We don’t want to be something else. We want to be something more

Dear shareholders and TeliaSonera followers. The only thing we know for sure about the future is that it will be different from now and the past and that the rate of development is unlikely to slow down. Those looking back with nostalgia will be outrun by those who have their eyes on the horizon.

We at TeliaSonera witness daily how new players and services challenge our previous core products, whose margins are shrinking. To continue to hang on to a shrinking source of revenues is not an option for us, as we want to be an attractive alternative for customers, employees and shareholders. Growth requires new thinking, courage and a will to change.

We don’t want to be something else. We want to be something more. TeliaSonera has only just set out on the journey to become a new generation telco. In short, this means utilizing the strength of our networks and existing services for expanding and deepening our customer offering through innovation and cooperation.

Our business customers will have a closer relationship with us, when their systems and processes are integrated with ours. Consumers expect to have access to a buzzing ecosystem of world-leading services and new pioneering solutions - that can come - directly from us.

Today, we already have a great variety of communication platforms, and the customers can easily test and switch to new technologies and services. We must have a keen ear to understand what the customers want in the future, but we must also provide services they do not even know they need.

We have every possibility of succeeding in the expansion, and we have already seen how innovative companies of all sizes turn to us for cooperation. During the past year, we have been able to introduce new solutions for various things, from audio books to connected cars. Our cooperation with Spotify has been so rewarding that we decided to deepen the relationship and become owners.

Improved competitiveness

TeliaSonera’s transformation is not just about adding but also about removing. We must review our efficiency. Old technology and old systems require lots of resources and cannot provide modern and future-proof services for our customers. We still have a lot of streamlining to do, but we aim for less manual work and lower costs, which will improve our customer experience and competitiveness.

The transition from old to new technology is very much customer driven. Every day we help our customers to switch from old to new services, and the demand for fiber connections is enormous. During the year, Telia Sweden connected 150,000 Swedish households, which means a new connection every three to four minutes, every day, around the clock.

The traffic in our networks is no longer characterized by calls and text messages. Today the traffic is dominated by TV and films, which set considerably higher requirements for the network capacity and the customer’s access. There is no sign that the pace will slow down. On the contrary, the number of connected devices is expected to explode. This will set high requirements for continued investments during the next few years.

Leaving region Eurasia responsibly

The Board of Directors’ decision to dispose the operations in region Eurasia will transform TeliaSonera. On the one hand, the margins in the region have been high, and historically the growth has been fast. On the other hand, it has been problematic in many ways to operate in the region. On some of the markets, we have unknown co-owners, and it is difficult to repatriate cash. This and other challenges in the region have required our attention and lots of resources. The decision to leave has given and will give us focus, strength and energy to develop our operations in the Nordic and Baltic countries, where 80 percent of our net sales comes from.

We have made progress in finding new owners for our operations in the region: we have, for example, been able to announce the sale of our subsidiary in Nepal. When we leave these markets and say goodbye to our good and competent employees, we must do it as carefully and responsibly as possible. We want to hand over well-managed operations with ambitious sustainability efforts and satisfied customers.

The past year

Thanks to great efforts from our employees during the year we are well on track to shape TeliaSonera for the future. A solid foundation is now in place and I am pleased that our core markets continued to improve in the fourth quarter at the same time as we started to execute our decision to reduce our presence in Eurasia. Following the decision, region Eurasia is now reported as discontinued operations and results have also been impacted by non-cash write-downs.

Based on our good cash flow in the year and the solid financial position, the board proposes a maintained dividend of SEK 3.00 per share for the fiscal year 2015, which is in line with our stated ambition.

Optimism and belief in the future

I am convinced that part of the solution to the biggest social problems of our time can be found in digital technology and telecommunications. By using modern technology, we can provide good and cost-effective care for a growing and aging population. There is enormous potential in online education and teaching aids. Our services will be a central infrastructure for people, companies and societies for a long time to come.

In our corner of the world, we have a long tradition of innovation desire and development optimism. Likewise TeliaSonera has a proud history of breaking new ground and showing the way, and we will continue on this path.

A thank you to our shareholders large and small for believing in what we do.

 

Stockholm, March 10, 2016

Johan Dennelind

President and CEO

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© TeliaSonera 2015
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