As filed with the Securities and Exchange Commission on June 27, 2003

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 20-F

|o                                            | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|-------------------------------------------- | ----------------------------------------------------------------------------------------------
|or                                          
|ý                                            | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934          
|For the fiscal year ended: December 31, 2002
|or                                          
|o                                            | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934      
|For the transition period from N/A to N/A   

Commission file number: 0-29080

|Tele2 AB(Exact name of Registrant as specified in its charter)                           
|-----------------------------------------------------------------------------------------
|SWEDEN(Jurisdiction of incorporation or organization)                                    
|Skeppsbron 18
Box 2094
S-103 13 Stockholm, Sweden(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

|Title of each class |  | Name of each exchange on which registered
|------------------- |  | -----------------------------------------
|None                |  | None                                     

Securities registered or to be registered pursuant to Section 12(g) of the Act.

|Title of each class                                                                              |  | Name of each exchange on which registered
|------------------------------------------------------------------------------------------------ |  | -----------------------------------------
|American Depository Shares, each representing one Series A Share (nominal value SEK 5 per share) |  | NASDAQ National Market                   
|American Depository Shares, each representing one Series B Share (nominal value SEK 5 per share) |  | NASDAQ National Market                   

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

|Title of each class |  | Name of each exchange on which registered
|------------------- |  | -----------------------------------------
|None                |  | None                                     

|Outstanding shares of each of the issuer's classes of capital or common stock as of December 31, 2002: |  | 21,689,804 Series A Shares
125,770,371 Series B Shares
|------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate
by check mark which financial statement item the registrant has elected to
follow. Item 17 o    Item 18 ý

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TABLE OF CONTENTS

|                                                |  |                                                             |  | Page
|----------------------------------------------- |  | ----------------------------------------------------------- |  | ----
|PRESENTATION OF FINANCIAL AND OTHER INFORMATION |  | 1                                                          
|FORWARD-LOOKING INFORMATION                     |  | 1                                                          
|Part I                                          |  |                                                             |  |     
|Item 1:                                         |  | Identity of Directors, Senior Management and Advisers       |  | 2   
|Item 2:                                         |  | Offer Statistics and Expected Timetable                     |  | 2   
|Item 3:                                         |  | Key Information                                             |  | 2   
|Item 4:                                         |  | Information on the Company                                  |  | 11  
|Item 5:                                         |  | Operating and Financial Review and Prospects                |  | 83  
|Item 6:                                         |  | Directors, Senior Management and Employees                  |  | 108 
|Item 7:                                         |  | Major Shareholders and Related Party Transactions           |  | 114 
|Item 8:                                         |  | Financial Information                                       |  | 117 
|Item 9:                                         |  | The Offer and Listing                                       |  | 119 
|Item 10:                                        |  | Additional Information                                      |  | 121 
|Item 11:                                        |  | Quantitative and Qualitative Disclosures About Market Risks |  | 130 
|Item 12:                                        |  | Description of Securities Other Than Equity Securities      |  | 131 
|Item 13:                                        |  | Defaults, Dividend Arrearages and Delinquencies             |  | 131 
|Item 14:                                        |  | Material Modifications To The Rights Of Security Holders    |  | 131 
|Item 15:                                        |  | Controls and Procedures                                     |  | 131 
|Item 16:                                        |  | Reserved                                                    |  | 132 
|Part II                                         |  |                                                             |  |     
|Item 17:                                        |  | Financial Statements                                        |  | 133 
|Item 18:                                        |  | Financial Statements                                        |  | 133 
|Item 19:                                        |  | Exhibits                                                    |  | 134 

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless the context otherwise requires, references herein to "we," "us," "our," "the Company," "Tele2" or the "Group" are to Tele2 AB and its consolidated
subsidiaries (collectively, the "Tele2 Group"), and references herein to "this Annual Report" are to our Annual Report on Form 20-F for the year ended December 31, 2002.

We
prepare our consolidated financial statements in conformity with the generally accepted accounting principles of Sweden, or Swedish GAAP, which is different in certain respects from
the generally accepted accounting principles of the United States, or U.S. GAAP. In this Annual Report, unless otherwise stated or the context otherwise requires, references to "kronor," "krona" or
"SEK" are to the lawful currency of Sweden, references to "U.S. dollars" or "$" are to the lawful currency of the United States, and references to "euro", "EUR" and "€" are to the
lawful currency of the EU member states participating in the third stage of European Economic and Monetary Union. Solely for your convenience, this Annual Report contains translations of certain SEK
amounts into dollars at specified rates. These translations should not be construed as representations that the SEK amounts actually represent such dollar amounts or that you could convert into
dollars at those rates. Unless otherwise stated, the translations of SEK into dollars have been made at the rate of $1.00 = SEK 8,6950, the rate derived from the noon buying rate in The City of
New York for cable transfers in SEK as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate") on December 31, 2002. See Item 3: "Key
InformationExchange Rate Information" for information regarding certain currency exchange rates and Item 11: "Quantitative and Qualitative Disclosures about Market RisksRisk
of Variations in Exchange Rates" for a discussion of the effects of fluctuations in currency exchange rates on the Company.

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FORWARD-LOOKING INFORMATION

This Annual Report includes certain forward-looking statements. All statements regarding our future financial condition, results of operations and business
strategy, plans and objectives are forward-looking. Statements containing words such as "believe," "plan," "intend," "estimate," "expect" and "anticipate" or similar expressions are also
forward-looking. Actual events or results may differ materially from those projected in such forward-looking statements as a result of various factors that may be beyond our control. These factors
include, without limitation, the effects on the Company of the intense competition existing in the markets in which we operate and in the markets we intend to enter, the impact on the Company of
government regulation, and risk of exchange rate fluctuations. You should also consider the information contained in Item 3: "Key InformationRisk Factors" and Item 5: "Operating and
Financial Review and Prospects," as well as the information contained in our periodic filings with the Securities and Exchange Commission (including our reports on Form 6-K), for
further discussion of the risks and uncertainties that may cause such differences to occur. We caution you not to place undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this document.

1

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PART I

Item 1: Identity of Directors, Senior Management and Advisers

This item is not applicable.

Item 2: Offer Statistics and Expected Timetable

This item is not applicable.

Item 3: Key Information

Selected Consolidated Historical Financial and Operating Data

The following tables set forth selected consolidated financial data for the periods indicated and are qualified by reference to, and should be read in conjunction
with, our consolidated financial statements and the accompanying notes thereto appearing elsewhere in this Annual Report (the "Consolidated Financial Statements") and Item 5: "Operating and Financial
Review and Prospects." The balance sheet data as of December 31, 2001 and 2002 and the income statement data for the years ended December 31, 2000, 2001 and 2002 set forth below have
been derived from our consolidated financial statements. The balance sheet data as of December 31, 1998, 1999 and 2000 and the income statement data for the years ended December 31, 1998
and 1999 have been derived from our audited consolidated
financial statements, which are not presented separately herein. Our consolidated financial statements have been prepared in accordance with Swedish GAAP, which, as described in Note 37 of the
Notes to the Consolidated Financial Statements, differs from U.S. GAAP in certain material respects.

During
1998, for business purposes and with no reportable disagreements with former accountants, we changed one of our accounting firms from Ernst & Young to
PricewaterhouseCoopers AB, authorized public accountants. Our consolidated financial statements for the periods ended December 31, 2002, 2001, 2000 and 1999 and as of December 31, 2002,
2001, 2000 and 1999 have been audited by representatives of PricewaterhouseCoopers AB, independent auditors.

2

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Consolidated Income Statement Data

|                                                      |  | Year ended December 31, |  
|----------------------------------------------------- |  | ----------------------- | -
|
|
|Amounts in accordance with Swedish GAAP               |  |                         |  
|Operating revenue(1)                                  |  | 5,918                   |  
|Operating profit/loss (EBIT)(2)                       |  | 506                     |  
|Share of profit/loss in associated companies(3)       |  | (10                     | )
|Profit/loss after financial items (EBT)(4)            |  | 219                     |  
|Profit/loss for the year(5)                           |  | 53                      |  
|Weighted average number of shares                     |  | 103,598,394             |  
|Earnings/loss per share/ADS SEK                       |  | 0.51                    |  
|Earnings/loss per share/ADS after full dilution SEK   |  | 0.51                    |  
|Amounts in accordance with U.S. GAAP                  |  |                         |  
|Profit/loss for the period                            |  | 149                     |  
|Earnings/loss per share/ADS (SEK)                     |  | 1.44                    |  
|Earnings/loss per share/ADS after full dilution (SEK) |  | 1.43                    |  

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3

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Consolidated Balance Sheet Data

|                                           |  | As of December 31,
|------------------------------------------ |  | ------------------
|
|
|Amounts in accordance with Swedish GAAP    |  |                   
|Fixed Assets:                              |  |                   
|Intangible Assets(1)                       |  | 1,360             
|Tangible assets                            |  | 5,613             
|Other long-term financial assets(1)        |  | 910               
|                                           |  |                   
|Total fixed assets                         |  | 7,883             
|Total current assets                       |  | 2,112             
|                                           |  |                   
|Total assets                               |  | 9,995             
|                                           |  |                   
|Shareholders' equity                       |  | 2,926             
|Minority interest                          |  | 1                 
|Provisions                                 |  | 102               
|Long-term liabilities                      |  | 4,802             
|Current liabilities                        |  | 2,164             
|                                           |  |                   
|Total shareholders' equity and liabilities |  | 9,995             
|                                           |  |                   
|Amounts in accordance with U.S. GAAP       |  |                   
|Total assets                               |  | 9,865             
|Total shareholders' equity                 |  | 2,802             

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Exchange Rate Information

This section contains translations of Swedish krona into U.S. dollars at specified rates. These are simply translations, and you should not expect that a krona
amount actually represents a stated U.S. dollar amount or that it could be converted into U.S. dollars at the rate suggested, or at any other rate. In particular, fluctuations in the exchange rate
between the krona and the U.S. dollar will affect, among other things, the U.S. dollar equivalent of the krona price of our ordinary shares on the Stockholm Exchange, which is likely to affect the
market price of, and amount of U.S. dollar dividends, if any, paid on our American Depositary Shares, or ADSs. Such fluctuations could also affect the U.S. dollar equivalent of the krona dividends, if
any, paid on our ordinary shares. Changes in the exchange rate between the krona and the U.S. dollar could affect our financial results and accordingly, our results on a consolidated basis. See Item
3: "Key InformationRisk Factors" and Item 11: "Quantitative and Qualitative Disclosures about Market Risk." These rates may differ from the actual rates used in the preparation of our
financial statements and other financial information appearing in this Annual Report.

The
table below sets forth the average of the year-end noon buying rates in New York City for cable transfers as certificated for customs purposes by the Federal Reserve Bank
of New York ("Noon

4

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Buying
Rates") for krona on the last full day of each full month during each of the last five years ending December 31, 2002:

Year ended December 31,

Kronor per U.S. dollar1998

7.96581999

8.30072000

9.22002001

10.45712002

9.6571


The
following tables set forth, for the previous six months, the high and low Noon Buying Rates expressed in kronor per $1.00.

Monthly rates

High

LowSEK

SEK2002December

9.0750

8.69502003January

8.7920

8.4750February

8.5650

8.4100March

8.7030

8.3650April

8.6425

8.1700May

8.1470

7.7479


On
June 20, 2003, the Noon Buying Rate for Swedish kronor was 7.8120 per $1.00. For additional information on exchange rates, see Note 22 of the Notes to the Consolidated
Financial Statements.

5

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Risk Factors

In addition to the other information contained in this Annual Report, investors in our securities should consider carefully the risks
described below. Our financial condition or results of operations could be materially adversely affected by any of these risks. The risks described below are not the only risks facing us. Additional
risks not currently known to us or risks that we currently regard as immaterial could also have a material adverse effect on our financial condition or results of operations.

The following discussion contains a number of forward-looking statements. Please refer to the "Forward-Looking Statements" discussion at the front of this Annual
Report for cautionary information.

Our operations are dependent upon interconnect agreements and transmission and leased lines.

Our
businesses are dependent upon access to networks not controlled by us, primarily networks controlled by current or former government-owned public telecommunications operators. Our
financial results are also significantly affected by the cost of transmission and leased lines. There can be no assurance that we will be able to maintain interconnect agreements on appropriate terms
to maintain and/or grow our business. As a result, there can be no assurance that we will be profitable or remain profitable in the future, especially if our companies remain in a growth phase longer
than currently expected.

Our projected financial results are subject to fluctuations in market conditions and factors that are difficult to predict.

Our
future ability to maintain positive cash flow and operating profits will be dependent upon a number of factors about which projections are difficult to make. This includes the
ability of our operating companies to attract and retain customers; maintain, control or improve usage levels per customer, tariff levels and the rate of churn; and the ability to control costs. In
addition, ongoing changes in our markets, including the current consolidation trend in a number of our European markets, may affect our results in the future. There can be no assurance, especially as
the number of our mobile customers increases, that average call volumes and average revenues per customer will remain at current levels or increase. The rapid growth of our prepaid services adds to
this uncertainty, as average revenue per user is significantly lower for prepaid customers than for contract customers, thus possibly lowering our overall average revenue per user, while increasing
the total customer base.

We anticipate significant future capital expenditures.

We
expect to incur significant costs related to expansion in the future. The GSM investments that we have undertaken in Russia in order to transfer our customer base from AMPS to GSM
technology will require significant capital expenditures. Our UMTS investments in Luxembourg will also require significant capital expenditures. There is a risk that these UMTS investments will not
deliver the same return we have historically experienced from our GSM investments. In particular, there is a risk that we may not be able to deliver data services that our current and future customers
are willing to pay for.

The success of our mobile telephony operations will depend on our ability to attract and retain customers.

Our
ability to attract and retain customersand thus the success of our mobile telephony operationsis subject to high penetration rates in some or our market
areas, and other external factors. Given these factors, as well as the relatively short history of these industries, it is difficult to predict our future penetration rate of mobile telephony services
for any of our companies.

The
growth of our mobile telephony customer base is increasingly vulnerable to market saturation and may be significantly lower than in past years. The market penetration rates in some
of the market areas in which we operate are among the highest in the world. This forces us to seek growth in direct competition with other providers. With the focus of competition shifting from
customer acquisition to customer retention and to increasing average revenues per user by stimulating demand for new

6

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products
and services, churn rates could rise as mobile network operators seek to acquire customers of other mobile network operators.

In
addition, the growth of our customer base in each of our markets may be affected by dealer commissions and related costs of attracting new customers, the prices of handsets, tariffs,
general customer usage patterns, the competitiveness of alternative services, the development of the mobile telecommunications market and general macroeconomic conditions, some of which are outside
our control.

Expected benefits from our acquisition of Tele2 Russia may not be realized.

Our
Russian subsidiary, Tele2 Russia, operates AMPS/D-AMPS (Advanced Mobile Phone System/Digital-Advanced Mobile Phone System) networks in all regions in Russia where we have
mobile operations. This technology is currently being complemented by GSM in Russia, which we expect to attract additional mobile telephony customers. We will have to make significant investments to
build out the GSM-networks under the twelve GSM 1800-licenses. To date we have launched GSM networks in two regions in Russia and plan to launch in another four regions during
2003, and the remaining regions during 2004. Failure to transfer our AMPS customer base to GSM technology could prevent us from phasing out the AMPS technology. Failure to phase out AMPS technology
could lead to increased costs related to operating two networks rather than one network, which in turn could have an adverse effect on results from our Russian operations.

We expect to encounter increasing competition, which could force us to lower prices and reduce margins.

Despite
recent consolidation in certain markets, the telecommunications markets in which we operate are generally characterized by a large number of competitors that may have
significantly greater financial, technical and marketing resources than us. Our operations in the Nordic market area face competition from TeliaSonera AB and Vodafone Group plc (in the mobile
telecommunications market) and from TeliaSonera AB, Telenor ASA, Song Networks AB and Glocalnet AB (in the fixed-line telephony market), among others. Our competitors in continental Europe
include local public telecommunications operators as well as new entrants, such as cable companies, that are able to leverage their existing networks.

In
order to continue to grow and become profitable, we must provide our customers with attractive pricing policies. However, sustained price competition could hinder our ability to
become profitable. In Germany, for example, Deutsche Telekom has in the past repeatedly lowered its prices in response to competition from alternative operators such as Tele2, and in The Netherlands,
Koninklijke PTT has lowered its prices for national and international calls. Other competitors in all of our markets have also made or announced significant reductions in their prices, and further
price reductions are likely. Recent trends in these markets have been toward consolidation and a number of competitors have been forced out of the market, but it is not yet clear what the effect will
be on price trends. If we are forced to lower our rates to the extent that we cannot cover our costs, our business, financial condition and results of operations will be adversely affected.

Our mobile telephony operations may be subject to spectrum capacity constraints.

Our
mobile telephony services business has experienced substantial growth since it commenced operations. The growth of our mobile telephony services businesses could, at least in densely
populated metropolitan areas, be restricted by capacity limitations in the local mobile telecommunications networks. One major constraint on the capacity of a mobile telecommunications system is the
amount of frequency spectrum it is allocated. The only other currently practical ways to increase capacity are cell-splitting, adding base stations to existing cells and utilizing
dual-band handsets to exploit our GSM 1800 network frequencies. The ability to increase capacity by continuing to split cells can be costly and subject to technological limitations. See
Item 4: "Information on the CompanyProducts and ServicesMobile TelephonyCapacity Limitations."

7

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The success of our fixed-line operations is dependent upon effective interconnections with other operators.

Our
ability to provide commercially viable telephony services depends in part on our ability to interconnect with the telecommunications networks of all other fixed and mobile operators.
We lease national and international circuits from network operators, usually the successors of the relevant state-owned public telecommunications operator, in certain countries in which we operate. We
depend on these network operators to provide interconnect services for the origination and termination of our public fixed-line and mobile telephony services. We have experienced
interconnection capacity shortages in the past, and we may be unable to obtain and maintain such interconnect services as rapidly as we would like and on competitive terms in each country in which we
intend to introduce or continue to offer our telephony services. Interconnect and transmission circuits provided by national public telecommunications operators and other network operators are often
subject to unanticipated price fluctuations and service restrictions or cancellations. We may also be subject to the constraints of the relevant network operator, which may be unable to provide all of
the capacity that we request. If we cannot obtain the capacity we require to adequately serve all of our existing customers, our services may suffer. As a result, we could lose our customers, and
consequently our reputation in the market could suffer. If we cannot obtain the capacity we require to connect all of our potential new customers, we may lose them to our competitors. All of these
factors could adversely affect our business, financial condition and results of operations.

Our operations could be interrupted.

Our
operations depend on our ability to protect our computer and telecommunications equipment and software systems against damage. Such damage could result from fire, power loss,
telecommunications interruption or failure, attacks by computer hackers, terrorists, war, natural disaster or similar events. Our data processing services are particularly sensitive to interruptions.

If
all or part of our systems become temporarily or permanently unavailable, our businesses could be adversely affected. Should such interruption occur, we might have to pay contractual
damages to clients or allow clients to terminate or renegotiate their contracts.

We may be unable to adapt to technological changes on a timely basis or may need to make substantial unbudgeted expenditures to do so.

Rapid
technological changes in communications and information technology are redefining the markets in which we operate and the products and services we offer. Our businesses depend
heavily on our computer and telecommunications equipment and software systems. If we fail to maintain and upgrade the quality of our technological capabilities or to respond effectively to
technological changes, our business, financial condition and results of operations could be adversely affected. Future success also depends heavily on our ability to enhance existing services and
introduce new services and products to respond to changing technological developments. We may not succeed in developing and marketing any new services or products. Furthermore, such new services or
products might not succeed commercially. Moreover, technologies or services developed by our competitors might render our products or services uncompetitive or obsolete.

Majority control of our company is concentrated.

As
of December 31, 2002, Invik & Co. AB ("Invik") owns, directly or indirectly, 9% of our outstanding share capital (but controls 30% of our voting rights),
Industriförvaltnings AB Kinnevik ("Kinnevik") owns, directly or indirectly, 21% of our outstanding share capital (but controls 26% of our voting rights), Emesco AB ("Emesco") owns,
directly or indirectly, 2% of our outstanding share capital (but controls 9% of our voting rights), Millicom International Cellular S.A. ("Millicom") owns, directly or indirectly, 7% of our
outstanding share capital (but controls 3% of our voting rights) and, lastly, the estate of Jan Stenbeck owns 1% of our outstanding share capital (but controls 3% of our voting rights). Collectively,
Invik, Kinnevik, Emesco, Millicom and the estate of Jan Stenbeck own

8

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shares
representing a majority of our voting rights and, consequently, acting together would be able to elect our entire board of directors and cast the majority of the votes with respect to virtually
all matters submitted to a vote of our shareholders. See Item 7: "Major Shareholders and Related Party TransactionsMajor Shareholders." Other holders of our shares may therefore have
limited influence over our management and affairs.

Mr. Stenbeck
was the chairman of the board of directors of Tele2, Invik, Kinnevik and Millicom until he passed away on August 19, 2002. The estate of Mr. Stenbeck is
currently in probate (or the equivalent proceedings under applicable local law) in both Luxembourg and Sweden. A Luxembourg notary is administering the estate (at the direction of the heirs) in
Luxembourg. A Swedish executor has also been appointed. The Luxembourg notary is currently in control of the estate's substantial direct or
indirect shareholdings in related parties Kinnevik, Invik and Millicom which are greater than those of any other shareholder. These shareholdings could, in the aggregate, be deemed under the U.S.
federal securities laws to constitute control of such companies. The distribution of Mr. Stenbeck's estate will most likely take more than a year to resolve. See Item 7: "Major Shareholders and
Related Party TransactionsMajor Shareholders."

Our historical financial results may not be indicative of future financial results.

Certain
of our operating companies have experienced rapid growth and development in a relatively short period of time. Given the speed and magnitude of our growth, we believe that
comparisons of changes in our financial condition and results between 1998 and 2002 may not be indicative of future financial results.

We have incurred substantial indebtedness.

To
finance the establishment and operation of our businesses, we have incurred substantial indebtedness in the form of loans from external lenders. As of December 31, 2002, the
net borrowing of the Tele2 Group was SEK 7,729 million and shareholder's equity was SEK 28,728 million. All of this indebtedness has been incurred directly by our companies.

Our
ability to borrow additional funds is limited in a number of respects by the terms of existing external debt obligations, including a syndicated EUR 1.2 billion senior secured
credit facility. We have at December 31, 2002 liquidity of SEK 2,332 million, of which unutilized overdraft facilities and unused credit lines amount to SEK 729 million. See Item
5: "Operating and Financial Review and ProspectsLiquidity and Capital ResourcesBorrowings."

We
may need to seek additional financing in order to finance growth in the longer term or if investments exceed currently expected levels, or in the event that operating profitability is
lower than expected. We may also need to seek additional financing in order to finance the expansion of our operations, including the Russian market and moves into other markets, or to pursue
opportunities relating to the joint provision of services by our divisions that require investments beyond those currently planned. We believe that we will continue to be able to access the capital
markets on terms and in amounts adequate to meet our financing needs. If such additional financing is not available when needed, however, our business, financial position and results of operations
could be adversely affected.

We are exposed to exchange rate risks, and exchange rate fluctuations may affect the market price of our ADSs.

We
are exposed to fluctuations in exchange rates. Although we maintain our books and report our results in Swedish kronor, we conduct a material portion of our operations through
subsidiaries outside Sweden. These subsidiaries accounted for approximately 67% of our consolidated revenues in 2002. The translation risks associated with currency fluctuations between the Swedish
kronor and the currencies in which these subsidiaries conduct operations may have an adverse effect on our financial

9

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condition
in the future. In addition, our SEK 10.8 billion five-year loan facility is partly denominated in Euro. The exchange rate difference that continually arises in translating
the loan liability is offset against the exchange rate differences that arise on the corresponding net investments in subsidiaries. No hedge is undertaken against other types of currency risk. See
Item 11: "Qualitative and Quantitative Disclosures about Market RiskRisk of Variations in Exchange Rates" and note 22 of the Notes to the Consolidated Financial Statements.

Fluctuations
in the exchange rate between the Swedish kronor and the dollar will affect the dollar equivalent of the kronor price of our shares traded on the Stockholm Exchange and, as a
result, could affect the price of the ADSs traded on NASDAQ. Such fluctuations will also affect the dollar amounts received by holders of ADSs on conversion of any cash dividends paid in kronor on our
shares represented by ADSs.

We are affected by fluctuations in variable interest rates.

Our
total loan liability that carried a variable rate of interest at December 31, 2002 was SEK 9,330 million. An increase in interest rates would cause us to incur
additional interest expense, adversely affecting our financial results. See Item 11: "Qualitative and Quantitative Disclosures about Market RiskRisk of Variations in Floating Interest
Rates" and Note 24 of the Notes to the Consolidated Financial Statements.

Additional regulatory restrictions and changes in the regulatory environment may negatively affect our business.

The
telecommunications markets in the countries in which we operate or intend to introduce our telephony services are subject to a significant degree of regulation. Like other
telecommunications service providers we face regulatory and market access barriers resulting from a variety of restrictive laws, policies and licensing requirements. We must obtain licenses from
regulatory authorities and enter into interconnect agreements with one or more telecommunications network operators in most of the countries in which we intend to introduce telephony services. Our
ability to continue to provide services depends on the ability to obtain and maintain such licenses and agreements. However, the regulatory regime in respect of EU Member States is developing toward
notification rather than licensing
requirements in accordance with the impending regulatory framework of the European Union. Nevertheless, EU Member States will be permitted to require individual licenses for communications activities
that consume scarce resources, i.e., for the use of radio frequencies and numbers.

Changes
in laws, regulations or governmental policy affecting our business activities and those of our competitors could adversely affect our results of operations. Discussions regarding
changes in the regulatory framework in each European Union member state continue to take place as the European Union liberalization process is progressing. Significant changes in the regulations
affecting our operations could have a material adverse effect on our results of operations. In particular such changes could affect our ability to interconnect, or the prices at which we obtain
interconnection, to the national public telecommunications operator in each of their markets. For example, Sweden's National Post and Telecommunications Agency, or NPTA, has annually introduced new
caps on interconnect rates for Telia Mobile. Industry periodicals indicate that the NPTA may force Sweden's other mobile telecommunications network operators to comply with similar caps. Such a
reduction or cap could have an adverse effect on our business. Moreover, in February 2002, NPTA designated Tele2 Sweden as an operator with Significant Market Power ("SMP") in (i) the
national market for interconnect and (ii) the national market for mobile telephony services. In June 2003, the Administrative Court in Stockholm ruled on appeal that Tele2 Sweden does
not have SMP status on the national market for interconnect. The NPTA may appeal this ruling. If Tele2 Sweden is found on this subsequent appeal to have SMP status on the national market for
interconnect, that decision could limit or otherwise affect the permissible scope of our operations. The court also ruled in June 2003 that Tele2 Sweden does have SMP status on the national
market for mobile telephony services. We do not expect this decision to have any material effect on our business.

10

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Other changes in regulation that could affect our business are, in particular, decisions by regulators about the grant, amendment, renewal or revocation of licenses to our entities. For
example, the NPTA announced in August 2000 that the rates that a non-SMP in the national market for interconnect mobile operator may charge cannot exceed the price that the majority
state owned mobile operator (i.e. Telia Mobile) may charge by more than 10%. We appealed this decision on several grounds. The Administrative Court in Stockholm ruled in favor of Tele2. This decision
has been appealed to the Administrative Court of Appeal. The appeals were submitted with motions to stay the effectiveness of the Administrative Court's judgment, which were denied by the
Administrative Court of Appeal.

Mobile telephone handsets may pose technological and health risks.

Media
reports have suggested that radio frequency emissions from wireless handsets and cell sites may raise various health concerns, including cancer, and may interfere with various
electronic medical devices, including hearing aids and pacemakers. Research and studies are ongoing. Whether or not such research or studies conclude there is a link between radio frequency emissions
and health, these concerns over radio frequency emissions may discourage the use of wireless handsets and may result in significant restrictions on the location and operation of cell sites, either or
both of which could have a material adverse effect on our results of operations.

Although
we are not aware of any current or threatened litigation relating to these health concerns in any of our market areas, lawsuits against several wireless service operators and
several wireless phone manufacturers relating to radio frequency transmissions to and from wireless handsets are pending in the United States. There can be no assurance that similar litigation will
not arise in our markets or that we will not be subject to such litigation in the future. In addition, we could be subject to additional legislation or adverse publicity relating to damage caused by
mobile telephones, including damages caused by persons using mobile telephones while driving.

Item 4: Information on the Company

History and Development of the Company

We are a public limited liability company incorporated under the laws of Sweden and subject to the Swedish Companies Act. We were incorporated under the legal and
commercial name NetCom Systems AB on November 19, 1990 with the Swedish Patent and Registration OfficeCompany Register under the registration number 556410-8917. We
changed our legal and commercial name to Tele2 AB from NetCom AB on February 16, 2001. Our principal offices are at Skeppsbron 18, S-103 13 Stockholm, Sweden, and our telephone
number is +46-8-562 000 60. Our agent in the United States is CT Corporation, 111 Eighth Avenue, New York, New York, 10011.

NetCom
Systems AB, our predecessor company, was formed to own and develop Industriförvaltnings AB Kinnevik group's telecommunications operations in the Nordic market area
following the deregulation of the Swedish fixed telephony market in 1993. We were demerged from Kinnevik when the shareholders of Kinnevik received a special dividend of Tele2 shares in
May 1996, and trading of our shares on the Stockholm Exchange commenced. We expanded our fixed telephony operations into Norway in 1995 and Denmark in 1996. In 1998, we expanded our operations
into the Baltic States, with the acquisition of Tele2 Eesti (formerly Ritabell) in Estonia, and in 1999, we acquired a 17.8% stake in Société Européenne de
Communication S.A. ("SEC"), with operations in continental Europe (The Netherlands, Germany, Switzerland, Austria, France, Italy, Luxembourg, Liechtenstein, the Czech Republic and Spain). In 2000, we
increased our stake in SEC to 99.7% and acquired Tele2 Latvia (formerly Baltkom). In 2001, we increased our interest in SEC to 100% and we expanded our operations into Russia with the acquisition of
Tele2 Russia Telecom BV (formerly Fora Telecom BV). Given the speed and magnitude of our growth since the launch of our primary services, comparisons of changes in financial condition and results
between 1999 and 2001 may not be indicative

11

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of
our future financial results. See "Acquisitions and Divestitures" and Item 7: "Major Shareholders and Related Party TransactionsRelated Party
TransactionsAcquisitions and Divestitures."

Business Overview

Tele2 AB, formed in 1993, is the leading alternative pan-European telecommunications company offering fixed and mobile telephony, as well as data
network and Internet services under the brands Tele2, Tango and Comviq to over 16.8 million customers in 22 countries. We also operate Datametrix, which specializes in systems integration; 3C
Communications, which operates Internet payment and credit card transactions, and public pay phones; Transac, which offers data processing of credit card transactions and billing; C3,
which is active in prepaid cards for fixed telephony; and Optimal Telecom, which offers households low price guarantees for fixed telephony services. We also offer cable television services and
jointly own the Internet portal Everyday.com with Modern Times Group MTG AB. Our shares are listed on theStockholmbörsen(Stockholm
Stock Exchange) under TEL2A and TEL2B and on the NASDAQ National Market under TLTOA and TLTOB.

Our
company is organized around six market areas:



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The
following table presents a breakdown of the primary services we provide in the market areas in which we operate, and the year of launch.

Market Area

Mobile

Fixed

Internet

Cable TVNordicSweden

1981

1993

1991

1986Norway

2000

1998

1997

Denmark

2000

1996

1997

Finland



2000

2001

Eastern Europe & RussiaEstonia

1998

1998



1998Latvia

1999





Lithuania

2000





Russia

1992





Poland



2003

2000

Czech Republic



2002

2000

Central EuropeGermany



1998



The Netherlands

2001

1997



Switzerland

2000

1998

2002

Austria

2003

1999



Ireland



(license)



Southern EuropeFrance



1999

2002

Italy



1999

2002

Spain



2001



Portugal



2003



LuxembourgLuxembourg

1998

1999

2000

Liechtenstein

2000

2000

2000

Belgium



2003






Additional
operations are Datametrix, X-Source, 3C Communications, Transac, Everyday, C3 and IntelliNet.

We
had total consolidated operating revenues of SEK 31,282 million in 2002, of which our Nordic market area represented 43% (SEK 13,566 million), Eastern Europe &
Russia 8% (SEK 2,320 million), Central Europe 18% (SEK 5,689 million), Southern Europe 26% (SEK 8,105 million), Luxembourg 2% (SEK 754 million) and Branded
products & services 3% (SEK 848 million). Broken down by the types of service we provide, fixed telephony & Internet represented 68% (SEK 22,385 million) of our total
consolidated operating revenues, mobile telephony 30% (SEK 9,857 million), cable television 1% (SEK 298 million), and data processing 1% (SEK 415 million). Our total consolidated
operating revenues decreased by SEK 1,673 million due to intra-group sales. In 2002, we had operating profit after depreciation and amortization of SEK 1,530 million and net profits of
SEK 223 million. For additional information on the results of our operations see Item 5: "Operating and Financial Review and Prospects" and Note 1 and Note 2 of the Notes to our
Consolidated Financial Statements.

The
following table presents a breakdown of our numbers of active customers by market area and by business area as of December 31, 2002 and 2001. We define active customers as
those customers

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who
have, during the last 90 days, generated revenue for us by making a call, receiving a call or being charged a fee.

As of December 31,

Net
Customer
Intake from
2001 to 2002

Net
Customer
Intake in
%2002

2001(in thousands)Market AreaNordic

6,252

6,274

(22
)
0Eastern Europe & Russia

1,574

996

578

58Central Europe

3,587

3,191

396

12Southern Europe

5,129

4,286

843

20Luxembourg

222

211

11

5Total

16,764

14,958

1,806

12Business AreaMobile Telephony

5,039

3,710

1,329

36of which prepaid

3,363

2,179

1,184

54Fixed Telephony & Internet

11,452

11,182

270

2Cable Television

273

66

207

314Total

16,764

14,958

1,806

12


As
of January 1, 2002, we changed the definition of active customers in Sweden and Denmark in order to make the definition uniform across the Group. As a result of this adjustment
and the effect of the merger with Optimal Telecom, the number of customers in Sweden for fixed telephony and Internet has been decreased in a one-off adjustment by 197,000, and the number
of mobile telephony customers has been increased by 80,000. In addition, the number of cable television customers was reported for the first time in 2002, which has resulted in an increase in active
customers of 189,000. In the case of Denmark, a one-off adjustment has been applied to fixed telephony and Internet during 2002 that resulted in a decrease in active customers by 461,000.
During 2001, the acquisition of Tele2 Russia and the Levicom Group caused our number of customers to increase by a total of 296,000. Net customer intake in 2002, before the above adjustments, amounted
to 15%.

Recent Acquisitions and Divestitures

Acquisition of Alpha Telecom (United Kingdom)

In February 2003, we acquired all the shares in Alpha Telecom for a net cash payment of SEK 700 million. The acquisition resulted in goodwill of SEK
695 million. Alpha Telecom is a United Kingdom service provider of prepaid fixed network telephony for individuals and cash cards for fixed telephony.

Acquisition of Tele2 Russia Telecom BV (Russia)

On November 30, 2001, we acquired all the shares in Tele2 Russia Telecom BV (formerly Fora Telecom BV), or "Tele2 Russia," from Millicom, a related party,
in exchange for newly issued shares of Tele2 AB corresponding to a value of SEK 849 million. The acquisition resulted in goodwill of SEK 86 million. Tele2 Russia has twelve mobile
telephony operations in Russia located in Belgorod, Chelyabinsk, Irkutsk, Kemerovo, Kursk, Moscow, Nizhny Novgorod, Omsk, Rostov, Smolensk, St. Petersburg, and the Republic of Udmurtia. See Item 7:
"Major Shareholders and Related Party TransactionsRelated Party TransactionsAcquisitions and Divestitures."

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Acquisition of OÜ Levicom BroadBand (the Baltic States)

During the first quarter of 1999 we acquired 19.9% of the capital of OÜ Levicom BroadBand, a cable television and broadband company with fixed
telephony operations in the Baltic States. In accordance with the shareholders' agreement, Levicom International Holdings B.V. exercised a put option requiring us to purchase from it all of the
outstanding shares of OÜ Levicom BroadBand. Effective December 31, 2001, we acquired the remaining shares of OÜ Levicom BroadBand for SEK 153 million in
cash and through the issue of two tranches of loan notes in an aggregate principal amount of SEK 134 million. The notes were paid in full in 2002. The acquisition resulted in goodwill of SEK
167 million. See Item 10: "Additional InformationMaterial Contracts."

Divestiture of Transcom Worldwide S.A.

In January 2001, we sold our 37.5% shareholding in Transcom Worldwide S.A., an associated company of SEC, which we acquired during 2000, to Kinnevik at a
value of SEK 235 million, resulting in a capital gain of SEK 91 million. The purchase price was based on the share price 60 trading days after Transcom was listed on the Stockholmsbörsen(Stockholm Exchange). See Item 7: "Major Shareholders and Related Party TransactionsRelated Party
TransactionsAcquisitions and Divestitures."

Acquisition of SEC (Continental Europe)

As of October 2, 2000, we acquired 81.9% of Société Europèenne de Communication S.A., or "SEC," thereby
increasing our ownership to 99.7% of SEC's total issued share capital. SEC's principal subsidiaries provide telephony services in Germany, The Netherlands, Switzerland, Austria, France, Italy,
Luxembourg and Liechtenstein. As of December 31, 2001, we own 100% of SEC as a result of a restructuring undertaken in November 2001 of SEC S.A. In connection with the restructuring, the
shareholders of the remaining 0.3% received compensation when the assets and liabilities were sold to another Tele2 company at market value, and SEC was subsequently liquidated. See Item 7: "Major
Shareholders and Related Party TransactionsRelated Party TransactionsAcquisitions and Divestitures."

Acquisition of SIA Tele2 (Latvia)

In October 2000, we acquired SIA Tele2 (formerly Baltkom GSM), now called Tele2 Latvia, for SEK 2,162 million. Tele2 Latvia is a mobile telephony
operator in Latvia that offers prepaid phone cards.

Divestiture of 4T Solutions (Sweden)

As of April 1, 2000, we divested 4T Solutions, a company active in the development of invoicing systems for telecom companies, to X-Source
Corporation in exchange for newly issued shares in X-Source Corporation equal to 11.88% of its share capital. X-Source Corporation is a global invoicing and telecommunications
consulting company. See Item 5: "Operating and Financial Review and ProspectsConsolidated Results of OperationsAcquisitions and Divestitures," Item 7: "Major Shareholders and
Related Party TransactionsRelated Party TransactionsAcquisitions and Divestitures."

Organizational Chart

The following organizational chart shows the structure of the Tele2 Group as of December 31, 2002. Our organizational structure includes certain
non-operating holding companies interposed between Tele2 AB and certain of its subsidiaries. These holding companies, along with other smaller

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operations
not material to our operations, have been omitted for purposes of showing the ownership structure of our operating subsidiaries.

100%
ownership if nothing else stated

GRAPHIC

The
following organizational chart shows the market structure of the Tele2 Group as of December 31, 2002. Holding companies and other smaller operations have been omitted for
purposes of showing the market structure of our operating subsidiaries.

100%
ownership if nothing else stated

GRAPHIC

Strategy

Our principal strategic objectives to date include:



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We
believe that our products and services can create synergies in that they can be more used effectively in several markets, creating conditions for higher profitability through
economies of scale and better resource utilization. We seek to integrate the services offered by our various businesses by exploiting the management, marketing and infrastructure synergies among them.
For example, we believe we have successfully marketed mobile telephony to our fixed-line client base in certain markets and will continue to market such combined solutions in other
markets.

We
believe that, as competition in the telecommunications sector increases, it will become more expensive for new operators to build their market shares and that our substantial customer
base, together with a high-quality infrastructure, will give us an advantage in maintaining leading positions in our chosen markets. We intend to develop and strengthen our position as a
leading alternative provider of pan-European telephony services as well as to expand our provision of services in the Baltic states, Poland and Russia.

We
have separate marketing and sales organizations that target the business market and the consumer market. We seek to offer each of these customer segments a full range of telephony
services, including fixed-line and mobile telephony, cable television, Internet services and broadband data communications services. We are also continually evaluating opportunities to
enhance or expand our telecommunications activities through joint ventures with strategic partners and also through targeted acquisitions.

We
avoid contracting and owning infrastructure when it is not necessary, in order to control costs. In countries in which we own infrastructure, we would not have been able to compete
with the former telecommunications monopoly without access to such proprietary infrastructure.

Products and Services

We offer mobile telephony, fixed telephony, Internet and data network services, cable television and content services in 22 countries in Europe. Every service is
not available in all of the countries in which we operate.

Mobile Telephony

Overview

We provide mobile telephony services through our own networks in Sweden, Estonia, Latvia, Lithuania, Russia, Luxembourg and Liechtenstein. In addition, in Denmark
and The Netherlands we provide these services as a mobile virtual network operator (a "MVNO") and in Switzerland and Norway we provide these services as a service provider. During 2002, we signed MVNO
agreements in Austria, where service was subsequently launched in February 2003, and in Norway. Tele2 has UMTS licenses in Sweden, Luxemburg, Liechtenstein, and Latvia. In addition to services
provided by our subsidiaries, we also own interests in Suomen Kolmegee OY, which owns a mobile telephony UMTS license in Finland.

Services

We provide a number of GSM mobile telephony services (including both GSM 900 and GSM 1800 coverage), as well as voice-mail,
call-forwarding, caller ID, call-waiting, mobile-terminated and mobile-originated short message services, three-way calling, facsimile services and data transfer.
We are able to

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transmit
data provided that the user has the appropriate interface between his or her mobile telephone and computer or fax machine. In 2002, we added a service whereby our Swedish mobile customers can
receive and make calls outside Sweden using a prepaid card.

We
charge customers for air-time, monthly access, service activation and custom calling features. Charges vary according to the type of subscription package purchased. Our
various subscription packages are designed to cater to the call patterns and volumes of different customer segments. Contracts are designed to permit a customer to switch among five different
subscription packages as his or her calling behavior changes. Customers may change their packages up to five times each year without incurring a charge. Our air-time tariffs vary according
to the type of subscription, time of day (peak and off-peak) and destination of call.

Roaming
agreements enable customers in one system to use their mobile telephones in another operator's system. We plan to enter into roaming agreements with additional GSM/Universal
Mobile Telecommunications Service (UMTS) operators as their systems develop to support roaming. The charges for terminating calls in each other's system are netted, and any balance owed to either
party is then paid. Currently, approximately 630 mobile telecommunications operators use or have a license/permission to use GSM/UMTS systems in approximately 190 countries. UMTS technology increases
capacity in mobile networks considerably compared with GSM, as the bandwidth is higher. Tele2 holds licenses to provide UMTS telephony for third generation telephony (3G) services in Sweden, Finland
(through ownership of Suomen Kolmegee Oy), Liechtenstein, Luxembourg and Latvia. In an effort to keep down costs of construction and operation of the UMTS network in Sweden, we and TeliaSonera have
established a jointly owned company, Svenska UMTS-nät AB. We curtail costs through this arrangement through the use of both companies' existing infrastructure, such as
telecom masts.

We
believe that third generation mobile telephony, 3G, will enhance access to personal information and entertainment by connecting mobile customers with mobile broadband services such as
e-mail, image services, games and content portals.

We
offer the IQ Direct service, a virtual private network service for businesses that allows fixed-line telecommunications direct access customers who are also mobile
telecommunications customers to make calls between the customer's fixed-line and
mobile telephones at advantageous prices. The IQ Direct program and the future growth of this business depend in large part on how many of our fixed-line telecommunications customers have
direct access to our fixed-line network. We expect that the number of such customers will grow in the future. See "Fixed-line Telephony and
InternetInfrastructure" and "Fixed-line Telephony and InternetServicesInternational and National Telephony Services."

We
also offer innovative services that combine mobile telecommunications and Internet technologies by taking advantage of synergies among our various businesses. One such service, IQ
E-Post, enables customers to send and receive Internet e-mail correspondence of up to 160 characters to and from their GSM phones without the need for any additional programs
or equipment. We also offer access to Internet services through mobile handsets using wireless application protocol, or WAP, technology, which streamlines Internet data for transmission over cellular
networks.

GPRS
(General Package Radio Service) was implemented to increase data speeds in GSM networks. GPRS also facilitates the transition from GSM to UMTS. We currently offer GPRS services in
several application areas, thus enabling users to send e-mail and surf the Internet, for example. GPRS allows for significantly faster data transmission speeds than previous technologies
and is expected to support speeds up to 115 kbit/s (GSM 9.6 kbit/s). It is also possible for users to be constantly connected to the GSM network, even when the users are not making calls. Instead of
paying for connection time, users pay for the amount of information that is sent.

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In
cases where deregulation in the telecommunications sector has been effective, new markets can be opened to service providers. Both Mobile Virtual Network Operators (MVNO) and Service
Providers (SP) have emerged as new business models that add to competition in the mobile telephone market. In both cases, the operator leases an existing network and thus avoids building a new mobile
network. The difference between MVNOs and SPs is a fundamental one. In the case of SPs, the operator becomes a vendor of another company's telephony, since it only handles outgoing traffic. MVNO, by
contrast, means simply that a mobile operator purchases radio access from an existing mobile operator, but is otherwise completely independent and can develop services, payment forms and direct
traffic as if it were a conventional mobile operator. A difference between a conventional operator and a real MVNO is that the MVNO has no control of geographic coverage build-out. In
countries in which Tele2 does not have a mobile license, the MVNO concept permits us to supply fixed telephony with a full range of services in subscription and prepaid calling cards for mobile
telephony. We operate as a MVNO in Denmark and the Netherlands. During 2002, we signed a MVNO agreement with Telenor in Norway and with Connect Austria in Austria, where service was subsequently
launched in February 2003. We expect MVNOs to expand in the immediate future since deregulation of the EU telecom market is gaining an impact and the mobile market is maturing. These
alternative models could provide major growth opportunities for our company, given our large customer base in many countries coupled with the fact that we do not have our own infrastructure.

Market Area Nordic

Sweden.Tele2 Sweden remains the principal market for our services despite our recent expansion in other market areas. Tele2
Sweden gained market share in all product areas in 2002. The strongest growth was in Comviq prepaid. Our total number of mobile telephony customers in Sweden grew to over 3 million as of
December 31, 2002, a 16% increase over our total number of telephony customers as of December 31, 2001. Of this total, 73% were prepaid customers. Sweden is also a key test market for
the development of new products and services, which we then, on a case-by-case basis, implement in other countries in which we operate.

We
market our mobile services in Sweden under the Comviq and Tele2 Mobile brands. Comviq addresses the consumer market, where its focus is to make services available to as many people as
possible at the lowest possible rates. At the close of the year, Comviq celebrated its 10th anniversary with a number of activities, which included presenting existing activities and new
customers with lower calling prices. Tele2 Mobile services the business segment. Both brands are positioned as price leaders in the market, and they enjoy 97% brand recognition in Sweden. There are
few providers of mobile telephony services in Sweden, with our principal competitors being Telia Mobile and Vodafone.

According
to telecommunications market publications, Sweden has one of the highest penetrations of mobile telephone services in the world. We believe, based in part on industry
estimates, the rapid growth of our mobile telephony services to date and the global trend in growth of the GSM market, that there is still potential for customer growth in Sweden. We anticipate,
however, that the future growth rate will be slower than the rapid growth we have experienced in the past.

In
2002, we created two customer areas in our Swedish market, Private Customers and Corporate Customers in order to better tailor our products to customer needs. Each of these customer
areas is responsible for services and packaging, as well as for reaching preset profitability targets. The primary results of this creation of two customer areas are more effective distribution as
well as a distinct and better targeted product offering.

In
December 2000, we received one of four third-generation cellular standard Universal Mobile Telecommunications Service, or UMTS, mobile network licenses offered in Sweden. On
March 15, 2001, we entered into a joint venture with TeliaSonera AB, which was not awarded a Swedish UMTS license, and its wholly-owned subsidiary Telia Mobile, to exploit our UMTS license. As
a result, we

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formed
UMTS nät Sweden as a jointly owned network company to implement the joint venture. We believe the joint venture with TeliaSonera is the most effective way to limit our costs in
building the necessary infrastructure and to generate a more rapid return on our invested capital. Both we and TeliaSonera can use our existing GSM networks as a base upon which to build the new
network, reducing both the need for new transmitting masts and the environmental impact of the build out. On September 19, 2002, UMTS nät Sweden entered into a term loan and
revolving credit facility of SEK 11 billion to finance the expansion of the UMTS network in Sweden. We and Telia Sonera each guarantee this loan facility up to the extent of our 50% interest in
UMTS nät Sweden, or SEK 5.5 billion. As of December 31, 2002, the amount outstanding under that guarantee was zero.

Norway.We have offered mobile telephony services in Norway through our wholly-owned subsidiary Tele2 Norway since 2000. In
addition, Tele2 Norway offers contract subscriptions for its mobile telephony services, and customers using Tele2 Norway's fixed-line services receive all Tele2 Norway charges on a single
bill.

Tele2
Norway increased its market share and strengthened its position in the mobile market in 2002, with revenue showing a stable increase during the year. Tele2 Norway successfully
recruited mobile customers from its existing customer base in fixed telephony. In September 2002, Tele2 Norway signed an MVNO agreement with Telenor. The agreement offers Tele2 Norway the
potential to transfer customers currently covered by the present Service Provider agreement to the more competitive MVNO service. We expect that this agreement will permit us to develop new,
price-leading services for our customers in Norway.

In
November 2000, we received a license to operate a UMTS network in Norway. The costs relating to developing a UMTS system depended heavily on license conditions, in particular
build-out requirements. In November, Tele2 Norway returned its UMTS license to the Norwegian authorities. Consequently, we no longer have any commitments or expenses linked to the
expansion of the UMTS network in Norway. See "Regulatory OverviewNorwayTele2 Norway's Licenses" and Item 5: "Operating and Financial Review and
ProspectsLiquidity and Capital ResourcesWorking Capital and Investments."

Denmark.In October 2000, Tele2 Denmark, our Danish subsidiary, launched the first MVNO through an agreement with
Sonofon A/S. The agreement allows us to offer mobile telephony services to our existing fixed-line customers in Denmark.

In
mobile telephony, 2002 was a year of consolidation, restructuring and reassessment of the market for Danish mobile operators. Prices in the private market declined and competition
continued to be strong. In addition, a number of companies have withdrawn from the market. Tele2 Denmark conducted measures aimed at raising profitability from mobile services, which led to a
reduction in costs for customer procurement and an increase in call volume per customer. In addition, during early 2002, Tele2 Denmark launched a subscription service, which reported rapid growth.

At
the end of the year, the Danish authorities presented new regulations that entail a reduction in interconnect charges in certain areas during 2003. We believe that this may allow for
better margins.

Finland.In March 1999, we acquired 20% of the shares and 15% of the voting rights in Suomen, a Finnish company,
making us Suomen's largest shareholder. In March 2002, we increased our shareholding in Suomen to 27%, and in June 2003 we increased our shareholding to 100%. Suomen has been granted one
of four Finnish UMTS licenses in Finland. In addition, on June 12, 2003, we announced that we signed an MVNO agreement with Radiolinja Origo, the number two GSM operator in Finland, with a
market share of 30%. The agreement will enable us to offer GSM mobile services in Finland without having to build our own infrastructure.

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Market Area Eastern Europe & Russia

We established a common network platform in the three Baltic countries in 2001. The common network makes significant long-term cost savings possible
and creates competitor advantages like flexibility and large-scale advantages when developing new services. Tele2 is growing rapidly in the Baltic states, with more than one million customers in total
as of December 31, 2002.

Estonia.We provide mobile telephony services under the Tele2 brand as a part of our wide range of product offerings in
Estonia. Tele2 is the most rapidly growing mobile telephone operator in Estonia and is now the second largest operator in the Estonian mobile market, with an estimated one-third of the
market. We target our mobile telephony services to small and medium sized companies and focus on sales growth for prepaid services in Estonia.

During
2002, we launched several supplementary services in Estonia. For example, beginning in 2002, we became the only mobile operator that currently offers pan-Baltic
roaming for prepaid customers, and we have introduced a uniform bill for customers who use both our fixed and mobile telephone services.

Latvia.We are the leading alternative operator in Latvia with GSM 900 and GSM 1800 licenses. The company was acquired in
October 2000 and has since then been growing rapidly, especially through prepaid calling card plans. We have built its leading position on price leadership, new innovative voice and SMS
services and superior distribution. Since the name and brand was changed in March 2001, we have 80% brand recognition in Latvia.

Tele2
leads the market for prepaid calling cards with its Zelta Zivtina, or "Gold Fish" card. Our subscription service remains the leading alternative mobile telephony provider to the
former monopoly. We also introduced a service in 2002 whereby both subscription and prepaid customers can call from anywhere in the Baltic states at the same rates as if they were in Latvia as well as
an initiative offering prepaid calling card customers a cash bonus credited to their card that can be applied to pay for calls. Customers in Latvia can also refill their prepaid calling cards directly
from their bank account, saving cost for Tele2.

Lithuania.UAB Tele2 holds a Lithuanian GSM 1800 license and a GSM 900 license. Since the acquisition of its GSM 900 license
in December 2000, UAB Tele2 has gradually upgraded its network to operate on the GSM 900 band. During 2002, the GSM network was expanded to cover approximately 90% of the population. Mobile
penetration in Lithuania grew from 29% to 44% from 2001 to 2002. One of the key factors driving customer growth and increased usage was the reduction in price during evenings and weekends. UAB2 Tele2
in Lithuania was also the first operator to launch pan-Baltic roaming for its prepaid calling card customers. We designed our product offerings for this market with lower fixed monthly
rates and a simpler price schedule as compared to the competition.

UAB
Tele2 has become a leading mobile service provider among private customers, and its mobile penetration rose sharply in 2002 and its customer base more than doubled. In the fourth
quarter of 2002, 71% of Lithuanians recognized the Tele2 brand. In 2002, UAB Tele2 launched its Joker subscription service, which offers a low monthly rate that is structured to be adjusted to equal
any lower price offered by a competitor. UAB Tele2 also launched a subscription plan that is aimed at small and medium-sized companies in 2002. We expect the mobile telephony market to continue to
grow in Lithuania.

Russia.We acquired Tele2 Russia from Millicom, a related party, in November 2001. Tele2 Russia's network reaches an
estimated 48 million people in Belgorod, Chelyabinsk, Irkutsk, Kemerovo, Kursk, Moscow, Nizhny Novgorod, Omsk, Rostov, Smolensk, St. Petersburg and the Republic of Udmurtia. It has a GMS1800
license covering ten of these jurisdictions. Thus, all companies have licenses for GSM1800, and operations in two of the regions in which we operate, Irkutsk and Rostov,

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were
launched in April and May 2003 respectively. The mobile market in Russia expanded by 125% in 2002.

In
November 2002, Tele2 Russia sold its share of the Moscow-based NMT450 operator MCC.

Our
subsidiary in Omsk was the first mobile operator to launch a Calling Party Pays ("CPP") service, whereby a person calling a mobile phone pays for the cost of the call. CPP is unusual
in Russia, which tends to be dominated by Mobile Party Pays ("MPP") services in which the owner of the mobile telephone pays for all incoming and outgoing calls. Offering a CPP service has proved to
be an attractive and effective means of competing in the Russian market. We have also launched a CPP service in Chelyabinsk. During 2003, we expect to continue our efforts to negotiate CPP service
agreements in other regions in Russia.

We
believe that prospects for the Russian economy in 2003 are positive. The mobile telephone market expanded by 125% in 2002 and we expect rapid growth to continue during the current
year. The customer segments now seeking to acquire mobile telephones in Russia are the middle class, middle management in companies and small business owners, which traditionally have been strong
customer groups for us.

Market Area Central Europe

Germany.In December 2001, we announced a MVNO agreement in Germany. Tele2 Germany and VIAG Interkom, a British
Telecom subsidiary, signed an agreement allowing us to use Interkom's wireless network to provide the interface for our fixed line customers. Tele2 Mobil will also offer the benefits of
"one-bill" and other bundled services.

The Netherlands.In August 2001, we launched the first MNVO in The Netherlands. We signed an agreement with Telfort, a
GSM operator in The Netherlands, which is wholly owned by British Telecom. The agreement enables us to offer mobile telephony services in the country in addition to our existing fixed line offering.
The MVNO agreement gives us our own exchanges and thus the capacity to handle incoming traffic unlike a service provider agreement. Further, as an MVNO, we will be able to develop our own products
such as prepaid and postpaid services and international roaming. During 2002, this operation expanded its customer base and focused on cross-selling mobile services to our substantial fixed line
customer base. We were the second largest alternative operator in the Dutch fixed telephony market in 2002. At the end of the year, 80% of the population recognized the Tele2 brand.

Austria.Tele2 launched a mobile telephony service under a MVNO agreement occurred in early 2003. Up to 85% of the Austrian
population is familiar with the Tele2 brand. A high proportion of pre-selection customers and a low churn indicate the level of customer satisfaction and loyalty. During 2002, we
introduced electronic-invoices and prepaid cards for international calls. We will
continue to focus on profitable growth in Austria while exploring new business potential such as MVNO agreements and other value-added services.

Switzerland.In 2000, we launched a GSM mobile telephony service in Switzerland. We have an agreement to lease wireless
capacity from Swisscom's network, giving the Tele2 Mobile network coverage of 98% of the country and providing Tele2's broader mobile customer base with roaming services in Switzerland. Tele2 Mobile
offers the use of prepaid cards. The card can be recharged either by entering a pin-code on the mobile handset or by calling help-lines operated by Transcom World Wide.

Market Area Luxembourg

Luxembourg.Through Tango, we are the bigger of the two providers of mobile telephony services in Luxembourg, with a share of
almost 50% of the active customers in the market. Tango holds a

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combined
GSM 900/GSM 1800 license and offers a wide range of mobile telephony services, including, in addition to cellular telephony, voice mail, call-forwarding, call waiting,
mobile-terminated and mobile-originated SMS and three-way calling. Traffic volume rose in 2002 by more than 40% in 2002 compared to 2001, mainly because of strong growth within prepaid
calling cards. Tango received a UMTS license in May 2002 and services in the new network were launched in April of 2003. Tango is now also marketed through Optimal Telecom in Sweden.

Liechtenstein.We have provided mobile telephony services in Liechtenstein since March 2000 under the Tango brand, and
are the single largest alternative operator in Liechtenstein. We hold a license for GSM and were awarded a UMTS license in 2002. We plan to offer UMTS services in the new network during the second
half of 2003.

Mobile Telephony Technology

GSM and other digital systems have effectively superseded analog systems as the predominant standard for cellular communications. Digital technology, and GSM in
particular, offers numerous advantages over earlier analog systems. Currently, approximately 630 mobile telecommunications operators use GSM systems in approximately 190 countries.

The
basic infrastructure of a GSM cellular network consists of a mobile services switching center (or exchange), base station controllers, radio base stations, repeaters and transmission
systems. The area serviced by a cellular telephone network is divided into a number of cells. A radio base station, containing a number of transmitters and receivers, is installed in each cell. Radio
base stations are connected to base station controllers that, in turn, are connected to a mobile services switching center. Switches control the routing of calls and allow cellular phone users to move
freely from cell to cell while continuing their calls. Mobile services switching centers are connected to other such centers in the same network and to other fixed or mobile telephone networks.
Transmissions between base stations, base station controllers and switches occur through digital fiber optic cables or radio microwave links.

GSM
systems use the frequency band from 870 MHz to 960 MHz. This frequency band is generally referred to as the 900 MHz spectrum. The widespread adoption of the GSM standard in Europe
and elsewhere facilitates international roaming that enables a customer to use the same mobile telephone throughout the countries that use the GSM standard. In addition, because digital system
equipment is now mass-produced and cheaper than analog system equipment, digital systems such as GSM can involve lower infrastructure costs per customer.

The
GSM 1800 standard is based on the GSM standard, except that it is implemented in a higher frequency band. The GSM 1800 system uses the frequency band from 1730 MHz to 1875 MHz, which
is generally referred to as the 1800 MHz spectrum. The higher frequency GSM 1800 signals generally do not travel as far as GSM signals. Therefore, more GSM 1800 base stations may be required in
certain areas to achieve the same level of coverage as the number of GSM base stations required in such area. Certain markets may use dual-band handsets that allow customers to obtain the
roaming advantages of the GSM system while enabling greater capacity efficiencies through GSM 1800 technology. Customers can, however, also use traditional single-band GSM handsets.

Infrastructure

Improved capacity is achieved through decreasing cell size or increasing the number of base stations per cell. Additional capital expenditures will continue to be
focused on improving coverage in more densely populated regions. To optimize infrastructure investment, we seek to cooperate with other operators by co-locating base stations where
possible.

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Cellular
telephone systems are interconnected with fixed-line telephone networks, allowing customers to receive and originate local, long-distance and
international calls from their cellular telephones. Cellular telephone system operators therefore require interconnection
with the local fixed-line telephone companies. We pay TeliaSonera, P&T Luxembourg and other operators directly for interconnection to their respective public telephone networks. Rates vary
according to the distance traveled on the public telephone network. See Item 4: "Information on the CompanyRegulatory Overview." We attempt to use our own fixed-line network
as much as possible to minimize interconnect costs.

Capacity Limitations

One major constraint on the capacity of a mobile telecommunications system is the amount of frequency allocated to the system operator. Frequency is limited, and
is shared both by the different operators providing a particular type of service and, for frequency bands, by other systems. Currently, one of the economically practical ways to increase a cellular
system's capacity (other than the procurement of additional frequency allocations) is through a process known as cell-splitting. Cell-splitting entails dividing a single cell
into a number of smaller cells through relatively simple technological modifications. This allows for better use of the allocated frequency, thereby increasing the number of calls that can be handled
in a given area. Another way to increase system capacity is to add base stations to existing cells. As cells become smaller, the investment per customer increases as the infrastructure required to
handle calls within smaller cells is more costly. The ability to increase capacity by continuing to split cells is limited beyond a minimum cell size because of cost and technological limitation
reasons, particularly in densely populated areas.

We
have applied these capacity enhancement techniques, and will continue to do so, in order to satisfy our capacity needs. However, based on the present allocation of frequency, existing
technologies and the current pattern of GSM customer growth rates, we could reach capacity limitations in certain markets in future years. For the same reasons, other GSM operators may experience
similar capacity limitations. We expect, however, that advances in capacity enhancement technologies and frequency related to our additional licenses should provide us with sufficient additional
capacity during the intervening years.

Suppliers

Siemens, Motorola and Ericsson supply most of the network infrastructure for our mobile telecommunications operations. We expect that these suppliers will
continue to supply our future network equipment needs. Like most cellular system operators, we obtain network equipment from a small number of suppliers. Our business relationships with suppliers are
stable and typically involve a high degree of cooperation with respect to our particular infrastructure needs.

Under
the Council Directive 93/38/EEC (EC Competitive Procurement Directive) we are required to solicit bids in order to procure equipment for our networks in the European Union. We
believe that we have complied to date with these tender requirements and intend to comply with such requirements in the future.

Marketing

We distribute our mobile telephony services through independent dealers and our own direct sales force. Our marketing strategy involves close cooperation with
dealers, particularly large consumer appliance and electronic goods retailers and telephone retailers, and a strong emphasis on advertising and sales campaigns. Our corporate sales efforts are aimed
at obtaining high volume business customers. We expect to continue increasing our corporate sales efforts over the next few years.

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We
have non-exclusive distribution contracts with dealers that serve our markets. We obtain at least 60% to 70% of our new mobile telephony customers from a limited number of
dealer chains. We offer dealers a commission for each new customer they obtain. We also offer "air-time based" customer support incentives to dealers, which consist of payments of a
portion of call revenues over a certain level made by customers obtained by the dealer. In order to enhance the dealers' ability to sell our services successfully, we offer special training programs
for our dealers' sales forces.

We
periodically conduct sales campaigns and offer special dealer incentives that typically give rise to significant increases in our mobile telephony services customer base. In addition,
we have used television advertising extensively to enhance brand-name recognition.

Competition

We face strong competition in the GSM market. We could in the future face competition from other cellular systems that are being developed, or from new entrants
to the market. Although we believe that our existing mobile telephony services customer base and network investments give us an advantage over any potential new entrant, there is no guarantee that an
operator with substantial resources could not establish itself as a competitor in the provision of mobile telephony services. Furthermore, in order for us to implement a full-scale GSM
1800 system, infrastructure investments would need to be made, at a potentially substantial cost over time.

Fixed-line Telephony and Internet

Overview

Through our subsidiaries, we provide a number of international and national public telephony services in Sweden, Norway, Denmark, Finland, Estonia, Poland, Czech
Republic, Austria, Germany, The Netherlands, Switzerland, France, Italy, Spain, Portugal, Belgium, Luxembourg and Liechtenstein. We have also received licenses to provide fixed-line
telephony services in Ireland, and intend to offer services there in the near future. We are also one of the two leading providers of Internet access services in Sweden, where we provide business
network services, primarily consisting of LAN-to-LAN interconnect services, data communication services and leased line services.

Services

Our fixed-line services can be divided into international and national telephony services, Internet and broadband services and business network
services.



We provide national long-distance telephony services, and direct and indirect access fixed-line telephony services.

