The financial results of the three months of 2005

22 April 2005
 Financial results in brief
Q1 2005 Q1 2004 Ch. % Q1 2004 Ch. %
Adjust.1)
 Revenue growth continued.
Total revenues, mEEK 1,220 1,217 0.2 1,184 3.0
 Strong growth in net profit.
EBITDA, mEEK 519 522 -0.4 522 -0.5
Margin, % 42.6 42.8 44.1
EBIT, mEEK 329 310 6.3 311 5.7
Margin, % 27.0 25.4 26.3
Net profit for the period, 344 319 7.9 321 7.3
1) Eltel Group eliminated
mEEK
2) ROA – net profit of the rolling 4 quarters as
CAPEX, mEEK 51 107 -51.9 105 -48.5 percentage of the average assets of the same
Net gearing, % -43.0 -38.5 period;
3) ROAe– pre-tax profit of the rolling 4 quarters
ROA2), % 22.4 28.8
as percentage of the average equity of the
ROE3), % 35.2 33.2 same period;

1,219.6 1,183.6 Q1 2005

Q1 2004 Adj.
mln EEK

519.5 522.2 468.1 417.0

329.3 311.4

-51.4 -105.2
Total revenue EBITDA EBIT CAPEX FCF = EBITDA -CAPEX

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Financial results in brief. Cash flow
Net debt, Q4 2004 -Q1 2005
mln EEK

51.4 0.0 11.8

-491.1
Cash position is traditionally strong
at end Q1, as AS Eesti Telekom pays
out dividends in Q2. -1,465.1

-1,893.0
Staring Inflow from CAPEX Dividends Other End value
value at operating at 31.03
The Group had 3.7 mln EEK interest 31.12 activities

bearing liabilities at end Q1 2005. Net gearing

Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05

-30.2% -29.7%
-34.0% -32.5% -32.8% -32.5%
-36.1%
-38.6%
-43.0%

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Results by business segments

Fixed network telecommunications Mobile telecommunications

mEEK
(the Elion Group) (the EMT Group)

Q1 05 Q1 04 % Q1 041) % Q1 05 Q1 04 %

Total revenue 624 651 -4.1 616 1.4 715 681 4.9

EBITDA 222 225 -1.5 225 -1.3 302 301 0.0

Margin 35.5 34.6 36.4 42.2 44.2

EBIT 119 99 21.0 99 20.3 214 216 -1.1

Net profit 129 101 27.7 99 29.7 216 220 -1.7

1) with The Eltel Group eliminated

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Revenue history
Eesti Telekom Group
Elion Group
5,200 2,700
5,100
2,650
5,000

12M rolling, mEEK

2,600

12M rolling, mEEK

4,900
4,800 2,550

4,700 2,500
4,600 2,450
4,500
2,400

604.2

631.0

651.3

665.7

682.6
660.4

679.1

677.9

624.4
4,400
1,186.1
1,105.7

1,241.1

1,259.8

1,217.5

1,287.1

1,323.4

1,310.3

1,219.6
2,350
4,300
Q1 2003 Q1 2004 Q1 2005
4,200
(excl. non-rec. items; incl. the Eltel Group)
Q1 2003 Q1 2004 Q1 2005
(excl. non-rec. items; incl. the Eltel Group)
EMT Group
3,100

 Q1 has traditionally low revenues (seasonal factors); 3,000

12M rolling, mEEK

2,900

 The impact of the sale of the Eltel Group on total 2,800

revenues of Q1 of the Elion Group and the Eesti Telekom 2,700

Group was ~37 mln EEK; 2,600

2,500
609.4

682.8

701.6

762.8

789.4

766.0

715.0
734.1

681.2
 Intense price war has affected revenue growth in the 2,400
mobile communications area. Q1 2003 Q1 2004 Q1 2005

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 EBITDA history

Elion Group
Eesti Telekom Group Quarterly EBITDA and EBITDA margin 40%
Quarterly EBITDA and EBITDA margin 2,150
2,140
35%

