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BEGINNING OF A NEW ROAD

BEGINNING OF A NEW ROAD. TEO LT, AB CORPORATE PRESENTATION. HISTORY OF THE COMPANY. 1992-1997. 1998-2002. 2003-2005. 2006-. State-owned company. Re-branding. Privatisation and modernisation. Market liberalisation.

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BEGINNING OF A NEW ROAD

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  1. BEGINNING OF A NEW ROAD TEO LT, ABCORPORATE PRESENTATION

  2. HISTORY OF THE COMPANY 1992-1997 1998-2002 2003-2005 2006- State-owned company Re-branding Privatisation and modernisation Market liberalisation

  3. TEO LEADERSHIP IN LITHUANIA • No. 1 in fixed voice telephony • No. 1 in broadband internet • No. 1 in data communication and leased lines • No. 1 in Call Center services • No. 1 in the social partnership • Most liquid share on Vilnius stock exchange

  4. BUSINESS OF TEO VOX - voice services for residential customers ZEBRA - internet services for residential customers GALA – digital television services TEO VERSLAS - voice, internet, data communication and IT services for business customers

  5. TEO – PART OF TELIASONERA GROUP • TeliaSonera - largest operator in the Baltic region • Consolidated mobile and fixed business in Estonia and Lithuania • Consolidated mobile business in Latvia • Minority holding in fixed business in Latvia • Baltic countries: 10.4% of total TeliaSonera net sales (2005) • TEO: 2.3% of net sales and 3.3% of EBITDA (2005)

  6. TELIASONERA CUSTOMERS IN THE BALTICS • Estonia:- 677,000 mobile- 388,000 fixed voice- 121,000 datacom & broadband • Latvia:- 735,000 mobile- 624,000 fixed voice- 68,000 datacom & broadband • Lithuania:- 1,889,000 mobile- 798,000 fixed voice- 126,000 datacom & broadband

  7. TEO IS A PUBLIC COMPANY • Amber Teleholding A/S - subsidiary of TeliaSonera AB • State of Lithuania reduced its stake from 10.03% (2003) to below 2% by giving shares of the Company to the citizens of Lithuania as a compensation for realty redeemable by the State of Lithuania (realty seized during the Soviet times) • UAB Lintel, a member of TEO Group, holds the treasury stocks since IPO • More than 12 thousand shareholders

  8. TEO GROUP TEO LT, AB(voice, internet, wholesales, data communication, digital TV services; Internet portal Zebra) 100% UAB Lintel(directory inquiry 118, contact center services, treasury stocks) • In 2006, disposed construction business, UAB Comliet • Disposed UAB TietoEnator Consulting (26%) • Acquired remaining 40% in UAB Baltic Data Center • 100% stake in OOO Comliet-Kaliningrad (Kaliningrad Region, Russian Federation) • Dormant Baltic Data Center’s subsidiary in Latvia, Baltic Data Center SIA 100% UAB Baltic Data Center (IT infrastructure services) 100% UAB Voicecom (NMT-450 network) 100% UAB Kompetencijos Ugdymo Centras (training and consultancy) 100% VšĮ TEO Sportas (women’s basketball team TEO, fitness club ZEBRA SPORT)

  9. TELECOMMUNICATIONS MARKET IN LITHUANIA (H1 2006) • Total revenue: LTL 1,289 million (LTL 1,148 million in H1 2005) • Growth: 12.32% (y-o-y) • Penetration per 100 residents: fixed voice – 23.3 mobile voice – 130 internet – 42.1 broadband internet – 8.4 • Investments: LTL 214 million Source: Report of Communications Regulatory Authority

  10. TEO COMPETES IN ALL AREAS EXCEPT MOBILE VOICE • CATV market is very fragmented: 51 players, market revenue LTL 33 million (H1 2006), only 2 operators with market share above 10%. • Radio and TV program transmission is dominated by one player. Market revenue LTL 10 million (H1 2006). Source: Report of Communications Regulatory Authority

  11. VOX - VOICE TELEPHONY SERVICES • Number of main lines in service: -2.5% (y-o-y) • Disconnected lines mainly none revenue generating ones • Stable number of business customers lines: 175 thousand • Number of subscribed payment plans: 606 thousand • Total traffic: -2.3% • Number of alternative operators customers: 52 thousand (Q2 2006) • VoIP services launched in August.