Customers
with large telecommunications capacity needs are connected to our fixed-line network through "direct access." We have opened up direct access points to our network,
through radio links and local fiber optic cable loops, primarily in heavily populated areas, as well as in other areas with customers that account for telephone traffic volumes sufficient to enable us
to make a profit after factoring in set-up costs. See "Fixed-Line Telephony and Internet ServicesInfrastructure." We bear the cost of directly
connecting a customer to our network. In exchange for bearing this cost, we typically obtain from the customer a contract to use fixed-line telephony services for 12 to 24 months
with certain minimum usage requirements. Customers are also given an incentive to increase their use of our services for such period through call charge discounts that apply only if they generate
certain minimum traffic volumes.

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In
most cases, smaller customers connect to our fixed line telephony service by connecting through a local network operator, usually the (formerly state-owned) national public
telecommunications operator. If a Tele2 call is carried by a local network operator's network, we are required to pay the local network operator an interconnect fee. For indirect connections, a
customer usually selects our network by dialing our prefix or by having chosen us by carrier preselect. If preselection has been established, connection to our network occurs automatically each time
the customer makes a call.

Operating
revenue from outgoing international call traffic and from national long-distance fixed-line telephony services is derived from call charges. Tariffs are
usually set on the basis of a flat rate per second that varies according to the destination and time of a call in addition to a set-up charge. We charge customers for the actual time
elapsed during a call, which is measured to the nearest second and multiplied by the applicable tariff. In some countries, however, calls are subject to set-up fees or minimum charges, and
customers may be subject to charges for increments larger than a single second. We provide customers with itemized bills that identify, for each of the customer's telephone lines, the time, duration,
destination and cost of each telephone call.

International
telephone revenues also arise from amounts receivable from overseas telephony service providers in respect of return traffic carried on our network. Direct carrier
agreements permit interconnection between our network and the domestic network of the particular telephony service provider. Direct carrier agreements generally provide that we will receive for
delivery in our home market the same percentage of the total traffic to our home market from a particular overseas destination that we directly transmit to that destination.



We are one of the leading providers of access to Internet services in Scandinavia, where our Internet subscriptions have grown significantly in recent years. We
have also launched dial up Internet in France and Italy in 2002. We expect to launch a dial-up Internet service in additional countries during 2003. Our Internet product is continually
upgraded with new services. We provide dial-up Internet access to consumers and businesses. We also provide fixed broadband Internet access for our direct access customers and web hosting
that permits customers to establish businesses with their own web site. Dial-up customers purchase Internet subscriptions from us consisting of software, related literature and, sometimes,
a modem. Dial-up customers connect to the Internet through our server web sites by dialing into our modem pools. Permanent access customers consist of customers who are directly connected
to our network and lease Internet capacity from us at a fixed rate regardless of volume of use. We also lease capacity to other Internet services providers and carry large volumes of Internet signal
traffic, both to our server sites and as a transit carrier. Demand for Internet services has increased significantly in recent years, and we believe that we are well positioned to take advantage of
opportunities that may emerge from the growth of this sector.

Asymetric
Digital Subscriber Line ("ADSL") is a technology that permits the use of broadband speed Internet access via conventional telephone lines. We believe that ADSL
has commercial potential, especially since customers find the product easy to use relative to other Internet products, such as dial-up Internet. However, pricing by the former monopolies
presents an obstacle to future growth as the former monopolies can charge higher fees for access to their network, which we must use for ADSL connections. We are actively continuing efforts to find
solutions to this monopoly problem.

We
offer ADSL services in Sweden, Norway, Denmark and Switzerland. Our ADSL services have made an impact in the Nordic market and we have consolidated our position as the largest
Internet supplier in Scandinavia. We expect to introduce ADSL in additional countries in 2003.

Our
Internet products also include an Internet telephony service and special subscriptions for corporate customers to satisfy demand for solutions that provide a combination of fixed and
mobile telephony. We offer customers the ability to make and receive telephone calls while accessing the

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Internet
on the same line. We also offer VoIP, voice-over Internet protocol, or telephony via the Internet. During 2002, we conducted a number of successful tests using VoIP in broadband
networks.



Data communications services broadly consist of the linking of computers in order to facilitate access to, and the processing of, information. These linkages are
needed between computers within a company as well as between companies and external destinations. The dominant international standards for data communications are currently TCP/IP, and ISDN. We offer
access to the TCP/IP and standards through our "SWIPnet," and "Lan2Lan" brand services. SWIPnet, one of the largest TCP/IP network services in Sweden, is used for, among other things, communication
over the Internet through e-mail and other Internet services. Linkages for companies' geographically separate LAN networks are provided by our and Lan2Lan service.

We
provide a variety of digital lines for leasing and also resell some of the capacity leased from TeliaSonera and Banverket. Leased line service involves making a permanent
point-to-point communication for telephone and data traffic between two geographically separate points, and represents an alternative to public telephony and data networks. The
lines are directly connected private lines for the exclusive use of the customer and are leased at a fixed rate regardless of use. Customers for leased lines typically include businesses with a
significant demand for private telecommunications facilities, particularly banks, stockbrokers and multinational corporations, many of which have an international network of leased lines.



Broadband is a method for transferring data in the form of text, images and voice at very high speeds. Wireless broadband via WLL (Wireless Local Loop), which is
available through radio networks, is a way of circumventing the access network when broadband connections via the conventional network are impossible due to technical, regulatory or business reasons.
We offer wireless broadband via WLL in parts of Poland, Czech Republic, Finland, Norway, Sweden and Denmark.

Metropolitan Area Networks

Tele2 offers broadband Internet access at speeds of 10 Mbit/s in a number of MANs (metropolitan area networks) in Sweden and Denmark. In Sweden, the MAN is linked
to our wide-ranging network, Swipnet, which was the first commercial Internet Protocol (IP) network in Sweden. In Denmark, the MAN is linked to the country's largest network.

Market Area Nordic

Sweden.We estimate that Tele2 Sweden had approximately 14% of the international telephony market in Sweden as of
December 31, 2002. We estimate our international telephony market share based on the amount of return traffic we receive from other countries, which corresponds to the percentage of
international traffic from Sweden transmitted to these countries by us. Our Internet services business, in particular the Internet access service, has grown to account for a significant portion of our
revenues. We estimate, based on independent estimates of the total Swedish Internet market, that as of December 31, 2002, we had approximately 26% of the expanding market for the provision of
access to the Internet in Sweden.

In
the case of Internet customers in Sweden, our focus in 2002 was on ADSL, which was launched in June. Tele2 also launched Internet Protocol Virtual Private Networks
(IP-VPN) in 2002,a data network access product for the data network market. The launch marked a major sales success and we expect to
enhance the product portfolio in data networks during 2002. In February 2002, we offered our fixed telephony customers pre-selection for local calls. We are working towards
achieving a solution

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to
offer the line rental part of fixed telephony subscriptions, currently handled by the incumbent service provider, since this offers additional potential to reduce customer costs and enhance
customer loyalty.

Norway.Tele2 Norway strengthened its fixed telephony product offerings and sales rose in 2002, despite aggressive marketing
from old and new competitors. In September of 2001 we acquired the customer base of Enitel, Norway's third largest provider, and all private and many business customers moved to Tele2 Norway. A
variety of marketing programs have been implemented in Norway to assist in the continued growth, including free domestic calling and one-fee calling on weekends.

Although
the market for our dial-up Internet product continued to weaken in Norway in 2002, Tele2 Norway managed to increase its market share. Marketing campaigns and
cross-selling were successful in recruiting a substantial number of new customers. In August, Tele2 Norway launched its ADSL service for households, which offers customers access to the market's
lowest rates.

Denmark.The Danish telecom market is undergoing restructuring and consolidation. A number of players have withdrawn from the
market. We are continually seeking to maximize the resulting emerging opportunities. We focused on controlling growth and costs and we believe we are entering 2003 with good prospects in terms of
growth and earnings.

During
2002, Tele2 launched what could be viewed as an alternative to fixed price telephony, the Weekend+ service, which offers 24-hour free telephony each Sunday. The
service attracted considerable attention and appeals to the conservative, fixed telephony market. Two small operators with the corporate sector as their niche were acquired in July 2002,
Ventelo and Dicotel, which contributed to an increase in the customer base and revenue in the corporate segment.

In
the Internet area, Tele2 ASDL was launched in August 2002. The launch of such broadband Internet products has meant a reduction in dial-up traffic in the overall
market and an increase in customers. A review of the company and its internal processes permitted the achievement of synergies between Tele2 and UNi2, our brand for broadband Internet offered to
corporate customers.

Finland.We continued to market our prepaid calling cards and fixed telephony services in Finland during 2002. Although we
offer long-distance and international calling in Finland, the continued monopoly over the local calling market prevents our entrance. We will also continue the development of our Internet
services in Finland. During 2002, we entered into new agreements covering international calls and other services that reduce our fixed telephony costs. We also shifted our focus from technological
issues and network building, to marketing and increasing our customer base, and further developed our fixed telephony services.

Tele2
Finland offers fixed telephony in Finland in the form of domestic calls, international calls and calling cards. In the Helsinki area, we also offer dial-up Internet
access. The launch of iHear telephones commenced in the summer of 2002. Tele2 also operates a Wireless Local Loop for broadband in Jyväskylä. The service was launched in
spring 2002 and Tele2 is studying the possibility of expanding into other cities with other network owners.



Optimal Telecom, established in 1998, provides consumers with fixed telephony and Internet access, as well as the Tango prepaid card for mobile telephony. Being a
pure service provider, Optimal Telecom does not have its own infrastructure in Sweden. In January 2001, Optimal Telecom and Everyday.com launched a prepaid calling card for Internet use in
Sweden, followed by the mobile prepaid calling card Tango in June 2001.

The
Optimal Selector device allows the customer to automatically obtain the lowest ordinary rates from TeliaSonera, Tele2, Telenordia, Rix Telecom, Utfors, Glocalnet and ACN. The
Selector also has the ability to respond to changes in current rates. Optimal Telecom also sells cordless telephones and

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speaker
telephones equipped with a calling-router whereby calls are always handled by Optimal Telecom.

The
Optimal Internet subscription carries no monthly fee. Customers in Sweden can connect through Optimal Telecom's modem pool at the lowest standard rate from TeliaSonera, Tele2 or
Telenordia. The subscription always reflects the latest rates. The company offers value-added services such as email and free SMS in collaboration with Everyday.com.

The
Tango mobile prepaid calling card offers attractive terms for longer use. The card always chooses the lowest standard rate within Sweden from Telia Refill, Europolitan Easy or Comviq
Kontant.

Market Area Eastern Europe and Russia

During 2001 we established a common network platform in the three Baltic countries. The common network makes significant long-term cost savings
possible and creates competitor advantages like flexibility and large-scale advantages when developing new services. Tele2 is growing rapidly in the Baltic States, with more than one million
customers.

Estonia.Our operation in Estonia covers a population under license of approximately 1.4 million people. During 2001
we increased our ownership in Levicom BroadBand from 60% to 100% by acquiring a 40% stake from Levicom International. Levicom BroadBand operates fixed telephony and Internet in Estonia as well as
cable TV in Estonia and Lithuania. In October 2001 the Tele2 brand was launched for all telecommunication services in Estonia. We have taken a large share of the market and are today the
fastest growing operator in the country. We are also the leading alternative fixed network operator after Eesti Telecom. We are the second biggest provider of dial-up Internet after Eesti
Telecom.

Poland.We hold a national data concession for Wireless Local Loop (WLL) that covers nine cities in Poland. As of
December 31, 2002, we offered this service in six of nine cities. We offer wireless broadband in Gdansk, Krakow, Trojmastro (a region containing Gdansk, Gdynia and Sopot), Poznan and Wrocklaw,
areas that together account for more than five million inhabitants and approximately half a million companies. The Internet market in Poland is not very developed, and only 15% out of
40 million inhabitants and 40% out of 1.5 million companies in the country have Internet access. This is a market with big potential for us. National telephony was deregulated in
January 2002 and the market for international telephony was deregulated in January 2003. We are expecting advantages from the deregulation and to grow rapidly.

In
March 2002, we became the first company in Poland to obtain a public license for fixed telephony. We received an interconnect traffic agreement with the former monopoly
telephone company in December and launched fixed telephony services in March 2003. In addition, in November 2002, Tele2 signed a distribution agreement with the Polish Post Office for Tele2's
fixed telephony prepaid calling cards, which sharply increased the number of sales outlets from 2,000 to 10,000.

We
believe that the deregulation of the Polish telephony sector that was completed during the first quarter of 2003 will provide significant opportunities for Tele2 to market a more
comprehensive range of fixed telephony services in Poland, which has some of the highest telephony rates in Europe.

The Czech Republic.We also hold a national WLL license in the Czech Republic. The first cities to be covered by its WLL
coverage were Prague and Brno in October 2000. The services have expanded during 2001 and the service is now provided in six cities with a total population of three million. The Internet
penetration in Czech Republic has increased from 24% to 31% during 2002. During 2002 we intend to upgrade the network and expansion will continue into more cities. In

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June 2001,
we were awarded a fixed line telephony license, and in July 2002, we became the first fixed telephony operator to conclude an interconnect traffic agreement with Cesky
Telecom. The agreement allows private customers to choose Tele2 fixed telephony services using their current telephone lines by dialing a prefix. Tele2 is now a well-known brand in the
Czech Republic and the largest alternative operator in the private market. During 2003, we plan to introduce pre-selection and local calling services in the Czech market.

Latvia.Our application for a license to provide fixed telephone services was approved by Latvian authorities in
March 2003, and we plan to launch fixed telephone services in Latvia during 2003. We also have one of the two GSM licenses (on both the 900 and 1800 MHZ bands) to provide Internet services and
hold a license for broadband Internet connection via radio networks.

Lithuania.The market for fixed telephony in Lithuania was deregulated in 2003 and we expect UAB Tele2 to pursue
opportunities for cross-selling as they emerge. In the cable television and broadband area, where we operate under the "C Gates" brand, we expanded our operations to serve the entire Vilnius area in
2002. The number of broadband customers doubled during 2002.

Market Area Central Europe

Germany.Having joined the fixed telephony market in March 1998, we are now the third largest alternative operator in
Germany. In 2002, we strengthened our position as the third-largest alternative operator in the German fixed telephony market and are currently one of the fastest-growing operators in the country.
Growth is the result of several measures undertaken during the year such as simplified price structure, successful marketing campaigns focusing on comparing our prices with those of our competitors
and a district targeting of preselection customers.

The Netherlands.We began offering services in The Netherlands in October 1997 and are now the country's second
largest alternative fixed telephony operator. Our preselection customers, with either iHear phones or other selectors, accounted for more than half of the total in December 2002. The result is
greater loyalty and revenue per customer. At the end of the year 80% of the population was familiar with the Tele2 brand.

Austria.We are the largest alternative fixed telephony operator in Austria. The number of customers as well as operating
revenue rose during 2002. We focus on providing competitive rates, a high level of customer service and reliability in Austria. Greater focus on pre-selection customers and "iHear" brand
phones led to a substantial increase in Average Revenue Per User, or APRU, during the latter part of 2002. Efforts to increase customer loyalty during the third and fourth quarter were successful and
contributed to the rise in traffic volume. We target our marketing on private customers in Austria, and market share increased during the year.

Switzerland.We launched fixed telephony in Switzerland as soon as the market was deregulated in October 1998. We are
now the second largest fixed telephony operator in Switzerland. In Switzerland we have been able to take local traffic since April 1, 2002. We are known for our competitive rates,
easy-to-understand pricing and for challenging the former monopoly.

Ireland.We have a fixed telephony license in Ireland.

Market Area Southern Europe

France.Tele2 France is the largest alternative fixed operator in France. In 2001 the French market was consolidated, leaving
France Telecom, Tele2 and Cégétel as the only substantial operators remaining in the market. Local calling was launched in the first quarter 2002 and has progressively
opened up across all regions, which has meant that revenues per customer are now extra growth at no

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extra
cost to us. This helped us to report profitability three years after the operational start. Also from January 1, 2002 interconnect tariffs were reduced.

In
France, we provide a complete range of fixed telephony services to private customers and smaller businesses that consists of local calls, national calls, international calls and calls
to mobile phones. We are the leading alternative operator in France with a market share of 12%. With almost three million active customers and 50% of the market area's revenue, France is also one of
our largest operations. We are perceived as the price-leading operator in France and enjoy a brand recognition rate exceeding 80% among the French population. We believe that the French market offers
potential for continuing growth. The strong brand offers us the potential to strengthen our position as the price-leading operator and keep down costs in order to attract new customers.

We
expect to launch ADSL in 2003 against the background of the access network being opened up and the fact that we already have an attractive dial-up Internet offering.

Italy.We offer a complete range of services in fixed telephony in Italy. Tele2 is Italy's second largest alternative
operator, and we have a market share of about 9%. We continued to experience growth in Italy in 2002, with revenues increasing by more than 60% and traffic volumes increasing by 80% compared to 2001.
A factor in our rapid growth is that we have been offering all customers local calls via pre-selection since 2001.

With
about 2 million customers and a high ARPU, Tele2 Italy is a strong and profitable part of our group. Tele2 Italy, which is positioned as the price leader in the Italian
market, is a well-known brandmore than 80% of the population recognizes it. Greater recognition of Tele2, combined with higher customer satisfaction, has increased customer
loyalty.

Tele2
Italy benefits from being able to offer local calls and a stable competitive situation. During the third quarter of 2002 Tele2 Italy launched dial-up Internet services,
which have thus far proved to be a success. The strategy of supplementing the product and service offering to the existing customer base and an increased number of preselection customers creates the
potential for continuing growth. As in the case of Tele2 France, Tele2 Italy is undergoing strong development and the rapid customer intake has continued in early 2003.

Spain.We are the number four alternative fixed-line operator in the Spanish market. The prepaid only offer
generates high operational savings and allows us to offer the best prices on the market. We offer prepaid fixed telephony services for national calls, international calls and calls to and from mobile
networks. The prepaid services are highly effective in curtailing billing costs, reducing bad debts and reducing churn. Our revenue rose more than 160% compared with 2001.

With
a brand recognition rate of 60% among the Spanish population, Tele2 is beginning to capitalize on its marketing and effective IP-based network. Spain is the first
country in Southern Europe in which we received an MVNO license.

Portugal.Using Spain as the base, we are launching fixed telephony in Portugal during the second half of 2003.

Market Area Luxembourg

Luxembourg.Tele2 Luxembourg provides a variety of fixed-line telecommunications services. The company has
offered fixed telephony since October 1999 and launched Internet services in June 2000. Tele2 Luxembourg is now the leading alternative to the former monopoly. Pre-selection
customers comprised 40% of Tele2 Luxembourg's customer base in 2002. After repeated appeals from Tele2, regulatory authorities have forced the former monopoly to cut its interconnection fees by 20%
during 2003. In March 2002, Tele2 began to offer prepaid calling cards for fixed telephony. In addition, the youth-oriented Tango Sunshine pop music radio station, which introduced its
operations in

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February 2002,
can be heard on FM-band, cable and the Internet. We also market products and services through Tango Sunshine. We established an Everyday Media subsidiary called Tango
TV, which is licensed to broadcast 24 hours a day over the Luxembourg cable network and via the Astra satellite.

Everyday
Media encompasses Tango TV and Tango Radio. Apart from marketing Tango's services, the main purpose for this structure is to create interactivity between the media and mobile
telephony by using SMS, MMS, WAP and IVR as bearers of content services being generated by the media companies.

Liechtenstein.We have provided fixed telephony services in Liechtenstein under our own brand since June 2000. We hold
a license for GSM and for all types of fixed telecom services, including the Internet. In 2002, we were awarded a UMTS license. We are the single largest alternative operator in Liechtenstein.

Belgium.We hold a license for fixed telephony in Belgium and services have been offered since January 2003. Our goal
is to quickly become the leading alternative to the former monopoly.



3C Communications.Through 3C, we are the leading independent provider in Europe of credit card telephone, Internet and fax
machine services. 3C's equipment is installed in prime locations, such as airport lounges and public areas and hotels throughout Europe. Through 3C's international electronic data communications
network, which it operates as the separate entity Transac we are able to centrally retrieve the credit card transactions conducted on 3C's equipment and settle them through the appropriate credit card
organizations. We also provide these electronic data processing services, again through Transac, to operators of automated car park facilities under the brand name "Parkomat," as well as to hotels and
restaurants in several European countries under Transac's name, to enable these entities to process more effectively credit card payments for their services.

3C
approves and processes credit card transactions for 20 different national and international banks. Its pan-European presence in 650 hotels, 300 restaurants and 550 parking
companies makes the company a unique player in the European market for integrated credit card transactions. Some of the kiosks and terminals also provide a base for adding WLAN (Wireless LAN), "Hot
Spots" which permit a link up with portable computers. We operate via the operator organization Pass-One for global roaming among various Hot Spots.

Since
1994, we have experienced a continuous decline in the volume of traffic generated on 3C's telecommunications equipment, primarily due to the development and increasing penetration
of mobile telecommunications equipment around the world. We expect this decline to continue and possibly accelerate. 3C also faces competition from national public telecommunications operators and
other independent credit card telephone providers as well as from providers of mobile telecommunications equipment.

The
Parkomat service is an overall concept for parking lot operators. The concept was developed in Britain, where 3C has 95% of the market for parking spaces at the airports and in
larger cities. We expect to expand operations to Sweden, Norway and Germany in the near future.

Market Area Branded Products & Services

United Kingdom.Tele2 UK is a fixed telephone provider that started operations in November 2001. In collaboration with
the Post Office, the company offers fixed telephony services and markets its services under the Post Office brand, which is one of the strongest in brands in the UK. To supplement our fixed telephony
business, we market a number of prepaid calling cards through the Post Office's sales outlets. In addition, Tele2 UK also supplies national and international access through a digital switch based in
London.

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In
2002, the customer base in fixed telephony in the United Kingdom grew consistently. We expect the challenge ahead to be to continue to capitalize on the major potential of the Post
Office brand and its 40,000 cashier counters at 17,500 sales outlets. We have successfully managed trials to offer pre-selection services in the UK.

Access
operations doubled traffic volume during the year as Tele2 increased its presence in the competitive market for access services in London.

In
February 2003, we announced the acquisition of Alpha Telecom. Alpha Telecom is the leading "pay as you go" service provider in the UK with pre-paid residential
customers as well as being a market leader in pre-paid cards, selling some 1.25 million cards per month in 60,000 outlets across the UK.

Calling Card Company (C3).Calling Card Company, or C3, sells calling cards in the UK, France,
Germany, Italy, the Netherlands, Spain and Austria and Tele2's rechargeable international call card, which may be used in a large number of countries. C3 operates in close cooperation
with Tele2, which supplies network capacity, with the focus on price and quality in international lines. C3 enhanced its prepaid calling card technology to permit calls from Call Shops,
a service now available in France, Italy and Spain, and which will be further expanded to include the UK and Germany during the first half of 2003. Along with 3C, C3 has also developed a
magnetic card that is undergoing trials in Italy and the UK.

Prepaid
calling cards are sold mainly in stores and newsstands, but C3 is continuing to seek additional sales channels. The prepaid card was launched in cooperation with
the British Post Office in October 2001 and volumes increased steadily during 2002.

In
February 2002, C3 won a tender from AAFES (American Army and Air Force) for deliveries to bases in Italy, UK and the Netherlands. In October, the agreement was
extended to include US naval bases. In addition, after trials during the summer of 2002, Tele2 was selected as the supplier of calling cards to the Travelex group in continental Europe.
C3 doubled its volume in the second half of 2002 compared with the first six months.

The
key to C3's success is a stable distribution network and a flexible pricing strategy. Although prepaid calling cards are sold mostly in stores and newsstands,
C3 is now launching a card for the business market, where it encounters little competition. The company has reached agreement with a French retail chain that offers sales through
airlines, travel agencies and Europe's biggest post offices. C3 is marketing the card in collaboration with Nestlé in Italy. Among its customers are Deutsche Bank and
Dresdner Bank. The company has also designed a card with a magnetic strip for its public phones.

Datametrix.Our Datametrix subsidiary is active in customer relationship management, corporate networks and broadband access
as well as making strategic investments in system integration of customized business network, telephony and data solutions. These are fields for which the companies offer services in consulting,
operations and system integration. We integrated the operations of our NätTeknik subsidiary into Datametrix in 1999. We believe the acquisition of Datametrix has improved our ability to
provide a comprehensive range of business solutions to our customers in the area of systems integration and support for our telecommunications and data network services. Datametrix is a strong system
integrator in the Nordic market. During 2002 the Swedish organization has been streamlined and is now focusing on IP telephony and system integration of telephony and data. In Norway, Datametrix
celebrated its 20th anniversary in November 2002. The company has developed into a prominent systems integrator in the Norwegian market in its three core areas: infrastructure, IP
telephony and security. In Denmark Datametrix was ranked number 18 on the Børsen Gazelle index of fastest growing companies (as computed by the daily paper Børsen Gazelle
index). The underlying factor for this success was the keen focus on products for customers in the call center business.

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In
May 2002, Datametrix was appointed Norway Gold Partner to Cisco Systems. In Sweden, the company is Gold Partner to Avaya and a certified Ericsson Service and Sales Partner.
During the year, Datametrix also signed an OEM agreement with Intel, making it the sole vendor of Intel's product line for Virtual Private Networks in Sweden.

X-Source.X-Source, which is active in information technology outsourcing services, is a company
started by Tele2 to support IT operations throughout the Group. X-Source's head office is located in Stockholm, and opened offices in London, Luxembourg and Copenhagen in 2002. It also
took over part of Transcom Sweden's IT operations meaning that it is currently established in six locations in Sweden. The company plans to establish a presence in the Baltic States during 2003.
X-Source offers services in the areas of PC workplace operation and development, server operation and maintenance, data communications and data security. X-Source helps
customer companies to create a secure and controlled IT infrastructure, while reducing IT costs.

X-Source's
services are also offered to companies outside the Tele2 Group. Customers include Datscha, Metro International S.A., Modern Times Group MTG AB, Viasat, EIM, Iocore
and Basset Support Solutions External customers generate approximately 60% of revenues.

Sales and Marketing

We market fixed-line telephony and Internet services through our own direct sales force as well as through independent dealers. We also use television
and print media, as well as special promotions and campaigns to promote sales of fixed-line telephony and Internet services.

We
promote ourselves as the price leader for telephony services, providing services of equal quality at a lower cost. We periodically promote our services in connection with fundraising
events for charities.

We
sell our Internet services through a network of independent dealers who receive a commission on sales. In Sweden we also give away start-up disks for our Free2Connect
service, which was recently voted the best free access provider by a Swedish Internet users association.

We
perform customary credit checks on our small to medium sized business customers. We do not, however, perform a credit evaluation of our residential customers. For residential
customers, we rely on the fact that a residential customer who fails to pay his or her telephone bills from the national public telecommunications operator is generally disconnected from its services,
and therefore cannot access our services. In addition, residential customers are subject to a credit limit.

Competition

The Swedish fixed-line telephony market is highly developed. Telephony revenues represent about half of the revenues from telephony services in
Sweden, while broadband and other data communications services, mobile telephony, leased lines, cable television and other types of communications services comprise the remaining sources of revenue,
as reported by the Swedish government. Sweden also has a growing Internet market. We and TeliaSonera are the leading Internet access service providers, with the remainder of the market served by
Glocalnet and a number of smaller providers.

Denmark
has a competitive and open telecommunications market. Tele2 A/S, our Danish subsidiary, provides fixed-line and Internet access to both consumer and business markets
in Denmark. Tele2 A/S is the second largest fixed-line telephony service provider in Denmark and competes with TDC, Sonofon and TeliaSonera. TDC, the largest fixed-line
telephony service provider, also has the largest share of the market in mobile telecommunications, data communications and cable television and broadband services. Danish telecommunications
legislation promotes an open market for competition by granting foreign access to the country's fixed-line network.

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Denmark also has a growing Internet market. As of December 31, 2002more than one-half of Danish households were reported to have personal computers and 55% of those
were reported to have Internet access. Since its purchase of the commercial Internet operations of UNI-C in June 1997, Tele2 Denmark has become one of the leading Internet access
providers in Denmark.

Norway
has a competitive fixed-line telephony market. The Norwegian market was deregulated effective January 1, 1998, and in 1998 three new telecommunications
companies began competing in Norway. We provide fixed-line telephony, mobile telephony, Internet access and data communications services to consumer and business markets through our
Norwegian subsidiary, Tele2 Norway. Tele2 Norway faces significant competition from the largest fixed-line providers in Norway, Telenor, the majority state-owned provider. The customers of
the former second major competitor, Enitel AS, were acquired by Tele2 Norway in September 2001. Enitel AS had private and corporate fixed telephony customers as well as Dial-up
Internet customers, which were included in Tele2 Norway. Tele2 Norway is also one of the leading Internet access service providers in Norway. Internet competition in Norway includes Telenor,
TeliaSonera and a significant number of smaller Internet service providers

The
markets in which we currently operate or which we intend to enter are generally highly competitive and increasingly are characterized by price competition. The relevant national
public telecommunications operator or the former national public telecommunications operator, such as Deutsche Telekom in Germany, Koninklijke PTT in The Netherlands, Swisscom in Switzerland and
Liechtenstein, France Telecom in France, Telekom Austria in Austria, Telecom Italia in Italy and P&T Luxembourg in Luxembourg, generally has a dominant market position in its national market. In
addition, in each market there are usually a number of competitors, some of which may have more experience, longer operating histories and greater resources than us. Currently, our competitors in the
fixed-line telephony market include, among others:



In
these markets, the intense competition has led to lower prices for telephony services. In Germany, for example, Deutsche Telekom has repeatedly lowered its prices in response to
competition from alternative operators such as us, with the result that its prices were reduced significantly during 2000. In The Netherlands, Koninklijke PTT has lowered its prices for national and,
in 1999 in particular, international calls. Other competitors in all of our markets have also announced significant reductions in their prices, and further price reductions are possible.

As
a result of intense price competition in these markets, however, the market cycle has moved toward consolidation. A number of competitors have been forced out of the market, but it is
not yet clear what the effect will be on price trends. Our call charges are generally lower than those of most of our competitors. Nevertheless, these prices may not remain competitive, especially
given the uncertainty associated with the relatively recent introduction of competition in several of our principal markets.

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We,
along with other competitors of the dominant national public telecommunications operator in each country, face a structural competitive disadvantage in that customers access an
alternative carrier's telephony services indirectly by dialing a prefix, while calls generally default to the network of the respective national public telecommunications operator if no access code is
dialed. The prefixes are "01013" in Germany, "1602" in The Netherlands, "10753" in Switzerland, "4" in France, "1005" in Austria, "1022" in Italy, "15777" in Luxembourg and "1076" in Liechtenstein. We
are attempting to alleviate such competitive disadvantage by implementing the pre-dialer and preselection initiatives described above.

Despite
intense competition with the relevant national public telecommunications operators and other competitors, we believe that we will be able to compete successfully and further
develop our customer base because of important competitive advantages, including our marketing strategy aimed at residential customers and small to medium-sized business customers, our focus on "core"
telecommunications services, competitive prices, cost efficiency, lean staff and attention to customer service. We also expect to benefit from the significant experience of Kinnevik, Millicom and
Tele2 AB in a liberalized telecommunications environment. Furthermore, while there have been numerous telephony service rate reductions by our competitors since the launch of our services, our call
charges are, in general, lower than those of most of our competitors for similar services, even after the announced price cuts of its competitors. We do not plan to offer all the services provided by
other competitors, but we expect to offer a range of services that will present an attractive alternative for residential and small-to medium-sized business customers.

Infrastructure

In the Nordic market area, we expect that expenditure on infrastructure over the next few years will principally be to accommodate for growth in GSM mobile
telephony as well as to rollout the next generation mobile network, UMTS.

In
the rest of Europe, we expect that expenditure on infrastructure will principally be on network improvements and modifications designed to accommodate for growth in
fixed-line telephony. We also plan to expand our MVNO operations.

Further
we expect that expenditure on investments in Russia, for the Tele2 Russia companies, with regards to the GSM-mobile telephony networks buildout will principally be
directed to initiate the GSM-1800 networks to accommodate for growth in GSM rather than in the present AMPS-/D-AMPS-networks.

Our
right to use capacity on the trunk network of Banverket in Sweden, based on an agreement between Kinnevik (transferred to us as of December 2001) and Banverket, is critical to
our fixed-line telecommunications infrastructure, particularly in areas not served by the network of Svenska Kraftnät. See Item 10: "Additional
InformationMaterial Contracts."
We have the exclusive right to install fiber optic cables through 2017 on the electricity transmission network of Svenska Kraftnät. This capacity is supplemented in Stockholm by our own
local trunk network. These local cable networks permit us to expand our base of direct access fixed-line telephony services customers and to reduce payments to TeliaSonera for customer
access. The fiber optic cable loop formation also protects against service interruptions since calls are merely routed in the opposite direction in the event of a fault somewhere in the loop.
Additional fiber optic cable loops will be added in other towns and cities consistent with customer demand.

In
Sweden, TeliaSonera charges us fixed-line interconnect fees at peak and off-peak rates which are based on either "local segments" for interconnection in the
local area, "single segments" for interconnection in each of its 13 transit exchange areas or "double segments" for calls through two or more of these areas. Interconnect fees are higher for double
segments than for single segments and higher for single segments than for local segments. We have established interconnect points in each

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transit
exchange area to ensure that double segment fees are avoided. Local interconnection points are established to assure that the vast majority of calls are rated at local interconnection rates.

The
previous interconnect agreement between TeliaSonera and Tele2 Sweden expired on December 31, 2000, although the agreement still applied afterward on an interim basis. The
agreement introduced new interconnect fee arrangements that resulted in substantially lower interconnection tariffs for Tele2 Sweden. In particular, under the agreement, Tele2 Sweden paid only local
segment fees on approximately 85% of its fixed-line interconnect traffic. The service we provide to our customers depends in part on the cooperation of TeliaSonera in implementing its
interconnect agreements, although TeliaSonera is required by the Swedish Telecommunications Act to enter into such agreements. See "Regulatory
OverviewNordicSwedenCompetitionInterconnect Arrangements."

We
currently do not intend to build a pan-European network infrastructure with its own cable and microwave links for Tele2. Instead, we lease existing lines under
short-term leases from other operators of telecommunications networks, such as Koninklijke PTT NV in The Netherlands, Deutsche Telekom AG in Germany, Swisscom AG in Switzerland, Telekom
Austria in Austria, France Telecom in France, Telefonica in Spain and Telecom Italia in Italy. We lease its international lines that connect its national networks from other independent service
providers.

As
our customer base grows, we expect to be able to use leased lines sourced from new alternative suppliers with increasingly higher bandwidths and on longer-term low cost
contracts. The current terms of such contracts are one-year leases, but as prices and the industry stabilize, the terms may be extended. We expect that this, together with technological
enhancements, will decrease our network unit costs per customer over time.

Germany.Our network in Germany currently consists of six digital switches, one each in Düsseldorf, Hamburg,
Berlin, Frankfurt, Stuttgart and Munich, and 24 points of interconnect and digital transmission equipment to interconnect to the network of Deutsche Telekom. The points of interconnect are located
throughout Germany in regional centers and are linked to our switches in Düsseldorf, Hamburg and Berlin via lines leased from Deutsche Telekom or other suppliers on a one year basis.
Every call initiated with our Germany prefix, "01013," is carried by Deutsche Telekom to the point of interconnect within the relevant "collection area," where it is transferred to our leased lines.
The call then travels to the switch, is routed to the designated point of interconnect, transferred back to Deutsche Telekom's network carried to the recipient of the call.

Under
the terms of our existing interconnect agreement with Deutsche Telekom, Deutsche Telekom continues to charge fees at peak and off-peak rates based on the distance over
which the call travels on Deutsche Telekom's network, the applicable time-of-day tariff, the type of interconnection service and the duration of the connection. The tariffs
were lowered effective January 1, 2000 by a regulatory decision in December 1999.

For
international call termination, we use wholesale carriers to a considerable extent, and terminate at a location and with a carrier selected on the basis of price, quality and volume.

Under
a new element-based charging system established by the German regulatory authority, operators will be charged on the basis of the level of network use rather than distance, and
Deutsche Telekom must offer interconnection to alternate carriers at 475 local switches and 23 transit switches. Deutsche Telekom has challenged the regulators' September 2000 decision and is
seeking an interim injunction.

The Netherlands.The structure of our Dutch network is similar to our German network. It currently consists of three digital
switches and digital transmission equipment to interconnect with Koninklijke PTT's network, with 20 points of interconnect.

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The
interconnect agreement with Koninklijke PTT had a term of three years, from 1997 to 2000, and is automatically extended for consecutive twelve-month periods unless terminated with
six-months' notice. Koninklijke PTT charges fees at peak and off-peak rates based on the distance over which the call travels on Koninklijke PTT's network, the applicable
time-of-day tariff, and duration of interconnection.

In
The Netherlands, a MVNO was launch in November 2001, based on an agreement with Telfort BV. This service is operated on our own GSM equipment to handle calls, roaming, SMS and
voice mail.

Switzerland.The structure of our network in Switzerland is substantially similar to the existing networks in Germany and The
Netherlands. It currently consists of one digital switch and digital transmission equipment to interconnect with Swisscom's network. We have 18 points of interconnect.

The
interconnect agreement with Swisscom, dated as of September 1, 1998, has an indefinite term but may be terminated by either party on three-months' notice after the first year.
The parties may, by mutual agreement, amend the terms. Swisscom charges fees at peak and off-peak rates based on the distance over which the call travels on Swisscom's network, the
applicable time-of-day tariff, the type of interconnection service and the duration of the interconnection. The tariffs can be changed by the end of June and December of each
year on three months' notice. If the parties cannot reach agreement on the tariff, they can request a decision by the regulatory authority.

Austria.Our network in Austria currently consists of one digital switch and digital transmission equipment to interconnect
with Telekom Austria's network. We currently have 11 points of interconnect.

The
interconnect agreement with Telekom Austria has an indefinite term but may be terminated by either party with three-months' notice, as of June 30 and December 31 of
each year.

France.Our network in France currently consists of 10 digital switches and digital transmission equipment to interconnect
with France Telecom. We currently have 22 points of presence, of which 19 are interconnected. We have expanded the network to include dual interconnect points and have, during the beginning of 2002,
launched local calls, connecting to another 200 switches.

Customers
can access our network in France through its one-digit access code, "4." Our license in France, awarded on April 1998, has a term of 15 years, subject
to renewal. The interconnect agreement with France Telecom is of indefinite duration, but can be terminated by both parties with three-months' notice. France Telecom charges fees at peak and
off-peak rates.

Italy.Our network in Italy currently consists of seven switches and digital transmission equipment to interconnect with
Telecom Italia. As of June 30, 2002, we have 500 points of interconnect, of which 467 are at local level.

The
interconnect agreement with Telecom Italia entered into on March 20, 1999, has a 15-year term. It is automatically renewable and can be terminated exclusively by
us on six-months' notice. Telecom Italia charges fees at peak and off-peak rates based on the distance over which the call travels on Telecom Italia's network and the duration
of the interconnect.

Luxembourg.Our network in Luxembourg consists of one switch and two points of interconnect with P&T Luxembourg.

We
have an interconnect agreement with P&T Luxembourg, which can be terminated on three-months' notice. Interconnect rates are renegotiated every year. There is no call
set-up fee. We charge a unitary tariff rate, regardless of whether such calls are made during peak or off-peak hours.

Spain.Our network in Spain is based on Voice over IP (VoIP). A central soft switch is located in Madrid, from which 13 VoIP
points of presence are controlled. The interconnect with Telefonica is

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legacy
CCITT No 7, but internally IP protocols are used. The network is built up with a mix of leased lines and VPN services to connect the locations. During Q3 2002, local calls will be launched
braking down the network to more interconnect points than the regulatory required 54.

United Kingdom.We also have a digital switch located in London that enables us to some extent to terminate traffic in the
United Kingdom and route to other international destinations by connecting international carriers to this switch. In November 2001, in cooperation with the Post Office (Consignia) a prepaid
service based on our iHear telephones, was launched in the UK.

International traffic.We strive to carry our international traffic between our countries of operation on direct leased lines
across borders. Traffic to other destinations outside our network are routed through external carriers. As the volume of traffic carried on our network grows, we will consider obtaining capacity on
international links to the most frequent destinations, thus obviating the need to incur the additional cost of leasing lines from third parties, but as an upside receive revenues by selling
termination within countries where we have our own operation.

We
offer our international telephone services through international sea cables in which we have purchased or leased capacity, through terrestrial cables and through radio links. We and
Tele Danmark jointly own a sea cable and radio links between Sweden and Denmark. We are co-ownerstogether with Cable & Wireless, Sonera and Lattelcomof sea
cables between Sweden and Latvia, and we are also
co-ownerstogether with Cable & Wireless and Soneraof sea cables between Sweden and Finland. We are a part-owner of certain German-Swedish sea
cables. We are also one of the investors, together with Mercury, Sonera and Tele Danmark, in a second sea cable between Sweden and Denmark. In October 1996, we bought capacity in a fiber optic
sea cable between Europe and the United States. This additional capacity is being used to meet growing demand for our Internet services. We believe we can maintain adequate capacity for the needs of
our Internet customers.

International
traffic can also be carried via satellite. Most such satellites belong to international organizations such as Intelsat and Eutelsat.

We
believe that our capacity in sea cables, terrestrial cables and our radio links will enable us to satisfy projected customer demand for our services in the foreseeable future.

Suppliers

Like most telecommunications operators, we obtain fixed-line telecommunications network equipment from a small number of suppliers. These business
relationships are stable and typically involve a high degree of cooperation with respect to a customer's particular infrastructure needs. Most of the network infrastructure for our operations has been
supplied by Nokia AB, which we believe is able to supply our future network equipment requirements. Nokia provides network switching elements and transmission equipment. Ericsson AB supplies the radio
microwave links and some switching elements. We also purchase fixed-line telecommunications equipment from Cisco and Digital Switch Corporation. We believe that we have a good relationship
with these suppliers.

Cable Television

We provide cable television (CATV) services in Sweden under our Kabelvision brand and in our Eastern European region through OU Levicom BroadBand.

We
offer multiple channels of entertainment, news, sports and informational programming to customers who pay a monthly fee based upon the package of channels they receive. Under the
Kabelvision brand, we offer a basic package (Pluspaket) in Sweden that includes access to 15 popular TV channels such as MTV, Viasat Sport, Discovery, Eurosport and E! In addition, Kabelvision offers
two expanded packages, Silver and Gold, as well as premium channels such as Canal+ and TV1000. Kabelvision is available throughout Sweden to 310,000 households, making it the country's second

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largest
cable-TV operator in terms of customers. We also conduct cable-TV operations in Estonia and Lithuania. We offer our CATV customers a basic subscription package, several
expanded basic subscription packages and also a premium service package.

Taking
advantage of our cable-TV lines, we started offering broadband to consumers in 1998. Our continued efforts in 2001 resulted in the conversion of a significant
percentage of our network to handle broadband. Since 1999, we also offer broadband over local area networks (LANs). We use wireless local loop (WLL) technology as well. In addition, we have access to
a highly developed backbone network in Swipnet.

The
cable industry in Sweden is generally deregulated, and there can be multiple competitors in any geographical area. A license is not required to provide cable television programming
in Sweden. We face fierce competition in most areas throughout Sweden, especially from the cable television programming provider owned by TeliaSonera, the market leader, which has considerably larger
resources than we have. Other competitors include Sweden Online as well as Stjärn TV, which is owned by UPC Sverige AB.

Content services

Our strategy with respect to content services is to provide access to, and organize but not develop, content service (e-mail, news, games, ringtones,
image services). The services are linked to the portal Tele2 Internet that can be accessed irrespective of the form of communication. We have established a payment solution attached to the platform
for exchange of micro-payments from customers to us, and then to the companies supplying services via revenue sharing.

During
2002, we launched the Tele2 SelfNavigator service, permitting customers to review, add to or terminate certain services on the Internet. It is also possible to view billing
information and account information through this service.

Tele2
also offers a large amount of SMS and WAP-based content services in various markets. For example, we were one of the first companies in Estonia to offer payment of
parking charges via mobile telephone. We were also the first operator to provide customers in Luxembourg the ability to send images using MMS.

Seasonality

Our results are not materially affected by seasonal variations. However, our revenues may be subject to quarterly fluctuations depending on purchasing patterns,
customer usage and other factors that are subject to general economic conditions and are difficult to predict. Generally, in our mobile operations, usage based on the number of customer minutes
declines in July and August, but this is at least partially offset by an increase in international calls during those months, resulting in higher revenue per minute. Revenues that we receive in a
particular quarter may not be indicative of future revenues to be received in any subsequent quarter.

Additional Information

Insurance

We believe that the Tele2 Group has sufficient insurance coverage, taking into account the nature and scope of our businesses. We purchase most of our insurance
from Moderna Försäkringar, a subsidiary of Invik & Co. AB, which is one of our major shareholders and a related company. Today, the whole of the Tele2 Group is
insured by Moderna Försäkringar, except for our Russian operations, which are insured by AIG. In addition, the Tele2 Group has signed for a cargo insurance with the If
group for all kinds of transportation between own premises, including transportation in owned and leased vehicles.

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Property

We lease our premises, the most significant of which are located in Kista, Sweden. The premises, which cover approximately 11,000 square meters, are the subject
of a package of leases that expire on different dates with respect to the different divisions, ranging from 2004 through 2008. We also lease
small office premises in Stockholm from Kinnevik, a related party. We believe that the lease is on terms equivalent to those that would be determined on an arm's-length basis. The lease is renewable
annually. We also rent offices that we believe are suitable and adequate in each of the countries in which we operate. Through our subsidiary 3C, we own office space in Luxembourg.

The
principal categories of our equipment consist of numerous telecommunications installations, including switches of various sizes, transmission equipment, cable networks, base stations
for cellular networks and equipment for radio communication. In Sweden, Estonia, Latvia, Lithuania, Russia and Luxembourg, we rent space for mobile base stations, and in Sweden, Estonia, Latvia and
Lithuania we rent space for cable television installations.

We
are not dependent on patents or intellectual property licenses in a way that would materially impact our business, financial position or results of operations.

Tele2
owns the right to the Tele2 name in each country of operation.

Regulatory Overview

We are subject to certain licensing and other regulatory requirements in the countries in which we provide fixed-line or mobile telephony services. In
our major markets, all of our current and planned telephony services are now open to competition. We generally must interconnect to a network operator (usually the formerly state-owned national public
telecommunications operator) in each country in which we operate to provide access services for the origination and termination of public fixed-line and mobile telephony services and to
obtain a license to provide public telecommunications services.

We
believe that we are in compliance with applicable telecommunications laws and regulations in our chosen markets.

European Union



All of the fifteen member states of the European Union must incorporate principles of European Union law into their respective domestic legal frameworks. As a
matter of practice, several other countries, including Switzerland and Norway (non-members of the European Union), in which we operate, have conformed or are conforming their regulatory
frameworks to European Union requirements. As a result, the markets in which we operate have been significantly affected by regulation initiated by the European Union. As it develops, such European
Union regulation, including future developments relating to the convergence of telecommunications, media and information technology, will continue to have a significant effect on these markets.

European
Union "legislation" can take a number of forms. European Union regulations have general application and are binding in their entirety and directly applicable in all European
Union member states. European Union directives are binding on the member states as to "the result to be achieved," but national authorities may choose the form and method of implementation. Failure on
the part of a member state to implement the directive completely or properly within the required period of time may lead to litigation against the defaulting Member State before national courts. Thus,
directives could have major effects in certain circumstances, in particular, if the respective provision concerned is unconditional and sufficiently precise, and confers rights on individuals that can
be exercised against a member state.

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European
Union decisions are binding in their entirety upon the member state or party to which they are addressed. European Union recommendations and opinions are legal acts but, unlike
regulations and directives, are not binding. European Union resolutions are political statements that have no legal character.



The European Union institutions adopted a directive on competition in the markets for telecommunications services on June 28, 1990. That directive, as
amended, calls for further liberalization of the European Union telecommunications sector through the withdrawal of special or exclusive rights granted to a particular entity to provide
telecommunications services, and the separation of the regulation of the telecommunications sector from the operation of the relevant national public telecommunications operator.



The European Union institutions have also adopted specific directives and recommendations regarding open and efficient access to and use of public
telecommunications networks and, where applicable, public telecommunications services. See "Competition Rules of the EC Treaty." Those directives and recommendations address what are
referred to as Open Network Provision ("ONP") requirements, which are intended to harmonize technical interfaces, usage conditions and tariff principles throughout the European Union and to ensure, on
the basis of published criteria, objectivity, transparency and non-discrimination in access to and use of public telecommunications networks and public telecommunications services at fair
and reasonable costs. The legislation includes: (i) a basic ONP framework directive dated June 28, 1990; (ii) a European Union Council Directive dated June 5, 1992 on the
application of ONP principles to leased lines; (iii) a recommendation dated June 5, 1992 dealing with packet switching data services; and (iv) a recommendation dated
June 5, 1992 dealing with ISDN access arrangements and a minimum set of ISDN offerings. The ONP directive on leased lines requires that leased line tariffs be cost-based, based on
objective criteria, transparent and non-discriminatory, and independent of the application that a user of leased lines implements. Access and usage of leased lines may be restricted only
to ensure compliance with essential requirements.

On
December 13, 1995, the European Union institutions adopted a directive relating to the application of the ONP requirements to the provision of voice telephony services. On
October 6, 1997, the European Parliament and the European Union Council of Ministers adopted a directive amending the basic ONP framework directive and the leased line directive for the purpose
of adapting to a competitive environment in telecommunications. This directive increases the independence required of national regulatory authorities under the ONP framework directive and limits the
obligations imposed by the ONP leased lines directive to organizations with significant market power. On February 26, 1998, the European Parliament and the European Union Council of Ministers
adopted a directive on the application of ONP to voice telephony and on universal service for telecommunications in a competitive environment, replacing the directive of December 13, 1995. The
purpose of the new directive is to take account of the liberalization of the telecommunications market that occurred beginning January 1, 1998, and to guarantee the provision of a defined level
of universal service for telecommunications in the European Union. The directive describes the scope of the universal service for telecommunications that must be available to all individuals in the
European Union independent of their location, and requires European Union member states to ensure that this service is affordable, taking into account national situations. The proposal also sets out
harmonized conditions for the provision of fixed public telephone networks and publicly available telephone services in the European Union.

On
December 18, 2000, the Council of Ministers adopted a new directive that imposes, in certain circumstances, obligations on operators of fixed telephony networks to allow other
telecommunications

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services
providers transparent, fair, and non-discriminatory access to their local loop and related facilities. Access to the local loop is supervised by the relevant national regulatory
authority.



The European Union has been committed to the liberalization of public voice telephony services and telecommunications infrastructure. Beginning in 1993, the
European Union Council of Ministers issued a series of resolutions aimed at liberalization of public voice telephony services and telecommunications infrastructure in most European Union member
states. Beginning in 1994 the European Commission adopted a series of directives liberalizing satellite communications, the use of cable networks and the provision of public voice telephony and public
telecommunications networks. As described above, the Council of Ministers also has adopted a directive on access to the local loop, which directive is intended to ensure continued liberalization of
the provision of voice telephony services.



The European Commission liberalized the mobile communications market in the European Union in 1996 by adopting the Mobile Directive. The Mobile Directive requires
European Union member states to remove by November 15, 1996 (unless otherwise extended) all existing restrictions on the provision of mobile and personal communications services, including
restrictions on the use of facilities for mobile networks, in order to allow operators in the sector to make full use of their own and third parties' infrastructure.

The
Mobile Directive allows member states to make the provision of mobile radio telephony subject to licensing or authorization procedures in order to ensure compliance with essential
requirements as defined in the services directive of June 28, 1990 and, in case of systems intended for use by the general public, to ensure compliance with public services specifications
relating to performance, availability and quality of service. Licensing conditions also can be imposed on operators in order to ensure transparent and non-discriminatory behavior between
fixed and mobile network operators in common ownership. As long as frequencies are available, member states shall award licenses according to open, non-discriminatory and transparent
procedures.

The
Mobile Directive requires member states to lift all restrictions imposed on operators of mobile and personal communications systems with regard to: (i) establishment of their
own infrastructure; (ii) use of infrastructure provided by third parties; and (iii) sharing of infrastructure, facilities and sites.

The
Mobile Directive imposes an obligation on member states to ensure that restrictions on direct interconnection between mobile communications systems, as well as between mobile
communications systems and fixed telecommunications networks, are lifted. Moreover, it requires member states to abolish restrictions on the operators of mobile networks that prevent them from
building their own infrastructure or operating lines leased from third parties. The Mobile Directive also requires that member states ensure that conditions for interconnection with the public
telecommunications network are proportionally set on the basis of objective, transparent and non-discriminatory criteria.

The
Mobile Directive mandates that member states not refuse to allocate licenses for operating digital mobile radio-based services according to the GSM 1800 standard. This provision was
required to be implemented into national law at the latest after the adoption of a decision by the European Radio Communications Committee on the allocation of GSM 1800 frequencies and, in any case,
by January 1, 1998. Following the entry into force of the Mobile Directive, member states shall not refuse to allocate licenses for public access or telepoint applications, including systems
operating on the basis of the digital enhanced cordless telecommunications, or DECT, standard. Member states shall adopt, where required, measures to ensure competition between operators competing in
the relevant markets.

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European
Union legislation has also been aimed at ensuring reservation of adequate frequency for the introduction of public pan-European cellular digital mobile
communications services. Pursuant to a directive issued by the European Union Council of Ministers on June 25, 1987, member states were required to ensure that the 905-914 and
950-959 megahertz frequency bands (often referred to as the "core band"), or similar portions of the 890-915 and 935-960 megahertz bands, were reserved by
January 1, 1991 exclusively for a public pan-European cellular digital mobile communications service (which emerged as the GSM system). The directive further requires that plans be
prepared quickly, according to commercial demand, for such a system to occupy the whole of the 890-915 and 935-960 megahertz bands.



The European Parliament and the European Union Council of Ministers have also adopted directives concerning the overall framework for dealing with interconnection
in the telecommunications sector, the common framework for general authorizations and individual licenses in the field of
telecommunications services, number portability and carrier preselection, and the rapid and coordinated introduction of compatible UMTS networks and services in the European Union.

On
June 23, 1999, the European Commission adopted a directive amending the June 28, 1990 directive on the liberalization of the telecommunications sector in order to ensure
that telecommunications networks and cable television networks owned by a single operator are separate legal entities.



On June 8, 2000, the European Parliament and the European Union Council of Ministers adopted the E-Commerce Directive, relating to the legal
aspects of information society services in the European Union. The purpose of the E-Commerce Directive is to ensure the free circulation of electronically provided services among European
Union member states.

The
E-Commerce Directive sets forth two fundamental principles:



The
most relevant provisions of the E-Commerce Directive provide that:



European
Union member states will have 18 months in which to implement the E-Commerce Directive into national law following its publication in the Official Journal of the European Communities.

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European
Union member states will have 18 months in which to implement the E-Commerce Directive into national law following its publication in the Official Journal of the European Communities.



The telecommunications regulatory framework has recently been significantly revised. On March 7, 2002, the European Parliament and the Council of the
European Union adopted the Directive (2002/21/EC) on a Common Regulatory Framework for electronic communications networks and services ("Framework Directive"), Directive (2002/19/EC) on access to, and
interconnection of, electronic communications networks and associated facilities ("Access Directive"), Directive (2002/20/EC) on the authorization of electronic communications networks and services
("Authorization Directive"), and Directive (2002/22/EC) on universal service and users' rights relating to electronic communications networks and services ("Universal Service Directive"). These
directives will supersede the current directives and must be implemented in the member states no later than July 25, 2003. A new telecommunications data protection directive (Directive
(2002/58/EC) concerning the processing of personal data and the protection of privacy in the electronic communications sector) was adopted on July 12, 2002.

The
objective of the new regulatory regime is to replace the existing complex system of telecommunications regulations with a single system that can be applied to all types of electronic
communications, including fixed-line telephony, mobile telephony, and internet-based communications.

The
new regulatory framework:



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The
European Commission issued a recommendation on relevant product and services markets in February 2003. The recommendation identifies certain markets having characteristics
which may justify the imposition of regulatory obligations relating to, for example, the cost-orientation of prices, transparency of information, non-discrimination between
customers, accounting separation and mandated access to, and use of, network facilities. The Commission recommendation refers to, among other things:



In
the area of mobile communications, the framework directive includes references to:



The
new telecommunications data protection directive allows member states to adopt legislative measures concerning traffic data retention where this is proportionate and necessary to,
among other things, safeguard national and public security and to prevent and prosecute criminal offences or unauthorized uses of electronic commerce systems. An obligation to retain traffic data
could, depending on scope and duration of the retention, result in significant costs for us as a network operator.

We
cannot predict what consequences the new regulatory framework will have, but it is possible that, contrary to the stated goal of the framework, it may result in additional regulation
of our business. The new regulatory framework applies to all communications markets that the European Commission has included in its recommendation or that NRAs have decided to include in the scope of
sector-specific regulation with the agreement of the Commission. Thus, an extension of sector-specific regulation to mobile markets and online communications markets cannot be ruled out.

In
certain fields that are currently subject to sector-specific regulation, the new regulatory framework may lead to some reduction of regulatory burdens as a result of greater
flexibility of NRAs when choosing appropriate regulatory measures to address alleged market failure and the alignment of the notion of significant market power with the concept of dominance under
general European Union competition rules. In particular, the new regulatory framework no longer allows for regulation of retail markets unless an NRA concludes that regulation on the level of
wholesale markets is not sufficient to achieve the objectives of the directives. Whether any reduction of regulatory burdens will occur will largely depend on the manner in which the directives are
implemented in member states and the concepts of the new framework are applied in practice. We expect that one result of the new framework will be an increase in co-operation among the EU
Commission and the NRAs, with the EU Commission taking a leading role in deciding key regulatory issues such as market definition and market power analysis. We also believe that the new framework may
lead to an increase in legal proceedings and uncertainty in the telecommunications market.

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The European Union competition rules directly affect European Union member states. The main principles in the general European Union competition rules are
contained in Articles 81 and 82 (formerly Articles 85 and 86, respectively) of the Treaty of Rome. Article 81 prohibits collusion, agreements, and assorted practices that restrict competition
within the European Union. Article 82 prohibits abuse of a market-dominant position within a substantial part of the European Union that may affect trade between member states. These rules are
enforced primarily by the European Union institutions, which cooperate with the national competition authorities, and through the national courts. The application of the general antitrust rules
complements the regulatory framework described above. The obligations imposed by the regulatory regime on telecommunications operators, particularly incumbent carriers, are in some cases stricter than
restrictions resulting from the application of Articles 81 and 82.

In
September 1991, the European Community published general guidelines on the application of the competition rules in the telecommunications sector; these guidelines outline the
European Community's approach to common competition issues. On March 3, 1998, the European Commission adopted a notice on the application of the competition rules to access agreements in the
telecommunications sector. The notice sets forth a series of rules designed to assist providers of telecommunications services with gaining access to existing networks in competition with current
suppliers. Without establishing new principles, the notice sets forth the way in which the principles of current competition law implemented by the European Commission and the European Court of
Justice could be applied to the problems relating to access in the context of the liberalization of the telecommunications sector.

The
European Parliament and the Council of the European Union adopted on March 7, 2002 the Directive (2002/21/EC) on a Common Regulatory Framework for electronic communications
networks and services ("Framework Directive"), Directive (2002/19/EC) on access to, and interconnection of, electronic communications networks and associated facilities ("Access Directive"), Directive
(2002/20/EC) on the authorization of electronic communications networks and services ("Authorization Directive"), and Directive (2002/22/EC) on universal service and users' rights relating to
electronic communications networks and services ("Universal Service Directive"). These directives are intended to supersede the current directives and must be implemented in the member states no later
than July 25, 2003.

Market area Nordic

Sweden



In 1993, legislation was enacted to govern the telecommunications sector in Sweden. The regulatory framework was established principally by the Telecommunications
Act and the Radio Communications Act. Regulation under both acts is carried out by the National Post and Telecom Agency ("NPTA"). The Telecommunications Act has been amended several times since 1993.
The amendments have primarily been responsive to new European Union directives that Sweden has been required to implement into national legislation. Sweden will implement the new
e-commerce legal framework in July 2003. See "European UnionElectronic Commerce."



The main objective of the Telecommunications Act is to provide the Swedish government with the means to manage and regulate telecommunications activities so that
two telecommunications policy objectives can be met: providing the general public and the authorities with effective

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telecommunications
at the lowest possible cost, and enabling all persons to use telephone services within a public network. The Telecommunications Act strives to achieve these policy goals by creating
and promoting efficient competition within all areas of the telecommunications sector.

Under
the Telecommunications Act, operators of certain telecommunications services in a public telecommunications network are required to notify the NPTA about their activities in that
sector. In addition, a license is required in order to provide, within a public telecommunications network: (i) telephony service to a fixed termination point; (ii) mobile
telecommunications service; or (iii) network capacity, if the extent of the operator's activities is considerable. A license under the Telecommunications Act may contain conditions that impose
obligations on the operators to provide certain services and information. Operators that do not provide services to an extent that requires obtaining a license must nevertheless notify the NPTA before
providing these services.

There
is no limit under the Telecommunications Act on the number of licenses that may be granted for telephony services, mobile telecommunications services or leased lines, although the
number of licenses for mobile telecommunications services may otherwise be limited by the scarcity of frequency spectrum.

As
a general rule, the term of a license is indefinite, but licenses for mobile telecommunications services or network capacity for such services may be of limited duration. Even if a
license is indefinite, its conditions are limited and, upon expiry, must be renegotiated with the NPTA. New conditions may be substantially different. If stated in the license, conditions may also be
altered before they expire.

A
license may be revoked in whole or in part if the operator violates the terms of the Telecommunications Act or any conditions of the license. However, in the absence of special
circumstances, the operator must be notified and given an opportunity to cure the violation before any of the above measures are taken. The NPTA also may impose fines on licensees for failure to
fulfill the conditions set forth in the license.

On
July 1, 1999 the Telecommunications Act was amended to implement the European Union ONP voice telephony directive of February 26, 1998 and the European Union ISDN
directive of December 15, 1999. On May 1, 2000, the Telecommunications Act was further amended to impose an obligation under certain conditions on licensed operators of networks for
mobile telecommunications to supply network capacity on market terms to other operators, to the extent such capacity is available. On July 1, 2000, new rules under the Telecommunications Act
entered into force providing that operators of networks that have been licensed for a period exceeding five years shall, under certain circumstances, be obliged to enter into agreements on national
roaming, which permits customers of one network to use the network of another operator when their own is not accessible. On June 1, 2002, new rules entered into force regarding the operator's
possibilities to preserve and hand out information from the provided telecommunication services, entitlinginter aliaofficial authorities and customers
to upon demand receive certain information.



The Radio Communications Act, which replaced the Radio Act of 1966 relating to the possession and use of radio transmitters, was enacted to promote the efficient
use of radio transmitters and the radio frequency spectrum in Sweden. The act established a licensing scheme for the ownership and use of radio transmitters, including the assignment of frequency for
such transmitters. Since the enactment on April 8, 2000 of a new act on equipment for radio and telecommunication, the Radio Communications Act no longer covers the possession of radio
transmitters.

Licenses
issued under the Radio Communications Act have an expiration date; upon expiration, an operator must apply for a new license. The conditions of the new license may be
substantially different.

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In
some instances, a license may be revoked. The principal circumstances in which a license may be revoked are as follows: (i) violation of the license conditions;
(ii) considerably lower than anticipated usage of the licensed radio transmitter; or (iii) occurrence of a change in radio technology or the application of such technology that, under
the terms of any of Sweden's international agreements regarding radio transmission or related matters, would require changing the terms of the license. Before a license may be revoked for a violation
of license conditions, the licensee generally will be given the opportunity to cure the violation.

Tele2
Sweden has licenses under the Radio Communications Act for the transmission of radio signals in the GSM system and for the transmission of signals via its radio link network. The
licenses terminate at regular intervals and are renewed through notice by Tele2 Sweden to the NPTA.



GSM 900/1800 Licenses.Under the current regulatory structure, all providers of mobile telecommunications services must be
licensed under the Radio Communications Act and, in certain circumstances where the level of activity is substantial, must also be licensed under the Telecommunications Act. Tele2 Sweden received a
license under the Telecommunications Act in April 1995. As noted above, Tele2 Sweden also has the necessary Radio Communications Act licenses. Following our reorganization in 1997 and 1998,
Tele2 Sweden now holds our Swedish GSM 900 license. The GSM 1800 license is held directly by us. License obligations apply to the license holder. The conditions of the GSM 900 license were amended,
and the amendments took effect on January 1, 2000. The principal conditions, which unless otherwise noted are valid until December 31, 2003, are as follows:



The
license is valid through 2004, although the license conditions expire before that date. Both the license and the conditions may, upon expiration, be reconsidered by the NPTA. Tele2
Sweden must pay, in addition to an initial fee of SEK 100,000 that it has already paid, a yearly fee to the NPTA of 0.157% of Tele2 Sweden's annual turnover for the business subject to the license.

Tele2
Sweden also provides mobile telephony services under a GSM 1800 license granted on January 31, 1996. The GSM 1800 license is valid through 2005 and contains conditions
similar to those described above with respect to Tele2 Sweden's GSM 900 license, including those with respect to payment of fees. The conditions of the GSM 1800 license also were altered in a similar
manner with

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effect
from January 1, 2000. These conditions also expire on December 31, 2003. See "Mobile TelephonyCapacity Limitations" for a discussion of our frequency
allocations.

