Financial results of the third quarter

1
Financial results of the third quarter

• 21 October 2005

2
Financial results in brief. Q3
3
Financial results in brief. 9M
4
Financial history. Eesti Telekom Group(Excl.
Eltel Group in 2004)

• Revenue and OPEX growth slowed down in early
  2005.
• Still, in Q3 2005 revenue decline of Q2 turned
  into some growth again.
• Revenue growth of the last two quarters has
  exceeded OPEX growth of the respective periods.

5
Financial history. Eesti Telekom Group(Excl.
Eltel Group in 2004)

• EBITDA margin of the Eesti Telekom Group has been
  stable, some small improvement in 2005.
• Resulting from some stabilization in the mobile
  market, EBITDA of Q3 2005 showed some growth,
  compared to the same period in 2004.

6
Financial history. Eesti Telekom Group(Excl.
Eltel Group in 2004)

• Net profit of Q3 was up by 10.
• Net profit of 9M was up by 18.

• Lower depreciation has had strong positive impact
  on net profit.
• Tax on dividends was 34 mln EEK lower in 2005,
  compared to 2004.

7
Financial results in brief. Investments and
depreciation

• There has been some increase in CAPEX in 2005,
  compared to 2004.
• High CAPEX of Q3 of the EMT Group mainly results
  from relatively low investments in Q1 and Q2.
• High investments of the Elion Group are related
  to roll-out of DSL network and financing
  activities.

8
Financial results in brief. Cash flow
Dividends were paid out in June 2005. Despite
1,104 mln EEK dividend payment and 349 mln EEK
dividend tax, the Group has continuously strong
financial position. Up to 100 mln EEK acquisition
is planned to take place in Q4 2005.
9
Headcount
10
Results by business segments
1) with The Eltel Group eliminated
11
Financial history. Elion Group(Excl. Eltel Group
in 2004)

• Total revenue growth from the area is slightly
  negative.
• Strong decline in voice revenues continues
• Revenues from new business areas are almost
  compensating the decline.
• Lower mobile termination tariffs have had
  positive impact on Elions OPEX.

12
Financial history. Elion Group(Excl. Eltel Group
in 2004)

• EBITDA of the Group remained at the same level
  with Q3 2004.
• EBITDA margin in 2005 has been higher than in 2004

13
Fixed voice communications. Market shares

• Market shares by call minutes have been stable
• Elion has strengthened its position by service
  bundling and special offers
• Market shares of international call minutes are
  strongly related to ongoing campaigns

14
Elion Group. Customers

• Fast growth of the number of permanent Internet
  connections continues. Y-to-Y growth at end
  September 2005 was 50.
• The number of main lines fell over the summer
  despite several marketing activities of Elion,
  oriented on keeping customers.

15
Elion Group. Revenues
) 2004 with the Eltel Group eliminated

• Strong revenue growth from Internet continued
• Revenue growth from data communications and IT
  accelerated
• Revenue from voice connections were down
  strongly as a result of a summer discount
  campaign.

16
Financial history. EMT Group

• Both revenues and OPEX have been influenced by
  two important factors
• Continuous fast customer growth and lower
  end-user tariffs have boosted traffic between the
  mobile networks
• Mobile termination tariffs were cut in
  March-April 2005.

17
Financial history. EMT Group

• Positive developments on the revenue side
  together with very limited OPEX-growth resulted
  with 3.7 EBITDA growth.
• The Group has maintained its strong margins
  despite intensive price war in the area.

18
Mobile communications. Market shares

• Number of active SIM-cards continues to grow.
• Mobile penetration in Estonia has exceeded 100.
• EMT has maintained its 47 market share by number
  of active SIM-cards.

• No brand new clients any more everyone is
  buying over existing clients
• Operators are fighting with special offers and
  clients have more interest and flexibility to
  move from one operator to another in conditions
  of number portability
• Constant price war is reducing the turnover and
  increasing the churn
• Many clients follow the special offers and use 2
  or more SIM-cards constantly

19
AS EMT. Customers and ARPU

• Cumulative results of the mobile number
  portability is positive for AS EMT after nine
  months
• In Q3 2005 several positive developments took
  place in business segment
• AS EMT has a strong position in the discount
  segment
• mARPU is down by 10 on yearly bases. Still,
  there has been some slow down during the last
  quarters.

20
AS EMT. Revenues

• Call charges continue to grow despite
  tariff-cuts. Both number of customers and minutes
  per subscriber are up.
• Mobile data gave positive contribution into
  revenue growth
• Interconnection revenues are up despite lower
  than in 2004 termination tariffs
• Continuous decline of monthly fees.

21
Share price

• 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.
• 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