Tax dispute

In 2000, Tele2 acquired the outstanding majority of the listed company S.E.C. SA. The assets and liabilities of S.E.C. SA were, in connection with a restructuring in 2001, transferred to a new legal entity. At the time of the transfer an independent valuation was carried out. The valuation showed a decrease in the market value of the assets. As a result, Tele2 claimed a tax deduction for the realized loss of SEK 13.9 billion. The tax authorities did not agree and Tele2’s tax return was rejected in December, 2004. The decision was appealed to the County Administrative Court in 2005.

On January 27, 2009, the County Administrative Court declined Tele2’s claim for a tax deduction of SEK 13.9 billion corresponding to a tax effect, excluding interest, of SEK 3.9 billion related to the S.E.C. tax dispute, of which SEK 186 million has been expensed during 2009. The Court concluded that Tele2 had not proved that the loss should be considered real. Tele2’s opinion is that the prerequisites for a deduction have been fulfilled and the decision by the County Administrative Court has been appealed to the Administrative Court of Appeal during 2009. The Administrative Court of Appeal is expected to issue a ruling during the fall 2010. The interest is estimated to amount to SEK 630 (653) million at December 31, 2009.

Tele2 is of the opinion that the dispute will be settled in Tele2’s favour and has not provisioned any costs related to this. The dispute is however recognized as a contingent liability.