UMTS Licenses.Tele2 assigned 50% of its UMTS license to TeliaSonera. A jointly owned company, Svenska
UMTS-licens AB, now holds the license. The principal conditions, which unless otherwise noted are valid until March 31, 2006, are as follows:



Fixed-line Telecommunications Licenses.Under the Telecommunications Act, a license is required for the provision
of public telephony services, and a separate license is required for the provision of leased lines, where the extent of these activities is significant. Currently, Tele2 Sweden has both a telephony
license and a license for the provision of leased lines. Tele2 Sweden also has licenses under the Radio Communications Act for the operation of its radio links.

License for Telephony.On January 7, 1994, Tele2 Sweden was granted an interim license to provide telephony services;
a final license was granted on October 25, 1994. The license is valid indefinitely, subject to license conditions that were amended by the NPTA and took effect on January 1, 2000. The
principal license conditions for the provision of telephony services, which unless otherwise noted are valid until December 31, 2003, are as follows:



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License for Leased Lines.Tele2 Sweden was granted a license to provide leased lines on April 5, 1994. The license is
valid indefinitely, although, as in the case of the license for telephony services, the license conditions expired in 1999, were amended, and took effect from January 1, 2000. The existing
conditions are as follows:



The Swedish government follows a policy of unlimited competition in the telecommunications sector in Sweden. Entry into the telecommunications sector was never
formally restricted in Sweden. Since, however, TeliaSonera was the only operator and there was no independent regulator, TeliaSonera had a de facto monopoly over the telecommunications market. The
Swedish government decided to encourage competition through the introduction of a new competition law, new telecommunications legislation, and an independent telecommunications agency, the NPTA. See
"Mobile TelephonyCompetition."

Competition Law.On July 1, 1993, a new Competition Act entered into effect in Sweden. The Competition Act prohibits
the abuse of a dominant position in a market and abusers are subject to a fine of up to 10% of annual turnover. The Competition Act also imposes fines on any supplier with a dominant position in a
market that establishes excessive prices or unreasonable terms. The Competition Authority, the regulatory authority under the Competition Act, is empowered to issue injunctions and

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to
enjoin a party to immediately discontinue practices that are not permitted under the Competition Act. The Competition Act is based on and generally conforms to European Community competition rules.
The Competition Authority and the NPTA cooperate in order to facilitate investigations of monopolistic behavior in the area of telecommunications services.

Tele2
Sweden has filed complaints with the Competition Authority relating to what it believes to be anti-competitive practices by TeliaSonera, including an abuse of dominance
relating to the pricing policy in respect of ADSL services.

Interconnect Arrangements.In respect of interconnect agreements, the most critical issue is the interconnect rate that
entitles a network operator to compensation for: (i) terminating a call in its network that has originated in another network; (ii) providing its customers with access to those services
of another network that are invoiced by the other network; and (iii) transit of traffic between two networks.

Operators
licensed to provide public telephony services or operators that have notified the NPTA of their intention to provide such services are required to interconnect with other
operators. The interconnect rates for fixed operators and mobile operators with a significant portion of the interconnection market must be cost-based. Operators of other telephony
services are required to interconnect with other operators on market terms. The amended Telecommunications Act prevents TeliaSonera from factoring the costs for universal service obligations into
interconnect rates. See "SwedenThe Telecommunications Act."

Mobile Telephony Interconnect Agreements.Interconnect rates that TeliaSonera charges Tele2 Sweden were revised as of
July 14, 2000, effective as of March 1, 2001, and are based on whether Tele2 Sweden's interconnection is for a local segment, single segment or a double segment, and on the basis of the
time of day (peak or off-peak) at which a call is made. See "Mobile TelephonyInfrastructure." Under the Telecommunications Act, TeliaSonera is obligated to
provide interconnect services to operators even where there is no interconnect agreement between the parties.

On
January 21, 2000, Tele2 Sweden asked the NPTA to decide what tariffs TeliaSonera should pay Tele2 Sweden for internationally originated calls, and calls transmitted via
TeliaSonera's network to Tele2 Sweden's mobile network. On August 31, 2000, the NPTA ruled that Tele2 Sweden should be entitled to the same remuneration regardless of where the calls originated
and, unless another agreement existed, payment should be made by the operator transmitting the calls. The decision was appealed to the District Administrative Court of Stockholm, which ruled in favor
of Tele2 in March 2002. This decision has been appealed to the Administrative Court of Appeal.

Tele2
Sweden has entered into similar interconnect agreements with Vodafone, Colt Telecom AB, Banverket, Worldcom AB, Telenor Business Solution AB, Utfors Bredband AB,
IP-Only Telecommunications AB and CallMedia Telecom CMT AB. Tele2 Sweden also has an interim agreement with Sonera Sverige AB.

Fixed-line Telephony Interconnect Agreement.The interconnect agreement between TeliaSonera and Tele2 Sweden
expired on December 31, 2000, though the agreement continued to apply afterwards on an interim basis. For its fixed network, Tele2 Sweden also has interconnect agreements with, among others,
Telia Mobile, Telenordia, Colt Telecom AB, Song Networks AB and Utfors Bredband AB.

Equal Access.A key feature of a competitive public telecommunications environment is equal access for customers to the
services of all telecommunications operators. Initially, equal access existed in the area of international calls and in the area of regional and domestic long-distance calling, but not as
to local calling. To comply with European Union legislation, Sweden introduced "00" as the international prefix to replace the previous "007" and "009" on September 11, 1999. Local calling was
included in February 2002.

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Also
on September 11, 1999, Sweden introduced carrier preselection rules to allow consumers a choice in determining their default provider for domestic long-distance
calls. A customer registered with Tele2 Sweden can make domestic long-distance calls through Tele2 Sweden using the same procedure for making a call through TeliaSonera. As of
February 2002, the same rule applies for local calls.

Number Portability.On September 1, 2001, number portability between mobile networks was implemented in Sweden.

Pricing.The NPTA oversees pricing and tariff structures of the telecommunications service providers in Sweden. We are not
currently subject to any controls over our pricing or tariff structures, and we believe that it is unlikely that any such controls will be established so long as we do not become a dominant operator
in any of our markets. Our SMP status for mobile telephony prevents us from applying different terms and conditions to different operators, for example, with respect to interconnect rates. We may
appeal the decision regarding our SMP status.

Our
fixed-line telephony service pricing structure and long-term pricing strategy is, however, influenced by the price controls that the Swedish government has
currently placed on TeliaSonera in accordance with the regulation of tariffs in a fixed network. TeliaSonera has partially rebalanced its prices by lowering the price it charges for international
calls and increasing its charges on local calls, leased lines and subscriptions.

Norway



The telecommunications market in Norway was fully opened to free competition on January 1, 1998 under the Telecommunications Act of June 23, 1995,
as revised April 30, 1999, and the Regulations on Public Telecommunications Networks and Public Telecommunications Services of December 5, 1997. We expect that these will be replaced by
a new act and regulation, probably from July 25, 2003, that will implement the new regulatory framework of the European Union. However, the state-owned provider Telenor still controls a
majority of the telecommunications infrastructure in Norway.



Norway, although not a member state of the European Union, is a member of the European Free Trade Agreement and the European Economic Area Agreement; thus,
Norway's regulatory framework must conform to the European Union model. Deregulation of the Norwegian telecommunications market has, to a large extent, been parallel to deregulation in the European
Union, and European Union directives and implementing legislation in various European Union countries have served as points of reference for the development of the Norwegian regulatory regime.

The
regulatory framework in the telecommunications sector in Norway is established by the two telecommunications acts mentioned above. The Regulations on Public Telecommunications
Networks and Public Telecommunications Services enables the Ministry of Transport and Communications ("NMTC") to issue rulings with the force of law.

The
object of both of these laws is to implement European Union telecommunications legislation and to enable free and fair competition in the telecommunications sector. Also, they aim to
guarantee the proper functioning of a telecommunications network, which is seen as a public utility service. The laws define concepts in conformity with the respective European Union directives and
provide a framework for the subjects to be covered by governmental regulations. They grant administrative remedies against monopolistic measures such as, for example, charging unreasonable fees or
setting unreasonable technical conditions for access by a dominant network operator.

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The
Norwegian Post and Telecommunications Authority ("PT") sets conditions for interconnect prices. In an April 2001 decision, PT announced that current cost accounting will
become the basis from which to calculate cost-based pricing in the Telenor network from January 2002. Telenor has challenged the decision, and no final decision has been taken by
the NMTC.

In
September 2000, PT proposed a reduction in interconnect rates of approximately 7%, retroactively effective from February until August 2000. Telenor challenged the
reduction. The reduction was considered invalid by the Norwegian Telecommunications Authority Complaints and Advisory board in May 2001, due to, among other things, insufficient documentation
from PT. The price reduction has already been paid by Telenor, and Telenor has stated to PT that Telenor will not reclaim the price reduction. Since August 2000, there has been no significant
increase or decrease in interconnect rates.

In
May 2001, PT also proposed a 25% reduction in interconnect rates on fixed to mobile calls effective as of May 2001. Telenor challenged the decision, but the 25%
reduction was upheld by the NMTC in a July 4, 2002 decision.

Norway
has imposed obligations on certain telecommunications operators to provide open access services, including carrier preselection. PT determines which entrants classify as having
significant market power such that these types of obligations apply. Those operators not having significant market power need not provide open access to the network to public phone providers, as do
those with significant market power. Tele2 are not considered to have significant market power. However, all operators are obligated to provide special network access to other carriers and to
negotiate interconnection. Number portability has been gradually implemented and mobile number portability was implemented on November 1, 2001.

Tele2 Norway's Licenses.Only telecommunications operators who have significant market power are required to apply for a
license in Norway. Those operators not having significant market power but providing public telecommunications networks or services are required to register with PT. Our subsidiary, Tele2 Norway,
applied for a license for the development and operation of UMTS networks in August 2000 and received such a license in November 2000. The licence was returned to the NMTC in
October 2002 and replaced with a mobile virtual network operator (MVNO) agreement with Telenor Mobile. This agreement gives Tele2 an opportunity to offer services in both the GSM and UMTS
markets.

Denmark

Regulatory Overview.In Denmark, the Telecommunications Act of June 1997 provided the basis for the liberalization of
the telecommunication market in Denmark. However, in the access network market, Tele Danmark ("TDC"), the incumbent and the former public telecommunications operator, still retains a dominant
position.

Regulatory Framework.In 1998, the Danish Telecommunications Act amended the previous law, extending obligations to all
telecommunications operators. The new operators were granted new rights, including carrier preselection and number portability from fixed to fixed in 1999, which, together with the unbundling of the
local loop and service provisions in 1998, further helped liberalize the telecommunications market in Denmark. On July 1, 2001, number portability from mobile to mobile was introduced. Number
portability between fixed and mobile was postponed to April 2004 due to technical and billing issues and lack of international standards.

More
recently, the legal framework governing telecommunications has been established by the "Act of Competition and Consumer Regulation in the Telecommunication Market" of May 31,
2000. The law represents a general revision and includes conditions regulating a decrease in interconnect prices in Denmark by using the long run average incremental cost ("LRAIC") model in order to
further

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liberalize
the telecommunications market. An LRAIC Bottom Up working group was established by several operators, including Tele2 A/S, Telia A/S and Orange A/S, and a Bottom Up Model was delivered on
November 1, 2001. The incumbent operator delivered its Top Down Model as well on November 1, 2001. The interconnect prices based on LRAIC are planned to be in force on January 1,
2003. The above mentioned law is based upon the "Agreement in principle concerning perspectives of the telecommunication policy in Denmark" of September 1999. The agreement is between political
parties whose objectives include offering Internet access to all consumers in Denmark and creating virtual network operator access for new mobile operators.

The
National Competition Authority in Denmark regulates competition issues generally, including those in the telecommunications market.IT- og
Telestyrelsen, the National Telecom Agency in Denmark, administers specific telecommunication regulation by, for example, granting licenses and supervising compliance with
regulation. The Ministry of Telecommunications has the authority to implement applicable laws by issuing "executive orders" with the force of law.

Tele2 A/S's Licenses.Under Danish law, only mobile telecommunications operators need a license for radio frequencies.
Licenses are not required for mobile virtual net operators ("MVNOs"), or operators on the fixed network, such as Internet or telephony service providers. Tele2 A/S currently provides mobile telephony
as a MVNO, fixed telephony and Internet services, and, accordingly, does not have a license. From August 2002 Tele2 A/S will offer ADSL. Tele2 A/S was granted a fixed wireless access license in
December 2000.

Finland

Regulatory Overview.Finland has always had a multi-operator telecommunications market. Until 1994 Finland had regional fixed
local monopolies, each of them having the sole licence for that particular area. In 1994 national and international telephony was liberalized. The Telecommunications Market Act of 1997 took further
the liberalization of telecommunications market in Finland. The Act is applicable to telecommunications and provision of directories. The Act contains framework regulations. Decrees and decisions of
the Ministry of Transport and Communications contain more detailed regulations.

Regulatory Framework.The Act of 1997 was replaced with new Telecommunications Market Act, which came into force in two
phases. The first phase came into force in June 2002 and it contained essential elements of convergence, including the policy of technology neutrality. There is no distinction between networks
built for traditional telecommunications, cable television and terrestrial television, except for frequency listening. All these networks can be used for any service.

The
second phase will come into force in June 2003. The aim of the Act is to promote the development of telecommunication services as well as provision and use of the services in
telecommunication networks. Pursuant to the Act liabilities and obligations of telecommunication operators are applicable only to companies having significant market power (SMP). The Finnish
Communications Regulatory Authority (FICORA) defines the relevant communication market and imposes obligations on telecommunications operators in cooperation with the European Commission and
regulatory authorities of other member states. The said obligations may include an obligation to relinquish access rights to smart card capacity. At regular intervals FICORA shall perform a market
analysis of relevant wholesale and retail markets, in order to establish the competitive situation. The Act also introduces number portability from mobile to mobile.

Third
generation mobile services can be provided through GSM mobile network. Pursuant to the new Act a network operator with significant market power and with a licence for a GSM mobile
network has an obligation to negotiate on roaming with network operators that have a licence for a third generation mobile network. If the operators fail to agree on the conditions of the roaming,
FICORA can decide on the conditions.

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Tele2 Licences in Finland.Under Finnish legislation a licence is required to provide a network service that uses radio
frequencies in a digital terrestrial mass communications network or in a mobile network practising public telecommunications. Tele2 has an UMTS-license in Finland with limited coverage
obligations.

When
providing telecommunication services in a fixed network there a notification requirement. The rights and obligations are general and defined in the Telecoms Act. Tele2 has made such
a notification.

Market area Eastern Europe & Russia

Estonia



The telecommunications sector in Estonia is regulated by the Telecommunications Act (the "Act"), which was passed on February 9, 2000 by the Parliament of
Estonia and entered into force on March 19, 2000. The purpose of the Act is to create favorable conditions for the development of telecommunications and to promote free competition among
operators. The Act establishes the requirements for telecommunications networks, for the operation of telecommunications networks and the provision of telecommunications services, and the procedure
for state supervision of compliance with the established requirements. The Act guarantees the purposeful and just allocation and use of limited telecommunications resources. The preparation of the new
electronic communication act is expected to be complete and effective when Estonia enters the EU on May 1, 2004.



In the telecommunications sector the regulatory agency is the Estonian National Communications Board ("NRA"), which acts under the Authority of the Estonian
Ministry of Economic Affairs and Communications. NRA represents the state, and reports directly to the Secretary of the Economic Affairs and Communications, who coordinates and supervises NRA's
activities. The key function of NRA in the telecommunications sector is to supervise telecommunications networks and services, radio communication, number series and line facilities.

The
NRA is examining the interconnection tariffs of mobile operators. It claims that current tariffs are too high in light of the interconnection tariffs found in the EU. Particular
attention has been given to Tele2 since our termination tariffs are among the highest in Europe. The bottom-up Forward Looking-Long Run Average Incremental Cost
("FL-LRAIC") based calculation model has not been put into practice yet. At the moment, two unresolved issues are the new electronic communication act and number portability in mobile
networks, which is scheduled for January 1, 2004. Number portability is under discussion in the workgroup established by the Association of IT and telecommunications companies. Finally, there
is a new numbering plan.

On
May 8, 2003, Estonian authorities announced a tender for the UMTS licenses in the form of a direct offer to three mobile operators, including Tele2 Estonia. The deadline for
filing applications is July 11, 2003.



According to the Act, a license is required for the operation of a public telecommunications network if the operation is based on either use of radio frequency
bands from the national radio frequency allocation plan, or use of number sites from the national numbering plan. A license is also required if a telecommunications network is interconnected with a
public telecommunications network or a telecommunications network located in a foreign country. Our current license was granted by the

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NRA
on November 24, 2000 for a period of 10 years. The license grants the right to operate a public mobile telephony network, transmission network, and access network of the GSM 900/1800
standard.

Latvia

Regulatory Overview.The main legislation governing the telecommunications sector in Latvia is currently the Law on
Telecommunications of November 30, 2001. The object of the above law is to coordinate national legislation with European Union telecommunications legislation and liberalize the
telecommunications market in Latvia. Latvia's telecommunication market was liberalized on January 1, 2003 when the incumbent fixed line operator's (Lattelekom) monopoly expired.

Regulatory Framework.In 2001, the Law on Telecommunications amended the previous law changing the regulatory environment.
Since 2002, the regulatory authority in Latvia is the Public Utilities Commission, which, according to the new law, overtook the regulation function in the telecommunications sector from the Ministry
of Transport. The Ministry of Transport has authority to promulgate Regulations of the Cabinet of Ministers concerning telecommunications matters. In addition, the Council of Competition has
jurisdiction over general matters of unfair competition and abuse of a dominant position in the market. The Ministry of Transport has established a working group that elaborates Electronic
Communication Law in order to implement the new EU Regulatory Framework into the national legislation.

The
Public Utilities Commission administers the law by granting licenses and overseeing compliance with regulations. The Public Utilities Commission will review the quality of services
and monitor interconnection agreements in order to provide fair, transparent and non-discriminatory rules. The interconnection cost calculation model was approved by the Public Utilities
Commission. Incumbent operator (Lattlekom) and mobile operators have been recognized as having significant market power in the interconnection market and are obliged to provide interconnections
services to other telecommunications operators and service providers on a non-discriminatory basis and in accordance with a transparent policy. Interconnection tariffs are not yet
regulated according to the Regulator's decision, and cost oriented tariffs will come into effect on February 2004. If the parties involved cannot agree on the terms of interconnect, the Public
Utilities Commission may intervene and make a decision. Decisions of the Public Utilities Commission may be appealed in court.

SIA Tele2's Licenses.Under the Law on Telecommunications, licenses are required if limited national resources, i.e., radio
frequencies or numbering, will be used. Only general authorization is required for telecommunication providers if they do not use limited national resources. SIA Tele2's current mobile telephony (GSM
900/1800 standard) license was granted in October 2000 for a five-year period.

In
October 2002 SIA Tele2 was granted a UMTS license for a 10 year period. The license terms requests that operation of UMTS network should be started not later than
January 1, 2005.

SIA
Tele2 subsidiary SIA "Tele2 Telecom" was granted a fixed telephony license on March 26, 2003 for a five year period.

The
Public Utilities Commission extends a license upon the operator's six-month prior written request.

Lithuania



The July 5, 2002 edition of the Law on Telecommunications (effective January 1, 2003) is the main statutory instrument regulating the
telecommunication sector. Under the Law on Telecommunications, the telecommunications regulatory body is required to take into account the requirements of European

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Union
law; regulate relations between the telecommunications operators and the users of their services; regulate the management, use and control of radio communication, as well as the import,
manufacturing, use and maintenance of equipment which radiate electromagnetic waves; ensure effective use of radio frequencies; and to set forth conditions for promoting competition in the
telecommunications sector.



The new Law on Telecommunications notably expands the competence of the national regulator, officially called the Communications Regulatory Authority ("CRA"). The
CRA has the following functions: 1) to draft and approve the terms and conditions for engaging in telecommunications activities; 2) to monitor compliance with the terms and conditions of
telecommunications activities; 3) to draft and approve regulations for the construction, use and protection of telecommunications networks; 4) to establish minimum quality requirements
for public telecommunications services and regulations establishing the procedure for a joint use of conduits, cable ducts, collectors, towers, masts and other facilities used by telecommunications
operators and telecommunications service providers; 5) draft and approve general terms and conditions of agreements on the interconnection of telecommunications networks and the procedure for
the resolution of disputes between telecommunications operators and telecommunications service providers concerning interconnection of telecommunications networks; 6) to draft and approve lists
and procedures of telecommunications activities, 7) to draft and approve the National Telephone Numbering Plan, setting forth the procedure for the implementation of the Plan; 8) to
draft and approve the procedure for the allocation and usage of telephone numbers, control and monitor their implementation; 9) to draft and approve regulations for the provision of
telecommunications services; 10) to draft and approve conditions for access provision and standard conditions for operators' offers concerning access; 11) to examine disputes between
telecommunications operators concerning the interconnection of telecommunications networks and a joint use of conduits, cable ducts, collectors, towers, masts and other facilities, access, as well as
disputes between
telecommunications service providers and users, within the limits of its competence and to the extent provided for by this Law, protect the rights and legitimate interests of the consumers, approve
the procedure for the settlement of disputes between telecommunications service providers and users, including consumers; 12) to draft and approve legal acts setting forth the criteria and
procedure for the definition of the relevant market and determination of which undertakings have significant power in the relevant market; 13) monitor competition in the telecommunications
sector, approve and carry out the market research procedure, carry out analysis and define relevant markets, determine the market share of undertakings and their position on the relevant market,
determine which undertakings enjoy significant market power and their obligations; 14) investigate and review infringements of the Law on Telecommunications and apply sanctions to the
infringers.



The NPTA oversees pricing and tariff structures of the telecommunications service providers in Sweden. We are not currently subject to any controls over our
pricing or tariff structures, and we believe that it is unlikely that any such controls will be established so long as we do not become a dominant operator in any of our markets. Our
SMP-status on the national market for mobile telephony only prevents us from applying different terms and conditions to different operators.

Our
fixed-line telephony service pricing structure and long-term pricing strategy is, however, influenced by the price controls that the Swedish government has
currently placed on TeliaSonera in accordance with the regulation of tariffs in a fixed network. TeliaSonera has partially rebalanced its prices by lowering the price it charges for international
calls and increasing its charges on local calls, leased lines and subscriptions.

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Under the Law on Telecommunications, all telecommunications operators and service providers whose list is established by the Communications Regulatory Authority
shall have a right and duty to negotiate the interconnection of networks. Operators of public telecommunications networks and leased lines and/or service providers with significant market power must
meet the requests of other telecommunications operators to interconnect public telecommunications networks under the conditions prescribed by this Law and the Communications Regulatory Authority.
Telecommunications networks must be interconnected within three months after the day of receiving the request, unless the operators and/or service providers agree otherwise. If the request is
reasonable and technically feasible, interconnection of telecommunications networks may not be refused by an undertaking having significant market power in the relevant market. A refusal to grant
interconnection must be duly grounded, and the arguments shall be submitted in writing to the requesting telecommunications operator and to the Communications Regulatory Authority within one month
after the day of submitting the request.



UAB Tele2's DCS-1800 license No. 188/98 and GSM-900 license No.195/200 were granted on August 23, 1998, and
December 29, 2000, respectively.



The draft Law on Electronic Communications is prepared by CRA. It is expected that it will be adopted in the course of 2003. The law shall bring in conformity the
national legislation with the new regulatory package of EU.

Russia



The legal framework in the telecommunications sector in Russia is established by the "Federal Law on Communications" of January 20, 1995. Currently, a
draft federal law to introduce amendments and addenda to the current Federal Law on Communications has been prepared and approved by the Government of the Russian Federation; the draft law is to be
considered and enacted by the Russia's Parliament (State Duma). The following are the major principles of the draft law, as declared by the Russian Federation Ministry of Communications:



However,
actually the draft law "On Communications", prepared by the Ministry of Communications in 2000-2002, was intended to strengthen a regulative role of the state in the
industry and on the market. But operators lobbied against such a draft law at the State Parliament and in 2002 it could pass only the first reading.

Besides,
in January 2003 the President officially indicated the draft law problems, and it was partially amended, which fact means some kind of the industry liberalization as
regards interconnection of operators, distribution of the numbering resource, role of self-regulating institutions. The second reading of the draft law is expected in summer, but its fate
is still unclear, since there have not been

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resolved
so far the problems with management of frequency resource, licensing, supervision over communications and certification.

In
addition, activities in the Russian communications market are regulated by the Russian Federation Act "On Competition and Restriction of Monopoly in Commodity Markets," which defines
the organizational and legal principles to prevent, restrict and suppress monopoly and unfair competition and aims at securing the conditions to establish and ensure effective operation of commodity
markets, including the markets for all types of communications services.



The procedure and terms of interconnection to PSTN are governed by an Act of the Ministry of Communications entitled "Regulations on the Interconnect Procedure."
Refusals to interconnect are not allowed, except where provisions of the regulations would be violated. Network operators are obliged to conclude with PSTN operators the interconnect agreements that
regulate the procedure of mutual settlements between them. Despite attempts of the Ministry of Communications to set a single PSTN interconnect fee, the interconnection terms vary in different regions
of Russia, sometimes to a considerable extent. Currently, the Ministry of Communications is working on regulating the PSTN interconnect terms to reduce fees. Major provisions of this process will be
specified in the forthcoming "Law on Communications."



All of the telecommunications activities in Russia are subject to licensing unless a network is used for internal production and technology or for state control,
defense, or security. The licenses are granted by and registered with the Ministry of Communications. Legal entities or persons can hold licenses for different types of telecommunications activities.
The licenses can have limitations in terms of the territories they cover. A license is issued for a period of 3 to 10 years. The new Law on Communications proposes to set a period of 3 to
25 years depending on a type of the services to be provided. A license validity period can be extended for the same period for which it was initially issued.

Currently,
Tele2 Russia has 11 AMPS licenses, 1 CDMA license, 12 GSM-1800 licenses, 1 GSM 900 license, three licenses for local telephony, a data transmission license for 17
regions, a telematic service license for 17 regions and 4 licenses for channel leasing. The terms of the GSM-1800 and GSM 900 licenses (identical for all twelve Russia's operations) can be
summarized as follows:



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Poland



Telecommunications Act of May 2000 (the "Act") currently governs the telecommunications sector in Poland. Its stated purposes are:





According to the Act, the market is to be gradually deregulated. Following an earlier opening of the local market for switched telephony competitors, the domestic
long-distance market was opened in 2002. Pursuant to the Act, until December 31, 2002, the provision of international telecommunications services falls within the exclusive
competence of Telekomunikacja Polska SA, the former public telecommunications operator. Data transmission related services can be provided by every enterprise that notifies the President of the new
independent Regulation Authority (Urzad Regulacji Telekomunikacji i Poczty).



The Act represents a significant step forward in interconnection. Every company determined by a decision of the Regulation Authority to be a Dominant Market
Player must satisfy a number of conditions regarding access to its network for other operators. These conditions are as follows:



Tele2's licenses.Our subsidiaries in Poland, In2Loop sp. z o.o. and Tele2 Polska sp. z o.o., operate based on the following
licenses/permissions:



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Since
licenses are no longer required, Tele2 Polska sp.z o.o. has obtained the following:



Czech Republic



In the Czech Republic the liberalization process began in 2000 and is continuing. The Telecommunications Act of 2000, effective July 2000, formally
provided for the complete liberalization of the telecommunications market in the Czech Republic in compliance with European Union directives to enable fair and free competition in the
telecommunications market.



The Telecommunications Act includes conditions and obligations for all telecommunications operators. The new operators are being granted new rights, including the
introduction of carrier selection in the second half of 2002 and number portability and preselection at the end of 2002.



Network operators with significant market power are obligated by the Telecommunications Act to conclude interconnection agreements with other telecommunications
service providers. Currently, Cesky Telecom is the only telecom operator labeled as having significant market power. Copies of interconnection agreements must be deposited with the Cesky Telekomunikacni Urad, or CTU.



Tariffs are regulated by CTU. Recently CTU issued two regulations relating to reductions in interconnect tariffs. Because of the new regulation about using the
LRAIC model for calculations of interconnection prices, a further decrease of interconnection prices is expected.



The Office For Protection of Economic Competition in the Czech Republic regulates competition issues generally, including those in the telecommunications market.
CTU administers laws concerning telecommunications by granting licenses, overseeing the compliance with the regulations, and issues
decisions to regulate prices, numbering plans, and frequency band plan. The Ministry of Telecommunications has the authority to implement laws by issuing "departmental orders" with the same force as
laws.



Under Czech Law, all telecommunications operators need a license for operating and providing public telephony service via public fixed telecommunication network,
mobile telecommunication network, and radio frequencies. Licenses are not required for Internet providers. Tele2 s. r. o. currently provides Internet access via fixed wireless access at 3.5 GHz. Tele2
received the frequency allocation for

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3.5
GHz at the end of 1999 and, in accordance with then valid law, did not obtain a license. Tele2 s. r. o. obtained a telephony license in July 2001.

Market area Central Europe

Germany



The regulatory framework of the telecommunications sector in Germany was transformed by the Telecommunications Act
(Telekommunikationsgesetz) ("TKG"), which entered into force on August 1, 1996. The TKG required process liberalization of the German
telecommunications market by January 1, 1998, as mandated by the directives of the European Commission. It represented the final step in the German telecommunications market liberalization
process that began in 1989. Due to the European Union reform package of 2002, the regulatory framework set out in the TKG has to be brought in line with the substantially revised European standards.
At the time of writing this report, the Federal Ministry of Economics and Labour has issued the draft of a fundamentally revised TKG. It seems certain that Germany will not meet the stipulation to
implement the European reform package until
July 25, 2003; rather it is expected that a revised TKG will come into force not before January 2004. This report is, in principle, confined to the TKG presently in force.



In passing the TKG, Germany created the basis for market access by qualified entrants such as Tele2. The principal objectives of the TKG are to promote
competition in the telecommunications sector through regulatory measures, to guarantee appropriate and adequate telephony services throughout Germany and to provide for the regulation of frequencies.
The TKG is intended to achieve these objectives principally by requiring licenses for the conduct of certain telecommunications activities, allocating frequencies, securing universal service and
subjecting enterprises having dominant positions in particular telecommunications markets (so-called "market-dominant providers") to a special regulatory framework.

Since
January 1, 1998 regulatory functions under the TKG have been carried out by a new supervisory body, the Regulatory Authority for Telecommunications and Post
(Regulierungsbehörde für Telekommunikation und Post) (the "Regulatory Authority"). The Regulatory Authority has various
powers under the TKG, including the authority to grant and revoke licenses, assign and supervise frequencies, impose universal service obligations, control network access and interconnection, and
approve or review the tariffs and tariff-related general business terms and conditions of market-dominant providers. It is uncertain whether and to what extent the Regulatory Authority will directly
apply the European Union reform package after its coming into force on July 25, 2003 and prior to the finalization of the national implementation process.



The TKG establishes licensing requirements for provision of voice telephony services to the public and for operation of transmission lines that cross property
boundaries and are used to provide public telecommunications services. Generally, the number of licenses is not limited, and each applicant satisfying basic qualification requirements is entitled to
receive a license. In applying for a license, an applicant is entitled to specify the geographic scope and the type of activity subject to license. Conditions and obligations may at any time be
attached to a license to promote the achievement of the objectives of the TKG. Under the new Authorisation Directive 2002/20/EC of March 7, 2002, most of the current license requirements may
not be maintained.

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Under the TKG, tariffs (including tariff-related business terms and conditions) for the telecommunications services of market-dominant providers and their
affiliates, are subject to special regulatory oversight and control. The tariffs of all providers in Germany are, however, subject to European and German law of general application, including
competition and consumer protection laws and ordinances.

The
tariffs of a market-dominant provider such as Deutsche Telekom in the areas of public voice telephony service, the operation of transmission lines for telecommunications services to
the public, and access and interconnection services require prior regulatory approval. In 2001, Deutsche Telekom sought declaratory orders from Regulatory Authority confirming that it does not have a
market-dominant position in certain delimited geographical and product markets for voice telephony. The Regulatory Authority rejected this attempt in principle but accepted that traffic for
termination in certain foreign states must be considered a distinct product market. As a consequence, rate regulation was abandoned regarding traffic to be terminated in Turkey. It is possible that
Deutsche Telekom will succeed before the administrative courts in defining smaller markets and thus avoiding rate regulation. As the Universal Service Directive 2002/22/EC of March 7, 2002
restricts rate regulation for end-customer services, it is expected that the amended TKG will at least introduce additional requirements for rate regulation on retail markets.



The TKG imposes specific obligations concerning access to networks and interconnection. The Network Access Ordinance
(Netzzugangsverordnung) provides details concerning these obligations and specifies the manner in which special network access (including
interconnection) is to be effected.

Every
operator of a public telecommunications network, irrespective of the operator's market position, is obligated upon request to offer to other network operators interconnection to
its networks. If the respective parties cannot reach an agreement on interconnection, the Regulatory Authority will order the interconnection on other terms.

A
network operator that offers telecommunications services to the public and is a market-dominant provider in a particular market must allow every user access to its network or to parts
thereof. A market-dominant provider must also grant to its competitors access to essential services it uses internally upon the same conditions it applies to itself, unless different conditions can be
objectively justified.

Agreements
on special network access (including interconnection) must be reported to the Regulatory Authority immediately following execution. The conditions of such agreements must be
based on objective criteria, be comprehensible, and guarantee equal access.

The
Regulatory Authority publishes the terms and conditions for interconnect agreements if the terms and conditions are expected to be included in a number of agreements. These terms and
conditions will then constitute a "basic offer" that must be included in the general business terms and conditions of a market-dominant provider.

Market-dominant
providers are obligated to unbundle their service offerings to the extent demanded by their competitors in a public telecommunications market unless the market-dominant
provider can demonstrate that unbundling is not objectively justified in the particular circumstances. Consequently, Deutsche Telekom has to grant Tele2 Germany access to its fixed local loop and
parts thereof, including customer access lines. In April 2001, the Federal Administrative Court affirmed obligations on unbundling access in the local loop as imposed on Deutsche Telekom by the
Regulatory Authority.

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In
October 2001, the Regulatory Authority established a new interconnect tariff regime for the period beginning January 1, 2002. Under the new regime operators are charged
on the basis of the network elements used (element-based-charging), thus replacing the former regime of distance-based charging. As a corollary to the new element-based charging, the relevant network
for interconnect agreements with Deutsche Telekom has changed to a two-tiered-system with 475 local switch-areas and 23 transit switch-areas. Preliminary injunctions applied for by
Deutsche Telekom against both the new interconnect tariffs and its relevant network structure were rejected in all instances.

At
present, interconnection between Deutsche Telekom and Tele2 is carried out on the basis of an order by the Regulatory Authority dated February 21, 2003. This decision, taken
within a dispute settlement procedure, follows the new interconnect structure and the element-based charging system. The interconnection order is not limited in time. As the Regulatory Authority
ordered a number of changes to Deutsche Telekom standard offer for interconnection, Deutsche Telekom brought legal action against this order; Tele2's right to interconnection is, as such, not
disputed. No decision has been taken yet in the court procedure.

Based
on a statutory amendment to the TKG dated October 21, 2002, Deutsche Telekom is explicitly obliged to allow call-by-call and
pre-selection for local calls beginning April 25, 2003 and July 9, 2003 respectively. The statutory amendment on carrier selection provides that different
pre-selected choices may be made for national and local calls. On the level of interconnection, the Regulatory Authority requires interconnection at all 475 local switch areas in order for
a competitor to be entitled to a nationwide offer of call-by-call and pre-selection. There are pending lawsuits
as to whether this regulatory requirement conforms to EU directives. As judicial clarification is not expected in foreseeable time, Tele2 has ordered and started to extend its network to 475 points of
interconnection with Deutsche Telekom. On this basis Tele2 is already presently capable to offer local calls nationwide. At the same time the extension to 475 points of interconnection optimizes its
average level of interconnect tariffs. In general the lowest interconnection tariffs will apply with a network configuration of 475 points of interconnect. Carrier selection for local calls is,
however, burdened by a surcharge of EUR 0,004 / min. on the call origination rate. In the Regulatory Authority's decision of April 29, 2003, the surcharge was reasoned as a consequence of the
still existing access deficit in Deutsche Telekom's access revenues. Tele2 has filed a lawsuit against the surcharge on local calls. At the time of writing this report, there are strong indications
that Deutsche Telekom will seek to eliminate its access deficit by the end of 2003. It is an open question whether the current statutory basis for ordering a carrier selection surcharge will be
maintained under the new TKG.

By
orders of 2001, the Regulatory Authority ordered Deutsche Telekom to offer a wholesale product for its services as access provider, in particular ISDN and analogue services as well as
T-DSL lines. After unsuccessful negotiations between Tele2 and Deutsche Telekom, the Regulatory Authority on May 21, 2003 opened a rate regulation and abuse procedure with regard to
the terms of Deutsche Telekom's wholesale offer. It is expected that both procedures will be decided by July 21, 2003.



We hold both a Class 3 license for the operation of transmission lines and a Class 4 license for the provision of voice telephony services in
Germany. The licenses are of unlimited duration and not subject to any special restrictions or material license conditions.

The Netherlands



The regulatory framework in the telecommunications sector in the Netherlands is currently the Telecommunications Act of October 19, 1998. The object of the
act is to implement European Union telecommunications legislation and, notably, to enable fair and free competition in the

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telecommunications
sector. At the same time, the act aims to guarantee the proper functioning of a telecommunications network that is seen as a public utility service. According to European Directives
the Telecommunications Acts has to be amended by the July 25, 2003. Currently the adaptation of The Telecommunications Act is in Parliament. However it is not to be expected that the deadline
will be met. Therefore, as of July 25, 2003 an intermediate Law will become applicable.



The Telecommunications Act defines its concepts in conformity with the respective European Union directives and provides a framework for the subjects to be
governed by governmental regulations.

The
Telecommunications Act grants administrative remedies against such anti-competitive measures as charging unreasonable fees or setting unreasonable technical conditions
for access by a dominant network provider. Decisions of theOnafhankelijke Post en Telecommunicatie Autoriteit, or OPTA, the administrative authority,
concerning anti-competition matters may be appealed. In addition, theNetherlandse Mededingingsautoriteithas jurisdiction over general
matters of unfair competition and abuse of a dominant position in the market.



Network operators with significant market power are obliged by the Telecommunications Act to form interconnection agreements with service providers, such as our
subsidiary in The Netherlands. Copies of interconnection agreements must be deposited with OPTA. Complaints alleging unreasonable terms and conditions in such agreements or unreasonable refusal of
requests for other forms of access may be lodged with OPTA.

Cost
calculation, in conformity with European regulation, should be based on long-run incremental costs, though only originating access is calculated in this manner.
Terminating access is still calculated on embedded direct costs. Complaints about pricing may be lodged with OPTA.



Under the Telecommunications Act, licenses for telecommunications providers are no longer required. Instead, it was sufficient to register Tele2 (Nederland) BV in
a public register.

Switzerland



A comprehensive new regulatory framework governing telecommunications services in Switzerland was established with the entry into effect on October 20,
1997 and January 1, 1998, of the Telecommunications Act (Fernmeldegesetz), or FMG. The FMG and implementing ordinances opened domestic and
international public fixed-line telephony in Switzerland to full competition.

The
Ordinance to the FMG (Fernmeldeverordnung) or FDV was amended per April 1, 2003 by new articles granting to all
telecommunication service providers full access, shared line access and bitstream-access to the ultimate last line to the customer, which was under Swisscom control so far. Swisscom announced to fight
against these provisions.

The
FMG is also under construction. The most important issue Swiss Parliament is discussing is the planned abolition of licensing telecommunication service providers.

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Switzerland is not a member state of the European Union and therefore is not subject to European Union legislation relating to telecommunications. However, the
deregulation of the Swiss telecommunications market has to a large extent been parallel to deregulation in the European Union, and European Union directives and implementing legislation in various
European Union countries have served as points of reference for the development of the Swiss regulatory regime.

The
FMG is intended to ensure that: (i) reliable universal service is provided at affordable prices to the entire Swiss population; (ii) telecommunications traffic is free
from interference and respects personal and intellectual property rights; and (iii) effective competition in the provision of telecommunications services is allowed to develop. Important
features of the regulatory framework include:



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Important
regulatory matters that were not resolved by the FMG are regulated by legislative bodies and regulatory agencies through the implementation of ordinances. Due to the relatively
recent enactment of the FMG and the lack of prior competition in most of the Swiss telecommunications market, important aspects of the regulatory regime will require time to clarify. Legal challenges
concerning the application of the FMG and the interpretation of the ordinances that follow may subsequently arise.



The FMG requires that anyone who provides telecommunications services, and thereby independently operates a significant portion of a telecommunications network
used to provide transmission, obtain a license.

In
general, anyone meeting the conditions for a license application is entitled to receive a license. Conditions include satisfying the necessary technical capabilities and compliance
with the FMG and its implementing ordinances, the terms of the license and respective Swiss labor laws, including the maintenance of working conditions that are customary for the industry.

Under
the FMG, a failure to comply with the applicable law and the terms of the license may lead to the suspension, restriction, revocation or withdrawal of the license.



The FMG provides that a telecommunications service provider having a dominant position in a particular market must provide interconnection to other
telecommunications service providers on a non-discriminatory basis and in accordance with a transparent and cost-based pricing policy, stating the conditions and prices
separately for each interconnection service. The FMG authorized the Federal Council of Switzerland to determine the principles governing interconnection. Failing a negotiated agreement between the
market-dominating operator and another service provider, the regulatory authority may determine the interconnection conditions.

In
a telecommunications ordinance, the Federal Council has specified that a market-dominant provider must provide access to the necessary equipment, services and information to other
providers on a non-discriminatory basis, in the same manner than the market-dominant provider supplies internally to its divisions, subsidiaries and partners. Interconnection is to be made
through common usage of, for example, telecommunications installations, buildings and land, as necessary.

This
ordinance requires that prices charged for interconnection services be cost-oriented. Beginning January 1, 2000, prices must be based on or include the following:



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Costs
must reflect the expenses and investments of an efficient operator using modern equipment and account for future circumstances. Prior to January 1, 2000, Swisscom could
include in its prices for interconnection services a proportional charge for its cost base resulting from its former status as a government entity, to the extent related to the requested
interconnection service, and the use of long-run incremental cost was not mandatory.



Our Swiss subsidiary was granted a final license on February 9, 1999 to provide the requested fixed-line telephony services.

Austria



The Austrian Telecommunications Act (Telekommunikationsgesetz), or TKG, became effective on August 1, 1997
and was enacted to prepare the market for the abolition of the voice telephone monopoly in 1998 and to fulfill Austria's obligations under the relevant European Union directives. In order to implement
the new European Regulatory Package of 2002 the TKG will be replaced by a new Telecommunications Act (TKG 2003) in second half 2003.



The TKG establishes the basic regulatory framework but leaves it to the relevant authority to issue ordinances containing detailed provisions. So far, the Federal
Minister of Traffic, Innovation and Technology has issued several ordinances. The TKG aims primarily at achieving technical minimum standards, reliable, high-quality, innovative services,
modern infrastructure promoting high-quality services and efficient and interference-free use of the available frequencies, open competition and the provision of universal
service.

The
TKG provides for two regulatory authorities: theRundfunk und Telekom-Regulierungs-GmbH(RTR GmbH, formerly Telekom
Control GmbH) and theTelekom-Control-Kommission, or the Kommission. RTR GmbH (acts as an operative arm of the Kommission) is responsible for the
implementation of the basic provisions, and provides legal, technical and commercial expertise for the Kommission's decisions. The Kommission is an independent three-member committee meeting the
requirements of a tribunal under the European Convention on Human Rights. According to the TKG, the Kommission is responsible for decisions regarding the issuance, withdrawal, revocation and amendment
of licenses, the approval of business conditions and tariffs of market-dominating operators, the definition of financial compensation to be paid from and to the universal service fund, decisions
regarding market-dominating operators, definition of the conditions for interconnection in the event of a dispute and decisions regarding failure of market-dominating operators to comply with the ban
on cross-subsidization and discrimination.



According to the TKG anyone may offer telecommunications services, provided that the statutory requirements are met. An individual license issued by the
Kommission is required for the voice and non-voice public mobile telecommunications services by means of an owner-operated mobile network and public voice telephony or the public offer of
leased lines by means of an owner-operated fixed network.

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The framework for interconnection is set out in the TKG and two ordinances concerning interconnection
(Zusammenschaltungsverordnung) and numbering (Numerierungsverordnung). Additional principles for
interconnection have been set out by the Kommission in several decisions. These decisions also determine interconnection fees for traffic between the incumbent dominant operator, Telekom Austria AG,
mobile operators and certain individual fixed-line operators and in practice serve as a guideline for interconnection agreements concluded between other operators.

A
decision dated October 1998 established, among other things, the tariffs for carrier selection, the type of carrier selection to be implemented, local exchange interconnection,
mutual access to free-phone numbers and transmission of unrestricted ISDN bearers at the same tariff as voice and emergency services. The specific conditions and fees for interconnection
with Telekom Austria were modified in April and September 2002.

Provision
of preselection was required by law by January 1, 2000. A decision of the Kommission dated March 7, 2000, modified in April 2002, has established specific
conditions and modalities for carrier preselection.

A
decision by the Kommission dated July 1999 and last modified in January 2003 established conditions and modalities under which Telekom Austria AG is required to unbundle
local loops.

With
decisions of April 2003 the Kommission modified the interconnection fees for mobile operators.



On July 3, 1998, the Kommission granted the local subsidiary of Tele2 two licenses, one for fixed-line voice telephony and one for the
operation of leased lines. The licenses are of unlimited duration and are not subject to any special restrictions or material license conditions. Both licenses have been transferred to the local
subsidiary of Tele2. Tele2 started operations in Austria in mid-March 1999.

Market area Southern Europe

France



TheLoi de Réglementation des Télécommunications, or
LRT, which was adopted in France on July 26, 1996, is the principal legislation governing the activities of Tele2's subsidiary in France. The LRT provided for a complete transformation of the
regulatory environment for the French telecommunications industry and full liberalization as of January 1, 1998. Its general objectives are to create a framework for a fully competitive
telecommunications market, to ensure the provision of universal service and to establish an independent regulatory authority, theAutorité de Regulation des
Télécommunications, or ART, which was formed on January 1, 1997.



The LRT has been implemented through a series of detailed administrative decrees (décretsor arrêtés) covering specific subjects. Most of the regulatory framework set out in the LRT has been implemented, especially
the provisions pertaining to numbering and interconnection, or universal service. In April 2000, the EU directive relating to terminal equipment was put into effect, imposing obligations on
network operators that would ensure greater access and easier interconnection of networks. Furthermore, a European recommendation on local access (unbundling the copper pair of the incumbent) enables
the French regulator to rule unilaterally on conditions on this local loop access.

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In
addition, carrier selection and preselection for mobile networks became effective in July 2000, and carrier selection and preselection for local calls in January 2002. The carrier
selection and preselection were until now restricted to long-distance and fixed to mobile calls. This opening of local competition, both on voice (extension of selection and preselection
to local calls) and broadband services (unbundling), has tremendous consequences on the French market.



The LRT requires licensing for certain telecommunications services and telecommunications networks. Each license is accompanied by a schedule of conditions
(cahier des charges) setting forth obligations applicable to the particular service or network. Standard provisions of the cahier des chargeshave been set
forth by decree. These standard provisions relate to privacy of communications, public safety, education and national
defense requirements, research and development expenditures, provision of directory information, equal treatment of foreign operators, regulatory oversight, use of frequencies, management and
accounting procedures necessary to guarantee fair competition, publication requirements, network coverage and universal service.



Any operator authorized by license to operate a public telecommunications network is required to permit interconnection with its network, on public and
non-discriminatory terms, to other public network operators and public telephone service providers. As a result, any such operator is required to provide interconnection to its competitors
on terms comparable to those afforded to its subsidiaries, divisions and business partners. Any authorized operator may not refuse a request for interconnection within the terms of the LRT if the
terms are reasonable. Interconnection requests are governed by agreements between the parties, which must conform to the requirements of the LRT and its implementing decrees. Market-dominant operators
with significant influence over a relevant
telecommunications market must fulfill certain supplemental obligations. Primarily, they must publish their technical and pricing terms for interconnection to other operators. The operators that are
considered dominant operators are determined annually by ART after prior consultation with the French Competition Council (Conseil de la Concurrence).
The only operator currently considered a dominant operator is France Telecom. Orange (France Telecom mobile) and SFR (Vivendi Group) will have obligations related to their power on the mobile market.

In
general, interconnection tariffs of dominant operators must reflect their pertinent costs, including a proportionate share of overall costs that are common to interconnection and
other services, network replacement costs based on the best available technology and an appropriate return on investment.



On April 16, 1998, the French Minister of Telecommunications granted our French subsidiary, Téle2 France SA, a license to
establish and exploit a telecommunications network open to the public and to provide telephone service to the public. A one-digit prefix (préfix
E) was granted by a decision of the ART, No. 98-94 of February 9, 1998, giving Téle2 France SA the number "4" as a
carrier selection code. The license has a term of 15 years, subject to renewal in accordance with the provisions of the LRT. This license requires Tele2's French subsidiary to establish:
(i) at least one point of interconnect in each of the 22 regions of mainland France within 18 months of the grant of the license; (ii) at least two points of interconnect in each
region of mainland France within 36 months of the grant of the license; and (iii) at least three points of interconnect in each region of mainland France comprising at least three
departments within ten years of the grant of the license. Téle2 France SA is also required to carry, within 36 months of the grant of the license, more than 60% of
its national

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long-distance
traffic on lines owned or leased by it. Téle2 France SA fully complies with this term of the one-digit license.

Article 4
of the license requires that Téle2 France SA notify the ART of any changes which have occurred in the composition of its capital.

Italy



The Italian telecommunication market has been extensively liberalized for substantially all telecommunications services, including the provision of fixed public
voice telephony services and the operation of networks to support the provision of such services, starting from January 1, 1998. The core legislative provisions are set forth by the
Presidential Decree 318 of September 19, 1997 (the "Telecommunications Regulation"), implementing European Union legislation aimed at liberalizing the telecommunications sector.



The main authorities in the Italian telecommunication sector are the Ministry of Communication, which is responsible for issuing licenses in Italy, and the
National Regulatory Authority (Autorità per le Garanzie nelle Comunicazioni) ("AGCOM"), established in 1998 pursuant to Law
No. 249 of July 31, 1997. The AGCOM is mainly responsible for i) implementing primary and secondary legislation; ii) promoting competition in the telecommunication market;
iii) settling interconnection disputes between telephone network operators; iv) promoting the unbundling of the local loop; and v) granting UMTS licenses, WLL licenses and mobile
frequencies. In addition, the Antitrust Authority (Autorità Garante della Concorrenza e del Mercato) is competent for antitrust issues
and cooperates with AGCOM.

The
Telecommunications Regulation contains provisions concerning:



The
AGCOM is in charge of establishing detailed regulations governing the telecommunications sector and monitoring the application of the regulations, while the Ministry of
Communications retains the responsibility for defining telecommunications policy in Italy.



Licensing rules and procedures are set forth in Article 6 of the Telecommunications Regulation and in a Decree of the Ministry of Communications dated
November 25, 1997. These provisions distinguish between general authorizations and individual licenses for the offering of telecommunications services to the public. Operators meeting the
requirements set forth by AGCOM Resolution No. 467/00/CONS, issued on July 28, 2000, and offering telecommunications services other than voice telephony, installation of a
telecommunications network, and supplying network access to third-party operators, may provide telecommunications services or operate telecommunications

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networks
within the scope of such authorizations. For services and networks not covered by such general authorization, an individual license must be obtained.

All
individual licenses must be granted pursuant to open, transparent and non-discriminatory procedures. The number of individual licenses may be restricted only to the
extent required to ensure the efficient use of radio frequencies or for reasons of number availability. An individual license is valid for a maximum period of 15 years and may be renewed. It
cannot be assigned to third parties without prior consent from the AGCOM. Licenses provide the right of interconnection and rights of way on public and private land.



A decree of the Ministry of Communications dated April 23, 1998 (the "Interconnection Decree") sets forth the general requirements for the content of
interconnection agreements and confers extensive power to the AGCOM in this matter. Pursuant to the Interconnection Decree, interconnection agreements shall include provisions on the terms of payment,
liability rules, intellectual property rights, duration of the agreement, dispute resolution procedures and technical specifications of the interconnection offer. With respect to the last item, the
Interconnection Decree lays out elements that must be part of the offer, including:



The
Interconnection Decree further specifies the obligations pertaining to operators with significant market power, as discussed below. The AGCOM is charged with monitoring the
interconnection market. It may set time limits for the execution of interconnection agreements on a case-by-case basis, and if such time limits are not observed, the AGCOM can
establish mandatory time frames for interconnection. The AGCOM also has the power to issue binding decisions on operators failing to comply with the conditions of interconnection agreements and, in
the event of disputes, to mandate interconnection. To this end, each party may file a request for the settlement of any unresolved issue.



Under the Telecommunications Regulation, companies operating fixed or mobile networks, or offering fixed-line public voice telephony services, leased
lines or international circuits, are subject to special obligations with respect to interconnection and accounting policies if they have significant market power. An operator is presumed to have
significant market power if its share of the relevant market is greater than 25%. However, the AGCOM may determine that an operator having a market share greater than 25% does not have significant
market power, or that an operator with a market share lower than 25% does have such power.

Telecommunications
operators both providing telephony services and having significant market power are required to publish and submit to the AGCOM an annual interconnection offer,
indicating interconnection terms and conditions. The AGCOM may review the interconnection offer and impose changes to ensure that interconnection rates are transparent and sufficiently unbundled. In
addition, the AGCOM ensures that interconnection rates do not exceed European "best practice" as assessed in the European Union recommendation.

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A decree of the Ministry of Communications dated March 10, 1998 mandates provision of universal servicea minimum set of services of a given
quality, including the provision of fixed public voice telephony services, publication of telephone directories and provision of customer information services, public payphones, free emergency call
services and special services for disabled or disadvantaged peopleto end users regardless of their geographical location and at an affordable price. The decree also establishes a special
fund for compensating operators who bear the cost of universal service provision. Initially, incumbent operator Telecom Italia must provide universal services. However, other service providers
operating in the market may face similar obligations.

The
costs for universal service obligations must be borne by public networks providers, voice telephony operators and mobile and personal licensees. Providers of value added services,
data transmission services, Internet services, private networks and services to closed user groups are excluded from contribution to the fund. Under specific market competition conditions, the AGCOM
may also decide to exempt newly entered operators from contribution to the fund.

On
August 1, 2000, the AGCOM issued Resolution No. 8/00, stating that Telecom Italia is entitled to some degree of contribution for its universal service obligations with
regard to 1999. The total fund will amount to ITL 120.83 billion, ITL 69 billion of which will be contributed by Telecom Italia itself, while the remaining 51.83 billion liras
will be contributed by Infostrada (ITL 1.2 billion), Omnitel Pronto Italia (ITL 16.67 billion) and Telecom Italia Mobile (ITL 33.96 billion).



The Ministry of Telecommunications assigns ranges of numbers to requesting operators. Those companies allocated a range of numbers and having a license are
entitled to negotiate reverse interconnection agreements, whereby they receive a termination fee whenever a call is terminated on one of their numbers.

In
addition, since January 1, 2000, carrier preselection has been introduced for international and long-distance calls, allowing users to choose specific carriers on a
permanent basis and to override such choices by means of call-by-call choices. Carrier preselection for local calls was to be made available in July 2000 and, to date,
has only been partially implemented.

On
the other hand, number portability between operators was scheduled to be operational as of January 1, 2001, and is currently being deployed in various districts in Italy
according to the detailed guidelines issued on December 7, 1999, by AGCOM Resolution No. 3/99/CIR. With the resolution 6/00/CIR the AGCOM reserved a new numbering range (700,701,702,709)
to be used to provide Internet services. The use of the number 7 allows to the licensing Operators to originate or terminate Internet traffic at lower tariffs than the normal voice service.



According to the Telecommunications Regulation, all licensed operators enjoy equal rights with regard to rights of way. No special authorization is required to
install the equipment to offer licensed services, except for those licenses issued by the competent local authorities, which must be granted based on non-discriminatory criteria.



Through its Resolution No. 2/00/CIR, issued on March 16, 2000, the AGCOM established the timeline and guidelines for unbundling the Italian local
loop. This decision became effective on March 29, 2000. Pursuant to this decision, Telecom Italia will be obligated to offer unbundled access to the local loop. In particular, Telecom Italia
must offer a number of unbundled services to its

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competitors,
including access to the terminal end of its local loops (whether copper or fiber optic wires) and the collocation of competitors' equipment in Telecom Italia switches. To make such
collocation possible, Telecom Italia could be required to provide a link from the competitor's switch to Telecom Italia's switch. In the event that these unbundled access services are not available
for a justified reason, Telecom Italia must nevertheless provide a digital channel for connection with the end userthat is, capacity on the Telecom Italia network so that competitors may
transmit from their own switches to their customers' premises. Where Telecom Italia uses digital subscriber line ("DSL") access technology for the provision of services to
end-users through its commercial arm or by its controlled, controlling or associated companies, it must offer other operators sufficient capacity through a permanent virtual channel. The
AGCOM established access conditions to the permanent virtual channel in Resolution No. 15/00/CIR issued on January 15, 2001. AGCOM requires, that, in determining access prices, Telecom
Italia should leave competitors a suitable margin between wholesale and retail prices.

In
furtherance of its Resolution No. 2/00/CIR, the AGC has determined both access conditions to the local loop and the timing and procedures of delivery for such access through,
respectively, Resolution No. 14/00/CIR, issued on December 21, 2000, and Resolution No. 13/00/CIR issued on December 6, 2000. In particular, Resolution No. 13/00/CIR
lays down a stringent timetable for local loop access. Telecom Italia informed competitors about the sites effectively available for collocation and competitors were to confirm their collocation
request in March 2001. Ninety days from such request, Telecom Italia was required to enable the relevant sites.



On September 15, 1998, the Italian Ministry of Communications granted us a license for the provision of voice telephony services in Italy. The license has
a term of 15 years. On March 17, 1999, the AGCOM approved the transfer of the license to our Italian subsidiary, Tele2 Italia S.p.A. The main conditions of the license are:



The
Performance Bond is no longer required by Italian law.

In
addition to an initial fee of ITL 100 million, Tele2 must pay an annual contribution of EUR 129,000 for the allocation of certain carrier selection codes, and EUR 62,000 as an
annual contribution for the coverage of costs for the control of the performance of services offered.

On
December 23, 1998 the Italian Finance Ministry issued a decree defining the obligation of licensed operators to pay an annual contribution set for 2002 to an amount equal to 2%
of the annual approved
earnings of each licensed operator achieved on telecommunications like fixed and mobile telephony, radio and television services and interactive multimedia services

On
July 12, 2000 the Italian Finance Ministry issued a decree defining the obligation of licensed operators to contribute to the funding of the AGCOM (as provided for in
Article 2, paragraph 38

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(b) of
the Telecommunications Regulation). For 2000, the contribution was set to an amount equal to 0.35 per thousand of the annual approved earnings of each licensed operator achieved on
telecommunications services, like fixed and mobile telephony, radio and television services and interactive multimedia services.

To
facilitate the market entry of new competitors, during 2000 such contribution is not levied on, among other things, revenues arising from (i) services that have been rendered
by an operator for a period of less than two years, unless such revenues derive from the same activity performed by other operators during the same two-year period; (ii) services
rendered pursuant to concessions, authorizations or licenses assigned for coverage at a local level; and (iii) interactive and multimedia services.

Spain



The Telecommunications Market Commission (Comisión del Mercado de las Telecomunicaciones, or CMT)
is administratively attached to the Ministry of Science and Technology, moved from the Ministry of Economic Affairs 2003, but is legally independent from it. It is responsible for safeguarding
competition in the market and for relations between operators (e.g. interconnection, including dispute resolution, cost accounting and local loop unbundling). The Secretariat of State for
Telecommunications and the Information Society, which forms part of the Ministry of Science and Technology, is responsible for regulation, spectrum management, activities relating to the information
society, external relations and supervision of telecommunications operators.



In late 2002, Spanish regulation has included several measures to promote competition in the market: excluded incumbent monthly rental in the price cap control
mechanism, resale incumbent monthly rental to be regulated in 2003 and new Law of Telecommunications to be approved in 2003.

However,
market players are concerned that still many uncertainties prevail. For instance, the incumbent operator's ADSL roll-out has captured more than 80% of the broadband
market. The incumbent has been fined because of preselected customers win-back practices and delaying introduction of new interconnection models.



New entrants continue to express concern about a price squeeze between the incumbent's interconnection charges and its retail tariffs and the discounts applied.
local loop unbundling offer for 2002 introduced an average reduction of 30% however penetration of unbundling is very low. Entrants consider that price squeeze effects are aggravated by the way tariff
rebalancing is conducted. Under the price cap regime, increases in the line rental charge must be offset by large decreases in call tariffs, especially for long-distance communications.
Entrants note that these decreases and the lack of proportional reductions in the incumbent's interconnection charges make entry more difficult in this segment. They also claim that Telefonica's per
minute local call tariffs are among the cheapest in the European Union and are not cost-based.

CMT
has also introduced a new interconnection model based on capacity, cost is depending on number of channels and independent from time which allows innovative offering of flat fee for
voice.

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We were awarded a mobile virtual network operator (MVNO) license (A2) in July 2002, being the first operator in the market to obtain one. However, mobile
network operators are reluctant to open their networks, and commercial negotiations still continue.

Market area Luxembourg

Luxembourg



Until recently, the telecommunications sector in the Grand-Duchy of Luxembourg was a state monopoly. Despite the adoption of European Union legislation aimed at
liberalizing the markets for telecommunications services, the public sector remained the sole operator of telecommunications systems in Luxembourg. In 1997, the state monopoly was repealed and
replaced by a more liberal legal framework, the Telecommunications Act (Loi du 21 mars 1997 sur les télécommunications),
as amended.



The enforcement of telecommunications laws and regulations is carried out by the Luxembourg Institute of Regulation (Institut
Luxembourgeois de Régulation, or ILR).

The
main objective of the Telecommunications Act is to create a competitive environment in the telecommunications sector to allow the unrestricted provision of telecommunications
services in accordance with the law and to ensure the provision of a minimum universal telecommunications service. The Telecommunications Act sets forth principles governing universal service, open
networks (interconnect), terms and conditions of services, interconnection, equipment, allocation of frequencies, numbering plan, easement on public and private property and telephone directories.



Interconnect rates are renegotiated every year. We charge a uniform tariff rate for fixed international calls, regardless of whether such calls are made during
peak or off-peak hours.



The Telecommunications Act provides for a licensing regime that fundamentally conforms to European Union law. Mobile telephony services are, among various other
telecommunications services, subject to a licensing requirement.

The
minimum schedule of conditions for the awarding of licenses to operate mobile telephony services is set forth by Grand-Ducal decree of December 14, 2001
(Règlement Grand-Ducal du 14 décembre 2001 fixant les conditions minimales du cahier des charges pour l'établissement et
l'exploitation de réseaux de services de télécommunications mobiles). The schedule of conditions provides for: (i) certain
minimum coverage (95%) of GSM and GSM 1800 services within a certain period of time; (ii) a maximum call blocking rate; and (iii) other specified minimum standards of service.

Grand-Ducal
decrees were enacted to promote the efficient use of radio transmitters and receivers and to monitor the use of the radio frequency spectrum in Luxembourg. The decrees
established a licensing regime for the ownership and use of radio transmitters and certain types of radio receivers, including the assignment of frequency to such devices.

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Our Luxembourg subsidiary, Tango, was granted a license under the Telecommunications Act on November 28, 1997. The principal conditions of the license are
as follows:



Tango's
license is valid until 2012. Unless otherwise notified by the Ministry of Telecommunications prior to its expiration, the license will be renewed automatically, at each time for
an additional five-year period. In addition to the initial fee of EUR 1,859,201, Tango is required to
pay an annual management fee of minimum EUR 400,000 and maximum 0.2% of the turnover on the market covered by the license concerned, and an annual frequency fee of EUR 7,500 per dublex channel.



On May 22, 2002, Tango was granted a 3G license under the Telecommunications Law (modified on March 21, 1997) and under the Grand-Ducal decree of
December 14, 2001. The principal conditions of the license are as follows: (i) Launch of commercial operation of the 3G network on January 2003 with a population coverage of 90%
and geographical coverage of 69.5% at launch; (ii) Population coverage of 97% in May 2004 and 99% in May 2010 (with geographical coverage of 92% in May 2004 and 98% in
May 2010); (iii) probability of connectivity of 90% at launch and 95% in May 2004 (with call blocking rates in peak time below 1% and call seizure rate below 1.5%;
(iv) services offered at commercial launch to include higher quality voice service and data transmission of a speed of 384 kbit/s downlink and 64kbit/s uplink in the areas of coverage.

These
obligations are subject to modifications based on regulation and building permits, the granting of necessary authorizations, and the existence and availability of adequate 3G
equipment. The Minister will be able to modify the license upon a reasoned request of the license holder.

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Under
the terms of the license, we have further committed to share sites at conditions based on objective and transparent criteria based on costs, offer number portability from
commercial launch onwards and to offer technical and financial conditions for national roaming to other operators at the latest on the date of commercial launch.

Tango's
license is valid until 2017. Unless otherwise notified by the Ministry of Telecommunications prior to its expiration, the license will be renewed automatically, at each time for
an additional five-year period. Tango is required to pay an annual management fee of minimum EUR 200,000 and maximum 0.2% of the turnover on the market covered by the license concerned,
and an annual frequency fee of EUR 24,000 per MHz of duplex symmetrical channel in paired bands and EUR 12,000 per MHz of simplex channel in non-paired bands.



