Elisa's Interim Report January–June 2014 ELISA INTERIM

ELISA INTERIM REPORT RELEASE 16 JULY 2014 AT 8:30 A.M.

Second quarter 2014

• Revenue amounted to EUR 384 million (390)
• EBITDA was EUR 127 million (122) and EBIT was EUR 73 million (69)
• Profit before tax was EUR 67 million (63)
• Earnings per share were EUR 0.35 (0.30)
• Cash flow after investments was EUR 64 million (-30, excluding PPO acquisition 54)

• Mobile ARPU was EUR 16.2 (15.8 in previous quarter)
• Mobile churn decreased to 15.7 per cent (17.2 in previous quarter)
• The number of Elisa’s mobile subscriptions decreased by 4,800 during the quarter mainly due to discontinuation of a service provider's operations in Elisa's network
• The number of fixed broadband subscriptions remained at the previous quarter's level
• Net debt / EBITDA was 2.1 (2.0 end 2013) and gearing 141 per cent (113 end 2013)

January – June 2014

• Revenue was EUR 766 million (751)
• EBITDA was EUR 253 million (231), EBIT EUR 145 million (128)
• Earnings per share grew to EUR 0.67 (0.56)
• Cash flow after investments was EUR 103 million (7, excluding acquisitions 95)

Key indicators:

Financial position and cash flow:

¹⁾ (interest-bearing debt – financial assets) / (four previous quarters’ EBITDA exclusive of non-recurring items)

²⁾ 2013 Cash flow after investments excluding acquisitions: Q2 EUR 54m and year-to-date EUR 95m

Additional information regarding the Key Performance Indicators is available at: www.elisa.com/investors (Elisa Operational Data.xls)

CEO Veli-Matti Mattila:

The widest 4G LTE coverage in Finland boosted Elisa's earnings

The uncertainty of the general economic situation continued without any significant changes. Our earnings increased year-on-year during the second quarter, whereas revenue fell slightly. The improvement of Elisa's earnings and competitiveness continued successfully. As an example, Elisa's 4G LTE network has the widest coverage in Finland according to an independent study conducted during the second quarter.

The use of mobile data services has increased by 78 per cent since last year among both consumers and corporate customers. The interest in fast 4G data connections has grown significantly, which has, in turn, had a positive impact on subscription-specific revenue. 4G already accounts for half of new sales of mobile broadband subscriptions. The mobile subscription base fell by 4,800 subscriptions during the second quarter. The dip was affected by the discontinuation of the operations of a service provider that operated in Elisa's network. The number of fixed broadband subscriptions remained at the previous quarter's level.

We introduced new services and content to consumers. The Elisa Perhe online service allows families to follow the movements of their children and to supervise the use of phones by children. For example, this smart phone application can tell you if the battery of a child's phone is charged. In Elisa Viihde, we engaged for the first time in content cooperation with regard to the sketch series Molton Klubi. A large amount of new Finnish content has been published on the Elisa Kirja service, further strengthening Elisa Kirja’s position as the leading publisher of Finnish e-books.

We launched the Elisa Pilvi Cloud service application store for small and medium-sized enterprises. It is hosted on a centralised location where you can safely experiment with, purchase and manage both applications and cloud services. The application store offers an excellent sales and marketing channel for smaller-scale application developers. We continued our cooperation with public administration across a range of projects that were designed to improve the productivity of the sector. Over the course of our joint studies, savings opportunities of almost EUR 1 billion were identified in the transaction services of municipalities and cities through the implementation of multi-channel customer service.

According the independent research company European Communications Engineering Oy, Elisa's 4G LTE network has the widest coverage in Finland. With 4G LTE connections, data transfer is smoother and even faster than on fixed broadband connections. According to a study conducted in the spring of 2014, the coverage of Elisa's LTE network is 30 – 50 per cent wider than that of other operators. We make an annual investment of approximately EUR 200 million in Finland. The largest single investment has been the rapid construction of the 4G LTE network that employs the new 800 MHz frequency across even sparsely populated areas. In addition, we are preparing for increasing amounts of data through the renewal of its core network.

We will continue our determined work to improve customer satisfaction and the productivity of our operations. Improving our productivity, developing new services for our customers and maintaining our strong investment ability create a solid foundation for competitive operations in the future.

Outlook and guidance for 2014

The macroeconomic environment in Finland is still expected to be weak in 2014. Competition in the Finnish telecommunications market also remains challenging.

Full year revenue is estimated to be at the same level or slightly higher than in 2013. Mobile data, ICT and new online services as well as completed acquisitions are expected to increase revenue. Full-year EBITDA, excluding non-recurring items, is anticipated to be at the same level as in 2013 or slightly higher. Full-year capital expenditure is expected to be a maximum of 12 per cent of revenue. Elisa’s financial position and liquidity are good.

Elisa is continuing its cost efficiency measures, for example by streamlining product portfolio and IT systems and operations. Additionally, Elisa is continuing to increase customer service and sales efficiency, as well as to reduce general administration costs.

Elisa's transformation into a provider of exciting, new and relevant services for its customers is continuing. Long-term growth and profitability improvement will derive from mobile data market growth, as well as new online and ICT services.

Disclosure procedure

Elisa is adopting the disclosure procedure enabled by the Standard 5.2b published by the Finnish Financial Supervision Authority. This is a summary of Elisa’s Q2 2014 Interim Report and the complete report is attached as a pdf-file to this release and is also available on our website at www.elisa.com/investors .

ELISA CORPORATION

Additional information:

Mr. Veli-Matti Mattila, CEO, tel. +358 10 262 2635
Mr. Jari Kinnunen, CFO, tel. +358 10 262 9510
Mr. Vesa Sahivirta, IR Director, tel. +358 10 262 3036

Distribution:

NASDAQ OMX Helsinki
Principal media
www.elisa.com