SECURITIES
  AND EXCHANGE COMMISSION

Washington,
  DC 20549

_________________

FORM
  20-F_________________

Annual
  report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  for the fiscal year ended December 31, 2005

Commission
  File Number: 001-12998TDC
  A/S(Exact Name of Registrant
  as Specified in its Charter)

DENMARK(Jurisdiction of Incorporation)

Nørregade
  21DK-0900 Copenhagen C,
  Denmark
  (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
|------------------------------------------- | -------------------------------------------------
|American Depositary
      Shares, each      | None                                             
|representing one half
      of one Ordinary |                                                  
|Share, 5 DKK par value                      |                                                  

Securities registered
  or to be registered pursuant to Section 12(g) of the Act:None

Securities for which
  there is a reporting obligation pursuant to Section 15(d) of the Act:None

The number of outstanding
  shares of each of the issuers classes of capital or common stock as of
  December 31, 2005 was:

216,459,540
  Ordinary Shares, 5 DKK par value each

Indicate by check mark
  if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
  the Securities Act.

YES
  ýNO
  o

If this report is an
  annual or transition report, indicate by check mark if the registrant is not
  required to file reports pursuant to Section 13 of 15(d) of the Securities Exchange
  Act of 1934.

YES
  oNO
  ý

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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
  ýNO
  o

Indicate by check mark
  whether the registrant is a large accelerated filer, an accelerated filer, or
  a non-accelerated filer. See the definition of accelerated filer and large
  accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated
  filerýAccelerated filero    
  Non-accelerated filero

Indicate by check mark
  which financial statement item the registrant has elected to follow.

Item 17ýItem
  18o

If this is an annual
  report, indicate by check mark whether the registrant is a shell company (as
  defined in Rule 12b-2 of the Exchange Act).

YES
  oNO
  ý

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TABLE
  OF CONTENTS

|                                                                |                                                                                    | Page
|--------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ----
|Introduction                                                    | 2                                                                                 
|Cautionary
      Statement Regarding Forward-Looking Statements | 2                                                                                 
|Item
      1                                                    | Identity
      of Directors, Senior Management and Advisers                        | 4   
|Item
      2                                                    | Offer
      Statistics and Expected Timetable                                      | 4   
|Item
      3                                                    | Key
      Information                                                              | 4   
|Item
      4                                                    | Information
      on the Company                                                   | 26  
|Item
      4A                                                   | Unresolved
      Staff Comments                                                    | 41  
|Item
      5                                                    | Operating
      and Financial Review and Prospects                                 | 42  
|Item
      6                                                    | Directors,
      Senior Management and Employees                                   | 70  
|Item
      7                                                    | Major
      Shareholders and Related Party Transactions                            | 76  
|Item
      8                                                    | Financial
      Information                                                        | 78  
|Item
      9                                                    | The
      Offer and Listing                                                        | 79  
|Item
      10                                                   | Additional
      Information                                                       | 81  
|Item
      10C                                                  | Material
      Contracts                                                           | 88  
|Item
      11                                                   | Qualitative
      and Quantitative Disclosures about Market Risk                   | 89  
|Item
      12                                                   | Description
      of Securities Other than Equity Securities                       | 92  
|Item
      13                                                   | Defaults,
      Dividend Arrearages and Delinquencies                              | 92  
|Item
      14                                                   | Material
      Modifications to the Rights of Security Holders and Use of Proceeds | 92  
|Item
      15                                                   | Controls
      and Procedures                                                      | 92  
|Item
      16A                                                  | Audit
      committee financial expert                                             | 92  
|Item
      16B                                                  | Code
      of Ethics                                                               | 93  
|Item
      16C                                                  | Principal
      Accountant Fees and Services                                       | 93  
|Item
      16E                                                  | Purchase
      of Equity Securities by the Issuer and Affiliated Purchasers        | 94  
|Item
      17                                                   | Financial
      Statements                                                         | 95  
|Item
      18                                                   | Financial
      Statements                                                         | 95  
|Item
      19                                                   | Exhibits                                                                           | 95  

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Introduction

We
  publish our financial statements in Danish kroner. Unless otherwise indicated,
  all amounts in this annual report are expressed in Danish kroner. References
  in this annual report to US dollars, USD, US$,
  $ or ¢ are to US currency, references to Danish
  kroner or DKK are to Danish currency, references to EUR, euro
  or € are to the currency of the member states of the European
  Union (with the exception of the United Kingdom, Denmark and Sweden) and references
  to CHF or Swiss francs are to Swiss currency. Solely
  for the convenience of the reader, certain amounts have been translated into
  US dollars at the rate of DKK 6.2985 to the US dollar, the official exchange
  rate of the Nationalbank of Denmark on December 31, 2005. Such translation should
  not be construed as a representation that the Danish kroner amounts represent,
  or have been or could be converted into, US dollars at that or any other rate.

Unless
  otherwise indicated, financial information in this Annual Report as of and for
  the years ended December 31, 2004 and 2005 has been prepared in accordance with
  International Financial Reporting Standards as adopted by the EU (IFRS). IFRS
  differ in certain significant respects from US GAAP. For a reconciliation of
  certain of our financial data to US GAAP, see note 33 to our consolidated financial
  statements.

As
  used in this annual report, unless the context otherwise requires or specifies,
  references to we , the group , us and our
  refer to TDC A/S and its subsidiaries.

Certain
  sections of this Annual Report contain forward-looking statements that are subject
  to risks and uncertainties.

Examples
  of such forward-looking statements include, but are not limited to:

| |  | statements
      containing projections of revenue, income (or loss), earnings per share,
      capital expenditures, dividends, capital structure or other net financials.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | statements
      of our plans, objectives or goals for future operations including those
      related to our products or services.                                        
| |  | statements
      of future economic performance.                                                                                                                           
| |  | statements
      of the assumptions underlying or relating to such statements.                                                                                             

Words
  such as believes, anticipates, expects,
  intends, aims and plans and similar expressions
  are intended to identify forward-looking statements but are not the exclusive
  means of identifying such statements. These statements are based on current
  plans, estimates and projections, and therefore undue reliance should not be
  placed on them.

By
  their very nature, forward-looking statements involve inherent risks and uncertainties,
  both general and specific, and risks exist that the predictions, forecasts,
  projections and other forward-looking statements will not be achieved. We caution
  that a number of important factors could cause actual results to differ materially
  from the plans, objectives, expectations, estimates and intentions expressed
  in such forward-looking statements made by us or on our behalf. These factors
  include, but are not limited to:

| |  | changes
      in applicable Danish and EU legislation                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increases
      in the interconnection rates we are charged by other carriers or decreases
      in the interconnection rates we are able to charge other carriers
| |  | decisions
      from the Danish National IT and Telecom Agency whereby the regulatory obligations
      of TDC are extended                                       
| |  | developments
      in competition within domestic and international communications solutions                                                                      
| |  | introduction
      of and demand for new services and products                                                                                                    
| |  | developments
      in the demand, product mix and prices in the mobile market, including marketing
      and customer-acquisition costs                           
| |  | developments
      in the market for multimedia services                                                                                                          
| |  | the possibilities
      of being awarded licenses                                                                                                                 
| |  | developments
      in our international activities, which also involve certain political risks                                                                    
| |  | investments
      in and divestitures of domestic and foreign companies.                                                                                          

2

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We
  caution that the above list of important factors is not exhaustive. When relying
  on forward-looking statements to make decisions with respect to TDC, investors
  and others should carefully consider the foregoing factors and other uncertainties
  and events. Such forward-looking statements speak only as of the date on which
  they are made and we do not undertake any obligation to update or revise any
  of them, whether as a result of new information, future events or otherwise.

A
  complete discussion of the risks related to our business is contained in the
  Risk Factors section of Item 3.

3

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Item
  1 Identity of Directors, Senior Management and Advisers

Not applicable.

Item
  2 Offer Statistics and Expected Timetable

Not applicable.

Item
  3 Key Information

Selected Financial
  Data

The
  following tables set forth our selected consolidated financial data for the
  periods indicated. This data is derived from our audited consolidated financial
  statements prepared in accordance with the International Financial Reporting
  Standards as adopted by the EU (IFRS). IFRS differ in certain respects from
  US GAAP. See note 33 to our consolidated financial statements for a description
  of the significant differences between IFRS and US GAAP as they relate to us.

These
  tables should be read together with Item 5, Operating and Financial Review
  and Prospects and our consolidated financial statements, including the
  notes to those financial statements, included elsewhere in this annual report.
  The Consolidated Financial Statements for the five years ended December 31,
  2005 have been audited by PricewaterhouseCoopers.

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|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|----------------------------------------------------------------- | ---------------------------------------------------------- | - | ------ |  | ------ |  | ------- | - | ------- | -
|                                                                  | Year
      Ended December 31,                              |  
|                                                                  |                                                            |  
|                                                                  | 2001                                                       |   | 2002   |  | 2003   |  | 2004    |   | 2005    |  
|                                                                  | DKK                                                        |   | DKK    |  | DKK    |  | DKK     |   | DKK     |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Statement of
      Income Data:                                   | (In
        millions except per share and per ADS amounts) |  
|                                                                  |                                                            |  
|Amounts in accordance
      with IFRS:                            |                                                            |   |        |  |        |  |         |   |         |  
|Revenue                                                           |                                                            |   |        |  |        |  | 42,339  |   | 46,588  |  
|Operating expenses
      before depreciation, etc                 |                                                            |   |        |  |        |  | (31,138 | ) | (34,773 | )
|Depreciation, amortization
      and impairment losses            |                                                            |   |        |  |        |  | (6,661  | ) | (6,827  | )
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Total operating expenses                                          |                                                            |   |        |  |        |  | (37,799 | ) | (41,600 | )
|Other income and expenses                                         |                                                            |   |        |  |        |  | 1,180   |   | 257     |  
|Operating income                                                  |                                                            |   |        |  |        |  | 5,720   |   | 5,245   |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Income from associates                                            |                                                            |   |        |  |        |  | 5,632   |   | 334     |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Net financials                                                    |                                                            |   |        |  |        |  | (716    | ) | (1,056  | )
|Income before income
      taxes                                  |                                                            |   |        |  |        |  | 10,636  |   | 4,523   |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Income taxes                                                      |                                                            |   |        |  |        |  | (1,041  | ) | (1,026  | )
|Net income from continuing
      operations                       |                                                            |   |        |  |        |  | 9,595   |   | 3,497   |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Net income from discontinued
      operations                     |                                                            |   |        |  |        |  | 315     |   | 3,953   |  
|Net income                                                        |                                                            |   |        |  |        |  | 9,910   |   | 7,450   |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Net income attributable
      to Company shareholders             |                                                            |   |        |  |        |  | 9,912   |   | 7,474   |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Operating income per
      share                                  |                                                            |   |        |  |        |  | 27.95   |   | 26.87   |  
|Operating income per
      ADS (1)                                |                                                            |   |        |  |        |  | 13.98   |   | 13.44   |  
|Earnings per share                                                |                                                            |   |        |  |        |  | 48.44   |   | 38.29   |  
|Earnings per ADS (1)                                              |                                                            |   |        |  |        |  | 24.22   |   | 19.15   |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Dividends per share
      (2)                                     | 11.00                                                      |   | 11.50  |  | 12.00  |  | 12.50   |   | 0.00    |  
|Dividends per ADS
      (2), (3)                                  | 5.50                                                       |   | 5.75   |  | 6.00   |  | 6.25    |   | 0.00    |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  
|Amounts in accordance
      with US GAAP(4):                      |                                                            |   |        |  |        |  |         |   |         |  
|Revenue                                                           | 40,411                                                     |   | 40,492 |  | 40,144 |  | 42,346  |   | 46,586  |  
|Operating income                                                  | (998                                                       | ) | 3,683  |  | 3,790  |  | 5,366   |   | 4,836   |  
|Net income from continuing
      operations                       | (1,401                                                     | ) | 6,850  |  | 2,802  |  | 9,610   |   | 3,276   |  
|Net income (loss)                                                 | (1,192                                                     | ) | 7,086  |  | 2,974  |  | 9,922   |   | 7,229   |  
|Earnings per share
      (basic) (1)                              | (5.53                                                      | ) | 32.98  |  | 13.92  |  | 48.49   |   | 37.04   |  
|Earnings per share
      (diluted) (1)                            | (5.53                                                      | ) | 32.98  |  | 13.91  |  | 48.39   |   | 36.83   |  
|Earnings per share
      from continuing operations (basic) (1).. | (6.51                                                      | ) | 31.88  |  | 13.12  |  | 46.96   |   | 16.79   |  
|Earnings per ADS (basic)
      (1)                                | (2.77                                                      | ) | 16.49  |  | 6.96   |  | 24.25   |   | 18.52   |  
|Earnings per ADS (diluted)
      (1)                              | (2.77                                                      | ) | 16.49  |  | 6.96   |  | 24.20   |   | 18.42   |  
|Earnings per ADS from
      continuing operations (basic) (1)..   | (3.26                                                      | ) | 15.94  |  | 6.56   |  | 23.48   |   | 8.40    |  
|                                                                  |                                                            |   |        |  |        |  |         |   |         |  

|(1) | Operating
      income and earnings per ADS reflect the ratio of one half of one share per
      one ADS.                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Subsequently,
      Interim Dividends of DKK 219.50 per share were declared on April 5, 2006
      and Interim Dividends of DKK 4.35 per share were declared on June 21, 2006.                                                                        
|(3) | Dividends
      per ADS reflect the ratio of one half of one share per one ADS.                                                                                                                                                                       
|(4) | Upon
      adoption of SFAS 142 on January 1, 2002, we ceased amortization of all goodwill
      for US GAAP reporting purposes. Amortization expense on goodwill on a US
      GAAP basis for the year ended December 31, 2001 was DKK 1,534 million.

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|                                                                        |                          |  |        |  |        |  |        |  |        | 
|----------------------------------------------------------------------- | ------------------------ |  | ------ |  | ------ |  | ------ |  | ------ | 
|                                                                        | As
      of December 31, | 
|                                                                        |                          | 
|                                                                        | 2001                     |  | 2002   |  | 2003   |  | 2004   |  | 2005   | 
|                                                                        | DKK                      |  | DKK    |  | DKK    |  | DKK    |  | DKK    | 
|                                                                        |                          |  |        |  |        |  |        |  |        | 
|Balance Sheet
      Data:                                               | (In
        millions)    | 
|                                                                        |                          |  |        |  |        |  |        |  |        | 
|Amounts in accordance
      with IFRS:                                  |                          |  |        |  |        |  |        |  |        | 
|Total non-current
      assets                                          |                          |  |        |  |        |  | 69,865 |  | 68,615 | 
|Total
      current assets                                              |                          |  |        |  |        |  | 20,399 |  | 24,909 | 
|Total assets                                                            |                          |  |        |  |        |  | 90,264 |  | 93,524 | 
|Total
      current liabilities                                         |                          |  |        |  |        |  | 15,089 |  | 18,598 | 
|Total non-current
      liabilities                                     |                          |  |        |  |        |  | 36,325 |  | 31,131 | 
|Total
      liabilities                                                 |                          |  |        |  |        |  | 51,414 |  | 49,729 | 
|Equity attributable
      to Company shareholders                       |                          |  |        |  |        |  | 38,823 |  | 43,520 | 
|Total
      equity                                                      |                          |  |        |  |        |  | 38,850 |  | 43,795 | 
|                                                                        |                          |  |        |  |        |  |        |  |        | 
|Amounts in accordance
      with US GAAP:                               |                          |  |        |  |        |  |        |  |        | 
|Total assets                                                            | 95,266                   |  | 93,276 |  | 93,187 |  | 93,444 |  | 96,713 | 
|Capital
      stock                                                     | 1,082                    |  | 1,082  |  | 1,082  |  | 1,082  |  | 992    | 
|Total shareholders
      equity                                        | 31,279                   |  | 35,856 |  | 35,507 |  | 39,663 |  | 43,973 | 
|                                                                        |                          |  |        |  |        |  |        |  |        | 
|Average
      number of shares (adjusted to reflect changes in capital) | 216.5                    |  | 216.5  |  | 216.5  |  | 216.5  |  | 208.1  | 



|                                                    |                               |  |        |  |        |  |         |   |        |  
|--------------------------------------------------- | ----------------------------- |  | ------ |  | ------ |  | ------- | - | ------ | -
|                                                    | Year
      Ended December 31, | 
|                                                    |                               | 
|                                                    | 2001                          |  | 2002   |  | 2003   |  | 2004    |   | 2005   |  
|                                                    | DKK                           |  | DKK    |  | DKK    |  | DKK     |   | DKK    |  
|                                                    |                               |  |        |  |        |  |         |   |        |  
|                                                    | (In
      millions)           | 
|                                                    |                               | 
|Statement of
      Cash Flow Data:                  |                               |  |        |  |        |  |         |   |        |  
|Net cash from operating
      activities            |                               |  |        |  |        |  | 11,084  |   | 8,691  |  
|Net cash used for
      investing activities        |                               |  |        |  |        |  | 2,889   |   | (1,226 | )
|Net cash from/(used
      for) financing activities |                               |  |        |  |        |  | (12,573 | ) | (4,229 | )
|                                                    |                               |  |        |  |        |  |         |   |        |  
|                                                    | 2001                          |  | 2002   |  | 2003   |  | 2004    |   | 2005   |  
|                                                    |                               |  |        |  |        |  |         |   |        |  
|Additional Information:                             |                               |  |        |  |        |  |         |   |        |  
|Number of customers
      ( 000) (1)               |                               |  |        |  |        |  |         |   |        |  
|Landline                                            | 3,913                         |  | 3,598  |  | 3,631  |  | 3,483   |   | 3,521  |  
|Mobile                                              | 4,575                         |  | 4,939  |  | 6,199  |  | 7,126   |   | 9,022  |  
|Internet                                            | 1,403                         |  | 1,285  |  | 1,696  |  | 1,814   |   | 1,769  |  
|Cable
      TV                                      | 828                           |  | 885    |  | 924    |  | 982     |   | 1,030  |  
|Capital expenditure
      (DKK millions) (2)        | 21,419                        |  | 7,243  |  | 13,461 |  | 9,992   |   | 6,274  |  
|Number of employees
      (3)                       | 21,344                        |  | 21,009 |  | 20,034 |  | 19,497  |   | 20,225 |  
|                                                    |                               |  |        |  |        |  |         |   |        |  

|(1) |   | Denotes
      end of period subscribers and includes customers with and without subscriptions
      on the following basis:                                       
|--- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | Landline
      customers with subscriptions;                                                                                                                      
|    |  | Mobile
      customers with subscriptions or who have been active within the last 3 to
      15 months; and                                                       
|    |  | Internet
      customers with subscriptions or who have been active within the last 1 to
      3 months. The number of subscribers also includes resale customers.
|(2) |   | Capital
      expenditure includes expenditure on intangible assets, property, plant and
      equipment, as well as share acquisitions.                          
|(3) |   | The figures
      denote end-of-year full time employee equivalents including permanent employees,
      trainees and temporary employees.                        

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Dividends

Dividends
  on our shares may be paid out of profits as shown in our annual financial statements,
  as adopted by our Board of Directors and approved at the Annual General Meeting
  of shareholders. Under Danish law, dividends may be paid in respect of a financial
  period as to which audited financial statements have been approved at a General
  Meeting

Under
  Danish law, interim dividend on our shares may also be paid out of profits as
  shown in an interim balance sheet, as adopted by the Board of Directors and
  reviewed by our auditor, provided that a General Meeting has authorized the
  Board of Directors to distribute interim dividend.

No
  dividends will be paid on the companys own holding of TDC treasury shares.

Exchange Rates

The
  following chart shows for the period from January 1, 2001 through May 31, 2006,
  the period end, average, high and low noon buying rates in the City of New York
  for cable transfers of Danish kroner as certified for customs purposes by the
  Federal Reserve Bank of New York expressed as Danish kroner per $1.00.

|              |  |                       |  |        |  |                           |  |                  | 
|------------- |  | --------------------- |  | ------ |  | ------------------------- |  | ---------------- | 
|              |  | DKK
        per $1.00 | 
|              |  |                       | 
|Year          |  | High                  |  | Low    |  | Period
        average(1) |  | Period
      end | 
|              |  |                       |  |        |  |                           |  |                  | 
|2001          |  | 8.8900                |  | 7.8260 |  | 8.3323                    |  | 8.3529           | 
|2002          |  | 8.6470                |  | 7.0850 |  | 7.8862                    |  | 7.0850           | 
|2003          |  | 7.1280                |  | 5.9150 |  | 6.5800                    |  | 5.9150           | 
|2004          |  | 6.3115                |  | 5.4596 |  | 5.9891                    |  | 5.4940           | 
|2005          |  | 6.3891                |  | 5.5161 |  | 6.0194                    |  | 6.2985           | 
|              |  |                       |  |        |  |                           |  |                  | 
|Month         |  |                       |  |        |  |                           |  |                  | 
|              |  |                       |  |        |  |                           |  |                  | 
|October 2005  |  | 6.2632                |  | 6.1423 |  | 6.2034                    |  | 6.2219           | 
|November 2005 |  | 6.3891                |  | 6.1857 |  | 6.3277                    |  | 6.3200           | 
|December 2005 |  | 6.3698                |  | 6.1874 |  | 6.2844                    |  | 6.2985           | 
|January 2006  |  | 6.2284                |  | 6.0714 |  | 6.1530                    |  | 6.1377           | 
|February 2006 |  | 6.2888                |  | 6.1677 |  | 6.2514                    |  | 6.2559           | 
|March 2006    |  | 6.2748                |  | 6.1174 |  | 6.2025                    |  | 6.1467           | 
|April 2006    |  | 6.1710                |  | 5.9076 |  | 6.0798                    |  | 5.9076           | 
|May 2006      |  | 5.9140                |  | 5.7841 |  | 5.8398                    |  | 5.8098           | 

---

|(1) | In respect of the
      yearly data, the average of the noon buying rates on the last business day
      of each month during the relevant period. In respect of the monthly data,
      the average of the noon buying rates on each business day during the month.
      The noon buying rate of the Danish kroner on May 31, 2006 was DKK5.8098
      = $1.00.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
  following chart shows for the period from January 1, 2001 through May 31, 2006,
  the period end, average, high and low noon buying rates in the City of New York
  for cable transfers of Danish kroner as certified for customs purposes by the
  European Central Bank expressed as Danish kroner per €1.00. The exchange
  rate of Danish kroner per euro is regulated by the Exchange Rate Mechanism (ERM
  II), a system originally established in 1979 for controlling exchange rates
  within the European Monetary System of the EU. Under this system, Denmark sets
  its central exchange rate to 7.46038 kroner per euro and allows fluctuations
  of the exchange rate within a 2.25% band. This means that Danish krone can fluctuate
  from a high of DKK 7.63 per €1.00 to a low of DKK 7.29 per €1.00.
  If the market determined floating exchange rate rises above, or falls below
  the bands, Danmarks Nationalbank, the Danish central bank, must intervene.

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|              |  |                     |  |        |  |                           |  |                  | 
|------------- |  | ------------------- |  | ------ |  | ------------------------- |  | ---------------- | 
|              |  | DKK
      per €1.00 | 
|              |  |                     | 
|Year          |  | High                |  | Low    |  | Period
        average(1) |  | Period
      end | 
|              |  |                     |  |        |  |                           |  |                  | 
|2001          |  | 7.4671              |  | 7.4342 |  | 7.4504                    |  | 7.4365           | 
|2002          |  | 7.4405              |  | 7.4246 |  | 7.4298                    |  | 7.4288           | 
|2003          |  | 7.4450              |  | 7.4234 |  | 7.4309                    |  | 7.4450           | 
|2004          |  | 7.4524              |  | 7.4287 |  | 7.4394                    |  | 7.4388           | 
|2005          |  | 7.4640              |  | 7.4351 |  | 7.4525                    |  | 7.4605           | 
|              |  |                     |  |        |  |                           |  |                  | 
|Month         |  |                     |  |        |  |                           |  |                  | 
|              |  |                     |  |        |  |                           |  |                  | 
|October 2005  |  | 7.4632              |  | 7.4594 |  | 7.4620                    |  | 7.4623           | 
|November 2005 |  | 7.4640              |  | 7.4537 |  | 7.4596                    |  | 7.4537           | 
|December 2005 |  | 7.4610              |  | 7.4487 |  | 7.4541                    |  | 7.4605           | 
|January 2006  |  | 7.4639              |  | 7.4573 |  | 7.4613                    |  | 7.4639           | 
|February 2006 |  | 7.4674              |  | 7.4598 |  | 7.4641                    |  | 7.4610           | 
|March 2006    |  | 7.4628              |  | 7.4586 |  | 7.4612                    |  | 7.4624           | 
|April 2006    |  | 7.4635              |  | 7.4556 |  | 7.4608                    |  | 7.4578           | 
|May 2006      |  | 7.4590              |  | 7.4521 |  | 7.4556                    |  | 7.4557           | 

---

|(1) | In respect of the
      yearly data, the average of the noon buying rates on the last business day
      of each month during the relevant period. In respect of the monthly data,
      the average of the noon buying rates on each business day during the month.
      The noon buying rate of the Danish kroner on May 31, 2006 was DKK7.4557
      = €1.00.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capitalization and
  Indebtedness

Not
  applicable.

Reasons for the Offer
  and Use of Proceeds

Not
  applicable.

Risk Factors

The
  risks described below are not the only risks we face. Additional risks and uncertainties
  not currently known to us or that we currently deem to be immaterial may also
  materially adversely affect our business, financial condition, results of operations
  or cash flows.

