The financial results of the second quarter of 2005

1

• The financial results of the second quarter of
  2005
• 15 July 2005

2
Financial results in brief. Q2
3
Financial results in brief. HY1
4
Results by business segments
1) with The Eltel Group eliminated
5
Revenue history

• Fast growth of Internet, IT and data
  communications revenue
• Slowdown in growth of mobile revenue
• Low sales revenue of mobile handsets.

6
EBITDA history

• The EBITDA margin of fixed communications has
  improved
• Margin of mobile communications is strongly
  influenced by higher volumes of traffic between
  the networks.

7
Financial results in brief. Investments and
depreciation

• The Elion Group invested 6.3 million euros. The
  majority of investment has been in the
  development of broadband services.
• The EMT Group invested 2.4 million euros. The
  majority of investment was made in order to
  ensure the quality of technological
  infrastructure.

8
Financial results in brief. Cash flow
Dividends were paid out in June 2005. Despite
70.5 mln EUR dividend payment, the Group has
continuously strong financial position. Up to 6.4
mln EUR acquisition is planned to take place in
Q3 2005.
9
Dividends

• The AGM decided to pay dividends 0.51 EUR per
  share for year 2004.
• Dividends were paid out on 16th June 2005.
• The total amount of the dividend payment in 2005
  was 70.5 mln EUR.
• Tax on dividends in 2005 amounts to 22.3 mln
  EUR, which is lower by 2.2 mln EUR than in 2004
  due to lower income tax rate in Estonia (26/74 in
  2004 24/76 in 2005).

10
Headcount
11
Fixed voice communications. Market shares

• Active marketing by cable TV operators and other
  fixed service providers has caused some decrease
  in market shares of Elion.
• Elion has still dominant position in all major
  call categories.

12
Elion Group. Customers

• Some decline in the number of main lines has
  continued. Still, with bundled offers and free
  installation campaigns Elion has slowed down the
  process.
• Fast growth of the number of permanent Internet
  connections continues. Y-to-Y growth at end June
  2005 was 53.

13
Elion Group. Revenues
) 2004 with the Eltel Group eliminated

• Revenue growth from IT and data communications
  accelerated in Q2 2005.
• In Q2 2005, additional revenues from Internet,
  IT and data communications compensated decline in
  voice communications revenue.

14
Elion digital TV broadcasting

• In April 2005, Elion started to offer digital
  television services.
• Vision to reach half of Estonian homes with
  digital television by the year 2010.
• In 2005 main focus to new residential areas, in
  2006 digital TV broadcasting for ADSL customers.
• Different transmission technologies are tested
  FTTU (PON - Passive Optical Network), coaxial
  cable, CAT5, ADSL.
• Digital TV package includes now 40 digital TV
  channels, 14 analogue TV channels and 15 radio
  channels, customer can add up to 25 digital TV
  channels for extra fee.

15
Purchase of IT-provider Microlink

• In May 2005, Elion Enterprises announced its
  intention to purchase 95 of the shares of
  MicroLink AS, the leading Baltic IT services
  company. MicroLink Estonia AS will continue
  independently in Elion group, MicroLink
  operations in Latvia will be sold to Lattelekom
  SIA and MicroLink operations in Lithuania to
  Lietuvos Telekomas AB.
• The aim of the acquisition of MicroLink Estonia
  is to reinforce the market position of Elion and
  MicroLink in the Estonian IT market and to offer
  customers the broadest selection of IT services
  and integrated IT communications solutions.
• Transition of the shares will take place after
  approval of the Estonian, Latvian and Lithuanian
  Competition Boards. The value of the MicroLink
  Estonia is less than 6.4 million euros for Elion.

• MicroLink (www.microlink.com) is the largest
  Baltic IT services company whose business
  interests include system integration and
  infrastructure solutions software development
  ERP and business solutions data communications
  and networking central systems and datacentre
  solutions systems management and maintenance
  end-user PC services and support full IT
  outsourcing.

• The group has 553 employees and is present in
  all three Baltic countries. MicroLink's 2003/2004
  financial year net revenue was 52.4 million euros
  and net profit 22.4 million euros. MicroLink is
  the only Baltic IT company, whose business areas
  and technology solutions cover more than 90 of
  IT needs of modern private and public
  organizations.Transition of the shares will take
  place after approval of the Estonian, Latvian and
  Lithuanian Competition Boards. The value of the
  MicroLink Estonia is less than 100 million kroons
  (less than 6.4 million euros) for Elion.

16
Mobile communications. Market shares

• Number of active SIM-cards continues to grow.
• Mobile penetration in Estonia was 99 at end-June
  2005.
• EMT has maintained its 47 market share by number
  of active SIM-cards.

17
AS EMT. Customers and ARPU

• The mobile number portability requirement was
  implemented from 1st January 2005. As the result
  of the first six months, net movements of EMTs
  customers were positive.
• In order to remain competitive, EMT has launched
  new packages, corrected tariffs. Free call
  minutes and free handsets are offered for certain
  customer categories as a part of marketing tools.
• Still, ARPU in June 2005 was higher than in March
  2005.

18
AS EMT. Revenues

• Double-digit growth from domestic calls and
  roaming
• Some slowdown in growth rate of SMS-revenues
• Lower termination tariffs since March-April 2005
  have slowed down growth of IC revenues and
  expenses
• Continuous decline of monthly fees.

19
Share price developments

• 14 April 2004 TeliaSonera announced its cash
  offer.
• 14 April 2004 Proposal for 2003 profit
  distribution released.
• 15 April 2004 Q1 2004 results were released.
• 8 June 2004 Dividend list was fixed.
• 10 June 2004 The cash offer ended.
• 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 fixed.