EBITDA margin,%
2,130

12M rolling, mEEK

2,120
30%
2,110
2,100
25%
2,090

229.9

220.5

184.2

225.2

211.1

221.1

203.8

221.8
231.3
2,080
20%
2,070 Q1 2003 Q1 2004 Q1 2005
521.5
539.8

562.7

566.2

448.8

551.8

562.4

486.6

519.5
2,060 (excl. non-rec. items; incl. the Eltel Group)
2,050
Q1 2003 Q1 2004 Q1 2005
EMT Group
(excl. non-rec. items; incl. the Eltel Group) Quarterly EBITDA and EBITDA margin 55%

50%

EBITDA margin,%
48.8%

45%
47.4%

45.6%

40%
42.9%
42.8%

42.6%
42.5%

35%

313.3

353.4

273.6

301.4

350.5

288.0

301.5
339.2

347.6
35.6%

37.1%

30%
Q1 2003 Q1 2004 Q1 2005

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Investments and depreciation
CAPEX Depreciation

256.8
 Low CAPEX is typical for the
228.4

221.3

220.5
214.9

215.2

211.8

204.6
first quarter:

201.9
198.2

190.2
178.3

The Elion Group invested 40

mln EEK

million kroons. The majority of

106.8

103.5
investment has been in the
85.1

84.1
development of broadband services.

51.4
43.2

 The EMT Group invested 12

Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 million kroons. The majority of that
12M rolling ratios
investment was made in order to
ensure the quality of technological
35%
infrastructure.
30% CAPEX / EBITDA
(excl. non-rec.)

25%

20%

15% CAPEX / Revenue

(excl. non-rec.)

10%

5%
Mar-04 Jun-04 Sep-04 Dec-04 Mar-05

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Headcount

No of customers per AS EMT employee

Mar-05 Dec-04
1,821 1,817
1,753
1,684
AS Eesti Telekom 7 7
1,669
Elion Enterprises AS 1274 1280
OÜ Viru Net 14 0
AS Elion Esindus 185 174
AS EMT 331 327
March 2004 June 2004 September 2004 December 2004 March 2005
EMT Esindused AS 138 138
No of main lines + Permanet Internet connections per AS Elion Ent. employee AS Mobile Wholesale 32 33
395
393 TOTAL 1980 1959
389
384
381

March 2004 June 2004 September 2004 December 2004 March 2005

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Fixed voice communications. Market shares

Market shares

Mar 2005 Dec 2004 Mar 2004

85 86 86 86 87 87
 The rapid fall in mobile phone rates
73 75 75
67 69 69
during the last six months has
encouraged the movement of call
minutes from the fixed-line network to
mobile networks.
33 31 31
27 25 25
 Elion has maintained its market
15 14 14 14 13 13
position among providers of fixed-line
voice communications.
Enterprises

Enterprises

Enterprises
Enterprises

Others

Others
Others

Others

Elion
Elion

Elion

Elion

All calls Domestic calls Calls to mobile International

networks calls

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Elion Group. Customers

Main lines
Main lines, change
Permanent Internet connections
Permanent Internet, change
During the last two quarters, the fall
502,912 503,708
in the number of main lines has
496,201 490,637 493,188

76,800 81,724
slowed considerably.
56,000 58,700 65,000

The stabilization of the number of

main lines and the increase in the

11,800
5,400

2,700

6,300

4,924
-2,076
number of permanent Internet
-4,460

-3,749

-4,128
connections have been supported by
-8,264

introduction of the Kodulahendus and

440201 431937 428,188 426,112 421,984
Ärilahendus packages.
March 2004 June 2004 September 2004 December 2004 March 2004

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Elion Group. Revenues

Q1 results

Domestic calls
10.8%
13.5% -18.5%
4.6% International calls
 Growth areas in Q1 were:
5.0% -7.2%
10.2%
9.3% Fix->mobile calls  Internet;
-7.6%
Voice connections
19.2% -3.7%
18.3%
 Data communications and IT;
2.5% Other voice comm.
2.6% -3.2%
15.6% Internet and dial-up  Network services; and
14.0%
12.9%
4.8%
5.1% Data comm. and IT  Retail sales of equipment.
7.0%
21.1%
7.3%
22.4% Network services  Decline in voice continued.
9.5% 21.4% 11.3% Other revenues

Q1 2004 616.3 mEEK Q1 2005 624.3 mEEK

*) Q1 2004 with the Eltel Group eliminated

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Elion digital TV broadcasting
Vision: to reach half of Estonian homes
with digital television by the year 2010.
In 2005 main focus to new residential areas,
in 2006 digital TV broadcasting for
ADSL customers.
Different transmission technologies are
tested – FTTU (PON - Passive Optical
Network), coaxial cable, CAT5, ADSL.
Digital TV package includes now 40 digital
TV channels, 14 analogue TV channels
and 15 radio channels, customer can add
up to 25 digital TV channels for extra
fee.

