ulvenveien 75A

NO-0581 Oslo, Norway

Phone: +47 21 31 90 00

Fax: +47 21 31 91 00

www.tele2.no

Datametrix AS

Grenseveien 95

NO-0663 Oslo, Norway

Phone: +47 23 03 59 00

Fax: +47 23 03 59 01

www.datametrix.no

Denmark

Tele2 A/S

Gammel Køge Landevej 55

DK-2500 Valby, Denmark

Phone: +45 77 30 10 01

Fax: +45 77 30 10 00

www.tele2.dk

Datametrix A/S

Gammel Køge Landevej 55-57

DK-2500 Valby, Denmark

Phone: +45 77 30 10 60

Fax: +45 77 30 10 61

www.datametrix.dk

Finland

Oy Finland Tele2 AB

Rälssintie 10

FIN-00720 Helsingfors, Finland

Phone: +358 432 000 200

Fax: +358 9 223 64 57

www.tele2.fi

Suomen 3G Oy

Rälssintie 10

FIN-00720 Helsingfors, Finland

Phone: +358 432 000 200

Fax: +358 9 223 64 57

France

Tele2 (France) S.A.

14 Rue des Frères Caudron

FR-78143 Vélizy cedex, France

Phone: +33 1 39 45 44 44

Fax: +33 1 39 45 44 00

www.tele2.fr

Italy

Tele2 Italia SpA

Via Cassanese 210

IT-20090 Segrate Milano, Italy

Phone: +39 02 269 571

Fax: +39 02 269 204 37

www.tele2.it

Spain

Tele2 Telecommunication

Services S.L.

Francisco de Ricci,3,

ES-28015 Madrid, Spain

Phone: +34 91 540 28 00

Fax: +34 91 540 28 01

www.tele2.es

Switzerland


Services AG

Postfach 49

CH-8037 Zürich, Switzerland

Hardturmstr. 161

CH-8005 Zürich

Phone: +41 1 524 24 24

Fax: +41 1 524 47 78

www.tele2.ch

Portugal

Tele2 Portugal

Rua de Artilharia 1,

n° 51 - Pateo Bagatella

Esc 3, Bloco B, Piso C

PT-1250-137 Lisboa, Portugal

Phone: +351 21 383 97 68

Fax: +351 21 383 07 38

www.tele2.pt

Storbritannien

Tele2 UK Communications Ltd

Ryde House

391 Richmond Road

Twickenham

Middx

GB-London TW1 2EF, England

Phone: +44 207 892 3600

Fax: +44 208 957 1901

www.tele2uk.com

Ireland


Services Ltd

Office 4, O’Duffy Centre, Main Street,

Carrickmacross,

Co Monaghan, Ireland

Phone: +353 42 969 2946

Fax: +353 42 969 2947

C3, Calling Card Company

1 Mill Street

GB-London SE1 2DE, England

Phone: +44 207 232 4949

www.cardsville.com

70 ADDRESSES TELE2 ANNUAL REPORT 2003

AddressesTele2 ABSkeppsbron 18P. O. Box 2094SE-103 13 Stockholm, SwedenPhone: +46 8 5620 0060Fax: +46 8 5620 0040www.tele2.com

Investor Relations:Shared Value30 St James’ SquareGB-SW1Y 4JH, London, EnglandPhone: +44 20 7321 5010Fax: +44 20 7321 5020

NORDIC SOUTHERN EUROPE

Germany

Tele2 Telecom Services GmbH

In der Steele 39a,

DE-40599 Düsseldorf, Germany

Phone: +49 211 7400 4600

Fax: +49 211 7400 4611

www.tele2.de

Austria


Services GmbH

Schönbrunnerstr. 213-215, 4tr

AT-1120 Wien, Austria

Phone: +43 181 101 300

Fax: +43 181 101 100

www.tele2.at

Poland

Tele2 Polska

ul. Marynarska 21

PL-02-674 Warzawa, Poland

Phone: +48 (22) 607 06 50

Fax: +48 (22) 607 06 51

www.tele2.pl

Czech Republic

Tele2 s. r. o.