Risks Related to Our
  Business

We operate in highly
  competitive industries, and competitive pressures could have a material adverse
  effect on our main business lines.

We
  face significant competition from established and new competitors. In our international
  operations, we compete against companies with in some cases better access to
  financing, more comprehensive product offerings, greater personnel resources,
  greater brand name recognition and experience or long-established relationships
  with regulatory authorities and customers. If we cannot match the product offerings,
  services or prices of our competitors, we may lose market share. If we are forced
  to lower our prices to match the prices of our competitors, we may experience
  decreasing profit margins.

In summary, competition
  in our business could lead to:

| |  | continued
      price erosion for our products and services;                                                 
| | - | -------------------------------------------------------------------------------------------------------------
| |  | loss
      of existing or prospective customers and greater difficulty in retaining
      existing customers;

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| |  | obsolescence
      of existing technologies and the need for more rapid deployment of new technologies;
      and                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increased
      pressure on our profit margins, preventing us from maintaining or improving
      our current level of operational profitability and cash flows.

Landline
  and Broadband.We expect increased competition to our landline business
  due to price reductions by our competitors, the development of new technologies,
  including VoIP, and fixed-to-mobile substitution. These factors may result in
  a loss of fixed line subscribers and market share, which could adversely affect
  our revenue and profit margins.

Providers
  of VoIP are offering telephony at significantly reduced prices. Therefore, there
  is considerable risk that our own introduction of VoIP could negatively affect
  our landline operations future earnings potential, as we may not be able
  to maintain a price level for VoIP similar to levels for PSTN.

Continuing
  competition is also expected in landline telephony from IP-based internal networks
  (such as IP-VPN for business customers), antenna and housing association networks
  and utility companies using their infrastructure to provide telephony and broadband.
  Similarly, in the market for leased lines, continuing competition is likely
  from substitution products, including new IP-based transmission products such
  as MPLS, Ethernet solutions, landline networks, local digital networks, wireless
  networks, WLAN, WiMAX and CDMA/450 MHz. Such products are often priced lower
  than leased lines, and product quality is sufficiently strong to constitute
  a viable alternative to traditional landline solutions. Although we offer our
  customers substitution products and services to our traditional telephony products
  and services, including VoIP and broadband access, there is no assurance that
  our current telephony customers will switch to our substitution products and
  services and not those of a competitor. Even if we manage to capture 100% of
  customer conversions from traditional telephony to substitution products, our
  landline business may still experience decreasing profit margins as margins
  for substitution products and services are generally lower than those for traditional
  telephony products and services.

Further
  growth in the landline market requires us to lead or adapt to technological
  developments, including the markets demand for higher DSL speeds. We expect
  the future landline market to be dominated by those providers who can offer
  high quality telephony, TV and internet in one package, known as triple play,
  at attractive prices. This type of bundled product puts increasing demands on
  providers because of the technological, logistical and pricing complexities
  of combining these three services into a single product offering. If we fail
  to adapt to or lead technological developments, or to offer an attractive triple
  play package, our market share and profit margins in the landline sector may
  be adversely affected.

In
  general, our future success in the landline market will depend on our ability
  to shift toward VoIP and other IP-based products, and adapt to lower prices
  for our services and generally more competitive market conditions. If we are
  unsuccessful in dealing with these risks, our revenue and profit margins may
  be negatively affected.

Furthermore,
  price decreases in the Danish mobile market may accelerate the trend of migration
  from landline to mobile telephony. As we have a smaller share of the mobile
  market than the landline market in Denmark, such a migration could negatively
  affect our earnings.

Competitive
  pressure in broadband may increase due to continuing competition from new product
  offerings from other providers. A number of operators have launched VoIP over
  DSL and utility companies have announced a long-term roll out of FTTH. In total,
  the utility companies expect to roll out FTTH to 40%, or approximately one million,
  of Danish households.

Mobile.
  We may not be able to develop and market attractive mobile services at competitive
  prices, which may prevent our mobile business from maintaining or increasing
  revenue and earnings.

As
  market price levels for many mobile services continue to fall, including price
  reductions as a result of regulations in certain jurisdictions limiting prices
  for terminating calls in our mobile networks and for roaming charges, further
  growth in earnings will require improved sales volumes or continued cost control,
  which we may fail to achieve.

Although
  our size gives us economies of scale, our mobile operations continue to be challenged
  by new business models and the introduction of new products by our competitors.
  We have implemented a new business model for online

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self-service mobile telephony
  through our Danish subsidiary Telmore. There is no guarantee that this new business
  model will stay profitable. In addition, we face the risk that our competitors
  may introduce new and successful business models before we do or that we may
  not be able to adopt such new business models to our business. Moreover, our
  success in such a competitive environment will depend on our ability to keep
  pace with new mobile technologies, including the change from 2G to 3G mobile
  telephony, video telephony and data packaging. Growth in mobile data services
  is expected to be driven by an increase in the quantitative and qualitative
  capabilities of mobile business applications. Our success with 3G technology
  depends largely on our ability to develop and introduce attractive 3G products
  and services at competitive prices, including our ability to benefit from general
  developments in the content services market. The introduction of VoIP may also
  threaten mobile telephony in the long term because of its low cost. Failure
  to lead or adapt to such technical changes in the mobile market or to compete
  with or adopt new business models may have a materially adverse effect on our
  mobile business.

Cable
  TV. TDC Cable TV is expected to face increasing competition from a number
  of sources, including utility companies, large antenna co-operatives and housing
  associations and satellite television providers. Competition is driven by price,
  convenience and the range of channels offered. I/S DIGI-TV, an entity owned
  by the Danish state broadcasting services, launched DTT in March 2006, which
  utilizes digital technology to provide a greater number of channels and picture
  and sound enhancements such as HDTV and Dolby Digital through a conventional
  antenna. Although DTT currently offers three channels, it is expected that DTT
  will expand to up to 16 channels by 2009. DTT is expected to result in a greater
  range of channels in the generally accessible terrestrial network, which will
  increase competition. In the long term, increased competition in the Danish
  cable TV market may also arise from new technology, most notably from future
  internet-based content providers. Failure by TDC Cable TV to meet these challenges
  may have a materially adverse effect on our market share in the Danish cable
  TV market.

Increasing competition
  in the Danish, Swiss and certain other European telecommunications markets in
  which we have major operations makes us vulnerable to margin squeeze and further
  market share loss.

The
  Danish telecommunications sector is highly competitive. The main drivers of
  competition in this market are the strong reduction in interconnection prices,
  competitors in the Danish market such as TeliaSonera, Tele2 and Sonofon, and
  the regulatory requirement that we provide our competitors with access to our
  network. To remain successful in this market, we may be required to reduce the
  prices for our services. In the Danish mobile market, prices have been declining
  due to fierce competition, particularly from online products. Broadband customers
  are being offered increasing bandwidth at unchanged or even falling prices.
  Although traditionally our prices for landline and mobile telephony as well
  as leased lines in Denmark have been among the lowest in the EU, as market pressures
  continue, our Danish operations may experience further reductions in profit
  margins. In the past few years, we have experienced loss of market share in
  the Danish landline and mobile markets.

We
  believe that ongoing regulatory initiatives in Denmark will make the Danish
  telecommunications market increasingly competitive, which has been the case
  with telecommunications regulations in recent years. These regulatory initiatives,
  such as CPS and number portability, have increased the ease with which our customers
  can move to other operators. As a result of these regulatory measures, competition
  in the Danish telecommunications market has increased, and we have lost market
  share in the Danish telecommunications market and are vulnerable to greater
  competition and further loss of market share in the future.

In
  the pan-Nordic market, our business customers increasingly demand Nordic solutions
  covering cross-border landline telephony, data communications, IP telephony
  and mobile communications, where competition, especially from other pan-Nordic
  providers, is intensifying. We face increasing competition from the Nordic operators
  Telenor and TeliaSonera, each of which offers a full product suite of mobile,
  broadband, voice and TV. If we are unable to provide cross-border solutions
  to our Nordic business customers, we risk losing an important segment of our
  customer base.

Our
  foreign subsidiaries also face increasing competition. This development could
  adversely affect the revenue and profit margins of our foreign subsidiaries.
  Almost half of TDCs 2005 revenue was related to operations outside Denmark,
  including operations in a number of emerging markets.

With
  regard to our Swiss landline business, TDC Switzerland has experienced price
  decreases in the landline market due to competition from established competitors,
  including the incumbent Swisscom. Such competition may result

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in loss of customers,
  reduced revenue and a lower profit margin in Switzerland. Competition in Switzerland
  is expected to intensify because established cable network operators, such as
  Cablecom, are offering landline telephony through their existing networks at
  very low or flat rate prices.

With
  respect to the Swiss mobile market, TDC Switzerland faces the risk of increased
  pricing pressure from competition from new MVNOs entering the market. In addition,
  future growth in revenue and earnings within the mobile telephony sector will
  depend on our ability to establish a presence in the business market, which
  we may not be able to achieve. In the past year, the Swiss mobile market has
  experienced intense competition, driven by Swisscoms attempt to retain
  its market share, which may result in declining margins and diluted earnings.
  The still increasing mobile penetration in the Swiss mobile market may result
  in fierce competition for remaining customers, which could in turn lead to a
  rise in customer-acquisition and retention costs, and further pressure on earnings.

The
  future growth of Bité will depend primarily on winning market share in
  Latvia, which Bité, as a new entrant there, may not be able to achieve.
  More generally, the future growth of Bité will also depend on country-wide
  factors beyond our control such as poor economic growth that may have an adverse
  effect on the competitive environment in Latvia and Lithuania. The future success
  of Talkline will depend largely on its ability to keep a large portion of the
  gross margin on traffic resales for itself when negotiating with network suppliers.
  There is also a significant risk of future pressure on retail prices in the
  German mobile market, which are high compared to price levels in other countries
  in the Organization for Economic Co-operation and Development.

The mobile telecommunications
  market in Denmark is mature and approaching saturation, with the consequence
  that subscriber growth in the market has slowed in recent years and our mobile
  business may not grow at historical rates.

The
  mobile telecommunications market in Denmark is approaching saturation, with
  a penetration rate of 101%. The degree to which the Danish mobile telecommunications
  market will continue to expand, if at all, is uncertain. We believe that, in
  addition to general market conditions, future market growth will be driven largely
  by new technologies and new content. Our ability to sustain growth in revenue
  and our customer base despite the increased competition that has resulted from
  this market saturation will depend in large part upon our ability to retain
  our existing subscribers, convince subscribers to switch from competing carriers
  to our services, and to stimulate and increase usage. We may not achieve these
  aims if we are not able to enhance our existing mobile products and services
  and to develop, introduce and market new mobile technologies, products and services.
  If we fail to increase revenue from or expand our subscriber base in our mobile
  business in the face of market saturation, our business, financial condition
  and results of operation could be materially adversely affected.

Our business is
  subject to rapid changes in technology and if we fail to lead or respond to
  technological developments, our business may be adversely affected.

Our
  landline, mobile, internet and cable TV operations may not be successful if
  we fail to lead or keep pace with continuing changes in technology and provide
  new or enhanced services in a timely and cost-effective manner, or to successfully
  anticipate the product demands of our customers. Recently, the market has witnessed
  the emergence of new technologies such as VoIP, ADSL2+, FTTH and Ethernet. We
  expect technological innovation to continue rapidly across all product lines.
  We will need to anticipate and react to these changes and to develop or apply
  new and enhanced products and services quickly enough for the changing market.
  Otherwise, we risk losing market share, customers and in the event substitution
  technologies introduced by our competitors result in lower sales costs, profit
  margins. In addition, new technologies may become dominant in the future, rendering
  our current systems obsolete. For example, SIP based technologies delivering
  VoIP and other communications services over broadband may make PSTN technology
  obsolete. ADSL2+, VDSL2 and FTTH based solutions may make the current DSL technology
  limited to 8 Mbps obsolete. Ethernet technology which reduces the cost level
  for IP aggregation considerably may make ATM technology obsolete.

Technological
  advancements could also result in the need to make substantial investments in
  new or enhanced technologies, products or services. We may not be able to adopt
  such technology due to insufficient funding to make the necessary capital expenditures,
  or if such technology is subject to third-party patents. Conversely, if we do
  succeed in introducing new technologies in the telecommunications market, such
  technologies may not prove commercially viable in the long run, and consequently
  we may risk being unable to earn an adequate return on, or recover the costs
  of, our investments in developing and marketing products that rely on these
  technologies.

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Failure to control
  customer churn may adversely affect our business.

Customer
  churn is a measure of customers who stop subscribing to our services. Churn
  arises mainly as a result of new housing development, relocation of subscribers
  and price decreases by our competitors. In addition, our customer churn rate
  may also increase as a result of competitive developments or if we are unable
  to deliver satisfactory services over our network. Any interruption of our services
  or other customer service problems could also contribute to an increase in customer
  churn. Any increase in customer churn may lead to a need to reduce our costs
  rapidly to preserve our margins and reduced revenue or, alternatively, to increase
  our marketing costs in an attempt to keep or bring back customers. There can
  be no assurance that the various measures we have taken to increase customer
  loyalty will reduce the rate of churn.

Furthermore,
  the mobile telecommunications market is characterized by frequent developments
  in product offerings, as well as by advances in network and handset technology.
  If we fail to maintain and upgrade our network and provide our customers with
  an attractive portfolio of products and services, we may not be able to retain
  our customers. Additionally, if competing mobile operators improve their ability
  to attract new customers, or offer their products and services at lower prices,
  it could become more difficult for us to retain our current customers, and our
  costs of acquiring new customers could increase.

We may face significant
  capital expenditures going forward driven mostly by investments in new technologies
  and infrastructure including our network and information technology systems.
  We cannot assure you that we will have sufficient liquidity to fund our capital
  programs or our ongoing operations in the future.

Our
  business is capital intensive and has always required significant amounts of
  cash. We have a capital expenditure program which will continue to require significant
  capital outlays in the foreseeable future, including the continued development
  of our GSM and UMTS networks, cable TV business, maintenance of our network
  backbones, our continuing fiber network roll out including FTTN and investments
  in new IT systems, including customer care and billing systems. The utility
  companies expect to roll out FTTH to 40%, or approximately one million, of Danish
  households. The Danish Competition Authority has estimated that this will require
  investments by the utility companies of DKK 9.5 billion. Although we now have
  more than 23,000 kilometers of fiber network, primarily in the backbone network,
  competition from utility companies may put pressure on us to invest more heavily
  in both FTTN and in FTTH.

Although
  we may have an advanced network, we may need to invest in new networks and technologies
  in the future, such as Next Generation Networks, which could require significant
  capital expenditures, and network usage may develop faster than we anticipate,
  requiring greater capital investments in shorter time frames than we anticipate.
  However, we may not have the resources available to make such investments. In
  addition, costs associated with the licenses needed to operate our existing
  networks and technologies including UMTS and those that we develop in the future,
  and costs and rental expenses related to their deployment could be considerable
  The amount and timing of our future capital requirements may differ materially
  from our current estimates due to various factors, many of which are beyond
  our control and we cannot assure you that we will generate sufficient cash flows
  in the future to meet our capital expenditure needs, sustain our operations
  or meet our other capital requirements.

Our international
  business activities expose our earnings to exchange rate risk and the risks
  of a fluctuating global economy.

Approximately
  30% of our 2005 revenue was generated outside Denmark and the euro area. This
  revenue originates primarily from Switzerland, Lithuania, Sweden and Norway,
  where we conduct our business operations and prepare our financial statements
  in currencies other than the Danish kroner or the euro. Any loss in the value
  of these currencies against the Danish kroner will have a negative impact on
  the value of our investments in the relevant business activities and the amount
  of income we derive from them.

Our reporting currency
  is the Danish kroner.

We are exposed to
  interest-rate risks.

Our
  borrowings under the Senior Facilities Agreement, entered into by Nordic Telephone
  Company Holding ApS ("NTCH" - a holding company of NTC) in connection with Nordic
  Telephone Company ApSs, (NTC - our major shareholder) acquisition
  of TDC and later the entry of TDC after the acquisition, are subject to floating
  interest rates. An

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increase in interest rates
  could increase our payment obligations and could have a material adverse effect
  on our operating results and financial position. We are required to hedge a
  portion of our floating rate debt pursuant to the Senior Facilities Agreement.
  Hedging may be expensive to maintain and may not protect us adequately against
  adverse movements in interest rates.

A favorable market
  for UMTS-based 3G services may not develop, limiting our ability to recoup the
  cost of our investments in UMTS services and the UMTS licenses and networks,
  which could adversely affect our results of operations.

Our
  UMTS-based 3G service has required us to make substantial investments in UMTS
  services and UMTS licenses and networks. We have UMTS licenses in Denmark, Latvia,
  Lithuania and Switzerland. Polkomtel has a UMTS license in Poland and One has
  a UMTS license in Austria. Our Danish UMTS license fee will cost approximately
  DKK 950 million in aggregate. We paid 25% of the license fee upfront in 2001
  and have subsequently paid four instalments of 7.5% each. The remaining 45%
  is to be paid in six yearly instalments ending 2011. As required under the terms
  of our license, we achieved coverage of 30% of the population at the end of
  2004, but must achieve a coverage of 80% by the end of 2008, which may require
  us to make substantial investments in the upcoming years. Our Danish UMTS license
  expires October 31, 2021. Our Swiss UMTS license fee cost 50 million Swiss francs
  and will expire at the end of 2016. The license fee was paid upfront. As required
  under the terms of our license, we achieved coverage of 50% of the population
  at the end of 2004.

Although
  certain markets for UMTS currently exist, if UMTS does not gain further acceptance
  or deliver anticipated advantages, or if we derive a smaller percentage of our
  revenue than expected from our UMTS-related 3G services, we may not be able
  to adequately recoup our investment in our UMTS licenses and networks. This
  may be the case even if we follow a strategy of making further significant investments
  in UMTS only when it is clear that UMTS use is becoming mainstream. UMTS technology
  needs further development in order to provide the expected advantages over existing
  GSM technology and rival competing mobile broadband technologies. Demand for
  UMTS-based 3G services may not develop to the extent that we anticipate. Accordingly,
  no assurance can be given that a larger market for UMTS services will develop
  or that we will be able to achieve our desired sales volumes for UMTS services.
  Moreover, competition from WLAN and CDMA/450 MHz may adversely affect the penetration
  of UMTS and associated data services. Substitution technologies including WiMAX
  and WiFi which also offer radio voice and data transmission solutions, may pose
  a threat to the growth of the UMTS market. Push-to-talk (walkie-talkie) and
  instant messaging may also pose a threat to the UMTS market in the future. We
  also face the risk that our UMTS customers will use lower margin packet transmission
  services (Packet Side traffic) rather than higher margin voice transmission
  services (Circuit Side traffic), thereby threatening the profitability
  of our UMTS business.

Furthermore,
  we rely on applications developers to develop services that will stimulate market
  demand for 3G services and our UMTS network. If third-party application service
  providers fail to develop such services, or experience delays in their development
  of such services, our ability to generate revenue from our UMTS network may
  be adversely affected.

Market
  demand for our UMTS operations is also dependent on the availability of reasonably
  priced handsets from suppliers, technologically proven network equipment and
  software with sufficient functionality and speed. If we cannot obtain such equipment
  and software or if we experience delays in their delivery or functional deployment,
  our ability to develop our UMTS network and our customers ability to access
  it will be impaired. Availability of this equipment and software is the required
  driver of demand for these services.

Market acceptance
  of our online telephony services, including our self-service products and e-commerce
  services, is still uncertain.

Our
  online services, including our self-service telephony products, and e-commerce
  services such as TDC Online are relatively new offerings in the telecommunications
  market. Consequently, there is uncertainty concerning market demand for, or
  profitability of, such products and services. If customer service costs turn
  out to be higher than expected, future profit margins could be affected. Moreover,
  it is uncertain if and how fast the expected efficiency savings resulting from
  such movement to online services may be realized.

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Equipment and network
  systems are vulnerable to terrorist attacks, natural disasters, security risks
  and other events that may disrupt our services and result in increased costs
  or lost revenue. In addition, terrorism laws and regulations might result in
  a heavier regulatory burden on our business and increased operating costs.

The
  performance, reliability and availability of our networks and our mobile and
  fixed line telecommunication services are critical to our ability to attract
  and retain subscribers. Our networks and the services we provide may be subject
  to damage or disruptions resulting from terrorist acts and numerous other events,
  including fire, flood or other natural disasters, power outages and equipment
  or system failures (major disruption events). Our network has been
  affected by floods and storms in the past. If a major disruption event were
  to affect our infrastructure or a third partys systems, and were to result
  in a failure of our networks or systems or of the third party-owned local and
  long distance networks on which we rely for the provision of interconnection
  and roaming services to our subscribers, it could affect the quality of our
  services or cause temporary service interruptions, which could result in customer
  dissatisfaction, regulatory penalties and reduced revenue. The occurrence of
  network or system failure could also harm our reputation or impair our ability
  to attract new customers, which could have a material adverse effect on our
  business, financial condition and result of operations. There can be no assurance
  that our business continuity plans, network security policies, the vulnerability
  analysis we conduct jointly with regulators or our monitoring activities will
  mitigate the impact of or prevent a disruption event.

In
  addition, our business is dependent on certain sophisticated critical systems,
  including exchanges, switches, other key network points and our billing and
  customer service systems. The hardware supporting those systems is housed in
  a relatively small number of locations and if damage were to occur to any of
  such locations, or if those systems develop other problems, it could have a
  material adverse effect on our business.

A
  substantial part of our network is not insured. In the event any losses due
  to terrorist acts and numerous other events, including fire, flood or other
  natural disasters, power outages and equipment or system failures, are not covered
  by insurance, we may not have the capital to make necessary repairs or replacements.

A
  significantly higher regulatory burden on our business prompted by terrorism
  or similar threats would increase our costs. As part of the anti-terrorism action
  plan passed by the Danish government in November 2005, the government has proposed
  requiring telecommunications operators to use or install communication interception
  equipment and to establish databases for mandatory retention of traffic passing
  through their networks in order to assist law enforcement agencies in tracking
  terrorist activity. If such measures are adopted, we may need to make additional
  investments on technical equipment and we may incur operational costs as a result.
  Such regulation substantially increases our potential data retention obligations,
  requiring us to keep traffic data well beyond what we need for legitimate business
  purposes. These requirements are expected to cause substantial costs, with no
  possibility of cost recovery from the public authorities.

We expect that our
  increasing dependency on digitalized information technology systems exposes
  us to risks of hacking, piracy and systems failure, which potentially could
  disrupt our business.

The
  telecommunications sector has become increasingly digitalized, automated and
  online, which means that we are exposed to increasing risks of hacking, piracy
  and general failure of IT systems. Unanticipated IT problems, system failures,
  computer viruses or hacker attacks could affect the quality of our services
  and cause service interruptions. Risks of network failure can never be completely
  eliminated and the occurrence of such failures may reduce revenue and harm our
  reputation.

In order to improve
  our profitability, we need to implement a sizeable reduction in our existing
  workforce, which may be costly and difficult to implement.

In
  order to maintain and improve our profitability as we face continuing pricing
  pressure due to competition, and to take advantage of the cost-saving potential
  of our new online self-service products, we need to make a sizeable reduction
  in our workforce over the next few years. Any reduction to our workforce may
  entail significant severance costs, which may affect our earnings. Many of our
  employees in Denmark have civil servant pension rights and some of them are
  entitled to severance benefits. We believe that the total costs related to domestic
  workforce reductions in 2006 will be DKK 342 million after tax. Furthermore
  cost related to workforce reductions in Switzerland will be DKK 72 million pre
  tax. The costs relating to workforce reductions may be higher than we anticipate
  and may have a material impact on our profitability.

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In
  addition, there can be no assurance that we will be able to implement sizeable
  reductions in our workforce. Danish law does not impose significant restrictions
  on workforce reductions, and our labor unions do not have a right under Danish
  law to veto any reductions in our workforce. We have entered into Borgfredsaftaler,
  collective agreements, with each of the telecommunications departments of the
  Danish Metal Workers Union (Dansk Metal), , the Association of Managers and
  Employees in Special Positions of Trust in TDC (Lederforeningen i TDC,)(LTD)
  and the Danish Confederation of Professional Associations (AC-organsiationerne)
  (AC) (collectively, the Borgfredsaftale unions). In
  these Borgfredsaftaler, we have agreed to follow certain procedural guidelines
  in connection with the implementation of reductions in our workforce, including
  providing redundant employees with training that would make them suitable for
  reassignment within TDC in certain circumstances. The Borgfredsaftaler expire
  at the end of 2007, however they may be terminated by us or the unions subject
  to three months notice in the event the assumptions behind the agreements lapse
  or change.

We
  also have entered into collective agreements with the Borgfredsaftale unions
  regarding the terms and conditions of voluntary resignations by employees as
  an incentive to encourage voluntary resignations. These agreements may be terminated
  by either party subject to two months notice. Neither the reductions in our
  workforce nor the scope of such reductions are part of these agreements.

Even
  though we have agreements with these unions relating to procedures for workforce
  reductions and the terms and conditions of voluntary resignations, there can
  be no assurance that any of our labor unions will not resist further workforce
  reductions. In addition, we may not be able to negotiate agreements with the
  Borgfredsaftale unions after 2007 similar to the Borgfredsaftaler.

