Telenor to acquire Globul in Bulgaria Kjell-Morten Johnsen – EVP and Head of Telenor Europe, 29 April 2013

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Agenda ● Transaction highlights ● Investment case ● Market and business overview ● Telenor’s plan for Globul ● Summary

Transaction highlights ●

Telenor on 26 April 2013 agreed to acquire Globul and Germanos from OTE 

Globul: #2 mobile operator in Bulgaria



Germanos: Retail network integrated with Globul

●

Acquisition price EUR 717 million on a debt and cash free basis

●

Opportunity to leverage Telenor’s operational expertise in the CEE region

●

Consistent with value-driven and disciplined M&A strategy

●

Closing of transaction pending regulatory approval

European mobile transactions EV/LFY EBITDA

Orange Austria / Hutchison Feb-12

(1)

7.4x

Polkomtel / Solorz Jun11

6.5x

Orange Switz. / Apax Nov11

6.5x

SFR / Vivendi Apr-11

6.4x

Globul / Telenor Apr-13

5.8x

(2)

Average precedents 6.7x

___________________________ 1. Including potential earn-outs (6.9x pre earn-outs). 2. EV/EBITDA multiple based on broker consensus 2013e EBITDA of EUR 123 million, reflecting recent MTR cuts. The EV/2012 EBITDA multiple is 5.3x. 4

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Investment case

Strong market position  #2 with 36% subscriber market share  Similar scale to #1  Strong profitability with further upside potential

Regional cluster  Leverage track record in the comparable Serbian market  Building on Telenor’s CEE experience

Proven execution  Postpaid and B2B upside  Network swap and upgrade opportunity

Stable macro fundamentals  Low public debt to GDP  Currency pegged to Euro  10% corporate tax rate

Mobile data potential  Low mobile data usage  Low smartphone penetration

5

Good fit with existing Telenor operations in the region

Telenor Hungary

Telenor Serbia

Telenor Montenegro

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Bulgaria: Macro context • Low public debt as a % of GDP • EU member with currency pegged to EUR • However, typical challenges associated with a developing European market Regional context for 2012 Bulgaria

Serbia

Public debt as a % of GDP (2012) Hungary

Romania

0%

20%

40%

60%

80%

Population (m)

7.3

7.1

10.0

21.4

GDP per Capita ('000€)

5.4

4.2

9.8

6.2

Real GDP Growth (%)

0.8

(1.7)

(1.7)

0.3

Public Debt (GDP %)

15.4

60.6

79.1

33.3

C ZE

Current Account (GDP %)

(1.0)

(10.7)

0.3

(3.8)

TUR

Unemployment (%)

11.7

25.5

10.7

5.6

3.0

7.3

5.7

3.3

Credit Rating (S&P)

BBB

BB-

BB

BB+

Stable

Negative

Negative

Stable

54,3%

POL

46,2%

36,0%

33,3%

ROM

MAC

BUL

Outlook

60,6%

SER

CPI (%)

100%

79,1%

HUN

27,9%

15,4%

___________________________ Source: EIU, BMI. 7

Bulgarian mobile market overview • Three-player market, with Globul as a strong #2 • Challenging business case for a new nationwide network

Dec. 2012 operating metrics Mobile subscriptions (million) % postpaid Market share (total subs) ARPU (EUR/month)

5.6

4.5

2.5

69%

62%

22%

44%

36%

20%

5.9

6.0

n.a.

469

378

439

2012 Financial metrics (EURm) Revenue

(1)

(1)

EBITDA

207

135

179

% EBITDA margin

44%

36%

41%

% Operating cash flow margin (2)

30%

24%

17%

__________________________ Source: Company Filings, TheMobileWorld, WBIS. 1. Consolidated (fixed and mobile). 2. EBITDA less capex. 8

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Regulatory landscape Gobul’s spectrum holdings

●

Regulation driven by EU directives

●

MTRs already among the lowest in the EU following cuts in 2012-2013

●

Mobile number portability in effect since 2007

●

New 1800 MHz spectrum awarded to potential new entrants in December 2011 – however no launches yet

• • •

900 MHz: 2x11.2 MHz (Jan 2021) 1800 MHz: 2x10 MHz (Jan 2021) 2100 MHz: 2x10 MHz (April 2025)

MTR development (EUR cent) 25

National rate International rate

20 15 10 5 0 2009

2010

2011

2012

2013

9

Globul: Financial profile ● Healthy EBITDA margin, with further upside potential

Globul financials (1) EBITDA margin (EURm)

● Operating cash flow margin below Telenor’s regional subsidiaries

450

● Opportunity to leverage Telenor’s operational excellence in CEE

150

40%

422

38%

413

378

300 168

158

2011 Revenue

2012 EBITDA margins in Bulgaria

40 %

36 %

41 %

44 %

40 %

31 %

34 %

34 %

24 %

20 %

20 %

10 %

10 % 0% (2) Globul Vivacom ___________________________ Source: Company Filings, Broker Research. 1. Globul financials only, excluding Germanos. 2. Consolidated (fixed and mobile). 3. Excluding telecommunications taxes

2012 EBITDA

2012 OCF margin vs. Telenor CEE subsidiaries

30 %

30 %

135

0 2010

50 %

36%

0% Mtel

Globul

Telenor Serbia

Telenor Hungary (3)

Telenor Montenegro

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Telenor’s strategy for Globul ● Utilise Telenor’s expertise to revamp service offering and price plans ● Network swap and other network upgrades ● Utilise know-how and joint CEE initiatives ● Take advantage of the mobile data opportunity

Telenor will leverage expertise from Serbia •

•

Strong track record of execution in Serbia •

Revenue market share growth despite entrance of 3rd operator

•

Market leadership in postpaid and B2B

•

Operational excellence by leveraging best practices

•

Market-leading cost metrics and profitability

Telenor Serbia revenue market share 38%

40%

42%

42%

2009

2010

2011

2012

Telenor Serbia opex/sales

Clear opportunity to replicate successful strategy in the Bulgarian market

34% 28%

2009

2010

25%

25%

2011

2012

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Summary ● Acquiring Globul, a strong #2 mobile operator in Bulgaria ● Leveraging on Telenor scale and core strengths in the CEE region ● Consistent with value-driven and disciplined M&A strategy

Appendix

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Globul: Financial profile Globul financials (1) 2010

2011

2012

Revenue % growth

422

413 (2.1%)

378 (8.5%)

EBITDA % Margin

168 39.8%

158 38.3%

135 35.7%

Capex % of revenue

78 18.5%

62 15.0%

46 12.2%

Operating cash flow % of revenue

90 21.3%

96 23.2%

89 23.5%

EURm

___________________________ Source: Company Filings. 1. Globul financials only, excluding Germanos. 15

Globul: History Sep 2001

Aug 2005

Sep 2006

• Globul awarded

• Globul acquired

• Globul launches

2nd mobile licence

2001

by Cosmote from OTE

…

Nov 2005

• Vivacom (Vivatel) entered as #3 MNO

2006

Apr 2013

• Acquisition by

3G services

2007

2008

Apr 2007

• Cosmote acquires Germanos

Telenor announced

2009

…

2012

2013

Oct 2012

• Sale process launched by OTE

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