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Mobile number portability

 The mobile number portability

requirement was implemented from
1st January 2005
Bravocom
 Less than expected customers have used the
Tele2
opportunity – only 19,623 customers
EMT
changed operators in three month period
47%
(incl. Movement between fixed-line
operators).
 The number of new customers
Radiolinja
obtained by EMT has exceeded the
number of customers it has lost.

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 AS EMT. Customers and ARPU
Contractual Prepaid Contractual, Change Prepaid, Change

595,400 601,400
557,300
530,600 232,000
507,500 223,600
207,700
194,900

24,300
188,600
 Customer growth has
lowed down, compared to

16,800

14,400
13,900

13,800
12,800
the 2nd half of 2004.

12,300

3,800

6,300
 Attractive offers to
contractual customers have

-8,400
led to a reduction in the 318,900 335,700 349,600 363,400 377,800
number of pre-paid call March 2004 June 2004 September 2004 December 2004 March 2005
cards.
Monthly ARPU in EEK

391 393 378 356 341

March 2004 June 2004 September 2004 December 2004 March 2005

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 AS EMT. Revenues

Quarterly results
4.1% 4.3%  Double-digit growth from SMS and event
10% based data, and roaming services;

53.9% 56.2%  Tariff – cuts have slowed down growth

from local calls;
10%
 Lower termination tariffs since March-
April 2005 will slow down growth of IC
42.0%
revenues and expenses;
39.6%
0%
 Continuous decline of monthly fees.

Q1 2004 587.1 mEEK Q1 2005 620.9 mEEK

Other Call charges Data & SMS

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Ownership structure
Eesti riik
Avalikud investorid 27.17%
22.57%

As of 13 January 2005, Baltic Tele AB made an

offer to the shareholders of AS Eesti Telekom
to acquire all of the shares of AS Eesti Telekom
that did not belong to Baltic Tele AB, at the
offer price of 109.84 kroons per share.

Baltic Tele (TeliaSonera)

50.26%

The deadline for accepting the offer passed on 23 February 2005. As a result of the
offer, Baltic Tele AB’s holding in AS Eesti Telekom increased by 352,857 shares, and
as of 7 March 2005, Baltic Tele AB owned 69,330,171 shares in AS Eesti Telekom,
which represents 50.255814% of the total number of AS Eesti Telekom shares. No
other company in the TeliaSonera Group possesses any AS Eesti Telekom shares.

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee

 Share price developments
Average price (HEX), EEK

130.0
120.0
110.0
100.0

01-May-04

10-Feb-05
16-May-04
31-May-04
15-Jun-04
30-Jun-04
15-Jul-04
30-Jul-04

13-Oct-04
28-Oct-04
12-Nov-04

12-Dec-04
27-Dec-04
11-Jan-05
26-Jan-05

25-Feb-05
12-Mar-05
27-Mar-05
27-Nov-04
13-Sep-04
28-Sep-04
01-Apr-04
16-Apr-04

14-Aug-04
29-Aug-04

11-Apr-05
 14 April 2004 – TeliaSonera announced its cash offer.
 14 April 2004 – Proposal for 2003 profit distribution released.
 15 April 2004 – Q1 2004 results were released.
 8 June 2004 – Dividend list was fixed.
 10 June 2004 – The cash offer ended.
 14 July 2004 – Q2 2004 results were released.
 14 October 2004 – Q3 2004 results were released.
 23 December 2004 – TeliaSonera increased its holding over 50%.
 4 February 2005 – Preliminary results for 2004 released.

AS Eesti Telekom eMail / mailbox@telekom.ee URL / http://www.telekom.ee