On February 10, 1999, the Luxembourg regulatory authority granted Tele2's subsidiary a license with a term of 30 years to provide fixed line
telecommunications services in Luxembourg. The license is renewable for ten-year periods. Significant terms of the license include: (i) an obligation that 95% of customers with
fixed lines be activated within eight hours; (ii) an obligation that 90% of customers with fixed lines be activated within 15 days; (iii) an obligation that requests for
appointments with the company be granted for 99% of all requests made; and (iv) a dropped call rate of no more than 1%.

Liechtenstein



Until recently, the telecommunications sector in Liechtenstein was a state monopoly. In 1996, the state monopoly was repealed and replaced by a more liberal legal
framework, the Telecommunications Act (Telekommunikationsgesetz (TelG) vom 30 August 1996), as amended.

The
telecommunication infrastructure and network is owned by LTN Liechtenstein Telenet which is 100% owned by the Liechtenstein state. They have no direct offer to the end customer.
Actors on the Liechtenstein market act as pure service providers and though pay interconnection fees to LTN for national and international switching activities.



The enforcement of telecommunications laws and regulations is carried out by the "Amt für Kommunikation" (or AK).

The
main objective of the Telecommunications Act is to create a competitive environment in the telecommunications sector to allow the unrestricted provision of telecommunications
services in accordance with the law and to ensure the provision of a minimum universal telecommunications service.



Interconnect rates are defined by a reference Interconnect Offer ("RIO") and are not based on bilateral agreements. LTN is publishing a new RIO every two years.



The Telecommunications legislation provides for a licensing regime that fundamentally conforms to European Union law. Mobile telephony services are, among various
other telecommunications services, subject to a licensing requirement.

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The
minimum schedule of conditions for the awarding of licenses to operate mobile telephony services is set forth by a Directive of June 2, 1998 (Verordnung vom 2 Juni 1998 über Einzelkonzessionen für die Erbringung
von Telekommunikationsdiensten) and a Directive of
July 13, 1999 (Verordnung vom 13 Juli 1999 über die Auschreibung und Vergabe von Einzelkonzessionen nach dem Telekommunikationsgesetz). The schedule of conditions provides for:
(i) certain minimum coverage (95% territory, 98% population) of GSM and GSM 1800 services within a certain period of time; and (ii) other specified minimum standards of service.



Our Liechtenstein subsidiary, Tango, was granted a license under the Telecommunications Act on February 22, 2000. The principal conditions of the license
are as follows:



Tango's
license is valid until 2015. For a possible extension to the duration, an appropriate application must be submitted to the Licensing Authority by no longer than 2 years
prior to the expiry of the license. There is no legal right to an extension being granted. In addition to the initial fee of CHF 40,000, Tango is required to pay an annual supervision fee of CHF 5,000
as well as the following frequency utilization charges:

Per
allocated 2x1 MHz in the 900 Mhz band: CHF 2162.16

Per
allocated 2x1 MHz in the 1800 Mhz band: CHF 1114.20



On January 15, 2002, Tango was granted a 3G license under the Telecommunications Law and a Directive RA 1/712-3810 of March 13, 2001
(Entscheidung der Regierung betreffend die Festlegung der regulatorischen Rahmenbedingungen und Konzessionsbestimmungen für die Erteilung von
UMTS/IMT-2000-Mobilfunkkonzessionen). The principal conditions of the license are as follows: (i) Launch of commercial operation of the 3G
network in June 2002 with a population coverage of 70% in December 2002 and 90% in December 2003.

These
obligations were subject to modifications based on regulation and building permits, the granting of necessary authorizations, and the existence and availability of adequate 3G
equipment. As those conditions applied, Tango has agreed with the Liechtenstein government that the effective launch date
would be postponed and that a new date would be communicated to the authorities before end of Q3 2003.

Under
the terms of the license, we have further committed to share sites at conditions based on objective and transparent criteria based on costs, offer number portability from
commercial launch onwards and to offer technical and financial conditions for national roaming to other operators at the latest on the date of commercial launch.

Tango's
license is valid until December 31, 2016. For a possible extension to the duration, an appropriate application must be submitted to the Licensing Authority by no longer
than 2 years prior to the expiry of the license. There is no legal right to an extension being granted. In addition to an

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initial
fee of CHF 60.000, Tango is required to pay an annual management fee of CHF 10000 and an annual frequency fee of CHF 3000 1*15 per MHz of simplex channel and CHF 15000 per 2x15 MHz paired
symmetrically.



On May 16, 2000, the Liechtenstein government granted our subsidiary a license with a term of 10 years to provide fixed line telecommunications
services in Liechtenstein. The license is renewable for ten-year periods.

In
addition to the initial fee of CHF 2000, Tele2 is required to pay an annual supervision fee of CHF 500.

Belgium



The basic provisions of Belgian telecommunications regulation are laid down in the Act of March 21, 1991 as modified on December 17, 1997 and
thereafter. The 1991 Act has been implemented by a number of Royal Decrees. It created the Belgian Institute of postal and telecommunications services (the "BIPT"), which is the regulatory authority
for the telecommunications sector in Belgium. The 1991 Act states that the provision of the telecommunication services is generally liberalized, provided that the conditions and procedures laid down
in the applicable laws and decrees are fulfilled. The 2002 European Regulatory Framework will not be implemented by July 24, 2003 as foreseen in the European directives. It is expected that the
Parliament will adopt the new law by end 2003 or to the latest early 2004.



Carrier selection exists since January 1, 1998. Carrier preselection became compulsory in Belgium on January 1, 2000. The royal decree of
March 16, 2000 obliges fixed operators to offer number portability to end-users. The Act of July 19, 2001, obliges mobile operators to offer mobile number portability to end
users. Mobile number portability entered into force on October 1, 2002. The 1991 Act contemplated the creation of a fund to finance universal telecommunications services. Operators of public
networks (fixed and mobile) and voice telephony operators will be called upon to contribute to this fund. Belgacom has requested in 2002 the activation of this fund. In April 2003, the
activation decision has been suspended for further investigation. Although the universal service fund is not currently in operation, if implemented, Tele2 Belgium would be required, under the terms of
its licenses, to contribute to it. The unbundling of the local loop and bitstream access were imposed on SMP operators (i.e. Belgacom) by a royal decree of December 12, 2000. Belgacom must
annually publish a Belgacom Reference Unbundling Offer (BRUO) and a Belgacom Reference Offer on Bitstream Access (BROBA).



Articles 87 and 92 of the 1991 Act regulate the grant of voice telephony licenses and infrastructure licenses. The rights and obligations resulting from these
licenses are contained in two royal decrees dated June 22, 1998. The royal decrees include provisions on interconnection, quality and availability of the services, numbering, duration of the
licenses, privacy of communications, public safety, provision of directory information, equal treatment of foreign operators, publication requirements, collaboration with the ombudsman service and
universal service obligations.

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All providers of a public telecommunications network or of telecommunication services offered to the public in Belgium and thereby controlling the means of access
to the end users are obliged to enter into negotiations with other providers of such networks or services if those other providers introduce a request for interconnection.

In
relation to interconnection tariffs, operators with significant market power in the market for interconnection (i.e.Belgacom, Belgacom
Mobile and Mobistar) are required to ensure that interconnection charges are non-discriminatory, transparent and cost-oriented. As a result, any such operator is required to
provide interconnection to its competitors on terms comparable to those afforded to its subsidiaries, divisions and business partners. The BIPT and the Minister for Telecommunications review and
approve every year the Belgacom Reference Interconnection Offer (BRIO) which includes all technical, commercial and financial terms of the interconnection with the incumbent.



On March 24, 2000, the Minister for Telecommunications has granted to Tele2 Belgium SA, a license to provide voice telephony services on the entire Belgian
territory and a license to establish and operator a public telecommunication network in the municipalities covered by the geographical license scope. The voice telephony license is granted for
15 years and is automatically renewed for 10 year periods, unless Tele2 Belgium or the Minister terminate the license in writing. The network license is granted for an undetermined
period of time. No investment or coverage obligations are linked to these licenses. Tele2 Belgium has received the Carrier Selection Code 1602 from the BIPT to offer indirect access to its voice
telephony services. Any change in the shareholder structure of Tele2 Belgium must be notified to the BIPT. Tele2 Belgium SA fully complies with the terms of its licenses.

Market Area Branded Product & Services

United Kingdom



In the UK, the Telecommunications Act of 1984 provided the basis for the liberalization of the telecommunication market in the UK. However, in the access network
market the incumbent and the former public telecommunications operator, British Telecommunications plc ("BT") still retains a dominant position.



The Office of Telecommunications (Oftel) is the regulator for the UK telecommunications industry. Oftel was set up on August 1, 1984 under the
Telecommunications Act 1984. Oftel has the authority to implement applicable laws by making regulations and issuing "determinations" having the force of law.

The
public register includes all telecommunications licenses and any amendments to licenses issued under the Telecommunications Act 1984. Although Oftel hold all license records, the
Department of Trade and Industry ("DTI") actually issues all the telecoms licenses that phone companies need to be able to offer services in the UK.

In
January 1985 BT's monopoly on the supply and maintenance of the prime (first) telephone ended. And in October 1985 the Director General published his determination of
the terms for the interconnection of public networks.

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In June 1993, the Competition and Services (Utilities) Act 1992 came into force enabling Oftel to prescribe standards of performance for operators.

In
December 1996 Oftel published its Code of Practice covering all public switched telephone networks in the UK. All calls originating or terminating in the UK which are carried
by one or more of the networks are covered by this Code.

In
the mobile market, following the licensing of Vodafone and Cellnet in 1983, a duopoly operated until the entry of One2One (now T-Mobile) in 1993 and Orange in 1994. In
2003 there are 8 licensed mobile phone operators in the market.

August 1999,
BT Cellnet agreed, at Oftel's insistence, to let independent service providers market their own pre-pay packages to customers on its network.

The
EU Interconnection Directive was implemented at the end of December 1997.

From
June 30, 1999, the provisions in the EU Licensing Directive which affect existing licences were implemented in the UK creating rules governing entitlement to inclusion in the
list of operators with rights and obligations to interconnect, known as the Annex 2 list.

Carrier
pre-selection was introduced by OfTel from January 1, 2000.

More
recently, the legal framework governing telecommunications has been reviewed and the Communications Act 2002 is due to become law on July 25, 2003. A new regulator, the
Office of Communications (OfCom) will be established. OfCom will be the new regulator for the UK for the radio, television and telecommunications sectors. It is scheduled to be operational by the end
of July 2003. OfCom currently has no statutory regulatory powers. Until OfCom is fully operational, Oftel will continue to be the regulator for telecommunications sector. The changes represent
a general revision of the regulation of all modes of communication as part of implementing relevant EU Directives.



Three Public Telecom Operators (PTO) licences have been issued to Tele2 companies in the UK by the Secretary of DTI under the Telecommunications Act authorising
the provision of public telephone services, international facilities (IF) and international simple voice resale (ISVR). Those companies are Alpha Telecom Communications Limited, Tele2 UK Limited and
Tele2 UK Communications Limited. Holding of a licence entitles the holder to be included in the list of operators with rights and obligations to interconnect, known as the Annex 2 list, which is
available for public inspection.



Another Tele 2 company, although not UK based, Alpha International Overseas Telecommunications Services Limited, has a branch office in Portugal and has
authorisation from the Portuguese regulator to operate a telecommunications business from Portugal.

Item 5: Operating and Financial Review and Prospects

This discussion of our results of operations and liquidity and capital resources includes forward-looking statements that involve risks
and uncertainties. Our actual results in the future could differ materially from those anticipated in these forward-looking statements. See"Forward-Looking Information"and Item 3:"Key InformationRisk
Factors."Our Consolidated Financial Statements, and the other financial information relating to the Tele2 companies set forth in this section, have
been prepared in accordance with Swedish GAAP. See "U.S. GAAPReconciliation with Swedish GAAP." You should read the following

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discussion in conjunction with our Consolidated Financial Statements and the accompanying Notes thereto appearing elsewhere in this Annual Report.

Introduction

Our operating revenue in 2002 amounted to SEK 31,282 million, an increase of SEK 6,197 million, or 25%, from SEK 25,085 million in 2001.
Revenue growth in 2002 was primarily attributable to increases
in the Southern Europe, Nordic and Eastern Europe & Russia market areas. We had a total of 16.8 million customers at December 31, 2002, to which a one-off adjustment
of389,000 was applied as of January 1, 2002 to adjust all of our group companies to report in line with the Group's definition of an active customer. Net customer intake for 2002
as a whole before this adjustment was 15%.

Operating
profit/loss ("EBIT") totaled SEK 1,530 million, compared with SEK1,356 million in 2001, with an EBIT margin of 5% for 2002 compared to5%
in 2001. These increases reflect positive contributions from the result from operations within all market areas, especially fixed telephony in Southern Europe and our Nordic operations. We reported
adjusted EBITDA (operating profit/loss before depreciation and amortization) of SEK 5,127 million for the 2002 financial year, compared with adjusted EBITDA of SEK 1,698 million in 2001,
with an adjusted EBITDA margin of 16% for 2002 compared to 7% in 2001.

Net
interest expense and other financial items totaled SEK698 million for 2002 compared to SEK621 million in 2001. Net interest expense and other
financial items for 2002 was affected by a write-down of SEK86 million, attributable primarily to shares in Xsource Corporation. The average interest rate on
outstanding liabilities was 6.4% in 2002 compared to 6.3% last year. Profit/loss after financial items ("EBT") amounted to SEK 796 million for 2002, compared to
SEK1,944 million in 2001.

Tax
on net profit for the year amounted to SEK574 million, which was positively affected by SEK 576 million in respect of a revaluation of loss carry-forwards
in a number of European companies. In 2001, tax on net profit was SEK 2,335 million, which reflected the tax effects in Swedish operations, and a tax effect of SEK 3,082 million in
connection with the restructuring of SEC. Profit after tax was SEK 223 million in 2002 compared to SEK 392 million in 2001. Earnings per share were SEK 1.51 after full dilution, compared
with SEK 2.70 in 2001.

Non-GAAP Financial Information

We use adjusted EBITDA (operating profit before depreciation and amortization) and EBIT (operating profit) as the principal measures for monitoring profitability
of our operations. Our management believes that, in addition to EBIT, EBITDA is a measure commonly reported and widely used by analysts, investors and other interested parties in the
telecommunications industry. Accordingly, adjusted EBITDA is presented to enhance the understanding of our historical operating performance. Adjusted EBITDA, however, should not be considered an
alternative to operating profit as an indicator of our operating performance, or an alternative to cash flows from operating activities as a measure of our liquidity. Adjusted EBITDA is not a measure
of financial performance under Swedish GAAP or U.S. GAAP and may not be comparable to other similarly titled measures for other companies. Adjusted EBITDA is not meant to be predictive of potential
future results.

For
illustrative purposes, the following table sets forth the relationship between adjusted EBITDA and net (loss)/income for the Tele2 Group for the periods indicated. Our calculation of
adjusted

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EBITDA
is equal to earnings before interest, taxes, depreciation and amortization adjusted for profit/(loss) in associated companies.

Year ended December 31,2000

2001

2002(in SEK millions)Net (loss)/income

(396
)
392

223Minority interest

0

(1
)
(1
)Income taxes

561

(2,335
)
574Net interest expense

211

621

698Profit/(loss) in associated companies

44

(33
)
36Depreciation and amortization

1,400

3,054

3,597Adjusted EBITDA

1,820

1,698

5,127


Factors Affecting Revenues

Mobile Telephony Services

The main revenue source for our mobile telecommunications business is air-time revenues, which consist of charges for calls that originate or
terminate in our mobile telecommunications network. Air-time revenues depend on the number of customers, call volume and tariff pricing. Air-time revenues also include charges
for "roaming" calls. Roaming calls are calls made by customers of other mobile networks that originate calls in a jurisdiction covered by our network, as well as calls made by our customers making
calls in a jurisdiction covered by another operator's network for which we receive revenue.

We
also derive revenues from payments received from other operators for delivering calls originating in their network and terminating in our network.

Other
revenue sources include monthly subscription fees, service activation fees and customer-calling services. The rates we charge for air-time, monthly access and service
activation are the key determinants of the level of our mobile telephony revenues.



The total number of mobile telephony customers increased by 36% to 5.0 million as of December 31, 2002, compared to 3.7 million as of
December 31, 2001. The prepaid card business increased its customer base by 54% to 3.4 million as of December 31, 2002, compared to 2.2 million as of December 31,
2001.

Our
mobile telephony operations in Sweden had 3.0 million customers as of December 31, 2002, an increase of 19% on an annual basis, accounting for 60% of our group's mobile
telephony customers. Mobile telephony customers in Eastern Europe & Russia increased by 60%, accounting for 27% of our group's total number of mobile telephony customers. We also operate mobile
telephony operations through proprietary networks in Luxembourg and Liechtenstein. During 2001 and 2002, we started to roll out mobile telephony operations in Norway, Denmark, Switzerland and the
Netherlands via MVNO
or service provider agreements with local network owners. In February 2003, we also launched service in Austria via an MVNO agreement.

Our
customer base is affected by the level of churn and the level of passive customers. "Churn" refers to subscription disconnections that are either voluntary, upon termination by the
customer, or involuntary, due to nonpayment of bills or because of suspected fraudulent use. "Passive customers" are customers that continue to pay subscription fees but do not use their phones. The
churn rate is measured as the number of subscription disconnections in a period of time, expressed as a percentage

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of
the midpoint of the number of customers at the beginning and end of the period. We generally seek to minimize customer churn by providing strong customer service and high quality services at
competitive prices, as well as through customer loyalty programs and direct customer communication. We believe, based on an independent survey conducted twice every year, that our emphasis on programs
intended to promote customer loyalty and our improved coverage have increased customer satisfaction across our operations. Continued customer growth is also dependent on tariff pricing as well as,
among other things, general economic conditions, competitive pressures and the quality and coverage of our mobile telecommunications network.



Our mobile telephony revenues are affected by the call volume per customer. An influx of new private customers in recent years has been partly a result of our
strategy to attract mobile telephony customers with call patterns that are different from those of business customers. However, we also focus mobile telephony marketing efforts on large corporate and
other high volume customers to maintain an appropriate balance of customers with differing calling patterns with the aim of ensuring maximum utilization of our network at all hours of the day.

Between
1997 and 2002, average call volume per customer increased and there was a shift in the pattern of call traffic toward peak hours. While significantly lower than the corresponding
average for customers during the same period, average call volume per prepaid customer also increased. Despite the increased call volumes, the total average call volume per customer decreased in 2002.
This is due to a shift in our growing customer base towards prepaid customers.

We
anticipate that our aggregate revenues will continue to increase as our customer base grows. However, while increased usage has thus far sustained average revenue per customer, we
believe that this average is likely to decline over time as the number of low-usage customers on our network increases. An increase in the proportion of the number of low-usage
customers
could have the effect of diluting the average revenue per customer and therefore lowering average revenue per customer, while overall aggregate revenues could increase.



Tariff pricing structures vary between market areas. Typically, we offer three or four main mobile telephony tariff structures for postpaid customers, with
different air-time, monthly access and service activation charges that are designed to cater to different usage patterns of customers. Air-time tariffs for domestic calls vary
depending on the time of day when a call is made and tariffs for international calls vary according to the destination of the call. We charge mobile customers separately for certain of the additional
custom-calling services we offer, such as voice-mail, call waiting, call forwarding, short message service and data and facsimile transmission.

Prepaid
customers purchase an initial start-up package and then purchase cards for fixed amounts from which their call charges are deducted. Prepaid customers do not pay
monthly fees, and this service normally does not include call waiting, call forwarding or data and facsimile transmission services.

We
believe that future price levels will be determined primarily by the level of competition in the GSM services market, changes affecting underlying costs, increased competition from
other technologies and local telecom regulators' decisions on termination fees. See "Factors Affecting ExpendituresMobile Telephony ServicesCost of Services" and
Item 3: "Key InformationRisk Factors."

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Fixed-line Telephony and Internet Services

The main revenue sources for our fixed-line telephony and Internet services are call charges from international, national and
fixed-to-mobile telephony and revenue from international traffic from overseas entities with which we have direct carrier agreements, known as "return traffic." We also
generate revenues for terminating traffic from our telephony and dial-up Internet access customers, subscription fees from our dial-up Internet access customers and payments
for the provision of leased lines and permanent Internet capacity to direct access customers.

Average
monthly revenue per customer varies significantly from market area to market area depending on factors such as price differentials, the percentage of international calls, the
percentage of fixed-to-mobile calls and general competitiveness in the fixed telephony and Internet services market. Average monthly revenue per customer in the Nordic market
area tends to be higher than in our continental European markets because of lower usage per customer, which is explained by the lower penetration of preselect. We introduced preselect in the Nordic
market area a few years before it was introduced in the continental European countries in which we operate.



The most significant factor that has affected, and is expected to continue to affect, our revenues in the Nordic market area is the level of our rates. The most
significant factors affecting continental European revenues are the number of customers in our targeted markets, their usage levels and our tariffs.

Our
fixed-line call charges are based on a rate per second that varies depending upon destination and time of call. We also charge a connection fee for each call. The rates
which the former monopolist charges its customers are likely to represent the upper limit on the rates we can charge for similar services. Hence, rate reductions by the former monopolist for services
offered by us without corresponding reductions in the former monopolist's interconnection charges could have an adverse effect on our profitability. We believe that downward pressure on rates and
interconnection charges are declining.

Due
to technological improvements, liberalization of the European telecommunications market and increased available transmission capacity from third parties, we expect costs per minute
to decline. We expect that the decline of per-minute costs will outpace any decline in per-minute rates. If reductions in costs do not outpace reductions in revenues, we may
experience a substantial decline of our margins on calls. Absent a significant increase in billable minutes of traffic carried or increased charges for additional services, this would have a material
adverse effect on our business and financial results.



Preselection is an option whereby a customer can have all calls are routed through an operator of the customer's choice, without having to dial a prefix for every
call. The availability of preselection in a given country depends, among other things, on the speed of implementation of the service by the relevant national public telecommunications operator. Our
experience in markets where preselection has been introduced is an increase in revenues per customer. Our intention is to introduce this service in each market served by the Tele2 brand as permitted
by the relevant regulators.



The main source of revenue for 3C Communications is from calls made on its credit card phone, fax and Internet telecommunications equipment and charges for
transactions made through its Parkomat and Transac equipment. Equipment usage and pricing are the key factors that determine 3C's revenues. 3C continues to experience a decline in traffic on its
equipment due to the increasing

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penetration
of mobile telecommunications equipment. We expect this trend to continue and possibly accelerate. In light of intense competition from mobile telecommunications equipment, 3C intends to
concentrate its equipment in locations where it experiences relatively high usage.

Cable Television Services

Our primary source of revenues from cable television services is monthly fees for subscription to our programming packages. The number of customers and pricing
levels are significant factors that have affected, and are expected to continue to affect, our cable television revenues. Revenues are also affected by the churn rate of the customer base. We believe
that cable customers are generally more sensitive to changes in disposable income than our fixed-line and mobile telephony customers.

Factors Affecting Expenditures

Mobile Telephony Services

The principal components of our mobile telecommunications operating expenditures are the cost of services, sales and distribution expenses and indirect production
and administrative costs.



Our cost of services for our mobile telephony business consists primarily of payments to other operators for delivering calls outside our network (interconnect
costs), payments for the provision of fixed-line and microwave links between our and outside networks, and payments to telecommunications operators abroad for calls made by our mobile
telephony customers in other systems. We also include certain costs of production and services personnel in cost of services. In addition, our costs in the Nordic market area include a portion of the
payments to Banverket, the National Railway Administration and Svenska Kraftnät for the use of capacity on their trunk networks. Although we capitalized the initial payment to Banverket
for the right to the base capacity, we expense annual payments for capacity in excess of such base capacity. See "Item 10: "Additional InformationMaterial Contracts" for a discussion of
the Banverket arrangements.

Our
costs have risen more slowly than revenues. This is due primarily to the effect of economies of scale, decreases in the interconnect rates payable for mobile calls delivered to other
networks and an increase in local mobile-to-mobile calls among mobile telephony customers within our network that do not incur interconnect expenses. The Swedish regulatory
authorities have indicated that we and other Swedish mobile telecommunications operators may be required to reduce mobile interconnection rates significantly in the near future. The benefit to us of
cost reductions associated with lower interconnection rates payable by us are likely to be offset in part, or possibly exceeded, by reductions in our revenues from incoming traffic. The decision of
the Administrative Court in Stockholm in June 2003 that Tele2 Sweden is an operator with Significant Market Power ("SMP") on the national market for mobile telephony services, if upheld on
appeal, may require us to reduce interconnect tariffs. We expect that the outcome of the last court decision in June 2003 will have only a minor retroactive effect on our revenues. In addition,
Sweden's National Post and Telecommunications Agency ("NPTA") may appeal the Administrative Court's June 2003 decision that Tele2 Sweden is not an operator with SMP on the national market for
interconnect. If the NPTA appeals this ruling and the decision is overturned on appeal, the permissible scope of our operations, including with respect to pricing, could be limited or otherwise
affected. See Item 3: "Key InformationRisk Factors."



Sales and marketing expenses include fixed commissions that are paid to dealers for the acquisition of customers, marketing contributions, variable dealer
commissions, advertising and other marketing costs, as well as certain costs of sales and marketing personnel. Dealer commissions have fallen

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significantly
from previous levels. Marketing contributions consist of contributions made to dealers to subsidize their marketing activities in connection with periodic sales campaigns. Marketing
contributions vary according to the sales campaign but are not related to a dealer's actual customer intake during a campaign. Competition has kept our fixed dealer commissions at relatively high
levels. Variable dealer commissions consist of air-time commissions, which depend on the call volume of the customers obtained by each dealer. In recent years, our prepaid customer base
has grown more rapidly than our contract customer base, and average sales and marketing expenses per prepaid customer are generally lower than for contract customers.

Expenditures
for advertising and other marketing activities (e.g., dealer commissions) are charged on an ongoing basis. Marketing
activities will have a negative effect on results of operations in the period the marketing activity is performed, but the result of the marketing activity will often have a positive effect (increased
revenues) in subsequent periods. This accounting principle will result in fluctuations in our results depending on when and to what extent marketing activities are undertaken.



Administrative costs include salary and overhead expenditures relating to administrative functions and costs not attributable to other functions. Transcom World
Wide, a company owned in part by Industri AB Kinnevik, performs customer service functions for us in exchange for a service fee that we believe is equivalent to compensation agreed at arm's length.
Because our customer base has been growing significantly, customer services account for an increasing share of the general administrative costs attributable to our mobile telephony services business.

Due
to fraud prevention efforts, we have not incurred significant expenses associated with mobile telecommunications customer fraud to date. We also have not made any significant
write-offs for bad debt in relation to our mobile telephony business.



Depreciation and amortization costs primarily represent depreciation of telephony and office equipment. We include the portion of depreciation and amortization
allocatable to assets employed in operating activities as part of cost of services. Other depreciation and amortization expenses are included in selling and administrative expenses. We allocate
substantially all of our depreciation and amortization expenses to assets employed in operating activities.

Goodwill
related to the acquisitions of Tango, Tele2 Eesti, Tele2 Latvia, Levicom BroadBand and Tele2 Russia will be amortized over a 20-year period and recorded as cost of
services sold.

Fixed-line Telephony and Internet Services



Our cost of services for fixed-line telephony and Internet services includes the cost of interconnecting to the relevant state-owned or former
state-owned public telecommunications operator's networks or to the networks of other local operators, including mobile operators, and the cost of transmission and leased lines. We also include
certain costs of production and services personnel in cost of services. We expect that rates charged by state-owned or former state-owned public telecommunications operators will continue to fall, but
that these expenses will increase overall, as our fixed-line customer base and total call volumes increase. The level of interconnect costs is an important factor in determining whether it
is cost-effective for us to offer certain services. By transmitting calls along our own owned or leased network as far as possible before interconnecting with the network of any other
operator for transmission of a call, we are able to control, to a certain extent, the level of

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our
fixed-line interconnect costs. See Item 4: "Information on the CompanyFixed-line Telephony and InternetInfrastructure."

Fixed-line
production expenses also include costs related to operating our international and national fixed-line network, such as payments for transmission
capacity, payments
for leased lines and payments for international call transmission capacity. We believe that the proportion of these costs relative to revenues, along with operating expenses relating to our
fixed-line networks, will decline as further growth yields economies of scale.

We
carry international calls between our countries of operation on direct leased lines across borders. These direct leased lines across borders offer significant cost advantages, as we
do not have to use other carriers, usually the state-owned or former state-owned public telecommunications operators that have links across borders. Instead, we can carry the call on our leased lines
directly to the relevant point of interconnection in the country in which the call is terminated. The interconnect costs payable by us to the relevant national public telecommunications operator are
local call rather than international call termination costs.

As
our customer base grows, we expect to be able to use leased lines with increasingly higher bandwidth. We expect that this, together with other technological enhancements, will
decrease our network unit costs over time. 3C also incurs expenses relating to its credit card phone, fax and Internet telephony equipment, as well as commissions payable for use of the location of
the equipment.



Selling and administrative expenses include marketing costs, amounts paid to Transcom World Wide for call center services and general expenses related to
administrative functions, as well as costs that cannot be allocated to other functions. We anticipate that these costs will increase in conjunction with the growth of our operations and work force
expansion. In particular, we expect our continental European marketing expenses to increase significantly as we expand our fixed-line telephony services and increase call center service
purchases from Transcom World Wide. However, we expect the impact of such increased outsourcing costs on revenue growth to be mitigated by corresponding savings in respect of cost of personnel.
Accordingly, our results of operations will vary, depending on the timing and speed of our expansion strategy. We believe that, during a period of rapid expansion, sales and marketing expenses will be
relatively higher than during more stable periods of growth.



Depreciation and amortization costs represent primarily depreciation of telephony and office equipment. We include the portion of depreciation and amortization
allocatable to assets employed in operating activities as part of its cost of services. Other depreciation and amortization expenses are included in selling expense and administrative expenses.
Substantially all of our depreciation and amortization expense is allocated to assets employed in operating activities.

Goodwill
related to acquisitions of SEC, Datamatrix and Levicom BroadBand will be amortized over a 20-year period and recorded as cost of services sold.

Cable Television Services

The principal operating costs for our cable television services include the costs of programming, system maintenance and customer service expenses. Our
programming costs have decreased in recent years due to the decline in customer numbers that resulted from the transfer of small master antenna-based, or SMATV, Finvision customers, a related company,
as well as the outsourcing to ViaSat, a related company, of program distribution to individual cable or fiber-optic based television, or CATV, customers. Both system maintenance and customer service
costs have been relatively stable in recent

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years.
We expect system maintenance and customer service costs in the future to change proportionally with the number of customers. The cable television industry in Sweden has not shown significant
growth for several years, with approximately 70% of households connected. If demand for cable service increases, costs would likely rise proportionally. Future growth of Internet service on the 950
MHz band could increase expenditures on cable infrastructure, customer service and technical support.

Critical Accounting Policies under Swedish GAAP

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in Sweden. Our reported financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that
underlie preparation of the financial statements. We base our estimates on historical experience and on various other assumptions, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources.

The
selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in
conditions and assumptions are factors to be considered when reviewing our financial statements. We believe the following critical accounting policies involve the most significant judgments and
estimates used in the preparation of our consolidated financial statements.



Depreciation and amortization is based on the acquisition value of each fixed asset and its estimated utilization period. Estimated utilization periods for
machinery and other technical assets are valued to be between 2 to 25 years. All depreciation and amortization is applied on a straight-line basis over the utilization period. See
Note 2 of the Notes to the Consolidated Financial Statements.

The
amortization periods for goodwill are set on the basis on the estimated long-term and strategic significance of each acquisition on the acquisition date made by
management. In the case of corporate acquisitions in new markets, an amortization period of 20 years is applied. This means that all significant goodwill from strategic acquisitions made in
recent years (e.g., in respect of the Baltic States, continental Europe and Russia) will be amortized over a period of 20 years. Management
regularly reassesses the useful life. If technology changes more rapidly than anticipated or competitive, regulatory or market conditions develop in a manner different than expected, our estimates of
useful lives may be impacted in future periods. If such changes in estimate are necessary, they may affect our results of operations in future periods.



To assess impairment of intangible assets and property, plant and equipment and related goodwill under Swedish GAAP, we apply recommendation RR17 "Impairment" of
the Swedish Financial Accounting Standards Council. If management has concluded that impairment indicators exist, we test for impairment by comparing the sum of the future discounted cash flows
derived from an asset or a group of assets to their carrying value. If the carrying value of the asset or the group of assets exceeds the sum of the future discounted cash flows, impairment is
considered to exist and estimated as such. The identification of impairment indicators, the estimation of future cash flow and the determination of fair values for assets or groups of assets requires
management to make significant judgments concerning the identification and validation of impairment indicators, expected cash flows and applicable discount rates. If actual results differ from these
estimates, or if we adjust these estimates in future periods, operating results could be significantly affected. See Note 11 and Note 12 of the Notes to the Consolidated Financial
Statements.

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Deferred taxes are recorded for temporary differences, including net operating loss carry-forwards. In addition, we carry out a valuation to reduce our deferred
tax assets to an amount the realization of which is probable. Deferred income tax receivables are reported only for that portion that, in our estimate, can be used in the near future. A prudent
valuation has been made of deferred tax receivables and management reassesses the valuation on a regular basis. The valuation of deferred tax assets is dependent upon expectations about future
operating results and market conditions and, as such, is inherently subjective. The actual utilization of deferred tax assets may differ from current expectations and affect future earnings. See
Note 10 of the Notes to the Consolidated Financial Statements.



Receivables are valued continually and reported in the amount expected to be paid. Allowances for doubtful accounts are made based on assumptions and historical
experience. Actual recoveries of doubtful accounts may differ from the amounts recorded in the financial statements. See Note 18 of the Notes to the Consolidated Financial Statements.

U.S. GAAP

Reconciliation with Swedish GAAP

Our financial statements are prepared in accordance with Swedish GAAP, which differ in certain respects from U.S. GAAP. Adjustments that must be made for the
purpose of reporting our profit (loss) for 2002 and shareholders' equity as of December 31, 2002 in accordance with U.S. GAAP amounted to SEK 1,469 million and SEK 7,850 million,
respectively, of which SEK 6,500 million relates to calculating the share price and the value of net assets when we acquired SEC in 2000 and SEK 1,512 million relates to the reversal of
amortization of goodwill.

The
adjustments relate to: (i) transactions between companies under common control; (ii) amortization of goodwill; (iii) lease agreements; (iv) tangible fixed
assets; (v) stock options; (vi) software development cost; (vii) accounting for step acquisitions; (viii) accounting for acquisitions; (ix) deferred tax liability;
(x) Alecta refund; (xi) changes in accounting principles; and (xii) hedge accounting. A detailed description
of the differences and a quantification of their effects can be found in Note 37 of the Notes to the Consolidated Financial Statements.

Critical Accounting Policies under U.S. GAAP

In order to prepare the reconciliation of our consolidated financial statements to U.S. GAAP, the following critical accounting policies require significant
judgments and estimates different from those used for Swedish GAAP.



To assess impairment of intangible assets and property, plant and equipment under U.S. GAAP, we apply SFAS 144, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." U.S. GAAP differs from Swedish GAAP in that it mandates the use of undiscounted cash flow to determine whether
impairment exists. Both U.S. GAAP and Swedish GAAP use discounted cash flow techniques for the measurement of impairment, if any.

For
US GAAP reconciliation purposes, FAS 142 is applied for goodwill and other intangible assets. Under this rule, acquisition goodwill and intangible assets deemed to have
indefinite life are not amortized, but are subject to annual impairment tests in accordance with FAS 142. The impairment test for goodwill is based on expected future cash flows of the
reporting unit to which the goodwill has

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been
allocated. Expected future cash flows are based on management's best estimates but are inherently uncertain. Different expectations could lead to different goodwill valuations.

Effect of New Accounting Pronouncements

U.S. GAAP

In June 2001, the Financial Accounting Standards Board (FASB) issued a Statement of Financial Accounting Standards No. 143 (SFAS 143),
entitled "Accounting for Asset Retirement Obligations." SFAS 143 states when and how accounting for liabilities and expenses attributable to the retirement of fixed assets should occur. We
intend to apply SFAS 143 as of January 1, 2003. The application of this statement is not expected to have any significant effect on our earnings and financial position.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity." SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only
when the liability is incurred. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. We
do not expect the adoption of SFAS 146 to have a material impact on our results of operations, financial position and cash flows.

In
December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based CompensationTransition and Disclosure Amendment" of FASB Statement No. 123.
SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation" to provide alternative methods of transition for an entity that voluntarily changes to the fair value methods of
accounting for stock-based employee compensation. Tele2 AB accounts for stock based compensation according to APB 25 and has not adopted the new rules for voluntary transition to the fair value based
method of accounting for stock-based employee compensation.

In
January 2003, the Emerging Issues Task Force issued EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." EITF 00-21 addresses
the issues of (1) how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting; and (2) how arrangement consideration should be
measured and allocated to the separate units of accounting in the arrangement. EITF is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. We are is
in the process of assessing the impact of adopting EITF 00-21.

In
November 2002, FASB issued FASB Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." Fin 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees, such as standby letters of credit. It also clarifies that at the time
a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligation it assumes under the guarantee and must disclose that information
in its interim and annual financial statements. FIN 45 will be effective to the Company on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements of this Interpretation are effective for financial statements of periods ending after December 15, 2002. Tele2 AB has not
determined the impact, if any, that this statement will have on its consolidated financial position or results of operations.

In
January 2003, the FASB issued FIN 46 "Consolidation of Variable Interest Entities, and Interpretation of ARB 51." FIN 46 addresses the consolidation of entities for which
control is achieved through means other than through voting rights ("variable interest entities" or "VIE") by clarifying the

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application
of ARB 51 to certain entities in which equity investors do not have the characteristics of a controlling financial interest, or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from others. FIN 46 provides guidance on how to determine when and which business enterprise should consolidate the VIE. In
addition, FIN 46 requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures. FIN 46 is required to be immediately
applied by all entities with a variable interest in a VIE created after January 31, 2003. A public entity with a variable interest in a VIE created before February 1, 2003 is required to
apply FIN 46 to that entity no later than the beginning of the first interim or annual period beginning after June 15, 2003. We are in the process of assessing the impact of adopting FIN 46.

Swedish GAAP

Effective January 1, 2004, we expect to begin to apply RR29 Employee Benefits, a recommendation of the Swedish Financial Accounting Standards Council,
which means that defined-benefit pension plans for all our group's subsidiaries are to be reported on the basis of uniform principles. To date, we had reported such plans in line with local rules and
stipulations in each country. Since we have largely had defined-contribution plans, see Note 35 of the Notes to the Consolidated Financial Statements, we do not expect the introduction of RR29
to have any material impact on our earnings or financial position.

Consolidated Results of Operations

Acquisitions and Divestitures

During the three years ended December 31, 2002, we acquired shares in a number of companies and, as a consequence, the financial results of many of these
companies were consolidated in our financial statements for the first time during that three-year period. The principal consolidated
subsidiaries acquired by us during the three years ended December 31, 2002, and the dates on which these entities became consolidated subsidiaries, are set out below.



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No
material acquisitions or disposals have affected the income statement during 2002.

The
acquisition of OÜ Levicom Broadband ("Levicom operations") in the Baltic States and Tele2 Russia Telecom BV ("Russian operations") (both in market area Eastern
Europe & Russia) during 2001 did not have any significant effect on the income statement in 2001 since the Levicom operations were not included in the income statement that year and the Russian
operations only affected the income statement for the one month during which they were consolidated. The contribution of the Russian operations during 2002 amounted to SEK 366 million, which
amounted to 1.2% of our aggregated revenues or 15.8% of the total revenues for the Eastern Europe & Russia market area. The Levicom operations represent 0.4% of our aggregated revenues for
2002.

The
income statement in 2001 was not significantly affected by the acquisitions of Tele2 Latvia in 2000. The contribution of Tele2 Latvia in 2000 amounted to SEK 70 million
compared with SEK 618 million in 2001, or 0.6% and 2.5% respectively of our aggregate revenues. Total revenues for Tele2 Latvia in 2001 represented 53.8% of total revenues for the Eastern
Europe & Russia market area.

Due
to the acquisition of SEC in 2000, our results reported for 2001 reflected a full-year consolidation of SEC, whereas our results reported for 2000 consolidated SEC only
as from October 2000. The acquisition of SEC (continental Europe) resulted in a change in market area reporting for our group in which SEC entities are organized in four market areas, Central
Europe, Southern Europe, Luxembourg and Branded products & services. Our operations prior to the acquisition of SEC were principally organized in two markets areas: Nordic and Eastern
Europe & Russia.

Results of Operations

During 2002, we grew faster than our competitors, with an organic growth rate of 25%, and managed to generate record cash flow provided by operating activities to
date, amounting to SEK 4.4 billion. We also increased pre-tax profit by more than SEK 2.7 billion to SEK 796 million. We expect to continue to prioritize maintaining a
balance between customer growth, profitability and cash flow in 2003. We are continuing to focus on cutting costs in an effort to win new customers, reduce customer turnover (or churn) and control
operating expenses.

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Results of Operations for 2002 as Compared with 2001



Tele2 had total operating revenue of SEK 31,282 million in 2002, compared with SEK 25,085 million in 2001.

Our
total operating revenues are generated from our six market areas. The Nordic market area represented 43% of total revenues for our group in 2002. Continental Europe is growing
rapidly and Southern Europe and Central Europe represented 26% and 18%, respectively, of total revenues in 2002. The contribution of each of our market areas to our total revenues in 2002 was as
follows: Nordic with SEK 13,566 million (2001: SEK 11,898 million), Eastern Europe & Russia with SEK 2,320 million (2001: SEK 1,148 million), Central Europe with SEK
5,689 million (2001: SEK 4,844 million), Southern Europe with SEK 8,105 million (2001: SEK 5,124 million), Luxembourg with SEK 754 million (2001: SEK
663 million) and Branded products & services with SEK 848 million (2001: SEK 1,408 million).

Our
total operating revenues are generated from four business areas, of which Fixed telephony & Internet represented 68% of revenues for our group and Mobile telephony represented
30% in 2002. Both CableTV and Dataprocessing represent 1% each of total revenue. Mobile telephony grew by 29% and Fixed telephony & Internet grew by 20% in 2002. See Note 1 of the Notes
to the Consolidated Financial Statements.

In
2002, revenues increased to SEK 8,105 million in our Southern Europe market area compared with SEK 5,124 million in 2001, a 58% rise, and Central Europe had an increase
of SEK 845 million, or 17%. The total number of customers had at the same period increased by 20% for Southern Europe and 12% for Central Europe. These increases are due in part to local
pre-selection being steadily introduced throughout Europe in 2002, when it was widely available in, for example, Sweden, Denmark, France, Spain and Italy. Local pre-selection
made a major contribution to growth in Southern Europe during the year, with revenue increasing by 58%. With local pre-selection already available in the Netherlands since
August 2002 and with its expected introduction in Germany during 2003, we expect Central Europe to experience the same benefits during 2003.

Eastern
Europe & Russia experienced growth of 102%, or SEK 1,172 million in 2002. Our Russian operations and Levicom operations were acquired in December 2001 and
consolidated with full-year effect for the first time in 2002. The growth for Eastern Europe & Russia (less operating revenue from purchased operations during 2001) represented SEK
721 million in 2002, a 65% increase from 2001. The total number of customers in the Eastern Europe & Russian market area increased by 58% during 2002.

Nordic
and Luxembourg each had growth of 14%, or SEK 1,668 million and SEK 91 million respectively. A decrease of operating revenues for Branded products & services
was mainly due to Optimal Telecom being moved to market area Nordic with effect from January 1, 2002. For the Nordic market area, mobile telephone revenues increased by 18% from 2001 to 2002,
and the number of customers increased during the same period by 22%. Revenues from fixed telephony and Internet increased by 13% in 2002, compared with a change of -4% in the number of
customers in 2001, adjusted to account for the group-wide definition of customers adopted as of January 1, 2002. Tele2 Sweden is the largest operation in the Nordic market area.
Tele2 Sweden has more than 3 million mobile telephony customers, reflecting growth during 2002 when Tele2 Sweden expanded faster than its two primary competitors, attaining a market share of
more than 50% of the total number of new customers for the year.

A
general pattern for all market areas is that average monthly minutes per customer (MoU) increased during 2002 at the same time as revenue per minutes has decreased compared to 2001.
The monthly average revenue per customer (ARPU) has, however, increased in 2002 compared to 2001.

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Total operating costs increased by 12% from SEK 26,555 million in 2001 to SEK 29,740 million in 2002. Operating costs consisted, in both 2002 and
2001, of 67% of costs of service sold, 25% of selling costs and 8% of administrative expenses.

Cost
of services sold increased by SEK 2,175 million, or 12%, from SEK 17,715 million in 2001 to SEK 19,890 million in 2002, due in large part to volume growth in
most market areas. For 2002, selling expenses amounted to SEK 7,279 million, an increase of SEK 627 million, or 9%, from SEK 6,652 million for 2001, due to higher marketing and
sales costs in countries and market areas with higher growth. Administrative expenses increased by SEK 383 million, or 17%, from SEK 2,188 million in 2001 to SEK 2,571 million in
2002.

The
increased costs of service sold ("CoS") were driven mainly by the market areas where we experienced strong revenue growth, Southern Europe, Nordic, Eastern Europe & Russia and
Central Europe.

Southern
Europe, contributing 48% of the revenue growth, accounted for 60% of the increased CoS. Nordic, contributing 27% of the revenue growth, accounted for 21% of the increased CoS.
Eastern Europe & Russia, contributing 19% of the revenue growth, accounted for 26% of the increased CoS. Central Europe, contributing 14% of the revenue growth, accounted for 1% of the
increased CoS. Branded products & services had a decrease in revenues as a result of Optimal Telecom's move to the Nordic market area.

In
all of the above Market Areas, CoS is influenced by two factors: continually decreasing interconnect and network capacity costs, offset by the steadily increasing volume growth.
Selling cost per gross new customer increased in 2002 compared to 2001. We expect this cost to continue to increase as markets mature, and customers become more and more reluctant to change telecom
operator.

Administrative
expenses increased by a lower percentage than the increase in revenue. We believe this to be the result of administrative economies of scale, and expect a further decrease
of administrative costs in relation to revenue as we continue to grow.



Other operating revenue decreased during 2002 by SEK 139 million to SEK 50 million, primarily due to lower revenue from rental of capacity and
antenna installations in Sweden of SEK 64 million, lower exchange rate gains in business operations of SEK 9 million, higher capital gain of SEK 7 million relating to sale of
fixed assets and lower other revenues from secondary operations of SEK 73 million. See Note 3 of the Notes to the Consolidated Financial Statements.

Other
operating expenses decreased by SEK 13 million to SEK -62 million in 2002. This development was mainly attributable to higher exchange losses from
operations of SEK 15 million and a lower capital loss of SEK -28 million relating to disposal of fixed assets. See Note 4 of the Notes to the Consolidated Financial
Statements.



Operating profit/loss ("EBIT") was SEK 1,530 million (2001: SEK -1,356 million), an increase of SEK 2,886 million, with an EBIT
margin of 5% (2001: of -5%). The additional decrease compared with the change in EBITDA is an increase of depreciation and amortization of from SEK -3,054 in 2001 to SEK
-3,597 million in 2002. The increase in depreciation and amortization is mainly attributable to Tele2 Norway's return of its UMTS license, whereby the net book value of capitalized
costs was eliminated in its entirety and was charged against depreciation for the year in an amount of

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SEK
-400 million. In addition, depreciation from the Russian operations and the Levicom operations, both acquired at the end of 2001, were fully consolidated first time in 2002. See
Note 2 of the Notes to the Consolidated Financial Statements.

The
EBIT margin in the Nordic market area increased from 24% to 26% in 2002, of which mobile telephony accounted for 49% (2001: 48%) and fixed telephony and Internet accounted for 13%
(2001: 10%). Eastern Europe contributed an EBIT margin of 7% in 2002 (2001: -1%). Southern Europe and Central Europe improved EBIT margin significantly to -3% and
-4% respectively in 2002, compared with -28% and -15% respectively for 2001. In addition, Luxembourg showed strong improvements to 5% compared with -17%
in 2001. Explanations to changes of EBIT are the same as stated under the section "Adjusted EBITDA" immediately below.



Adjusted EBITDA (operating profit/loss before depreciation and amortization) was SEK 5,127 million (2001: SEK 1,698 million), an increase of SEK
3,429 million, with an adjusted EBITDA margin of 16% (2001: of 7%).

The
adjusted EBITDA margin in the Nordic market area increased from 32% to 35%, of which mobile telephony accounted for 55% (2001: 54%) and fixed telephony and Internet accounted for 22%
(2001: 21%). The adjusted EBITDA margin for fixed telephony operations in Sweden remains within our profitability target. Eastern Europe & Russia contributed an adjusted EBITDA margin of 23%
(2001: 24%), with a strong customer intake, notably in the Baltic States. Southern Europe and Central Europe improved adjusted EBITDA margin significantly to -1% for both areas in 2002,
compared with -26% and -13% respectively in 2001. In addition, Luxembourg showed strong improvement, increasing adjusted EBITDA margin to 17% in 2002, compared with 1% in 2001.
The strong improvements of adjusted EBITDA margins for continental Europe demonstrated that our subsidiaries, according to plan, in country after country report positive adjusted EBITDA about three
years after start-up. This was mainly a result of effective cost control, rolling out our concept across Europe, and from the benefits that flowed from our experience with previously
deregulated markets. See Note 2 of the Notes to the Consolidated Financial Statements.

Fixed
telephony operations in continental Europe continued to show sharp growth, and as of December 31, 2002, had 8.5 million customers. Combined, Southern and Central
Europe reached breakeven at the adjusted EBITDA level during 2002. Growth of 58% in Southern Europe was driven through the introduction of local pre-selection. This is encouraging since
local pre-selection is about to be introduced in Germany during 2003, which we expect to boost revenue in Central Europe without raising costs.



Loss on shares in associated companies in 2002 decreased from SEK -58 million in 2001 to SEK -41 million in 2002, mainly
attributable to lower losses of Everyday Webguide AB. See Note 5 of the Notes to the Consolidated Financial Statements.

The
sale in 2002 of Moscow Cellular Communications and the sale in 2001 of Transcom Worldwide S.A. resulted in a capital gain of SEK 5 million and SEK 91 million
respectively. See Note 6 of the Notes to the Consolidated Financial Statements.



Net interest expenses and other financial items totaled SEK -698 million in 2002 (2001: SEK -621 million), an increase of
12% including write-down costs, or a decrease of 1% before write-down.

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Profit
on other securities and receivables classified as fixed assets declined from SEK 4 million in 2001 to SEK -84 million in 2002. During 2002 a
write-down of SEK -86 million affected the result attributable to shares in Xsource Corporation. See Note 7 of the Notes to the Consolidated Financial Statements.

Other
interest revenues and similar income increased from SEK 65 million in 2001 to SEK 165 million in 2002, mainly attributable to penalty interest revenue and higher bank
balance interest revenue compared to last year. See Note 8 of the Notes to the Consolidated Financial Statements.

Interest
expense and similar costs totaled SEK -779 million for 2002, an increase of 13% from the SEK -690 million recorded for 2001. Interest on
loans increased by SEK -122 million, or 22%. The average interest rate applied to debt outstanding increased to 6.4% compared to 6.3% the same period last year. Exchange rate gain
on financial liabilities increased with SEK 55 million and other financial expenses increased with SEK 43 million related to our five year senior loan facility agreement settled during
2001 with full year affect first time in 2002. See Note 9 of the Notes to the Consolidated Financial Statements.



Profit/loss after financial items ("EBT") amounted to SEK 796 million (2001: SEK -1,944 million), with the difference from the prior
year being attributable to the improved profitability throughout the Group.



Tax on net profit for the year amounted to SEK -574 million, which was positively affected by SEK 576 million in respect of a
revaluation of loss carry-forwards in a number of European companies. In 2001, tax on net profit was SEK 2,335 million, which reflected the tax effects in Swedish operations, and a tax effect
of SEK 3,082 million in connection with the restructuring of SEC.

A
deferred tax receivable in the case of loss carry-forwards is reported only to the extent that it is estimated that it can be utilized in the near future. Due to the improved results
in Nordic, Eastern Europe and continental Europe, deferred tax receivables have been recognized in the profit and loss statement in 2002. Total losses carried forward for the Group at
December 31, 2002 amounted to SEK 19,173 million, of which SEK 7,881 million had been utilized for deferred tax accounting and the remaining part, SEK 11,292 million, is
valued to zero. Deferred tax receivables will currently be recognized in future profit and loss statement when the criteria for doing so is met for the Group's subsidiaries throughout Europe. See
Note 10 of the Notes to the Consolidated Financial Statements.

For
the years ended December 31, 2002 and 2001, certain one-time items impacted the effective tax rates which amounted to 72.1% in 2002 and 120.1% in 2001. The
effective tax rates were impacted by a SEK 576 million revaluation of a loss carry-forward in a number of European companies in 2002, and SEK 3,082 million restructuring of SEC in 2001.
As a result, these rates should not be considered indicative of effective rates expected in future years.



Profit after tax in 2002 was SEK 223 million (2001: SEK 392 million). Earnings per share in 2002 were SEK 1.51 (2001: SEK 2.70) on a fully diluted
basis.

Results of Operations for 2001 as Compared with 2000

SEC, with operations in continental Europe, became a consolidated subsidiary on October 1, 2000. To facilitate a comparison between 2001 and 2000 results,
certain income statement items in the following narrative compare 2001 actuals with pro forma 2000 figures adjusted as if SEC was acquired

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at
January 1, 2000 instead of in October. All numbers set forth below are actuals, unless specifically identified as pro forma. Pro forma accounts are unaudited.



Our aggregate operating revenues in 2001 amounted to SEK 25,085 million (2000: SEK 12,440 million), reflecting a
year-on-year increase of 102%, or a rise of 54% against 2000 pro forma operating revenue of SEK 16,243 million. Companies acquired in 2001 had no material impact on
operating revenue or profits in 2001. The increase was attributable primarily to the effect of the acquisition in 2000 of SEC, coupled with organic growth of our mobile telephony, fixed telephony and
Internet operations in Sweden, Norway, Denmark and the Baltic States, all of which have materially contributed to revenue growth in 2001. We had a total of 15.0 million customers as of
December 31, 2001, an increase of 29%, and a customer net intake of 3.4 million for the year 2001. See Note 1 of the Notes to the Consolidated Financial Statements.

Our
revenues were generated from six market areas in 2001, of which Nordic represented 46% of revenues for the total Group. Southern Europe and Central Europe represented 21% and 20%,
respectively, of total revenues.

Nordic
contributed SEK 12,366 million (2000: SEK 10,481 million) and Eastern Europe & Russia contributed SEK 1,181 million (2000: SEK 261 million) in
2001. Nordic had an increase in revenues compared with 2001 of SEK 1,885 million, or 18%, and net intake of customers for the same period was 15%. Eastern Europe & Russia had an increase
of SEK 920 million, or 352%, and net intake of customers for 2001 of 258%, partly due to the acquisition of Tele2 Latvia in October 2000 with full year effect in 2001. The growth for
Eastern Europe & Russia in 2001 less purchased operations during 2000 and 2001 represented 101%. Our total number of customers at December 31, 2001, less customers in acquired companies
during 2000 and 2001, increased by 164% in 2001.

Central
Europe contributed with SEK 5,364 million (2000: SEK 1,018 million), Southern Europe with SEK 5,591 million (2000: SEK 882 million), Luxembourg with
SEK 786 million (2000: SEK 161 million), Branded products & services with SEK 1,576 million (2000: SEK 496 million). Operating revenues were
also affected by an adjustment for internal sale within the Group of SEK -1,779 million (2000: SEK -859 million). The increases in Central Europe, Southern
Europe, Luxembourg and Branded products & services were mainly a result of SEC operations being acquired at October 1, 2000, affecting the figures for 2000 for one quarter compared with
a full year effect in 2001. Our operations within these market areas in 2001 also showed strong growth compared to 2000.

Our
revenues were generated from four business areas of which Fixed telephony & Internet represented 69% of revenues for the total Group and Mobile telephony represented 28%. Both
CableTV and Dataprocessing represented 1% and 2% respectively of total revenue. Mobile telephony experienced growth during 2001 of 50%, and Fixed telephony & Internet experienced growth of
141%, attributable to the acquisition of SEC and from growth in the Nordic and Baltic markets. See Note 1 of the Notes to the Consolidated Financial Statements.

For
the Nordic market area, the mobile telephone revenues increased by 26%, and net intake of customers was 24% during the same period. Revenues from fixed telephony & Internet
increased by 11%, compared with a net intake of customers with 9%. Tele2 Sweden was our largest operation in the Nordic market area. Tele2 Sweden had 2.5 million mobile telephony customers as
of December 31, 2001, reflecting growth during 2001.

A
general pattern for all market areas in 2001 was that average monthly minutes per customer (MoU) increased during the year at the same time as revenue per minutes has decreased
compared to 2000. The monthly average revenue per customer (ARPU), has however, increased from 2000 to 2001.

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Total operating costs increased by 115% from SEK 12,374 million in 2000 to SEK 26,555 million in 2001. Operating costs consisted in 2001 of 67%
(2000: 65%) of costs of service sold, 25% (2000: 28%) of selling costs and 8% (2000: 7%) of administrative expenses.

Our
operating costs increased in 2001 mainly due to the full-year consolidation of SEC in 2001. Cost of services sold increased 119% from SEK 8,078 million in 2000 to
SEK 17,715 million in 2001, also reflecting volume growth in all market areas. For 2001, selling expenses amounted to SEK 6,652 million, an increase of 90% from SEK 3,499 million
for 2000, also due to higher marketing and sales costs in countries and market areas with higher growth. Administrative expenses increased by 174% from SEK 797 million in 2000 to SEK
2,188 million in 2001.



No expense or income was recorded in 2001 that related to the management incentive program for key personnel. In 2000, we recorded a positive effect on the income
statement of SEK 229 million for the twelve months ended December 31, 2000, due to a decision to issue or purchase on the market shares equal in value to those outstanding under the
terms of the program, rather than to pay a cash settlement.



Other operating revenue decreased during 2001 by SEK 23 million to SEK 189 million, attributable primarily to a decline in rentals of capacity and
antenna installations in Sweden of SEK 41 million and a decline in mobile telephony equipment sales of SEK 12 million, offset in part by an exchange gain in business operations of SEK
33 million. See Note 3 of the Notes to the Consolidated Financial Statements.

Other
operating expenses decreased by SEK 12 million to SEK 75 million in 2001. This development was primarily attributable to lower exchange losses from operations of SEK
37 million and a capital loss of SEK 17 million relating to the divestiture of 4T Solution that took effect in 2000, offset in part by an increase of costs of sale/scrapping of other
fixed assets by SEK 41 million. See Note 4 of the Notes to the Consolidated Financial Statements.



Operating profit/loss ("EBIT") was SEK -1,356 million in 2001 (2000: SEK 420 million), a decrease of SEK 1,776 million, with an
EBIT margin of -5% (2000: 3%). The additional decrease compared with the change in adjusted EBITDA is an increase of depreciation and amortization of SEK -1,654 million
from SEK -1,400 in 2000 to SEK -3,054 million in 2001, mainly due to a result of the amortization of goodwill from the acquisition of SEC in October 2000. See
Note 2 of the Notes to the Consolidated Financial Statements.

The
EBIT margin in the Nordic market area increased from 20% to 23% in 2001. Eastern Europe contributed an EBIT margin of -1% (2000: -34%) in 2001. Southern
Europe and Central Europe contributed an EBIT margin of -26% and -13% respectively in 2001, compared with -38% and -50% respectively for 2000.
Luxembourg contributed an EBIT margin of -14% in 2001
compared with -68% in 2000. Explanations to changes of EBIT are the same as stated under the section "Adjusted EBITDA" immediately below.



Adjusted EBITDA (operating profit/loss before depreciation and amortization) amounted to SEK 1,698 million (2000: SEK 1,820 million), a decrease of
SEK 122 million, or 7%, with an adjusted

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EBITDA
margin of 7% (2000: 15%). The net change reflects a negative contribution of SEC compared with last year, due to lower operating profit margins on SEC operations than our more mature
operations, offset in part by positive contributions from our operations in Sweden, Norway, Denmark and the Baltic States. SEC showed a material improvement of adjusted EBITDA between 2000 and 2001.
See Note 2 of the Notes to the Consolidated Financial Statements.

The
Nordic market area increased adjusted EBITDA margin from 28% to 30%, of which adjusted EBITDA margin for mobile telephony was 48% (2000: 47%) and 14% (2000: 13%) for fixed
telephony & Internet. Eastern Europe had an adjusted EBITDA margin of 23% (2000: -11%). Southern Europe and Central Europe improved adjusted EBITDA margin significantly to
-24% and -11% respectively, compared with -38% and -49% respectively for last year. In addition, Luxembourg showed strong improvement to 1% compared
with -57% last year. The strong improvement of adjusted EBITDA margins for continental Europe demonstrates that our subsidiaries report, according to plan, with a goal of having a positive
adjusted EBITDA about three years after start-up. See Note 2 of the Notes to the Consolidated Financial Statements.



Loss on shares in associated companies in 2001 increased from SEK -44 million in 2000 to SEK -58 million in 2001,
attributable to losses of Everyday Webguide AB. See Note 5 of the Notes to the Consolidated Financial Statements.

The
sale in 2001 of Transcom Worldwide S.A. resulted in a capital gain of SEK 91 million. See Note 6 of the Notes to the Consolidated Financial Statements.



Net interest expenses and other financial items totaled SEK -621 million in 2001 (2000: SEK -211 million), an increase of
194% mainly due to the acquisition of SEC in 2000 and our five-year senior loan facility agreement.

Profit
on other securities and receivables classified as fixed assets declined from SEK 6 million in 2000 to SEK 4 million in 2001. See Note 7 of the Notes to the
Consolidated Financial Statements.

Other
interest revenues and similar income increased from SEK 57 million to SEK 65 million. See Note 8 of the Notes to the Consolidated Financial Statements.

Interest
expense and similar costs totaled SEK -690 million for 2001, an increase of 152% from the SEK -274 million recorded for 2000, largely due
to the increase in debt as a result of the acquisition of SEC in 2000 and the EUR 1.2 billion senior secured credit facility in 2001. Interest on loans increased by SEK
-352 million or 171%. The average interest rate applied to debt outstanding increased to 6.3% compared to 4.8% the same period last year. See Notes 7 through 9 of the Notes to the
Consolidated Financial Statements.



Profit/loss after financial items ("EBT") amounted to SEK -1,944 million (2000: SEK 165 million), with the difference from the prior
year being mainly attributable to the acquisition of SEC, offset in part by improved results of operations across all market areas.



Tax on net profit (loss) for the twelve months ended December 31, 2001, amounted to a benefit of SEK 2,335 million (2000: SEK
-561 million), which reflects the tax effects of Swedish operations and a tax benefit of SEK 3,082 million in connection with the restructuring of SEC.

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Deferred
income tax receivable is reported only as a loss carry-forward for that portion which it is estimated can be used in the near future. A prudent valuation has been made of the
deferred income tax receivable in foreign operations, which, as of December 31, 2001, was reported as zero. Deferred tax receivables will currently be recognized in future profit and loss
statements when the criteria for doing so is met for the Group's subsidiaries throughout Europe. See Note 10 of the Notes to the Consolidated Financial Statements.



Profit (loss) after tax in 2001 was SEK 392 million (2000: SEK -396 million). Earnings (loss) per share were SEK 2.70 (2000: SEK
-3.47) on a fully diluted basis.

Liquidity and Capital Resources

Our primary sources of liquidity have been cash generated by operations, mainly from our Swedish operations, and secured long-term bank loans from
external lenders. As of December 31, 2002, we had cash and bank balances of SEK 2.5 billion and a liquidity of SEK 2.3 billion after reduction for blocked accounts of SEK
0.9 billion and addition of unutilized overdraft facilities and credit lines of SEK 0.7 billion. See "Borrowings." We intend to meet our current and future cash requirements
from cash flow from operations and additional borrowings, as necessary. In the immediate future we anticipate that our primary needs will be investments in the Russian operations and in capital
expenditures and marketing expenditures in both fixed and mobile business areas in the market areas where we are experiencing the strongest growth.

Cash Flow

The following table sets forth certain information about the cash flows of the Tele2 Group for the periods indicated.

Year ended December 31,2000

2001

2002(SEK in millions)Cash flows from operations

1,574

1,161

4,564Change in working capital

(691
)
(748
)
(199
)Net cash provided by operating activities

883

413

4,365Net cash used in investing activities

(770
)
(1,467
)
(2,516
)113

(1,054
)
1,849Net cash from financing activities

1,121

1,793

(1,398
)Net change in cash

1,234

739

451Cash at the end of period

1,511

2,275

2,473of which, blocked funds

434

897

870


Net
cash provided by operating activities increased strongly by SEK 3,952 million to SEK 4,365 million in 2002, after a decrease from SEK 883 million in 2000 to SEK
413 million in 2001 due mainly to the
acquisition of SEC in October 2000. The improved cash flow for 2002 is mainly due to improvements of operations within all market areas.