During
  the last three years, we implemented two overall domestic redundancy programs
  and initiated a third: the first covering the period 2003 to 2004 and the second
  covering 2005. In 2005, due to our international acquisition activity, our total
  number of employees and the number of our international employees increased.
  We expect our number of employees to increase in the event we continue to make
  acquisitions. In 2005, we did manage to reduce our number of domestic full-time
  employees from 14,437 to 13,876. A redundancy program has also been initiated
  in 2006, pursuant to which we expect to reduce staff by up to 570 employees.
  We have also initiated a redundancy program in Switzerland in 2006, and we expect
  a reduction in the workforce by 145 employees, corresponding to 5.7 pct. We
  cannot assure you that we will be able to implement redundancy programs in the
  future or that our third redundancy program will be effective.

Strikes or other
  industrial actions could disrupt our operations or make it more costly to operate
  our facilities.

We
  are exposed to the risk of strikes and other industrial actions to the same
  extent as other companies on the Danish labor market. We estimate that more
  than 70% of our employees are union members. As noted above, we have entered
  into Borgfredsaftaler with each of the Borgfredsaftale unions, which provide
  for certain procedural guidelines to be followed in connection with the implementation
  of reductions in our workforce until the end of 2007. Pursuant to our Borgfredsaftaler
  with the telecommunications departments of the Dansk Metal the parties thereto
  have agreed to enter into dialogue within 24 hours in the face of an imminent
  conflict in order to prevent industrial action. As noted above, we have also
  entered into separate agreements with each of the Borgfredsaftale unions regarding
  the terms and conditions of voluntary resignations by employees as an incentive
  to encourage voluntary resignations. These agreements may be terminated by either
  party with two months notice. Any industrial action we experience might disrupt
  our operations, including our repair times, possibly for a significant period
  of time, result in increased wages and benefits or otherwise have a material
  adverse effect on our business, financial condition and results of operations.

We depend on equipment
  and service suppliers that may fail to deliver or discontinue their products
  or seek to charge us prices that are not competitive, which may adversely affect
  our business and profitability.

Due
  to our existing legacy network, we are dependent on certain suppliers for the
  maintenance and upgrade of certain hardware and software platforms, especially
  such hardware or software platforms that have become industry standard. For
  example, our cable TV business has made substantial investments in the equipment
  and software of particular suppliers, making it difficult for us in the short
  term to change supply and maintenance relationships in the event that our initial
  supplier refuses to offer us favorable prices or ceases to produce equipment
  or provide the support that our telecommunications and cable TV networks and
  systems require. In the past, some of our key suppliers have stopped

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providing us with hardware
  that we use, such as the AC4 SDH platform, and certain support services, such
  as feature development for ATM based DSL platforms (without which triple play
  products are impossible on such platform), DSL line card delivery on certain
  older DSL platforms and upgrades for PSTN platforms.

Any
  discontinuance of certain products or services or failure to upgrade such products
  and services by our suppliers, any financial instability of our suppliers or
  failure by such supplier to deliver certain products to us pursuant to our supplier
  contracts in the future could lead to the risk of:

| |  | delays
      to upgrades and new products and features from suppliers, impacting our
      product development programs,               
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | products
      being discontinued, impacting supply of existing products,                                                              
| |  | deteriorating
      quality of support services, affecting operational and customer services,                                          
| |  | higher
      volatility with regard to our demands on suppliers, and in stock levels
      affected by customer returned equipment, and
| |  | consequential
      impact on our business.                                                                                            

Failure
  on the part of our suppliers, which may in turn delay or prevent us from providing
  our own products and services to our customers, may adversely impact our revenue.
  We may not be able to recover monies paid to such suppliers for their products
  and services or obtain contractual damages, when applicable, in such an event.
  In addition, any increase in pricing by our suppliers may cause a margin squeeze.
  The above factors could have an adverse impact on our business, financial condition
  and operating results.

Even
  though in most cases our equipment and software suppliers can be replaced, switching
  to alternative suppliers could cause us to experience difficulty or delays in
  providing support and maintenance, new products and upgrades and operational
  services, or result in significant cost increases, which could harm our financial
  condition and operating results.

We are party to
  a number of different contracts with third parties which contain change of control
  provisions. If one or more of the change of control clauses are exercised, this
  may adversely affect our business and profitability.

We
  have important co-operation agreements and contracts with suppliers and service
  providers and hold insurance policies which are subject to change of control
  provisions. Exercise of change of control provisions by third parties in certain
  material contracts may adversely affect our competitiveness and profitability.

Should
  any of our contractual relationships be terminated, we may be forced to enter
  into new contracts which may be on less favorable terms. Moreover, the termination
  of one or more of our co-operation agreements may lead to loss of business from
  certain supplementary service providers, which we may not be able to maintain
  through independent relationships.

We depend on a small
  number of distributors, retailers and sales agencies (mobile distributors)
  to distribute or sell our mobile products and services to end users. Our mobile
  distributors may stop distributing our mobile products to end users and may
  have distribution agreements with our competitors.

We
  distribute our mobile products and services in cooperation with a small number
  of mobile distributors. In Denmark 35% of our sales are distributed through
  a small number of mobile distributors. In Switzerland, over 40% of our sales
  are distributed through a few mobile distributors. Under our current arrangements
  with our key mobile distributors, our mobile distributors may stop distributing
  or selling our products at any time. Should this occur, we may face difficulty
  in finding new mobile distributors that can provide the same level of sales.
  In addition, our mobile distributors have distribution agreements with our competitors.
  These distribution agreements with our competitors may negatively affect the
  level of our gross activations through our distribution partners, threatening
  our market share, and thus adversely affecting our financial condition and results
  of operations. Our mobile distributors may more actively promote the products
  and services of our competitors to our detriment. Our failure to maintain key
  distribution relationships, or the failure of our

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distribution partners
  to procure sufficient customers for us for any reason, could have a material
  adverse effect on our financial condition and result of operations.

We depend on third
  party telecommunications providers over which we have no direct control for
  the provision of interconnection and roaming services outside of Denmark.

Our
  ability to provide high quality mobile and fixed line telecommunications services
  outside of Denmark depends on our ability to interconnect with the telecommunications
  networks and services of other mobile and fixed line operators, particularly
  those of our larger competitors. Outside of Denmark, we also rely on third party
  operators for the provision of international roaming services for our mobile
  subscribers. For example, in Switzerland we depend on Swisscoms ULL to
  reach a significant number of end users. While we have interconnection and roaming
  agreements in place with other operators, we have no direct control over the
  quality of their networks and the interconnections and roaming services they
  provide. Any difficulties or delays in interconnecting with other networks and
  services, or the failure of any operator to provide reliable interconnection
  services to us on a consistent basis, could result in a loss of subscribers
  or a decrease in traffic, which would reduce our revenue and adversely affect
  our financial condition and results of operations.

Outside
  of Denmark, we depend on access to the incumbents facilities to install
  our ULL facilities. If the incumbent fails to allow us access to these facilities,
  or is slower in allowing access than we anticipate, our ability to roll out
  additional direct access products and attract direct access customers may be
  adversely affected.

Our minority shareholdings
  in the mobile telephony industry, and the fact that we only own 63.4% of HTCC,
  expose our business to ill-informed or inadequate management decisions made
  on behalf of companies of which we do not have full control and may require
  strategic and financial support.

The
  performance of the international operators in which we have minority interests
  and of HTCC may depend on the financial or strategic support of other shareholders.
  We only own 15% of Austrian mobile operator One and 19.6% of Polish mobile operator
  Polkomtel (which is in the process of being sold). Even though we own a majority
  interest in HTCC of 63.4% of the share capital, we may not be able to exercise
  full control over its operations. Such international operators may rely on us
  and/or other shareholders for strategic and financial support. Such other shareholders
  may fail to supply or not be willing to supply the required operational, strategic
  and financial resources relating to, for example, the build-out of infrastructure,
  the cost of meeting regulatory requirements or effective marketing, which could
  adversely affect both the ability of these operations to compete and the return
  on our investment.

The loss of important
  intellectual property rights, including our key trademarks and domain names,
  could adversely affect our competitiveness.

Some
  of our intellectual property rights, including our key trademarks and domain
  names which are well known in the telecommunications markets in which we operate,
  are important to our business. A significant part of our revenue is derived
  from products and services marketed under the brand names TDC or sunrise. We
  rely upon a combination of trademark laws, copyright and data base protection
  as well as, where appropriate, contractual arrangements to establish and protect
  our intellectual property rights. We are required from time to time to bring
  claims against third parties in order to protect our property rights which may
  not succeed in protecting such rights.

In
  addition to the risk that a third party will infringe on our intellectual property
  rights, we face the risk that a third party may claim that we are infringing
  on such third partys intellectual property rights, including but not limited
  to, patent rights. As a result, we may not be able to use intellectual property
  that is material to the operation of our business. Alternatively, a third party
  may allege one of our suppliers is infringing on such third partys intellectual
  property rights and may bring suit to prevent such supplier from providing us
  with products or services important to our business.

We
  cannot be sure that any lawsuits or other actions brought by us to protect our
  intellectual property rights will be successful or that such suppliers will
  not be found to infringe the intellectual property rights of third parties.
  Although we are not aware of any material infringements of any intellectual
  property rights that are significant to our business, any lawsuits, regardless
  of their outcome, could result in substantial costs and diversion of resources
  and could have a material adverse effect on our business, financial condition
  and results of operations. The illegal use by third parties or the loss of our
  important intellectual property rights, such as our trademarks and domain names,
  could have a material adverse effect

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upon our business, financial
  condition and results of operation. If we are prevented from using certain products
  and services or if we are forced to pay significant damages or higher prices
  for important products or services due to a third partys successful intellectual
  property claim, there may be a material adverse effect on our business.

A loss of key personnel
  could have a material adverse effect on our business.

Our
  success is in part dependent on the skills, experience and efforts of our senior
  management. The loss of services of one or more members of our senior management
  team could materially and adversely affect our business, results of operations
  and financial condition. On June 22, 2006 our current Chief Executive Officer,
  Henning Dyremose, accepted an offer to become Chairman of TDC, effective March
  2007, and Jens Alder, former President and CEO of Swisscom, accepted an offer
  to become the new President and Chief Executive Officer of TDC. Mr. Alder is
  expected to assume his new position as of November 1, 2006. See Recent
  Developments in Item 5. In addition, as our business develops and expands,
  we believe that our future success will depend on our continued ability to attract
  and retain highly skilled and qualified personnel without increased labor costs.
  We cannot assure you that we will be able to continue to employ key personnel
  or that we will be able to attract and retain qualified personnel in the future,
  especially in light of Denmarks tight labor market with very low unemployment.
  Any failure by us to retain or attract such key personnel could materially and
  adversely affect our business, results of operations and financial condition.

A downturn in the
  general economic conditions could adversely affect our business, financial condition
  and operating results.

Any
  downturn in the global economy, European economy or the economy of any of the
  countries in which we operate may adversely affect our business. The financial
  prospects in our markets are currently uncertain due to, among other things,
  the rise of oil prices throughout 2004 and 2005. A major terrorist attack in
  Europe might also cause a downturn in the markets in which we operate. In addition,
  some Danish businesses are being subjected to a boycott linked to protests related
  to the publication of cartoons in a Danish newspaper; if this boycott were to
  continue, it could potentially have a harmful effect on the Danish economy generally.
  If the Danish business outlook is cautious or negative, our customers may delay
  or cancel investments in telecommunications systems and services, which may
  adversely affect our revenue and the development of new products and services.
  Any decrease in economic activity may generally decrease network traffic and
  demand for data storage.

Our failure to meet
  growing customer demand for content services and adapt to technological developments
  in content delivery may not only negatively impact the growth of our content
  services business, but may also decrease the market share of our bundled products
  with a content component.

Our
  cable TV business has given us significant experience with and access to the
  content market and content delivery products. However, our future success in
  content services will depend on our ability to produce or acquire attractive
  programming such as popular TV shows, music and games and to adapt and lead
  technological developments in content delivery applications. There can be no
  assurance that we will be able to acquire popular content in the future. One
  of our major content suppliers for cable TV competes with us in certain TVoIP
  markets and has so far refused to allow us to provide its content on our TVoIP
  product at prices that are acceptable to us. This may have a materially adverse
  impact on the growth of our TVoIP business. Moreover, the telecommunications
  sector is undergoing advances in content services as technological developments
  increasingly enable customers to receive content whenever they wish (such as
  digital video recorders or time-shift software for a PC with TV-card), and wherever
  they wish (such as MPEG4/H.264-videopodcasts for iPods and other portable digital
  media players or 3G/DVB-H transmissions for handsets). Not only do we face the
  risk that we will fall behind our competitors in terms of content delivery technology,
  but also that the platforms, applications or technology we invest in will not
  become the market standard. Growth in content services is expected to be driven
  by an increase in the quantitative and qualitative capabilities of content providers.
  However, the specific extent and characteristics of such quantitative and qualitative
  progress are difficult to predict at present. Also, we may not be able to match
  the quantitative or qualitative capabilities of our competitors. In addition,
  failure to provide content services may also negatively impact sales of our
  products and services with a bundled content component, such as cable TV, broadband,
  triple play and 3G, or to which our competitors have added a bundled content
  component.

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Our business may
  be adversely affected by the alleged health risks from the use of mobile telephones
  and by other environmental requirements.

We
  are subject to regulations and guidelines relating to radio frequency emissions
  and other forms of non-ionizing radiation. We are aware of allegations that
  there may be health risks, including some forms of cancer, associated with such
  emissions from mobile telephones and from other mobile telecommunications devices.

The
  European Commission has been investigating these concerns since 1995. Although
  the results of these studies have been inconclusive, we cannot provide assurances
  that further medical research and studies will not establish a link between
  the radio frequency emissions of mobile handsets and health concerns. The EU
  and Danish or Swiss authorities could increase regulation of mobile telephones
  and base stations as a result of such health concerns. In Switzerland in particular,
  public concern over alleged adverse health effects related to electromagnetic
  radiation and strict Swiss rules on radiation may result in increased costs
  related to the GSM and UMTS networks and thereby impeding both the continuation
  of our 2G and the growth of our 3G mobile telephony business.

The
  actual or perceived risk of mobile telecommunications devices, press reports
  about risks or any litigation relating to such risks could adversely affect
  us through a reduction in the size or growth rate of our customer base, a decline
  in our ARPU and AMOU, increased regulatory burdens on us or significant litigation
  costs, and could have an adverse effect on our financial condition and results
  of operations.

In
  addition, we are subject to a variety of laws and regulations relating to land
  use and the protection of the environment, including those governing the storage,
  management and disposal of hazardous materials and the cleanup of contaminated
  sites. We could incur substantial costs, including cleanup costs, fines, sanctions
  and third-party claims for property damage and personal injury, as a result
  of violations of, or liabilities under, such laws and regulations. We believe,
  however, that we are in substantial compliance with such laws and regulations.

Risks
  Related to Regulatory Matters and Litigation

The regulatory framework
  for the Danish telecommunications sector may result in tougher competition,
  further reductions of tariffs and decreased profit margins for our business.
  In addition, we have been designated by NITA as having significant market power
  (SMP) in Denmark in a number of submarkets.

Denmarks
  regulatory regime governing its telecommunications sector requires us to deliver
  a broad range of products to the retail and wholesale markets, and subjects
  us to price regulation.

EU
  Regulatory Framework. In March 2002, the EU passed a number of directives
  designed to promote competition in the European telecommunications market that
  were subsequently implemented into Danish law in 2003. In accordance with this
  legislation, NITA performs market analyses on 18 specifically defined submarkets
  with respect to landline telephony, mobile telephony, leased lines, unbundled
  access, broadband and TV and radio transmission. In each submarket, NITA may
  designate a dominant telecommunications operator as having Significant Market
  Power (SMP) in such submarket. If imperfections in a submarket in
  which an operator has been designated as having SMP are identified, NITA may
  impose remedies against such operator in order to promote competition. In the
  wholesale market, such measures may include the acceptance of a reasonable request
  for interconnection, non-discrimination, reference offers, transparency, accounting
  separation, specific cost accounting obligations and price control methods.
  NITA has so far issued decisions on 14 out of 18 submarkets. Final decisions
  for all the submarkets, except the submarket for television and radio transmission,
  are expected during the first half of 2006. Until market analyses of the relevant
  submarkets have been completed and NITA has decided whether to adopt new regulatory
  measures or revoke former measures, the current regulation will be maintained
  in each relevant submarket.

SMP
  Designation. We have been designated as having SMP by NITA in almost all
  of the submarkets in Denmark, except for Market 15 (the wholesale market for
  mobile access), Markets 5 and 6 (the retail markets for national and international
  traffic for business customers) and according to the market analysis also in
  Market 17 (the market for international roaming). As a result of our SMP designation,
  we are subject to additional regulatory burdens, which are summarized below.
  In addition, NITA has been considering whether to create an additional submarket
  for cable TV

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networks. If NITA creates
  a cable TV submarket, it is likely we would be designated as having SMP in the
  cable TV market and might be required to provide third parties with access to
  our cable network. There can be no assurance that NITA will not impose additional
  regulatory burdens on us as a result of our current SMP status or designate
  us as having SMP in additional markets.

Retail
  Markets.As a result of our SMP status, the larger part of our retail offerings
  of leased lines must comply with a rule of cost orientation. As a result, we
  are required to calibrate leased line prices annually to ensure that they match
  the corresponding cost plus a mark-up set by the regulatory authorities.

Wholesale
  Markets.In the wholesale markets in which we have SMP status, the majority
  of our prices are regulated as a result of our SMP designation. Until 2002,
  interconnection prices were regulated mainly on the basis of historical cost
  analyses and best-practice benchmarking against corresponding international
  prices. Since January 1, 2003, NITA has set the prices we charge for switched
  interconnection traffic, interconnection capacity, shared access and ULL (also
  known as raw copper) as well as related co-location. NITA calculates these prices
  once a year in accordance with the LRAIC model and evaluates and updates the
  LRAIC model once every three years. Only minor price adjustments were implemented
  in 2004 and 2005. In early 2006, the LRAIC model was adjusted and the prices
  for ULL, switched interconnection traffic and interconnection capacity were
  decreased considerably. The decrease may have a negative impact on our revenue
  and earnings. The prices for TDCs other interconnection products are based
  on historical costs according to a formula set by NITA. It is uncertain how
  this pricing method will affect TDCs future prices. Furthermore, the telecommunications
  law was amended with effect from January 1, 2006, resulting in changes in calculation
  principles for depreciation, amortization and interest payments. Such changes
  will likely result in price decreases for bitstream access and leased lines.
  The amended law also gives NITA increased power to stipulate specific terms
  and conditions for TDCs interconnection agreements.

NITAs
  decision on the submarket for broadband access requires us to discontinue our
  geographical differentiation of bitstream access prices unless we also differentiate
  our retail prices for broadband. Discontinuation of geographical differentiation
  of prices for bitstream access will strengthen our competitors in remote areas,
  where production of bitstream access is very costly for us. Alternatively, we
  may decide to let the current differentiation of wholesale prices affect our
  end user prices. The decision also requires us to offer wholesale broadband
  solutions (bitstream access) without compulsory landline subscriptions, which
  will improve our competitors conditions for offering broadband solutions
  combined with IP telephony. We have appealed the decision for this market and
  some of the other decisions to the Telecommunications Complaints Board.

The
  authorities have announced that they may intervene in the pricing of traditional
  landline subscriptions for customers who also have broadband subscriptions in
  order to address the so-called excess cost recovery problem. The
  formulation of such intervention and its impact on TDCs earnings are uncertain.

In
  the market for termination of mobile calls in mobile networks, NITA has decided
  that TDC, TeliaSonera, Sonofon, Tele2 and Hi3G have SMP with regard to termination
  in the respective mobile networks. However, price regulation has been introduced
  only for TDC, Sonofon and TeliaSonera, whose average price (including call set-up
  fee) must be reduced by approximately 35% over the next two years. This decision
  will adversely impact our earnings. If the domestic market for international
  roaming, market 17, also becomes subject to price regulation, such regulation
  may have a negative impact on TDC Mobils revenue and earnings.

On
  October 31, 2005, NITA concluded that TDC abuses its dominant position in Denmark
  by requesting wholesale customers to pre-pay certain quarterly charges for certain
  wholesale products, and to require these customers to provide guarantees for
  their contractual obligations. We believe that we have not abused our dominant
  position, and have appealed NITAs decision to the Danish Competition Appeal
  Tribunal, where the matter is currently pending. Based on the ruling by the
  NITA, Tele2 has filed a claim for payment of damages, which the court has postponed
  until the summer of 2006, when the Competition Appeal Tribunal is expected to
  conclude our appeal to the NITA decision. Based on a legal assessment of the
  possible outcome of Tele2s claim, as well as the other lawsuits and cases
  that are currently pending, management is of the opinion that these will have
  no significant adverse effect on TDC Groups financial position.

Decisions
  have also been made on four retail submarkets for telephony traffic, the retail
  market for leased lines, the wholesale markets for terminating segments of leased
  lines, unbundled access and shared use including co-location, as

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well as for call termination
  on landline networks. None of the decisions include significant changes in relation
  to existing regulation with the exception of regulations relating to extended
  access related to co-location and extended requirements to guarantee the line
  quality against disturbances.

Anti-Terror
  Measures.As part of the anti-terrorism action plan passed by the Danish
  government in November 2005, the government has proposed a bill requiring telecommunications
  operators to use or install communication interception equipment and to establish
  databases for mandatory retention of traffic passing through their networks
  in order to assist law enforcement agencies in tracking terrorist activity.
  If such measures are adopted, we may have to make additional investments in
  technical equipment, and we may incur operational costs as a result.

EU
  Universal Service Obligation (USO) directive. Pursuant to the EU USO directive
  and Danish USO regulation, which are designed to ensure that all end users have
  access to certain basic telecommunications services regardless of their geographical
  location at an affordable price, NITA has designated us as the Universal Service
  Provider (USP) in Denmark. In the past NITA fixed the prices that
  we could charge to our Danish customers who use PSTN services (USO customers)
  for PSTN services, but these price caps were lifted at the end of 2005. We face
  the risk that NITA will decide to reintroduce a price cap on the products and
  services we offer to our USO customers. In addition, we face uncertainty concerning
  the renewal of our USP designation after 2007, which may affect our revenue
  and earnings.

EU
  Roaming Charge Regulation.The EU Commission is currently considering new
  regulations designed to cut international roaming charges and a proposal has
  been submitted for consultation. It is unclear what would be the outcome of
  such regulations if imposed. However, such regulation could have a negative
  impact on TDC Mobile Internationals revenue and earnings.

Certain regulatory
  contingencies in Switzerland may have a material adverse effect on our Swiss
  business.

Prompted
  by a preliminary decision by the Swiss competition authority regarding abuse
  of market power by Swisscom, the Swiss incumbent, in 2005, Swisscom reduced
  its prices for terminating mobile calls, putting heavy pressure on other Swiss
  mobile operators, including TDC Switzerland, to reduce their tariffs as well.
  The Swiss competition authority is continuing its review of the level of competition
  in the mobile call termination market and is currently investigating whether
  the Swiss mobile operators, including TDC Switzerland, have abused a dominant
  position. In parallel since January 2006 a number of interconnection filings
  regarding the Mobile Termination tariffs, against all three major mobile operators,
  have been submitted to the sector specific regulator ComCom. Consequently, TDC
  Switzerland faces the significant possibility that the Swiss competition authority
  or the Swiss regulator ComCom will require Swisscom and/or TDC Switzerland to
  make further price reductions for terminating mobile calls. Such price reductions,
  if imposed on TDC Switzerland, may have a material adverse effect on the earning
  and profit margins of our Swiss operations. In addition, there can be no assurance
  that the Swiss competition authority will not impose a material fine upon TDC
  Switzerland if the Swiss competition authority determines that TDC Switzerland
  has a dominant position in the mobile call termination market and has abused
  such position.

Swisscom
  announced on April 10, 2006 that it had received a draft ruling from the Swiss
  competition authority recommending that it pay a CHF 489 million fine for misuse
  of mobile termination rates. Swisscom reported that the competition authority
  considered that all Swiss mobile carriers had a monopoly on incoming calls within
  their network, but only Swisscom Mobile misused its dominant position on the
  market in the period between April 1, 2004 to May 31, 2005 by demanding excessively
  high termination fees. Swisscom reported that the investigation into the period
  following the reduction of fees is to be continued and will also cover the other
  Swiss mobile carriers, including TDC Switzerland. Swisscom has said it will
  argue against the ruling.

Our
  Swiss business benefits from regulations requiring Swisscom to grant other telecommunications
  operators, including us, interconnection services under cost-based terms and
  conditions. Swisscom has challenged the interconnection tariffs as set by the
  Swiss Communication Commission (ComCom) in court. In its ruling
  of April 21, 2006 (sent to the parties on May 19, 2006) the Federal Court (Supreme
  Court of Switzerland) has largely rejected Swisscoms complaints and returned
  the matter to ComCom only in a minor point. As many methodological flaws in
  the Regulators costing model have been approved with this ruling it may
  prove difficult to deduce future landline interconnection costs from this ruling
  which covers the years 2000  2003.