  12. ZEBRA - INTERNET SERVICES • Number of broadband internet connections: +93.8% • 3 major internet payment plans: - Basic (up to 256 kbps during off-peak and weekend time for 26 LTL), - Optimum (up to 1 Mbps without limitations for 49 LTL),- Premium (up to 4 Mbps without limitations for 79 LTL). • More than 600 wireless internet (Wi-Fi) access points. Connection speed increased up to 4Mbps. 1,000 access points by end of 2006. • Number of dial-up internet access users: 16 thousand (30 thousand a year ago).

  13. NEW SERVICES • July 2006: TEO started transmission of digital terrestrial television (DVB-T) signals in Vilnius area • Licence for construction of 2 out of 4 national DVB-T networks for transmission of 10 TV programs per network • By 2012 DVB-T should completely substitute analogue terrestrial transmission of TV programs in Lithuania • September 2006: PC maintenance service for small and medium size companies

  14. GALA – NEW GENERATION TELEVISION • IP TV launched in October • Basic package - 38 TV programs • 4 additional packages: news, cinema, leisure and knowledge • Basic monthly fee – 35 LTL • Available for almost all TEO customers all over the country • Digital video and audio quality • Selection of broadcasting language • Internet and e-mail on TV screen • More IP TV functionalities in spring of 2007

  15. MAJOR FINANCIAL INDICATORS • In 2005:- revenue +1.5%- EBITDA +5.7%- EBITDA margin: 48.6%- net profit + 149.9%- investments: LTL 74 million • In H1 2006:- revenue +0.3%- EBITDA +4.2%- EBITDA margin: 51.1%- net profit +74.9%- investments: LTL 29 million Revenue, EBITDA and Net Profit (LTL million)

  16. REVENUE

  17. OPERATING EXPENSES AND EMPLOYEES

  18. BALANCE SHEET AND CASH FLOW(H1 2006) • Total assets: LTL 1,172 million • Cash and short term financial investments: LTL 268 million • Loan granted: LTL 100 million • Borrowings: LTL 12.4 million • Net debt is negative (LTL -255 million) • Gearing ratio: -24.5% • Equity to assets ratio: 9 to 10 • ROA: 6.5% • ROE: 6.0% • Paid-out dividends: LTL 124 million

  19. DIVIDEND PAYOUT • Dividend payout ratio for 2005 was also determined by decrease in retained earnings of parent Company by LTL 216 million due to changed subsidiaries accounting policy from equity method to accounting at acquisition cost

  20. MOST LIQUIDE SHARE ON VILNIUS STOCK EXCHANGE • Initial Public Offering (IPO) in June 2000 • Shares listed on Vilnius Stock Exchange (VSE ticker: TEO1L) • Global Depository Receipt (GDRs) program: 1 GDR = 10 shares • 12.16% of shares are represented by GDRs (30 June 2006). • GDRs are listed on London Stock Exchange (LSE ticker: TEOL). • Share price: - all times high: 3.19 LTL (June 2000) - all times low: 0.75 LTL (October 2002) Market Capitalisation of the Company at the end of period (LTL million)

  21. CORPORATE GOVERNANCE OF TEO Shareholders’ Meeting Audit Committee Board Remuneration Committee General Manager • AGM within 4 month after the end of the financial year • The Board consist of 7 members elected for a 2 years term • New Board was elected on 24 April 2006 • Audit and Remuneration Committees consist of 3 Board members each

  22. BOARD OF TEO Erik Hallberg, TeliaSonera AB Gintautas Žintelis, TEO LT, AB Morgan Ekberg, TeliaSonera AB Valdo Kalm, CEO of EMT, TeliaSonera Group Gert Tiivas, East Capital Asset Management AB Brita Hanberger, TeliaSonera AB Matti Hyyrynen, EBRD, Head of Vilnius and Riga office

  23. MANAGEMENT OF TEO Darius Gudačiauskas (born 1975), Chief Sales Officer and Deputy General Manager Nerijus Ivanauskas (born 1970), Chief Marketing Officer and Deputy General Manager Darius Didžgalvis (born 1969) Chief Operating Officer and Deputy General Manager Jan-Erik Elsérius (born 1943) Chief Financial Officer and Deputy General Manager Arūnas Šikšta (born 1968), General Manager (CEO)

  24. SOCIAL PARTNERSHIP • More than LTL 3 million annually spend for sponsorship and support of:- educational projects- local communities- cultural events- social projects- women basketball • “Swedish Business Awards 2006” • One of the most attractive employers

  25. THANK YOUFOR YOUR KIND ATTENTION ANY QUESTIONS? WWW.TEO.LT

  26. BEGINNING OF A NEW ROAD TEO LT, ABCORPORATE PRESENTATION

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