The financial results of the three months of 2004

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The financial results of the three months of 2004

• 15 April 2004

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Macroeconomic developments in Estonia
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Estonian telecommunications market
Fixed voice )
Mobile
CityGSM )
Vertelson Haldus )
Data and Internet
Calbe TV)
) opened 01.01.01 ) Eesti Telekom not
allowe to enter ) have not started yet 1)
ICT market value 10-11mrd EEK
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Estonian telecommunications market
47
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Fixed voice
The market fully opened for competition on 1
January 2001.
On 1 January 2004, the operator pre-selection
requirement and the fixed phone number
portability requirement came into force.
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Mobile market
Estonia has had relatively high mobile
penetration, compared to average incomes, for
years. In 2003, growth in the total number of
mobile customers accelerated.
The mobile number portability can be started from
fall 2004 as the government has decided to amend
the present Telecommunications Law.
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Internet and data communications
Estonia (with 25) holds 4th position among the
EU Acceding and Candidate Countries by PC
penetration.
The number of secure Internet servers per mln
inhabitants in Estonia exceeds the EU 15 average
by 2.9 times and the ACC average by 3.8 times.
Estonian private individuals are the most active
users of eBanking.
Source eEurope 2003. Progress Report
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Structure of the Eesti Telekom Group
Republic of Estonia 27.23
Public investors 23.86
TeliaSonera 48.91
Eesti Telekom
Elion Enterprises 100
EMT 100
25 Sertifitseerimiskeskus 25
EMT Esindused 100
100 Elion Esindus
Mobile Wholesale 100
26 Voicecom
100 EsData 1)
Intergate 50

• Shareholding increased from 30 to 100 in
  December 2003.
• Acquired in July 2003
• Acquired in October 2003.
• Acquired in January 2004.
• A merger agreement signed between Connecto and
  Eltel Networks.

51 Connecto 5)
Eltel Networks 100 3)
100Connecto Latvia
Reveko Telekom 100 2)
100 Lidivos Technologijos 4) (Lithuania)
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Financial results in brief
ROA Net profit , expressed as a percentage of
average total assets ROE Pre-tax profit ,
expressed as a percentage of average equity
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Results by business segments
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Revenue history
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EBITDA history
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Cash flow
The Group generated strong positive cash flow.
Net gearing fell to 38.6
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Dividends
PROPOSAL FOR PROFIT DISTRIBUTION The net profit
of AS Eesti Telekom in 2003 was 66,209 thousand
euros in 2003. The companys distributable funds
totalled 146,394 thousand euros. The Management
Boards proposal is that the distributable funds
for 146,394 thousand euros should be allocated as
follows 1.  To allocate to the legal reserve 17
thousand euros. 2. The number of A-shares id
137,644,429. To distribute between shareholders
and to pay out to shareholders as dividends
70,376 thousand euros, i.e. 0.51 euros per
A-share. 3. The residual of retained earnings not
to distribute amounts to 76,002 thousand euros.
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CAPEX
Investments of the Q1 2004 were relatively high.
Almost half of the investments of Elion
Enterprises went into development of DSL network.
Majority of EMTs investments went into exchanges
and VAS platforms.
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Headcount
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Elion Group. Revenue and customers
Internet, IT and data communications revenues
formed 21 of the Elion Enterprises Q1 2004 total
revenues.
The number of Elions main lines per 100
inhabitants was 32.6 in March 2004.
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Elion Group. Market shares
Neither operator pre-selection nor number
portability have had any significant effect upon
the revenues or market shares of Elion
Enterprises AS.
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AS EMT. Revenue structure and customers
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A new brand POP!
In January 2004, AS EMT launched a new
children-oriented brand
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ID-ticket
ID Ticket On 1 March 2004, Tallinn started a new
electronic ticket system for public transport.
All three mobile operators participated in
development of the system as well as Elion
Enterprises, the fixed operator.
Mobile operators introduced a mobile payment sign
which pictures logos of the operators and number
1312. The sign marks out locations where mobile
payments can be made.
The ticket solution is the first practical
solution based on ID-cards.
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Share price developments. HEX Tallinn
In May 1999, the shareholders agreement between
the Republic of Estonia and TeliaSonera became
effective. The agreement provides that AS Eesti
Telekom shall be carried on in accordance with
certain business principles for the period of
validity of the agreement, one of them being
that All parties to the agreement agreed not to
acquire in excess of 49 of the issued shares of
AS Eesti Telekom. The shareholders agreement
expires on 15 May 2004, or on the date when the
Republic of Estonias holding of shares falls
bellow 10. The special share shall be converted
into an ordinary A-share on the expiry date and
all special right resulting from the special
share will come to an end. All limits on
shareholding by one party will also
expire. TeliaSonera has given a notice of
decision to make the cash offer.
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TeliaSoneras cash offer for Eesti Telekom

• TeliaSonera announced on 14 April 2004 its
  decision to make a public offer for all the
  issued shares in AS Eesti Telekom that it does
  not already own.
• TeliaSonera will offer EEK 111.30 in cash for
  each A-share.
• TeliaSonera expects that the dividends (8.00 EEK
  per A-share) will be paid out to the shareholders
  prior to the end of the acceptance period for the
  offer.
• The offer price together with the dividend
  represents a premium of 12.3 percent over the
  volume-weighted average Eesti Telekom share price
  during the last twelve months.
• The acceptance period for the offer begins on
  the date when the prospectus is published and
  will last for 42 days.
• The offer is conditional upon the offer being
  accepted to such an extent that TeliaSonera
  becomes the owner of not less than 85 percent of
  the total number of shares in Eesti Telekom. The
  offer is also conditional upon the approval of
  the Estonian Competition Board.
•  TeliaSonera will not increase the offer price.

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TeliaSonera a Nordic and Baltic communications
leader
Consolidated mobile subscribers Dec. 31, 2002
Consolidated fixed network access lines Dec. 31,
2002
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Takeover regulations

• If TeliaSonera raises its stake above 50 per
  cent, it must make a tender offer for the
  remaining shares. The purchase price shall be
  determined at the highest possible level based on
  the following criteria or combinations of
  thereof
• At least the weighted average price of the stock
  during the previous six months
• At least the highest price paid for the security
  by the offerer or persons acting in concert with
  the offerer during the previous six months
• At least the weighted average price paid for the
  security by the offerer or persons acting in
  concert with the offerer during the previous six
  months
• Should be no lower than 10 below the weighted
  average price of the security within the previous
  10 trading days.

Ownership structure of AS Eesti Telekom