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Our
  business plan and earnings forecasts, particularly in relation to expected broadband
  and triple play sales, anticipate that the Swiss legislature will enact legislation
  requiring Swiss telecommunications operators to open their local loop networks
  to other operators. Such regulations would allow TDC Switzerland to lease network
  capacity on Swisscoms ULL and gain access to Swisscoms customers.
  A revised telecommunications law providing for such opening of ULL networks
  was passed by the Swiss Parliament on March 24, 2006. A 100-day referendum period
  expires on July 13, 2006. If there is no referendum and the ordinances implementing
  the new law are finalized, the new law enters into force probably on January
  1, 2007. Although unlikely, it is possible that organizations opposed to the
  law could force a public vote, which would further delay enactment by at least
  a year and could potentially result in enactment being prevented. Once the law
  is enacted, vested interests may attempt to prevent, impede or delay access
  to the ULL networks through other measures. If ULL terms and conditions are
  not set and enforced in a favourable way, we might have to adjust our business
  plan and earnings forecast.

Substantial
  parts of TDC Switzerlands backbone consist of leased dark fibres situated
  in the guard wire of high-voltage power lines. In a pending court case the use
  of the power line for telecommunication purposes is disputed by an owner of
  a property over which a power line is situated. Dependent on the outcome of
  the pending and potential similar future cases,TDC Switzerland might be forced
  to find alternative facilities (e.g. build pipes and lay dark fibre cables)
  to secure certain parts of its backbone at substantial costs.

The licenses for
  the key technologies underlying our service offerings have finite terms and
  the failure to renew one of these licenses upon termination, or our inability
  to obtain new licenses for new technologies, could adversely affect our business.

We
  are licensed by NITA to provide mobile telecommunications services in Denmark
  and by the Swiss regulator to provide mobile telecommunications services in
  Switzerland. For example, we have UMTS licenses to provide 3G services in Denmark
  and Switzerland, three GSM licenses in Denmark (including licenses for DCS 1800,
  DC56 and GSM, respectively) and one GSM license in Switzerland. Our Danish and
  Swiss UMTS licenses are valid until October 31, 2021 and December 31, 2016,
  respectively. Our Danish GSM licenses are valid until June 12, 2007, January
  1, 2011 and March 1, 2012, respectively and our Swiss GSM license is valid until
  May 31, 2008. There can be no assurance that NITA or the Swiss regulator will
  not withdraw our existing licenses if we can not meet license conditions, including
  obtaining the regulators consent in the event of a change of control.
  After their respective expiration dates, we will have to reapply for a new Danish
  UMTS license and new Swiss GSM and UMTS licenses. There can be no assurance
  that any application for renewal of such licenses will be successful. The three
  Danish GSM licenses will be extended automatically for periods of 10 years unless
  NITA, at its discretion, issues a decision not to extend such licenses, which
  decision must be made one year before the scheduled expiry date. In the event
  that we are unable to renew a license or obtain a new license for any technology
  that is important for the provision of our service offerings, we could be forced
  to discontinue use of that technology and our financial condition and result
  of operations could be materially adversely affected.

We face various
  litigation and commercial dispute risks that could have a material adverse effect
  on our results of operations.

Pursuant
  to the change of control provisions in Polkomtels bylaws and the shareholder
  agreement among Polkomtels shareholders, as a result of our recent change
  of control, TDC is required to offer to sell its 19.6% ownership share to the
  other shareholders of Polkomtel. In February 2006 TDC offered its shares for
  a price of €214.04 per share. On March 10, 2006, the Polish shareholders
  in Polkomtel entered into an agreement with TDC whereby, subject to certain
  conditions including the outcome of the Vodafone litigation described below,
  they agreed to exercise their right to purchase their pro rata share of 14.8%
  of the share capital of Polkomtel for an aggregate price of €650.5 million.
  The remainder of TDCs shareholding in Polkomtel, 4.8%, has been offered
  to Vodafone, the only shareholder of Polkomtel who has not entered into the
  purchase agreement with TDC. Vodafone has claimed that the offer procedure is
  invalid and that the offer price determined by TDC does not reflect the market
  value of the Polkomtel shares. Vodafone also maintains that the price at which
  TDCs shares in Polkomtel should be offered for sale to Vodafone and the
  other shareholders should be determined in arbitration. Legal proceedings are
  pending in the Polish courts and the International Arbitral Center in Vienna.
  Upon Vodafones motion, the District Court in Warsaw, Poland has issued
  an injunction which prohibits TDC

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from transferring any
  of its shares in Polkomtel. Vodafone has initiated arbitration against TDC.
  If these proceedings are determined adversely to TDC, TDC may be required to
  sell its shares in Polkomtel for less than the €214.04 price per share.
  Even if determined favorably to TDC, these proceedings will delay the sale of
  Polkomtel shares and the receipt of proceeds by TDC.

At
  the EGM held on February 28, 2006, NTC proposed that TDC seek to delist its
  shares and ADSs from the Copenhagen Stock Exchange and from the NYSE, respectively,
  and subsequently seek to deregister all securities from the U.S. Exchange Act.
  NTC also proposed the introduction of a new clause into the articles of association
  of TDC permitting the compulsory acquisition of the shares of minority shareholders.
  These proposals attained an affirmative vote of over 90% of the share capital
  of TDC represented at the Extraordinary General Meeting (although less than
  90% of the share capital of TDC) and such resolutions were declared passed by
  the Extraordinary General Meeting. Subsequently, the Danish Commerce and Companies
  Agency ruled that it would not register the new articles of association. TDC
  has filed a writ with the Eastern High Court against the Danish Commerce and
  Companies Agency seeking an acknowledgment of the registration of the squeeze-out
  provision in the articles of association.

Further,
  ATP, a Danish pension fund holding 5.5% of the shares in TDC, has filed a writ
  with the Copenhagen City Court (which has been passed on to the Eastern High
  Court) against both TDC and NTC seeking an acknowledgment of the invalidity
  of both the squeeze-out provisions in the articles of association and the authorization
  to delist from the Copenhagen Stock Exchange and the NYSE granted at the Extraordinary
  General Meeting. On April 5, TDC and NTC announced that they would challenge
  the ruling from the Danish Commerce and Companies Agency in the Danish courts.
  TDC has proceeded with its intention to delist its ADSs from the NYSE, which
  delisting occurred on April 19, 2006. If ATP succeeds in its litigation, NTC
  will be unable to proceed with the compulsory acquisition. In addition, ATP
  may seek an award of damages against us or other relief. In the legal proceedings
  instigated by ATP against NTC and TDC, ATP has reserved the right to challenge
  authorizations adopted at the annual general meeting of TDC on April 26, 2006,
  as illegal, in particular authorizations (i) to issue warrants to management
  and others and (ii) to repurchase shares. Furthermore, ATP claims that the reference
  date with regard to the redemption price of ATPs shares should only be
  decided as of when the redemption may actually be completed. Finally, ATP claims
  that the NTC should pay interest on the redemption price. TDC and NTC have responded
  to the claims by ATP.

Risks Related to Our
  Indebtedness and Our Structure

You may be required
  to sell your shares at a price that is uncertain.

NTC
  suspended the compulsory acquisition of minority shares following the ruling
  by the DCCA that it would not register the articles of association granting
  NTC the right to compulsorily acquire shares held by other shareholders of TDC.
  NTC and TDC have decided to challenge that ruling. If and when the compulsory
  acquisition were to go ahead, you could be required to sell your shares in TDC.
  The price at which the sale might take place is not certain.

TDC is dominated
  by an 88.2% shareholder, who will be able to influence certain actions requiring
  shareholder approval, and whose interests may be inconsistent with the interests
  of TDC and our minority shareholders.

NTC,
  holding 88.2% of TDCs outstanding shares, effectively controls TDC, which
  permits NTC to influence certain actions requiring shareholder approval, such
  as the election of TDCs board of directors, the adoption of amendments
  to TDCs articles of association and the approval of a capital increase,
  merger, consolidation or liquidation, and to effect all decisions that a majority
  shareholder is permitted to make under Danish law.

Also,
  the interests of NTC and its respective shareholders and affiliates could conflict
  with your interests and with the interests of TDC, particularly if we encounter
  financial difficulties or are unable to pay our debts when due. NTC and its
  respective shareholders and affiliates could also have an interest in pursuing
  acquisitions, divestitures, financings or other transactions that, in their
  judgment, could enhance their equity investments, although such transactions
  might involve risks to you as a holder of shares. In addition, NTC and its respective
  shareholders and affiliates may own, acquire and hold interests in businesses
  that compete directly or indirectly with us or may own businesses with interests
  that conflict with ours.

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Our high leverage
  and debt service obligations could materially and adversely affect our business,
  financial condition or results of operations.

We
  are highly leveraged and have significant debt service obligations. As a holder
  of TDC shares, our high leverage could have important consequences for you.
  Our substantial leverage poses the risk that

| |  | our vulnerability
      to a downturn in our business or economic and industry conditions will increase;                                                                                                                                                                                                       
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to obtain
      additional financing to fund future working capital, capital expenditures,
      business opportunities and other corporate requirements will be limited;                                                                                                                          
| |  | we may have a much
      higher level of debt than certain of our competitors, which may put us at
      a competitive disadvantage and may make it difficult for us to pursue our
      business strategy and to grow our business in accordance with our strategy;                                           
| |  | a substantial portion
      of our cash flow from operations will have to be dedicated to the payment
      of principal of, and interest on, our indebtedness, which means that this
      cash flow will not be available to fund our operations, capital expenditures
      or other corporate purposes; and
| |  | our flexibility in
      planning for, or reacting to, changes in our business, the competitive environment
      and the industry in which we operate will be limited.                                                                                                                                        

Any
  of these or other consequences or events could have a material adverse effect
  on our ability to satisfy our debt obligations and to declare and pay dividends
  on our shares. In addition, we may incur substantial indebtedness in the future.

We require a significant
  amount of cash to service our debt, and our ability to generate sufficient cash
  depends on many factors beyond our control.

Our
  ability to make payments on and to refinance our debt and to fund working capital
  and capital expenditures will depend on our future operating performance and
  ability to generate sufficient cash. This depends, to some extent, on general
  economic, financial, competitive, market, legislative, regulatory and other
  factors, many of which are beyond our control, as well as the other factors
  discussed in these Risk Factors and elsewhere in this Annual Report.
  We cannot assure you that our business will generate sufficient cash flows from
  operations or that future debt and equity financing will be available to us
  in an amount sufficient to enable us to pay our debts when due, or to fund our
  other liquidity needs. If our future cash flows from operations and other capital
  resources are insufficient to pay our obligations as they mature or to fund
  our liquidity needs, we may be forced to:

| |  | reduce
      or delay our business activities and capital expenditures;            
| | - | -----------------------------------------------------------------------------------
| |  | sell
      assets;                                                                 
| |  | obtain
      additional debt or equity capital; or                                 
| |  | restructure
      or refinance all or a portion of our debt, on or before maturity.

We
  cannot assure you that we would be able to accomplish any of these alternatives
  on a timely basis or on satisfactory terms, if at all.

We are subject to
  significant restrictive debt covenants which limit our operating flexibility.

The
  Senior Facilities Agreement and the indenture governing the high yield notes
  that were issued by NTCH in connection with its acquisition of TDC contain covenants
  significantly restricting our ability to, among other things:

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| |  | incur
      or guarantee additional indebtedness;                                                         
| | - | ----------------------------------------------------------------------------------------------------------
| |  | pay dividends
      or make other distributions, or repurchase or redeem our stock;                       
| |  | make
      investments or other restricted payments;                                                      
| |  | create
      liens;                                                                                       
| |  | enter
      into certain transactions with affiliates;                                                    
| |  | enter
      into agreements that restrict our restricted subsidiaries ability
      to pay dividends; and
| |  | consolidate,
      merge or sell all or substantially all of our assets.                                  

These
  covenants could limit our ability to finance our future operations and capital
  needs and our ability to pursue acquisitions, investments and other business
  activities that may be in our interest. We have a history of expansion through
  initial minority investments, and may be unable to continue this strategy.

The
  Senior Facilities Agreement also requires us to maintain specified financial
  ratios and satisfy specified financial tests. Our ability to meet these financial
  ratios and tests may be affected by events beyond our control and, as a result,
  we cannot assure you that we will be able to meet these ratios and tests. In
  the event of a default under the Senior Facilities Agreement or certain other
  defaults under any other agreement, the lenders could terminate their commitments
  (in the case of the Revolving Credit Facility) and declare all amounts owed
  to them due and payable. In addition, a default under the indenture would result
  in cross-default under the Senior Facilities Agreement. Borrowings under other
  debt instruments that contain cross-acceleration or cross-default provisions
  could also be accelerated and become due and payable in such circumstances.
  We may be unable to pay these debts in such circumstances, which could have
  a material negative effect on the value of TDCs shares.

We are subject to
  restrictions on making dividend payments.

The
  terms of the Senior Facilities Agreement and applicable law restrict the ability
  of TDC to make, among others, dividend payments, including the need to have
  retained earnings to distribute. As of December 31, 2005, TDCs retained
  earnings on a stand-alone basis for TDC A/S were DKK 43,967 million (€5,893
  million), which amount has been reduced by the amount of an extraordinary dividend
  of DKK 43,481 million (€5,828 million) paid to TDC shareholders on April
  11, 2006. This amount will also be reduced by the amount of any losses incurred
  or other dividends paid after December 31, 2005.

Actions proposed
  by TDCs majority shareholder may eliminate a liquid market for TDC shares.

At
  the EGM of TDC held on February 28, 2006, NTC proposed, and a majority of TDCs
  shareholder represented at the EGM approve, that TDC seek to delist its shares
  and ADSs from the Copenhagen Stock Exchange and from the NYSE, respectively,
  and subsequently seek to deregister all securities registered under the Securities
  Exchange Act of 1934, as amended (the U.S. Exchange Act). ATP challenged
  these shareholder resolutions, the matter is currently pending in the Eastern
  High Court. TDC has proceeded with the delisting of its ADSs from the NYSE,
  which delisting occurred on April 19, 2006. If we succeed with our litigation
  against ATP and NTC effects the delisting from the Copenhagen Stock Exchange,
  TDC would cease to be a publicly listed company, which could adversely affect
  the liquidity, and thus the value, of the shares in TDC. In addition, if our
  shares are delisted from the Copenhagen Stock Exchange and our securities deregistered
  from the U.S. Exchange Act, we would no longer be subject to comply with certain
  disclosure and other obligations required by the relevant authorities.

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Item
  4 Information on the Company

Overview

The TDC GroupToday
  we are the leading provider of communications solutions in Denmark, the second-largest
  telecommunications provider in Switzerland, and we have a significant presence
  in selected Northern and Central European telecommunication markets. Over the
  past decade, we have transformed our business from a traditional provider of
  landline and mobile telephony services in the Danish market into a Danish-based
  European provider of communications solutions.

At
  the end of 2005, we had more than 15 million customers in Europe, including
  more than 9 million mobile customers, 3.5 landline customers, 1.8 internet customers,
  and 1.0 cable-TV customers. In 2005, we had revenue of DKK 46,6bn, of which
  49% stemmed from international activities compared with 47% in 2004.

At
  year-end 2005, we had 20,225 full-time employee equivalents compared with 19,497
  in 2004. The increase may be explained primarily by acquisitions of companies.
  At year-end 2005, our domestic operations accounted for 13,876 full-time employee
  equivalents compared with 14,437 in 2004. The decrease is related mainly to
  the continued need to reduce our domestic workforce, primarily to adjust to
  the decline in traditional landline telephony and intensified competition in
  the domestic market. Increased customer interest in self-service and internet-based
  solutions has also contributed to this trend. The adjustment was effected partly
  by natural attrition partly by the completion of redundancy programs implemented
  during 2003 to 2005. The lower number of full-time employee equivalents in Denmark
  also results from outsourcing a number of services to external service providers.

The
  telecommunications sectorIn
  recent years, the fierce competition in the telecommunications sector has intensified.
  Competition in the domestic market is especially tough, with many operators,
  and public regulation aimed particularly at TDC. New technology that allows
  telephony over the internet (VoIP), has further intensified competition.

As
  a reaction to the continued competition in the telecoms market, TDC has substantially
  expanded its international activities. After the acquisition of TDC Song and
  NetDesign at year-end 2004, TDC further strengthened its position in the pan-Nordic
  market by acquiring Dotcom Solutions in Sweden and introducing broadband solutions
  for residential customers in the Swedish market. We also acquired sunrise business
  communications1 to strengthen our position in Switzerland, and increased
  our ownership share in the Hungarian company HTCC.

With
  regard to regulations in Denmark, the Danish National IT and Telecom Agency
  is still considering measures concerning excess cost recovery, and its decisions
  on the follow-up reviews of its market analyses. A more detailed description
  is given in the section on Risk factors related to TDCs operations on
  page 8.

The
  key trends in the telecoms market are continued migration from landline to mobile
  telephony and migration to package-switched traffic (VoIP, IP-VPN, GPRS, UMTS).
  In addition, the telecoms market is characterized by a more pronounced use of
  consumption-independent flat-rate pricing, increased self-services and web-based
  distribution channels.

TDC
  continuously adapts to technological and market developments and in 2005 launched
  3G mobile telephony, enabling high-speed data services such as video telephony,
  internet access, live streaming and games. We also introduced internet-based
  telephony (VoIP) and internet-based TV (TVoIP), as well as ADSL speeds of up
  to 8 Mbps on the domestic market.

In
  2006, we have launched Video on Demand (VoD), which allows customers to watch
  films or programs whenever it suits them.

---

|1 | In May 2005, we acquired
      Ascoms business communications solutions unit, subsequently changed
      to sunrise business communications.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------

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Business linesWe
  are organized as five main business lines:

TDC
  Solutions provides mainly communications services primarily in Denmark and the
  Nordic countries. Its activities include landline telephony services, convergence
  products (combined landline and mobile telephony), data communications and internet
  services, including broadband solutions, security and hosting services, leased
  lines, sale of terminals and installation. TDC Solutions main activities
  are performed by the parent company TDC Solutions A/S, and its subsidiaries
  TDC Song (pan-Nordic), HTCC (Hungary), NetDesign (Denmark) and TDC Dotcom (based
  in Sweden).

TDC
  Mobile International provides mobile telecommunications services in Denmark
  and a number of other European countries. The domestic activities include the
  wholly-owned subsidiaries TDC Mobil A/S and Telmore. The international activities
  include the wholly-owned subsidiaries Talkline, a German MVNO, and Bité,
  a Baltic mobile operator in Latvia and Lithuania. TDC Mobile International also
  holds a 19.6% stake in Polkomtel, operating in Poland (which we are in the process
  of selling), a 15% stake in One, which operates in Austria, and an 88.9% stake
  in Telmore International Holding (Telmore International), responsible
  for cooperation with easyGroup, which launched the easyMobile concept in 2005.
  Talkline owns 80% of the easyMobile business in Germany, which was also launched
  in 2005.

TDC
  Switzerland is the second-largest telecommunications provider in the Swiss market.
  Its activities include mobile, landline and internet communications services.

TDC
  Cable TV is a Danish provider of cable TV, internet access and VoIP and can
  therefore provide triple play solutions. TDC Cable TVs activities also
  include those of its wholly-owned subsidiaries Dansk Kabel TV, Connect Partner
  and Telelet.

Other
  activities include primarily TDC Services, which provides services mainly for
  TDCs domestic business lines.

Our History and Development

We
  were founded by the Danish State in November 1990 to serve as a holding company
  for the four Danish regional telecommunications enterprises and Telecom A/S
  ("Telecom"), the international telephone service provider. We are a public limited
  company and were incorporated on November 14, 1990. We are subject to the provisions
  of the Danish Act relating to Public Limited Liability Companies. Our principal
  offices are located at Nørregade 21, 0900 Copenhagen C, Denmark, and
  our telephone number is: +45 33 43 7777.

The
  primary reason we were formed was to strengthen the competitiveness of the Danish
  telecommunications sector. In 1991, we acquired two of the regional telecommunications
  enterprises, Tele Sønderjylland A/S (Tele Sønderjylland) and
  Fyns Telefon A/S (Fyns Telefon), as well as Telecom. We completed the acquisition
  of the two remaining regional telecommunications enterprises, Kjøbenhavns
  Telefon Aktieselskab (KTAS) and Jydsk Telefon-Aktieselskab (Jydsk Telefon),
  in March 1992. Minority shareholdings in KTAS and Jydsk Telefon, the two entities
  that had been partially privatized, were either exchanged for our shares or
  purchased by the Danish State. The acquisition of the Danish States interests
  in all of these enterprises was effected by an exchange of our shares, together
  with cash payments.

Prior
  to our establishment, the four regional companies provided a wide range of telecommunications
  services and products including domestic telephone services, mobile services,
  rental and sales of equipment, data communications and public payphones.

From
  1991 to 1994, we reorganized and strengthened our management functions. Units
  were formed to handle a number of nationwide activities and services, such as
  mobile services, data network services, supply and service of

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telecommunications equipment,
  information technology and financial functions. The new structure improved our
  responsiveness to changing market conditions.

In
  March 1992, our subsidiary Tele Danmark Mobil A/S (Tele Danmark Mobil) began
  providing mobile telephone and other mobile services that were previously provided
  by the regional companies. In January 1993, another subsidiary, Tele Danmark
  Erhverv A/S (Tele Danmark Erhverv), assumed, through a merger of activities
  of KTAS and Jydsk Telefon in this area, responsibility for supplying and servicing
  private branch exchanges, or PBXs, internal networks, cabling and wide area
  networks for larger businesses. Tele Danmark Erhverv in 1994 took over responsibility
  for similar activities previously performed by Tele Sønderjylland and
  Fyns Telefon. In 1993, our subsidiary, Tele Danmark Datacom A/S (Datacom)
  took over the handling of the production and marketing of data network and communication
  services. Datacom was made a subsidiary of Tele Danmark Erhverv in January 1994
  in order to coordinate Datacoms services with other business oriented
  services we offered.

In
  1994, our international activities were organized under Tele Danmark International.
  This division was responsible for the management of the groups foreign
  companies and international ventures. It also assessed and prepared the groundwork
  for future business opportunities outside of Denmark.

In
  April 1994, we made a public offering of 63,229,770 class B shares, of which
  51,839,540 were in the form of American Depositary Shares, each representing
  one half of one class B share. After this offering and a related reorganization
  of our capital structure, the ownership of the Danish State was reduced to 51%
  of our nominal share capital and voting power. Of the 63,229,770 class B shares
  offered, 25,919,770 were offered in the United States and 37,310,000 were offered
  outside the United States, including in a public offering in Denmark. Further,
  in the same year the overall coordination of both marketing efforts and R&D
  was strengthened by setting up cross-organizational management groups.

In
  1995, the groups parent company, Tele Danmark A/S, merged with the following
  subsidiaries: KTAS, Jydsk Telefon A/S, Fyns Telefon A/S, Tele Sønderjylland
  A/S, Telecom A/S, Tele Danmark EDB A/S, Tele Danmark Erhverv A/S, Tele Danmark
  Datacom A/S, Tele Danmark Finans A/S and Teldan Indkøb A/S. The merger
  had legal and financial effect from January 1, 1995. The merger had entailed
  a fundamental restructuring of our organization. The changes were planned in
  the second half of 1995 and came into effect on January 1, 1996. The restructuring
  was based on the gradual structural development over five years of the Danish
  telecommunications sector.

In
  October 1997, we entered into a strategic partnership with Ameritech, aimed
  at benefiting customers, employees and shareholders. Ameritech supported the
  partnership by acquiring 34% of our shares from the Danish State.

In
  January 1998, our shareholders decided to reduce our share capital by 17% by
  repurchasing and canceling the Danish States remaining shares in Tele
  Danmark A/S. This transaction completed our privatization.

In
  October 1999 Ameritech and SBC Communications merged making SBC Communications
  one of the largest communications companies in the world.

In
  2000, we completely restructured our operations to strengthen our competitive
  position and focus more clearly on high potential growth areas. TDC group now
  comprises a holding company with business lines operating in specific business
  areas. These important changes are reflected in the names of our holding company
  and its business lines. As of year end 2000, our holding company (formerly Tele
  Danmark Group) became known as TDC. Our principal business lines became TDC
  Tele Danmark, TDC Mobile International, TDC Internet, TDC Directories, TDC Cable
  TV and TDC Services.

In
  February 2001, we established the business line TDC Switzerland following our
  investments in Switzerland, where we increased our ownership in sunrise and
  purchased a majority stake in diAx, a Swiss mobile provider. These investments
  and the subsequent merger of sunrise and diAx have made us the second-largest
  communications provider in Switzerland, offering landline, mobile and Internet
  services in direct competition with Swisscom.

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In
  January 2003, we streamlined domestic operations through the merger of TDC Tele
  Danmark and TDC Internet to form TDC Solutions.

In
  June 2004, SBC reduced its shareholding in TDC from 41.6% to 9.5%, while TDC
  acquired approximately 8.4% of TDCs total share capital for approximately
  DKK 3.4bn. In November 2004, SBC sold its remaining 9.5% stake in TDC.

In
  recent years we have also divested certain of our non-core businesses, including
  TDC Directories, our print and electronic web-based directory business that
  operated in Denmark, Sweden and Finland, which we sold in 2005.

In
  October 2005, we announced the stock exchanges that we had received non-binding
  offer interest indications for acquisition of TDC. In the light of this, TDCs
  Board of Directors decided it was in the interest of TDC and its shareholders
  to review these indications more closely.

At
  the request of NTC, the Board of Directors decided to accede to a limited due
  diligence investigation following the conclusion of a confidentiality and stand-still
  agreement. An electronic data space was made available to NTC starting October
  20, 2005, and the Chairmanship and representatives of TDCs Management
  met with representatives of NTC to discuss TDCs business activities. The
  investigations resulted in a new non-binding tender offer increasing the proposed
  offer price on the part of NTC, and on November 24, 2005, the Board of Directors
  approved that the Chairman and the Vice Chairman, on behalf of the Board of
  Directors, could initiate negotiations with NTC regarding the terms of a possible
  transaction.