Vinohradská 184, Praha 3,

CZ-130 00, Czech Republic

Phone: +420 267 13 22 38

Fax: +420 274 77 82 40

www.tele2.cz

Estonia

Tele2 Eesti AS

Jöe 2a,

EE-10151 Tallinn, Estonia

Phone: +372 6866 866

Fax: +372 6866 877

www.tele2.ee

Latvia

SIA Tele2

Kurzemes Prospectus 13

Riga LV-1067, Latvia

Phone: +371 706 00 69

Fax: +371 709 01 76

www.tele2.lv

Lithuania

UAB Tele2

Sporto g. 7a

LT-20 51 Vilnius, Lithuania

Phone: +370 2 366 300

Fax: +370 2 366 301

www.tele2.lt

Russia

Tele2 Russia Telecom

B. Gnezdnikovsky Per.,1str.2, 7 tr

RU-103 009, Moskva, Russia

Phone: +7 095 797 21 61

Fax: +7 095 797 21 62

www.tele2.ru

The Netherlands

Tele2 Nederland B.V.

Ellermanstraat 19

NL-1099BX Amsterdam,

Netherlands

Phone: +31 207 020 202

Fax: +31 207 020 222

www.tele2.nl

Luxembourg

Tele2 Luxemburg

75 route de Longwy,

LU-8080 Bertrange, Luxembourg

Phone: +352 27 750 101

Fax: +352 27 750 250

www.tele2.lu

Tango S.A.

177, rue de Luxembourg,


Phone: +352 27 777 101

Fax: +352 27 777 888

www.tango.lu

Liechtenstein

Tele2 AG

75 route de Longwy,


Phone: +352 27 750 101

Fax: +352 27 750 250

www.tele2.li

Belgium

Tele2 Belgium S.A.

Chausse de Wavre 1945

B-1160 Brussel, Belgium

Phone: +322 213 02 01

Fax: +322 502 82 49

www.tele2.be

3C Communications S.A.

75 route de Longwy


Phone: +352 27 750 101

Fax: +352 27 750 250

www.ccc.lu

X-Source AB (UNI2)

Västertorpsvägen 135

SE-129 44 Hägersten, Sweden

Phone: +46 8 5222 3500

Fax: +46 8 5222 3552

www.uni2.com

ProcureITright, PIR

Linnégatan 89 E

P. O. Box 24 142

SE-104 51 Stockholm, Sweden

Phone: +46 8 783 13 00

Fax: +46 8 783 13 01

www.procureitright.com

CENTRAL EUROPEBALTICAND RUSSIA BENELUX SERVICES

TELE2 ANNUAL REPORT 2003 ADDRESSES 71

72 ANNUAL GENERAL MEETING TELE2 ANNUAL REPORT 2003

2004 Annual General Meeting Time and placeThe Annual General Meeting will be held on Wednesday, May 12, 2004, at 1.30 p.m. (CET) at Brasserie by the Sea, Tullhus 2, Skeppsbron, Stockholm. The doors will open at 12.30 p.m. and registration will take place until 1.30 p.m., when the doors will close.

Who is entitled to participate?Shareholders who wish to participate in the Annual General Meeting shall– have entered in the register of shareholders maintained by VPC AB (the Swedish Securities Register Center) on Friday, April 30, 2004 – notify the Company of their intention of participating by no later than Thursday, May 6, 2004, at 1.00 p.m. (CET)

How do I become recorded in the register of shareholders?In the VPC register of shareholders, shares may be recorded in the name of the shareholder or the name of the nominee. Shareholders whose shares are registered in the names of nominees must temporarily re-register the shares in their own name in order to be entitled to participate in the Meeting. In order to be entered in the register of shareholders by Friday, April 30, 2004, shareholders must request temporary re-registration a sufficient number of working days before this date.

How do I notify the Company?The Company may be notified as follows:– on the Company’s website, www.tele2.com– by telephone +46 (0)433-747 56– in writing to the Company to the following address: Tele2 AB, P.O. Box 2094, SE-103 13 Stockholm, Sweden. Please mark the envelope “AGM”

When notifying the Company, the following information should be provided:– Name– Personal identification number (or company registration number)– Address and telephone number– Shareholdings– Any advisors attendingShareholders who wish to be represented by a representive shall submit a written power of attorney given authorisation to a specific person together with the notice of participation.