Cash
used in investing activities primarily consists of capital expenditures relating to infrastructure and acquisition of new businesses. The net change in 2002 compared to 2001 is
mainly attributable to acquisitions and divestments that had a positive effect on cash flow in 2001 because cash balances in acquired companies exceeded the amount paid for them, and there was a lower
level of tangible asset investments in 2002. The net change in 2001 compared to 2000 is mainly attributable to a higher level of investments in tangible assets. See Note 12 of the Notes to the
Consolidated Financial Statements.

103

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Net
cash provided by financing activities decreased in 2002, due to amortization of loans, and increased in 2001 due to an increase in the amount of borrowing capacity to the Group when
we signed the SEK 10.8 billion five-year loan facility. See "Borrowings."

Borrowings

During August 2001, Tele2 Sverige AB signed a five-year bank finance facility for SEK 10.8 billion, guaranteed by ABN Amro, CIBC World
Markets, ING Bank, Nordea, The Royal Bank of Scotland and West LB. The loan is partly denominated in SEK and partly in EUR. The five-year bank financing facility with amortization is
divided up into three tranches, in which the agreed SEK 9.4 billion in Tranche A is to be repaid in seven repayments, and in which each amortization amount between 5% and 15% of the original
loan amount and the remaining 17.5% of the loan is to be repaid by June 30, 2006. In, 2002, repayment of Tranche A was made in the amount of SEK 467 million. The potential to borrow
under Tranche B is limited to SEK 1.1 billion and is to be repaid by June 30, 2006. Tranche C, amounting to SEK 250 million, was repaid in its entirety in January 2002. See
Item 10: "Additional InformationMaterial Contracts."

The
following table summarizes our current external interest-bearing indebtedness outstanding as of December 31 of the years indicated.

December 31,2000

2001

2002(SEK in millions)Tele2 Holding AB:Five-year Bank Facility





9,298Tele2 Sweden:Five-year Bank Facility



10,541

Bank loan facilities

6,320



Other interest-bearing liabilities

74

134

SEC Group:Bank loan facilities

1,642



Other interest bearing liabilities

555

75

Tele2 Russia Group:Bank loan facilities (Banque Invik)



881

755Other interest-bearing liabilities



57

3Other companies:Bank loan facilities

43

17

Other interest-bearing liabilities

3



29Financial leases

181

149

196Total

8,818

11,854

10,281Of which mature within one year

3,228

882

2,382


Restrictive Covenants

The five-year loan facility is based on requirements involving the fulfillment of certain financial key ratios. We expect to fulfill these
requirements. The loan liability carries a rate of interest corresponding to Euribor and Libor, respectively, plus an interest margin. The interest margin, which is based on indebtedness in relation
to EBITDA, starts at 2.25% and is reduced in line with the improvement in EBITDA. At December 31, 2002, we attained the minimum interest differential of 0.75% with effect from
February 2003.

104

---

The
five-year loan facility also contains standard restrictive covenants, which, among other things, limit our ability to borrow money and grant security interests over our
assets. See Note 24 of the Notes to the Consolidated Financial Statements.

The
average rate of interest on loan liabilities during 2002 was 6.4% (2001: 6.3%).

Working Capital and Investments

The following table summarizes the capital resources of the Tele2 Group for the periods indicated.

Year ended December 31,2000

2001

2002(SEK in millions)Change in working capital

(691
)
(748
)
(199
)Capital expenditures(1)

1,510

2,146

1,890


---

We
have incurred, and expect to continue to incur, capital expenditures in order to build and expand our operations. The vast majority of our capital expenditures over the past three
years have consisted of telecommunications infrastructure costs and the acquisition of licenses. We believe that we have completed most of the significant further capital expenditures associated with
building up our backbone infrastructure and network of licenses. However, we expect significant investment in the market areas where we are experiencing the strongest growth and anticipate further
capital expenditures in connection with the network build out as a result of the award to us of UMTS mobile licenses in Sweden. Tele2 Sweden finalized the financing of Svenska UMTS nät
AB, the Swedish UMTS network company that is a 50/50 joint venture with TeliaSonera. As a result of our acquisition of Tele2 Russia, the construction of new GSM networks will likely necessitate
substantial capital expenditure to take advantage of mobile telephony's potential throughout the various regions in Russia. Lastly, we are continually evaluating opportunities to enhance or expand our
telecommunications activities through joint ventures with strategic partners and also through targeted acquisitions, which may require us to commit substantial parts of our cash flow from operations
and/or incur additional indebtedness.

If
future operating results are lower and capital expenditures are higher than expected or if anticipated cost savings in our businesses are not achieved or investments are accelerated
beyond currently projected levels, additional financing may be necessary in order to fund development and operations or to service the principal and interest repayment obligations under our external
financing arrangements. During 2002, however, not only did Tele2 grow faster than its competitors, with an organic growth of 25%, but also managed to generate the record cash flow to date.



We plan to expand our mobile telecommunications network in order to meet anticipated growth in the number of mobile customers and to add new services. We
anticipate that significant additional investment in our mobile telecommunications networks will be required. Additional expenditures, which consist primarily of dealer commissions and related
incentives, will also be necessary to attract new mobile customers. We believe that additional capital expenditure relating to infrastructure will be principally based on projections as to where it
would be most profitable to increase capacity and quality of coverage.

In
March 2001, we signed an agreement to form a joint UMTS network company with TeliaSonera in Sweden. We decided on the joint venture with TeliaSonera as the most
effective way to limit our

105

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costs
in building the necessary infrastructure and generate a more rapid return on our invested capital. Both we and TeliaSonera can use our existing GSM network as a base upon which to build the new
network, reducing the need for new transmitting masts and reducing the environmental impact of the build out. The joint venture is 50%-owned by each party, through both equity and guarantees of the
financing obtained by the joint venture. In September, 2002 Tele2 and TeliaSonera announced that a bank credit of SEK 11 billion had been signed to finance the expansion of the UMTS network in
Sweden. We and Telia Sonera each guarantee any amounts outstanding under this loan facility up to the extent of our 50% interest in the joint venture, or SEK 5.5 billion. The joint venture will
build and maintain the UMTS network and will own the license. We will continue to compete with TeliaSonera for customers, on the basis of both prices and services offered. The terms of the joint
venture were approved by the relevant competition authorities in March 2002. See Item 4: "Information on the CompanyProducts and ServicesMobile
TelephonyMarketsNordicSweden."

During
2002, Tele2 Norway returned its UMTS license, whereby the net book value of capitalized costs was eliminated in its entirety and was charged against depreciation for the year in
an amount of SEK400 million. To replace the license, Tele2 Norway signed an MVNO agreement for UMTS with Telenor in Norway in exchange for Telenor gaining access to Tele2's UMTS
network in Sweden. The advantage for Tele2 is reduced investment costs of some SEK 5 billion for UMTS in Norway.



We have largely completed the build-up of our fixed-line network's backbone infrastructure. We expect, however, that Svenska
Kraftnät in Sweden will continue, in accordance with our needs over the next few years, to lay fiber optic cable in its system, which we have the right to lease on an exclusive basis.
See Item 4: "Information on the CompanyFixed-line Telephony and Internet ServicesInfrastructure."



We expect to fund capital expenditures for our cable television services in large part through a combination of the existing budget for our fixed-line
telecommunications capital expenditures and cash flow from operations.

Contractual Obligations and Commercial Commitments

The following table represents our contractual cash obligations and other commercial commitments as of December 31, 2002:

|                                                 |  | Payments Due by Period
|------------------------------------------------ |  | ----------------------
|
|
|
|Loans by Financial Institutions                  |  | 10,253                
|Financial leasing, agreements signed before 1997 |  | 92                    
|Operational Leases                               |  | 2,149                 
|Other interest-bearing liabilities               |  | 28                    
|                                                 |  |                       
|Total Contractual Cash Obligations               |  | 12,522                
|                                                 |  |                       

UMTS
nät Sweden, our 50/50 joint venture with Telia, is party to a SEK 11 billion term loan and revolving credit facility agreement. We and Telia
Sonera each guarantee any amounts outstanding under this loan facility up to the extent of our 50% interest in UMTS nät Sweden, or SEK 5.5 billion. As of December 31,
2002, the amount outstanding under that guarantee is zero.

106

---

Tele2
Group has no contingent liabilities on a consolidated basis. See Note 29 of the Notes to the Consolidated Financial Statements. The Group's pledged assets of SEK
23,678 million are mainly net assets in Group companies. See Note 28 of the Notes to the Consolidated Financial Statements.

Tax Loss Carry-forwards

As of December 31, 2002, the Group had loss carry-forwards totaling SEK 19,173 million (2001: SEK 19,871 million), of which SEK
1,744 million (2001: SEK 3,300 million) expires within five years and the remaining amount, SEK 17,429 million (2001: SEK 16,571 million), expires after five years or
continue to apply in perpetuity.

A
deferred tax asset in the case of loss carry-forwards is reported only to the extent that it is estimated that they can be utilized in the near future. Due to the improved results in
continental Europe, deferred tax receivables of a total amount of SEK 576 million have been recognized in the profit and loss statement in 2002. Total losses carried forward for the Group at
December 31, 2002 amounted to SEK 19,173 million, of which SEK 7,881 million has been utilized for deferred tax accounting and the remaining part, SEK 11,292 million, is
valued to zero.

The
Swedish tax authorities have queried a loss carry-forward in Tele2 AB corresponding to a tax effect of SEK 176 million (2001: SEK 176 million). These have been valued
to SEK 169 million.

Foreign Exchange

Our results are affected by fluctuations in exchange rates. Currently, companies reporting in Swedish kronor account for 33% (2001: 37%) of the Group's revenue.
Companies using Euro account for 43% (2001: 40%). See Note 22 of the Notes to the Consolidated Financial Statements.

A
currency risk arises in respect of telephony operations in connection with international call traffic, which means that a liability or a receivable arises between Tele2 companies and
foreign operators. In mobile telephony through December 2002, these transactions were calculated in SDRs (Special Drawing Rights) but were invoiced and paid for in U.S. dollars. As of 2003,
these are calculated and paid in Euro.

The
five-year loan facility is denominated partly in Euro. The exchange-rate difference that continually arises in translating the loan liability is offset
against the exchange-rate differences that arise on the corresponding net investment in subsidiaries. No hedging is undertaken against other types of currency risk.

Off Balance Sheet Arrangements

We do not have any material off balance sheet arrangements.

Trend Information

Our European operations are in a development stage during which we expect them to produce lower margins than our more mature operations. In the longer term,
however, we anticipate that our European margins will improve as the European operations mature. We also hope to see the continuation of the trend to lower interconnection rates. We believe that the
negative effects resulting from a decrease of our interconnect revenues in respect of our mobile networks will be offset by the reduced interconnect costs in respect of our fixed and mobile networks,
as well as our operations in general, including the trend toward higher internal efficiency through synergies across our businesses.

The
markets in which we operate are evolving. Certain of our European markets have experienced significant consolidation among competitors in recent periods. As a result, the extreme
competitive pressures that have been a hallmark of the European telephony markets have eased to some extent. We expect this trend toward consolidation to continue.

Inflation

Management believes that the effect of inflation was not material to our results of operations or financial condition during the three years ended
December 31, 2002.

107

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Item 6: Directors, Senior Management and Employees

Directors

Under the Swedish Companies Act, our board of directors is responsible for the organization of Tele2 and the management of its affairs. The board of directors is
also responsible for ensuring that satisfactory controls exist in the areas of accounting and the management of assets. The president is appointed by our board of directors and is in charge of
day-to-day management of Tele2 according to guidelines and instructions issued by the board of directors. The members of the board of directors are elected at the annual
general meeting of our shareholders and serve for a period that expires at the end of the next annual general meeting. The chairman is elected by the board of directors. Each year the board of
directors is required to adopt rules of procedure to govern its activities, guidelines setting forth the division of responsibilities between the board of directors and the managing director,
Lars-Johan Jarnheimer, and guidelines for reporting financial results to the board of directors.

Jan
Hugo Stenbeck was chairman of our board of directors for nine years, from 1993 to 2002. He was also chairman of Industriförvaltnings AB Kinnevik, Invik & Co AB,
Modern Times Group MTG AB, Millicom International Cellular S.A., Metro International S.A. and Transcom WorldWide S.A., each of which is a related party. Mr. Stenbeck passed away on
August 19, 2002. Bruce Grant served as chairman of the board of directors of Tele2 from August 2002 to the annual general meeting in May 2003, when a member of our board, Sven
Hagströmer, was appointed as the new chairman of the board. The members of our board of directors and our executive officers, and their respective year of birth, positions, and year of
appointment, are as follows:

Board Members

|Name                           |  | Position in Tele2                                                     |  | Other Positions                                                                                                                                                                                                                         |  | Current Term Expires
|------------------------------ |  | --------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------
|Sven Hagströmer
(born in 1943) |  | Chairman of the board since May 2003. Member of the board since 1997. |  | Mr. Hagströmer serves as chairman of the board of directors of Investment AB Öresund, AB Custos and Acando AB. He is a member of the board of LGP Telecom Holding AB, Avanza AB and HQ Fonder AB.                                       |  | May 2004            
|Marc J.A. Beuls
(born in 1956) |  | Member of the board since 1998.                                       |  | Mr. Beuls serves as president and CEO of Millicom International Cellular SA and as Managing Director of Banque Invik SA. Mr. Beuls previously held executive positions at Générale de Banque of Belgium.                                |  | May 2004            
|Vigo Carlund
(born in 1946)    |  | Member of the board since 1995.                                       |  | Mr. Carlund serves as president and CEO of Industriförvaltnings AB Kinnevik, chairman of the board of Metro International S.A., Transcom Worldwide S.A. and Korsnäs AB, and member of the board of Millicom International Cellular
S.A. |  | May 2004            
|                               |  |                                                                       |  |                                                                                                                                                                                                                                         |  |                     

108

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|Bruce Grant
(born in 1959)       |  | Member of the board since 2001.     |  | Mr. Grant was the chairman of the board of Tele2 from August 2002 to May 2003.
Mr. Grant is the chairman of the board and managing partner of Applied Value LLC and a member of the board of Industriförvaltinings AB Kinnevik, Korsnäs AB, Metro International S.A. and Transcom Worldwide S.A.                                  |  | May 2004
|-------------------------------- |  | ----------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|Håkan Ledin
(born in 1937)       |  | Member of the board since 1994.     |  | Mr. Ledin serves as chairman of the board of Millicom International Cellular S.A.
Mr. Ledin was president of Tele2 from 1995 to 1996.                                                                                                                                                                                             |  | May 2004
|John Shakeshaft
(born in 1954)   |  | Member of the board since May 2003. |  | Mr. Shakeshaft is an adviser to the board of Quintain Estates and Development plc and an external member of the Audit committee for Cambridge University.                                                                                                                                                                         |  | May 2004
|Cristina Stenbeck
(born in 1977) |  | Member of the board since May 2003  |  | Miss Stenbeck serves as board chairman of Emesco AB, Société Européenne de Communication S.A. and vice chairman of the board of Metro International S.A., Industriförvaltnings AB Kinnevik and Invik & Co, and
member of the board of Millicom International Cellular S.A., Modern Times Group MTG AB and Transcom Worldwide S.A. |  | May 2004

109

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Senior Executives

Senior executives of the operations of Tele2 is as follows:

|Name                                 |  | Position                                                                                                                                
|------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------
|Lars-Johan Jarnheimer
(born in 1960) |  | President and chief executive officer of Tele2 AB since 1999.                                                                           
|Håkan Zadler
(born in 1960)          |  | Chief financial officer and executive vice president of Tele2 AB. Employed by Tele2 since 2000.                                         
|Fredrik Berglund
(born in 1961)      |  | Market area director of Nordic; president of Tele2 Sweden and executive vice president of Tele2 AB. Employed by Tele2 since 1995.       
|Johnny Svedberg
(born in 1962)       |  | Market area director of Eastern Europe & Russia and executive vice president of Tele2 AB. Employed by Tele2 since 1990.                 
|Roman Schwarz
(born in 1947)         |  | Market area director of Central Europe and president of Tele2 Switzerland. Employed by Tele2 since 1991.                                
|Jean-Louis Constanza
(born in 1961)  |  | Market area director of Southern Europe and president of Tele2 France. Employed by Tele2 since 1998.                                    
|Jean-Claude Bintz
(born in 1956)     |  | Market area director of Luxembourg. Employed by Tele2 since 1989.                                                                       
|Jeanette Almberg
(born in 1965)      |  | Customer service director. Employed by Tele2 since 1995.                                                                                
|Björn Lundström
(born in 1965)       |  | Network planning and implementation director. Employed by Tele2 since 1991.                                                             
|Ib Andersen
(born in 1955)           |  | Network operations director. Employed by Tele2 since 2000.                                                                              
|Roger Mobrin
(born in 1968)          |  | Billing operations and coordination director. Employed by Tele2 since 1995.                                                             
|Anders Olsson
(born in 1969)         |  | Market area director of Branded products & services, marketing coordinator and president of Tele2 Germany. Employed by Tele2 since 1997.
|Karl-Johan Nybell
(born in 1968)     |  | Product management director. Employed by Tele2 since 1995.                                                                              
|Lars-Erik Svegander
(born in 1941)   |  | Personnel director. Employed by Tele2 since 1991.                                                                                       

Compensation of Directors and Senior Executives

The total aggregate salary and remuneration paid to senior executives for the year ended December 31, 2002, was SEK 70 million (2001: SEK
42 million). In addition to the costs stated, we also incurred costs relating to social security expenses. See Note 35 of the Consolidated Financial Statements.

110

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Board of Directors

We paid total board fees of SEK 1.9 million to our directors in 2002, compared to the SEK 2.1 million authorized at the annual general shareholders'
meeting in May 2002. During 2002, Jan Hugo Stenbeck served as chairman of our board of directors until his death in August, and Bruce Grant served as our chairman until the next annual general
shareholders' meeting in May 2003. During 2002, we paid SEK 6.8 million to a company wholly owned by our former chairman Jan Hugo Stenbeck for consulting services that cannot be regarded
as board work. In addition, Tele2 Group paid SEK 8.7 million (2001: SEK 17.3 million) in consulting fees to a company partly owned by Bruce Grant for services that cannot be regarded as
board work.

President and CEO

In 2002, Lars-Johan Jarnheimer, President and CEO of Tele2, received a fixed salary of SEK 10.0 million (2001: SEK 7.6 million) and a
bonus of SEK 1.5 million (2001: SEK 1.6 million). The bonus was based on individualized goals. In addition, the company made a contribution to Mr. Jarnheimer's defined pension
plan in an amount equal to 20% of his fixed basic salary. Mr. Jarnheimer may begin to collect his pension at age 65. The period of notice of termination of Mr. Jarnheimer's employment
when served by the company is a minimum of 12 and a maximum of 18 months. Salary for a period of notification of 12 months would be paid to Mr. Jarnheimer in the event he were to
serve notice of termination of employment to the company. Salary and remuneration for our president and Chief Executive Officer are determined annually by the board of directors based on the
recommendation of the Chairman of the Board. See Note 35 of the Notes to the Consolidated Financial Statements for additional information.

Senior Executives

The "senior executives" group consists of thirteen people. The salaries of these executives consist of a fixed salary and variable bonus. During 2002, these
individuals collectively received a fixed salary of
SEK 21.8 million (2001: SEK 18.9 million). Their bonuses, which were based on financial benchmarks and individualized goals, totaled SEK 10.3 million (2001: SEK
10.4 million). Our pension plan contributions on behalf of these executives equaled SEK 1.3 million in 2002 (2001: SEK 1.0 million) with SEK 1.1 million (2001: SEK
0.2 million) paid to a defined-contribution plan and SEK 0.2 million (2001: SEK 0.2 million) paid to a defined-benefit plan. These executives may begin collecting their pensions
at age 65. The period of notice of termination of employment when served by the company is a minimum of six and a maximum of 12 months. Salary for a period of notification of six months is
received of a senior executive serves notice of termination of employment to the company.

During
2002, provision of SEK 16 million (2001: SEK 15 million) was made for bonuses to senior executives and key personnel in the Group. For additional information on
executive compensation see Note 35 to the Consolidated Financial Statements.

111

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Share and Option Ownership

The following table sets forth information known to us with respect to the ownership of our ordinary shares by each of the members of directors and our senior
executives as of December 31, 2002.

|                      |  | Number of Shares |  | Percentage |  |  
|--------------------- |  | ---------------- |  | ---------- |  | -
|
|
|Board                 |  |                  |  |            |  |  
|Sven Hagströmer       |  |                 |  | 130,000    |  | 
|Marc J.A. Beuls       |  |                 |  |           |  | 
|Vigo Carlund          |  |                 |  | 379        |  | 
|Bruce Grant           |  |                 |  |           |  | 
|Håkan Ledin           |  |                 |  | 30,000     |  | 
|Pelle Törnberg        |  |                 |  | 4,100      |  | 
|Lars Wohlin           |  |                 |  | 1,100      |  | 
|Senior executives     |  |                  |  |            |  |  
|Lars-Johan Jarnheimer |  |                 |  | 52,000     |  | 
|Håkan Zadler          |  |                 |  | 5,000      |  | 
|Fredrik Berglund      |  |                 |  | 30,000     |  | 
|Johnny Svedberg       |  | 1                |  | 9,240      |  | 
|Roman Schwarz         |  |                 |  |           |  | 
|Jean-Louis Constanza  |  |                 |  |           |  | 
|Jean-Claude Bintz     |  |                 |  |           |  | 
|Jeanette Almberg      |  |                 |  | 1,500      |  | 
|Björn Lundström       |  |                 |  | 1,500      |  | 
|Ib Andersson          |  |                 |  |           |  | 
|Roger Mobrin          |  |                 |  | 1,550      |  | 
|Anders Olsson         |  |                 |  | 1,056      |  | 
|Karl-Johan Nybell     |  |                 |  | 1,000      |  | 
|Lars-Erik Svegander   |  |                 |  | 1,500      |  | 
|                      |  |                  |  |            |  |  
|Total                 |  | 1                |  | 269,925    |  |  
|                      |  |                  |  |            |  |  

As
of December 31, 2002, 1 Series A Share and 269,925 Series B Shares were owned either directly or through NC Intressenter, see "Options to Purchase
SecuritiesIncentive Program 1997-2006," by members of our board of directors and our senior executives as a group, representing an aggregate of approximately 0.01% of our
voting capital. In addition, as of December 31, 2002, our senior executives held options to acquire 210,000 Series B Shares.

At
the annual general shareholders' meeting in May 2003, Cristina Stenbeck and Johan Shakeshaft were appointed members of our board of directors. The estate of Jan Stenbeck holds
914,157 Class A shares at December 31, 2002, representing 0.6% share of capital and 2.7% share of votes in Tele2. The estate of Mr. Stenbeck is currently in probate (or the
equivalent proceedings under applicable local law) in both Luxembourg and Sweden. A Luxembourg notary is administering the estate (at the direction of the heirs) in Luxembourg. A Swedish executor has
also been appointed. The Luxembourg notary is currently in control of the estate's shareholdings in us, Kinnevik, Invik and Millicom. The distribution of Mr. Stenbeck's estate will most likely
take more than a year to resolve.

112

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Options to Purchase Securities

Incentive Program 1997-2006

At the Annual General Meeting in 1997, it was decided to adopt an incentive program for a number of our senior executives. These persons were able to acquire
shares in a newly created entity, NC Intressenter AB. Eligible executives were able to acquire 100,000 Series B shares per year from 1999 until 2003, up to a maximum total amount of 500,000
Series B shares, through NC Intressenter AB. In October 2000, 200,000 shares were issued and three convertible-debenture notes corresponding to 300,000 shares were issued to NC
Intressenter to fulfill the offer. At December 31, 2002, NC Intressenter held 400,000 Series B shares and a convertible debenture note corresponding to 100,000 Series B shares.
The premium for the option amounted to SEK 7 million in 1997. This was based on a Black-Schole evaluation and an exercise price of SEK 150 per share. In their turn, all partners in NC
Intressenter made payments to NC Intressenter based on the Black-Scholes evaluation. On December 31, 2002, Invik & Co AB, a related party, owned 42% (2001: 42%) of the shares in NC
Intressenter. Invik & Co AB is not entitled to sell or transfer these shares without the permission of Tele2.

SEC Program

SEC maintained a number of options programs for its senior executives. These programs were not included in our bid for SEC. For additional information, see
Note 27 of our Consolidated Financial Statements.

Incentive Program 2002-2007

At the Annual General Meeting in 2002, it was decided to adopt an incentive program through which current and future key employees of the Group may acquire up to
1,055,000 of our Series B shares. These persons are to be offered the opportunity, via warrants, to subscribe for Series B shares during a period of three to five years after allotment,
at a price totaling the market value of the Series B share plus 10% at the time of allotment, on condition that they remain employed by the Group. No premium is to be paid. At
December 31, 2002, allotments corresponding to 663,000 shares had been implemented. All of these had a redemption price of SEK 191 per option. In addition, allotments corresponding to 153,700
shares had been made to a wholly owned Group company to secure the future cash flow for social insurance costs.

Audit and Remuneration Committee

We have no audit committee or remuneration committee.

113

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Employees

During 2002, we had an average number of 3,115 employees. We believe that relations with our employees are good. The following table sets out the average number
of employees in each market area for the past three years.

Year ended December 31,Market Area2000

2001

2002Nordic

1,192

1,126

1,169Eastern Europe & Russia

460

602

1,456Central Europe

29

122

116Southern Europe

16

81

95Luxembourg

40

189

231Branded products & services

10

52

481,747

2,172

3,115


Item 7: Major Shareholders and Related Party Transactions

Major Shareholders

The former chairman of our board of directors, Jan Hugo Stenbeck, passed away on August 19, 2002. In May 2003, Mr. Stenbeck's daughter,
Cristina Stenbeck, became a member of our board of directors. As a result of its substantial direct and indirect shareholdings in us, Invik Group, Kinnevik Group, Transcom Worldwide Group, Millicom
Group, Xsource Corporation Group, MTG Group, Metro Group and other companies, the estate of Jan Stenbeck has the potential to exert considerable influence in terms of financial and operational
decisions regarding operations in these companies. The estate of Mr. Stenbeck also has direct or indirect holdings in us that are greater than those of any other shareholder and could therefore
be deemed under the U.S. federal securities laws to control such companies. See Item 3: "Key InformationRisk Factors." The estate of Mr. Stenbeck is currently in probate (or
equivalent proceedings under applicable local law) in both Luxembourg and Sweden. A Luxembourg notary is administering the estate (at the direction of the heirs) in Luxembourg. A Swedish executor has
also been appointed. The Luxembourg notary is currently in control of the estate's substantial direct or indirect shareholdings in us, Kinnevik, Invik and Millicom. The distribution of
Mr. Stenbeck's estate will most likely take more than a year to resolve. Millicom's common shares and ADSs representing both A and B shares of Kinnevik are quoted on the NASDAQ and, therefore,
each of these companies is required to file periodic reports under Section 13 of the U.S. Securities Exchange Act of 1934.

As
far as we are aware, we are neither directly nor indirectly owned or controlled by another corporation or any government, and there are no arrangements in place, the operation of
which may result in a change in its control of us. However, Invik may, given the size of its holding of our shares and the other relationships described below, be deemed to control us. Except as set
forth below, we are not aware of any persons who own more than 5% of the votes in our shares. The table below sets forth

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certain
information regarding the holdings of our Series A Shares and Series B Shares as of December 31, 2002.

Percentage at
December 31, 2002(1)Number of SharesIdentity of
Person or GroupA Shares

B Shares

Capital

VotesInvik & Co AB(2)

9,891,787

2,825,579

8.6

29.7Industriförvaltnings AB Kinnevik(3)

6,498,880

24,611,021

21.1

26.1EMESCO(4)

3,205,379

75,100

2.2

9.4Millicom International Cellular(5)



10,012,543

6.8

2.9Jan H. Stenbeck (Estate)

914,157



0.6

2.7


---

Our
Series A shares and Series B shares carry ten and one votes per share, respectively. None of our major shareholders have voting rights different from any other of our
shareholders.

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As
a result of its ownership interests described above, the estate of Jan Stenbeck could be deemed to be the beneficial owner of the shares of Tele2 owned by Kinnevik, Invik, and
Millicom, although the estate of Jan Stenbeck, in accordance with Rule 13d-4 under the U.S. Securities Exchange Act of 1934, disclaims such beneficial ownership.

Significant Changes in Major Shareholders

During the past three years, there has been no significant change in the percentage ownership held by any major shareholder, other than as a result of the issue
of shares to acquire shares of SEC in 2000.

Before
completion of our exchange offer to acquire shares of SEC, Millicom owned, directly and indirectly, 29.6% of SEC's capital and controlled 29.6% of its voting shares. Through a
subsidiary, Brotherton Corporation NV, Millicom owned 1,384,316 of our Series A shares and 3,707,228 of our Series B shares, representing 4.9% of our capital and 6.6% of our voting
shares. Millicom exchanged all of its SEC shares for Tele2 shares and, after completion of the offering, it owned, directly and indirectly, 5,384,316 Tele2 AB Series A shares and 14,422,888
Tele2 AB Series B shares, representing 13.7% of our capital and 16.5% of our voting shares.

As
a result of the exchange offer, Kinnevik received 6,368,880 class A shares and 13,247,678 Series B shares in exchange for 210,742,140 Series A shares of SEC and
14,848,297 class B shares of SEC.

Shareholder Information

As of December 31, 2002, 147,460,175 shares were issued, including 21,689,804 Series A shares and 125,770,371 Series B shares, excluding
warrants. No additional shares have been issued since that date.

At
our annual general meeting in 2002, our shareholders voted to implement a new global incentive program for key personnel within the Group. The program will be limited to a maximum of
1,055,000 Series B shares. At December 31, 2002, allotments corresponding to 663,000 Series B shares had been
implemented. In addition, allotments corresponding to 153,700 Series B shares had been made to cover insurance costs that, according to Swedish law, arise when distributing options to
employees. See Note 35 of the Notes to the Consolidated Financial Statements. During 2002, Tele2 had a reclassification of 8,317,143 A shares to 8,317,143 B shares as per the decision made at
the annual general meeting in May 2002. See Note 23 of the Notes to the Consolidated Financial Statements.

As
of February 5, 2003 (the most recent date for which demographic information about our ordinary shareholders is available), five registered shareholders with addresses in the
U.S. held an aggregate of 10,277 Series A shares and 75 registered shareholders with addresses in the United States held an aggregate of 252,110 Series B shares.

We
believe that a significant portion of our ADSs, both Series A and Series B, are beneficially held by U.S. holders. Since a significant percentage of the registered
holders of our shares and ADSs are brokers and other nominees, however, data regarding record holdings by U.S. residents of our shares or ADSs is likely not to be an accurate representation of the
actual number of U.S. beneficial holders or the number of our shares beneficially held by U.S. persons.

As
of May 30, 2003, there were 2,874 registered shareholders of our Series A shares and 58,254 registered shareholders of our Series B shares with addresses in
Sweden. The Swedish shareholders collectively held 16,064,464, or 74.1%, of our Series A shares and 84,800,258, or 67.5%, of our Series B shares as of May 30, 2003.

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Related Party Transactions

Acquisitions and Divestitures

The estate of Jan Stenbeck, as a result of its substantial direct and indirect shareholdings in the Tele2 Group, Invik Group, Kinnevik Group, Transcom Worldwide
Group, Millicom Group, XSource Corporation Group, MTG Group, Metro Group and other companies, has the potential to exert considerable influence in terms of financial and operational decisions
regarding operations in these companies. These companies have been regarded as related parties to us. Business relations between us and all related parties are subject to commercial terms and
conditions. The estate of Mr. Stenbeck is currently in probate (or the equivalent proceedings under applicable local law) in both Luxembourg and Sweden. A Luxembourg notary is administering the
estate (at the direction of the heirs) in Luxembourg. A Swedish executor has also been appointed. The Luxembourg notary is currently in control of the estate's substantial direct or indirect
shareholdings in each of us, Kinnevik, Invik, MTG and Millicom that are greater than those of any other shareholder. The estate of Mr. Stenbeck has substantial direct or indirect shareholdings
in Invik that are greater than those of any other shareholder. The distribution of Mr. Stenbeck's estate will most likely take more than a year to resolve.

In
October 2002, we acquired all shares in the ProcureITright Group, a supplier of procurement function services and Internet-based procurements systems, from XSource Corporation
Group, a related party, for SEK 42 million. Significant transactions between us and related parties before January 1, 2002 are set forth in Note 33 of the Notes to the
Consolidated Financial Statements.

Operational agreements

Tele2 supplies telephony and data services on commercial terms to related parties. For additional financial and other information regarding our obligations with
regards to related parties, see Note 33 of the Notes to the Consolidated Financial Statements.

Item 8: Financial Information

Consolidated Statements and other Financial Information

See Item 18: "Financial Statements."

Dividends and Dividend Policy

Our income is principally derived from the operations of our subsidiaries and associated companies. External loan facilities and a shareholders' agreement also
impose limitations on our ability to pay dividends. See Item 5: "Operating and Financial Review and ProspectsLiquidity and Capital Resources."

As
of December 31, 2002, we had not paid any dividends to our shareholders. We may pay dividends in the future, although the payment of future dividends in any given year will
depend on our earnings, financial condition and business prospects in addition to other factors relating to our business. Dividends in respect of a fiscal year, if proposed by our board of directors
and if approved by our shareholders at the annual general meeting of shareholders after the end of such fiscal year, will be payable following the receipt of such approval. Under Swedish law, no
dividends may be paid in respect of a fiscal year as to which audited financial statements have not been adopted by the annual general meeting of shareholders. Dividends may not, except in limited
circumstances, exceed the amount recommended by the board of directors and may only be paid from funds available for dividends. Under the Swedish Companies Act, dividends to shareholders may not
exceed the amount which, according to a company's balance sheet adopted for the most recent fiscal year and the consolidated balance sheet adopted for the most recent fiscal year of the group, is the
equivalent of the company's or the group's net profit for such year, profits brought forward and non-restricted reserves less the sum

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of:
(1) the amount of reported losses; (2) the amount which, pursuant to law or the articles of association of the company, is to be allocated to restricted equity or the amount which,
according to the annual reports submitted by the group entities, is to be transferred from group non-restricted equity; and (3) the amount which, according to the articles of
association of the company, shall otherwise be used for a purpose other than for dividends to its shareholders.

As
dividends, if any, will be paid by us in kronor, exchange rate fluctuations will affect the U.S. dollar amounts received by holders of our ADSs upon conversion by the depositary of
such cash dividends. Any dividends may be subject to Swedish withholding tax. See Item 10: "Additional InformationTaxation."

Legal Proceedings

The Swedish tax authorities have a pending claim in an amount with a tax effect of SEK 23 million against us. The tax authorities challenge deductions made
by us for the fiscal year 1990 in relation to certain assets that were depreciated on an accelerated basis. The Administration Court of Appeal rendered an unfavorable judgment in November 2000,
which we have appealed to the Supreme Administrative Court in August 2002. The outcome of this appeal is uncertain, although we believe that an outcome in our favor is likely. We have not,
therefore, made any financial provision with respect to such claim.

The
Swedish tax authorities have challenged certain tax loss carry-forwards with an aggregate tax effect of SEK 176 million. We have appealed the Swedish tax authorities'
decisions to the Swedish tax administration and the County administrative court. In 2002, we made financial provisions of SEK 7 million with respect to such claims.

In
January 2000, we made an application to thePost och Telestyrelsen("PTS") that it decide that: (1) TeliaSonera, in its
capacity as transit operator, should remunerate us for all traffic that TeliaSonera transits through its network for termination on our mobile network, from other Swedish operators with which we did
not have interconnect agreements at such time; and (2) that the remuneration be determinable at fair market value. PTS ruled in our favor in respect of both claims. The ruling also sets forth
that rates charged by us for the termination of calls on our mobile network may not exceed an amount equivalent to 10% above the cost-oriented fee that Telia Mobile was allowed to charge
for terminating calls on its network. We appealed this decision, requesting the court to determine that we have the right to charge an amount equivalent to market rates when terminating calls on our
network and that such market rates could not be linked to the cost of a competitor for producing similar services. The Administrative Court ruled in our favor. Its decision has been appealed to the
Administrative Court of Appeal by both PTS and TeliaSonera, where both parties moved for a suspension of the decision pending a final judgment. These motions were not granted.

In
furtherance of the above dispute, Tele2 Sverige AB has sued TeliaSonera AB for payment of approximately SEK 630 million claiming failure to make due payments of interconnect
fees (no deduction of payments passed on by TeliaSonera has been made in this amount). TeliaSonera alleges that calls originating from third party operators' networks (with which we have not concluded
agreements), received through TeliaSonera's network for termination on our network, are to be considered traffic for which TeliaSonera has no financial liability toward us. While TeliaSonera has
passed on payments received from such third party operators, it maintains that it only remains liable toward us for calls originating on TeliaSonera's own network. The PTS and the Administrative Court
of Stockholm have stated that TeliaSonera is liable for these calls in accordance with the
so-called "cascade accounting" principles. The proceedings have been suspended by the District Court pending a final decision in the above-referenced case between Tele2, TeliaSonera and
PTS.

We
have had discussions with Levicom International Holdings B.V. ("Levicom"), regarding the terms of a shareholders' agreement to which Tele2 Sweden is a party. Levicom has taken the
position

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that our acquisition of SIA Tele2 violates a provision of the agreement. We dispute this interpretation. Levicom has commenced an action regarding this claim. There can be no assurance that we would
prevail in such an action.

In
February 2002, Sweden's National Post and Telecommunications Agency ("NPTA") designated Tele2 Sweden as an operator with Significant Market Power ("SMP") in (i) the
national market for interconnect and (ii) the national market for mobile telephony services. In June 2003, the Administrative Court in Stockholm ruled on appeal that Tele2 Sweden does
not have SMP status on the national market for interconnect. The NPTA may appeal this ruling, and there can be no assurance that we would prevail in such an appeal. The court also ruled in
June 2003 that Tele2 Sweden does have SMP status on the national market for mobile telephony services. We may appeal this ruling.

In
addition to the cases described above, various Tele2 companies are parties to routine litigation incidental to the normal conduct of their businesses. We do not believe that
liabilities related to these proceedings, in the aggregate, are likely to have a significant effect on the financial position of the Tele2 Group.

Significant Changes

Other than as disclosed above or elsewhere in this annual report, no significant change has occurred since the date of our most recent audited financial
statements.

Item 9: The Offer and Listing

Price History of Our Stock

The principal trading market for our shares is theStockholmsbörsen. The Stockholmsbörsenconsists of shares quoted on two lists: the A-list and the O-list. The O-list is
primarily intended for smaller companies, companies with short operating histories, and companies intending to join the A-list but unable to satisfy the
requirements of the A-list at this time. Our Shares began trading on the O-list of theStockholmsbörsenon
May 14, 1996.

On
January 24, 1997, our ADSs, each representing one B Share, began trading on the National Market of the NASDAQ Stock Market, Inc. ("NASDAQ"). The Bank of New York is the
depository of our ADSs, which trade on NASDAQ under the symbols "TLTOA" and "TLTOB." During 2002, our Series A and Series B ADSs had trading volumes ranging from approximately zero to
13,500 and zero to 101,600 shares traded per day, respectively. As of December 31, 2002, the Series A ADS closed at $25.11 and our Series B ADSs closed at $26.22. Our
Series A ADSs closed at $37.59 and our Series B ADSs closed at $37.00 on June 23, 2003.

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The
following table sets forth the range of high and low closing prices for the common shares on the Stockholmsbörsen for the periods indicated.

Series A Shares

Series B SharesHigh

Low

High

Low(SEK)

(SEK)1998

First quarter

227.00

158.50

233.00

162.00Second quarter

308.00

222.00

317.00

234.00Third quarter

382.00

224.50

382.00

231.00Fourth quarter

335.00

170.00

333.50

186.001999

First quarter

369.00

235.00

368.00

251.00Second quarter

318.50

249.00

292.50

252.50Third quarter

316.00

256.50

312.50

266.00Fourth quarter

590.00

280.00

598.00

301.002000

First quarter

885.00

460.50

950.00

505.00Second quarter

700.00

501.00

725.00

570.00Third quarter

686.00

435.50

713.00

471.50Fourth quarter

467.00

298.00

495.00

333.002001

First quarter

458.50

265.00

490.00

287.00Second quarter

388.00

274.00

425.00

290.00Third quarter

324.00

198.00

362.00

226.50Fourth quarter

346.00

219.50

378.00

254.002002

First quarter

289.00

258.50

314.50

279.50Second quarter

288.00

148.50

313.00

148.00Third quarter

210.00

135.00

213.00

133.50Fourth quarter

244.00

126.00

249.00

122.002003

January

249.00

222.00

254.00

220.50February

255.00

217.00

262.50

217.00March

268.50

227.00

280.00

230.00April

274.00

242.00

281.50

246.00May

292.00

256.50

295.00

260.00June(1)

297.00

275.00

309.00

279.00


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The following table sets forth the range of high and low closing prices for the common shares on the NASDAQ National Market for the periods indicated.

American Depositary
SharesSeries A

American Depositary
SharesSeries BHigh

Low

High

Low($)

($)

($)

($)1998

Whole year





48.50

21.001999

Whole year





71.75

30.002000

Whole year

48.00

29.00

107.00

33.382001

First quarter

40.00

33.00

51.38

28.25Second quarter

40.00

32.25

41.25

28.63Third quarter


(1)

(1)
34.30

20.00Fourth quarter

27.50

26.25

35.75

24.352002

First quarter

28.50

24.26

30.50

26.39Second quarter

28.50

17.69

30.28

15.91Third quarter

23.00

16.09

22.10

14.75Fourth quarter

26.93

13.50

26.69

14.102003

January

27.10

25.10

28.78

26.02February

29.00

27.00

30.80

25.98March

31.75

27.75

31.41

28.05April

32.50

30.69

33.80

29.50May

35.00

32.50

38.20

32.50June(2)

38.00

35.00

39.90

37.00


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Item 10: Additional Information

Memorandum and Articles of Association

Articles of Association

Set forth below is certain information concerning our share capital and related summary information concerning certain provisions of our articles of association
and applicable Swedish law. The following summary does not purport to be complete and is qualified in its entirety by reference to our articles of association and to applicable Swedish law.

General

We are registered in Sweden, No. 556410-8917. Our principal objects are set out in full in Clause 3 of our articles of association and
include managing the transmission of mobile and fixed telephony and similar businesses.

Directors

Directors and deputy directors are appointed by shareholders at an annual general meeting for the period until the end of the next annual general meeting.
Pursuant to our articles of association, we must have no fewer than five directors and no more than nine directors. Under Swedish law, a director may not be under-age, bankrupt, under the
supervision of a trustee or prohibited from carrying out business by law.

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The
fees of the directors are decided by the shareholders at an annual general meeting and the allocation to each director is resolved by the Board of Directors. A director or deputy
director may retire or be removed prematurely by the shareholders at a General Meeting at any time.

The
Swedish Act on Board Representation for the Privately Employed (lag 1987:1245 om styrelserepresentation for de
privatanställda) gives a right to trade unions to appoint two additional directors in all companies with more than 25 employees (three directors if the company
is active in more than one industry and has more than 1,000 employees in Sweden) and a corresponding number of deputy directors for such union directors should there be a collective bargaining
agreement in force between a trade union and the employer. There are presently no union directors and no deputy union directors on our board of directors.

Up
to three auditors and up to three deputy auditors are appointed at the annual general meeting for a period of four years, with the possibility of early removal by a decision taken at
a general meeting. An authorized Audit Company may be appointed as auditor.

A
chairman of the board and a managing director are appointed by the directors.

Although
our articles of association do not address voting by directors on matters in which they are interested, under Swedish law, a director may not take part in matters regarding:



The
above does not apply where the director directly or indirectly owns all of the shares in the company at issue.

Issuance of Shares

Our articles of association provide for class A shares and class B shares. Each class A share carries 10 votes, and each class B share
carries one vote. No class of shares provide for any preference over the other class of shares.

Meetings of Shareholders

According to the Swedish Companies Act, a shareholder's right to take part in decisions related to our affairs is exercised at the annual general meeting of
shareholders.

Annual
general meetings shall be held within six months of the end of each financial year and will consider statutory accounts and reports, disposition of profit or loss, discharging the
directors and the managing director from liability, electing directors and, if applicable, auditors and related matters. We must provide four to six weeks' notice of our annual general meetings and
two to six weeks' notice of our extraordinary general meetings. We must provide four to six weeks' notice of an extraordinary general meeting if the articles of association are to be amended at such
meeting. Extraordinary general meetings may be held when the board of directors considers appropriate and must be held upon written request by the auditors or by shareholders representing at least
one-tenth of all of our issued shares.

Under
Swedish law, a shareholder may attend and vote at an annual general meeting in person or by proxy. Shareholders wishing to vote by proxy may submit their own forms of proxy to us.
A form of proxy, which must be signed and dated, cannot be valid for more than one year from the date of issue. Our articles of association provide that a shareholder must give us notice of his
intention to attend the

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annual
general meeting not later than the date specified in the notice convening the meeting. Under Swedish law, a person designated on the register of shareholders as a nominee is not entitled to
vote at an annual general meeting. To be entitled to vote, a beneficial owner whose shares are registered in the name of a nominee must arrange to have the shares registered in his or her own name on
the register of shareholders not later than on the tenth day prior to the date of the meeting and also notify us. A shareholder may bring advisors to a general meeting, however the shareholder shall
have notified the company of the number of advisors that shall attend the meeting.

Resolutions
are passed by a simple majority of the votes cast, except in certain circumstances provided by law, including:



Special
rules also apply for voting in connection with a reduction of share capital, mergers or the disapplication of preemption rights (see "Preferential Rights to
Subscribe for Shares").

The
Swedish Companies Act stipulates, in addition to the rules in the articles of association, that a written notice must be sent to each shareholder whose address is known to us when an
annual general meeting is convened to deal with, inter alia, amendments to the articles of association as described under (b) and (c) above or with the commencement or discontinuance of
our liquidation.

There
are no limitations under Swedish law or under our articles of association on the right of foreigners to hold or vote our shares.

Dividends

Decisions regarding payment of dividends are made at an annual general meeting. Our Articles of Association stipulates that all classes of shares carry equal
rights regarding entitlement to dividends, assets and capital distribution. The Swedish Companies Act stipulates that interim dividends are not permitted.

Värdepapperscentralen VPC AB, or VPC, the Swedish Central Securities Depository, administers dividend payments on behalf of
Tele2. Dividends unclaimed for a period of 10 years from the due date are forfeited and revert to us.

The
amount of any dividends paid is limited by, among other things, reference to our profits and non-restricted reserves available at the end of the preceding financial year
and may normally not exceed the amount proposed or approved by the board of directors or be of such amount as, having regard to our cash requirements and financial position, would be contrary to good
business practice.

In
accordance with the Swedish Companies Act, at least 10% of the net profit for the year, after deducting any losses carried forward, must be allocated to a restricted reserve unless
and until the

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amount
of such reserve equals 20% of the nominal amount of the issued share capital. Any premium on an issue of shares must also be allocated to such reserve.

Preferential Rights to Subscribe for Shares

Under the Swedish Companies Act and our articles of association, existing shareholders have preferential rights to subscribe for new shares, convertible debt
instruments or similar instruments issued for cash in proportion to their existing holdings unless the articles of association provide otherwise or the annual general meeting deciding on the issue
stipulates that the shareholders shall not have such preferential rights. Such a decision by the annual general meeting requires approval of shareholders representing at least two-thirds
of the votes cast as well as at least two-thirds of the shares represented at the meeting. Our articles of association do not limit the shareholders' preferential rights to subscribe.

Disclosure of Change in Ownership

The Swedish Industry and Commerce Stock Exchange Committee (Näringslivets
Börskommitté, or NBK) has issued recommendations according to which any seller and purchaser of shares in a Swedish company listed on the
Stockholm Stock Exchange and companies whose shares are listed on another Swedish stock exchange or authorized marketplace is required to disclose transactions to such company and to the relevant
stock exchange wherein the purchaser, as a result of the purchase, holds directly or indirectly 5% or more of either the total voting rights for all shares or the total number of shares in the
company, or the seller ceases to own that threshold amount or the holdings of a 5% holder subsequently reaches, exceeds or falls below any of the thresholds of 10%, 15%, 20% and further increments of
5%, up to 90%. The recommendations are also applicable to certain sales and purchases of convertible debt instruments, options and futures contracts regarding the purchase of shares.

Disclosure
in accordance with the recommendations shall be made to the issuing company, the stock exchange, an established news agency and to a nationally published newspaper, no later
than 9:00 a.m. on the first day of stock exchange trading after the date of the transaction.

The
1991 Swedish Financial Instruments Trading Act (lag 1991:980 om handel med finansiella instrument) also provides that when a natural
person or legal person acquires or disposes of shares in a Swedish limited liability company which has issued shares that are registered on a securities exchange situated or operating in one or more
European Economic Area Countries, or shares that without being
registered are listed on a securities exchange or authorized marketplace in Sweden,, and following that acquisition or disposal the proportion of voting rights held reaches, exceeds or falls below one
of the thresholds of 10%, 20%, 33,1/3%, 50% or 662/3%, that person shall notify both the company and such stock exchange in writing or if the shares are not listed in
Sweden, the Swedish Financial Supervisory Authority (Finansinspektionen) within seven calendar days of the acquisition or disposal.

The
Swedish Reporting Duty (Certain Holdings of Financial Instruments) Act (lagen (2000:1087) om anmälningsskydighet för vissa innehav av finansiella
instrument) calls for a person holding an insider position, that is a person deemed to enjoy especially good conditions to obtain access to confidential information regarding the company, to report in
writing shareholdings and other financial instruments in the company held by him and by closely affiliated natural or legal persons. Changes in such holdings must also be reported to The Financial
Supervisory Authority within five days of the change. Where the change relates to closely affiliated persons, the report must be made within five calendar days from the date on which the insider
became aware of the change. Stock market companies are obliged to report to the Financial Supervisory Authority the identity of persons in the company and its subsidiaries who hold insider positions.
The report must be received by the Financial Supervisory Authority within 14 calendar days from the date on which the insider position arose.

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A
party holding less than 40% of the total number of voting rights in a Swedish publicly listed company, which then, by way of purchase, subscription, conversion or other form of
acquisition of shares in the company alone or together with an affiliated party reaches or exceeds 40% of the total number of voting rights in the company, is required, pursuant to the NBK Takeover
Recommendation 2003 to offer to acquire all outstanding shares and other securities issued by the company.

Rights of Redemption and Repurchase of Shares

Under Swedish law, we may not subscribe for, or receive as security, our own shares. We may, however, redeem our own shares through a statutory redemption
procedure pursuant to the Swedish Companies Act, which will normally require (among other things) court approval when such redemption would result in the repayment of paid-up capital to
shareholders.

Swedish
listed companies may under certain circumstances buy and sell their own shares. A resolution authorizing a company to repurchase its own shares must be passed by the general
meeting of the company's shareholders, or, following authorization by the general meeting, by the board of directors. The resolution by the shareholders must be passed by a two-thirds
majority of the votes cast as well as at least two-thirds of the shares represented at the meeting.

Company
share repurchases may only take place on the stock market or pursuant to an offer to all shareholders (or all shareholders of a specified class of shares) and may not exceed
10 percent of the issued shares. We may not repurchase our own shares by way of direct negotiations with any of our shareholders. To buy our own shares on a stock exchange or marketplace
outside the European Economic Area, we must be granted permission by the Swedish Financial Supervisory Authority.

Share
buybacks may only take place to the extent they do not impair our restricted equity after the buyback. We may not record our own shares as assets on our balance sheet. Further, the
proportions of a share buyback may not be so large as to violate sound business practice considering our need of consolidation, liquidity or financial position in other respects. We may not hold more
than one tenth of all our issued shares. In this context, shares held by any of our subsidiaries are deemed to belong to us.

We
may hold repurchased shares for an unlimited period of time. We may not vote the shares, and the shares do not give a right to dividends or preferential rights to new shares in
connection with an issue of new shares. However, if we hold our own shares, we may receive new shares by way of a bonus issue.

As
a public company, if we hold our own shares, we may either reduce the share capital and cancel the shares or sell the shares to someone else. If we buy or sell our own shares, we must
notify the stock exchange or the marketplace where the shares are listed, as well as an established newsagency and at least three newspapers that circulate throughout the country.

Miscellaneous

Under Swedish law, a general meeting of shareholders may not adopt any resolution that is likely to give an undue advantage to a shareholder or a third party to
our detriment or to the detriment of our other shareholders, nor may our board of directors or other representatives enter into legal transactions or undertake other measures that are likely to give
an undue advantage to a shareholder or to a third party to our detriment or to the detriment of our other shareholders.

Under
Swedish law, where a Swedish parent company alone or together with one or more subsidiaries owns more than nine-tenths of all the shares in a subsidiary and these
shares represent more than nine-tenths of the votes, the parent company is entitled to purchase the remaining shares in the subsidiary (compulsory acquisition of shares). A person whose
shares are subject to such a right of purchase may require the parent company to purchase its shares.

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Material Contracts

On October 25, 1994 the National Post and Telecom Agency issued a license for Kinnevik to provide telephony services in Sweden within a public
telecommunications network. This license was initially valid for a five year period, but has since been extended by action of the National Post and Telecom Agency. See Item 4: "Information on the
CompanyRegulatory OverviewSweden" and Exhibit 4.1.

On
April 7, 1995, the National Post and Telecom Agency issued a license for Comviq GSM AB to provide mobile telecommunications services within a public telecommunications network.
This license is valid until the end of 2004 and was transferred to Tele2 Sweden in January 1999. See Exhibit 4.2.

On
November 30, 1997, we were granted a license by the Grand Duchy of Luxembourg. The license allowed us to establish a mobile telecommunications network in Luxembourg and to
provide services via this network. The license is valid until 2012, after which it is automatically renewed in five year increments unless revoked by the regulator in Luxembourg. We pay an annual
management fee to maintain the license.

Under
a license dated February 22, 2000, granted by the Government of the Principality of Liechtenstein, Tele2 AG obtained the right to establish and operate a mobile
communications network and to provide mobile communications services within the Principality of Liechtenstein. The license was granted for an initial period of fifteen years, with an option to extend
the duration. SEC agreed to pay an annual fee of CHF 40,000, in addition to an annual management fee of CHF 5,000 and an annual fee for the use of the frequency allocated to it. See
Exhibit 4.4.

Under
a license and franchise agreement among Everyday Webguide AB, Everyday Holding B.V. and SEC, SEC obtained a license to set up and operate domestic versions of the Everyday Portal
in different countries in Europe. The license was granted for an initial period of twelve months, after which SEC will have an exclusive right to operate the national Everyday Portals it set up during
that period. In consideration for the license, SEC paid Everyday Webguide AB a start-up fee of SEK 2 million for every country in which it set up a domestic Everyday Portal and 15%
of its total revenues from the Everyday Portal operations. See Exhibit 4.5.

We
hold a license from the Latvian Ministry of Transport to operate a GSM mobile radio telecommunications network in Latvia. The license is valid for five years from the date of
issuance, and is subject to annual fees calculated on a per user basis. See Exhibit 4.6.

We
hold a license from the Lithuanian Ministry of Transport to establish and operate a mobile digital cellular GSM-900 radio telecommunications network in Latvia. The license
is valid for ten years from the date of issuance, and is subject to annual fee and stamp duty. See Exhibit 4.7.

We
hold a license from the Estonian Communications Board to operate a mobile communications network of general use in Estonia. See Exhibit 4.8.

On
April 15, 1994 (following an agreement dated December 20, 1989, entered into by Banverket ("BV") and Industriförvaltnings AB Kinnevik ("Kinnevik"),
regarding Kinnevik's use of BV's optic cable), Kinnevik amended its June 19, 1991 agreement with Comviq Systems AB ("Comviq") and granted Comviq a right to utilize the optic cable for its
mobile telephony activities according to the GSM standard. This agreement was assigned to Tele2 Sweden in January 1999. In January 1995, Kinnevik entered into a similar agreement with
Tele2 AB (now Tele2 Sweden) regarding the Banverket rights. This agreement was assigned to Tele2 Sweden in December 2001. Both agreements will terminate on June 30, 2017. See
Exhibit 4.9 and Exhibit 4.10.

On
October 28, 1998, NetCom AB entered into an agreement for the acquisition of the entire issued share capital of Beleggingsmaatschappij Belmus B.V. from Millicom Holding B.V.
The aggregate consideration paid by NetCom AB was US$ 40,681,056.58. See Exhibit 4.11.

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On
January 29, 1999, Tele2 AB entered into a Framework Agreement in order to purchase 90% of the share capital of AS Levicom Cellular ("CellCo") and 19.9% of the share capital of
OÜ Levicom BroadBand ("BroadCo") from Levicom Investments Curacao N.V. ("NV") the legal owner of all the issued shares of both companies. In this context, NetCom and Levicom
International Holdings B.V. entered into Shareholders' Agreements of the same date relating to 90% of CellCo's issued shares and 19.99% of BroadCo's issued shares. See Exhibit 4.12. Pursuant to
a Share Purchase Agreement of January 29, 1999, between Levicom International Holdings B.V. and Tele2 AB, Tele2 AB purchased 914,616 shares of CellCo., representing 90% of the issued share
capital of CellCo. See Exhibit 4.13. In accordance with the Shareholders' Agreement relating to BroadCo, Levicom International Holdings B.V. exercised a put option requiring Tele2 Sweden to
purchase from it all of the outstanding shares of BroadCo. Consequentially, under a Share Purchase Agreement dated December 28, 2001, between Levicom International Holdings B.V. and Tele2
Sverige AB, Tele2 Sverige AB acquired 80.1% of the outstanding shares of OÜ Levicom BroadBand. See Exhibit 4.18.

In
March 2001, Tele2 AB (publ) and Tele2 Sverige AB entered into a Framework Agreement with TeliaSonera AB (publ) and Telia Mobile AB. Under it, Tele2 and TeliaSonera will provide
UMTS services to jointly exploit the UMTS license granted to Tele2 through a jointly-owned Swedish limited liability company, the Network Company, of which each party owns 50% of the shares. A
separate company will hold the license and be a wholly-owned subsidiary of the Network Company. See
Exhibit 4.14. The Shareholder Agreement, dated March 15, 2001, between TeliaSonera AB (publ), Telia Mobile AB, Tele2 AB (publ), Nätbolaget, and Tele2 Sverige AB governs
the rights of the parties with respect to the joint venture companies created under the Framework Agreement. See Exhibit 4.15.

In
August 2001, Tele2 Sverige and SEC Luxembourg S.A., as borrowers, signed a senior debt facility of EUR 1.2 billion in aggregate available principal, with, among others,
ABN AMRO Bank N.V., CIBC World Markets plc, ING Bank N.V., Nordbanken AB (publ), The Royal Bank of Scotland plc and Westdeutsche Landesbank Girozentrale, as lenders and arrangers. Various of the Tele2
Group companies, including Tele2 AB, Tele2 Holding AB, Tango S.A, SEC Luxembourg S.A., and Tele2 Sverige AB have guaranteed repayment of all outstandings under the agreement. The Senior Credit
Facility replaces all of our previous major facilities. The Senior Credit Facility was amended and restated on November 28, 2001 and was further amended on December 20, 2002 and
March 3, 2003. For additional information on the facility agreement, see Item 5: "Operating and Financial Review and ProspectsLiquidity and Capital
ResourcesBorrowings" and Exhibits 4.16, 4.19 and 4.20.

In
November 2001, we entered into a agreement with Millicom International Operations B.V., for the acquisition of all of the shares of Fora Telecom BV in exchange for 2,461,449
newly issued B shares of Tele2 AB, corresponding to a value of SEK 849 million. See Exhibit 4.17.

Exchange Controls

There are currently no limitations, either under the laws of Sweden or our articles of association, on the rights of non-residents to hold or vote the
Series A or Series B Shares. Additionally, there are currently no Swedish foreign exchange control restrictions on the conduct of our operations or affecting the remittance of dividends
on unrestricted shareholders' equity.

Taxation

The following is a summary of the material Swedish and U.S. federal tax considerations relevant to the ownership and disposition of shares or ADSs. The summary
does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular holder, including tax considerations that arise from rules of general
application or that are generally assumed to be known by holders. In particular, the summary deals only with holders that hold shares or ADSs as capital assets and does not address the tax treatment
of holders that are subject to special rules,

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such
as banks, insurance companies, dealers in securities or currencies, persons that elect mark to market treatment, persons that hold shares or ADSs as a position in a straddle, conversion
transaction, synthetic security or other integrated financial transaction and persons that own, or will own, directly or indirectly, 10% or more of our outstanding stock.

The
summary is based on laws, treaties and regulatory interpretations in effect on the date hereof, all of which are subject to change. Holders should consult their own advisers
regarding the tax consequences of the ownership and disposition of shares or ADSs in light of their particular circumstances, including the effect of any state, local or other national laws.

Swedish Tax Considerations

The following is a summary of the Swedish tax considerations for non-Swedish holders, as defined below, of the acquisition, ownership and disposition
of shares or ADSs. The following discussion of Swedish tax considerations does not address the tax considerations that are relevant to holders who are subject to special rules, such as investment
companies, mutual funds, pension funds and holders who hold shares or ADSs through a partnership or as current assets in a business operation. For purposes of this discussion, a
non-Swedish holder is a holder that is not resident in Sweden for Swedish tax purposes and does not hold shares or ADSs through a permanent establishment in Sweden.

For
purposes of the income tax treaty between Sweden and the United States and for Swedish income tax purposes, holders of ADSs will be treated as owning the shares represented by those
ADSs.



A non-Swedish holder generally is not liable to pay Swedish taxes in respect of gain realized on the sale or other disposition of shares or ADSs.
Special regulations, however, apply to persons who have resided in Sweden at some time during the ten years prior to the disposition.



Non-Swedish holders will be subject to withholding tax with respect to any dividends paid on shares or ADSs at a 30% or a lower rate pursuant to the
applicable provisions of income tax treaties with other countries. For example, the income tax treaty between the United States and Sweden reduces the rate of withholding for certain eligible holders
to 15%. In Sweden, VPC normally performs the withholding of tax, with the exception of nominee registered shares, for which the tax is withheld by the nominee. VPC or the nominee generally will
withhold at a lower treaty rate with respect to cash dividends paid on shares or ADSs to a non-Swedish holder entitled to the benefits of such treaty. However the tax treaty with Sweden
does not permit VPC or a nominee to withhold at the lower treaty rate. In such a case, a non-Swedish holder may claim a refund from the Swedish tax authorities of the amount withheld in
excess of the treaty rate by complying with the refund procedure in that treaty.



Non-Swedish holders will not be subject to wealth tax in Sweden. No gift, estate or inheritance taxes will arise in Sweden in respect of a gift of
shares or ADSs by, or on the death of, a non-Swedish holder, except in the case of a gift or inheritance from a Swedish citizen, or a person who is married to a Swedish citizen, who has
resided in Sweden at some time during the ten years prior to the gift or death. Gift tax will arise in Sweden in respect of a gift of shares or ADSs by a non-Swedish holder if the
recipient is a Swedish citizen.

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U.S. Federal Income Tax Considerations

The following discussion of U.S. tax considerations applies to you if your functional currency is the U.S. dollar and you are a citizen or resident of the United
States, a U.S. corporation or otherwise subject to U.S. federal income taxation on a net income basis in respect of your investment in shares, or ADSs.

In
general, for U.S. federal income tax purposes and for purposes of the income tax treaty entered into between Sweden and the United States, beneficial owners of ADSs will be treated as
owning the shares represented by those ADSs.



A holder generally will be entitled to benefits under the income tax treaty between the United States and Sweden, including the reduced 15% Swedish withholding
rate on dividends, if it (i) is an individual U.S. resident, a U.S. corporation, or a partnership, estate, or trust to the extent its income is subject to taxation in the United States as the
income of a U.S. resident, either in its hands or in the hands of its partners or beneficiaries; (ii) is not also a resident of Sweden for Swedish tax purposes; (iii) is not subject to
an anti-treaty shopping article that applies in limited circumstances; and (iv) does not hold shares or ADSs in connection with the conduct of business in Sweden through a permanent
establishment or the performance of personal services in Sweden through a fixed base.

The
gross amount of dividends received by you (including amounts withheld in respect of Swedish withholding tax) generally will be subject to U.S. federal income taxation as foreign
source dividend income and will not be eligible for the dividends received deduction allowed to corporations. Dividends paid in a currency other than the U.S. dollar will be included in your income in
a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt by the Depositary, if applicable, or you, regardless of whether the payment is in fact converted into
U.S. dollars. If such dividends are converted into U.S. dollars on the date of receipt, you should generally not be required to recognize foreign currency gain or loss in respect of the dividend
income. Subject to certain exceptions for positions that are hedged or held for less than 60 days, if you are an individual then generally you will be subject to U.S. taxation at a maximum rate
of 15% in respect of dividends received after 2002 and before 2009.

Swedish
withholding tax at the rate applicable to you under the Sweden-U.S. income tax treaty will be treated as a foreign income tax that, subject to generally applicable
limitations, is eligible for credit against your U.S. federal income tax liability. Foreign tax credits may not be allowed for withholding taxes imposed in respect of certain short-term or
hedged positions in securities or in respect of arrangements in which your expected economic profit, after non-U.S. taxes, is insubstantial. You should consult your own adviser concerning
the implications of these rules in light of your particular circumstances.

Distributions
of additional shares with respect to your shares or ADSs that are made as part of a pro rata distribution to all Tele2 shareholders generally will not be subject to U.S.
federal income tax.



