Financial results for the first quarter of 2006

1
Financial results for the first quarter of 2006

• 31 March 2006

2
Financial results in brief
3
Financial history. Eesti Telekom Group

• Both sales and OPEX were up heavily.
• Main reasons for sales growth
• Acquisition of MicroLink in November 2005
• Good results of retail sales of equipment
• Strong sales of mobile services
• Continuously fast growth in IT services and
  Internet access areas.

4
Dynamics of sales

• All major areas, except fixed voice, contributed
  to sales growth

5
Financial history. Eesti Telekom Group

• Changes in sales structure have put some pressure
  on margins.
• Share of IT services is up
• Share of retail sales is up
• During Q1 2006, reorganisation of IT and datacom
  areas of Elion and MicroLink contributed to the
  OPEX growth and lower margins.

6
Financial results in brief. Investments and
depreciation

• During Q1 2006 Elion invested into its Digi TV
  mass-market product. The product was launched on
  April 17th.
• At the beginning of March 2006, Elion introduced
  a new IP-based network platform for multimedia
  services.
• EMT continues to expand the coverage of its EDGE
  and 3G networks.

7
Financial results in brief. Cash flow
As of 31 March 2006, Eesti Telekom Group had
1,950 mln EEK as cash, cash equivalents and short
term investments. The Group had interest bearing
liabilities for 6 mln EEK. Net gearing as of 31
March 2006 was -44.3
8
Headcount
9
Results by business segments
10
Financial history. Elion Group

• Strong sales and OPEX growth of the Elion Group
  results from consolidation of the MicroLink
  Group.
• With acquisition growth eliminated, sales growth
  would be 3 and OPEX growth 5

11
Financial history. Elion Group

• The major reason for lower margins of the Group
  is changing structure of sales.
• In case of Q1 2006, restructuring of some
  business areas had strong impact.

12
Fixed voice communications. Market shares

• Market shares by call minutes have been stable
• Elion has strengthened its position by service
  bundling and special offers.

13
Elion Group. Customers

• Starting with 2006, reporting of main lines has
  been replaced by reporting of active voice
  connections
• Active users of traditional fixed voice services
• Users of VoIP.
• Decline in number of active voice connections
  has slowed down during last two quarters.

14
Elion Group. Sales

• Strong sales growth continued in both IT
  services and retail sales area.
• Popularity of product bundles is growing. As a
  result, sales of separate products are down.
• Decline of domestic call revenue continued also
  in Q1 2006.

• In order to present better organic developments
  of sales, MicroLink Eesti sales have been
  consolidated also to Q1 2005 of the Elion Group.
• Incl. domestic and international interconnection.
• Incl. connection fees of product bundles.

15
Financial history. EMT Group

• Sales growth resulted from
• Higher number of customers
• Active use of new services (mobile data) by
  customers
• Higher use of traditional, voice services
• Growth of retail sales.
• OPEX growth resulted from
• Higher interconnection costs
• Higher costs of goods.

16
Financial history. EMT Group

• Growth of retail sales has put some pressure on
  mobile margins
• Cut of mobile termination rates from 1 July 2006
  (at the latest) shall have positive impact on
  mobile margins.

17
Mobile communications. Market shares

• Mobile penetration in Estonia has reached 107.
• EMT has maintained its 47 market share by number
  of active SIM-cards.

• In order to strengthen its position among young
  customers AS EMT bought 51 of Serenda Invest
  OÜon April 5 2006, which owns the Rate brand, and
  administers Estonias most popular Internet
  communications environmentRate.ee.
• Rate.ee, which was launched on May 1, 2002, is
  the largest social network in Estonia, which
  unites about 360,000 registered users. The main
  users of the site are 1525-year-old young
  people. There is an average of 130,000 visits per
  day made to Rate.ee per day and 350,000 separate
  visits per week. During 2005, Rate Solution OÜ
  earned revenues of 6.2 million kroons and a
  profit of 4.9 million kroons from services and
  advertisements on Rate.ee.

18
AS EMT. Customers and ARPU

• The number of AS EMT contractual clients
  continues to increase.
• The number of pre-paid cards was up on yearly
  bases. The decrease compared to December 2005 was
  caused by seasonal factors that influence the
  pre-paid card market.
• Decline in mARPU has slowed down to 2.6 (on
  yearly bases).

19
AS EMT. Sales

• AS EMT continues with stable revenue structure.
• There has been some decline in roaming and
  pre-paid revenue, compensated by higher revenues
  from domestic calls and data.

20
Share price

• 22 April 2005 Q1 2005 results released.
• 22 April 2005 Proposal for 2004 profit
  distribution
• 2 June 2005 Dividend list was closed
• 15 July 2005 Q2 2005 results released
• 21 October 2005 Q3 2005 results released
• 7 February 2006 2005 preliminary results
  released

21
Structure of Eesti Telekom Group
22
Main shareholders of AS Eesti Telekom