On
  December 2, NTC made a public tender offer for the total amount of common shares
  in TDC. The company offered to purchase all shares and ADSs in TDC for a price
  of DKK 382 per share and DKK 192 per ADS, corresponding to a premium of 39.9%
  compared with the average market price on August 16, 2005. On the same date,
  TDC published a statement from the Board of Directors recommending that shareholders
  and holders of ADSs accept NTCs tender offer.

Based
  on NTCs offer to the shareholders of December 2, 2005 for DKK 382 per
  share and DKK 191 per ADS, corresponding to a premium of 39.3% compared with
  the average price on August 16, 2005, NTC announced on January 25, 2006 that
  the company owned or had valid acceptances to acquire 88.2% of the shares in
  TDC A/S in connection with NTCs public tender offer. On February 1, 2006, NTC
  settled and paid for shares and ADSs, thereby becoming the owner of 88.2% of
  the common shares.

NTC
  is indirectly wholly-owned by certain equity funds that are directly or indirectly
  advised or managed by the five international equity funds Apax Partners Worldwide
  LLP, The Blackstone Group International Limited, Kohlberg Kravis Roberts &
  Co. L.P., Permira Advisers KB and Providence Equity Partners Limited.

For
  a complete list of our significant subsidiaries and associated companies, see
  note 32 to our consolidated financial statements.

Overview of Our Revenue
  by Service Area

Revenue
  by business line and geographic market are specified in the table below. This
  revenue was generated by our various business lines operating in Denmark, Switzerland
  and ten other countries in Europe. Since 2001, approximately half of our revenue
  has come from operations outside of Denmark. A discussion of our revenue by
  service area is included in Our Subsidiaries below, and in Item 5 under Results
  of Operations by Business Line.

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|                                               |                               |   |        |  
|---------------------------------------------- | ----------------------------- | - | ------ | -
|DKK M                                          | Year
      Ended December 31, |  
|                                               | 2004                          |   | 2005   |  
|                                               |                               |   |        |  
|TDC Solutions                                  | 18,590                        |   | 21,631 |  
|TDC Mobile International                       | 15,105                        |   | 16,039 |  
|TDC Switzerland                                | 9,692                         |   | 9,582  |  
|TDC Cable TV                                   | 1,766                         |   | 2,107  |  
|Other activities,
      including TDC A/S, TDC |                               |   |        |  
|Services and eliminations                      | (2,814                        | ) | (2,771 | )
|                                               |                               |   |        |  
|Total                                          | 42,339                        |   | 46,588 |  
|of
      which                                 |                               |   |        |  
|International activities                       | 19,824                        |   | 22,849 |  
|Domestic activities                            | 22,515                        |   | 23,739 |  

Our Subsidiaries

TDC Solutions

TDC
  Solutions offers a wide range of communications services in Denmark and the
  Nordic countries as well as the Hungarian market through HTCC. Its activities
  include landline telephony services, convergence products (combined landline
  and mobile telephony), data communications and internet services, including
  broadband solutions, security and hosting services, leased lines, sale of terminals
  and installation.

At
  year-end 2005, TDC Solutions had 4.5 million customers, with 4.1 million in
  the domestic market and 392,000 in international subsidiaries and 12,231 full-time
  employee equivalents. Revenue was DKK 21,631 million in 2005. At year-end 2005,
  TDC Solutions A/S had 8,912 employees and significant operations through a number
  of companies. TDC Song (which includes companies in Denmark, Norway, Sweden
  and Finland), our fully-owned pan-Nordic network operator mainly for business
  customers, had 797 full-time employee equivalents at year-end 2005. HTCC, our
  63.4% owned Hungarian landline and data communications provider, had 685 full-time
  employee equivalents at year-end 2005. TDC Dotcom, an important provider of
  telecommunications infrastructure for Swedish business customers, had 760 full-time
  employee equivalents at year-end 2005. Of our fully-owned subsidiaries, NetDesign,
  a leading provider of IP/LAN infrastructure for business customers, had 171
  full-time employee equivalents and Contactel, our provider of internet and landline
  telephony in the Czech Republic, which was divested with effect from February
  2, 2006, had 264 full-time employee equivalents at year-end 2005.

Landline telephonyLandline
  telephony represents the major share of revenue in TDC Solutions and was DKK
  10,453 million in 2005, corresponding to 48% of TDC Solutions revenue
  compared with 52% in 2004.

Landline
  telephony includes retail landline telephony, including landline traffic and
  subscriptions, and wholesale landline telephony, consisting primarily of domestic
  and international wholesale traffic as well as domestic service provider revenue.
  TDC Song and HTCC generated DKK 1,597 million of total revenue.

The
  number of landline customers in TDC Solutions A/S has declined because of the
  migration toward mobile telephony and IP-based technologies. To counter this
  development and to meet the markets increased focus on flat rate products,
  TDC Solutions A/S launched TDC Samtale in 2004, giving unlimited
  landline minutes in off-peak hours at a flat monthly rate. This product was
  well received by our customers and as a continuation of its success, TDC Solutions
  A/S launched TDC Samtale Døgn in 2005, extending the hours
  of unlimited national landline minutes at a flat monthly rate day and night.
  TDC Solutions A/S has launched internet-based telephony (VoIP) for residential
  customers in January 2006.

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Data communications
  and internet servicesIn
  2005, revenue from data communications and internet services was DKK 5,000 million,
  corresponding to 23% of TDC Solutions total revenue compared with 21%
  in 2004. The business area includes mainly broadband solutions, private IP-based
  networks, dial-up solutions and data communications services. TDC Song and HTCC
  generated DKK 1,171 million of total revenue from data communications and internet
  services. The customer migration from dial-up internet toward broadband solutions
  continued in 2005, and broadband penetration per Danish household increased.
  To counter the increasing competition in the broadband market, TDC Solutions
  introduced a number of campaigns and price changes in 2005, including higher
  speeds at unchanged prices. TDC Solutions also doubled the DSL speed for Danish
  residential customers with the launch of 8 Mbps. In 2005, TDC Solutions also
  launched the internet-based TDC TV (TVoIP), and launched VoIP for residential
  customers in January 2006. Through TDC Song, TDC Solutions also launched broadband
  solutions on the Swedish market at speeds of up to 28 Mbps in the fall of 2005.

Terminal equipment,
  etc.With
  revenue of DKK 3,172 million in 2005, terminal equipment etc. was the third-largest
  contributor to TDC Solutions revenue, contributing 15% of revenue compared
  with 14% of revenue in 2004. This business area includes sales and installation
  of hardware ranging from handsets to large switchboards and service agreements.
  NetDesign and Dotcom Solutions generated DKK 670 million of the total revenue
  from terminal equipment etc.

Leased linesRevenue
  from leased lines was DKK 1,538 million in 2005 and was 7% of TDC Solutions
  total revenue compared with 6% in 2004. This business area includes both domestic
  and international leased-line services. TDC Song and HTCC generated DKK 422
  million of the total revenue from leased lines. Despite increased revenue from
  leased lines driven by acquisitions, this business is declining due to increased
  competition from IP-based networks resulting in customer migration toward IP-based
  solutions.

Other servicesTDC
  Solutions remaining share of revenue, including mainly operator services
  such as directory inquiries and mobile telephony, including Duét, a convergence
  product combining landline and mobile telephony, was DKK 1,468 million or 7%
  of total revenue in 2005.

TDC Mobile International

TDC
  Mobile International is the leading provider of mobile telecommunications services
  in Denmark, provides mobile telephony services in the UK, Germany, Lithuania
  and Latvia, and holds minority interests in mobile operations in Austria and
  Poland (which is subject to sale). Its activities include mobile voice telephony,
  sale of handsets, mobile data services and sale of traffic to MVNOs in Denmark,
  Lithuania, Latvia and Austria.

Over
  the past few years, the domestic mobile sector has experienced fierce price
  competition, and in 2005 the prices stabilized as a result of consolidation
  of the mobile operators. However, as in 2004, earnings from operations were
  adversely impacted as many customers chose to switch to cheaper mobile solutions
  with web-based self-services.

At
  year-end 2005, TDC Mobile International had 2,434 full-time employee equivalents
  and 7.4 million customers, with 2.2 million in domestic operations, 3.4 million
  in Talkline etc. and 1.7 million in Bité. Revenue was DKK 16,039 million
  in 2005.

Business areasTDC
  Mobile International has three main business areas: domestic operations, Talkline
  etc. and Bité.TDC Mobile International also has minority ownership shares
  in the mobile companies, One (Austria), and Polkomtel (Poland).

Domestic operationsThe
  domestic operations primarily include TDC Mobil and Telmore. TDC Mobils
  business areas primarily include retail activities, including mobile telephony,
  sale of handsets and wholesale activities. In 2005, revenue from these areas
  was as follows: 47% from retail, of which 67% was derived from mobile telephony,
  18% from handsets and 14% from subscriptions; 52% from wholesale; and 1% from
  other activities. Telmore offers mobile telephony services as web-

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based self-services through
  TDC Mobils network and is the present market leader for the online segment.
  The domestic mobile market is characterized by high penetration. Further growth
  has been achieved by developing new services and products. In 2005, the trend
  toward increased use of consumption independent flat rate pricing for SMS messages
  and voice traffic contributed to a declining overall share of the wholesale
  and retail markets. TDC Mobil therefore launched the consumption-independent
  product MaxSMS and the supplementary services Fri SMS and Fri
  Tale for MobilEkstra subscribers, which have stimulated consumption. In
  2005, the growth in MOU increased as a result of customers migrating from landline
  to mobile telephony. SMS and MMS traffic also rose significantly due to increased
  customer consumption. In the fourth quarter of 2005, TDC Mobil launched data
  services (mobile broadband) via the UMTS network (3G). Following the introduction
  of UMTS, data transmission prices halved and resulted in data traffic growth
  of 102.9%. All TDC Mobil customers with 3G mobile phones or mobile broadband
  cards for portable PCs have automatic access to the mobile broadband. The UMTS
  launch is expected to result in growth in data traffic and increased revenue
  from TDC Mobils content services in the years ahead. At year-end 2005,
  TDC Mobils UMTS network covered the four largest cities in Denmark and
  selected business areas. Telmore also launched UMTS services for its customers
  in the fourth quarter of 2005.

Talkline etc.Talkline
  etc. comprises the MVNO Talkline, its 80% stake in the easyMobile business in
  Germany and the 88.9% of Telmore International that is owned by TDC Mobile International.

Talkline.TDC Mobile International owns 100% of Talkline, a German MVNO, which itself
  owns 80% of easyMobile Germany, an MVNO operating under its own brand through
  T-Mobiles network. Talkline provides mobile telephony. Talkline also provided
  content services and call-by-call pre-select telephony until April 1, 2005 (Talklines
  disposal of content services and call-by-call pre-select telephony is described
  as the disposal of Talkline ID), when these activities were divested.
  Revenue from these two divested business areas was DKK 326 million from January
  1 to March 31 in 2005. Talkline now operates as an MVNO and sells handsets,
  pre-paid SIM cards and mobile subscriptions in cooperation with mobile operators
  in Germany. Talkline operates through internet-based customer services and has
  a strong distribution network with retail outlets in selected areas. At year-end
  2005, Talkline had increased the number of customers receiving only electronic
  bills to more than 1 million, thereby realizing various cost savings. Talkline
  has had a strong customer base growth resulting in increased market shares in
  2005. The expanded customer base is due mainly to Talklines success with
  its primary distribution channels in 2005, including direct telemarketing channels
  and various specialist dealers.

Telmore
  International.Telmore International is the parent company of the easyMobile
  operations in the UK which works closely with easyMobile in Germany. TDC Mobile
  International owns 88.9% of Telmore International. In March 2005, Telmore International
  launched easyMobile UK, the first MVNO under the easy brand. In the fourth quarter
  of 2005, easyMobile was launched in Germany and The Netherlands; the easyMobile
  operation in The Netherlands is pending discontinuation. Telmore International
  has the option of using the easy brand in a further nine European countries.
  The easyMobile companies provide mobile telephony following the same concept
  as Telmore in Denmark using internet-based self-service.

Bité 
  Bité Lithuania and Bité LatviaBité
  is a mobile operator that is 100% owned by TDC Mobile International operating
  in the Latvian and Lithuanian markets. Bités revenue in Lithuania
  is generated primarily by mobile telephony. The company also offers a wide range
  of content and data services for business customers. Throughout 2005, the Lithuanian
  market experienced pronounced growth, and penetration has been estimated at
  151.5% at year-end 2005 compared with 98.8% at year-end 2004. In mid-September
  2005, Bité launched commercial activities primarily pre-paid mobile telephony,
  in Latvia, and already had 55,000 customers by year-end 2005.

Associates

Polkomtel (Poland)TDC
  Mobile International holds a 19.6% stake in Polkomtel, a Polish mobile operator
  that exceeded nine million customers at year-end 2005 and thereby maintained
  its one-third share of the Polish mobile market. Polkomtel has also successfully
  strengthened its leading position in the post-paid market. Our stake in Polkomtel

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is currently subject to
  sale. See Recent developments in Item 5.

One (Austria)TDC
  Mobile International owns 15.0% of One, the third largest mobile operator in
  Austria. Mobile phone penetration is 105.6% in Austria, and the Austrians are
  among the highest spenders in terms of mobile telecommunications in Europe.
  In 2005, Ones customer base increased by 15.0% to 1.8 million customers
  partly due to the successful launch of its pre-paid concept Yesss!

Polkomtel
  and One are recognized in TDCs consolidated financial statements under
  the equity method.

TDC Switzerland

TDC
  Switzerlands activities include mobile telephony and sales of landline
  and internet services. In 2005, TDC Switzerland acquired Ascoms communications
  solutions unit (now called sunrise business communications), which has considerably
  helped strengthen the provision of infrastructure solutions for TDC Switzerlands
  business customers.

At
  year-end 2005, TDC Switzerland had 2.2 million customers, with 1.3 million mobile
  customers, 527,000 landline customers and 386,000 internet customers. Revenue
  was DKK 9,582 million in 2005. At year-end 2005, TDC Switzerland had 2,454 full-time
  employee equivalents, with 254 directly related to the inclusion of sunrise
  business communications.

Mobile telephonyMobile
  telephony represents the highest share of revenue in TDC Switzerland and was
  DKK 5,710 million in 2005 compared with DKK 5,795 million in 2004. Mobile telephony
  represented 59.6% of total revenue compared with 59.8% in 2004. The mobile telephony
  business includes subscription fees, revenue from mobile traffic and sale of
  handsets. The number of mobile subscribers in the Swiss mobile telephony market
  grew in 2005, and TDC Switzerland retained its position as the second-largest
  provider of mobile telephony in Switzerland. In 2005, TDC Switzerland also introduced
  yallo, a product that enables mobile telephony following the Telmore Concept.
  Initially launched as an online-only product, TDC Switzerland now sells yallo
  through our direct and indirect distribution channels.

Landline telephonyRevenue
  from landline telephony was DKK 3,080 million in 2005, representing a decrease
  of 1.8% compared with 2004. Landline telephony represented 32.1% of total revenue
  compared with 32.4% in 2004. Landline telephony includes retail, including pre-fix
  and pre-select products, as well as wholesale activities. Network integration
  solutions were included in landline telephony in 2005 as a result of the acquisition
  of sunrise business communications. The market for landline voice traffic in
  Switzerland declined in 2005, primarily due to migration from landline to mobile
  telephony.

Internet servicesIn
  2005, internet services contributed DKK 792 million of revenue, representing
  an increase of 4.3% compared with 2004. Internet services represented 8.3% of
  revenue in TDC Switzerland, compared with 7.8% in 2004. Internet services includes
  both dial-up traffic and DSL. The broadband market grew significantly in 2005.
  TDC Switzerland introduced ADSL Flex, which was the first consumption-based
  DSL product in Switzerland. The Swiss dial-up market continued to decline in
  2005.

TDC Cable TV

TDC
  Cable TV installs and operates cable TV networks, most with internet access,
  which provide TV signals for approximately 40% of Danish households. TDC Cable
  TV continued its high growth in customer numbers, revenue and earnings of recent
  years. At year-end 2005, the number of cable TV customers was 1 million, an
  increase of 4.8%, and the number of customers with internet access increased
  by 34.9% to 251,000. In 2005, revenue was DKK 2,107 million, representing growth
  of 19.3%.

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Business areasTDC
  Cable TVs core business area is analog TV, offered in three standard packages
  (basic, medium and full-range) both to individual customers and antenna and
  housing associations. In 2006, TDC Cable TV plans to focus more on customer
  migration from analog to digital TV. 4.0% of our analog TV customers have already
  used Selector to supplement their packages with digital channels from TDC Cable
  TV. Selector is the current means of delivery of digital services from TDC Cable
  TVs network. To receive digital services, customers must have a digital
  receiver, called a Selector box, and a Selector subscription.

The
  share of internet activities is expected to continue to grow in TDC Cable TVs
  future business. In 2005, TDC Cable TV and its subsidiary Dansk Kabel TV launched
  a new IP telephony product, VoIP, which allows telephony over the cable TV network.
  With the introduction of IP telephony in 2005, TDC Cable TV can now offer its
  customers triple play solutions containing TV, internet and telephony. In July
  2005, TDC Cable TV acquired the company Telelet, which, as part of the subsidiary
  Connect Partner, provides triple play solutions to counter the competition in
  the housing association market.

Other activities

Other
  activities cover TDC Services, TDC A/S and elimination of transactions between
  the TDC Groups business lines. TDC Services supplies a number of business
  services for the TDC Groups domestic business lines, which gain economies
  of scale and cost-effective solutions in billing, procurement, logistics, facility
  management, IT, accounting, risk management and security. TDC A/S is the parent
  company of our business lines and undertakes Group functions including treasury,
  legal affairs, human resources, marketing and communications.

Regulatory Environment

European Union

In
  March 2002, the EU passed a number of directives designed to promote competition
  in the European telecommunications market that were subsequently implemented
  into Danish law in 2003. In accordance with this legislation, NITA performs
  market analyses on 18 specifically defined submarkets with respect to landline
  telephony, mobile telephony, leased lines, unbundled access, broadband and TV
  and radio transmission. In each submarket, NITA may designate a dominant telecommunications
  operator as having Significant Market Power (SMP) in such submarket.
  If imperfections in a submarket in which an operator has been designated as
  having SMP are identified, NITA may impose remedies against such operator in
  order to promote competition. In the wholesale market, such measures may include
  the acceptance of a reasonable request for interconnection, non-discrimination,
  reference offers, transparency, accounting separation, specific cost accounting
  obligations and price control methods. NITA has so far issued decisions on 14
  out of 18 submarkets. Final decisions for all the submarkets, except the submarket
  for television and radio transmission, are expected during the first half of
  2006. Until market analyses of the relevant submarkets have been completed and
  NITA has decided whether to adopt new regulatory measures or revoke former measures,
  the current regulation will be maintained in each relevant submarket.

Denmark

SMP Designation

We
  have been designated as having SMP by NITA in almost all of the submarkets in
  Denmark, except for Market 15 (the wholesale market for mobile access), Markets
  5 and 6 (the retail markets for national and international traffic for business
  customers) and according to the market analysis also in Market 17 (the market
  for international roaming). As a result of our SMP designation, we are subject
  to additional regulatory burdens, which are summarized below. In addition, NITA
  has been considering whether to create an additional submarket for cable TV
  networks. If NITA creates a cable TV

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submarket, it is likely
  we would be designated as having SMP in the cable TV market and might be required
  to provide third parties with access to our cable network. There can be no assurance
  that NITA will not impose additional regulatory burdens on us as a result of
  our current SMP status or designate us as having SMP in additional markets.

Retail markets.

As
  a result of our SMP status, the larger part of our retail offerings of leased
  lines must comply with a rule of cost orientation. As a result, we are required
  to calibrate leased line prices annually to ensure that they match the corresponding
  cost plus a mark-up set by the regulatory authorities.

Wholesale markets.

In
  the wholesale markets in which we have SMP status, the majority of our prices
  are regulated as a result of our SMP designation. Until 2002, interconnection
  prices were regulated mainly on the basis of historical cost analyses and best-practice
  benchmarking against corresponding international prices. Since January 1, 2003,
  NITA has set the prices we charge for switched interconnection traffic, interconnection
  capacity, shared access and ULL (also known as raw copper) as well as related
  co-location. NITA calculates these prices once a year in accordance with the
  LRAIC model and evaluates and updates the LRAIC model once every three years.
  Only minor price adjustments were implemented in 2004 and 2005. In early 2006,
  the LRAIC model was adjusted and the prices for ULL, switched interconnection
  traffic and interconnection capacity were decreased considerably. The decrease
  may have a negative impact on our revenue and earnings. The prices for TDCs
  other interconnection products are based on historical costs according to a
  formula set by NITA. It is uncertain how this pricing method will affect TDCs
  future prices. Furthermore, the telecommunications law was amended with effect
  from January 1, 2006, resulting in changes in calculation principles for depreciation,
  amortization and interest payments. Such changes will likely result in price
  decreases for bitstream access and leased lines. The amended law also gives
  NITA increased power to stipulate specific terms and conditions for TDCs
  interconnection agreements.

NITAs
  decision on the submarket for broadband access requires us to discontinue our
  geographical differentiation of bitstream access prices unless we also differentiate
  our retail prices for broadband. Discontinuation of geographical differentiation
  of prices for bitstream access will strengthen our competitors in remote areas,
  where production of bitstream access is very costly for us. Alternatively, we
  may decide to let the current differentiation of wholesale prices affect our
  end user prices. The decision also requires us to offer wholesale broadband
  solutions (bitstream access) without compulsory landline subscriptions, which
  will improve our competitors conditions for offering broadband solutions
  combined with IP telephony. We have appealed the decision for this market and
  some of the other decisions to the Telecommunications Complaints Board.

The
  authorities have announced that they may intervene in the pricing of traditional
  landline subscriptions for customers who also have broadband subscriptions in
  order to address the so-called excess cost recovery problem. The
  formulation of such intervention and its impact on TDCs earnings are uncertain.

In
  the market for termination of mobile calls in mobile networks, NITA has decided
  that TDC, TeliaSonera, Sonofon, Tele2 and Hi3G have SMP with regard to termination
  in the respective mobile networks. However, price regulation has been introduced
  only for TDC, Sonofon and TeliaSonera, whose average price (including call set-up
  fee) must be reduced by approximately 35% over the next two years. This decision
  will adversely impact our earnings. If the domestic market for international
  roaming, market 17, also becomes subject to price regulation, such regulation
  may have a negative impact on TDC Mobils revenue and earnings.

On
  October 31, 2005, NITA concluded that TDC abuses its dominant position in Denmark
  by requesting wholesale customers to pre-pay certain quarterly charges for certain
  wholesale products, and to require these customers to provide guarantees for
  their contractual obligations. We believe that we have not abused our dominant
  position, and have appealed NITAs decision to the Danish Competition Appeal
  Tribunal, where the matter is currently pending. Based on the ruling by the
  NITA, Tele2 has filed a claim for payment of damages, which the court has postponed
  until the summer of 2006, when the Competition Appeal Tribunal is expected to
  conclude our appeal to the NITA decision. Based on a legal assessment of the
  possible outcome of Tele2s claim, as well as the other lawsuits and cases
  that are currently pending, management is of the opinion that these will have
  no significant adverse effect on TDC Groups financial position.

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Decisions
  have also been made on four retail submarkets for telephony traffic, the retail
  market for leased lines, the wholesale markets for terminating segments of leased
  lines, unbundled access and shared use including co-location, as well as for
  call termination on landline networks. None of the decisions include significant
  changes in relation to existing regulation with the exception of regulations
  relating to extended access related to co-location and extended requirements
  to guarantee the line quality against disturbances.

Anti-terror measures.

As
  part of the anti-terrorism action plan passed by the Danish government in November
  2005, the government has proposed a bill requiring telecommunications operators
  to use or install communication interception equipment and to establish databases
  for mandatory retention of traffic passing through their networks in order to
  assist law enforcement agencies in tracking terrorist activity. If such measures
  are adopted, we may have to make additional investments in technical equipment,
  and we may incur operational costs as a result.

EU Universal Service
  Obligation (USO) directive.

Pursuant
  to the EU USO directive and Danish USO regulation, which are designed to ensure
  that all end users have access to certain basic telecommunications services
  regardless of their geographical location at an affordable price, NITA has designated
  us as the Universal Service Provider (USP) in Denmark. In the past
  NITA fixed the prices that we could charge to our Danish customers who use PSTN
  services (USO customers) for PSTN services, but these price caps
  were lifted at the end of 2005. We face the risk that NITA will decide to reintroduce
  a price cap on the products and services we offer to our USO customers. In addition,
  we face uncertainty concerning the renewal of our USP designation after 2007,
  which may affect our revenue and earnings.

EU Roaming Charge Regulation.

The
  EU Commission is currently considering new regulations designed to cut international
  roaming charges and a proposal has been submitted for consultation. It is unclear
  what would be the outcome of such regulations if imposed. However, such regulation
  could have a negative impact on TDC Mobile Internationals revenue and
  earnings.