The notification must be received by the Company no later than Thursday, May 6, 2004, at 1.00 p.m. (CET)

Tele2 in brief Tele2 is Europe’s leading and profitable

alternative telecom operator. With our unique

values, we provide cheap and simple telecom

for all Europeans every day. We currently

have over 22 million customers in 23

countries. We offer products and services

in fixed and mobile telephony, Internet

access, data networks, cable TV and content

services. Our main competitors are the former

government monopolies. Tele2 was founded

in 1993 by Jan Stenbeck and has been listed

on Stockholmsbörsen since 1996. The share

has also been listed on Nasdaq since 1997.

In 2003 we had an operating revenue of

SEK 36,911 million and reported a profit of

SEK 5,710 million (EBITDA). Tele2 always

strives to offer the market’s best prices.

2003. President’s message, page 2

You just have to know this about Tele2, page 6

Tele2 has an important mission, page 4

Good growth in Tele2’s markets, page 21

CONTENTS TELE2 ANNUAL REPORT 2003

Contents

2 President’s message: Profitability and growth, with satisfied customers at the top of the agenda

4 Mission and values: Tele2 has an important mission6 Our working method: You just have to know this about Tele28 Products and services: What Tele2 offers

9 Board of Directors10 Senior executives

12 The Tele2 share

14 New market organization: New organization for growth in Europe16 Market: Nicely aligned with the customers’ needs18 Competition policies: Everyone wins with more competition

20 The right quality: The customer’s wellbeing – our reward21 Tele2 on each market: Good growth in Tele2’s markets22 Market area Nordic: Cross-selling with Nordic focus 24 Market area Southern Europe: ADSL already a success in France 26 Market area Central Europe: Germany now profitable 28 Market area Baltic and Russia: Strong foothold in

fast-growing countries30 Market area Benelux: The successes continue 32 Market area Services: Growth in smart IT and telecom products

33 Tele2 and the community: Close cooperation34 Employees: Hungry for success

36 Accounts38 Report of the Board of Directors41 Income statement42 Balance sheet44 Cash flow statement45 Changes in shareholders’ equity 46 Notes 68 Audit report69 Definitions and Glossary 70 Addresses72 Annual General Meeting

Financial information

• Quarterly report, January–March April 21, 2004• Annual General Meeting May 12, 2004• Quarterly report, January–June August 2, 2004• Quarterly report, January–September October 20, 2004

Annual General Meeting

For more information about the Annual General Meeting, see page 72.

Tele2 in brief Tele2 is Europe’s leading and profitable alternative telecom operator. With our unique values, we provide cheap and simple telecom for all Europeans every day. We have over 22 million customers in 23 countries. We offer products and services in fixed and mobile telephony, Internet access, data networks, cable TV and content services. Our main competitors are the former government monopolies. Tele2 was founded in 1993 by Jan Stenbeck and has been listed on Stockholmsbörsen since 1996. The share has also been listed on Nasdaq since 1997. In 2003 we had an operating revenue of SEK 36,911 million and reported a profit of SEK 5,710 million (EBITDA). Tele2 always strives to offer the market’s best prices.

Best year ever. Still hungry...

Annual Report 2003

...HATE FAT CATS!

Tele2 was launched in the United Kingdom in 2003, much to the

delight of our customers. But the historical supplier, British Telecom,

did not appear to be joining in the celebrations. So Bill Butler,

Head of Tele2’s UK operations, was kind enough to explain why he

and the British people prefer Tele2. Mail on Sunday, February 2004

www.tele2.com

PRO

DU

CTIO

N Narva PRINTED BY Sörmlands Grafiska Quebecor, Katrineholm

2004 PHOTO Håkan Flank and Getty Images

Tele2 Annual Report 2003. Best year ever. Still hungry...

Annual Report 2003

Investor Relations

Transcript of Annual Report 2003