New regulation enabling Sweden’s digital agenda Brussels, Robert Liljeström April, 2014

Agenda 1. Sweden – Our situation and digital agenda 2. New regulation – EOI, only a first step 3. EOI – What does it mean in practice? 4. Implementation – Key success factors and risk April, 2014TeliaSonera Business Development1

Vi April, Swedish Digital Agenda: Best in the world in using the opportunities from the digitalization TeliaSonera Business Development

Challenging broadband target for a large country with small population SwedenGermany Population (million)981 Area (000 km 2 ) Population density (per km 2 ) Cities over 1M pop.1 (Stockholm)4 Distances North – South East – West 1574 km 499 km 876 km 640 km Other facts73% of area is forest, lakes and mountains April, 2014TeliaSonera Business Development3 Source: CIA world fact book; Wikipedia; visitsweden.se; travel-to-germany.net 40% of households to have 100Mbit/s by % of households to have 100Mbit/s by % of households to have 100Mbit/s by % of households to have 100Mbit/s by 2020

Fiber driving growth of 100Mbps+ access April, 2014TeliaSonera Business Development4 % of population

Agenda 1. Sweden – Our situation and digital agenda 2. New regulation – EOI, only a first step 3. EOI – What does it mean in practice? 4. Implementation – Key success factors and risk April, 2014TeliaSonera Business Development5

Necessary to create a regulatory situation that enables deployment of fiber in increasingly expensive areas April, 2014TeliaSonera Business Development6 Broadband target: From 53% today to 90% 2020 Cost to deploy FTTH /SDU Single dwelling units in Sweden Increasingly expensive areas to deploy Less expensive if optimal deployment applied

The regulatory challenge – From 1 access network (copper) to 200 local city networks (fiber) April, 2014TeliaSonera Business Development7 City Networks (owned by municipalities) Skanova (Part of TeliaSonera) IP-Only (private equity) Geographical coverage200 of 290 municipalities NationalPlans to become a national fiber provider % offering dark fiber % offering capacity > 95 % > 80% Yes NoYes Annual investments (fiber access network) billion SEK/year~1 billion SEK/yearPlans to invest 30 billion SEK in city networks Estimated market share fiber (access) 66%33% A new regulation needed to secure access to relevant bottlenecks

A new regulation is necessary to enable investments and secure freedom of choice April, Predictability and flexibility in pricing Replace price regulation with increased non- discrimination(EOI) 2. Reduced cost for rolling-out infrastructure New EU-directive. Secure access to civil infrastructure (electricity, water) 3. Access to relevant bottlenecks SMP is replaced with “Symmetric access regulation” Regulation enabling Investment in new infrastructure Freedom of choice for all consumers Regulation enabling Investment in new infrastructure Freedom of choice for all consumers EOI is only a first step TeliaSonera Business Development

Agenda 1. Sweden – Our situation and digital agenda 2. New regulation – EOI, only a first step 3. EOI – What does it mean in practice? 4. Implementation – Key success factors and risk April, 2014TeliaSonera Business Development9

What will be different with EOI? Same Product - Same quality - Same service(SLA) - Same contract Same Price - Same price list - Same discount scheme Same Information - Same interface for information Same process - Same order interface, - Same process from order to delivery Same delivery -Same delivery -Same suppliers Same billing - Invoice generated in the same system 10April, 2014TeliaSonera Business Development Same KPI´s that are measured in the same systems guarantee that EOI is working = Not implemented today

Significant need for IT and process changes, in particular for Telia SP April, 2014TeliaSonera Business Development11 TS-TelSims Current situation Wanted Position - EOI

Agenda 1. Sweden – Our situation and digital agenda 2. New regulation – EOI, only a first step 3. EOI – What does it mean in practice? 4. Implementation – Key success factors and risk April, 2014TeliaSonera Business Development12

Clear scope of implementation of EOI is crucial – Risk of regulatory uncertainty during several years Clear scope of requirements to fulfill the coming 3 years (Not only EOI directive) Definition of limitations of scope. What is outside the scope for the coming 3 years? Clear rules regarding when and how price regulation will be lifted An economic replicable test that fulfills its purpose (not a new LRIC-model) April, 2014TeliaSonera Business Development13

Wrap-up A new regulation is necessary to achieve digital agenda targets Assuming PTS decision 2014 EOI finalized within 3 years Clear scope of implementation of EOI is crucial – Risk of regulatory uncertainty during several years EOI is only the first step. Long-term view and goal not defined – e.g. symmetric regulation April, 2014TeliaSonera Business Development14

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