Switzerland

Regulations

Prompted
  by a preliminary decision by the Swiss competition authority regarding abuse
  of market power by Swisscom, the Swiss incumbent, in 2005, Swisscom reduced
  its prices for terminating mobile calls, putting heavy pressure on other Swiss
  mobile operators, including TDC Switzerland, to reduce their tariffs as well.
  The Swiss competition authority is continuing its review of the level of competition
  in the mobile call termination market and is currently investigating whether
  the Swiss mobile operators, including TDC Switzerland, have abused a dominant
  position. In parallel since January 2006 a number of interconnection filings
  regarding the Mobile Termination tariffs, against all three major mobile operators,
  have been submitted to the sector specific regulator ComCom. Consequently, TDC
  Switzerland faces the significant possibility that the Swiss competition authority
  or the Swiss regulator ComCom will require Swisscom and/or TDC Switzerland to
  make further price reductions for terminating mobile calls. Such price reductions,
  if imposed on TDC Switzerland, may have a material adverse effect on the earning
  and profit margins of our Swiss operations. In addition, there can be no assurance
  that the Swiss competition authority will not impose a material fine upon TDC
  Switzerland if the Swiss competition authority determines that TDC Switzerland
  has a dominant position in the mobile call termination market and has abused
  such position.

Swisscom
  announced on April 10, 2006 that it had received a draft ruling from the Swiss
  competition authority recommending that it pay a CHF 489 million fine for misuse
  of mobile termination rates. Swisscom reported that the competition authority
  considered that all Swiss mobile carriers had a monopoly on incoming calls within
  their network, but only Swisscom Mobile misused its dominant position on the
  market in the period between April 1, 2004 to May 31, 2005 by demanding excessively
  high termination fees. Swisscom reported that the investigation into the period
  following the

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reduction of fees is to
  be continued and will also cover the other Swiss mobile carriers, including
  TDC Switzerland. Swisscom has said it will argue against the ruling.

Our
  Swiss business benefits from regulations requiring Swisscom to grant other telecommunications
  operators, including us, interconnection services under cost-based terms and
  conditions. Swisscom has challenged the interconnection tariffs as set by the
  Swiss Communication Commission (ComCom) in court. In its ruling
  of April 21, 2006 (sent to the parties on May 19, 2006) the Federal Court (Supreme
  Court of Switzerland) has largely rejected Swisscoms complaints and returned
  the matter to ComCom only in a minor point. As many methodological flaws in
  the Regulators costing model have been approved with this ruling it may
  prove difficult to deduce future landline interconnection costs from this ruling
  which covers the years 2000  2003.

Our
  business plan and earnings forecasts, particularly in relation to expected broadband
  and triple play sales, anticipate that the Swiss legislature will enact legislation
  requiring Swiss telecommunications operators to open their local loop networks
  to other operators. Such regulations would allow TDC Switzerland to lease network
  capacity on Swisscoms ULL and gain access to Swisscoms customers.
  A revised telecommunications law providing for such opening of ULL networks
  was passed by the Swiss Parliament on March 24, 2006. A 100-day referendum period
  expires on July 13, 2006. If there is no referendum and the ordinances implementing
  the new law are finalized, the new law enters into force probably on January
  1, 2007. Although unlikely, it is possible that organizations opposed to the
  law could force a public vote, which would further delay enactment by at least
  a year and could potentially result in enactment being prevented. Once the law
  is enacted, vested interests may attempt to prevent, impede or delay access
  to the ULL networks through other measures. If ULL terms and conditions are
  not set and enforced in a favourable way, we might have to adjust our business
  plan and earnings forecast.

Substantial
  parts of TDC Switzerlands backbone consist of leased dark fibres situated
  in the guard wire of high-voltage power lines. In a pending court case the use
  of the power line for telecommunication purposes is disputed by an owner of
  a property over which a power line is situated. Dependent on the outcome of
  the pending and potential similar future cases,TDC Switzerland might be forced
  to find alternative facilities (e.g. build pipes and lay dark fibre cables)
  to secure certain parts of its backbone at substantial costs.

Licenses - Denmark
  and Switzerland

We
  are licensed by NITA to provide mobile telecommunications services in Denmark
  and by the Swiss regulator to provide mobile telecommunications services in
  Switzerland. For example, we have UMTS licenses to provide 3G services in Denmark
  and Switzerland, three GSM licenses in Denmark (including licenses for DCS1800,
  DC56 and GSM) and one GSM license in Switzerland. Our Danish and Swiss UMTS
  licenses are valid until October 31, 2021 and December 31, 2016, respectively.
  Our Danish GSM licenses are valid until June 12, 2007, January 1, 2011 and March
  1, 2012, respectively, and our Swiss GSM license is valid until May 31, 2008.
  There can be no assurance that NITA or the Swiss regulator will not withdraw
  our existing licenses if we can not meet license conditions, including obtaining
  the regulators consent in the event of a change of control. After their
  respective expiration dates, we will have to reapply for a new Danish UMTS license
  and new Swiss GSM and UMTS licenses. There can be no assurance that any application
  for renewal of such licenses will be successful. The three Danish GSM licenses
  will be extended automatically for periods of 10 years unless NITA, at its discretion,
  issues a decision not to extend such licenses which decision must be made one
  year before the scheduled expiry date.

Research and Development,
  Patents and Licenses

Our
  research and development activities are currently focused on developing next-generation
  services and network platforms in the landline and mobile business areas. This
  includes development of broadband applications and services, as well as IP-based
  and UMTS network platforms and wireless LAN capabilities. Furthermore, we participate
  in international programs, including standardization efforts, and cooperate
  with independent research organizations. Although we expect our research and
  development efforts to contribute to future revenue growth, we believe our results
  of operations and cash flows are not dependent upon the success of such efforts.

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We
  are licensed by NITA to provide mobile telecommunications services in Denmark
  and by the Swiss regulator to provide mobile telecommunications services in
  Switzerland. For example, we have UMTS licenses to provide 3G services in Denmark
  and Switzerland, three GSM licenses in Denmark (including licenses for DCS1800,
  DC56 and GSM) and one GSM license in Switzerland. Our Danish and Swiss UMTS
  licenses are valid until October 31, 2021 and December 31, 2016, respectively.
  Our Danish GSM licenses are valid until June 12, 2007, January 1, 2011 and March
  1, 2012, respectively, and our Swiss GSM license is valid until May 31, 2008.
  There can be no assurance that NITA or the Swiss regulator will not withdraw
  our existing licenses if we can not meet license conditions, including obtaining
  the regulators consent in the event of a change of control. After their
  respective expiration dates, we will have to reapply for a new Danish UMTS license
  and new Swiss GSM and UMTS licenses. There can be no assurance that any application
  for renewal of such licenses will be successful. The three Danish GSM licenses
  will be extended automatically for periods of 10 years unless NITA, at its discretion,
  issues a decision not to extend such licenses which decision must be made one
  year before the scheduled expiry date.

In
  August 2004, TDC signed an exclusive license agreement with easyGroup, which
  allows us to use the easy brand when offering mobile telephony in up to 11 European
  countries. At present we have operations in the UK and in Germany using the
  easy brand. However, the operations are still at a very early stage in their
  development. See Business  Talkline etc.

Apart from our leading
  brands, we do not believe that we are dependent on any other intellectual property
  right including any individual brands.

Property, Plant and
  Equipment

TDC
  Services manages the majority our office premises and floor space in Denmark.
  However, certain of our Danish operations, such as Telmore, manage their own
  premises. We believe we have sufficient leased space and real property to conduct
  our business activities effectively.

Our
  principal properties consist of numerous telecommunications installations, including
  exchanges of various sizes, transmission equipment, cable networks, base stations
  for mobile networks and equipment for radio communication, the majority of which
  are located in Denmark. We also have numerous computer installations, which
  are primarily located in Copenhagen and Aarhus.

The
  total area of our domestic properties was approximately 972,000 gross square
  meters as of December 31, 2005, of which approximately 60% was owned by us and
  approximately 40% was leased. As of December 31, 2005, telecommunication installations
  (exchanges and base stations) represented 38% of our total property, plant and
  equipment, and other installations represented 4% of our total property, plant
  and equipment.

The following table shows
  our domestic properties by purpose of use and ownership (managed by TDC Services):

|                       |  |         |                             |         |  |         |  |              |   |                     |   | Share
      of |  
|---------------------- |  | ------- | --------------------------- | ------- |  | ------- |  | ------------ | - | ------------------- | - | -------------- | -
|                       |  |         |                             |         |  |         |  | Owned/leased |   | total
      gross   |  
|Purpose
        of use |  | Owned   |                             | Leased  |  | Total   |  | ratio        |   | square
      meters |  
|                       |  |         |                             |         |  |         |  |              |   |                     |  
|                       |  |         | (gross
      square meters) |         |  |         |  |              |   |                     |   |               
|Administration         |  | 155,961 |                             | 263,899 |  | 419,860 |  | 37           | % | 63                  | % | 43             | %
|Exchanges              |  | 337,844 |                             | 21,487  |  | 359,332 |  | 94           | % | 6                   | % | 37             | %
|Multiple purposes      |  | 39,173  |                             | 79,392  |  | 118,564 |  | 33           | % | 67                  | % | 12             | %
|Shops                  |  | 575     |                             | 15,865  |  | 16,440  |  | 3            | % | 97                  | % | 2              | %
|Base stations          |  | 4,779   |                             | 6,169   |  | 10,948  |  | 44           | % | 56                  | % | 1              | %
|Radio sites            |  | 31,774  |                             | 2,107   |  | 33,881  |  | 94           | % | 6                   | % | 3              | %
|Other                  |  | 10,241  |                             | 2,736   |  | 12,976  |  | 79           | % | 21                  | % | 1              | %
|                       |  |         |                             |         |  |         |  |              |   |                     |   |                |  
|Total                  |  | 580,347 |                             | 391,655 |  | 972,001 |  | 60           | % | 40                  | % | 100            | %
|                       |  |         |                             |         |  |         |  |              |   |                     |   |                |  

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The following table shows
  our ten largest domestic properties:

|                                        |  | Gross
      square |   | Owned
      or |  |                           |  
|--------------------------------------- |  | ------------------ | - | -------------- |  | ------------------------- | -
|Principal
      properties              |  | meters             |   | leased         |  | Use                       |  
|                                        |  |                    |   |                |  |                           |  
|Sletvej 30, Aarhus                      |  | 79,008             |   | Owned          |  | Administration            |  
|Teglholmen, Copenhagen                  |  | 70,589             |   | Leased         |  | Administration            |  
|Nørregade 21,
      Copenhagen          |  | 48,289             |   | Leased         |  | Multiple
        purposes |  
|Borups Allé,
      Copenhagen           |  | 42,061             |   | Owned          |  | Multiple
        purposes |  
|Telegade, Taastrup                      |  | 36,486             |   | Owned          |  | Administration            |  
|Telehøjen,
      Odense                 |  | 32,347             |   | Owned          |  | Multiple
        purposes |  
|Lautruphøj
      2-10 Ballerup          |  | 31,147             |   | Leased         |  | Administration            |  
|Slet Parkvej, Aarhus                    |  | 17,106             |   | Leased         |  | Administration            |  
|Klingenberg, Odense                     |  | 16,082             |   | Leased         |  | Multiple
        purposes |  
|Ny Østergade,
      Roskilde            |  | 11,533             |   | Leased         |  | Administratio             | n
|                                        |  |                    |   |                |  |                           |  
|Total                                   |  | 384,648            |   |                |  |                           |  
|                                        |  |                    |   |                |  |                           |  
|Share of total gross
      square metre |  | 40                 | % |                |  |                           |  

In
  2005, the new Zurich headquarters of TDC Switzerland, the sunrise Tower, opened
  and we relocated a majority of TDC Switzerlands staff to the headquarters.
  As a result, certain of our other office spaces are currently empty. Efforts
  are underway to sublet or assign these empty office spaces.

The main office buildings
  in Switzerland are:

|Location                              |  | Function                  |  | Square
      meters | 
|------------------------------------- |  | ------------------------- |  | ------------------- | 
|                                      |  |                           |  |                     | 
|Zürich Oerlikon
      (sunrise Tower) |  | HQ                        |  | 37,000              | 
|Longemalle, Lausanne                  |  | Office,
      call center |  | 1,753               | 
|Freiburgstr., Bern                    |  | Office                    |  | 6,018               | 
|Salzhausstr., Biel                    |  | Call center               |  | 5,718               | 

In addition to the main
  office buildings, TDC Switzerland has 5,200 square meters of retail shops in
  Switzerland.

Competition

Since
  the full liberalization of the Danish telecommunications market in mid-1996,
  we have faced intense competition in the market for domestic landline telephony
  services based primarily on price. Features of the domestic landline market
  include a large number of operators, many new entrants and public regulation
  aimed particularly at TDC. In the market for domestic and international long
  distance telephony services, competition has been enhanced by regulations requiring
  us to permit other telecommunications companies to interconnect with our network
  at rates controlled by NITA. These rates have been reduced numerous times over
  the past five years, resulting in a continuous reduction of end user prices.
  New technology that enables VoIP has further intensified competition.

In
  response to continued competition in the Danish telecommunications market, TDC
  has substantially expanded its international activities. After the acquisition
  of TDC Song and NetDesign at year-end 2004, TDC further strengthened its position
  in the pan-Nordic market by acquiring Dotcom Solutions in Sweden and introducing
  broadband solutions for residential customers in the Swedish market. In 2005,
  we also increased our ownership share in the Hungarian company HTCC.

There
  are four key players in the Danish landline market. Tele2 covers around 65%
  of Danish households and is our largest external wholesale customer. Telia has
  its own infrastructure and acts as a wholesaler and retailer and provides fixed
  and mobile services under the Telia brand. Telia also offers cable TV and broadband
  services under the Telia Stofa brand. Cybercity (acquired by Norwegian Telenor
  in May 2005) develops, manages and sells broadband solutions with a particular
  focus on the small-to-medium enterprise (SME), home office and high-end
  consumer markets. GlobalConnect,

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a privately owned backbone
  operator, has a fiber-optic network which covers most parts of Denmark and Northern
  Germany.

Customer
  migration from dial-up internet to broadband solutions in Denmark continued
  in 2005, and the broadband penetration of Danish households rose to approximately
  54% in 2005. To counter the increasing competition in the broadband market,
  TDC Solutions introduced a number of product and pricing promotions in 2005,
  including higher speeds for the same prices and reduced connection fees. In
  2005, TDC Solutions also doubled the maximum DSL speed for Danish residential
  customers with the launch of 8 Mbps.

Traffic
  volumes have declined steadily during the past years. This trend can be explained
  by fixed-to-mobile substitution and increased competition. Furthermore, the
  emergence of competitively priced IP-VPN solutions has made it possible for
  business customers with several branches to establish their own networks, based
  on IP-VPN, allowing them to route traffic between branches within their own
  network instead of through the public telephone network. The result of this
  is a sharp decline in billed MOU for business customers, which has partly been
  offset by an increase in internet services and data communication revenue.

A
  number of our competitors such as Cybercity and Tele2 have introduced VoIP at
  very competitive flat rate prices including all traffic with the exception of
  calls to mobile. We have launched IP telephony in cooperation with TDC Cable
  TV using the cable TV network and a VoIP product using DSL in order to compete
  for the customers who migrate towards VoIP. We estimate that the emergence of
  VoIP has not yet had a significant impact on subscriber and traffic volumes,
  but we expect that migration to VoIP will cannibalize a substantial part of
  our PSTN customers with a significant impact on our financial result.

In
  the Danish PSTN market, there is not much differentiation between products except
  through the packaging of different combinations of features. Accordingly, if
  a competitor in the PSTN market offers a successful PSTN package, we believe
  we could offer a comparable product in a matter of weeks. For example, one of
  our competitors in the PSTN market offered a successful flat rate product and
  we were able to offer a comparable product within weeks.

For more information on
  TDCs competitors and our competitive position in the Danish telecommunications
  market, see Industry. For more information on the impact of regulations
  on our business, see  Regulatory Environment.

Corporate Governance

Our
  shares are listed on the Copenhagen Stock Exchange and our American Depositary
  Shares (ADSs) were previously listed on the New York Stock Exchange ("NYSE").

On March 3, 2006, TDC applied for a delisting of its ADSs from the NYSE, which
  delisting occurred on April 19, 2006, cf. The Offer and Listing
  in Item 9. Following the delisting from the NYSE, we do not disclose any differences
  between our corporate governance practices and the NYSE governance standards
  on our web page.

Legal Proceedings

The
  TDC Group is a party to certain pending lawsuits and cases pending with public
  authorities and complaint boards.

TDCs
  stake in Polkomtel is currently being disposed of and certain legal proceedings
  are pending in relation to this disposal, as described in Recent developments
  in Item 5.

At
  the EGM held on February 28, 2006, NTC proposed that TDC seek to delist its
  shares and ADSs from the Copenhagen Stock Exchange and from the NYSE, respectively,
  and subsequently seek to deregister all securities from the

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U.S. Exchange Act. NTC
  also proposed the introduction of a new clause into the articles of association
  of TDC permitting the compulsory acquisition of the shares of minority shareholders.
  These proposals attained an affirmative vote of over 90% of the share capital
  of TDC represented at the Extraordinary General Meeting (although less than
  90% of the share capital of TDC) and such resolutions were declared passed by
  the Extraordinary General Meeting. Subsequently, the Danish Commerce and Companies
  Agency ruled that it would not register the new articles of association. TDC
  has filed a writ with the Eastern High Court against the Danish Commerce and
  Companies Agency seeking an acknowledgment of the registration of the squeeze-out
  provision in the articles of association.

Further,
  ATP, a Danish pension fund holding 5.5% of the shares in TDC, has filed a writ
  with the Copenhagen City Court (which has been passed on to the Eastern High
  Court) against both TDC and NTC seeking an acknowledgment of the invalidity
  of both the squeeze-out provisions in the articles of association and the authorization
  to delist from the Copenhagen Stock Exchange and the NYSE granted at the Extraordinary
  General Meeting. On April 5, TDC and NTC announced that they would challenge
  the ruling from the Danish Commerce and Companies Agency in the Danish courts.
  TDC has proceeded with its intention to delist its ADSs from the NYSE, which
  delisting occurred on April 19, 2006. If ATP succeeds in its litigation, TDC
  will be unable to proceed with the compulsory acquisition. In addition, ATP
  may seek an award of damages against us or other relief. In the legal proceedings
  instigated by ATP against NTC and TDC, ATP has reserved the right to challenge
  authorizations adopted at the annual general meeting of TDC on April 26, 2006,
  as illegal, in particular authorizations (i) to issue warrants to management
  and others and (ii) to repurchase shares. Furthermore, ATP claims that the reference
  date with regard to the redemption price of ATPs shares should only be
  decided as of when the redemption may actually be completed. Finally, ATP claims
  that the NTC should pay interest on the redemption price. TDC and NTC have responded
  to the claims by ATP.

Item
  4A Unresolved Staff Comments

We do not believe that
  there are unresolved staff comments that are material.

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Item
  5 Operating and Financial Review and Prospects

The
  following discussion should be read in conjunction with our consolidated financial
  statements. Unless otherwise indicated, financial information as of and for
  the years ended December 31, 2004 and 2005 has been prepared in accordance with
  International Financial Reporting Standards as adopted by the EU (IFRS). IFRS
  differ in certain significant respects from US GAAP, see note 33 to the Consolidated
  Financial Statements.

Overview of Group Results

TDC
  A/S is a holding company operating in the communications services industry,
  with subsidiaries and affiliates in Denmark and selected other European countries.
  Currently, we conduct our operations through five business lines: TDC Solutions,
  TDC Mobile International, TDC Switzerland, TDC Cable TV and TDC Services. A
  description of each business line is included in a separate discussion of their
  results as well as in Item 4 above.

In
  2005 we continued to generate positive results supported by TDCs continued
  successful xDSL sales and strong growth in both the domestic and international
  mobile businesses. In addition, ongoing stringent cost control in the domestic
  operations, including the effect of the redundancy programs. TDC Cable TV continued
  to increase its customer base and earnings. Progress was achieved despite fierce
  competition and a general decline in traditional landline telephony. The performance
  was also impacted by the acquired and divested companies, especially the acquisitions
  of TDC Song and HTCC.

The financial results
  for the group are summarized in the table below.

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|TDC Group                                              |         |   |         |   |                |  
|------------------------------------------------------ | ------- | - | ------- | - | -------------- | -
|                                                       |         |   |         |   | Percent        |  
|                                                       |         |   |         |   | Change         |  
|                                                       |         |   |         |   |                |  
|DKK M                                                  |         |   |         |   | 2005
      vs. |  
|                                                       | 2004    |   | 2005    |   | 2004           |  
|                                                       |         |   |         |   |                |  
|Revenue                                                | 42,339  |   | 46,588  |   | 10.0           |  
|                                                       |         |   |         |   |                |  
|Operating expenses                                     | (31,138 | ) | (34,773 | ) | (11.7          | )
|Depreciation, amortization
      and impairment losses | (6,661  | ) | (6,827  | ) | (2.5           | )
|                                                       |         |   |         |   |                |  
|Total operating expenses                               | (37,799 | ) | (41,600 | ) | (10.1          | )
|Other income and expenses                              | 1,180   |   | 257     |   | (78.2          | )
|                                                       |         |   |         |   |                |  
|Operating income                                       | 5,720   |   | 5,245   |   | (8.3           | )
|                                                       |         |   |         |   |                |  
|Income from associates                                 | 5,632   |   | 334     |   | (94.1          | )
|                                                       |         |   |         |   |                |  
|Fair value adjustments                                 | 178     |   | (184    | ) | NM             |  
|Financial income                                       | 2,547   |   | 2,454   |   | (3.7           | )
|Financial expenses                                     | (3,441  | ) | (3,326  | ) | 3.3            |  
|                                                       |         |   |         |   |                |  
|Net financials                                         | (716    | ) | (1,056  | ) | (47.5          | )
|                                                       |         |   |         |   |                |  
|Income before income
      taxes                       | 10,636  |   | 4,523   |   | (57.5          | )
|Income taxes                                           | (1,041  | ) | (1,026  | ) | 1.4            |  
|Net income from continuing
      operations            | 9,595   |   | 3,497   |   | (63.6          | )
|Net income from discontinued
      operations          | 315     |   | 3,953   |   | NM             |  
|                                                       |         |   |         |   |                |  
|Net income                                             | 9,910   |   | 7,450   |   | (24.8          | )
|                                                       |         |   |         |   |                |  

Results
  for each of the years shown above include the impacts of certain special items
  that are not necessarily reflective of the underlying operations, as discussed
  below.

The specific special items
  that have impacted our results in each of the two years shown above are as follows:

2005

Restructuring
  costs in 2005 amounted to DKK (968) million before tax and DKK (817) million
  after tax reflecting primarily the redundancy programs in the domestic operations
  and costs for financial and legal advisers related to the Nordic Telephone Companies
  equity tender offer to acquire the TDC shares. The restructuring costs are shown
  as wages, salaries and pension costs and other external charges, respectively,
  and included under operating expenses. For further explanation, see below under
  Restructuring effects.

The total net income impact
  of special items after tax was DKK (817) million in 2005.

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2004

Restructuring
  costs before tax amounted to DKK (558) million and related primarily to the
  redundancy programs in the domestic operations. Restructuring costs after tax
  amounted to DKK (192) million, of which DKK 199 million related to a change
  in the tax value of goodwill in Talkline. The restructuring costs are shown
  as wages, salaries and pension costs and included under operating expenses.
  For further explanation, see below under Restructuring effects - Redundancy
  programs in domestic business.

Profit
  before tax on divestment of major enterprises amounted to DKK 943 million before
  tax, reflecting primarily the disposal of Dan Net. These gains are shown as
  other income and included in other income and expenses.

The total net income impact
  of special items after tax was DKK 741 million in 2004.

Restructuring effects

Transaction costs
  regarding sale of TDC

The
  transaction costs for the sale of TDC reflect primarily to the costs for financial
  and legal advisers related to NTCs equity tender offer to acquire the
  TDC shares. The after-tax cost was DKK 382 million in 2005.

Redundancy programs
  in domestic business

In
  2003 we initiated a series of reductions of our domestic workforce. Customers
  are switching from traditional landline telephony to mobile and IP-based broadband
  solutions, which are less labor intensive than traditional landline telephony:
  the first reduction covering the period from 2003-2004 and a second covering
  2005. During these periods, we achieved workforce reductions partly through
  our redundancy programs and partly from attrition. In 2004, 494 employees were
  covered by the redundancy programs and 630 employees in 2005. In 2005, we reduced
  the number of domestic full-time employees from 14,437 to 13,876. At year-end
  2005, we had 20,225 full-time employee equivalents compared with 19,497 in 2004.
  The after-tax cost related to the redundancy programs was DKK 410 million in
  2004 and DKK 320 million in 2005.

In
  2006 we have initiated a new redundancy program in the domestic business and
  in Switzerland, see Employee section in Item 6 and Recent Development in Item
  5.

Results of Group Operations

Following
  is a discussion of the consolidated results of TDC Group on an as-reported basis
  without adjusting for the special items discussed above. In addition, the developments
  in 2004 and 2005 were impacted by certain major changes in activities and ownership
  shares.

In
  January 2004, we agreed with Telmores shareholders to buy the remaining
  80% stake in the company. TDC Mobile International now owns 100% of Telmore.
  In August 2004, we sold Dan Net, which operates with data clearing for mobile
  and landline operators, electronic data interchange and e-commerce solutions,
  also in September 2004, we announced our acquisition offer to the owners of
  shares and convertible bonds in Song Networks Holding AB, and at the beginning
  of November 2004 we could announce that the offer had been accepted. In December
  2004 we acquired NetDesign, a company specializing in IP communications solutions
  for the Danish business market.