You generally will realize gain or loss on the sale or other disposition of shares or ADSs equal to the difference between the amount realized on the disposition
and your adjusted tax basis in the shares or ADSs. Any such gain or loss will be subject to U.S. federal income taxation as capital gain or loss, and will be long-term gain or loss if your
holding period for the shares or ADSs is more than one year at the time of disposition. If you are an individual, the net amount of long-term capital gain realized by you generally is
subject to taxation at a maximum rate of 15% for gain recognized after May 5, 2003 and before 2009, and otherwise at a maximum rate of 20%.

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Deposits and withdrawals of shares in exchange for ADSs will not be subject to U.S. federal income tax.



Dividends on shares or ADSs that are paid in the United States or through a U.S. related financial intermediary and proceeds from the sale or other disposition of
shares or ADSs may be subject to information reporting and backup withholding unless you (i) are a corporation or other exempt recipient, or (ii) provide a taxpayer identification number
and certify that no loss of exemption from backup withholding has occurred.

Holders
that are not U.S. persons generally are not subject to information reporting or backup withholding. However, a non-U.S. person may be required to provide a
certification to establish its non-U.S. status in connection with payments received within the United States or through certain U.S.-related financial intermediaries.

Documents On Display

We are subject to certain informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports and other information with
the Securities and Exchange Commission. Such reports and other information filed by us can be inspected and copied at the public reference facilities maintained by the Securities and Exchange
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Reports and other information concerning us also may be inspected at the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006. Any filings we make electronically in the future will be available to the public over the Internet at the Security and Exchange
Commission's website athttp://www.sec.gov.

Item 11: Quantitative and Qualitative Disclosures About Market Risks

The Tele2 Group faces primary market risk exposures in three categories: exchange rate fluctuations, interest rate fluctuations and creditworthiness of customers.

Risk of Variations in Exchange Rates

We are affected by fluctuations in exchange rates. Currently, companies reporting in Swedish kronor account for 33% of our operating revenue and companies using
EUR account for 43%. In telephony operations a currency risk arises in connection with international call traffic, which means that a liability or a receivable arises between our companies and foreign
operators. In mobile telephony through December 2002, these transactions were calculated in SDRs (Special Drawing Rights) but were invoiced and paid for in U.S. dollars. As of 2003, these are
calculated and paid in EUR. See note 22 of the Notes to the Consolidated Financial Statements.

Our
SEK 10.8 billion five-year loan facility is partly denominated in EUR. The exchange-rate difference that continually arises in translating the loan
liability is offset against the exchange-rate differences that arise on the corresponding net investment in subsidiaries. No hedge is undertaken against other types of currency risk.

Our
net foreign exchange difference reported in the income statement amounted to a gain of SEK 53 million in 2002 and a gain of SEK 13 million in 2001. We believe that some
of the risks of our operations in multiple currencies is mitigated by structural matching. This structural matching occurs because we incur many of our operating expenses in the same currency in which
we invoice the services relating to such costs.

Although
we maintain our books and report our results in Swedish kronor, we conduct a material portion of our operations through subsidiaries outside Sweden (corresponding to
approximately 67% of

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consolidated
revenues in 2002). We record the assets and liabilities in the books of such subsidiaries in reporting currencies other than Swedish kronor. Net unrealized exchange adjustments arising
from translation of assets and liabilities are not included in the consolidated statements of earnings but appear as a component of shareholders' equity, accounting for SEK 749 million, SEK
1,734 million and SEK1,026 million in 2000, 2001 and 2002 respectively. The translation risks associated with currency fluctuations may have an adverse effect on our
financial condition in the future. Currency risks in our international operations are limited by denominating loans to group companies in the subsidiary's local currency.

Risk of Variations in Floating Interest Rates

Our total loan liability that carried a variable rate of interest at December 31, 2002 was SEK 9,330 million. An increase in interest rates of 100
basic points would entail an additional interest expense of SEK 93 million, calculated on the basis of variable interest-bearing liabilities at December 31, 2002.

Our
group's interest-rate on borrowing is currently variable with fixed-interest periods of up to 12 months. However, we are monitoring trends on
interest-rate markets and decisions regarding the interest-rate fixing strategy are assessed on an ongoing basis. See Note 24 of the Notes to the Consolidated Financial
Statements.

A
table summarizing our debt obligations as of December 31, 2002, which are sensitive to changes in interest rates, is set forth in Note 24 of Notes to the Consolidated
Financial Statements. The table presents principal payment obligations by maturity date, where 25% of total interest-bearing liabilities with variable interest rates of SEK 9,330 million mature
for payment within one year, and the remaining 75% mature within two to four years.

Credit Risk

Credit risk entails the book loss that would be reported on the closing date if counterparties completely neglected to fulfill their payment liability in
accordance with agreements. We have limited its credit risk in respect of receivables by continually conducting credit assessments of the customer stock. Since we have a highly varied customer stock
that covers individuals as well as companies, this entails that the
credit risk is limited. We make provisions for any credit losses, and these have remained within management's expectations.

Item 12: Description Of Securities Other Than Equity Securities

This item is not applicable.

Item 13: Defaults, Dividend Arrearages And Delinquencies

This item is not applicable.

Item 14: Material Modifications To The Rights Of Security Holders And Use Of Proceeds

This item is not applicable.

Item 15: Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried out an evaluation under the supervision and with the participation of the
Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. There are
inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or

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overriding
of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as
of the date of the Company's evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to provide reasonable assurance
that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

There
were no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent of the date of the most recent
evaluation, nor were there any significant deficiencies or material weaknesses in our internal controls identified that required corrective actions.

Item 16: Reserved

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PART II

Item 17: Financial Statements

The registrant has responded to Item 18 in lieu of responding to this item.

Item 18: Financial Statements

The financial statements listed in the Index to Financial Statements are filed or incorporated by reference as a part of this Annual Report.

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Item 19: Exhibits

The following is a list of exhibits filed as part of this Annual Report, including exhibits incorporated by reference.

|Number |  | Description                                                                                                                                                                                                                                                              
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1    |  | Articles of Association of Tele2 AB (as amended and adopted on May 17, 2001) (unofficial translation).(1)                                                                                                                                                                
|2.1    |  | Deposit Agreement, dated as of January 17, 1997, among NetCom, The Bank of New York as Depositary and the Owners and Beneficial Owners from time to time of American Depositary Receipts evidencing American Depositary Shares representing Series B
Shares of NetCom.(2)
|2.2    |  | Specimen form of American Depositary Receipt representing NetCom's American Depositary Shares evidencing the right to receive one Series B Share (nominal value SEK 5 per share) (included as Exhibit A to Exhibit 2.1 herein).(2)                                       
|2.3    |  | Deposit Agreement, dated as of August 24, 2000, among NetCom, The Bank of New York as Depositary and the Owners and Beneficial Owners from time to time of American Depositary Receipts evidencing American Depositary Shares representing Series A Shares
of NetCom.(3) 
|2.4    |  | Specimen form of American Depositary Receipt representing NetCom's American Depositary Shares evidencing the right to receive one Series A Share (nominal value SEK 5 per share) (included as Exhibit A to Exhibit 2.3 herein).(3)                                       
|4.1    |  | License to Provide Telephony Services within a Public Telecommunications Network, issued by the National Post & Telecom Agency to Tele2 AB, dated October 25, 1994 (unofficial translation).(4)                                                                          
|4.2    |  | License to Provide Mobile Telecommunications Services within a Public Telecommunications Network, issued by the National Post & Telecom Agency to Comviq GSM AB, dated April 7, 1995 (unofficial translation).(4)                                                        
|4.3    |  | License of Millicom Luxembourg S.A. to establish and operate a cellular digital network for mobile communications, granted by the Communications Minister of the Grand Duchy of Luxembourg on November 30, 1997.(5)                                                      
|4.4    |  | License of Tele2 AG, dated February 22, 2000, to establish and operate a mobile communications network and mobile communications services granted by the Government of the Principality of Liechtenstein.(6)                                                             
|4.5    |  | License and Franchise Agreement between Everyday Webguide AB, Everyday Holding B.V. and SEC relating to Everyday.com.(6)                                                                                                                                                 
|4.6    |  | License to render wireless telecommunications services in the Republic of Latvia, dated August 29, 2000, granted by the Minister of transport of the Republic of Latvia.(1)                                                                                              
|4.7    |  | License to establish and operate a public national mobile digital cellular GSM-900 radio telecommunication network and to provide services via the network, granted by the Minister of transport of the Republic of Lithuania.(1)                                        
|4.8    |  | Operating License for a Mobile Communication Network of General Use, issued by the Communications Board of Estonia, dated as of November 24, 2000.(1)                                                                                                                    
|4.9    |  | Agreement between Industriförvaltnings AB Kinnevik and Comviq GSM AB regarding the Banverket Rights, dated April 15, 1994.(4)                                                                                                                                            
|       |  |                                                                                                                                                                                                                                                                          

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|4.10 |  | Agreement between Industriförvaltnings AB Kinnevik and Tele2 AB regarding the Banverket Rights, dated January 1995.(4)                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.11 |  | Agreement, dated October 28, 1998, between Millicom Holding B.V. and NetCom AB for the acquisition of the entire issued share capital of Beleggingsmaatschappij Belmus B.V.(7)                                                                                                                                                                                                                                                                                                                                                                
|4.12 |  | Shareholders' Agreement, dated January 29, 1999, among Tele2 AB, Levicom International Holdings B.V., Levicom Investments Curacao N.V., the shareholders of Levicom Investments Curacao N.V. and NetCom AB relating to AS Levicom Cellular.(7)                                                                                                                                                                                                                                                                                                
|4.13 |  | Share Purchase Agreement, dated January 29, 1999, between Levicom International Holdings B.V. and Tele2 AB.(7)                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.14 |  | Framework Agreement, dated as of March 15, 2001, between TeliaSonera AB (publ), Telia Mobile AB, NetCom AB (publ) and Tele2 AB.(8)                                                                                                                                                                                                                                                                                                                                                                                                            
|4.15 |  | Shareholder Agreement, dated as of March 15, 2001, between TeliaSonera AB (publ), Telia Mobile AB, NetCom AB (publ) and Tele2 AB.(8)                                                                                                                                                                                                                                                                                                                                                                                                          
|4.16 |  | Amendment and restated Agreement, dated as of November 28, 2001, among Tele2 Sverige AB, Société Européenne de Communication S.A., ABN AMRO Bank N.V., CIBC World Markets plc, ING Bank N.V., Nordbanken AB (publ), Royal Bank of
Scotland plc and Westdeutsche Landesbank Girozentrale, London Branch, amending and restating the Facility Agreement, dated as of August 22, 2001, including as Annex A the amended and restated form of the Facility Agreement.(9)                                                                          
|4.17 |  | Share Purchase Agreement, dated as of November 30, 2001, between Millicom International Operations B.V., and Tele2 AB.(9)                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.18 |  | Share Purchase Agreement, dated as of December 28, 2001, between Levicom International Holdings B.V. and Tele2 Sverige AB.(9)                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.19 |  | Amendment Agreement, dated December 20, 2002, among Tele2 Sverige AB, Tele2 Holding AB, the Security Providers, the Original Cross-Guarantors, the Original Guarantors (as such terms are defined in the Amendment Agreement), Tele2 AB (publ), ABN AMRO
Bank N.V., CIBC World Markets plc, ING Bank N.V., Nordea Markets, the Royal Bank of Scotland plc and WestLB, London Branch, amending and restating the amended and restated Senior Loan Facility dated as of November 28, 2001.                                                      
|4.20 |  | Second Amendment and Restatement Agreement, dated March 3, 2003, among Tele2 Sverige AB, Tele2 Holding AB, the Security Providers, the Original Cross-Guarantors, the Original Guarantors (as such terms are defined in the Second Amendment and
Restatement Agreement), Tele2 AB (publ), the Lenders (as such term is defined in the Second Amendment and Restatement Agreement) Nordea Bank Sweden AB (publ) and CIBC World Markets plc, amending and restating the amended and restated Senior Loan
Facility dated as of November 28, 2001.
|8.1  |  | List of subsidiaries and other associated companies of Tele2 AB as of December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|99.1 |  | Certification of CEO Pursuant to 17 C.F.R. 240.13a-14 or 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                         
|99.2 |  | Certification of CFO Pursuant to 17 C.F.R. 240.13a-14 or 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                         
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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|99.3 |  | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------

---

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

| |  | TELE2 ABRegistrant                                                                
| |  | ----------------------------------------------------------------------------------
| |  | /s/LARS-JOHAN JARNHEIMERLars-Johan JarnheimerPresident and Chief Executive Officer

Date:
June 27, 2003

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CONSOLIDATED FINANCIAL STATEMENTS OF TELE2 AB,  AS OF AND FOR THE YEARS ENDED  DECEMBER 31, 2000, 2001 AND 2002

F-1

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REPORT OF INDEPENDENT ACCOUNTANTS

To
the Board of Directors and Shareholders of Tele2 AB (publ):

We
have audited the accompanying consolidated balance sheets of Tele2 AB and its subsidiaries, collectively "Tele2" as of December 31, 2002 and 2001 and the related consolidated
income statements, statements of cash flows and of changes in shareholders' equity for each of the three years in the period ended December 31, 2002, all expressed in Swedish kronor. These
financial statements are the responsibility of Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform our audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tele2 at December 31, 2002 and 2001, and the results
of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in Sweden.

Accounting
principles generally accepted in Sweden vary in certain significant respects from accounting principles generally accepted in the United States of America. The application of
the latter would have affected the determination of consolidated net income expressed in Swedish kronor for each of the three years in the period ended December 31, 2002 and the determination
of consolidated shareholders' equity also expressed in Swedish kronor at December 31, 2002, 2001 and 2000 to the extent summarized in Note 37 to the consolidated financial statements.

Stockholm,
Sweden
March 3, 2003

Pål
Wingren
Authorized Public Accountant
PricewaterhouseCoopers AB

F-2

---



Tele2 AB AND SUBSIDIARIES        CONSOLIDATED INCOME STATEMENTS        (in millions except per share data)

|                                                                        |  | Year ended December 31, | 
|----------------------------------------------------------------------- |  | ----------------------- | 
|
|
|
|
|Operating revenue                                                       |  | (1)                     | 
|Cost of services sold                                                   |  |                         | 
|                                                                        |  |                         | 
|Gross profit                                                            |  |                         | 
|Selling expenses                                                        |  |                         | 
|Administrative expenses                                                 |  | (36)                    | 
|Executive options                                                       |  |                         | 
|Other operating revenue                                                 |  | (3)                     | 
|Other operating expenses                                                |  | (4)                     | 
|                                                                        |  |                         | 
|Operating profit/loss                                                   |  | (2, 35)                 | 
|Profit/loss in associated companies:                                    |  |                         | 
|Result from associated companies                                        |  | (5)                     | 
|Sale of associated companies                                            |  | (6)                     | 
|Profit/loss on financial investments:                                   |  |                         | 
|Result from other securities and receivables classified as fixed assets |  | (7)                     | 
|Other interest revenue and similar income                               |  | (8)                     | 
|Interest expenses and similar costs                                     |  | (9)                     | 
|                                                                        |  |                         | 
|Profit/loss after financial items                                       |  |                         | 
|Tax on profit/loss for the year                                         |  | (10)                    | 
|Minority interest                                                       |  |                         | 
|                                                                        |  |                         | 
|Profit/loss for the year                                                |  | (31-32)                 | 
|                                                                        |  |                         | 
|Earnings/loss per share                                                 |  | (23)                    | 
|Earnings/loss per share after full dilution                             |  | (23)                    | 
|Number of shares                                                        |  | (23)                    | 
|Average number of shares                                                |  | (23)                    | 
|Number of shares after dilution                                         |  | (23)                    | 
|Average number of shares after dilution                                 |  | (23)                    | 

Solely
for the convenience of the reader, the 2002 financial statements have been translated into United States Dollars (USD) using the December 31, 2002 noon buying rate of the
Federal Reserve Bank of New York of USD 1 = SEK 8.6950.

The
accompanying notes are an integral part of these financial statements.

F-3

---

TELE2 AB AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (in millions)

|                                       |  | At December 31,
|-------------------------------------- |  | ---------------
|
|
|
|
|ASSETS                                 |  |                
|Fixed assets                           |  |                
|Intangible assets                      |  |                
|Licenses and right of use              |  | (11)           
|Goodwill                               |  | (11)           
|                                       |  |                
|Total intangible assets                |  |                
|Tangible assets                        |  |                
|Buildings and land                     |  | (12)           
|Machinery and other technical plant    |  | (12)           
|Equipment, tools and installations     |  | (12)           
|Fixed plant under construction         |  | (12)           
|                                       |  |                
|Total tangible assets                  |  |                
|Financial fixed assets                 |  |                
|Shares in group companies              |  | (13)           
|Shares in associated companies         |  | (14)           
|Receivables from associated companies  |  | (15)           
|Other long-term holdings of securities |  | (16)           
|Other long-term receivables            |  | (17)           
|Deferred tax receivable                |  | (10)           
|                                       |  |                
|Total financial fixed assets           |  |                
|                                       |  |                
|Total fixed assets                     |  |                
|Current assets                         |  |                
|Inventory                              |  |                
|Current receivables                    |  |                
|Accounts receivable                    |  | (18)           
|Current tax receivables                |  |                
|Other receivables                      |  | (19)           
|Prepaid expenses and accrued revenues  |  | (20)           
|                                       |  |                
|Total current receivables              |  |                
|Cash and bank balances                 |  | (21)           
|                                       |  |                
|Total current assets                   |  |                
|                                       |  |                
|Total assets                           |  | (31-32)        
|                                       |  |                

Solely for the convenience of the reader, the 2002 financial statements have been translated into United States Dollars (USD) using the
December 31, 2002 noon buying rate of the Federal Reserve Bank of New York of USD 1 = SEK 8.6950.

The
accompanying notes are an integral part of these financial statements.

F-4

---

|                                                 |  | At December 31,
|------------------------------------------------ |  | ---------------
|
|
|
|
|EQUITY AND LIABILITIES                           |  |                
|Shareholders' equity                             |  | (22)           
|Restricted equity                                |  |                
|Share capital                                    |  | (23)           
|Restricted reserves                              |  |                
|                                                 |  |                
|Total restricted equity                          |  |                
|Non-restricted reserves/accumulated losses       |  |                
|Non-restricted reserves/accumulated losses       |  |                
|Profit/loss of the year                          |  |                
|                                                 |  |                
|Total non-restricted reserves/accumulated losses |  |                
|                                                 |  |                
|Total shareholders' equity                       |  |                
|Minority interest                                |  |                
|Provisions                                       |  |                
|Shares in associated companies                   |  | (14)           
|                                                 |  |                
|Total provisions                                 |  |                
|Long-term liabilities                            |  |                
|Interest-bearing                                 |  |                
|Liabilities to financial institutions            |  | (24)           
|Bank overdraft facility                          |  | (21)           
|Other liabilities                                |  | (25)           
|                                                 |  |                
|Total interest-bearing liabilities               |  |                
|Non-interest-bearing                             |  |                
|Other liabilities                                |  |                
|                                                 |  |                
|Total non-interest-bearing liabilities           |  |                
|                                                 |  |                
|Total long-term liabilities                      |  |                
|Current liabilities                              |  |                
|Interest-bearing                                 |  |                
|Liabilities to financial institutions            |  | (24)           
|Other liabilities                                |  | (25)           
|                                                 |  |                
|Total interest-bearing liabilities               |  |                
|Non-interest-bearing                             |  |                
|Accounts payable                                 |  |                
|Current tax liabilities                          |  |                
|Other liabilities                                |  | (26)           
|Accrued expenses and prepaid revenues            |  | (27)           
|                                                 |  |                
|Total non-interest-bearing liabilities           |  |                
|                                                 |  |                
|Total current liabilities                        |  |                
|                                                 |  |                
|Total shareholders' equity and liabilities       |  | (31-32)        
|                                                 |  |                
|PLEDGED ASSETS AND CONTINGENT LIABILITIES        |  |                
|Pledged assets                                   |  | (28)           
|Contingent liabilities                           |  | (29)           

Solely for the convenience of the reader, the 2002 financial statements have been translated into United States Dollars (USD) using the
December 31, 2002 noon buying rate of the Federal Reserve Bank of New York of USD 1 = SEK 8.6950.

The
accompanying notes are an integral part of these financial statements.

F-5

---



TELE2 AB AND SUBSIDIARIES        CONSOLIDATED CASH FLOW STATEMENTS        (in millions)

|                                                                                              |                                                                  | Year ended December 31, | 
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------- | 
|
|
|
|Operating activities                                                                          |                                                                  |                         | 
|Operating profit/loss                                                                         |                                                                  |                         | 
|Adjustments of income/expense items that do not generate cash flow from operating activities: |                                                                  |                         | 
|                                                                                              | Depreciation and amortization                                    |                         | 
|                                                                                              | Capital losses/gains on sale of machinery, other technical plant |                         | 
|                                                                                              | Financial leases                                                 |                         | 
|Exchange rate differences                                                                     |                                                                  |                         | 
|Interest received                                                                             |                                                                  |                         | 
|Interest paid                                                                                 |                                                                  |                         | 
|Financial expenses paid                                                                       |                                                                  |                         | 
|Tax paid/refund                                                                               |                                                                  |                         | 
|                                                                                              |                                                                  |                         | 
|                                                                                              |                                                                  |                         | 
|Change in working capital:                                                                    |                                                                  |                         | 
|                                                                                              | Inventory                                                        |                         | 
|                                                                                              | Accounts receivable                                              |                         | 
|                                                                                              | Other current receivables                                        |                         | 
|                                                                                              | Prepaid expenses and accrued revenues                            |                         | 
|                                                                                              | Accounts payable                                                 |                         | 
|                                                                                              | Other current liabilities                                        |                         | 
|                                                                                              | Accrued expenses and prepaid revenues                            |                         | 
|                                                                                              | Provisions                                                       |                         | 
|                                                                                              |                                                                  |                         | 
|                                                                                              |                                                                  |                         | 
|                                                                                              |                                                                  |                         | 
|Cash flow provided by operating activities                                                    |                                                                  |                         | 
|Investing activities                                                                          |                                                                  |                         | 
|Acquisition of intangible fixed assets                                                        |                                                                  |                         | 
|Sale of intangible fixed assets                                                               |                                                                  |                         | 
|Acquisition of tangible fixed assets                                                          |                                                                  |                         | 
|Sale of tangible fixed assets                                                                 |                                                                  |                         | 
|Acquisition of shares in Group companies, excluding cash                                      |                                                                  | (13)                    | 
|Acquisition of other long-term securities                                                     |                                                                  |                         | 
|Sale of other long-term securities                                                            |                                                                  |                         | 
|Other long-term lending                                                                       |                                                                  |                         | 
|Payments received on other long-term lending                                                  |                                                                  |                         | 
|                                                                                              |                                                                  |                         | 
|Cash flow from investing activities                                                           |                                                                  | (30)                    | 
|Financing activities                                                                          |                                                                  |                         | 
|Raising of loans from credit institutions                                                     |                                                                  |                         | 
|Amortization of loans from credit institutions                                                |                                                                  |                         | 
|Raising of other interest-bearing liabilities                                                 |                                                                  |                         | 
|Amortization of other interest-bearing liabilities                                            |                                                                  |                         | 
|New share issue                                                                               |                                                                  |                         | 
|                                                                                              |                                                                  |                         | 
|Cash flow from financing activities                                                           |                                                                  |                         | 
|Net change in cash                                                                            |                                                                  |                         | 
|Liquid funds at beginning of year                                                             |                                                                  | (21)                    | 
|Exchange rate differences in liquid funds                                                     |                                                                  | (21)                    | 
|                                                                                              |                                                                  |                         | 
|Liquid funds at end of year*                                                                  |                                                                  | (21)                    | 
|                                                                                              |                                                                  |                         | 
|*of which, blocked accounts                                                                   |                                                                  | (21)                    | 
|For additional cash flow information:                                                         |                                                                  | (30)                    | 

Solely for the convenience of the reader, the 2002 financial statements have been translated into United States Dollars (USD) using the
December 31, 2002 noon buying rate of the Federal Reserve Bank of New York of USD 1 = SEK 8,6950.

The
accompanying notes are an integral part of these financial statements.

F-6

---

TELE2 AB AND SUBSIDIARIES        CHANGE IN SHAREHOLDERS' EQUITY        (in millions)

|                                                           |  | Note |   | Share
Capital |  | Restricted
reserves |   | Unrestricted
reserves |   | Total
shareholders'
equity |  
|---------------------------------------------------------- |  | ---- | - | ------------- |  | ------------------- | - | --------------------- | - | -------------------------- | -
|
|Closing shareholders' equity Dec 31, 1999                  |  |      |   | 519           |  | 4,242               |   | 1,899                 |   | 6,660                      |  
|Items reported directly against shareholders' equity       |  |      |   |               |  |                     |   |                       |   |                            |  
|Step acquisitions, SEC                                     |  |      |   |              |  |                    |   | (284                  | ) | (284                       | )
|Exchange-rate difference                                   |  | (22  | ) |              |  | 1,050               |   | (301                  | ) | 749                        |  
|                                                           |  |      |   |               |  |                     |   |                       |   |                            |  
|Total items reported directly against shareholders' equity |  |      |   | 519           |  | 5,292               |   | 1,314                 |   | 7,125                      |  
|Other changes in shareholders' equity                      |  |      |   |               |  |                     |   |                       |   |                            |  
|New share issue, acquisition of SEC                        |  |      |   | 204           |  | 19,569              |   |                      |   | 19,773                     |  
|New share issue                                            |  |      |   | 1             |  | 36                  |   |                      |   | 37                         |  
|Transfers within shareholders' equity                      |  |      |   |              |  | 201                 |   | (201                  | ) |                           |  
|Net profit/loss for the year                               |  |      |   |              |  |                    |   | (396                  | ) | (396                       | )
|                                                           |  |      |   |               |  |                     |   |                       |   |                            |  
|Closing shareholders' equity Dec 31, 2000                  |  |      |   | 724           |  | 25,098              |   | 717                   |   | 26,539                     |  
|Closing shareholders' equity Dec 31, 2000                  |  |      |   | 724           |  | 25,098              |   | 717                   |   | 26,539                     |  
|Items reported directly against shareholders' equity       |  |      |   |               |  |                     |   |                       |   |                            |  
|Step acquisitions                                          |  |      |   |              |  |                    |   | (12                   | ) | (12                        | )
|Exchange-rate difference                                   |  | (22  | ) |              |  | 1,844               |   | (110                  | ) | 1,734                      |  
|                                                           |  |      |   |               |  |                     |   |                       |   |                            |  
|Total items reported directly against shareholders' equity |  |      |   |              |  | 1,844               |   | (122                  | ) | 1,722                      |  
|Other changes in shareholders' equity                      |  |      |   |               |  |                     |   |                       |   |                            |  
|New share issue, acquisition of Tele2 Russia               |  |      |   | 12            |  | 837                 |   |                      |   | 849                        |  
|New share issue                                            |  |      |   | 1             |  | 14                  |   |                      |   | 15                         |  
|Transfers within shareholders' equity                      |  |      |   |              |  | 7,948               |   | (7,948                | ) |                           |  
|Net profit/loss for the year                               |  |      |   |              |  |                    |   | 392                   |   | 392                        |  
|                                                           |  |      |   |               |  |                     |   |                       |   |                            |  
|Closing shareholders' equity Dec 31, 2001                  |  |      |   | 737           |  | 35,741              |   | (6,961                | ) | 29,517                     |  
|Closing shareholders' equity Dec 31, 2001                  |  |      |   | 737           |  | 35,741              |   | (6,961                | ) | 29,517                     |  
|Items reported directly against shareholders' equity       |  |      |   |               |  |                     |   |                       |   |                            |  
|Exchange-rate difference                                   |  | (22  | ) |              |  | (4,189              | ) | 3,163                 |   | (1,026                     | )
|                                                           |  |      |   |               |  |                     |   |                       |   |                            |  
|Total items reported directly against shareholders' equity |  |      |   |              |  | (4,189              | ) | 3,163                 |   | (1,026                     | )
|Other changes in shareholders' equity                      |  |      |   |               |  |                     |   |                       |   |                            |  
|New share issue                                            |  |      |   |              |  | 14                  |   |                      |   | 14                         |  
|Utilization of share premium reserve                       |  |      |   |              |  | (7,387              | ) | 7,387                 |   |                           |  
|Transfers within shareholders' equity                      |  |      |   |              |  | 222                 |   | (222                  | ) |                           |  
|Net profit/loss for the year                               |  |      |   |              |  |                    |   | 223                   |   | 223                        |  
|                                                           |  |      |   |               |  |                     |   |                       |   |                            |  
|Closing shareholders' equity Dec 31, 2002                  |  |      |   | 737           |  | 24,401              |   | 3,590                 |   | 28,728                     |  

F-7

---



TELE2 AB AND SUBSIDIARIES        NOTES        (in SEK millions)

Operations

Established in 1993, Tele2 AB is the leading alternative pan-European telecommunications company, offering fixed and mobile telephony, data network
and Internet services under the Tele2, Tango, Comviq brands to 16.8 million customers in 22 countries. Tele2 operates Datametrix, which specializes in systems integration, 3C Communications,
which is active in public pay phones and public Internet terminals, Transac, which is engaged in, data processing of card transactions and invoices, for example; C3, which provides cash
cards for fixed telephony, and Optimal Telecom, with "lowest-price guarantee" for households. The Group also offers cable-TV and, together with MTG, owns the Everyday.com Internet portal.

Significant events after the end of the financial year

In February 2003 Tele2 acquired 100% of the shares in Alpha Telecom. Alpha Telecom is the UK's leading operator in prepaid fixed network telephony for
individuals and a market leader in cash cards for fixed telephony. The acquisition of Alpha Telecom presents a unique opportunity for Tele2 to reach critical mass in the UK market and is in line with
our strategy to enter the UK market in stages. At the time of the acquisition, Alpha Telecom reported sales of about 1.25 million cash cards per month from 60,000 sales outlets in the UK and
reported sales of SEK 1.9 billion. The acquisition price amounted to approximately SEK 780 million, on a debt-free basis.

General accounting principles

The annual report has been prepared in accordance with the Annual Accounts Act and recommendations of the Swedish Financial Accounting Standards Council's
Emerging Issues Task Forece and the Swedish Financial Accounting Standards Council's recommendations RR1: 00-RR28, of which RR2:02, RR22 and RR24-RR28 were applied before they
came into force.

In
2002, Tele2 modified its accounting principles to conform to recommendations RR2:02 Inventories, RR22- Presentation of Financial Reports, RR23-Information on
Related Parties, RR24- Investment Properties, RR25-Reporting for segments - operating areas and geographical areas, RR26- Events after the Balance Sheet Date,
RR27-Financial Instruments:Disclosure and Presentation, and RR28-Government Grants. The new recommendations have no significant impact on Tele2's financial reporting.

Effective
2003, Tele2 will apply RR29 Employee Benefits, which means that defined-benefit pension plans for all the Group's subsidiaries are to be reported on the basis of uniform
principles. To date, Tele2 has reported such plans in line with local rules and stipulations in each country. Since the company primarily has defined-contribution plans (Note 37), the
introduction of RR29 is not expected to have any material impact on the Group's earnings and financial position.

Assets
and liabilities in subsidiaries are valued on the basis of the accounting principles applied by the Parent Company.

Estimates and assumptions

Some items in the consolidated accounts are based on estimates and assumptions. Actual results could differ from those estimates.

F-8

---

Consolidated accounts

The consolidated financial statements include the accounts of the Parent Company and all companies in which the Parent Company, directly or indirectly, controls
more than 50% of the votes, or in some other respect has a decisive influence.

The
consolidated financial statements have been prepared in accordance with the purchase method, whereby consolidated stockholders' equity includes equity in subsidiaries earned only
after acquisition.

All
assets and liabilities in a subsidiary on the date of acquisition are evaluated to determine the acquisition value to the Group. Any difference between the acquisition price and the
fair value of the acquired net assets are reported as goodwill or negative goodwill.

The
current method is used to translate the accounts of foreign subsidiaries. Consequently, the exchange rate on the closing date is used to translate items in the balance sheet, while
items in the income statement are translated using the average exchange rate for the year

All
non-Swedish companies in the Tele2 Group are regarded as independent foreign operations since they conduct independent operations and operations that are pursued with
transactions in local currency, so that exchange rate differences arising from translations are charged directly to shareholders' equity.

When
an independent foreign operation is divested, the accumulated exchange-rate differences attributable to the divested operation are reported in the income statement.

Accounting for associated companies and joint ventures

Companies in which the shareholding is regarded as long term and in which the Group's voting rights amount to a minimum of 20% and a maximum of 50%, or in which
the management believes that the shareholders have equal control, are treated as associated companies. Companies in which the owners have major control pursuant to agreement are regarded as joint
ventures.

Associated
companies and joint ventures ("associated companies") are reported in accordance with the equity method. This means that the book value of the shares in the associated company
that is reported in the consolidated financial statements corresponds to the Group's share in the equity of the associated company and any residual value of consolidated surplus values after
adjustment to the
consolidated accounting principles. Participation in earnings after net financial items of the associated company are reported in the income statement in the item "Result from shares in associated
companies" along with amortization of acquired surplus values. The share of associated companies' tax expense and deferred tax expense/income is reported in the income statement in the item "Tax on
profit for the year" and in the balance sheet as "Shares in associated companies". Earnings accrued in associated companies arising after the acquisition date, and which have not yet materialized
through dividends, are allocated to the equity method reserve, which comprises part of restricted shareholders' equity in the Group. The equity share reduces unrestricted shareholders' equity in the
event of losses.

In
the event of an increase or decrease in the Group's equity share in associated companies through share issues, the loss or gain is reported in the consolidated income statement in the
item "Result from participations in associated companies". If the non-recurring effect is significant, the amount is reported in the item "Items affecting comparability".

In
the event of negative shareholders' equity in associated companies and in which the company has pledged to contribute additional capital, the negative portion is reported as a
provision.

F-9

---

Group
surplus values relating to foreign associated companies are reported as assets in foreign currencies. These values are translated in accordance with the same principles as the
income statements and balance sheets for associated companies.

Minority interest

The minority share in net profit/loss and shareholders' equity is reported as minority interest.

Receivables and liabilities of Swedish and non-Swedish subsidiaries denominated in foreign currencies

Receivables and liabilities of Group companies denominated in foreign currencies have been translated into Swedish kronor applying the year-end rate.

Gains
or losses on foreign exchange in international transactions related to regular operations are included in the income statement under "Other operating revenues" and "Other operating
expenses",
respectively, while differences in financial receivables and liabilities are reported among financial items. Note 22 summarizes the exchange rate differences charged directly to shareholders'
equity and the differences that affected profit/loss for the year.

Long-term
lending to/borrowing from Tele2's foreign operations is regarded as a permanent part of the Parent Company's financing of/borrowing from foreign operations, and
thus as an expansion/ reduction of the Parent Company's investment in the independent foreign operation. This lending/ borrowing is translated at the historical rate of exchange if the borrowing is
denominated in the foreign company's currency.

Fixed assets

Intangible and tangible fixed assets are reported in net form after deductions for accumulated amortization and depreciation according to plan.
Depreciation/amortization according to plan is based on the acquisition value of the assets and the estimated utilization period. Note 2 presents depreciation and amortization schedules for
fixed assets and reasons for amortizing certain intangible fixed assets over utilization period longer than five years.

If
there is an indication that a tangible or intangible asset has declined in value, an estimate is made of its recovery value. If the calculated recovery value is less than the reported
value, a write-down is made to the asset's recovery value.

Intangible assets

License fees and right of use

The Company holds a number of licenses issued by the Swedish National Post and Telecom Agency and the equivalent licensing authority in other countries.
Capitalized expenses for these rights are amortized over the duration of the contract.

Goodwill

Goodwill is defined as the difference between the purchase cost of shares or assets acquired and the market value of net assets.

F-10

---

Tangible assets

Buildings and land

Buildings and land pertain to fixed assets intended for use in actual operations. Buildings are written off straight-line over the utilization period.
Acquisition value includes direct costs attributable to the building.

Machinery and technical plant

Machinery and technical plant include equipment and machinery intended for use in operations, such as network installations. The asset is written off on a
straight-line basis over the utilization period. The acquisition value includes direct expenses attributable to the construction and installation of networks. Interest directly relating to
acquisition, construction or production of an asset that necessarily requires considerable time to complete for the intended application is included in the acquisition value of the asset.

Additional
expenses for extensions and improvements that increase value are capitalized, while additional expenses for repairs and maintenance are charged continually to income during
the period in which they arise.

Equipment, tools and installations

Equipment comprises assets used in administration, sales and operations.

Proprietary software for internal use

Tele2 capitalizes certain direct development costs attributable to software for internal use. These are written off over the period of use, which commences when
the asset is ready for application. Costs attributable to the project phase in the planning stage as well as costs for maintenance and training are expensed as they arise.

Leasing

Leases are classified as either financial or operating leases. A lease is considered financial if all economic risks and benefits associated with ownership of the
asset have been transferred, to a material degree, to the lessee; otherwise, the lease is an operating lease. In the case of financial leases as reported in the consolidated financial statements, each
asset is entered as a tangible fixed asset, and a corresponding amount is entered as a loan on the liability side of the balance sheet. In the income statement, the cost of the lease is divided into a
depreciation portion and an item in interest expense. The asset is written off on a straight-line basis over the utilization period.

Agreements
covering financial leases before January 1, 1997 have been reported as operational leases in line with a transitional rule.

Materials and supplies

Inventories of materials and supplies are valued in line with the first-in, first-out principle at the lower of purchase cost and market
value.

Receivables

Receivables are reported in the amounts expected to be paid.

F-11

---

Liquid funds

Liquid funds consist of cash and bank balances as well as current investments with a maturity of a maximum three months. Liquid funds according to the cash flow
statement and balance sheet include blocked bank accounts.

Financial items

Financial items are reported originally at their acquisition value. Current financial assets are subsequently reported in line with the lower of cost and market
value. Financial items such as cash and bank balances, current investments, receivables and liabilities, prepaid income and current liabilities to financial institutions are viewed as corresponding to
their real value as they are of a short-term nature. The book value of long-term liabilities to financial institutions is also regarded as corresponding to their real value.

Shareholders' equity

Shareholders' equity consists of registered share capital, reserves that are not available for distribution (statutory reserve, share premium reserve and other
restricted reserves) and disposable earnings/accumulated losses, net profit/loss and shares in losses of associated companies.

The
share premium reserve pertains to surplus portions when a company's shares are issued at a price that exceeds the normal value. The equity reserve pertains to positive earnings of
associated companies received after the acquisition date. According to the Swedish Companies Act, a provision must be made each year to the statutory reserve in a minimum amount corresponding to 10%
of that portion of net profit for the year that is not used to cover retained losses until the statutory reserve and the share premium reserve, combined, correspond to 20% of the share capital.
Restricted reserves in Tele2 and the Swedish Group companies may be used to increase share capital in order to cover accumulated
losses, under certain conditions. Other restricted reserves pertain to the equity share of untaxed reserves, deferred tax receivables and a portion of exchange-rate differences.

According
to the Swedish Companies Act, Tele2's unrestricted earnings after the requisite provision to the statutory reserve and after covering accumulated losses of previous years are
available for distribution to shareholders. The legal limit for distributable funds is represented by rules to the effect that dividends may not threaten the company's liquidity or overall position or
exceed unrestricted shareholders' equity in the Group. The dividend is determined by shareholders at the Annual General Meeting and, generally, may not exceed the dividend proposed by the Board.

Revenue recognition

Sales are reported net of VAT, discounts and exchange rate differences for sales in foreign currency. Revenue from telephony, cable TV and other services and
products is recognized at the time the service/product is supplied to the customer.

Revenue
from mobile telecommunications services primarily comprises amounts charged to contract customers in respect of monthly charges, which are invoiced and recorded as part of a
periodic billing cycle, and airtime usage, which is recognized as the mobile services are provided. Unbilled revenue resulting from mobile services provided to contract customers from the billing
cycle date to the end of each period is accrued and unearned monthly access charges relating to period after each accounting period end are deferred. Revenue from sales to prepaid phone cards is
deferred until such time as the customer uses the airtime.

Revenue
from the Company's fixed line businesses is primarily derived from call charges, which is recognized as the services are provided. International telephone revenue also arises
from amounts receivable from overseas telephony service providers in respect of return traffic carried on Tele2's

F-12

---

network.
Unbilled revenue resulting from fixed line services provided to customers and to international telephony service providers from the billing cycle date to the end of each period is accrued.

Marketing expenses

Expenditure for advertising and other marketing activities is charged on an ongoing basis.

Corporate income tax

Consolidated profit or loss for the year is charged with the tax on taxable income for the year ("Current tax") and with estimated tax charges or credits for
temporary differences ("Deferred tax"). A temporary difference is a provision to appropriations made by an individual company or any other item that merely alters the time when an item is considered
taxable or entitling the company to a deduction.

The
calculation of deferred tax receivables in the Group takes into account the Group's loss carry-forwards to the extent that it is expected they can be used in the foreseeable future.
Deferred tax receivables and deferred tax liabilities are netted only among units with the same domicile for tax purposes.

Earnings per share

Earnings per share after dilution is calculated according to a method in which the present value of the exercise price of the option is assumed to be used to
acquire shares at the average market value during the accounting period. If the result for the year is negative, this does not affect the calculation, since the dilution may not reduce the loss per
share.

Transactions with related parties

Transactions with related parties are shown in Note 33.

US accounting principles (US GAAP)

The Group's balance sheet and income statement were drawn up in accordance with Swedish accounting principles. These diverge to a certain extent from US
accounting principles (US GAAP). Note 37 includes a quantitative reconciliation of the Company's net income or loss for each period as well as shareholders' equity to amounts determined in
accordance with US GAAP.

Other information

Tele2 AB is a limited liability company domiciled in Stockholm, Sweden. The company's head office (phone +46 8 5620 0060) is located at Skeppsbron 18, Box 2094,
103 13 Stockholm, Sweden.

F-13

---

Note 1    Operating revenue

Operating area by market area:

|                                   |                                             | Operating revenue |      
|---------------------------------- | ------------------------------------------- | ----------------- | -----
|
|
|
|Nordic:                            |                                             |                   |      
|Mobile telephony                   |                                             | 4,800             |      
|Fixed telephony and Internet       |                                             | 5,294             |      
|Cable TV                           |                                             | 190               |      
|Data processing                    |                                             | 197               |      
|Intra-Group sales                  |                                             | (620              | )    
|                                   |                                             |                   |      
|Total, Nordic                      |                                             | 9,861             |      
|                                   | Of which, Tele2 in Sweden; Mobile telephony |                   | 4,777
|                                   | Of which, Tele2 in Sweden; Fixed telephony  |                   | 3,013
|                                   | Of which, Tele2 in Sweden; Cable TV         |                   | 177  
|                                   |                                             |                   |      
|                                   | Of which, Tele2 in Sweden; Total            |                   | 7,967
|Eastern Europe and Russia:         |                                             |                   |      
|Mobile telephony                   |                                             | 222               |      
|Fixed telephony and Internet       |                                             | 5                 |      
|Cable TV                           |                                             |                  |      
|Data processing                    |                                             | 34                |      
|Intra-Group sales                  |                                             | (25               | )    
|                                   |                                             |                   |      
|Total, Eastern Europe and Russia   |                                             | 236               |      
|Central Europe:                    |                                             |                   |      
|Mobile telephony                   |                                             | 4                 |      
|Fixed telephony and Internet       |                                             | 1,014             |      
|Intra-Group sales                  |                                             | (90               | )    
|                                   |                                             |                   |      
|Total, Central Europe              |                                             | 928               |      
|Southern Europe:                   |                                             |                   |      
|Fixed telephony and Internet       |                                             | 882               |      
|Intra-Group sales                  |                                             | (39               | )    
|                                   |                                             |                   |      
|Total, Southern Europe             |                                             | 843               |      
|Luxembourg:                        |                                             |                   |      
|Mobile telephony                   |                                             | 74                |      
|Fixed telephony and Internet       |                                             | 50                |      
|Cable TV                           |                                             |                  |      
|Data processing                    |                                             | 37                |      
|Intra-Group sales                  |                                             | (18               | )    
|                                   |                                             |                   |      
|Total, Luxembourg                  |                                             | 143               |      
|Branded products & services        |                                             |                   |      
|Mobile telephony                   |                                             |                  |      
|Fixed telephony and Internet       |                                             | 496               |      
|Intra-Group sales                  |                                             | (67               | )    
|                                   |                                             |                   |      
|Total, Branded products & services |                                             | 429               |      
|                                   |                                             |                   |      
|Total by market                    |                                             | 12,440            |      
|                                   |                                             |                   |      

F-14

---

|                             |  | Operating revenue |  
|---------------------------- |  | ----------------- | -
|
|
|
|Mobile telephony             |  | 5,100             |  
|Fixed telephony and Internet |  | 7,741             |  
|Cable-TV                     |  | 190               |  
|Data processing              |  | 268               |  
|Intra-Group sales            |  | (859              | )
|                             |  |                   |  
|Total by operating area      |  | 12,440            |  
|                             |  |                   |  

Intra-group
sales include sales to companies in the Tele2 Group. Intra-Group sales in each market area and additional information concerning the segments are shown in
Note 31, Market areas and Note 32, Operating areas. Sales of telephones are included in operating revenue in the amount of SEK 453 million (2001: SEK 306 million, 2000: SEK
96 million).

Optimal
Telecom, which was previously reported in the Branded products and services market area, is included in the concept "Tele2 Sweden" as of January 1, 2002 and in the Nordic
market area. Operating revenue for Optimal Telecom amounted to SEK 450 million in 2001.

During
the first quarter of 2002, Tele2 won a case in the County Administrative Court against Telia regarding the principles of payment for joint traffic charges, which means that Telia
is responsible for paying SEK 350 million for switched traffic transited via its network (Cascade Accounting). As a result, operating revenue was positively affected in the amount of SEK
237 million in 2002 for traffic attributable to earlier periods.

F-15

---

Note 2    Depreciation/amortization for the year and operating profit

Market area split by business areas:

|                                   |                                             | EBITDA* |       | Depreciation/Amortization |       | EBIT** |      
|---------------------------------- | ------------------------------------------- | ------- | ----- | ------------------------- | ----- | ------ | -----
|
|
|
|Nordic:                            |                                             |         |       |                           |       |        |      
|Mobile telephony                   |                                             | 2,237   |       | 2,917                     |       | 3,576  |      
|Fixed telephony and Internet       |                                             | 667     |       | 847                       |       | 1,187  |      
|CableTV                            |                                             | 26      |       | (11                       | )     | 41     |      
|Data processing                    |                                             | 13      |       | 15                        |       | 10     |      
|                                   |                                             |         |       |                           |       |        |      
|Total, Nordic                      |                                             | 2,943   |       | 3,768                     |       | 4,814  |      
|                                   | Of which, Tele2 in Sweden; Mobile telephony |         | 2,200 |                           | 3,111 |        | 3,646
|                                   | Of which, Tele2 in Sweden; Fixed telephony  |         | 499   |                           | 675   |        | 870  
|                                   | Of which, Tele2 in Sweden; Cable TV         |         | 29    |                           | (13   | )      | 41   
|                                   |                                             |         |       |                           |       |        |      
|                                   | Of which, Tele2 in Sweden; Total            |         | 2,728 |                           | 3,773 |        | 4,557
|Eastern Europe and Russia:         |                                             |         |       |                           |       |        |      
|Mobile telephony                   |                                             | (14     | )     | 320                       |       | 611    |      
|Fixed telephony and Internet       |                                             | (24     | )     | (56                       | )     | (76    | )    
|Cable TV                           |                                             |        |       |                          |       | (1     | )    
|Data processing                    |                                             | 9       |       | 8                         |       | 7      |      
|                                   |                                             |         |       |                           |       |        |      
|Total, Eastern Europe and Russia:  |                                             | (29     | )     | 272                       |       | 541    |      
|Central Europe:                    |                                             |         |       |                           |       |        |      
|Mobile telephony                   |                                             | 1       |       | (21                       | )     | (186   | )    
|Fixed telephony and Internet       |                                             | (501    | )     | (585                      | )     | 105    |      
|                                   |                                             |         |       |                           |       |        |      
|Total, Central Europe              |                                             | (500    | )     | (606                      | )     | (81    | )    
|Southern Europe:                   |                                             |         |       |                           |       |        |      
|Fixed telephony and Internet       |                                             | (331    | )     | (1,331                    | )     | (101   | )    
|                                   |                                             |         |       |                           |       |        |      
|Total, Southern Europe             |                                             | (331    | )     | (1,331                    | )     | (101   | )    
|Luxembourg:                        |                                             |         |       |                           |       |        |      
|Mobile telephony                   |                                             | 6       |       | 101                       |       | 161    |      
|Fixed telephony and Internet       |                                             | (98     | )     | (61                       | )     | 6      |      
|Cable TV                           |                                             |        |       |                          |       | (29    | )    
|Data processing                    |                                             | 1       |       | (35                       | )     | (12    | )    
|                                   |                                             |         |       |                           |       |        |      
|Total, Luxembourg                  |                                             | (91     | )     | 5                         |       | 126    |      
|Branded products & services:       |                                             |         |       |                           |       |        |      
|Mobile telephony                   |                                             |        |       | (22                       | )     |       |      
|Fixed telephony and Internet       |                                             | (172    | )     | (388                      | )     | (172   | )    
|                                   |                                             |         |       |                           |       |        |      
|Total, Branded products & services |                                             | (172    | )     | (410                      | )     | (172   | )    
|Group depreciation/amortization    |                                             |         |       |                           |       |        |      
|                                   |                                             |         |       |                           |       |        |      
|Total by market                    |                                             | 1,820   |       | 1,698                     |       | 5,127  |      
|                                   |                                             |         |       |                           |       |        |      

---

*
EBITDA = Operating profit before depreciation/amortization        ** EBIT = Operating profit after depreciation/amortization

F-16

---

|                                |  | EBITDA* |   | Depreciation/Amortization |   | EBIT** | 
|------------------------------- |  | ------- | - | ------------------------- | - | ------ | 
|
|
|
|Mobile telephony                |  | 2,230   |   | 3,295                     |   | 4,162  | 
|Fixed telephony and Internet    |  | (459    | ) | (1,574                    | ) | 949    | 
|Cable-TV                        |  | 26      |   | (11                       | ) | 11     | 
|Data processing                 |  | 23      |   | (12                       | ) | 5      | 
|Group depreciation/amortization |  |         |   |                           |   |        | 
|                                |  |         |   |                           |   |        | 
|Total by operating area         |  | 1,820   |   | 1,698                     |   | 5,127  | 
|                                |  |         |   |                           |   |        | 

---

*
EBITDA: Operating profit/loss before depreciation/amortization.
** EBIT: Operating profit/loss after depreciation/amortization.

|                            |                                             | EBITDA-margin |    | EBIT-margin |   
|--------------------------- | ------------------------------------------- | ------------- | -- | ----------- | --
|
|
|Nordic                      |                                             | 30            | %  | 32          | % 
|                            | of which, Tele2 in Sweden; Mobile telephony |               | 46 | %           | 54
|                            | of which, Tele2 in Sweden; Fixed telephony  |               | 17 | %           | 21
|                            | of which, Tele2 in Sweden; Cable TV         |               | 16 | %           | (8
|                            | of which, Tele2 in Sweden; Total            |               | 34 | %           | 42
|Eastern Europe and Russia   |                                             | (12           | )% | 24          | % 
|Central Europe              |                                             | (54           | )% | (13         | )%
|Southern Europe             |                                             | (39           | )% | (26         | )%
|Luxembourg                  |                                             | (63           | )% | 1           | % 
|Branded products & services |                                             | (40           | )% | (29         | )%
|Total by operating area     |                                             | 15            | %  | 7           | % 

The
profit gauges above do not include internal sales to other companies in the Tele2 Group. Profit/loss including internal sales, depreciation by segment (with the exception of goodwill
for the acquisition of SEC) and additional information on segments is shown in Note 31, Market areas and Note 32, Operating areas. Sales of telephones are included in operating expenses
(cost of services sold) for the year in the amount of SEK -573 million (2001: SEK -543 million, 2000: SEK -120 million).

Optimal
Telecom, which was previously reported in the Branded products and services market area is included in the Nordic market area as of January 1, 2002. Operating profit/loss
before and after
depreciation/ amortization for Optimal Telecom in 2001 amounted to SEK -20 million and SEK -43 million, respectively.

By function:

|                                                         |  | Depreciation/Amortization |  
|-------------------------------------------------------- |  | ------------------------- | -
|
|
|
|Cost of services sold                                    |  | (1,275                    | )
|Selling expenses                                         |  | (35                       | )
|Administrative expenses                                  |  | (90                       | )
|                                                         |  |                           |  
|Total depreciation/amortization for the year by function |  | (1,400                    | )
|                                                         |  |                           |  

F-17

---

By type of asset:

|                                                              |  | Depreciation/Amortization |  
|------------------------------------------------------------- |  | ------------------------- | -
|
|
|
|Licenses and right of use                                     |  | (16                       | )
|Goodwill                                                      |  | (426                      | )
|Buildings                                                     |  | (3                        | )
|Machinery and other technical plant                           |  | (875                      | )
|Equipment, tools and installations                            |  | (80                       | )
|Plant under construction                                      |  |                          |  
|                                                              |  |                           |  
|Total depreciation/amortization for the year by type of asset |  | (1,400                    | )
|                                                              |  |                           |  

Estimated utilization period:

Intangible assets:Licenses and right of use

2-25 yearsGoodwill

3-20 yearsTangible assets:Buildings

5-40 yearsMachinery and other technical plant

2-25 yearsEquipment, tools, and installations

2-10 years


Depreciation/amortization
according to plan is based on the acquisition value of each fixed asset and its estimated utilization period. All depreciation/amortization is applied on a
straight-line basis over the utilization period.

Goodwill
arising from the original acquisition of Comviq GSM AB and Tele2 Sverige AB and other acquisitions before 1996 are amortized over ten years. The goodwill arising in 1996 in
conjunction with the acquisition of outstanding minority shareholding in Tele2 Sverige AB and outstanding options in Comviq GSM AB, is amortized over 20 years. Goodwill arising from the
acquisition of Datametrix, Ritabell, SIA Tele2, SEC, Fora and Levicom Broadband is amortized over a period of 20 years. The amortization periods are set on the basis of the estimated
long-term and strategic significance of each acquisition on the acquisition date. In the case of corporate acquisitions in new markets, an amortization period of 20 years is
applied. Other goodwill is amortized over five years.

Note 3    Other operating revenue

Year ended December 31,2000

2001

2002(SEK in millions)Rental of capacity and antenna installations

105

64

Exchange gains in business operations



33

24Divestment of fixed assets

4

2

9Other revenue, external

103

90

17Total other operating revenue

212

189

50


F-18

---

Note 4    Other operating expenses

|                                     |  | Year ended December 31, |  
|------------------------------------ |  | ----------------------- | -
|
|
|Exchange loss from operations        |  | (57                     | )
|Sale/scrapping of other fixed assets |  | (5                      | )
|Other expenses                       |  | (8                      | )
|Sale of shares in 4T Solution AB     |  | (17                     | )
|                                     |  |                         |  
|Total other operating expenses       |  | (87                     | )
|                                     |  |                         |  

Note 5    Profit/loss on shares in associated companies

|                                                     |  | Year ended December 31, |  
|---------------------------------------------------- |  | ----------------------- | -
|
|
|Participation in profit/loss of associated companies |  | (44                     | )
|                                                     |  |                         |  
|Total profit/loss in associated companies            |  | (44                     | )
|                                                     |  |                         |  

|                                                   |  | Holding at December 31, |  | Year ended December 31, |  
|-------------------------------------------------- |  | ----------------------- |  | ----------------------- | -
|
|
|Svenska UMTS nät AB                                |  |                        |  | 50                      | %
|Other associated companies                         |  | Note 16                 |  | Note 14                 |  
|                                                   |  |                         |  |                         |  
|Total net of profit/loss from associated companies |  |                         |  |                         |  
|                                                   |  |                         |  |                         |  

F-19

---

Profit/loss in associated companies:

|                                                   |  | Year ended December 31, | 
|-------------------------------------------------- |  | ----------------------- | 
|
|
|
|Profit/loss in each associated company             |  |                        | 
|Holding                                            |  |                        | 
|Share of profit/loss                               |  |                        | 
|Change in accounting principles, start-up costs    |  |                        | 
|Reversal to selling expenses                       |  |                        | 
|Change in share of profit/loss from preceding year |  |                        | 
|                                                   |  |                         | 
|Total net profit/loss from associated companies    |  |                        | 
|                                                   |  |                         | 

In
the fourth quarter of 2002, Tele2 sold its 20% shareholding in Moscow Cellular Communication, an associated company in Tele2 Russia Telecom BV Group (formerly Fora BV), which was
acquired in 2001.

Extracts from the balance sheets and income statements of each associated company:

|                                                      |  | Year ended December 31, | 
|----------------------------------------------------- |  | ----------------------- | 
|
|
|
|Income statement:                                     |  |                         | 
|Revenue                                               |  |                        | 
|Operating profit/loss after depreciation/amortization |  |                        | 
|Profit/loss for the year                              |  |                        | 

F-20

---

Year ended December 31,2001

2002Sv UMTS nät

Other

Sv UMTS nät

Other(SEK in millions)Balance sheetTangible assets

12

432

468

Intangible and financial assets



107



33Current assets

492

141

545

80Total assets

504

680

1,013

113Shareholders' equity

498

130

995

(8
)Long-term liabilities



349



37Current liabilities

6

201

18

84Total shareholders' equity and liabilities

504

680

1,013

113


Note 6    Sales of associated companies

Year ended December 31,2000

2001

2002(SEK in millions)Sale of Moscow Cellular Communication





5Sale of Transcom Worldwide S.A



91

Total sales of associated companies



91

5


Note 7    Profit/losses on other securities and receivables constituting fixed assets

Year ended December 31,2000

2001

2002(SEK in millions)Interest, external receivables

3

5

2Writedown of shares in Xsource Corporation





(86
)Exchange rate differences

3

(1
)
Total profit/loss on securities and receivables constituting fixed assets

6

4

(84
)


Note 8    Other interest income

Year ended December 31,2000

2001

2002(SEK in millions)Interest, bank balances, etc

58

66

111Interest, penalty interest, etc





47Exchange rate differences on financial fixed assets

(1
)
(1
)
7Total other interest income

57

65

165


F-21

---

Note 9    Interest expense and similar profit/loss items

Year ended December 31,2000

2001

2002(SEK in millions)Interest, loans

(205
)
(557
)
(679
)Interest, financial leasing

(11
)
(11
)
(13
)Interest, penalty interest rate and other liabilities

(34
)
(53
)
(30
)Exchange rate differences on financial liabilities

(6
)
2

57Other financial expenses

(18
)
(71
)
(114
)Total interest expenses and similar profit/loss items

(274
)
(690
)
(779
)


Note 10    Tax on profit/loss for the year and deferred tax liability/receivable

Tax on profit/loss for the year, geographic breakdownYear ended December 31,2000

2001

2002(SEK in millions)Current tax expense:Eastern Europe and Russia



(2
)
(45
)Central Europe

(3
)


(4
)Southern Europe



(1
)
Luxembourg

(9
)
4

(12
)
1

(49
)Deferred tax expense,as a result of temporary differences:Nordic

(549
)
2,334

(835
)Eastern Europe and Russia





22Central Europe





116Southern Europe





127Luxembourg





30Branded products & services





15(549
)
2,334

(525
)Total tax expense (-)/tax income (+) on profit for the year

(561
)
2,335

(574
)


Profit before tax and minority share,
geographic breakdownYear ended December 31,2000

2001

2002(SEK in millions)Sweden

1,904

2,072

2,532Other countries

(1,739
)
(4,016
)
(1,736
)Total profit/loss and minority shares

165

(1,944
)
796


F-22

---

The
difference between the booked tax expense for the Group and the tax expense based on prevailing tax rates in each country consists of the following components:

|                                                                |  | Calculation of effective tax rate |  
|--------------------------------------------------------------- |  | --------------------------------- | -
|
|
|
|Profit/loss before tax and minority share                       |  | 165                               |  
|Tax according to prevailing tax rate in:                        |  |                                   |  
|Tax effect according to the tax rates in Sweden                 |  | (46                               | )
|Difference between tax rates in Sweden for foreign subsidiaries |  | 49                                |  
|                                                                |  |                                   |  
|                                                                |  | 3                                 |  
|Tax effect of:                                                  |  |                                   |  
|Non-tax affecting items, Group adjustments                      |  | (119                              | )
|Non-tax affecting items, other adjustments                      |  | 238                               |  
|Liquidation of SEC and taxation of deferrel                     |  |                                  |  
|Non-deductible expences etc                                     |  | 22                                |  
|Loss carry-forwards:                                            |  |                                   |  
|-Valuation of loss carry-forwards in previous years             |  |                                  |  
|-Non-assessed additional loss carry-forward for the year        |  | (708                              | )
|-From profit of preceding year                                  |  | 3                                 |  
|                                                                |  |                                   |  
|Tax expense/income and effective tax rate                       |  | (561                              | )
|                                                                |  |                                   |  

Deferred tax receivable attributable toAt December 31,2001

2002(SEK in millions)Long-term receivables

(5
)
(3
)Machinery and technical plant

(928
)
(1,019
)Value of unutilized loss carry-forwards

2,697

2,268Total deferred asset (+)/tax liability (-)

1,764

1,246


F-23

---

Deferred tax receivable, geographic
distributionAt December 31,2001

2002(SEK in millions)Deferred tax receivable:Nordic

2,697

1,937Eastern Europe and Russia



35Central Europe



117Southern Europe



128Luxemburg



36Branded products & services



152,697

2,268Deferred tax liability:Nordic

(933
)
(1,022
)Total deferred asset (+)/tax liability (-)

1,764

1,246


Loss carry-forwards:

At December 31, 2002, the Tele2 Group had loss carry-forwards totaling SEK 19,173 million (2001: SEK 19,871million), of which SEK
1,744 million (2001: SEK 3,300 million) expires within five years and the remaining amount, SEK 17,429 million (2001: SEK 16,571 million), expires after five years or they
continue to apply in perpetuity.

A
deferred tax receivable in the case of loss carry-forwards is reported only to the extent that it is estimated that they can be utilized in the near future.

Due
to the improved results in Continental Europe deferred tax receivables of a total amount of SEK 576 million has been recognized in the profit and loss statement in 2002. Total
losses carried forward for the Group at December 31 2002 amounted to SEK 19,173 million, of which SEK 7,881 million has been utilized for deferred tax accounting and the remaining
part, SEK 11,292 million, is valued to 0.

The
Swedish tax authorities have queried a loss carry-forward in Tele2 AB corresponding to a tax effect of SEK 176 million (2001: SEK 176 million). These have been valued
to SEK 169 million.

F-24

---

Note 11    Intangible assets

|                                                            |  | December 31, 2001 |  
|----------------------------------------------------------- |  | ----------------- | -
|
|
|Acquisition value                                           |  |                   |  
|Acquisition value at Jan 1, 2002                            |  | 736               |  
|Acquisition value in acquired companies                     |  | 187               |  
|Investments for the year                                    |  | 17                |  
|Reclassifications                                           |  | 8                 |  
|Translation difference for the year                         |  | 48                |  
|                                                            |  |                   |  
|Total acquisition value                                     |  | 996               |  
|Accumulated depreciation/amortization:                      |  |                   |  
|Accumulated depreciation/amortization at Jan 1, 2002        |  | (129              | )
|Accumulated depreciation/amortization in acquired companies |  | (75               | )
|Depreciation/amortization for the year                      |  | (46               | )
|Reclassifications                                           |  | (2                | )
|Translation difference for the year                         |  | (8                | )
|                                                            |  |                   |  
|Total accumulated depreciation/amortization                 |  | (260              | )
|                                                            |  |                   |  
|Total intangible assets                                     |  | 736               |  
|                                                            |  |                   |  

|                                                            |  | December 31, 2002 |  
|----------------------------------------------------------- |  | ----------------- | -
|
|
|Acquisition value                                           |  |                   |  
|Acquisition value at Jan 1, 2002                            |  | 996               |  
|Acquisition value in acquired companies                     |  | 1                 |  
|Investments for the year                                    |  | 147               |  
|Sale and scrapping                                          |  | (272              | )
|Reclassifications                                           |  | (13               | )
|Translation difference for the year                         |  | (37               | )
|                                                            |  |                   |  
|Total acquisition value                                     |  | 822               |  
|Accumulated depreciation/amortization:                      |  |                   |  
|Accumulated depreciation/amortization at Jan 1, 2002        |  | (260              | )
|Accumulated depreciation/amortization in acquired companies |  |                  |  
|Depreciation/amortization for the year                      |  | (339              | )
|Sale and scrapping                                          |  | 271               |  
|Reclassifications                                           |  | 2                 |  
|Translation difference for the year                         |  | 13                |  
|                                                            |  |                   |  
|Total accumulated depreciation/amortization                 |  | (313              | )
|                                                            |  |                   |  
|Total intangible assets                                     |  | 509               |  
|                                                            |  |                   |  

Investments
for the year in goodwill relate essentially to the supplementary purchase price paid for Tele2 Russia (SEK 407 million).

F-25

---

Sales
and scrapping relate essentially to the phase-out of Tele2 Norway's UMTS license, in which the net book value of capitalized license costs was dissolved in its entirety
and charged to depreciation in the amount of SEK -263 million.

