Estonia

SEK million	2009	2008	Change
*) Including changed definition (see Note 5)
Number of customers (in thousand)*)	460	518	-11%
Net sales, external	1,009	1,059	-5%
EBITDA	292	345	-15%
EBIT	219	266	-18%

Key priorities in 2009

The economic downturn affected the operational performance of all telecom operators in Estonia. Tele2’s efforts during the year were focused on efficiency improvements and cost reduction measures in order to limit the effects of the recession. Tele2’s revenues proved more resilient than the overall market.

Tele2 Estonia continued to make significant investments in its mobile network in order to improve quality. Both industry regulators and Tele2’s own measurements confirm that these investments are paying off. Tele2’s network quality and coverage area are now on a par with, or even better, than the competition’s.

Another important objective during the year was to strengthen its market position in terms of revenue. These efforts were successful, and Tele2 gained market share in the consumer segment. Targeted campaigns, combined with improved network quality and clear price leadership have helped Tele2 achieve this result.

Increasing the market share in the Business-to-Business segment was also an important objective for 2009. Tele2 moved into the number two market position during the year, increasing its market share from 20 percent at the beginning of the year to 34 percent. As a result of the economic downturn, corporate customers and municipalities have become more price-sensitive. This fact greatly contributed to Tele2’s success. Customers’ quality perception of Tele2 also improved, driving increased sales.

Challenges to address in 2010

The macroeconomic situation is still fragile, and unemployment is expected to rise further in 2010. Customers have clearly become more price-sensitive. Tele2 needs to respond by offering more flexibility when it comes to packaging and product offers.

Tele2 Estonia will keep focusing on attracting residential customers by means of a distinct price leadership position, coupled with improved quality. At the same time, Tele2 will continue to develop its market share in the corporate segment. Tele2’s position is already relatively strong among small and medium enterprises (SMEs). Increasing the market share in the large corporate segment constitutes a significant opportunity.

Mobile internet is another major focus area. Tele2 will proceed with the roll-out of the 3G network, both in and outside of cities, in parallel with intensive marketing activities to drive sales.