In
  March 2005 TDC announced the signing of an agreement to increase our existing
  ownership share of 41.2% in HTCC the Hungarian landline and data communications
  provider. At year-end 2005, TDCs ownership share was 63.4%. Furthermore
  in May 2005, TDC announced the acquisition of Dotcom Solutions, an important
  Swedish provider of LAN infrastructure for business customers. Dotcom Solutions
  strengthens TDCs position in the rapidly expanding market for IP communications
  solutions as well as complementing and supporting TDCs services toward
  Swedish and pan-Nordic business customers with a need for IP/LAN solutions.
  Also in May 2005, TDC announced the acquisition of Ascoms

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communications solutions
  unit, an important provider of LAN services and infrastructure for business
  customers. The acquisition will strengthen TDCs position in the rapidly
  expanding market for IP communications solutions as well as complementing and
  supporting TDC Switzerlands offerings of IP/LAN products for Swiss business
  customers. TDC Directories, a traditional and electronic and web-based directory
  businesses in Denmark, Sweden and Finland, was divested in November 2005.

Revenue

TDCs
  revenue was DKK 46,588 million in 2005, increasing by DKK 4,249 million or 10.0%
  compared with 2004. This growth stemmed mainly from the inclusion of acquired
  companies, including changes in ownership shares, but also reflected growth
  in our mobile businesses in Denmark and Germany and our domestic broadband and
  cable TV businesses. This positive increase was partly offset by lower revenue
  from traditional landline telephony in the domestic operations caused by the
  migration toward mobile telephony and private IP-based networks.

Operating Expenses

Our
  operating expenses are composed of transmission costs and cost of goods sold;
  other external expenses; and wages, salaries and pension costs. Operating expenses
  increased from DKK 31,138 million in 2004 to DKK 34,773 million in 2005, primarily
  due to the acquisition of enterprises by TDC Solutions.

Transmission
  costs and cost of goods sold were DKK 17,164 million in 2005, increasing by
  DKK 1,534 million or 9.8% compared with 2004. The increase primarily reflected
  TDC Mobile International as a result of increased voice and SMS traffic as well
  as acquisitions of companies mainly related to TDC Song. This was partly offset
  by TDC Switzerland related to lower sales of handsets and lower mobile termination
  prices.

Other
  external expenses, including marketing and customer-acquisition costs as well
  as rent, leases and service agreements, were DKK 9,536 million in 2005, increasing
  by DKK 1,445 million or 17.9% compared with 2004. The increase occurred largely
  at TDC Mobile International due to higher customer-acquisition costs in Talkline
  and Bité. The increase also occurred at TDC Switzerland following the
  acquisition of sunrise business communications and the operation of an increased
  number of mobile sites at year-end 2005. Furthermore, other external charges
  increased due to costs for financial and legal advisers related to the Nordic
  Telephone Companies equity tender offer to acquire the TDC shares.

Wages,
  salaries and pension costs were DKK 8,073 million, increasing by DKK 795 million
  or 8.8% compared with 2004. The increase primarily reflected an increase in
  the number of average full-time employee equivalents by 929 or 4.9% due mainly
  to the acquisition of companies in TDC Solutions and TDC Switzerland. The increase
  also related to lower pension income from defined benefit plans for employees
  with civil servant status in domestic operations as well as increased costs
  related to the redundancy program. The increase was partly offset by lower wages,
  salaries and pension costs due to fewer employees in the domestic operations.
  In 2005, 574 employees retired in connection with redundancy programs.

Depreciation, Amortization
  and Write-downs

Depreciation,
  amortization and impairment losses increased by DKK 166 million or 2.3% compared
  with 2004 to DKK 6,827 million in 2005. This increase primarily related to acquired
  companies, partly offset by write-downs of software and network equipment in
  2004.

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Other Income and
  expenses

Other
  income and expenses declined by DKK 923 million or 78.2% compared with 2004
  to a net income of DKK 257 million in 2005. The decline mainly stemmed from
  divestment of major enterprises in 2004, primarily reflecting the disposal of
  Dan Net.

Income from associates

Income
  from associates after income taxes was DKK 334 million in 2005 compared with
  DKK 5,632 million in 2004, representing a decrease of DKK 5,298 million, reflecting
  primarily profit from the disposal of Belgacom in 2004.

Fair Value Adjustments

Fair
  Value Adjustments are composed of income (or loss) related to changes in the
  fair value of derivative financial instruments, marketable securities and other
  financial assets. In 2005, fair value adjustments totaled DKK (184) million
  and related mainly to negative fair value adjustments of TDCs holding of bonds
  and derivative financial instruments.

In
  2004, fair value adjustments amounted to income of DKK 178m reflecting primarily
  value adjustment of a cash receivable recognized in other fair value adjustments.

Financial Income
  and Expenses

Financial
  income was DKK 2,454 million in 2005, representing a decrease of DKK 93 million
  compared with DKK 2,547 million in 2004.

Financial
  expenses was DKK (3,326) million in 2005, representing a decrease of DKK 115
  million compared with DKK (3,441) million in 2004.

Financial
  expenses, net, excluding fair value adjustments, was DKK (872) million in 2005,
  representing a decrease of DKK 22 million compared with 2004. This development
  mainly reflected positive foreign currency adjustments, offset by higher net
  interest expenses, primarily due to interest relating to tax refunds in 2004.

Income Taxes

Income
  taxes were DKK 1,026 million in 2005, representing a decrease of DKK 15 million
  or 1.4%.The effective tax rate was 22.7% in 2005 compared with 9.8% in 2004.
  The increase in the effective tax rate from 2004 to 2005 is primarily related
  to the tax-free divestment of Belgacom in 2004. The effective tax rate for 2005
  was positively impacted by the non-recurring impact from the lowering of the
  Danish corporate income tax from 30% to 28% due to a reduction in deferred tax
  liabilities for TDC.

Net income from
  discontinued operations

Discontinued
  operations are comprised of our former TDC Directories business line and net
  income from discontinued operations increased from DKK 315 million in 2004 to
  DKK 3,953 million in 2005, primarily reflecting profit on the disposal of TDC
  Directories on November 30, 2005.

Results of Operations
  by Business Line

We
  have had five business lines since 2003, consisting of TDC Solutions, TDC Mobile
  International, TDC Switzerland, TDC Cable TV and TDC Services. With the exception
  of TDC Services, each of the business lines is

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discussed separately below.
  Results of TDC Services are discussed together with TDC A/S (parent company)
  expenses, and intercompany eliminations. We had an additional business line,
  TDC Directories, which were divested in November, 2005. TDC Directories is shown
  as net income from discontinued operations.

Our
  management evaluates business line performance based on results adjusted for
  special items. We believe that the special items excluded from business line
  results do not reflect the underlying fundamentals of the business, and should
  be analysed separately. Therefore, the figures in the following tables, and
  the related discussions of results, have been adjusted to exclude the impact
  of special items previously discussed. Information is provided to allow reconciliation
  of adjusted results to results on an as-reported basis.

TDC Solutions

TDC
  Solutions provides mainly communications services primarily in Denmark and the
  Nordic countries. Its activities include telephony services, convergence products
  (combined landline and mobile telephony), data communications and internet services,
  including broadband solutions, security and hosting services, leased lines,
  sale of terminals and installation. TDC Solutions main activities are
  performed by the parent and the following companies: TDC Song (pan-Nordic),
  HTCC (Hungarian), NetDesign (Danish) and TDC Dotcom (based in Sweden)2.
  The table below sets forth results for TDC Solutions.

|TDC Solutions                                        |        |   |        |   |         |  
|---------------------------------------------------- | ------ | - | ------ | - | ------- | -
|                                                     |        |   |        |   | Percent |  
|                                                     |        |   |        |   | Change  |  
|                                                     |        |   |        |   |         |  
|DKK M                                                |        |   |        |   | 2005    |  
|                                                     | 2004   |   | 2005   |   | vs.     |  
|                                                     |        |   |        |   | 2004    |  
|                                                     |        |   |        |   |         |  
|Revenue                                              |        |   |        |   |         |  
|Landline
      telephony                             | 9,643  |   | 10,453 |   | 8.4     |  
|Retail                                               | 7,453  |   | 8,059  |   | 8.1     |  
|Subscription
      fees                              | 3,659  |   | 3,803  |   | 3.9     |  
|Voice
      traffic                                  | 3,794  |   | 4,256  |   | 12.2    |  
|Wholesale                                            | 2,190  |   | 2,394  |   | 9.3     |  
|Transit
      traffic                                | 704    |   | 708    |   | 0.6     |  
|Other                                                | 1,486  |   | 1,686  |   | 13.5    |  
|Leased
      lines                                   | 1,117  |   | 1,538  |   | 37.7    |  
|Data
      communication and Internet services       | 3,840  |   | 5,000  |   | 30.2    |  
|Terminal
      equipment                             | 2,578  |   | 3,172  |   | 23.0    |  
|Other                                                | 1,412  |   | 1,468  |   | 4.0     |  
|                                                     |        |   |        |   |         |  
|Revenue                                              | 18,590 |   | 21,631 |   | 16.4    |  
|Operating expenses                                   |        |   |        |   |         |  
|Transmission
      costs, raw materials and supplies | 5,386  |   | 6,980  |   | (29.6   | )
|Other
      external charges                         | 3,766  |   | 3,824  |   | (1.5    | )
|Wages,
      salaries and pension costs              | 3,735  |   | 4,326  |   | (15.8   | )
|Depreciation,
      amortization and write-downs     | 3,549  |   | 3,754  |   | (5.8    | )
|                                                     |        |   |        |   |         |  
|Total operating expenses                             | 16,436 |   | 18,884 |   | (14.9   | )
|                                                     |        |   |        |   |         |  
|Other income and expenses                            | 169    |   | 147    |   | (13.0   | )
|Operating income                                     | 2,323  |   | 2,894  |   | 24.6    |  
|                                                     |        |   |        |   |         |  
|Operating margin                                     | 12.5   | % | 13.4   | % |         |  

---

|2 | TDC Dotcom AB was
        formerly named TDC Internordia AB. Following TDC Internordia ABs acquisition
        of Dotcom Solutions AB in June 2005, TDC Internordia ABs company name
        was changed to TDC Dotcom AB.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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The
  results shown in the table above exclude certain special items that do not necessarily
  reflect the underlying fundamentals of the business. If these items had been
  included in the results above, operating income would have been reduced by 500
  million in 2005, and increased by DKK 509 million in 2004. The amount for 2005
  consists of (i) the cost from the redundancy program (DKK (339) million) and
  costs related to Song integration (DKK (92) million). The amount for 2004 consists
  of (i) gain regarding sale of Dan Net A/S (DKK 943 million) partly offset by
  (ii) the costs from the redundancy program (DKK (484) million).

Revenue

In
  2005, TDC Solutions revenue was DKK 21,631 million, representing an increase
  of DKK 3,041 million or 16.4% compared with 2004, reflecting primarily the acquisition
  investments in TDC Song and HTCC.

Revenue
  from landline telephony, retail increased by DKK 606 million or 8.1% to DKK
  8,059 million in 2005. Revenue from subscriptions increased by DKK 144 million
  or 3.9% compared with 2004 to DKK 3,803 million in 2005, resulting mainly from
  TDC Song and HTCC and partly offset by a decrease in the number of domestic
  landline customers by approximately 127,000 or 5.3% to 2.3 million at year-end
  2005. However, the decline includes an increase in TDC Samtale and TDC Samtale
  Døgn flat rate plans resulting in 148,000 more customers, or an increase,
  of 85.7%, to a total of 321,000 in 2005.

Revenue
  from landline traffic was DKK 4,256 million, representing an increase of DKK
  462 million or 12.2% compared with 2004, resulting mainly from the acquisitions
  of TDC Song and HTCC and partly offset by reduced revenue from traditional landline
  traffic in the domestic operations due to a decrease in traffic minutes by 0.8
  billion or 9.2%. The more pronounced decrease in landline traffic compared with
  the decrease in the number of landline customers demonstrates a decline in MOU,
  which reflects that mostly customers with high MOU are migrating to alternative
  solutions.

Revenue
  from landline telephony, wholesale increased by DKK 204 million or 9.3% compared
  with 2004 to DKK 2,394 million, resulting mainly from acquisition investments
  in HTCC and TDC Song and partly offset by a fall in total domestic wholesale
  traffic.

Revenue
  from data communications and internet services increased by DKK 1,160 million
  or 30.2% compared with 2004 to DKK 5,000 million in 2005, resulting mainly from
  acquisition investments in TDC Song and HTCC and partly offset by the disposal
  of Dan Net in August 2004. The increase was also driven by growth in DSL sales,
  partly offset by a fall in revenue from dial-up customers. TDC Solutions
  broadband customer base rose from 549,000 in 2004 to 689,000 at year-end 2005

Revenue
  from terminal equipment etc. was DKK 3,172 million, representing an increase
  of DKK 594 million or 23% compared with 2004, primarily relating to the recognition
  of NetDesign and Dotcom Solutions and partly offset by increased sales of employee
  PCs in TDC Solutions A/S in 2004.

Revenue
  from leased lines increased by DKK 421 million, representing an increase of
  37.7% compared with 2004 to DKK 1,538 million in 2005. The increase is primarily
  related to the recognition of HTCC and TDC Song and is partly offset by lower
  revenue from domestic leased lines and servicing of companies with private data
  lines.

Total operating
  Expenses

Total
  operating expenses increased DKK 2,448 million or 14.9% in 2005 to DKK 18,884
  million from DKK 16,436 million in 2004. The increase in 2005 resulted mainly
  due to the recognition of TDC Song, HTCC, NetDesign and Dotcom Solutions.

Transmission
  costs and cost of goods sold were DKK 6,980 million in 2005, representing
  an increase of DKK 1,594 million or 29.6% compared with 2004. The increase resulted
  mainly from the recognition of TDC Song, HTCC,

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NetDesign and Dotcom Solutions
  and was partly offset by lower domestic landline traffic, balancing declining
  revenue from landline telephony.

Other
  external expenses increased by DKK 58 million or 1.5% compared with 2004
  to DKK 3,824 million in 2005. The increase resulted primarily from the recognition
  of TDC Song, HTCC, NetDesign and Dotcom Solutions, and was partly offset by
  stringent cost control in TDC Solutions A/S.

Wages,
  salaries and pension costsincreased by DKK 591 million or 15.8% compared
  with 2004 to DKK 4,326 million. The increase primarily reflected an increase
  of 1,041 or 9.4% in the number of average full-time employee equivalents resulting
  mainly from the inclusion of TDC Song, NetDesign and HTCC and was partly offset
  by the divestment of Dan Net. Wages, salaries and pension costs in TDC Solutions
  A/S increased as a result of higher wages and salaries and increased consumption
  of resources for network maintenance, partly offset by a decline in the number
  of average full-time employee equivalents of 460 to 9,310 due to redundancy
  programs.

TDC
  Solutions depreciation, amortization and write-downs increased
  by DKK 205 million or 5.8% compared with 2004 to DKK 3,754 million in 2005,
  primarily reflecting acquired and divested companies and partly offset by higher
  write-downs of software in TDC Solutions A/S in 2004.

TDC Mobile International

TDC
  Mobile International is the leading provider of mobile telecommunications services
  in Denmark, provides mobile telephony services in the UK, Germany, Lithuania
  and Latvia, and holds minority interests in mobile operations in Austria and
  Poland (which is subject to sale). Its activities include mobile voice telephony,
  sale of handsets, mobile data services and sale of traffic to MVNOs in Denmark,
  Lithuania, Latvia and Austria.

Over
  the past few years, the domestic mobile sector has experienced fierce price
  competition, and in 2005 the prices stabilized as a result of consolidation
  of the mobile operators. However, as in 2004, earnings from operations were
  adversely impacted as many customers chose to switch to cheaper mobile solutions
  with web-based self-services.

|TDC Mobile International                             |        |   |        |   |                |  
|---------------------------------------------------- | ------ | - | ------ | - | -------------- | -
|                                                     |        |   |        |   | Percent        |  
|                                                     |        |   |        |   | Change         |  
|                                                     |        |   |        |   |                |  
|DKK M                                                |        |   |        |   | 2005
      vs. |  
|                                                     | 2004   |   | 2005   |   | 2004           |  
|                                                     |        |   |        |   |                |  
|Revenue                                              |        |   |        |   |                |  
|Domestic
      operations                            | 6,503  |   | 7,151  |   | 10.0           |  
|Bité                                                 | 927    |   | 1,125  |   | 21.4           |  
|Talkline
      etc.                                  | 7,675  |   | 7,763  |   | 1.1            |  
|                                                     |        |   |        |   |                |  
|Revenue                                              | 15,105 |   | 16,039 |   | 6.2            |  
|Operating expenses                                   |        |   |        |   |                |  
|Transmission
      costs, raw materials and supplies | 7,879  |   | 8,094  |   | (2.7           | )
|Other
      external charges                         | 3,623  |   | 4,183  |   | (-15.5         | )
|Wages,
      salaries and pension costs              | 979    |   | 989    |   | (1.0           | )
|Depreciation
      and amortization                  | 1,250  |   | 1,123  |   | 10.2           |  
|                                                     |        |   |        |   |                |  
|Total operating expenses                             | 13,731 |   | 14,389 |   | 4.5            |  
|                                                     |        |   |        |   |                |  
|Other income and expenses                            | 53     |   | 36     |   | (32.1          | )
|                                                     |        |   |        |   |                |  
|Operating income                                     | 1,427  |   | 1,686  |   | 18.1           |  
|Operating margin                                     | 9.5    | % | 10.5   | % |                |  

The
  results shown in the table above exclude certain special items that do not necessarily
  reflect the underlying fundamentals of the business. If these items had been
  included in the results above, operating income would have increased

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by DKK 12 million in 2005
  and by DKK 28 million in 2004. The amount for 2005 consists of adjustments to
  previous redundancy programs and reversal of unused provisions in Talkline.
  The amount for 2004 consists primarily of reversal of unused provisions in Talkline.

Revenue

In
  2005, TDC Mobile Internationals revenue was DKK 16,039 million, representing
  an increase of DKK 934 million or 6.2% compared with 2004, resulting from increased
  traffic volumes in the domestic, German and Baltic markets (Lithuania and Latvia)
  and partly offset by lower prices due to fierce competition. Revenue from domestic
  operations increased by DKK 648 million or 10% compared with 2004 to DKK 7,151
  million in 2005. This category includes mobile traffic as well as subscriptions
  and handset sales. Growth was driven by increased revenue from both TDC Mobil
  and Telmore. Growth in retail revenue from domestic operations was driven mainly
  by a 14.5% increase in voice traffic and a 43% increase in SMS traffic, resulting
  from higher average consumption and an increased post-paid customer base. The
  growth in consumption resulted in increased ARPU. Revenue from wholesale in
  TDC Mobil increased by 13.1% in 2005, mainly due to increasing traffic from
  other mobile operators.

The
  growth in revenue from domestic operations was adversely impacted by declining
  average retail prices, reflecting customer migration toward cheaper mobile solutions
  with self-services via the internet. Revenue from Talkline etc. increased by
  DKK 88 million or 1.1% compared with 2004 to DKK 7,763 million in 2005, resulting
  from a 32.6% increase in the number of mobile customers to 3.4 million, partly
  offset by declining ARPU. Revenue was adversely impacted by the disposal of
  Talkline ID in April 2005. Adjusted for the disposal of Talkline ID, growth
  was DKK 1,011 million or 15.7%. Revenue in Bité was DKK 1,125 million,
  representing an increase of 21.4% or DKK 198 million in 2005, primarily driven
  by a 44.3% increase in voice traffic due to the strong 85.7% growth in the customer
  base. The increased customer base primarily reflected the launch of SMS consumption-independent
  flat rate pricing for the pre-paid segment. However, this increase should be
  seen in the context of declining retail prices and fewer average MOU per customer.

Total operating
  Expenses

Total
  operating expenses increased 4.5% in 2005 to DKK 14,389 million. The increase
  in 2005 related primarily to increased customer-acquisition costs in Bité
  and Talkline ID driven by strong growth in the customer base and start-up costs
  relating to the new operations. Furthermore increased transmission costs and
  cost of goods sold due to increased voice and SMS traffic in the domestic business,
  partly offset by the divestment of Talkline ID in April 2005. Depreciation,
  amortization and impairment losses decreased primarily driven by fewer write-downs
  in domestic operations in 2005

Transmission
  costs and cost of goods sold increased by 2.7% or DKK 215 million compared
  with 2004 to DKK 8,094 million in 2005. Transmission costs and cost of goods
  sold in domestic operations increased by 17.0% or DKK 404 million compared with
  2004 to DKK 2,778 million primarily reflecting increased voice and SMS traffic.
  Talkline etcs transmission costs and cost of goods sold decreased by 5.8%
  or DKK 301 million compared with 2004 to DKK 4,853 million and related to the
  disposal of Talkline ID in April 2005. The decline was partly offset by increased
  transmission costs and cost of goods sold driven by increased traffic and a
  larger customer base. Transmission costs and cost of goods sold in Bité
  were DKK 462 million, representing an increase of 32% or DKK 112 million and
  driven by increased traffic.

Other
  external expenses were DKK 4,183 million in 2005, up DKK 560 million or
  15.5% compared with 2004. Other external expenses in domestic operations were
  DKK 1,621 million in 2005, up 1.2% or DKK 20 million compared with 2004, primarily
  resulting from increased customer-acquisition costs and partly offset by lower
  uncollectibles. In Talkline etc., other external expenses increased by DKK 436
  million or 25.5% compared with 2004 to DKK 2,144 million in 2005 mainly due
  to increased customer-acquisition costs driven by strong growth in the customer
  base and start-up costs relating to the easyMobile operations. Bités
  other external expenses were DKK 418 million in 2005, representing an increase
  of DKK 104 million or 33.2% compared with 2004 as a result of increased customer-acquisition
  costs driven by strong growth in the customer base and the start-up of Bité
  Latvia.

Wages,
  salaries and pension costs were DKK 989 million, representing an increase
  of DKK 10 million or 1% compared with 2004, DKK 541 million of which was generated
  by domestic operations representing an increase of DKK

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15 million or 2.9% compared
  with 2004. Wages, salaries and pension costs in Talkline etc. decreased to DKK
  361 million compared with DKK 379 million in 2004 mainly due to the disposal
  of Talkline ID and offset by the start up of easyMobile operations. Wages, salaries
  and pension costs in Bité were DKK 87 million compared with DKK 74 million
  in 2004.

Depreciation,
  amortization and impairment losses in TDC Mobile International decreased
  by DKK 127 million or 10.2% compared with 2004 to DKK 1,123 million, primarily
  driven by fewer write-downs in domestic operations in 2005.

TDC Switzerland

TDC
  Switzerlands activities include mobile telephony and sales of landline
  and internet services. In 2005, TDC Switzerland acquired Ascoms communications
  solutions unit (now called sunrise business communications), which has considerably
  helped strengthen the provision of infrastructure solutions for TDC Switzerlands
  business customers.

|TDC Switzerland                                      |       |   |       |   |                |  
|---------------------------------------------------- | ----- | - | ----- | - | -------------- | -
|                                                     |       |   |       |   | Percent        |  
|                                                     |       |   |       |   | Change         |  
|                                                     |       |   |       |   |                |  
|DKK M                                                |       |   |       |   | 2005
      vs. |  
|                                                     | 2004  |   | 2005  |   | 2004           |  
|                                                     |       |   |       |   |                |  
|                                                     |       |   |       |   |                |  
|Revenue                                              |       |   |       |   |                |  
|Mobile
      telephony                               | 5,795 |   | 5,710 |   | (1.5           | )
|Landline
      telephony                             | 3,138 |   | 3,080 |   | (1.8           | )
|Internet
      services                              | 759   |   | 792   |   | 4.3            |  
|                                                     |       |   |       |   |                |  
|Revenue                                              | 9,692 |   | 9,582 |   | (1.1           | )
|Operating expenses                                   |       |   |       |   |                |  
|Transmission
      costs, raw materials and supplies | 3,895 |   | 3,507 |   | 10.0           |  
|Other
      external charges                         | 2,115 |   | 2,111 |   | (4.5           | )
|Wages,
      salaries and pension costs              | 1,225 |   | 1,281 |   | (4.6           | )
|Depreciation,
      amortization and write-downs     | 1,417 |   | 1,540 |   | (8.7           | )
|                                                     |       |   |       |   |                |  
|Total operating expenses                             | 8,652 |   | 8,439 |   | 2.5            |  
|                                                     |       |   |       |   |                |  
|Other income and expenses                            | (0    | ) | 1     |   | NM             |  
|                                                     |       |   |       |   |                |  
|Operating income                                     | 1,040 |   | 1,044 |   | 0.4            |  
|Operating margin                                     | 10.7  | % | 10.9  | % |                |  

Revenue

Revenue
  from mobile telephony was DKK 5,710 million in 2005, representing a decrease
  of DKK 85 million or 1.5% compared with 2004, resulting from decreases in sales
  of handsets and lower call termination prices from August 1, 2005, following
  a general market trend initiated by Swisscom. Revenue was further impacted by
  a decline in average revenue per customer, partly offset by an increase in TDC
  Switzerlands customer base of 77,000 customers or 6.5% to 1.3 million.
  Revenue from landline telephony decreased by DKK 58 million or 1.8% compared
  with 2004 to DKK 3,080 million in 2005, mainly resulting from a smaller customer
  base, which decreased by 46,000 or 8.0% compared with 2004 to 527,000 due to
  fierce competition in the Swiss market. Lower prices also had an adverse impact
  on revenue, as TDC Switzerland reduced its prices for calls from the landline
  to the mobile network by passing on to customers the cost savings from lower
  termination prices. The decrease in revenue from landline telephony was mainly
  due to a general decline in the Swiss landline market in 2005. Revenue was favorably
  impacted by the acquisition of sunrise business communications and, adjusted
  for this, revenue decreased by 9% or DKK 281 million compared with 2004.