When
Tele2 acquired Société Europénne de Communication SA, through an offer to SEC's shareholders, there were outstanding stock options in
SEC. Tele2's offer did not encompass the stock options, thus in order to calculate net assets, these have been given a theoretical value as if they had been encompassed by the offer and booked as a
liability in the consolidated balance sheet. During 2002, this liability was adjusted vis-à-vis goodwill, shown above as a reclassification, in the amount of SEK
498 million, with no effect on cash and profit.

Note 12    Tangible assets

|                                                            |  | At December 31, 2001 |  
|----------------------------------------------------------- |  | -------------------- | -
|
|
|Acquisition value:                                          |  |                      |  
|Acquisition value at Jan 1, 2001                            |  | 127                  |  
|Acquisition value in acquired companies                     |  | 29                   |  
|Investments for the year                                    |  | 22                   |  
|Sale and scrapping                                          |  | (20                  | )
|Reclassifications                                           |  | 10                   |  
|Translation difference for the year                         |  | 9                    |  
|                                                            |  |                      |  
|Total acquisition value                                     |  | 177                  |  
|Accumulated depreciation/amortization:                      |  |                      |  
|Accumulated depreciation/amortization at Jan, 1, 2001       |  | (28                  | )
|Accumulated depreciation/amortization in acquired companies |  | (9                   | )
|Depreciation/amortization for the year                      |  | (19                  | )
|Sale and scrapping                                          |  | 2                    |  
|Reclassifications                                           |  | 4                    |  
|Translation difference for the year                         |  | (3                   | )
|                                                            |  |                      |  
|Total accumulated depreciation/amortization                 |  | (53                  | )
|                                                            |  |                      |  
|Total tangible assets                                       |  | 124                  |  
|                                                            |  |                      |  

F-26

---



|                                                            |  | At December 31, 2002 |  
|----------------------------------------------------------- |  | -------------------- | -
|
|
|Acquisition value:                                          |  |                      |  
|Acquisition value at Jan 1, 2002                            |  | 177                  |  
|Acquisition value in acquired companies                     |  | 1                    |  
|Investments for the year                                    |  | 18                   |  
|Sale and scrapping                                          |  | (1                   | )
|Reclassifications                                           |  |                     |  
|Translation difference for the year                         |  | (13                  | )
|                                                            |  |                      |  
|Total acquisition value                                     |  | 182                  |  
|Accumulated depreciation/amortization:                      |  |                      |  
|Accumulated depreciation/amortization at Jan, 1, 2002       |  | (53                  | )
|Accumulated depreciation/amortization in acquired companies |  |                     |  
|Depreciation/amortization for the year                      |  | (19                  | )
|Sale and scrapping                                          |  |                     |  
|Reclassifications                                           |  |                     |  
|Translation difference for the year                         |  | 5                    |  
|                                                            |  |                      |  
|Total accumulated depreciation/amortization                 |  | (67                  | )
|                                                            |  |                      |  
|Total tangible assets                                       |  | 115                  |  
|                                                            |  |                      |  

Sales
and scrapping relate essentially to the phase-out of Tele2 Norway's UMTS license, in which the net book value of capitalized license costs was dissolved in its entirety
and charged to depreciation for the year in the amount of SEK -137 million.

|                                                     |  | At December 31,
|---------------------------------------------------- |  | ---------------
|
|
|Total capitalized interest expenses in fixed assets: |  | 193            

Financial leases:

All fixed assets utilized through financial leasing have been included in the consolidated accounts as fixed assets and loan liabilities, with the exception,
however, of contracts signed before 1997. The effects of these being included in the consolidated balance sheet are shown below and in Note 24.

At December 31,Booked assets

Assets not booked2001

2002

2001

2002(SEK in millions)Machinery and other technical plant:Acquisition value

306

298

155

155Accumulated depreciation/amortization

(87
)
(57
)
(42
)
(49
)Book value

219

241

113

106


F-27

---

Financial
leasing pertains primarily to the extension for transmission capacity in Sweden through Svenska Kraftnät, Vattenfall and agreements signed in Denmark. Also,
financial leasing occurs in Estonia, Russia and Luxembourg. During 2002, investments amounted to SEK 83 million, primarily in Sweden in the amount of SEK 66 million and in Luxembourg in
the amount of SEK 11 million. During the year, termination of financial leasing occurred in Estonia and Latvia.

Tax-assessed value:

The tax-assessed value of the Group's land in Sweden is SEK 1 million (2001: SEK 1 million).

Note 13    Shares in Group companies

During 2002, the Parent Company paid a supplementary purchase price for Tele2 Russia Telecom BV (formerly Fora) of SEK 299 million.

Effect on cash of corporate acquisitions and divestments during the year:

The Group's book value of acquired/divested assets and liabilities in acquired/divested companies was:

|                                     |  | Acquired |   | Divested
|------------------------------------ |  | -------- | - | --------
|
|
|
|Intangible fixed assets              |  | (24,764  | ) | (394    
|Tangible fixed assets                |  | (1,540   | ) | (614    
|Financial fixed assets               |  | (135     | ) | (469    
|Inventories                          |  | (131     | ) | (21     
|Current receivables                  |  | (1,876   | ) | (238    
|Current investments and liquid funds |  | (3,050   | ) | (890    
|Long-term liabilities                |  | 2,458    |   | 1,166   
|Current liabilities                  |  | 3,686    |   | 428     
|Exchange rate difference             |  | (145     | ) | (11     
|                                     |  |          |   |         
|Purchase sum                         |  | (25,497  | ) | (1,043  
|Paid with own shares                 |  | 23,290   |   | 849     
|Paid through loans from the seller   |  |         |   | 135     
|                                     |  |          |   |         
|Paid/received purchase sums          |  | (2,207   | ) | (59     
|Cash in acquired/divested companies  |  | 3,050    |   | 890     
|                                     |  |          |   |         
|Effect on Group cash                 |  | 843      |   | 831     
|                                     |  |          |   |         

Legal structure of the Tele2 Group*:

|Company, reg. No, reg'd. Office                           |                                                                                 | Number of
shares |  | Total par
value |  | Holding
(capital/votes) |    
|--------------------------------------------------------- | ------------------------------------------------------------------------------- | ---------------- |  | --------------- |  | ----------------------- | ---
|Tele2 Russia Telecom BV, 33287334, Rotterdam, Netherlands |                                                                                 | 400 pcs          |  | NLG 40 000      |  | 100                     | %  
|                                                          | Tele2 Russia Telecom Services BV, 33.287.334, Amsterdam, Netherlands            |                  |  |                 |  |                         | 100
|                                                          | PSNR Personal System Networks in region, 1025202610157, Niznhy Novgorod, Russia |                  |  |                 |  |                         | 100
|                                                          |                                                                                 |                  |  |                 |  |                         |    

F-28

---

|                                            | Tele2 Russia EKA Holding GmbH, FN 131600 f, Vienna, Austria                 |                                                                    |                                         |                                                              |                                                           |             | 100 | %  
|------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------------- | ----------- | --- | ---
|                                            |                                                                             | Fora Telecom M, no P-12721.17, Moskva, Russia                      |                                         |                                                              |                                                           |             |     | 100
|                                            | Tele2 Russia VOL Holding GmbH, FN 131602 h, Vienna, Austria                 |                                                                    |                                         |                                                              |                                                           |             | 100 | %  
|                                            |                                                                             | Kursk Cellular Communications, no P-16792.17, Kursk, Russia        |                                         |                                                              |                                                           |             |     | 100
|                                            |                                                                             | Smolensk Cellular Communications, no P-2581.16, Smolensk, Russia   |                                         |                                                              |                                                           |             |     | 60 
|                                            |                                                                             | Belgorod Cellular Communications, no P-2586.16, Belgorod, Russia   |                                         |                                                              |                                                           |             |     | 65 
|                                            |                                                                             | Kemerovo Mobile Communications, no P-13742.17, Kemerovo, Russia    |                                         |                                                              |                                                           |             |     | 100
|                                            |                                                                             | Rostov Cellular Communications, no P-1790.16, Rostov, Russia       |                                         |                                                              |                                                           |             |     | 75 
|                                            |                                                                             | Udmurtiya Cellular Communications, no P-5818.16, Izhevsk, Russia   |                                         |                                                              |                                                           |             |     | 55 
|                                            |                                                                             | Siberian Cellular Communications, no P-4458.16, Omsk, Russia       |                                         |                                                              |                                                           |             |     | 60 
|                                            |                                                                             | Chelyabinsk Cellular Network, no P-3656.15, Chelyabinsk, Russia    |                                         |                                                              |                                                           |             |     | 51 
|                                            | Tele2 Russia MAC Holding GmbH, FN 132666 y, Vienna, Austria                 |                                                                    |                                         |                                                              |                                                           |             | 100 | %  
|                                            |                                                                             | CISC Cellular, no P-8068.17, Moskva, Russia                        |                                         |                                                              |                                                           |             |     | 100
|                                            |                                                                             | Millicom New Tech. in Communications, no P-9894.17, Moskva, Russia |                                         |                                                              |                                                           |             |     | 100
|                                            | Tele2 Russia International Holding BV, Nr 33221654, Amsterdam, Netherlands  |                                                                    |                                         |                                                              |                                                           |             | 100 | %  
|                                            | Tele2 Russia International Cellular BV, Nr 33227655, Amsterdam, Netherlands |                                                                    |                                         |                                                              |                                                           |             | 100 | %  
|Suomen Kolmegee, Helsinki, Finland          |                                                                             |                                                                    |                                         | Note 16                                                      |                                                           | 27,44% / 15 | %  
|SCD Invest AB, 556353-6753, Sweden          |                                                                             |                                                                    |                                         | Note 16                                                      |                                                           | 9,1% / 49,9 | %  
|NetCom Luxembourg SA, RC B73.796 Luxembourg |                                                                             | 1 000 pcs                                                          |                                         | TEURO 35                                                     |                                                           | 100         | %  
|                                            | Tele2 Holding AB, 556579-7700, Stockholm, Sweden                            |                                                                    |                                         |                                                              |                                                           |             | 100 | %  
|                                            |                                                                             | Tele2 Sweden AB, 556267-5164, Stockholm, Sweden                    |                                         |                                                              |                                                           |             |     | 100
|                                            |                                                                             |                                                                    | Tele2 Sweden SA, RC B73.802, Luxembourg |                                                              |                                                           |             |     |    
|                                            |                                                                             |                                                                    |                                         | 4 T Solutions Holding AB, 556580-2690, Stockholm, Sweden     |                                                           |             |     |    
|                                            |                                                                             |                                                                    |                                         |                                                              | XSource Corporation, USA                                  |             |     |    
|                                            |                                                                             |                                                                    |                                         | X-Source Holding AB, 556580-2682, Stockholm, Sweden          |                                                           |             |     |    
|                                            |                                                                             |                                                                    |                                         |                                                              | X-Source AB, 556290-2238, Stockholm, Sweden               |             |     |    
|                                            |                                                                             |                                                                    |                                         |                                                              | X-Source SA, RC B 87235, Luxembourg                       |             |     |    
|                                            |                                                                             |                                                                    |                                         | Optimal Telecom Holding AB, 556580-7855, Stockholm, Sweden   |                                                           |             |     |    
|                                            |                                                                             |                                                                    |                                         |                                                              | Optimal Telecom Sweden AB, 556440-1924, Stockholm, Sweden |             |     |    
|                                            |                                                                             |                                                                    |                                         | Datametrix Sweden Holding AB, 556580-7871, Stockholm, Sweden |                                                           |             |     |    
|                                            |                                                                             |                                                                    |                                         |                                                              |                                                           |             |    

F-29

---

| |  |  |                                                        |                                                                         | Datametrix AB, 556539-4870, Stockholm, Sweden                 |                                                      |                                           |  |         |         | 100 | %  
| |  |  | ------------------------------------------------------ | ----------------------------------------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------- |  | ------- | ------- | --- | ---
| |  |  |                                                        | Everyday Holding AB, 556579-7718, Stockholm, Sweden                     |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        |                                                                         | Stenblocket i Fruängen AB, 556058-8500, Stockholm, Sweden     |                                                      |                                           |  |         |         | 100 | %  
| |  |  |                                                        |                                                                         |                                                               | Everyday Webguide AB, 556182-6016, Stockholm, Sweden |                                           |  |         | Note 14 |     | 50 
| |  |  |                                                        | Svenska UMTS-nät Holding AB, 556606-7988, Stockholm, Sweden             |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        |                                                                         | Svenska UMTS-nät AB, 556606-7996, Stockholm, Sweden           |                                                      |                                           |  | Note 14 |         | 50  | %  
| |  |  |                                                        | Svenska UMTS-licens Holding AB, 556606-7764, Stockholm, Sweden, dormant |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        | Tele2 Norge Holding AB, 556580-8143, Stockholm, Sweden                  |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        |                                                                         | Tele2 AS, 974534703, Oslo, Norway                             |                                                      |                                           |  |         |         | 100 | %  
| |  |  |                                                        |                                                                         |                                                               | Tele2 Norge UMTS AS, 982795761, Oslo, Norge          |                                           |  |         |         |     | 100
| |  |  |                                                        |                                                                         |                                                               |                                                      | Tele3 Norge AS, 932100975, Norge, dormant |  |         |         |     |    
| |  |  |                                                        | Tele2 Danmark Holding AB, 556580-8028, Stockholm, Sweden                |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        |                                                                         | Tele2 Denmark A/S, 221234, Köpenhamn, Danmark                 |                                                      |                                           |  |         |         | 100 | %  
| |  |  |                                                        |                                                                         |                                                               | In2Loop A/S, 25 48 43 47, Köpenhamn, Denmark         |                                           |  |         |         |     | 100
| |  |  | In21oop Polska Sp. So.o, 54380, Warsawa, Poland        |                                                                         |                                                               |                                                      |                                           |  | 90      | %      
| |  |  | Web Communication BV, 34112460, Amsterdam, Netherlands |                                                                         |                                                               |                                                      |                                           |  | 100     | %      
| |  |  |                                                        | Tele2 Polska Sp, 57496, Warsawa, Poland                                 |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  | Tele2 Holding AS, 10262238, Tallin, Estonia            |                                                                         |                                                               |                                                      |                                           |  | 90      | %      
| |  |  |                                                        | Tele2 Eesti AS, 10069046, Tallin, Estonia                               |                                                               |                                                      |                                           |  |         | 52      | %  
| |  |  |                                                        | UAB Tele2, 1147164, Vilnius, Lithuania                                  |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        | UAB Levi & Kuto Kaunas, 1149679, Kaunas, Lithuania, dormant             |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        | UAB Levi & Kuto Klaipeda, 1150061, Klaipeda, Lithuania, dormant         |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  | Belmus BV, 33261289, Amsterdam, Netherlands            |                                                                         |                                                               |                                                      |                                           |  | 100     | %      
| |  |  |                                                        | Tele2 Eesti AS, 10069046, Tallin, Estonia                               |                                                               |                                                      |                                           |  |         | 48      | %  
| |  |  | Tele2 Holding SIA, 000351206, Latvia                   |                                                                         |                                                               |                                                      |                                           |  | 100     | %      
| |  |  |                                                        | SIA Tele2, 000327285, Latvia                                            |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  | OU Levicom BroadBand, 10309744, Tallin, Estonia        |                                                                         |                                                               |                                                      |                                           |  | 100     | %      
| |  |  |                                                        | UAB KRT, 2304688, Vilnius, Lithuania                                    |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        |                                                                         | UAB C-Gates, 2424016, Vilnius, Lithuania                      |                                                      |                                           |  |         |         | 100 | %  
| |  |  |                                                        |                                                                         | UAB Trigeris, 2123967, Vilnius, Lithuania                     |                                                      |                                           |  |         |         | 100 | %  
| |  |  |                                                        | AS Levi Kaabel, 10417072, Tallinn, Estonia                              |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        |                                                                         | AS Telset Telecommunications Group, 10673906,Tallinn, Estonia |                                                      |                                           |  |         |         | 100 | %  
| |  |  |                                                        | Tallinna Kaabeltelevisiooni AS, 10375439,Tallinn, Estonia               |                                                               |                                                      |                                           |  |         | 65      | %  
| |  |  |                                                        | OU Trigger Software, 10687966, Tallinn, Estonia                         |                                                               |                                                      |                                           |  |         | 100     | %  
| |  |  |                                                        |                                                                         |                                                               |                                                      |                                          

F-30

---

| |  |  |                                                                            | AS Eesti Telag, 10310799, Tallinn, Estonia, dormant               |  |  |  |  |      | 100 | %
| |  |  | -------------------------------------------------------------------------- | ----------------------------------------------------------------- |  |  |  |  | ---- | --- | -
| |  |  |                                                                            | SIA Levicom Broadband, 000353597, Riga, Latvia, dormant           |  |  |  |  |      | 100 | %
| |  |  |                                                                            | Montalto Investments BV, 33135957,Amsterdam, Netherlands, dormant |  |  |  |  |      | 100 | %
| |  |  | Corporation Severnaya Korona, no P-6117.16, Irkutsk, Russia                |                                                                   |  |  |  |  | 100  | %  
| |  |  | St Petersburg Telecom, no AO-3177, St Petersburg, Russia                   |                                                                   |  |  |  |  | 60,6 | %  
| |  |  | Oblcom, no P-7180.16, St Petersburg, Russia                                |                                                                   |  |  |  |  | 60,6 | %  
| |  |  | ProcureITright AB, 556600-9436, Stockholm, Sweden                          |                                                                   |  |  |  |  | 100  | %  
| |  |  |                                                                            | Proceedo Solution AB, 5556599-5049, Stockholm, Sweden             |  |  |  |  |      | 100 | %
| |  |  | Datametrix Norway AS, 975993108, Oslo, Norway                              |                                                                   |  |  |  |  | 100  | %  
| |  |  | Datametrix Danmark A/S, 39419, Köpenhamn, Danmark                          |                                                                   |  |  |  |  | 100  | %  
| |  |  | Datametrix OY AS, 378548, Helsinki, Finland                                |                                                                   |  |  |  |  | 100  | %  
| |  |  | OY Finland Tele2 AB, 1482343-8, Helsinki, Finland                          |                                                                   |  |  |  |  | 100  | %  
| |  |  | Interloop AB, 556284-7565, Stockholm, Sweden                               |                                                                   |  |  |  |  | 100  | %  
| |  |  | NetCom GSM Sweden AB, 556304-7025, Stockholm, Sweden                       |                                                                   |  |  |  |  | 100  | %  
| |  |  | Åkersberga KV AB, 556326-3192, Österåker, Sweden                           |                                                                   |  |  |  |  | 100  | %  
| |  |  | Halmstads KV AB, 556380-6115, Halmstad, Sweden                             |                                                                   |  |  |  |  | 100  | %  
| |  |  | Skaraborgs Kabel-TV AB, 556483-6467, Mariestad, Sweden                     |                                                                   |  |  |  |  | 60   | %  
| |  |  | Hallstahammar KV KB, 916580-7912, Västerås, Sweden                         |                                                                   |  |  |  |  | 90   | %  
| |  |  | Kopparstaden KV KB, 916583-0564, Västerås, Sweden                          |                                                                   |  |  |  |  | 80   | %  
| |  |  | Nelab KV KB, 916597-8983, Västerås, Sweden                                 |                                                                   |  |  |  |  | 80   | %  
| |  |  | Kabelvision KB, 916836-8828, Sweden, dormant                               |                                                                   |  |  |  |  | 100  | %  
| |  |  | KB Haninge Kabelvision, 916633-3485, Sweden, dormant                       |                                                                   |  |  |  |  | 80   | %  
| |  |  | Härnösand Kabelvision KB, 916589-2481, Sweden, dormant                     |                                                                   |  |  |  |  | 80   | %  
| |  |  | KB June Kabelvision, 916702-4836, Sweden, dormant                          |                                                                   |  |  |  |  | 65   | %  
| |  |  | KB Lidingö Kabelvision, 916631-3289, Sweden, dormant                       |                                                                   |  |  |  |  | 80   | %  
| |  |  | Älmhults Kabelvison KB, 916525,1043, Sweden, dormant                       |                                                                   |  |  |  |  | 80   | %  
| |  |  | Trade2 (Sweden) AB, 556469-7836, Sweden, dormant                           |                                                                   |  |  |  |  | 100  | %  
| |  |  | Comviq Broadband AB, 556405-6678, Sweden, dormant                          |                                                                   |  |  |  |  | 100  | %  
| |  |  | SCD AB, 556353-6829, Sweden, dormant                                       |                                                                   |  |  |  |  | 100  | %  
| |  |  | Ca112Web AB, 556403-7983, Sweden, dormant                                  |                                                                   |  |  |  |  | 100  | %  
| |  |  | NIU Nätteknik, Installation och Underhåll AB, 556041-1307, Sweden, dormant |                                                                   |  |  |  |  | 100  | %  
| |  |  | Kalmar Kabelvision AB, 556244-2466, Sweden, dormant                        |                                                                   |  |  |  |  | 100  | %  
| |  |  | Comviq GSM AB, 556450-2606, Sweden, dormant                                |                                                                   |  |  |  |  | 100  | %  
| |  |  | Swipnet AB, 556411-9401, Sweden, dormant                                   |                                                                   |  |  |  |  | 100  | %  
| |  |  | NetCom Luxembourg Holding AB, 556580-7905, Sweden, dormant                 |                                                                   |  |  |  |  | 100  | %  
| |  |  | Tele1 A/S, 955780132, Norway, dormant                                      |                                                                   |  |  |  |  | 100  | %  
| |  |  |                                                                            |                                                                   |  |  | 

F-31

---

| |  |                                                   | SNPAC Swedish Nr Portability Adm.Centre AB, 556595-2925, Sweden                     |                                                                              |                                                   |  | Note 14 |     | 20  | %  
| |  | ------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------------- |  | ------- | --- | --- | ---
| |  |                                                   | Travellink AB, 556596-2650, Stockholm, Sweden                                       |                                                                              |                                                   |  | Note 16 |     | 15  | %  
| |  | S.E.C. Luxembourg S.A., R.C. B-84.649, Luxembourg |                                                                                     |                                                                              |                                                   |  |         | 100 | %  
| |  |                                                   | Managest Media SA, RCB87091, Luxembourg                                             |                                                                              |                                                   |  | Note 14 |     | 40  | %  
| |  |                                                   |                                                                                     | Managest Media Spa, Italy                                                    |                                                   |  |         |     |     | 100
| |  |                                                   | Tele2 Services Luxembourg SA, RC B 70203, Luxembourg                                |                                                                              |                                                   |  |         |     | 100 | %  
| |  |                                                   | Societe Europeenne de Communication (Ireland) Ltd, 316848, Dublin, Ireland, dormant |                                                                              |                                                   |  |         |     | 100 | %  
| |  |                                                   | 3C Communications (Ireland) Ltd, 164025, Ireland, dormant                           |                                                                              |                                                   |  |         |     | 100 | %  
| |  |                                                   | Tele2 s.r.o., 25650009, Prag, Czech Republic                                        |                                                                              |                                                   |  |         |     | 100 | %  
| |  |                                                   |                                                                                     | Tele2 /Slovakia/ s.r.o., 35806486, Slovakien                                 |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Magyarorszag Kft., 0109695967, Hungary                                 |                                                   |  |         |     |     | 100
| |  |                                                   | SEC Holding BV, 33141829, Rotterdam, Netherlands                                    |                                                                              |                                                   |  |         |     | 100 | %  
| |  |                                                   |                                                                                     | Kinnevik Telecommunications Int. SA, RC B 52976, Luxembourg                  |                                                   |  |         |     |     | 100
| |  |                                                   | Tele2 Europe SA, B 56944, Luxembourg                                                |                                                                              |                                                   |  |         |     | 100 | %  
| |  |                                                   |                                                                                     | Tele2 Telecommunication Services GmbH, FN 178222t, Vienna, Austria           |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Belgium SA, 609 392, Zellik, Belgium                                   |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Télé2 France SA, FR48-409914058, Velizy, France                              |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Telecommunication Services GmbH, 36232, Düsseldorf, Germany            |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Italia Spa, Ml-1998-247322, Segrate, Italy                             |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 AG, H.1045/80, Liechstenstein                                          |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Luxembourg SA, B 65774, Luxembourg                                     |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 (Netherlands) BV, BV 291906, Amsterdam, Netherlands                    |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Telecommunication Services S.L, B82051913, Madrid, Spain               |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Telecommunication Services AG, CH-020390 55 969, Zürich, Switzerland   |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Tele2 Communications Serv. Ltd, 3565220, London, UK                          |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Telemilenio, Telecomunicacoes, Sociedade Unipessoal, 10468, Lisbon, Portugal |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | TANGO SA, RC 59560, Luxembourg                                               |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Transac SA, B49487, Luxembourg                                               |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Everyday Media SA, R.C. B 78.227, Luxembourg                                 |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Everyday Prod. SA, 69802, Luxembourg                                         |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     | Calling Card Company SA, B 424 906 618, Paris, France                        |                                                   |  |         |     |     | 5  
| |  |                                                   |                                                                                     | 3C Communications International SA, RC B 29697, Luxembourg                   |                                                   |  |         |     |     | 100
| |  |                                                   |                                                                                     |                                                                              | 3C Communications GmbH, FN695021, Vienna, Austria |  |         |     |     |    
| |  |                                                   |                                                                                     |                                                                              |                                                   |  |        

F-32

---

| |  |  |  |  | 3C Communications BVBA, 514 274, Brussels, Belgium         |                                                            |  |  |  |  | 99  | % 
| |  |  |  |  | ---------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  | --- | --
| |  |  |  |  | 3C Communications SPA Italy, 28894/7359/14, Segrate, Italy |                                                            |  |  |  |  | 91  | % 
| |  |  |  |  | 3C Communications Czech s-r-s, Czech Republic, dormant     |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Communications A/S,184462, Ballerup, Denmark            |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Communications OY, 585632, Finland                      |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Communications SA, 345 343 396 00023 Orleans, France    |                                                            |  |  |  |  | 99  | % 
| |  |  |  |  | 3C Communications GmbH, HRB 24104, Germany                 |                                                            |  |  |  |  | 99  | % 
| |  |  |  |  | 3C Communications Luxembourg SA, B39690, Luxembourg        |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Kommunikacios Szolgaltato Kft, Budapest, Hungary        |                                                            |  |  |  |  | 90  | % 
| |  |  |  |  | 3C Communications BV, Amsterdam, 14630454, Netherlands     |                                                            |  |  |  |  | 99  | % 
| |  |  |  |  | 3C Communications A/S, Oslo, Norway                        |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Transac A/S, Norway                                     |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Communicacoes Ltda, Domingos de Rana, Portugal          |                                                            |  |  |  |  | 95  | % 
| |  |  |  |  | 3C Communications Espana SA, Madrid, Spain                 |                                                            |  |  |  |  | 99  | % 
| |  |  |  |  | 3C Communications AB, 556332-6346, Stockholm, Sweden       |                                                            |  |  |  |  | 97  | % 
| |  |  |  |  | 3C Transac AB Sweden,556057-2116, Stockhom, Sweden         |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Communications Ltd, 2343138, UK                         |                                                            |  |  |  |  | 96  | % 
| |  |  |  |  | 3C Transac Ltd, Kingston-upon-Thames, UK                   |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | Comviq Holding BV, 14630454, Amsterdam, Netherlands        |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  | 3C Communications Equipment SA, B 25465, Luxembourg        |                                                            |  |  |  |  | 100 | % 
| |  |  |  |  |                                                            | 3C Communications BVBA, 514 274, Brussels, Belgium         |  |  |  |  |     | 1 
| |  |  |  |  |                                                            | 3C Communications SPA Italy, 28894/7359/14, Segrate, Italy |  |  |  |  |     | 9 
| |  |  |  |  |                                                            | 3C Communications SA, 345 343 396 00023 Orleans, France    |  |  |  |  |     | 1 
| |  |  |  |  |                                                            | 3C Communications GmbH, HRB 24104, Germany                 |  |  |  |  |     | 1 
| |  |  |  |  |                                                            | 3C Kommunikacios Szolgaltato Kft, Budapest, Hungary        |  |  |  |  |     | 10
| |  |  |  |  |                                                            | 3C Communications BV, Amsterdam, 14630454, Netherlands     |  |  |  |  |     | 1 
| |  |  |  |  |                                                            | 3C Communicacoes Ltda, Domingos de Rana, Portugal          |  |  |  |  |     | 5 
| |  |  |  |  |                                                            | 3C Communications Espana SA, Madrid, Spain                 |  |  |  |  |     | 1 
| |  |  |  |  |                                                            |                                                            | 

F-33

---

| |  |  |  |                                                           |                                                                                   | 3C Communications AB, 556332-6346, Stockholm, Sweden |  |  |  |     |     | 3 | %
| |  |  |  | --------------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  | --- | --- | - | -
| |  |  |  |                                                           |                                                                                   | 3C Communications Ltd, 2343138, UK                   |  |  |  |     |     | 4 | %
| |  |  |  | CCC Holding BV, 33 269 398, Amsterdam, Netherlands        |                                                                                   |                                                      |  |  |  | 100 | %  
| |  |  |  |                                                           | Calling Card Company Limited, 3794813, UK                                         |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | CCC Calling Card Company Germany GmbH, HRB 40498, Germany                         |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | C3 Calling Card Company (Ireland) Limited, 309745, Ireland                        |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Calling Card Company SA, B 424 906 618, Paris, France                             |                                                      |  |  |  |     | 95  | %
| |  |  |  |                                                           | Calling Card Company Italy SpA, 233372, Milano, Italy                             |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Tele2 International Card Company S.A., RC 64 902, Luxembourg                      |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Calling Card Company Netherlands BV, BV 82334, Amsterdam, Netherlands             |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Calling Card Company Spain, S.A. A-62426457, Spain                                |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Calling Card Company Telecommunication Services GmbH, FN 215362i, Austria         |                                                      |  |  |  |     | 100 | %
| |  |  |  | SEC Everyday Europe BV, 341124357, Amsterdam, Netherlands |                                                                                   |                                                      |  |  |  | 100 | %  
| |  |  |  |                                                           | Everyday.com Internet Services GmbH, Austria                                      |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Everyday.com Switzerland AG, CHF-0203023164-4, Zürich, Switzerland                |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Everyday.com Germany GmbH, HR B 36232, Germany                                    |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Everyday.com France SAS, B-430291898, Velizy, France                              |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Everyday.com Italia S.R.L, R.C. 1605497, Italia Srl, Italy                        |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Everyday Luxembourg SA, B 64 902, Luxembourg                                      |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Everyday.com Netherlands BV, 34125168, Amsterdam, Netherlands                     |                                                      |  |  |  |     | 100 | %
| |  |  |  | IntelliNet Holding BV, 34126307, Amsterdam, Netherlands   |                                                                                   |                                                      |  |  |  | 100 | %  
| |  |  |  |                                                           | Intellinet Telecommunications GmbH, FN 190268 g, Vienna, Austria                  |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | Intellinet Telecommunication GmbH, HRB 48344, Frankfurt, Germany                  |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | IntelliNet S.p.A, R.C. 1615155, Segrate, Italy                                    |                                                      |  |  |  |     | 99  | %
| |  |  |  |                                                           | IntelliNet BV, 34120156, Amsterdam, Netherlands                                   |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           | IntelliNet Telecommunication Services AG, CH-020.3.021.518-8, Zürich, Switzerland |                                                      |  |  |  |     | 100 | %
| |  |  |  | Fagersta AB, 556238-4171, Stockholm, Sweden               |                                                                                   |                                                      |  |  |  | 100 | %  
| |  |  |  |                                                           | Transcom Holding AB, 556468-0857, Sweden, dormant bolag                           |                                                      |  |  |  |     | 100 | %
| |  |  |  |                                                           |                                                                                   |                                                      | 

F-34

---

| |  |  |  |                                                                         | 3C Holding AB, 556491-9503, Sweden, dormant bolag |  |  |  |  |     | 100 | %
| |  |  |  | ----------------------------------------------------------------------- | ------------------------------------------------- |  |  |  |  | --- | --- | -
| |  |  |  | Tele2 Marketing Dynamics AS, 932100975, Norway, dormant                 |                                                   |  |  |  |  | 100 | %  
| |  |  |  | Tele2 Telecommunications Services Ltd, 292887, Dublin, Ireland, dormant |                                                   |  |  |  |  | 100 | %  
| |  |  |  | IntelliNet S.p.A, R.C. 1615155, Segrate, Italy                          |                                                   |  |  |  |  | 1   | %  

In
October 2002, Tele 2 acquired 100% of the shares in ProcureITright, a supplier of procurement function services and WEB-based procurement systems, from XSource
Corporation. During 2002, the sale was made of the Swedish UMTS license to Svenska-nät AB, which is 50% owned with Telia; as well as a 20% share of OJSC Moscow Cellular
Communication.

Significant events after the end of the financial year:

In February 2003 Tele2 Alpha Telecom was acquired. This is the UK's leading operator in prepaid fixed network telephony for individuals and a market leader
in cash cards for fixed telephony. Tele2 Alpha Telecom, sells about 1.25 million cash cards per month from 60,000 sales outlets in the UK and has sales of SEK 1.9 billion. The
acquisition price amounted to approximately SEK 780 million, on a debt-free basis.

Note 14    Shares in associated companies

|                                                                                          |  | At December 31, | 
|----------------------------------------------------------------------------------------- |  | --------------- | 
|
|
|
|
|
|Svenska UMTS nät AB, 556606-7996, Stockholm, Sweden                                       |  | 502 000 st      | 
|OJSC Moscow Cellular Com., P7696.16, Moscow, Russia                                       |  | 1 250 000 st    | 
|Managest Media SA, RCB87091, Luxembourg                                                   |  | 12 000 st B     | 
|SNPAC Swedish Number Portability Administrative Centre AB, 556595-2925, Stockholm, Sweden |  | 200 st          | 
|                                                                                          |  |                 | 
|Total shares in associated companies                                                      |  |                 | 
|                                                                                          |  |                 | 
|Everyday Webguide AB, 556182-6016, Stockholm, Sweden                                      |  | 1 750 st        | 
|                                                                                          |  |                 | 
|Total provisions to associated companies                                                  |  |                 | 
|                                                                                          |  |                 | 

During
the fourth quarter of 2002, Tele2 sold its 20% shareholding in Moscow Cellular Communication.

F-35

---

Contribution of each associated company to Group equity:

|                                                    |  | 2001 |   | 2002 |  
|--------------------------------------------------- |  | ---- | - | ---- | -
|
|
|Goodwill:                                           |  |      |   |      |  
|Goodwill, book value, Dec 31                        |  |     |   |     |  
|Equity share:                                       |  |      |   |      |  
|Equity share, Jan 1                                 |  |     |   | (51  | )
|Acquired companies, opening balance                 |  |     |   | 75   |  
|Share of capital contributions and new share issues |  | 250  |   | 8    |  
|Share of profit/loss                                |  | (1   | ) | (57  | )
|Divestments during the year                         |  |     |   |     |  
|                                                    |  |      |   |      |  
|Equity share, Dec 31                                |  | 249  |   | (25  | )
|                                                    |  |      |   |      |  
|Total shares in associated companies                |  | 249  |   | (25  | )
|                                                    |  |      |   |      |  

Note 15    Receivables from associated companies

|                                           |  | At December 31, |  
|------------------------------------------ |  | --------------- | -
|
|
|Acquisition value at January 1             |  | 105             |  
|Shareholder contribution                   |  | (7              | )
|Lending                                    |  | 17              |  
|                                           |  |                 |  
|Total receivable from associated companies |  | 115             |  
|                                           |  |                 |  

Receivables
from associated companies are subject to commercial terms and conditions.

Note 16    Other long-term holdings of securities

|                                       |  | At December 31,
|-------------------------------------- |  | ---------------
|
|
|
|
|
|Suomen Kolmegee, Helsinki, Finland     |  | 1 924 st       
|SCD Invest AB, 556353-6753, Stockholm  |  | 1 058 425 A    
|XSource Corporation, USA               |  | 1 806 575 st   
|Travellink AB, 556596-2650, Stockholm  |  | 15 000 st      
|                                       |  |                
|Total long-term holdings of securities |  |                
|                                       |  |                

F-36

---

At December 31,2001

2002(SEK in millions)Acquisition value:Acquisition value at Jan 1

489

545Investment for the year

74

23Sale for the year



Reclassification

(18
)
Total acquisition value

545

568Write-downs:Accumulated write-downs at Jan 1

(343
)
(343
)Write-downs during the year



(86
)Accumulated write-downs

(343
)
(429
)Total other long-term holdings of securities

202

139


During
2002, additional investments were made in Suomen Kolmegee OY for SEK 23 million, as well as share write-downs in XSource Corporation by SEK 86 million. The book
value is regarded as corresponding to fair value.

Note 17    Other long-term receivables

At December 31,2001

2002(SEK in millions)Acquisition value at Jan 1

106

85Lendings

23

8Amortization

(5
)
(11
)Reclassified items

(41
)
(7
)Translation difference

2

(1
)Total other long-term receivables

85

74


At December 31,2001

2002(SEK in millions)Receivable from Finvision

47

39Receivable from Xsource Corporation

17

20Receivable from Alecta

6

6Other

15

9Total other long-term receivables

85

74


F-37

---

Note 18    Accounts receivable

ReceivablesAt December 31,2000

2001

2002(SEK in millions)Accounts receivable

3,012

4,542

5,656Reserve for doubtful receivables

(558
)
(918
)
(1,283
)Total other long-term receivables

2,454

3,624

4,373


Reserve for doubtful receivablesAt December 31,2000

2001

2002(SEK in millions)Reserve for doubtful receivables at Jan 1

172

558

918Reserves in companies acquired during the year

111

15

Netincrease of reserve

273

349

415Recovery of previous write-downs



(36
)
(30
)Translation differences in opening balances

2

32

(20
)Total reserve for doubtful receivables

558

918

1,283


Credit
risk entails the book losses that should be reported as of the closing date if the counter-parties have completely neglected to fulfill their payment liability in accordance with
agreements. The Group has limited its credit risk in respect of receivables by continually conducting credit assessments of the customer stock. Since the Group has a highly varied customer stock that
covers individuals as well as companies, this entails that the credit risk is limited. The Group makes provisions for any credit losses, and these have remained within management's expectations.

Note 19    Other current receivables

At December 31,2001

2002(SEK in millions)VAT receivables

262

174Receivable from Kinnevik

78

Receivable from Millicom International BV

113

Receivable from Svenska UMTS-nät

11

32Receivable from suppliers



13Miscellaneous

66

31Total other current receivables

530

250


F-38

---

Note 20    Prepaid expenses and accrued revenues

At December 31,2001

2002(SEK in millions)Accrued telephony revenue, other telecom operators

544

934Accrued telephony revenue, customers

1,511

1,525Financing fees

209

170Prepaid financing charges

505

420Total prepaid expenses and accrued revenues

2,769

3,049


Note 21    Liquid funds and overdraft facilities

LiquidityAt December 31,2001

2002(SEK in millions)Cash and bank balances

2,275

2,473Current investments



Total cash

2,275

2,473Blocked accounts

(897
)
(870
)Unutilized overdraft facilities and credit lines

247

729Total liquidity

1,625

2,332


Overdraft facilitiesAt December 31,2001

2002(SEK in millions)Overdraft facilities granted

26

19Overdraft facilities utilized

(14
)
Total unutilized overdraft facilities

12

19Unutilized credit lines

235

710Unutilized overdraft facilities and credit lines

247

729


Collateral pledged for
overdraft facilitiesAt December 31,2001

2002(SEK in millions)Receivables

18

Other assets

9

Total collateral pledged for overdraft facilities

27




F-39

---

Exchange-rate difference in liquid fundsAt December 31,2000

2001

2002(SEK in millions)Liquid funds at Jan 1

(36
)
83

(185
)Cash flow for the year

(108
)
(58
)
(68
)Total exchange-rate difference in cash

(144
)
25

(253
)


Note 22    Shareholders' equity

Exchange-rate differnce in shareholders' equityOther
restricted
reserves

Unrestricted
reserves

Total(SEK in millions)Year-end, Dec.31, 1999

(1
)
(19
)
(20
)Change during the year

1,050

(301
)
749Year-end, Dec.31, 2000

1,049

(320
)
729Change during the year

1,844

(110
)
1,734Year-end, Dec.31, 2001

2,893

(430
)
2,463Other changes during the year

(4,189
)
3,165

(1,024
)Tax effect this year, net



(2
)
(2
)Total change during the year

(4,189
)
3,163

(1,026
)Closing adjusted shareholders' equity, Dec.31, 2002

(1,296
)
2,733

1,437


Exchange rate difference in consolidated income statement:

Exchange-rate differences that arise in operations are reported across the income statements and amount to:

Year ended December 31,2000

2001

2002(SEK in millions)Other operating revenue



33

24Other operating expenses

(57
)
(20
)
(35
)Result from other securities and receivables treated as fixed assets.

3

(1
)
Other interest income and similar profit/loss items

(1
)
(1
)
7Interest expense and similar profit/loss items

(6
)
2

57Exchange-rate difference in the income statement

(61
)
13

53


F-40

---

The
consolidated balance sheet and income statement are affected by fluctuations in subsidiaries' currencies via-á-vis the Swedish krona. Group
operating revenue and EBITDA are distributed among the following currencies:

|      |  | Operating revenue |  | EBITDA* |  
|----- |  | ----------------- |  | ------- | -
|
|
|SEK   |  | 9,289             |  | 37      | %
|EURO  |  | 10,084            |  | 40      | %
|Other |  | 5,712             |  | 23      | %
|      |  |                   |  |         |  
|Total |  | 25,085            |  | 100     | %
|      |  |                   |  |         |  

---

A
1% currency movement against the Swedish krona affects the Group's operating revenue and EBITDA on an annual basis by SEK 209 million (2001: SEK158 million) and SEK
6 million (2001: SEK -20 million), respectively. At December 31, 2002 changes in exchange rates compared with the preceding year affected operating revenue by SEK
-57 million and EBITDA by SEK 1 million.

The
change rates used to translate income statements and balance sheets to SEK are shown below.

|     |  | Income statement |  | Balance sheet
|---- |  | ---------------- |  | -------------
|
|
|
|GBP  |  | 13.8579          |  | 14.8725      
|USD  |  | 9.16080          |  | 10.33080     
|EURO |  | 8.4463           |  | 9.2519       
|CHF  |  | 5.4250           |  | 6.1280       
|DEM  |  | 4.3185           |  |              
|FRF  |  | 1.2876           |  |              
|LUF  |  | 0.2094           |  |              
|NLG  |  | 3.8328           |  |              
|ITL  |  | 0.0044           |  |              
|ATS  |  | 0.6138           |  |              
|ESP  |  | 0.0508           |  |              
|PTE  |  | 0.0421           |  |              
|DDK  |  | 1.1332           |  | 1.2415       
|NOK  |  | 1.0411           |  | 1.1499       
|FIM  |  | 1.4206           |  |              
|EEK  |  | 0.5398           |  | 0.5913       
|LVL  |  | 15.1085          |  | 16.5171      
|LTL  |  | 2.2869           |  | 2.5819       
|PLN  |  | 2.1073           |  | 2.5239       
|CZK  |  | 0.2371           |  | 0.2718       
|HUF  |  | 0.0325           |  | 0.0361       

F-41

---

Currency risks:

In telephony operations a currency risk arises in connection with international call traffic, which means that a liability or a receivable arises between Tele2
companies and foreign operators. In mobile telephony through December 2002, these transactions were calculated in SDRs (Special Drawing Rights) but were invoiced and paid in USD. As of 2003,
these are calculated and paid in EUR.

Currency
risks in our international operations are limited by denominating loans to group companies in the subsidiary's local currency.

The
five-year loan facility is denominated partly in EUR. The exchange-rate difference that continually arises in translating the loan liability is offset against
the exchange-rate differences that arise on the corresponding net investment in subsidiaries. No hedging is undertaken against other types of currency risk.

Note 23    Number of shares

The share capital in Tele2 AB is divided into two share classes, namely, Series A and B shares. Both types of shares have a par value of SEK 5 per share
and offer equal participation in the company's net assets and earnings. Series A shares, however, entitle the holder to 10 voting rights and Series B shares to one voting right.

|                                           |  | A-shares   |   | B-shares   |  |            |  |             |  |            
|------------------------------------------ |  | ---------- | - | ---------- |  | ---------- |  | ----------- |  | -----------
|
|
|Number of shares:                          |  |            |   |            |  |            |  |             |  |            
|December 31, 1999                          |  |            |   | 18,095,632 |  |            |  | 85,754,614  |  | 103,850,246
|New share issues, acq. of SEC              |  | 11,911,315 |   | 30,006,947 |  | 28,837,165 |  | 114,591,779 |  | 144,598,726
|New share issues, options                  |  |            |   | 30,006,947 |  | 200,000    |  | 114,791,779 |  | 144,798,726
|                                           |  |            |   |            |  |            |  |             |  |            
|December 31, 2000                          |  |            |   | 30,006,947 |  |            |  | 114,791,779 |  | 144,798,726
|New share issues, acq. of Tele2 Russia     |  |            |   | 30,006,947 |  | 2,461,449  |  | 117,253,228 |  | 147,260,175
|New share issues, convertibles             |  |            |   | 30,006,947 |  | 100,000    |  | 117,353,228 |  | 147,360,175
|                                           |  |            |   |            |  |            |  |             |  |            
|December 31, 2001                          |  |            |   | 30,006,947 |  |            |  | 117,353,228 |  | 147,360,175
|Reclassification, A- to B-shares           |  | (8,317,143 | ) | 21,689,804 |  | 8,317,143  |  | 125,670,371 |  | 147,360,175
|New share issues, convertibles*)           |  |            |   | 21,689,804 |  | 100,000    |  | 125,670,371 |  | 147,360,175
|                                           |  |            |   |            |  |            |  |             |  |            
|December 31, 2002                          |  |            |   | 21,689,804 |  |            |  | 125,670,371 |  | 147,360,175
|                                           |  |            |   |            |  |            |  |             |  |            
|Outstanding convertibles and warrants:     |  |            |   |            |  |            |  |             |  |            
|Convertibles, 2000-2003                    |  |            |   |           |  |            |  | 100,000     |  | 100,000    
|Warrants, 2002-2005                        |  |            |   |           |  |            |  | 663,000     |  | 663,000    
|                                           |  |            |   |            |  |            |  |             |  |            
|Total number or shares after full dilution |  |            |   | 21,689,804 |  |            |  | 126,533,371 |  | 148,223,175
|                                           |  |            |   |            |  |            |  |             |  |            

---

Convertibles and warrants:

In October 2000, three convertible debenture loans were issued at a par value of SEK 1, each with preference rights to subscribe for 100,000 B shares in
Tele2 AB at a subscription price of SEK 150 per share, and maturing in 2001, 2002 and 2003. See Note 35 for further information.

The
outstanding warrants at Dec. 31, 2002 correspond to 663,000 B shares, at a subscription price of SEK 191 per share and a subscription period from 2005 to 2006. See
Note 35 for further information.

F-42

---

Earnings/loss per share:

|                                                                      |  | Earnings/loss per share |   | Earnings/loss per share after full dilution
|--------------------------------------------------------------------- |  | ----------------------- | - | -------------------------------------------
|
|
|Net profit/loss for the year                                          |  | (396                    | ) | 392                                        
|Reversal: interest for the year after tax on outstanding convertibles |  |                         |   |                                            
|Adjusted profit/loss for the year after full dilution                 |  |                         |   |                                            
|                                                                      |  |                         |   |                                            
|Weighted average number of shares                                     |  | 114,087,366             |   | 145,003,847                                
|Weighted average number of shares outstanding after full dilution     |  |                         |   |                                            
|                                                                      |  |                         |   |                                            
|Earnings/loss per share                                               |  | SEK (3.47               | ) | SEK 2.70                                   

Dividend per share:

Tele2 AB did not pay a dividend during the year and does not foresee paying a dividend during the current fiscal year.

Note 24    Liabilities to financial institutions

Short-term liabilities to financial institutionsAt December 31,2001

2002(SEK in millions)Five-year loan facility

707

2,344Alfa Bank / Omskpromstoy Bank



3(collateralt: chattel mortgages in Seberian Cellular Comm., Omsk Russia)Financial leases

24

30Total short-term interest-bearing loans

731

2,377


F-43

---

|                                                     |                                                                                                                                                                                                                                                                                                                                                         |                           |  | Long-term liabilities to financial institutions
|---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- |  | -----------------------------------------------
|
|
|
|Five-year loan facility                              |                                                                                                                                                                                                                                                                                                                                                         | EURIBOR/LIBOR +0.75-2.25% |  | 2003-2006                                      
|                                                     | (collateral: shares in Tele2 Sverige and SEC SA and certain shares in Group companies, which in turn are subject to, guarantees from Tele2 AB and cross-guarantees between certain Group companies, collateral provided in
the form of receivables from certain Group companies and limitations in repayment potential of internal loans from Tele2 AB) |                           |  |                                                
|Banque Invik                                         |                                                                                                                                                                                                                                                                                                                                                         | Marginal 0.5% - 1%        |  | 2004-2005                                      
|                                                     | (collateral: blocked bank accounts in Tele2 RussiaTelecom BV)                                                                                                                                                                                                                                                                                           |                           |  |                                                
|Merita- Nordbanken                                   |                                                                                                                                                                                                                                                                                                                                                         | Variable rate             |  | 2004                                           
|                                                     | (collateral: guarantees from Tele2)                                                                                                                                                                                                                                                                                                                     |                           |  |                                                
|Financial leasing, for machinery and technical plant |                                                                                                                                                                                                                                                                                                                                                         |                           |  |                                                
|                                                     |                                                                                                                                                                                                                                                                                                                                                         |                           |  |                                                
|Total long-term interest-bearing loans               |                                                                                                                                                                                                                                                                                                                                                         |                           |  |                                                
|                                                     |                                                                                                                                                                                                                                                                                                                                                         |                           |  |                                                

Collateral pledged for liabilities to financial institutionsAt December 31,2001

2002(SEK in millions)Chattel mortgages



11Net assets in subsidiaries

23,197

22,778Bank deposits

897

841Total collateral provided for liabilities to financial institutions.

24,094

23,630


During
2001, Tele2 Sverige AB signed a new five-year bank finance facility for SEK 10.8 billion, guaranteed by ABN Amro, CIBC World Markets, ING Bank, Nordea, The
Royal Bank of Scotland and West LB. The loan is partly denominated in SEK and partly in EUR. The five-year bank financing facility with amortization is divided up into three tranches, in
which the agreed SEK 9.4 billion in Tranche A is to be repaid in seven repayments, and in which each amortization amounts to between 5% an 15% of the original loan amount and the
remaining 17.5% of the loan is to be repaid by June 30, 2006. During 2002, repayment of Tranche A was made in the amount of SEK 467 million. The potential to borrow under
Tranche B is limited to SEK 1.1 billion and is to be repaid by June 30, 2006. Tranche C, amounting to SEK 250 million, was repaid in its entirety in
January 2002.

The
five-year loan facility is based on requirements involving the fulfillment of certain financial key ratios. Tele2 expects to fulfill the requirements. The loan liability
carries a rate of interest corresponding to Euribor and Libor, respectively, plus an interest margin. The interest margin, which is based on indebtedness in relation to EBITDA, starts at 2.25% and is
reduced in line with the improvement in EBITDA. At December 31, 2002 Tele2 attained the minimum interest differential of 0.75% with effect from February 2003. The five-year
facility entails a certain curtailment of Tele2 Group's potential to raise other external loans and the potential to provide assets as collateral.

F-44

---

The
loan in Banque Invik pertains to loan to the Russian operations. Tele2 has deposited the corresponding amount with Banque Invik. The interest margin is 0.5% - 1%.

Pledged
shares are reported in the Group at an amount that corresponds to the book value of the net assets that each subsidiary represents in the consolidated balance sheet.

The
average rate of interest on loan liabilities during the year was 6.4% (2001: 6.3%).

Loan liability maturesAt December 31,2001

2002(SEK in millions)Within 1 year

731

2,3771-2 years

2,375

3,0702-3 years

3,254

2,6463-4 years

2,601

2,0494-5 years

2,553

165-10 years

60

7510-15 years



20Total loans to financial institutions

11,574

10,253


Interest rate risk:

Of the total loan liability at December 31, 2002, SEK 9,330 million, corresponding to 91% (2001: SEK 10,824 million, 91%) carried a variable
rate of interest. An increase in interest rates of 100 basic points would entail an additional interest expense of SEK 93 million, calculated on the basis of variable interest-bearing
liabilities at December 31, 2002.

The
Group's interest-rate on borrowing is currently variable with fixed-interest periods of up to 12 months. However, Tele2 is monitoring trends on
interest-rate markets and decisions regarding the interest-rate fixing strategy are assessed continually.

Interest-bearing liabilities with variable interest rates mature for payment as follows:

|                                                          |  | Within 1 year |  | 1-2 years |  | 2-3 years |  | 3-4 years |  | 4-5 years |  | 5-10 years |  | Total
|--------------------------------------------------------- |  | ------------- |  | --------- |  | --------- |  | --------- |  | --------- |  | ---------- |  | -----
|Interest-bearing liabilities with variable interest rates |  | 2,352         |  | 2,368     |  | 2,578     |  | 2,032     |  |          |  |           |  | 9,330

F-45

---

Financial leasing:

All fixed assets utilized through financial leasing have been included in the consolidated accounts as fixed assets and loan liabilities, with the exception,
however, of contracts signed before 1997. The effects of these being included in the consolidated balance sheet are shown below and in Note 12.

Financial leasingBooked

Not bookedDecember 31,2001

2002

2001

2002(SEK in millions)Short-term portion

24

30

9

8Long-term portion

125

166

91

84Total loans for financial leasing objects

149

196

100

92


Loan liability maturesBooked

Not bookedAt December 31, 2002(SEK in millions)Within 1 year

43

121-2 years

30

122-3 years

28

123-4 years

25

124-5 years

23

115-10 years

79

4210-15 years

22

13Total loan liability and interest

250

114Less: interest portion

(54
)
(22
)Total loans for financial leasing objects

196

92


Financial
leasing pertains primarily to the extension of transmission capacity in Sweden through Svenska Kraftnät Vattenfall and agreements signed in Denmark. Also,
financial leasing occurs in Estonia, Russia and Luxembourg. During 2002, investments amounted to SEK 83 million, primarily in Sweden in the amount of SEK 66 million and in Luxembourg in
the amount of SEK 11 million. During the year, termination of financial leasing occurred in Estonia and Latvia.

Note 25    Other interest-bearing liabilities

Other short-term interest-bearing liabilitiesAt December 31,2001

2002(SEK in millions)Xsource Corporation



5Levicom International

134

Ericsson

17

Total other short-term interest-bearing liabilities

151

5


F-46

---

Other long-term interest-bearing liabilitiesAt December 31,2001

2002(SEK in millions)SCD Finans AB



23Ericsson

2

Motorola

55

Kinnevik S.A

14

Millicom International BV

44

Total other long-term interest-bearing liabilities

115

23


Loan maturity scheduleAt December 31,2001

2002(SEK in millions)Within 1 year

151

51-2 years

115

23Total other interest-bearing liabilities

266

28


Note 26    Other short-term liabilities

At December 31,2001

2002(SEK in millions)VAT liability

218

276Tax-at-source, personnel

37

27Other taxes

34

59Liability to SCD Finans AB

30

Liability to Motorola

26

Customer deposits

17

26Other

13

53Total other short-term liabilities

375

441


F-47

---

Note 27    Accrued expenses and prepaid revenues

At December 31,2001

2002(SEK in millions)Personnel-related costs

734

168Interest expense

150

212Telephony expense to other telecom operators

1,664

1,701Expenses for vendors

12

14Leasing and rental expenses

29

24Program costs

33

33External services expenses

602

715Prepaid income

541

702Other

249

204Total accrued expenses and prepaid revenues

4,014

3,773


When
Tele2 acquired Société Europénne de Communication SA, through an offer to SEC's shareholders, there were outstanding stock options in
SEC. Tele2's offer did not encompass the stock options, thus in order to calculate net assets, these have been given a theoretical value as if they had been encompassed by the offer and booked as a
liability in the consolidated balance sheet. During 2002, this liability was adjusted vis-à-vis goodwill, shown above as a personnel-related cost, and adjusted
against goodwill the amount of SEK 498 million, with no effect on cash and profit.

Note 28    Pledged assets

At December 31,2001

2002(SEK in millions)Chattel mortgages



11Net assets in Group companies

23,197

22,778Inventories

18

19Receivables

18

Bank deposits

897

870Other assets

9

Total assets pledged for own liabilities

24,139

23,678


The
above information shows the book value of assets pledged as collateral for external loans (as in Note 24), overdraft facilities and blocked bank funds (as in Note 21)
and other liabilities (as in Note 25). In the Group, pledged shares are reported in an amount corresponding to the book value of the net assets that each subsidiary represents in the
consolidated balance sheet.

Note 29    Contingent liabilities and other commitments

At December 31,2001

2002(SEK in millions)Contingent liabilities



Total contingent liabilities






F-48

---

Operational leases:

Operational leasing feesAt December 31,2001

2002(SEK in millions)Annual fees for operating leases

782

752


Payment schedule for future feesAt December 31,2001

2002(SEK in millions)Within 1 year

471

6211-2 years

238

2792-3 years

189

1973-4 years

123

1584-5 years

112

135More than 5 years

727

759Total future fees for operating leases due for payment

1,860

2,149


Contractual commitments/commercial pledges:

|                                                 |  | At December 31, 2002
|------------------------------------------------ |  | --------------------
|
|
|Liabilities to financial institutions            |  | 2,377               
|Other interest-bearing liabilities               |  | 5                   
|Financial leasing, agreements signed before 1997 |  | 8                   
|Operational leasing                              |  | 621                 
|                                                 |  |                     
|Total contractual commitments/commercial pledges |  | 3,011               
|                                                 |  |                     

Note 30    Supplementary cash-flow information

Transactions not affecting cash are as follows:

In addition to the reported investing and financing operations, as shown in the cash flow statement, the following transactions occurred that did not affect cash.

In
addition to reported investments and loan liabilities in cash flow, investments and the raising of loans through financial leasing amounted to SEK 66 million (2001: SEK
17 million), as well as amortization of loans through financial leasing in the amount of SEK -20 million (2001: SEK -22 million)

The
acquisition of shares in 2001 in Tele2 Russia Telecom BV and in OU Levicom Broadband, respectively, was conducted through a limited share issue of SEK 849 million and through
loan financing at the seller amounting to SEK 134 million and is not included in cash flow as investing or financing. On the acquisition date, the companies had cash of SEK 884 million
and SEK 5 million, respectively, which is reported in the cash flow as a reduction in investment.

F-49

---

Cash flow statement based on net profit/loss:

Year ended December 31,2000

2001

2002(SEK in millions)Current operations:Net profit/loss for the year

(396
)
392

223Adjustments of items in profit/loss for the year that do not generate cash flow from current operations:Depreciation/amortization

1,400

3,054

3,597Minority interest



(1
)
(1
)Profit/loss from shares in associated companies

44

(33
)
36Deferred tax expense

561

(2,334
)
525Financial leases

(6
)
(5
)
(9
)Unpaid interest

(31
)
88

107Write-down of shares

2



861,574

1,161

4,564Change in working capital

(691
)
(748
)
(199
)Cash flow from current operations

883

413

4,365


Investments according to the cash flow statement by market and operating area:

InvestmentsYear ended December 31,2001

2002(SEK in millions)Nordic

1,029

902Eastern Europe and Russia

328

594Central Europe

149

135Southern Europe

454

142Luxembourg

122

94Branded products & other services

63

232,145

1,890Change in long-term receivable

87

3Acquisition/divestment of companies

(765
)
623Total investments according to cash flow statement

1,467

2,516


F-50

---

InvestmentsYear ended December 31,2001

2002(SEK in millions)Mobile telephony

789

998Fixed telephony and Internet

1,272

794Cable-TV

52

85Data-processing

32

132,145

1,890Change in long-term receivable

87

3Acquisition/sale of companies

(765
)
623Total investments according to cash flow statement

1,467

2,516


Additional
information on segments is presented in Notes 31-32.

Note 31    Market areas

The Group's operations are primarily divided among six market areas: Nordic, Eastern Europe and Russia, Central Europe, Southern Europe, Luxembourg and Branded
products and services, which reflect internal reporting to the Board and executive management and the division of responsibility and organization within the Group. Market control and prioritization is
largely jointly undertaken for continental Europe, and thus goodwill and depreciation/amortization attributable to the acquisition of the SEC Group is not broken down across market areas Central
Europe, Southern Europe, Luxembourg and Branded products and services.

The
Nordic market area is acting on a more mature market, while continental Europe has not pursued operations for an equally long period. The Eastern Europe and Russia market area is yet
another market with its own particular risks and possibilities. The division is based on the geographical location of operations, which also reflects where customers are located. Relations between
companies within the Group are based on commercial terms and conditions and pricing.

The
Nordic market area consists of Tele2 operations in Sweden, Norway, Denmark and Finland, Datametrix operation and ProcureITright. Optimal Telecom are also included in the Nordic
market area as of January 1, 2002, having previously been part of the Branded products and services market area. The Eastern Europe and Russia market area encompasses Tele2 operations in the
Baltic States (Estonia, Latvia and Lithuania), Poland, Czech Republic and Russia as well as X-Source operations. The Central Europe market area comprises Tele2 operations in Germany,
Netherlands, Switzerland, Austria and a license in Ireland. The Southern Europe market area comprises Tele2 operations in France, Italy, Spain and Portugal. The Luxembourg market area encompasses
Tele2
operations in Liechtenstein and Luxembourg, plus the recently launched operations in Belgium, as well as 3C operations and Transac. The Branded products and services market area comprises Tele2 UK,
C3-operations, Everyday operations and IntelliNet operations.

Operating
revenue, operating profit before and after depreciation/amortization, as well as investments for the operating areas in each market area are presented in Note 1,
Note 2 and Note 30.

Below
is market area information presented for the two years ended December 31, 2002. It has been impractical for the Group to present similar information for the year ended 2000
due to the acquisition of SEC SA and because information on internal revenue (intra group sales) and amortization of goodwill by market area have not been available. Note 1 and 2, however,
provides

F-51

---

information
on total revenue by segment (including internal and external revenue), depreciations and operating income/loss before and after amortization and depreciation.

|                             |  | Year ended December 31, 2001
|---------------------------- |  | ----------------------------
|
|
|Balance sheet                |  |                             
|ASSETS                       |  |                             
|Intangible fixed assets      |  | 1,317                       
|Tangible assets              |  | 6,162                       
|Shares in associated comp    |  | 251                         
|Other long-term securities   |  | 80                          
|Other financial fixed assets |  | 9,935                       
|                             |  |                             
|                             |  | 17,745                      
|Current assets               |  | 4,459                       
|                             |  |                             
|Total assets                 |  | 22,204                      
|                             |  |                             
|LIABILITIES                  |  |                             
|Provisions                   |  | 102                         
|Interest-bearing liabilities |  | 11,094                      
|Long-term liabilities, other |  | 7                           
|Current liabilities, other   |  | 3,970                       
|                             |  |                             
|Total liabilities            |  | 15,173                      
|                             |  |                             

|                                  |                       | Year ended December 31, 2001 |       
|--------------------------------- | --------------------- | ---------------------------- | ------
|
|
|Income statement                  |                       |                              |       
|Operating revenue                 |                       |                              |       
|                                  | External              |                              | 11,898
|                                  | internal, other Group |                              | 226   
|                                  | internal, market area |                              | 242   
|                                  |                       |                              |       
|Operating revenue, total          |                       | 12,366                       |       
|Depreciation/amortization         |                       | (1,011                       | )     
|Operating expenses, other         |                       | (8,760                       | )     
|Other operating revenue           |                       | 198                          |       
|Other operating expenses          |                       | (36                          | )     
|                                  |                       |                              |       
|Operating profit/loss             |                       | 2,757                        |       
|Profit/loss on assoc. comp        |                       | (58                          | )     
|Profit/loss on fixed assets       |                       |                              |       
|Other interest income, etc.       |                       |                              |       
|Interest expense, etc.            |                       |                              |       
|                                  |                       |                              |       
|Profit/loss after financial items |                       | 2,699                        |       
|                                  |                       |                              |       
|Tax on profit for the year        |                       |                              |       
|Minority interest                 |                       |                              |       
|                                  |                       |                              |       
|Profit/loss for the year          |                       | 2,699                        |       
|                                  |                       |                              |       
|Miscellanuous                     |                       |                              |       
|Investments, intangible ass.      |                       | 1                            |       
|Investments, tangible ass.        |                       | 1,094                        |       

F-52

---

|                             |  | Year ended December 31, 2002
|---------------------------- |  | ----------------------------
|
|
|Balance sheet                |  |                             
|ASSETS                       |  |                             
|Intangible fixed assets      |  | 1,025                       
|Tangible assets              |  | 6,055                       
|Shares in associated comp    |  | 498                         
|Other long-term securities   |  | 103                         
|Other financial fixed assets |  | 9,318                       
|                             |  |                             
|                             |  | 16,999                      
|Current assets               |  | 5,008                       
|                             |  |                             
|Total assets                 |  | 22,007                      
|                             |  |                             
|LIABILITIES                  |  |                             
|Provisions                   |  | 28                          
|Interest-bearing liabilities |  | 9,931                       
|Long-term liabilities, other |  |                            
|Current liabilities, other   |  | 3,274                       
|                             |  |                             
|Total liabilities            |  | 13,233                      
|                             |  |                             

|                                  |                       | Year ended December 31, 2002 |       
|--------------------------------- | --------------------- | ---------------------------- | ------
|
|
|Income statement                  |                       |                              |       
|Operating revenue                 |                       |                              |       
|                                  | External              |                              | 13,566
|                                  | internal, other Group |                              | 79    
|                                  | internal, market area |                              | 585   
|                                  |                       |                              |       
|Operating revenue, total          |                       | 14,230                       |       
|Depreciation/amortization         |                       | (1,435                       | )     
|Operating expenses, other         |                       | (9,410                       | )     
|Other operating revenue           |                       | 37                           |       
|Other operating expenses          |                       | (43                          | )     
|                                  |                       |                              |       
|Operating profit/loss             |                       | 3,379                        |       
|Profit/loss on assoc. comp        |                       | (31                          | )     
|Profit/loss on fixed assets       |                       |                              |       
|Other interest income, etc.       |                       |                              |       
|Interest expense, etc.            |                       |                              |       
|                                  |                       |                              |       
|Profit/loss after financial items |                       | 3,348                        |       
|Tax on profit for the year        |                       |                              |       
|Minority interest                 |                       |                              |       
|                                  |                       |                              |       
|Profit/loss for the year          |                       | 3,348                        |       
|                                  |                       |                              |       
|Miscellanuous                     |                       |                              |       
|Investments, intangible ass.      |                       | 23                           |       
|Investments, tangible ass.        |                       | 885                          |       

Note 32    Operating areas

A secondary division of operations takes the form of a grouping into four operating areas: Mobile telephony, Fixed telephony & Internet, Cable TV and Data
processing, which is based on services and products that differ from each other in terms of risks and possibilities.

F-53

---

The
Fixed telephony & Internet operating area includes fixed telephony as well as the Dial-up and DNS data services. The Cable TV operating area encompasses broadband
services, Cable TV, the radio station Tango Sunshine and Tango TV. The Data processing operating area includes IT-outsourcing via X-source, as well as system integration
through Datametrix, Internet payments, credit card transactions and call phone services via 3C, data processing of card transactions and invoicing through Transac, cash cards for fixed telephony
through C3 and the Internet portal, Everyday.

It
is impractible to provide information that distribute financial fixed assets and current assets by operating area. Operating revenue, operating profit before and after
depreciation/amortization, as well as investments of the operating areas in each market area are presented in Note 1, Note 2 and Note 30.

|                        |  | Year ended December 31, 2001
|----------------------- |  | ----------------------------
|
|
|Balance sheet           |  |                             
|Intangible fixed assets |  | 4,188                       
|Tangible fixed assets   |  | 4,345                       
|Financial fixed assets  |  |                             
|Current assets          |  |                             
|                        |  |                             
|Total assets            |  | 8,533                       
|                        |  |                             

|                                          |  | Year ended December 31, 2001
|----------------------------------------- |  | ----------------------------
|
|
|Income statement                          |  |                             
|Operating revenue from external customers |  | 7615                        
|Miscellaneous                             |  |                             
|Investments in intangible ass.            |  | (2                          
|Investments in tangible ass.              |  | 841                         

|                        |  | Year ended December 31, 2002
|----------------------- |  | ----------------------------
|
|
|Balance sheet           |  |                             
|Intangible fixed assets |  | 3,687                       
|Tangible fixed assets   |  | 4,232                       
|Financial fixed assets  |  |                             
|Current assets          |  |                             
|                        |  |                             
|Total assets            |  | 7,919                       
|                        |  |                             

F-54

---



|                                          |  | Year ended December 31, 2002
|----------------------------------------- |  | ----------------------------
|
|
|Income statement                          |  |                             
|Operating revenue from external customers |  | 9,819                       
|Miscellaneous                             |  |                             
|Investments in intangible ass.            |  | 121                         
|Investments in tangible ass               |  | 901                         

Note 33    Transactions with related parties

As a result of its substantial direct and indirect shareholdings in the Tele2 Group, Invik Group, Kinnevik Group, Transcom Worldwide Group, Millicom Group,
XSource Corporation Group, MTG Group, Metro Group and other companies, the Stenbeck family has the potential to exert considerable influence in terms of financial and operational decisions regarding
operations in these companies. These companies have been regarded as related parties to Tele2. Business relations between Tele2 and all related parties are subject to commercial terms and conditions.

Significant transactions in recent years:



Transactions in 2002:



F-55

---



Operational agreements between Tele2 and related parties:

Tele2 supplies telephony and data services on commercial terms to closely related corporate groups.

Invik
Group:



Kinnevik
Group:



Transcom
Worldwide Group:



Millicom
Group:



XSource
Corporation Group:



MTG
Group:



Other
related companies:



F-56

---



Transactions between Tele2 and related parties:

Operating revenues

Operating costs2000

2001

2002

2000

2001

2002(SEK in millions)Invik Group



10





10

124Kinnevik Group



1

11

60

387

132Transcom Worldwide Group

20

20

23

504

2,031

1,860Millicom Group



16

17

1

7

14XSource Corporation Group



9

7

122

236

266MTG, Modern Times Group

11

32

28

3

163

108Metro International Group



2

3



5

4Other related companies

4

1

5

5

140

102Total

35

91

94

695

2,979

2,610


Interest revenues

Interest costsYear ended December 31,2000

2001

2002

2000

2001

2002(SEK in millions)Invik Group





97





131Total





97





131


Materials & supplies

Restricted cashYear ended December 31,2000

2001

2002

2000

2001

2002(SEK in millions)Invik Group









897

841Kinnevik Group





1





XSource Corporation Group



2







MTG, Modern Times Group





7





Other related companies



39

5





Total



41

13



897

841


Acc. receivable, etc.

Other receivablesYear ended December 31,2001

2002

2001

2002(SEK in millions)Invik Group

1





Kinnevik Group



9

78

Transcom Worldwide Group

6

2



Millicom Group

20

8

113

XSource Corporation Group

69

2

17

20MTG, Modern Times Group

45

53



Other related companies

1

8

47

39Total

142

82

255

59


F-57

---

Liabilities to suppliers, etc.

Other liabilitiesYear ended December 31,2001

2002

2001

2002(SEK in millions)Invik Group

11

124

881

755Kinnevik Group

43

23



Transcom Worldwide Group

267

188



Millicom Group

43





XSource Corporation Group

93

39



5MTG, Modern Times Group

27

17



Metro International Group



2



Other related companies

98

63

30

23Total

582

456

881

783


Note 34    Number of employees

|                            |  | Average number of employees | 
|--------------------------- |  | --------------------------- | 
|
|
|Nordic                      |  | 1,192                       | 
|Eastern Europe and Russia   |  | 460                         | 
|Central Europe              |  | 29                          | 
|Southern Europe             |  | 16                          | 
|Luxembourg                  |  | 40                          | 
|Branded products & services |  | 10                          | 
|                            |  |                             | 
|Total, by market            |  | 1,747                       | 
|                            |  |                             | 

The average number of employees for each year for acquired companies is reported in relation to the period of time they have been part of the
Tele2 Group. Tele2 Russia was acquired in December 2001.

Note 35    Personnel costs

|                    |  | Year ended December 31,
|------------------- |  | -----------------------
|
|
|
|Board and President |  | 18                     
|Other employees     |  | 563                    
|                    |  |                        
|Total Group         |  | 581                    
|                    |  |                        

F-58

---

Salaries and remuneration for each year for acquired companies is reported in relation to the period they have been part of the Tele2 Group. Tele2
Russia was acquired in December 2001. Note 34 shows the workforce.

Pension expenses2000

2001

2002Defined-benefit pension plans

1

4

20Defined-contribution pension plans

37

49

44Total, pension expenses

38

53

64


In
the case of defined-benefit plans, the company assumes the risk and responsibility on the pension payout date. In the case of defined-contribution plans, the company is not exposed to
risk on the pension payout date.

|                            |  | Year ended December 31,
|--------------------------- |  | -----------------------
|
|
|
|
|Nordic                      |  | 14                     
|Eastern Europe and Russia   |  | 1                      
|Central Europe              |  | 1                      
|Southern Europe             |  | 1                      
|Luxembourg                  |  |                       
|Branded products & services |  | 1                      
|                            |  |                        
|Total, by market            |  | 18                     
|                            |  |                        

In 2002, provision of SEK 16 million (2001: SEK 15 million, 2000: SEK 12 million) was made for bonuses to key personnel in
the Group, plus social security expenses of SEK 5 million (2001: SEK 5 million, 2000: SEK 4 million). Distribution of the amount will be decided in 2003.

Remuneration of senior executives:

The group "Other senior executives" consists of 13 people (2001: 13). In addition to the costs below, Tele2 also incurred costs relating to social security
expenses.

|                         |  | 2001
|------------------------ |  | ----
|
|
|Chairman of the Board:   |  |     
|Jan Hugo Stenbeck        |  | 0.3 
|Group President and CEO: |  |     
|Lars-Johan Jarnheimer    |  | 7.6 
|Other senior executives  |  | 18.9
|                         |  |     
|                         |  | 26.8
|                         |  |     

F-59

---

|                         |  | 2002
|------------------------ |  | ----
|
|
|Chairman of the Board:   |  |     
|Jan Hugo Stenbeck        |  | 0.1 
|Bruce Grant              |  | 0.2 
|Group President and CEO: |  |     
|Lars-Johan Jarnheimer    |  | 10.0
|Other senior executives  |  | 21.8
|                         |  |     
|                         |  | 32.1
|                         |  |     

|                        |  | 2002
|----------------------- |  | ----
|
|
|
|Group President and CEO |  |    
|Other senior executives |  |    
|                        |  |     
|                        |  |    
|                        |  |     

Board of Directors:

Board chairman Jan Hugo Stenbeck died during the year and Board member Bruce Grant was appointed Chairman in August. Total Board fees of SEK 1.9 million
were paid compared with SEK 2.1 million decided of the Annual General Meeting of shareholders.

During
the year, the parent company paid SEK 6.8 million to acompany owned by Jan Hugo Stenbeck, for consultations regarding services that cannot be regarded as Board work. In
addition Tele2 Group
paid SEK 8.7 million (2001: SEK 17.3 million) to a company partly owned by Bruce Grant, for consultations regarding services that cannot be regarded as Board work.

President and CEO:

In addition to a fixed salary, Lars-Johan Jarnheimer, President and CEO of Tele2, received a bonus of SEK 1.5 million (2001: SEK
1.6 million). The bonus is based on individualized goals. The pension premium, which is defined-contribution, is paid in the form of 20% of the fixed basic salary. The pension age is 65. The
period of notice when served by the company is a minimum 12 and maximum 18 months in the case of the President of Tele2 AB. Salary during a period of notification of 12 months is paid to
the President if he serves notice of termination of employment to the company. Salary and remuneration for the President are determined annually by the Board of Directors following proposals by the
Chairman of the Board.

Other senior executives:

Variable salary paid to other senior executives includes a bonus of 0%35% based on profit benchmarks, with the remainder being based on
individualized goals. Other benefits pertain primarily to car benefits. Pensions are paid in accordance with the public pension plan, of which SEK 1.1 million (2001: SEK 0.2 million)
represents a defined-contribution plan and SEK 0.2 million (2001. SEK 0, 2 million) is a defined-benefit plan. The pension age is 65. The period of notice when served by the company is a
minimum 6 and maximum 12 months. Salary during a period of notification of six months is received if the person serves notice of termination of employment to the company. Not other remuneration
is paid.

F-60

---

Incentive program 1997-2006

At the Annual General Meeting in 1997, it was decided to undertake an incentive program for a number of the senior executives employed at that time and future
senior executives in the Group. Through a company established for this purpose, NC Intressenter AB, these persons were provided with the opportunity to acquire 100,000 shares per year during
1999-2003, up to a maximum total amount of 500,000 Series B shares. In October 2000, 200,000 shares were issued and three convertible-debenture notes corresponding to 300,000
shares were issued to NC Intressenter to fulfill the offer. At December 31, 2002, NC Intressenter held 400,000 Series B shares and a convertible debenture note corresponding to 100,000
Series B shares. The premium for the option amounted to SEK 7 million in 1997. This was based on a Black-Scholes evaluation and an exercise price of SEK 150 per share. In their turn, all
partners in NC Intressenter made payments to NC Intressenter based on the Black-Scholes evaluations.

On
December 31, 2002, Invik & Co AB owned 42% of the shares in NC Intressenter. Invik & Co AB is not entitled to sell or transfer these shares without the permission
of Tele2 AB.

Incentive Program 2002-2007

At the Annual General Meeting in 2002, it was decided to undertake an incentive program corresponding to a maximum of 1,055,000 for current and future key
employees of the Group. These persons are to be offered the opportunity, via warrants, to subscribe for Series B shares during a period of three to five years after allotment, at a price
totaling the market value of the Series B share plus 10% at the time of allotment, on condition that they remain employed by the Group. No premium is to be paid. At December 31, 2002,
allotments corresponding to 663,000 shares had been implemented. All of these had a redemption price of SEK 191. In addition, allotments corresponding to 153,700 shares had been made to a wholly owned
Group company to secure the future cash flow for social insurance costs.

Note 36    Auditors' fees

|                   |  | Year ended December 31,
|------------------ |  | -----------------------
|
|
|
|Audit assignments* |  | 18                     
|Other assignments  |  | 13                     
|                   |  |                        
|                   |  | 31                     
|Total              |  |                        
|                   |  |                        

---

Note 37    The United States generally accepted accounting principles (US GAAP)

The consolidated balance sheets and income statements are drawn up in accordance with Swedish accounting principles. These differ in certain respects from
generally accepted accounting principles in the United States (US GAAP).

The
following adjustments are required for reporting profit/loss for the year and shareholders' equity in line with US GAAP.

F-61

---

Profit/loss for the year:

|                                                                     |  | Year ended December 31, |  
|-------------------------------------------------------------------- |  | ----------------------- | -
|
|
|
|Profit/loss for the year according to Swedish accounting principles: |  | (396                    | )
|Adjustments required for compliance with US GAAP.                    |  |                         |  
|a) Transactions between companies under common control               |  | 24                      |  
|b) Amortization of goodwill                                          |  |                        |  
|c) Lease agreements                                                  |  | 3                       |  
|d) Tangible fixed assets                                             |  | 31                      |  
|e) Stock options                                                     |  | (196                    | )
|f) Software development costs                                        |  | 80                      |  
|g) Accounting for step acquisitions                                  |  | (317                    | )
|h) Accounting for acquisitions                                       |  | (104                    | )
|i) Deferred tax liability                                            |  |                        |  
|j) Alecta refund                                                     |  | (8                      | )
|k) Changes in accounting principles                                  |  | 21                      |  
|l) Hedge accounting                                                  |  |                        |  
|                                                                     |  |                         |  
|Net adjustment                                                       |  | (466                    | )
|Deferred tax effect on above US GAAP adjustments                     |  | (38                     | )
|                                                                     |  |                         |  
|Profit/loss for the year according to US GAAP                        |  | (900                    | )
|                                                                     |  |                         |  

Earnings per share:

|                                                                     |  | Year ended December 31,
|-------------------------------------------------------------------- |  | -----------------------
|
|
|Profit/loss for the year according to US GAAP                        |  | (900                   
|Number of shares, weighted average                                   |  | 114 087 366            
|Earnings per share                                                   |  | SEK (7.89              
|Profit/loss of the year according to US GAAP                         |  | (900                   
|Number of outstanding shares after full dilution, weighted average*) |  | 114 087 366            
|Earnings per share after full dilution                               |  | SEK (7.89              

---

Adjusted profit/loss for the year:

The Company adopted the provisions of FAS 142 as of January 1, 2002 and, as a result, discontinued amortization and began testing goodwill for
impairment at a level of reporting referred to as a reporting unit for purposes of US GAAP. As required by FAS 142, the Company completed transitional impairment testing of goodwill as of
January 1, 2002 as well as an annual impairment test. No impairment losses were reported in fiscal year 2002 as a result of either test. The following table

F-62

---

presents
net income (and related share amounts) for fiscal year 2001 and 2000 adjusted to exclude amortization expense (including any related tax effects) recognized in those periods related to
goodwill and equity method goodwill.

|                                                       |  | Year ended December 31,
|------------------------------------------------------ |  | -----------------------
|
|
|Profit/loss for the year according to US GAAP          |  | (900                   
|Reversal: amortization of goodwill                     |  | 610                    
|                                                       |  |                        
|Adjusted profit/loss for the year according to US GAAP |  | (290                   
|                                                       |  |                        

Expected amortization of intangible assets

Expected amortization expense through 2007 related to the current balance of the intangible assets still subject to amortization is as follows:

Year ended
December 31(SEK in millions)2003

772004

772005

772006

772007

77


Adjusted earnings per share:

|                                                                     |  | Year ended December 31,
|-------------------------------------------------------------------- |  | -----------------------
|
|
|Profit/loss for the year according to US GAAP                        |  | (900                   
|Reversal: amortization of goodwill                                   |  | 610                    
|                                                                     |  |                        
|Adjusted earnings for the year                                       |  | (290                   
|Number of shares, weighted average                                   |  | 114 087 366            
|Adjusted earnings per share                                          |  | SEK (2.54              
|Profit/loss of the year according to US GAAP                         |  | (900                   
|Reversal: interest after tax on convertibles during the year         |  |                       
|Reversal: amortization of goodwill                                   |  | 610                    
|                                                                     |  |                        
|Adjusted earnings for the year after full dilution                   |  | (290                   
|Number of outstanding shares after full dilution, weighted average*) |  | 114 087 366            
|Adjusted earnings per share after full dilution                      |  | SEK (2.54              
|                                                                     |  |                        

F-63

---

Shareholders' equity:

|                                                                |  | At December 31, |  
|--------------------------------------------------------------- |  | --------------- | -
|
|
|
|Shareholders' equity according to Swedish accounting principles |  | 26,539          |  
|Adjustments required for compliance with US GAAP:               |  |                 |  
|a) Transactions between companies under common control          |  | (47             | )
|b) Amortization of goodwill                                     |  |                |  
|c) Lease agreements                                             |  | 11              |  
|d) Tangible fixed assets                                        |  | 51              |  
|e) Stock options                                                |  | (30             | )
|g) Accounting for step acquisitions                             |  | (94             | )
|h) Accounting for acquisitions                                  |  | 6,592           |  
|i) Deferred tax liability                                       |  | (828            | )
|j) Alecta refund                                                |  | (7              | )
|k) Changes in accounting principles                             |  | 156             |  
|l) Hedge accounting                                             |  |                |  
|                                                                |  |                 |  
|Net adjustment                                                  |  | 5,804           |  
|Deferred tax effect of above US GAAP adjustments                |  | (54             | )
|                                                                |  |                 |  
|Shareholders' equity according to US GAAP                       |  | 32,289          |  
|                                                                |  |                 |  

Change in shareholders' equity:

|                                                                   |  | At December 31, |  
|------------------------------------------------------------------ |  | --------------- | -
|
|
|
|Opening shareholders' equity, Jan. 1, according to US GAAP         |  | 5,772           |  
|Items reported directly against shareholders' equity               |  |                 |  
|Gradual acquisitions                                               |  | (33             | )
|Exchange-rate difference, according to US GAAP                     |  | 785             |  
|                                                                   |  |                 |  
|Total items reported directly against shareholders' equity         |  | 752             |  
|Other changes in shareholders' equity                              |  |                 |  
|New share issue, acquisition of SEC, according to US GAAP          |  | 26,628          |  
|New share issue, acquisition of Tele2 Russia, according to US GAAP |  |                |  
|New share issue, convertibles, according to US GAAP                |  | 37              |  
|Profit/loss for the year, according to US GAAP                     |  | (900            | )
|                                                                   |  |                 |  
|Closing shareholders' equity, Dec. 31, according to US GAAP        |  | 32,289          |  
|                                                                   |  |                 |  

F-64

---

Deferred tax liability/asset:

The estimated tax effect on temporary differences reported as deferred tax asset in accordance with US GAAP is shown below:

|                                                                  |  | At December 31, |  
|----------------------------------------------------------------- |  | --------------- | -
|
|
|
|Deferred tax liability/asset, according to Swedish acc.principles |  | 1,764           |  
|Deferred tax, adjustment according to US GAAP                     |  | (16             | )
|                                                                  |  |                 |  
|Total deferred tax liability (-)/asset (+) according to US GAAP   |  | 1,748           |  
|                                                                  |  |                 |  

Out
of Tele2's loss-carryforwards, approximately SEK 4,800 million of the unrecognized carry-forwards relate to the acquired SEC business. Any subsequent recognition
of the losses carry forwards will be allocated to reduce goodwill.

Extract from the consolidated balance sheets:

|                                           |  | Swedish accounting principles |  | Adjustment items |  | US GAAP
|------------------------------------------ |  | ----------------------------- |  | ---------------- |  | -------
|
|
|
|
|Fixed assets                               |  | 39,692                        |  | 36,373           |  | 6,612  
|Current assets                             |  | 9,566                         |  | 10,499           |  |       
|                                           |  |                               |  |                  |  |        
|Total assets                               |  | 49,258                        |  | 46,872           |  | 6,612  
|                                           |  |                               |  |                  |  |        
|Shareholders' equity                       |  | 29,517                        |  | 28,728           |  | 6,524  
|Minority interest                          |  | 28                            |  | 22               |  |       
|Long-term liabilities                      |  | 11,082                        |  | 7,927            |  | 80     
|Current liabilities                        |  | 8,631                         |  | 10,195           |  | 8      
|                                           |  |                               |  |                  |  |        
|Total shareholders' equity and liabilities |  | 49,258                        |  | 46,872           |  | 6,612  
|                                           |  |                               |  |                  |  |        

Explanation of current differences between Swedish accounting principles and US GAAP:

The account below presents a description of the adjustments that must be made to report Tele2 Group's profit/loss for 2000, 2001 and 2002 and shareholders' equity
as of December 31, 2000, 2001 and 2002 in accordance with US GAAP.

a)Transactions between companies under common control

In
1993 and 1994, the company acquired Tele2 and Comviq from the Industriförvaltnings AB Kinnevik Group. The acquisition method was used to report the transactions.
Accordingly, the difference
between the acquisition value and market value of net assets was reported as goodwill. According to US GAAP, acquisitions of operations from "jointly owned companies" should be conducted at historical
values. Thus, as a US GAAP adjustment, all re-evaluations of plants, materials and supplies, goodwill, etc. that arise on the transaction date are eliminated and the resulting
depreciation/amortization is reversed.

b)Amortization of goodwill

According
to Swedish accounting principles, all intangible fixed assets, including goodwill, must be amortized. Amortization rates are based on the acquisition value of the fixed assets
and the estimated

F-65

---

utilization
period. According to US GAAP, effective 2002, goodwill and intangible assets with an indefinite life are no longer amortized but are instead tested, at least annually, to identify any
impairment loss. The goodwill impairment test consists of a two-step method. First, each reporting units carrying value will be compared to its fair value. Second, where the reporting
unit's carrying value exceeds its fair value, an impairment loss is recognized to the extent that the goodwill carrying value exceeds the reporting unit's implied goodwill, which is calculated as the
difference between the reporting unit's fair value and the fair value of the reporting unit's recognized and unrecognized assets and liabilities. The impairment test for indefinite-lived intangible
assets will require that an impairment loss be recognized equal to the excess of its carrying value over its fair value.

c)Lease agreements

The
Group has certain leasing transactions which, according to generally accepted accounting principles in Sweden, have been treated as operating leases, but which, according to US GAAP,
are viewed as finance leases.

d)Tangible fixed assets

Through
1997, indirect costs, which also included general and administrative expenses, were capitalized under Swedish GAAP. General andadministrative expenses should be expensed as
incurred under US GAAP. From January 1, 1998 no indirect costs at all are capitalized under Swedish GAAP. Construction overhead costs related to the construction of new sites, continue to be
capitalized under US GAAP.

e)Stock options

According
to US GAAP, as a result of the terms and conditions of the options programs in 1997, a liability is calculated based on the market value of the underlying shares. According to
US GAAP, the commitments to employees should not be dissolved. Commitments to others should be valued at the value of the option on the date on which the decision was made to settle it through a new
share issue and report it directly against shareholders' equity.

f)Software development cost

Through
1999, Tele2 has capitalized development costs for software for external sales. According to US GAAP, this should be expensed and depreciation attributable to capitalization be
reversed until the product is technically finalized. As a result of the sale of 4T Solutions AB in 2000, there is currently no difference vis-a-vis US GAAP.

g)Accounting for step acquisitions

The
gradual acquisitions of OU Levicom and Société Européene de Communications S.A. during 1999-2001 has, according to Swedish
accounting principles, resulted in a restatement of adjustment of shareholders' equity corresponding to shares in profit of the holdings from the original acquisition date based on the equity method
rather than historical acquisition values. According to US GAAP, not only should shareholders' equity be adjusted against the share in profit/loss but also goodwill and depreciation should be taken
into account from the original acquisition date.

h)Accounting for acquisitions

The
acquisition of Société Européene de Communications S.A. in 2000 was conducted via a non-cash share issue, in which newly
issued shares in Tele2 were offered in exchange for the outstanding shares in Société Européene de Communications S.A. According to Swedish accounting
principles, the acquisition price is calculated at a value corresponding to the share price of Tele2 on the transaction date. According to US GAAP, the acquisition price should be set at the share
price on the date at which the offer was announced. There are also certain differences between acquired net assets according to US GAAP and Swedish accounting principles.

F-66

---

i)Deferred tax liability

According
to US GAAP, deferred taxes should be reported for all temporary differences apart from certain exceptions. The reversal of deferred tax liabilities as a result of changes in
circumstances is done restrictively. According to Swedish accounting principles, changes in circumstances can be taken into account in the assessment. In conjunction with the liquidation of
Société Européene de Communications S.A. in 2001, there was no longer any differences vis-a-vis US GAAP.

j)Alecta refund

According
to Swedish accounting principles, the value of the refund received by Tele2 from Alecta should be reported via the income statement in 2000. According to US GAAP, only the cash
portion received should be reported as income.

k)Changes in accounting principles

According
to Swedish accounting principles, changes in accounting principles are reported through a recalculation of the opening shareholders' equity as if the new principles had been
applied already when the transaction arose. According to US GAAP, the change is reported across the income statement when changes in principles are made.

l)Hedge accounting

According
to US GAAP, to qualify a hedge for accounting purposes, the hedge has to comply with very strict criteria in terms of the documentation of hedge relationship with hedged item
and proof of its effectiveness. Swedish accounting principles do not require compliance with this strict criteria. Effective 2002, the company has documented the hedge and proved the effectivness of
the hedge and thus there is no difference vis-à-vis US GAAP.

Stock options:

In accordance with Swedish accounting principles, the option liability for the 1997 incentive program was dissolved in its entirety in 2000 as a result of the
decision to settle the option through an issue of convertibles. According to US GAAP, depending on the conditions of the option program, a liability
should be calculated based on the difference between the market value of the underlying shares and the exercise price. During 2002, stock options were issued as part of a new incentive program. This
program is not reported as an expense in the income statement. A valuation in accordance with the Black-Scholes option model would have the following effect on profit/loss according to US GAAP. The
calculation is based on a risk-free rate of interest of 4.7% (2001: 5.0%, 2000: 5.3%), no dividend (due to the uncertainty as to whether or not the Board will propose a dividend),
volatility of 57.9% (2001: 45.5%, 2000: 40%) and the fact that the options expire on April 20, 2003 and September 1, 2005.

|                                                           |  | Year ended December 31,
|---------------------------------------------------------- |  | -----------------------
|
|
|Profit/loss for the year, reported as above                |  | (900                   
|Adjusted earnings per share after full dilution            |  | SEK (7.89              
|Profit/loss for the year, pro forma                        |  | (904                   
|Adjusted earnings per share after full dilution, pro forma |  | SEK (7.92              

F-67

---

Significant acquisitions during 2000:

The following table shows the profit/loss for 2000 pro forma in accordance with US GAAP as if the acquisition of SEC had been conducted on January 2000.

Unaudited

December 31,
2000(SEK in millions)Revenues

16,273Income/loss before tax

(2,071
)Net income/loss for the year

(2,661
)Earnings per share, basic and diluted, SEK

(18.40
)Number of shares before and after full conversion

144,598,726
)


Summarized financial information

Summarized financial information on Société Européenne de Communication S.A.

Summarized income statement

Nine months
period ended
September 30,
2000(SEK in millions)Revenues

3,905Cost of revenues (excl depreciation and amortization)

(3,163
)Loss before taxation

(1,305
)Net loss

(1,305
)


Summarized balance sheet

September 30,
2000(SEK in millions)Current assets

4,980Non current assets

3,118Current liabilities

3,505Non-current liabilities

1,258


Segment reporting in accordance with US GAAP

For US GAAP reporting purposes, the Company's market areas constitute its operating segments as a result of the fact that this is the level for which there is
segment management. For purposes of US GAAP segment disclosures, the reportable measure of profit or loss for the segment is EBIT. The segment disclosures in Note 1, Note 2 and
Note 30 include amounts that would not be reported for US GAAP.

F-68

---

Comprehensive income

Comprehensive income includes profit/loss for the year and changes in translation differences.

Year ended December 31,Comprehensive income according to US GAAP2000

2001

2002(SEK in millions)Profit/loss according to U.S. GAAP

(900
)
763

1,692Changes in translation differences according to US GAAP

785

2,144

(1,181
)Comprehensive Income based on U.S. GAAP

(115
)
2,907

511


Accumulated other comprehensive income:

2000

2001

2002(SEK in millions)Accumulated other comprehensive income according to US GAAP, Jan 1.

(22
)
763

2,907Change in translation differences according to U.S. GAAP

785

2,144

(1,181
)Accumulative Comprehensive Income based on U.S. GAAP, Dec 31

763

2,907

1,726


Advertising expenses:

Total advertising expenses for the year amount to SEK 979 million (2001: 1,031 million and 2000: 630 million).

Classifications

Equity method of accounting is used to account for associates. Under Swedish GAAP, result of associated companies is presented at a pre-tax level in
the income statement with
separate disclosure of the Company's share of the associate's income tax benefit/expense. Under US GAAP, result of associated companies is presented at a post-tax level. However, in the
years 2000-2002, no income tax expense or benefit have been recognized by Tele2's associates.

The
accompanying statements of cash flows are prepared in a format consistent with SFAS No. 95 "Statements of cash flows", except for the presentation of blocked accounts
(restricted cash) as liquid funds. Under US GAAP restricted cash should be disclosed separately from cash and cash equivalents in the statement of cash flows as a change in cash flows from investing
activities. Under Swedish GAAP restricted cash has been presented with cash and bank as liquid fund in the statement of cash flows. These differences between Swedish and US GAAP are included in the
following table.

At December 31,Balance Sheets2001

2002(SEK in millions)Swedish GAAPCash and bank

2,275

2,473US GAAPCash and bank

1,378

1,603Restricted cash

897

870


F-69

---

Year ended December 31,Statements of cash flows2000

2001

2002(SEK in millions)Net increase in cash (Swedish GAAP):

1,090

764

198Adjustments:.Cash flows from investing activitiesChange in restricted cash

(434
)
(463
)
27Net increase in cash (US GAAP)

656

301

225


Effects of new accounting Pronouncements:

US GAAP:

In June 2001, the Financial Accounting Standards Board (FASB) issued a Statement of Financial Accounting Standards No. 143 (SFAS 143),
entitled "Accounting for Asset Retirement Obligations". SFAS 143 states when and how accounting for liabilities and expenses attributable to the retirement o fixed assets should be done. Tele2
will apply SFAS 143 as of January 1, 2003. The application of this statement is not expected to have any significant effect on Tele2's earnings and financial position.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". SFAS 146 addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity". SFAS 146 requires that a liability for a cost associated with an exit or disposal activity
be recognized and measured initially at fair value only when the liability is incurred. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. We do not expect the adoption of SFAS 146 to have a material impact on our results of operations, financial position and cash flows.

In
November 2002, the FASB issued Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others". FIN 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees, such as standby letters of credit. It also clarifies that
at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under the guarantee and must disclose that
information in its interim and annual financial statements.FIN 45 will be effective to the Company on a prospective basis to guarantees issued or modified after December 31,2002. The disclosure
requirements in this Interpretation are effective for financial statements of periods ending after December 15, 2002. Tele 2 AB has not determined the impact, if any, that this statement will
have on its consolidated financial position or results of operations.

In
December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based CompensationTransition and Disclosure Amendment of FASB Statement No. 123.
SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation" to provide alternative methods of transition for an entity that voluntarily changes to the fair value methods of
accounting for stock-based employee compensation. Tele2 AB accounts for stock-based compensation according to APB 25 and has not adopted the new rules for volunatry transition to the fair value
based method of accounting for stock-based employee compensation.

In
January 2003, the Emerging Issues Task Force issued EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables". EITF 00-21
addresses the issue of (1) how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting; and

F-70

---

(2) how
arrangement consideration should be measured an allocated to the separate units of accounting in the arrangement. EITF 00-21 is effective for revenue arrangements
entered into in fiscal periods beginning after June 15, 2003. The Company is in the process of assessing the impact of adopting EITF 00-21.

In
January 2003, the FASB issued FIN 46 "Consolidation of Variable Interest Entities, and Interpretation of ARB 51". FIN 46 addresses the consolidation of
entities for which control is achieved through means other than through voting rights ("variable interest entities" or "VIE") by clarifying the application of ARB 51 to certain entities in which
equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from others. FIN 46 provides guidance on how to determine when and which business enterprise should consolidate the VIE. In addition, FIN 46
requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures. FIN 46 is required to be immediately applied by
all entities with a variable interest in a VIE created after January 31, 2003. A public entity with a variable interest in a VIE created before February 1, 2003 is required to apply
FIN 46 to that entity no later than the beginning of the first interim or annual period beginning after June 15, 2003. The Company is in the process of assessing the impact of adopting
FIN 46.

F-71

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UNAUDITED CONDENSED CONSOLIDATED  INTERIM FINANCIAL STATEMENTS OF  SOCIÉTÉ EUROPÉENNE DE COMMUNICATION S.A.        As of and for the nine months ended September 30, 2000

F-72

---



SOCIÉTÉ EUROPÉENNE DE COMMUNICATION S.A.i)UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETii)AS OF SEPTEMBER 30

|                                           |                                    | Notes                         |   | September 30, 2000 |          
|------------------------------------------ | ---------------------------------- | ----------------------------- | - | ------------------ | ---------
|
|ASSETS                                     |                                    |                               |   |                    |          
|NON-CURRENT ASSETS                         |                                    |                               |   |                    |          
|                                           | Tangible fixed assets              |                               | 3 |                    | 267,550  
|                                           | Intangible assets, net             |                               |   |                    | 352,687  
|                                           | Licenses, net                      |                               |   |                    | 62,262   
|                                           | Deferred costs, net                |                               |   |                    | 5,783    
|                                           | Equity investments                 |                               | 4 |                    | 30,820   
|                                           |                                    |                               |   |                    |          
|TOTAL NON-CURRENT ASSETS                   |                                    |                               |   | 719,102            |          
|                                           |                                    |                               |   |                    |          
|CURRENT ASSETS                             |                                    |                               |   |                    |          
|                                           | Current investments                |                               | 5 |                    |         
|                                           | Trade debtors and unbilled revenue |                               |   |                    | 263,092  
|                                           | Receivables from affiliates        |                               |   |                    | 15,531   
|                                           | Inventory                          |                               |   |                    | 28,747   
|                                           | Prepaids and other current assets  |                               |   |                    | 144,651  
|                                           | Cash and cash equivalents          |                               |   |                    | 696,598  
|                                           |                                    |                               |   |                    |          
|TOTAL CURRENT ASSETS                       |                                    |                               |   | 1,148,619          |          
|                                           |                                    |                               |   |                    |          
|TOTAL ASSETS                               |                                    | 8                             |   | 1,867,721          |          
|                                           |                                    |                               |   |                    |          
|SHAREHOLDERS' EQUITY AND LIABILITIES       |                                    |                               |   |                    |          
|SHAREHOLDERS' EQUITY                       |                                    |                               |   |                    |          
|                                           | Share capital, no par value        |                               | 6 |                    | 1,678,927
|                                           | Foreign currency reserve           |                               |   |                    | (536     
|                                           | Retained losses                    |                               |   |                    | (605,819 
|                                           | Loss for the period                |                               |   |                    | (303,551 
|                                           |                                    |                               |   |                    |          
|TOTAL SHAREHOLDERS' EQUITY                 |                                    |                               |   | 769,021            |          
|                                           |                                    |                               |   |                    |          
|LIABILITIES                                |                                    |                               |   |                    |          
|                                           | NON-CURRENT LIABILITIES            |                               |   |                    |          
|                                           |                                    | Debt and other financing      |   |                    |          
|                                           |                                    | Other non-current liabilities |   |                    |          
|                                           |                                    |                               |   |                    |          
|TOTAL NON-CURRENT LIABILITIES              |                                    |                               |   | 290,239            |          
|                                           |                                    |                               |   |                    |          
|                                           | CURRENT LIABILITIES                |                               |   |                    |          
|                                           |                                    | Debt and other financing      |   |                    |          
|                                           |                                    | Trade creditors               |   |                    |          
|                                           |                                    | Amounts due to affiliates     |   |                    |          
|                                           |                                    | Accrued expenses              |   |                    |          
|                                           |                                    | Other current liabilities     |   |                    |          
|                                           |                                    |                               |   |                    |          
|TOTAL CURRENT LIABILITIES                  |                                    |                               |   | 808,461            |          
|                                           |                                    |                               |   |                    |          
|TOTAL LIABILITIES                          |                                    |                               |   | 1,098,700          |          
|                                           |                                    |                               |   |                    |          
|TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |                                    |                               |   | 1,867,721          |          
|                                           |                                    |                               |   |                    |          

The
accompanying notes are an integral part of this unaudited condensed consolidated balance sheet.

F-73

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SOCIÉTÉ EUROPÉENNE DE COMMUNICATION S.A.        UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000

|                                                                            |                                                             | Notes |   | For the nine months ended September 30, 2000 |         
|--------------------------------------------------------------------------- | ----------------------------------------------------------- | ----- | - | -------------------------------------------- | --------
|
|Revenues                                                                    |                                                             | 8     |   | 908,479                                      |         
|Operating expenses                                                          |                                                             |       |   |                                              |         
|                                                                            | Cost of revenues (excluding depreciation and amortization)  |       |   |                                              | (735,942
|                                                                            | Sales and marketing                                         |       |   |                                              | (546,238
|                                                                            | General and administrative                                  |       |   |                                              | (128,380
|                                                                            | Depreciation and amortization                               |       |   |                                              | (71,559 
|                                                                            |                                                             |       |   |                                              |         
|OPERATING LOSS BEFORE FINANCING AND TAXES                                   |                                                             | 8     |   | (573,640                                     | )       
|                                                                            | Interest expense and financial chargesexternal             |       |   |                                              | (21,301 
|                                                                            | Interest expenseaffiliates                                 |       |   |                                              | (8,128  
|                                                                            | Interest and other income                                   |       |   |                                              | 16,609  
|                                                                            | Exchange gain/(loss)                                        |       |   |                                              | 6,609   
|                                                                            | Share of associates losses                                  |       | 4 |                                              | (157    
|                                                                            | Partial disposal of underlying assets of current investment |       | 5 |                                              | (6,482  
|                                                                            | Disposal of current investment                              |       | 5 |                                              | 282,971 
|                                                                            |                                                             |       |   |                                              |         
|LOSS BEFORE TAXATION                                                        |                                                             |       |   | (303,519                                     | )       
|                                                                            | Income tax charge                                           |       |   |                                              | (32     
|                                                                            |                                                             |       |   |                                              |         
|LOSS AFTER TAXATION                                                         |                                                             |       |   | (303,551                                     | )       
|                                                                            |                                                             |       |   |                                              |         
|Weighted average number of shares outstanding during the period (thousands) |                                                             |       |   | 572,220                                      |         
|                                                                            |                                                             |       |   |                                              |         
|Basic and diluted loss per shareDEM                                        |                                                             |       |   | (0.53                                        | )       
|                                                                            |                                                             |       |   |                                              |         

The accompanying notes are an integral part of this unaudited condensed consolidated statement of profit and loss.

F-74

---



SOCIÉTÉ EUROPÉENNE DE COMMUNICATION S.A.        UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000

|                                                                       |                                           | For the nine months
ended September 30,
2000 |        
|---------------------------------------------------------------------- | ----------------------------------------- | -------------------------------------------- | -------
|
|NET CASH USED BY OPERATING ACTIVITIES                                  |                                           | (453,618                                     | )      
|CASH FLOW FROM INVESTING ACTIVITIES                                    |                                           |                                              |        
|                                                                       | Impact of Transcom Europe deconsolidation |                                              | (7,950 
|                                                                       | Purchase of tangible fixed assets         |                                              | (76,776
|                                                                       | Proceeds from the sale of fixed assets    |                                              | 6,066  
|                                                                       | Proceeds from sale of current investment  |                                              | 945,744
|                                                                       |                                           |                                              |        
|NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES                       |                                           | 867,084                                      |        
|                                                                       |                                           |                                              |        
|CASH FLOW FROM FINANCING ACTIVITIES                                    |                                           |                                              |        
|Proceeds from the issuance of debt                                     |                                           | 54,167                                       |        
|Advances from shareholders                                             |                                           |                                             |        
|Cash received from non-consolidated subsidiary                         |                                           | 16,294                                       |        
|Repayment of debt                                                      |                                           | (13,131                                      | )      
|                                                                       |                                           |                                              |        
|NET CASH PROVIDED BY FINANCING ACTIVITIES                              |                                           | 57,330                                       |        
|                                                                       |                                           |                                              |        
|CASH EFFECT OF EXCHANGE RATE CHANGES                                   |                                           | 1,007                                        |        
|                                                                       |                                           |                                              |        
|NET INCREASE IN CASH AND CASH EQUIVALENTS                              |                                           | 471,803                                      |        
|Cash and cash equivalents, beginning of period                         |                                           | 224,795                                      |        
|                                                                       |                                           |                                              |        
|Cash and cash equivalents, ending                                      |                                           | 696,598                                      |        
|                                                                       |                                           |                                              |        
|The Group performed the following non-cash activities:                 |                                           |                                              |        
|Tangible fixed assets acquired through vendor loans and finance leases |                                           | 9,396                                        |        

The accompanying notes are an integral part of this unaudited condensed consolidated statement of cash flows.

F-75

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SOCIÉTÉ EUROPÉENNE DE COMMUNICATION S.A.        UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000

|                                           |  | Notes |  | For the nine months
ended September 30,
2000 |  
|------------------------------------------ |  | ----- |  | -------------------------------------------- | -
|
|Opening balance                            |  |       |  | 1,072,003                                    |  
|Convertible shareholder funding            |  |       |  |                                             |  
|Interest on 1999 convertible loan facility |  |       |  |                                             |  
|Translation adjustments                    |  |       |  | (1,281                                       | )
|Loss for the period                        |  |       |  | (303,551                                     | )
|Gain on Transcom Europe transaction        |  | 4     |  | 1,850                                        |  
|                                           |  |       |  |                                              |  
|Closing balance                            |  |       |  | 769,021                                      |  
|                                           |  |       |  |                                              |  

The accompanying notes are an integral part of this unaudited condensed consolidated statement of changes in shareholders' equity.

F-76

---



SOCIÉTÉ EUROPÉENNE DE COMMUNICATION S.A.        NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS        AS OF SEPTEMBER 30, 2000

1.     ORGANIZATION

In March 2000, the Group agreed, with effect from March 31, 2000, to merge its call centre activities with those of Kinnevik, leading to the
creation of a combined entity to be called Transcom World Wide SA (see note 4). Following this merger, the Group owns 37.4% of Transcom World Wide SA.

On
August 3, 2000 the Group sold its shareholding of Comvik International Norge AS, along with its remaining shareholding in NetCom ASA, to Telia AB for proceeds of DEM
719 million, recognising a gain on the sale of DEM 283 million (see note 5)

On
July 24, 2000, the Company announced an offer by NetCom AB, a related party, for the total issued and outstanding share capital of the Company. The agreement was finalised on
October 2, 2000 and resulted in NetCom AB owning 99.7% of the share capital of the Company (see note 9).

2.     SIGNIFICANT ACCOUNTING POLICIES

(a)Presentation and basis of interim financial statements

These
unaudited condensed consolidated interim financial statements of the Company and its subsidiary companies (the "Group") are prepared in accordance with IAS 34 Interim Financial
Reporting. The condensed consolidated interim financial data as of September 30, 2000 and for the nine months ended September 30, 2000 and 1999 is unaudited. However, in the opinion of
the Company, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of the interim periods. The accounting policies
used in the preparation of the interim financial statements are consistent with those used in the audited annual financial statements for the year ended December 31, 1999 except as discussed
below. The information included within these condensed interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 1999.

(b)Equity investments

Entities
over which the Group has significant influence but does not control, are accounted for using the equity method. The Group's share of the net assets of such companies is
presented under "Equity investments", the Group's share of their loss before tax is recorded under "Share of loss of equity investments" and the Group's share of taxation is recorded under "Taxation".
Provisions are recorded for long term impairment in value where appropriate.

F-77

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3.     TANGIBLE FIXED ASSETS

Movements during the period were as follows

|                         |                                                           | Land and Buildings |        | Telephone Network equipment |         | Public Access Terminals |        | Leasehold Improvements |        | Assets in the course of construction |        | Office and Computer equipment |        | Total |        
|------------------------ | --------------------------------------------------------- | ------------------ | ------ | --------------------------- | ------- | ----------------------- | ------ | ---------------------- | ------ | ------------------------------------ | ------ | ----------------------------- | ------ | ----- | -------
|
|Cost                     |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|                         | Opening balance January 1, 2000                           |                    | 7,154  |                             | 210,747 |                         | 22,217 |                        | 16,026 |                                      | 5,951  |                               | 44,961 |       | 307,056
|                         | Additions                                                 |                    | 918    |                             | 49,350  |                         | 1,252  |                        | 3,407  |                                      | 1,179  |                               | 22,420 |       | 78,526 
|                         | Disposals                                                 |                    | (2,791 | )                           | (2,967  | )                       | (1,037 | )                      | (2,601 | )                                    |       |                               | (402   | )     | (9,798 
|                         | Deconsolidation of Transcom Europe assets                 |                    |       |                             | (4,268  | )                       |       |                        | (8,013 | )                                    |       |                               | (8,128 | )     | (20,409
|                         | Exchange rate movements                                   |                    | (2     | )                           | 726     |                         | 8      |                        | 2      |                                      |       |                               | 344    |       | 1,078  
|                         | Other adjustments                                         |                    | 526    |                             |        |                         | 6,441  |                        | 503    |                                      | (5,776 | )                             | (1,694 | )     |       
|                         |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|                         | Closing balance, September 30, 2000                       |                    | 5,805  |                             | 253,588 |                         | 28,881 |                        | 9,324  |                                      | 1,354  |                               | 57,501 |       | 356,453
|                         |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|Accumulated depreciation |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|                         | Opening balance, January 1, 2000                          |                    | 527    |                             | 36,147  |                         | 8,990  |                        | 1,691  |                                      |       |                               | 8,378  |       | 55,733 
|                         | Charge for the year                                       |                    | 754    |                             | 24,486  |                         | 7,081  |                        | 950    |                                      |       |                               | 11,013 |       | 44,284 
|                         | Disposals                                                 |                    | (762   | )                           | (978    | )                       | (910   | )                      | (227   | )                                    |       |                               | (855   | )     | (3,732 
|                         | Deconsolidation of Transcom Europe assets                 |                    |       |                             | (1,146  | )                       |       |                        | (904   | )                                    |       |                               | (5,506 | )     | (7,556 
|                         | Exchange rate movements                                   |                    |       |                             | 74      |                         | (6     | )                      |       |                                      |       |                               | 106    |       | 174    
|                         | Other adjustments                                         |                    | 60     |                             |        |                         | 1,306  |                        | 256    |                                      |       |                               | (1,622 | )     |       
|                         |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|                         | Closing balance, September 30, 2000                       |                    | 579    |                             | 58,583  |                         | 16,461 |                        | 1,766  |                                      |       |                               | 11,514 |       | 88,903 
|                         |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|                         | Net book value, January 1, 2000                           |                    | 6,627  |                             | 174,600 |                         | 13,227 |                        | 14,335 |                                      | 5,951  |                               | 36,583 |       | 251,323
|                         |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|                         | Net book value, September 30, 2000                        |                    | 5,226  |                             | 195,005 |                         | 12,420 |                        | 7,558  |                                      | 1,354  |                               | 45,987 |       | 267,550
|                         |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        
|                         | Leased assets included in the above at September 30, 2000 |                    |       |                             | 3,343   |                         |       |                        |       |                                      |       |                               | 352    |       | 3,695  
|                         |                                                           |                    |        |                             |         |                         |        |                        |        |                                      |        |                               |        |       |        

---

Footnotes to above table:

4.     EQUITY INVESTMENTS

On March 31, 2000, Transcom Europe, a 75% owned subsidiary of the Company, issued 1,255 new shares to Kinnevik BV, an affiliated company, in exchange for
100% of the shares of Transcom Europe Holding BV. There was no cash or other consideration in the transaction. As a result of this transaction, the Company's holding in Transcom World Wide S.A.
(previously Transcom Europe) decreased from 75% to 37.4%. As of this date Transcom World Wide has been accounted for using the equity method as detailed below.

F-78

---



(DEM '000s)Equity in net asset value of Transcom Europe at March 31, 2000(ii)

30,982Equity loss from March 31, 2000 to September 30, 2000:Share of equity investment loss before taxation

(157
)Share of equity investment taxation

(5
)Net share of equity investment loss

(162
)Equity in Transcom World Wide S.A. net assets at September 30, 2000

30,820




(DEM '000s)Equity in net assets after contribution (37.4%)

30,982Less net assets prior to contribution (75%)

(21,849
)Less minority interest

(7,283
)Gain on contribution recorded in equity

1,850


5.     CURRENT INVESTMENTS

On February 1, 2000, Comvik International Norge AS sold 2,500,000 of its shares in NetCom ASA, reducing its investment to 15.9%.

The
carrying value of the investment in Comvik accordingly was reduced by DEM 169,592,000, comprising:



On
August 3, 2000, the Group sold its shares in Comvik International Norge AS to Telia AB for net proceeds of DEM 719 million, recognising a gain of DEM 283 million.
The gain was calculated as the difference between the proceeds of DEM 719 million, and the holding value of DEM 516 million adjusted for the write-off of the tax provision
DEM 63 million referred to above as a result of the transaction and loans forgiven by Comvik of DEM 17 million.

6.     SHAREHOLDERS' EQUITY

i) (a) Share Capital

|                                                  |  | Ordinary 'A' shares |   | Ordinary 'B' shares |  | Total shares
|------------------------------------------------- |  | ------------------- | - | ------------------- |  | ------------
|Opening balance at January 1, 2000                |  | 519,868,414         |   | 52,351,758          |  | 572,220,172 
|Conversion of class A shares to class B shares(i) |  | (56,000,000         | ) | 56,000,000          |  |            
|                                                  |  |                     |   |                     |  |             
|Closing balance at September 30, 2000             |  | 463,868,414         |   | 108,351,758         |  | 572,220,172 
|                                                  |  |                     |   |                     |  |             

On
May 24, 2000, at the request of one of the Group's major shareholders, the Group converted 56,000,000 class A shares into 56,000,000 class B shares.

F-79

---

The
authorised share capital is DEM 3,000,000,000, comprising 1,100,000,000 class A shares and 1,000,000,000 class B shares with no par value.

ii) (b) Stock Options

On May 31, 2000, the Company granted to members of its board of directors and certain key managers the option to purchase a total amount of 3,768,000 SEC
class B shares. One-third of these options will vest on each of May 31, 2003, 2004 and 2005. These options will expire on May 31, 2006. The exercise price of the
options is SEK44.9 per SEC class B share.

1,192,000
options under existing schemes were cancelled during the first nine months of 2000 as a result of employees leaving the group.

In
June 2000, the May 17, 1998 variable scheme was modified to provide for granting of a fixed number of options on each vesting date at a determined exercise price as
detailed below. The remaining terms of the scheme were not modified.

Date

Number of options

Exercise priceAugust 1, 1998

2,410,551

$
0.99August 1, 1999

2,410,551

$
1.57August 1, 2000

3,603,021

$
1.09


No
compensation expense has been recorded in the statement of profit and loss in relation to options granted during the period and the modifications described above. As of
September 30, 2000 no options relating to these plans have been exercised.

Management
is currently reviewing the effect of the NetCom AB acquisition of the Company (see footnotes 1 and 9) on the Company's stock option plans.

7.     DEBT AND OTHER FINANCING

Certain of the Company's loans contain change of ownership clauses. As a result of the NetCom acquisition of the Company (see footnote 9), the Company is
in violation of such clauses. Waivers have been obtained for all debt and trade credit facilities with the exception of the following, where waivers are being sought:

Balance as of September 30, 2000(DEM '000)ABN Amro € 20,000,000 trade credit facility

25,426CIBC World Markets Plc and ING Barings € 128,000,000 revolving credit facility

250,346


F-80

---

8.     SEGMENTAL INFORMATION

Nine months ended September 30, 2000 (DEM '000s)

|                                                    |  | 3C     |   | Tele2    |   | Tango   |  | Intelli Net |   | Transac |   | Trans com Europe |   | C3      |   | Holding Co's/ other |   | Elim       |   | Consolidated 2000 |  
|--------------------------------------------------- |  | ------ | - | -------- | - | ------- |  | ----------- | - | ------- | - | ---------------- | - | ------- | - | ------------------- | - | ---------- | - | ----------------- | -
|REVENUE                                             |  |        |   |          |   |         |  |             |   |         |   |                  |   |         |   |                     |   |            |   |                   |  
|External sales                                      |  | 21,538 |   | 751,523  |   | 55,144  |  | 8,719       |   | 7,557   |   | 1,393            |   | 62,544  |   | 61                  |   |           |   | 908,479           |  
|Inter-divisional sales                              |  | 2,343  |   | 49,078   |   | 1,105   |  |            |   | 1,410   |   | 30,640           |   |        |   |                    |   | (84,576    | ) |                  |  
|                                                    |  |        |   |          |   |         |  |             |   |         |   |                  |   |         |   |                     |   |            |   |                   |  
|Total revenue                                       |  | 23,881 |   | 800,601  |   | 56,249  |  | 8,719       |   | 8,967   |   | 32,033           |   | 62,544  |   | 61                  |   | (84,576    | ) | 908,479           |  
|Operating profit/ (loss) before financing and taxes |  | (2,783 | ) | (484,487 | ) | 7,520   |  | (17,278     | ) | (1,868  | ) | (102             | ) | (19,410 | ) | (34,239             | ) | (20,993    | ) | (573,640          | )
|                                                    |  |        |   |          |   |         |  |             |   |         |   |                  |   |         |   |                     |   |            |   |                   |  
|Segment total assets                                |  | 42,868 |   | 771,654  |   | 132,108 |  | 25,983      |   | 56,823  |   |                 |   | 47,775  |   | 3,343,502           |   | (2,552,992 | ) | 1,867,721         |  

9.     SUBSEQUENT EVENTS

In October 2000, the NetCom Group acquired 81.9% of the total issued share capital in S.E.C. for SEK 27.9 billion, bringing the total percentage of
S.E.C. owned by NetCom to 99.7%. NetCom previously held 17.8% of S.E.C. The terms of the offer were one NetCom class A share or one NetCom class B share, at the seller's election, in
exchange for every 11.5 S.E.C. class A shares and one NetCom class B share in exchange for every 11.5 S.E.C. class A and class B shares held in combination. The new shares
in NetCom were issued on October 2, 2000, resulting in 40,748,480 new shares, of which 11,911,315 are class A shares and 28,837,165 are class B shares. The acquisition will be
accounted for under the purchase method of accounting.

On
October 16, 2000 the SEC shares were delisted from the Nasdaq stock exchange. On November 3, 2000, the Company's shares ceased trading on the Luxembourg and Frankfurt
stock exchanges and the OM Stockholm Exchange.

10.   RECONCILIATION TO US GAAP

The unaudited condensed consolidated financial statements of the Group have been prepared in accordance with IAS. The following differences between IAS and US
GAAP impact the reconciliation of the Group's loss after taxes and balance sheet to US GAAP.

a)    Intangible
assets included in the balance sheet mainly represent the difference between the fair value of the Contribution as determined by an independent financial
advisor and the fair value of the separable net assets contributed. This amount, which was agreed upon by the shareholders on the date of the Contribution, is first attributable to the recognition of
the fair value of the licenses of the Company: the remainder is attributable to goodwill. Under US GAAP, both the Kinnevik Controlled Assets and the Millicom Controlled Assets are required to be
recorded by the Company at historic book value. Summarized below is the amount of the intangible asset value that would not be recorded under US GAAP as of September 30, 2000 and
December 31, 1999 (DEM thousands):

License

50,000Goodwill

418,381468,381


b)    As
referred to in a) above, under US GAAP the step-up in the value of the intangible assets would not have been permitted at the date of Contribution. In the
income statement, these intangible

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assets
are being amortized over periods up to 15 years in accordance with IAS. Under US GAAP, the step-up would not be permissible and, hence, the related amortization would not
have been charged.

Nine months ended
September 30, 2000(DEM '000s)Write-back of goodwill and license Amortization

23,766


c)     Deferred
costs include start-up costs incurred in connection with the formation of the businesses in previous years. In 1999 and previous years, the Company
had capitalized these costs and was amortizing them over a period of 5 years under then existing IAS. IAS 38 "Intangible assets", effective for periods beginning on or after
July 1, 1999, required the Company to write off all previously capitalized start-up costs and to expense further costs as incurred. Accordingly, the Company wrote off
start-up costs carried in the December 31, 1999 balance sheet, totaling DEM 8,796,000 on January 1, 2000. Under US GAAP, start-up costs are expensed as incurred
and as such were written off in previous periods. Accordingly, an adjustment to reverse the Company's write-off under IAS 38 has been made for US GAAP purposes.

d)    The
Company grants stock options to employees. Under IAS, no compensation expense is recorded. Under US GAAP Accounting Principles Board Opinion No. 25 "Accounting
for Stock Issued to Employees," compensation expense is required to be recorded. The following is the amount of compensation (benefit)/expense to be recorded:

Nine months ended
September 30, 2000(DEM '000s)Compensation (benefit)/expense for stock options

(9,435
)


Reconciliation of loss after taxes

The above items give rise to the following differences in net loss recorded under US GAAP:

Nine months ended
September 30, 2000(DEM '000s except loss per share)Loss after taxes under IAS per the financial statements

(303,551
)Items decreasing or increasing reported loss:Goodwill and license amortization, written back

23,766Additional start-up costs capitalized during the period

8,796Compensation benefit/(expense) for stock options

9,435Additional gain on Comvik sale

4,563Comvik net equity income

1,062Loss after taxes under US GAAP

(255,929
)Basic and diluted loss per shareDEM

(0.45
)


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Balance sheet reconciliation

The following significant differences arise between the IAS to US GAAP balance sheet as of September 30, 2000:

|                                           |                                          | US GAAP                       |          
|------------------------------------------ | ---------------------------------------- | ----------------------------- | ---------
|
|Non-current assets                         |                                          |                               |          
|                                           | Tangible fixed assets, net               |                               | 267,550  
|                                           | Intangible assets, net                   |                               | 352,687  
|                                           | Investment in affiliate                  |                               |         
|                                           | Licenses, net                            |                               | 62,262   
|                                           | Deferred costs, net                      |                               | 5,783    
|                                           | Equity investments                       |                               | 30,820   
|                                           |                                          |                               |          
|                                           |                                          | Total non-current assets      |          
|                                           |                                          |                               |          
|                                           | Trade debtors and unbilled revenues, net |                               | 263,092  
|                                           | Receivables from affiliates              |                               | 15,531   
|                                           | Inventory                                |                               | 28,747   
|                                           | Prepaid and other current assets         |                               | 144,651  
|                                           | Cash and cash equivalents                |                               | 696,598  
|                                           |                                          |                               |          
|                                           |                                          | Total current assets          |          
|                                           |                                          |                               |          
|                                           | TOTAL ASSETS                             |                               | 1,867,721
|                                           |                                          |                               |          
|Shareholders' equity and liabilities       |                                          |                               |          
|                                           | Common stock                             |                               | 1,678,927
|                                           | Additional paid-in-capital               |                               |         
|                                           | Foreign currency reserve / other         |                               | (536     
|                                           | Deferred stock option compensation       |                               |         
|                                           | Retained losses                          |                               | (909,370 
|                                           |                                          |                               |          
|                                           |                                          | Total shareholders' equity    |          
|                                           |                                          |                               |          
|Liabilities                                |                                          |                               |          
|Non-current liabilities                    |                                          |                               |          
|                                           | Debt and other financing                 |                               | 289,772  
|                                           | Deferred tax liability                   |                               |         
|                                           | Other non-current liabilities            |                               | 467      
|                                           |                                          |                               |          
|                                           |                                          | Total non-current liabilities |          
|                                           |                                          |                               |          
|Current liabilities                        |                                          |                               |          
|                                           | Debt and other financing                 |                               | 152,922  
|                                           | Trade creditors                          |                               | 295,620  
|                                           | Amounts due to affiliates                |                               | 90,827   
|                                           | Accrued expenses                         |                               | 216,287  
|                                           | Other current liabilities                |                               | 52,805   
|                                           | Current tax liability                    |                               |         
|                                           |                                          |                               |          
|                                           | Total current liabilities                |                               | 808,461  
|                                           |                                          |                               |          
|                                           |                                          | Total liabilities             |          
|                                           |                                          |                               |          
|TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |                                          | 1,867,721                     |          
|                                           |                                          |                               |          

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Additional stock option disclosures

As disclosed in footnote 6, the Company granted options to purchase a total of 3,768,000 S.E.C. class B shares. These options are non compensatory
for US GAAP purposes.

On
May 17, 1998 the Group granted to an individual who is a key executive officer and a member of its Board of Directors the option to purchase a number of S.E.C. class B
shares equal to an amount of 0.766% of the total S.E.C. shares outstanding on each of August 1, 1998, August 1, 1999 and August 1, 2000. These options expire on July 31,
2002. Previously, the exercise price and number of shares of the option was variable and thus not known at the time of grant. As mentioned in footnote 6, both the number of shares and exercise
price of the options became fixed. Under US GAAP, S.E.C. was required to record compensation expense associated with these options prior to the modification. The estimated compensation cost as of
December 31, 1999 for US GAAP purposes, based on a market value established by recent limited trading ranges in the NASDAQ and Swedish public markets, amounted to DEM 76,826,904, of which
57,766,106 had been recorded in previous years. As a result of the modification, total compensation was fixed at DEM 48,331,297 and a credit to compensation expense of DEM (9,434,809) was recorded for
the nine months ended September 30, 2000.

Comvik International Norge AS and NetCom ASA

In November 1999 SEC acquired 100% of the share capital of Comvik International Norge AS (Comvik). On August 3, 2000, Comvik was sold to Telia AB as
described in Note 5. Under IAS, Comvik International Norge had been treated as fully owned subsidiary held for resale in the near future and had not been consolidated into the Group financial
statements. The subsidiary was treated as a current investment and held at the lower of cost and fair value prior to its sale in 2000.

Under
US GAAP, the consolidation of Comvik from January 1 through August 3, 2000 would affect the condensed consolidated statement of profit and loss as follows for the
nine months ended September 30, 2000:

(DEM '000s)Reversal of loss on partial sale of NetCom ASA

6,482Adjustment to gain on sale of Comvik

10,60817,090Comvik income statement adjustments:Other income

1,322Share of equity investment loss

(9,469
)Loss on partial sale of Netcom ASA

(3,318
)(11,465
)


Under
US GAAP, the NetCom ASA shares had been accounted for under the equity method. In the Comvik purchase price allocation, the excess of the purchase price allocated to Netcoma ASA in
excess of the Groups share in Netcom ASA's net assets have been allocated to goodwill and other intangible. These goodwill and intangibles assets are being amortized over an estimated composite useful
life of 10 years, resulting in DEM 7,835,000 in amortization expense for the nine months ended September 30, 2000 included in the share of equity investee pre tax loss recorded in the
adjustment to loss after taxes.

Under
US GAAP, the subsidiary was required to be consolidated with the purchase price allocated to the fair value of the underlying assets and liabilities of Comvik as of the acquisition
date.

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---

The
purchase price in 1999 would have been allocated as follows:

(DEM '000s)Investment in Netcom ASA

1,107,269Other assets and liabilities

3,564Deferred tax liability

(311,141
)Total purchase price

799,692


Additional recent accounting pronouncements disclosures

In December 1999 the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No 101 "Revenue Recognition in Financial
Statements" ("SAB No 101"). SAB No 101 summarizes certain of the SEC staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. On
June 26, 2000, the SEC staff issued SAB 101B to provide registrants with additional time to implement guidance contained in SAB 101. SAB 101B delays the implementation date
of SAB No 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The Company is currently assessing the impact of the adoption of this
pronouncement on its financial statements.

In
June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. In July 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging ActivitiesDeferral of the Effective Date of SFAS No.133- an amendment of FASB Statement No. 133." Citing concerns
about companies' ability to modify their information systems in time to apply SFAS 133, the FASB delayed its effective date for one year, to fiscal years beginning after June 15, 2000
(January 1, 2001 for the Company). The Company is currently assessing the impact of the adoption of this pronouncement on its financial statements.

Comprehensive loss

The Group's statement of comprehensive income under US GAAP for the following periods is as follows:

Nine months ended
September 30, 2000(DEM '000s)Net loss after taxes under US GAAP

(255,929
)Other comprehensive loss:Foreign currency reserve

(536
)Comprehensive loss after taxes under US GAAP

(256,465
)


There
are no deferred taxes relating to the foreign currency reserve.

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