In
  2005, revenue from internet services increased by DKK 33 million or 4.3% compared
  with 2004 to DKK 792 million. This growth mainly related to 182,000 DSL customers
  in 2005, representing an increase of 34,000 or 23.0% compared with 2004. The
  growth was partly offset by a 117,000 or 36.4% decrease in the number of dial-up
  customers.

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Total operating
  Expenses

Our
  total operating expenses decreased to DKK 8,439 million in 2005 from
  DKK 8,652 million in 2004. In 2005 lower transmission costs and cost of good
  sold was partly offset by higher other external charges and wages due to
  the acquisition of sunrise business communications. Furthermore depreciation,
  amortization and impairment losses increased reflecting increased investments
  mainly in continued mobile network expansion etc.

Transmission
  costs and cost of goods soldwere DKK 3,507 million in 2005, representing
  a decrease of DKK 388 million or 10% compared with 2004, driven primarily by
  lower sales of handsets and a fall in landline telephony and transit traffic.
  The costs were also impacted by lower prices for termination of mobile calls
  at Swisscom as of June 1, 2005. The decrease was partly offset by the acquisition
  of sunrise business communications and, adjusted for this, transmission costs
  and cost of goods sold decreased by 12.7% or DKK 496 million compared with 2004.

Other
  external expenses were DKK 2,211 million in 2005, representing an increase
  of 4.5% from DKK 2,115 million in 2004, resulting primarily from the acquisition
  of sunrise business communications and further costs related to an increased
  number of mobile sites at year-end 2005 compared with 2004. Other external expenses
  also increased due to increased costs for retaining customers when a considerable
  number of subscriptions expired in 2005 and higher costs after moving to a new
  office building. Adjusted for the acquisition of sunrise business communications,
  other external expenses increased by 2.8% or DKK 60 million compared with 2004.

Wages,
  salaries and pension costs were DKK 1,281 million, representing an increase
  of DKK 56 million or 4.6% compared with 2004, reflecting the acquisition of
  sunrise business communications. The increase was partly offset by a decline
  in the average number of fulltime employee equivalents in the remaining operations
  resulting from the continued focus on improved efficiency, for example in call
  centers. Adjusted for the acquisition, wages, salaries and pension costs decreased
  by 2.2% or DKK 27 million, and the number of full-time employee equivalents
  decreased by 112 or 4.7%.

Depreciation,
  amortization and impairment losses increased by DKK 123 million or 8.7% compared
  with 2004 to DKK 1,540 million in 2005, reflecting increased investments in
  continued mobile network expansion, including UMTS, the IT infrastructure and
  leasehold improvements in new offices, sunrise Towers.

TDC Cable TV

TDC
  Cable TV installs and operates cable TV networks, most with internet access,
  which provide TV signals for approximately 40% of Danish households.

|TDC Cable TV                                         |       |   |       |   |                |  
|---------------------------------------------------- | ----- | - | ----- | - | -------------- | -
|                                                     |       |   |       |   |                |  
|                                                     |       |   |       |   | 2005
      vs. |  
|DKK M                                                | 2004  |   | 2005  |   | 2005           |  
|                                                     |       |   |       |   |                |  
|                                                     |       |   |       |   |                |  
|Revenue                                              | 1,766 |   | 2,107 |   | 19.3           |  
|Operating expenses                                   |       |   |       |   |                |  
|Transmission
      costs, raw materials and supplies | 838   |   | 912   |   | (8.8           | )
|Other
      external charges                         | 302   |   | 380   |   | (25.8          | )
|Wages,
      salaries and pension costs              | 281   |   | 348   |   | (23.8          | )
|Depreciation,
      amortization and write-downs     | 221   |   | 245   |   | (10.9          | )
|                                                     |       |   |       |   |                |  
|Total operating expenses                             | 1,642 |   | 1,885 |   | (14.8          | )
|                                                     |       |   |       |   |                |  
|Other income and expenses                            | 6     |   | 3     |   | (50.0          | )
|Operating income                                     | 130   |   | 225   |   | 73.1           |  
|Operating margin                                     | 7.4   | % | 10.7  | % |                |  

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Revenue

TDC
  Cable TVs revenue increased by DKK 341 million or 19.3% compared with
  2004 to DKK 2,107 million in 2005. Revenue primarily includes cable TV subscription
  and connection fees as well as revenue from cable modems. The increase resulted
  largely from an increase in the cable TV and cable-modem customer bases in 2005,
  as well as higher average revenue per customer. The rise in the number of cable-modem
  customers reflects a continuously increasing market for broadband services.

Total operating
  Expenses

Total
  operating expenses increased 14.8% in 2004 to DKK 1,885 million in 2005 from
  DKK 1,642 million in 2004. The increase resulted from increased activities,
  as evidenced by revenue increases.

Transmission
  costs and cost of goods sold were DKK 912 million in 2005, representing
  an increase of DKK 74 million or 8.8% compared with 2004, resulting from increased
  program expenses due to the larger customer base.

Other
  external expenses were DKK 380 million in 2005, representing an increase
  of DKK 78 million or 25.8% compared with 2004, driven mainly by increased business.

Wages,
  salaries and pension costs increased by DKK 67 million or 23.8% compared
  with 2004 to DKK 348 million, due largely to an increase in the average number
  of full-time employee equivalents by 158 or 19.5% to 971 at year-end 2005. The
  increase primarily related to customer service and Connect Partner, which was
  recognized from spring 2004.

TDC
  Cable TVs depreciation, amortization and impairment losseswere
  DKK 245 million in 2005, representing an increase of DKK 24 million or 10.9%
  compared with 2004, mainly resulting from write-downs of network equipment in
  2005.

Other Activities

Other
  activities cover TDC Services, TDC A/S and elimination of transactions between
  the TDC Groups business lines. TDC Services supplies a number of business
  services for the TDC Groups domestic business lines, which gain economies
  of scale and cost-effective solutions in billing, procurement, logistics, facility
  management, IT, accounting, risk management and security. TDC A/S is the parent
  company of our business lines and undertakes Group functions including treasury,
  legal affairs, human resources, marketing and communications.

The
  entities included in other activities recorded certain special items in each
  of the last two years that do not necessarily reflect the underlying fundamentals
  of those businesses. The impact of these items on our income from operations
  was a decrease of DKK 480 million in 2005 and a decrease of DKK 127 million
  in 2004. The amount for 2005 related to (i) transaction costs regarding sale
  of TDC DKK (390) million and (ii) the redundancy program of DKK (90) million.
  The amount related to 2004 related to (i) the domestic redundancy program of
  DKK (127) million.

Revenue

Revenue
  from other activities increased DKK 401 million or 6.9% to DKK (5,449) million
  in 2005 from DKK (5,850) million in 2004. The increase mainly stems from lower
  eliminations of intra-group transactions partly offset on total operating expenses.

Revenue
  from TDC Services decreased DKK 358 million to DKK 2,678 million in 2005, from
  DKK 3,036 million in 2004. The decrease in 2005 is primarily stemming from transfer
  of activities to other business lines, price reductions and a lower level of
  activity in the other business lines within TDC.

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Total operating
  Expenses

Total
  operating expenses from other activities, including the effects of eliminating
  internal settlements, were a net income of DKK 5,739 million in 2005, representing
  a decrease of DKK (569) million or 9.0% from DKK 6,308 million in 2004. The
  decrease mainly stems from lower eliminations of intra-group transactions partly
  offset on revenue.

Operating
  expenses in TDC Services decreased by DKK 413 million to DKK 2,675 million in
  2005 from DKK 3,088 million in 2004. The operating expense decrease in 2005
  stemmed primarily from rent and accrual regarding abandoned buildings in 2004
  and reduced depreciation and amortization expenses on buildings and it-servers.

Operating Environment
  and Trends of the Business

Markets and technology

General

The
  Danish telecommunications sector is highly competitive. In all markets, TDCs
  future success will depend on our ability to continuously attract new customers
  and especially retain existing customers, thereby maintaining a sufficiently
  large customer base to achieve profitable operations. TDCs business customers
  are increasingly demanding Nordic solutions covering cross-border landline telephony,
  data communications, IP telephony and mobile communications, where competition
  especially from other pan-Nordic providers is intensifying. All these companies
  regard the Nordic countries as their domestic market, which means that TDCs
  previously dominant position in Denmark will be of minor importance when considering
  pan-Nordic solutions. If TDC fails to be competitive in all areas in all countries
  it will adversely impact revenue and earnings.

Landline telephony

The
  biggest challenges and risks facing TDCs domestic landline operations
  are the increased competitive pressure on traditional landline telephony (PSTN)
  and customer migration from this business area. The pressure comes first and
  foremost from continuously falling prices for mobile telephony and therefore
  continued migration from traditional landline telephony to mobile telephony.
  Secondly, the increased competition from providers of VoIP (broadband-based
  telephony) offering telephony at significantly reduced prices. We therefore
  expect the future telecoms market to be dominated by those providers who can
  offer high quality telephony, TV and internet via one access only, known as
  triple play, at attractive prices. The development of high-technology combination
  solutions and convergence products makes heavy demands on providers. Future
  success in the market for communications solutions therefore requires TDC to
  adapt to and lead technological developments, including the markets demand
  for higher xDSL speeds. The increased speeds offered at the same or lower prices
  are also expected to squeeze earnings. TDC also expects increased competition
  from the electricity companies that will gain access to a wide customer base
  when they roll out fiber networks in many parts of Denmark. They are expected
  to invest considerable sums of money in the years ahead in fiber networks that
  will make them able to offer high-speed connections and triple-play solutions
  to their customers. Moreover, the penetration and further development of landline
  networks, local digital networks, wireless networks, Wireless Local Area Networks
  (WLAN), WIMAX and CDMA/450MHz constitute alternatives to traditional landline
  solutions and as such further increase competition. Competition in the Swiss
  market for landline telephony has intensified. The competition is expected to
  further intensify because established cable-network operators are offering landline
  telephony through their existing networks at flat-rate prices. TDC therefore
  expects the shifting trend in the Danish market toward triple play to also prevail
  in Switzerland.

Mobile telephony

Although
  traditionally TDC Mobils prices in Denmark for mobile telephony have been
  among the lowest in the EU, market pressures continue to intensify. TDC expects
  such intense competition in the Danish telecommunications market to continue,
  which may result in future price reductions and loss of market share. TDCs
  success depends on our ability to keep pace with continuing changes in technology,
  including the change from 2G to 3G mobile telephony, and the introduction of
  VoIP, which will also threaten mobile telephony in the long term. The penetration
  of WLAN, WIMAX and

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CDMA/450 MHz mentioned
  earlier may adversely impact the use and penetration of UMTS and associated
  data services. Growth in mobile data services is expected to be driven by an
  increase in the quantitative and qualitative capabilities of mobile business
  applications. TDCs success with 3G technology depends largely on our ability
  to develop and introduce attractive 3G products and services at competitive
  prices, including our ability to benefit from general developments in the content
  services market. The use and penetration of UMTS technology require the utilization
  of existing GSM sites as well as the deployment of a number of new base stations
  to serve these operations. TDC Mobil may experience difficulties in procuring
  sufficient sites due to their limited availability. Consideration should also
  be given to the public concern over alleged adverse health effects related to
  electromagnetic transmissions emitted from mobile base stations. Declining prices
  for mobile telephony, including price reductions as a result of regulation of
  prices for terminating calls in the mobile network and roaming charges require
  continued strict cost control and improved profitability in mobile operations.
  Competition in the Swiss mobile market has also increased considerably. Attracting
  new mobile customers may therefore be even more difficult due to the high penetration
  of mobile telephony. Increased costs necessary to retain existing customers
  may be expected. As in the Danish market, the success of rolling out 3G technology
  in the Swiss market is subject to risks. Also as in Denmark, the penetration
  of WLAN constitutes a potential risk with resulting adverse impact on the use
  and penetration of UMTS and associated data services. The availability of suitable
  new sites for UMTS stations is limited in Switzerland. Furthermore, public concern
  over alleged adverse health effects related to electromagnetic radiation and
  the strict Swiss rules on radiation are important factors. This could result
  in increased costs related to the GSM and UMTS networks and thereby lower the
  chance of a successful switch to 3G mobile telephony. The future success of
  TDCs mobile operators Talkline and the easyMobile companies will depend
  largely on their ability to achieve a sufficiently large gross margin on traffic
  resales when negotiating with network suppliers. A significant risk also exists
  of possible future price pressure on the relatively high retail prices, especially
  in Germany. The future growth of the Baltic mobile operator Bité will
  depend primarily on Bités ability to win market share in Latvia,
  and on the economic growth in Lithuania and Latvia in particular.

Cable TV

TDCs
  cable-TV operations may expect increased competition from electricity companies,
  antenna and housing associations as well as satellite-TV providers, which may
  adversely impact market shares and the prices for TV transmission and internet
  services. Both competition and the range of programs in the generally accessible
  terrestrial network are expected to increase when DigiTV realizes its plans
  to develop a digital terrestrial network. DigiTV is a public project that aims
  to introduce more digital channels, which will intensify competition for cable
  TV. Internet-based competitors offers of TV programs may also further
  increase competition.

Other matters

The
  telecommunications sector has become increasingly digitalized, automated and
  online, which means that TDC is exposed to increasing risks of hacking, piracy
  and general failure of IT systems. Unanticipated IT problems, system failures,
  computer viruses or hacker attacks could affect the quality of TDCs services
  and cause service interruptions. Risks of network failure can never be completely
  eliminated and the occurrence of such failures may reduce earnings and harm
  TDCs reputation. There is uncertainty concerning the future success of
  online services, e-commerce and other types of selfservice products. If developments
  in these markets are less advantageous than expected, future earnings might
  be affected. Moreover, it is uncertain how fast the efficiency synergies resulting
  from such movement to online services may be realized. A significant share of
  TDCs 2005 revenue was generated outside Denmark and the euro area. This
  revenue originated primarily from Switzerland, Lithuania, Poland, Sweden and
  Norway, where TDC conducts its business operations and where annual reports
  are prepared in currencies other than Danish kroner and euro. Any loss in the
  value of these currencies against the Danish kroner will negatively impact the
  value of TDCs investments in the relevant business activities and the
  amount of income TDC derives from them. This will be reflected in TDCs
  financial reporting, which is presented in Danish kroner. TDCs revenue
  also depends on general economic conditions, primarily in Denmark, Germany,
  Switzerland, Lithuania, Poland and the Nordic region. TDCs customers may
  delay or cancel investments in telecommunications systems and services if their
  business outlooks are cautious or negative, which may adversely affect TDCs
  revenue and the development of new products and services. A significant deterioration
  in current economic conditions could have a material adverse effect on TDCs
  operating results and financial position. The performance of the international
  operators in which TDC holds minority interests may depend on the financial
  or strategic support of other shareholders. Such other shareholders may fail
  to supply or not be willing to supply the required operational, strategic and

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financial resources relating
  to e.g. the build-out of infrastructure, the cost of meeting regulatory requirements,
  or effective marketing, which could adversely affect both the ability of these
  operations to compete and the return on TDCs investment.

Regulatory issues

Denmarks comprehensive
  regulatory regime governing its telecommunications sector requires TDC to deliver
  a broad range of services to the wholesale market at regulated prices. With
  respect to landline telephony and broadband services, TDC is subject to regulation
  of wholesale pricing, as well as specific requirements for accounting separation
  and reporting.

European Union

In
  March 2002, the EU passed a number of directives designed to promote competition
  in the European telecommunications market that were subsequently implemented
  into Danish law in 2003. In accordance with this legislation, NITA performs
  market analyses on 18 specifically defined submarkets with respect to landline
  telephony, mobile telephony, leased lines, unbundled access, broadband and TV
  and radio transmission. In each submarket, NITA may designate a dominant telecommunications
  operator as having Significant Market Power (SMP) in such submarket.
  If imperfections in a submarket in which an operator has been designated as
  having SMP are identified, NITA may impose remedies against such operator in
  order to promote competition. In the wholesale market, such measures may include
  the acceptance of a reasonable request for interconnection, non-discrimination,
  reference offers, transparency, accounting separation, specific cost accounting
  obligations and price control methods. NITA has so far issued decisions on 14
  out of 18 submarkets. Final decisions for all the submarkets, except the submarket
  for television and radio transmission, are expected during the first half of
  2006. Until market analyses of the relevant submarkets have been completed and
  NITA has decided whether to adopt new regulatory measures or revoke former measures,
  the current regulation will be maintained in each relevant submarket.

Denmark

SMP Designation

We
  have been designated as having SMP by NITA in almost all of the submarkets in
  Denmark, except for Market 15 (the wholesale market for mobile access), Markets
  5 and 6 (the retail markets for national and international traffic for business
  customers) and according to the market analysis also in Market 17 (the market
  for international roaming). As a result of our SMP designation, we are subject
  to additional regulatory burdens, which are summarized below. In addition, NITA
  has been considering whether to create an additional submarket for cable TV
  networks. If NITA creates a cable TV submarket, it is likely we would be designated
  as having SMP in the cable TV market and might be required to provide third
  parties with access to our cable network. There can be no assurance that NITA
  will not impose additional regulatory burdens on us as a result of our current
  SMP status or designate us as having SMP in additional markets.

Retail markets.

As
  a result of our SMP status, the larger part of our retail offerings of leased
  lines must comply with a rule of cost orientation. As a result, we are required
  to calibrate leased line prices annually to ensure that they match the corresponding
  cost plus a mark-up set by the regulatory authorities.

Wholesale markets.

In
  the wholesale markets in which we have SMP status, the majority of our prices
  are regulated as a result of our SMP designation. Until 2002, interconnection
  prices were regulated mainly on the basis of historical cost analyses and best-practice
  benchmarking against corresponding international prices. Since January 1, 2003,
  NITA has set the prices we charge for switched interconnection traffic, interconnection
  capacity, shared access and ULL (also known as raw copper) as well as related
  co-location. NITA calculates these prices once a year in accordance with the
  LRAIC model and evaluates and updates the LRAIC model once every three years.
  Only minor price adjustments were implemented in 2004 and 2005.

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In
  early 2006, the LRAIC model was adjusted and the prices for ULL, switched interconnection
  traffic and interconnection capacity were decreased considerably. The decrease
  may have a negative impact on our revenue and earnings. The prices for TDCs
  other interconnection products are based on historical costs according to a
  formula set by NITA. It is uncertain how this pricing method will affect TDCs
  future prices. Furthermore, the telecommunications law was amended with effect
  from January 1, 2006, resulting in changes in calculation principles for depreciation,
  amortization and interest payments. Such changes will likely result in price
  decreases for bitstream access and leased lines. The amended law also gives
  NITA increased power to stipulate specific terms and conditions for TDCs
  interconnection agreements.

NITAs
  decision on the submarket for broadband access requires us to discontinue our
  geographical differentiation of bitstream access prices unless we also differentiate
  our retail prices for broadband. Discontinuation of geographical differentiation
  of prices for bitstream access will strengthen our competitors in remote areas,
  where production of bitstream access is very costly for us. Alternatively, we
  may decide to let the current differentiation of wholesale prices affect our
  end user prices. The decision also requires us to offer wholesale broadband
  solutions (bitstream access) without compulsory landline subscriptions, which
  will improve our competitors conditions for offering broadband solutions
  combined with IP telephony. We have appealed the decision for this market and
  some of the other decisions to the Telecommunications Complaints Board.

The
  authorities have announced that they may intervene in the pricing of traditional
  landline subscriptions for customers who also have broadband subscriptions in
  order to address the so-called excess cost recovery problem. The
  formulation of such intervention and its impact on TDCs earnings are uncertain.

In
  the market for termination of mobile calls in mobile networks, NITA has decided
  that TDC, TeliaSonera, Sonofon, Tele2 and Hi3G have SMP with regard to termination
  in the respective mobile networks. However, price regulation has been introduced
  only for TDC, Sonofon and TeliaSonera, whose average price (including call set-up
  fee) must be reduced by approximately 35% over the next two years. This decision
  will adversely impact our earnings. If the domestic market for international
  roaming, market 17, also becomes subject to price regulation, such regulation
  may have a negative impact on TDC Mobils revenue and earnings.

On
  October 31, 2005, NITA concluded that TDC abuses its dominant position in Denmark
  by requesting wholesale customers to pre-pay certain quarterly charges for certain
  wholesale products, and to require these customers to provide guarantees for
  their contractual obligations. We believe that we have not abused our dominant
  position, and have appealed NITAs decision to the Danish Competition Appeal
  Tribunal, where the matter is currently pending. Based on the ruling by the
  NITA, Tele2 has filed a claim for payment of damages, which the court has postponed
  until the summer of 2006, when the Competition Appeal Tribunal is expected to
  conclude our appeal to the NITA decision. Based on a legal assessment of the
  possible outcome of Tele2s claim, as well as the other lawsuits and cases
  that are currently pending, management is of the opinion that these will have
  no significant adverse effect on TDC Groups financial position.

Decisions
  have also been made on four retail submarkets for telephony traffic, the retail
  market for leased lines, the wholesale markets for terminating segments of leased
  lines, unbundled access and shared use including co-location, as well as for
  call termination on landline networks. None of the decisions include significant
  changes in relation to existing regulation with the exception of regulations
  relating to extended access related to co-location and extended requirements
  to guarantee the line quality against disturbances.

Anti-terror measures.

As
  part of the anti-terrorism action plan passed by the Danish government in November
  2005, the government has proposed a bill requiring telecommunications operators
  to use or install communication interception equipment and to establish databases
  for mandatory retention of traffic passing through their networks in order to
  assist law enforcement agencies in tracking terrorist activity. If such measures
  are adopted, we may have to make additional investments in technical equipment,
  and we may incur operational costs as a result.

EU Universal Service
  Obligation (USO) directive.

Pursuant
  to the EU USO directive and Danish USO regulation, which are designed to ensure
  that all end users have access to certain basic telecommunications services
  regardless of their geographical location at an affordable price,

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NITA has designated us
  as the Universal Service Provider (USP) in Denmark. In the past
  NITA fixed the prices that we could charge to our Danish customers who use PSTN
  services (USO customers) for PSTN services, but these price caps
  were lifted at the end of 2005. We face the risk that NITA will decide to reintroduce
  a price cap on the products and services we offer to our USO customers. In addition,
  we face uncertainty concerning the renewal of our USP designation after 2007,
  which may affect our revenue and earnings.

EU Roaming Charge Regulation.

The
  EU Commission is currently considering new regulations designed to cut international
  roaming charges and a proposal has been submitted for consultation. It is unclear
  what would be the outcome of such regulations if imposed. However, such regulation
  could have a negative impact on TDC Mobile Internationals revenue and
  earnings.

Switzerland

Regulations

Prompted
  by a preliminary decision by the Swiss competition authority regarding abuse
  of market power by Swisscom, the Swiss incumbent, in 2005, Swisscom reduced
  its prices for terminating mobile calls, putting heavy pressure on other Swiss
  mobile operators, including TDC Switzerland, to reduce their tariffs as well.
  The Swiss competition authority is continuing its review of the level of competition
  in the mobile call termination market and is currently investigating whether
  the Swiss mobile operators, including TDC Switzerland, have abused a dominant
  position. In parallel since January 2006 a number of interconnection filings
  regarding the Mobile Termination tariffs, against all three major mobile operators,
  have been submitted to the sector specific regulator ComCom. Consequently, TDC
  Switzerland faces the significant possibility that the Swiss competition authority
  or the Swiss regulator ComCom will require Swisscom and/or TDC Switzerland to
  make further price reductions for terminating mobile calls. Such price reductions,
  if imposed on TDC Switzerland, may have a material adverse effect on the earning
  and profit margins of our Swiss operations. In addition, there can be no assurance
  that the Swiss competition authority will not impose a material fine upon TDC
  Switzerland if the Swiss competition authority determines that TDC Switzerland
  has a dominant position in the mobile call termination market and has abused
  such position.

Swisscom
  announced on April 10, 2006 that it had received a draft ruling from the Swiss
  competition authority recommending that it pay a CHF 489 million fine for misuse
  of mobile termination rates. Swisscom reported that the competition authority
  considered that all Swiss mobile carriers had a monopoly on incoming calls within
  their network, but only Swisscom Mobile misused its dominant position on the
  market in the period between April 1, 2004 to May 31, 2005 by demanding excessively
  high termination fees. Swisscom reported that the investigation into the period
  following the reduction of fees is to be continued and will also cover the other
  Swiss mobile carriers, including TDC Switzerland. Swisscom has said it will
  argue against the ruling.

Our
  Swiss business benefits from regulations requiring Swisscom to grant other telecommunications
  operators, including us, interconnection services under cost-based terms and
  conditions. Swisscom has challenged the interconnection tariffs as set by the
  Swiss Communication Commission (ComCom) in court. In its ruling
  of April 21, 2006 (sent to the parties on May 19, 2006) the Federal Court (Supreme
  Court of Switzerland) has largely rejected Swisscoms complaints and returned
  the matter to ComCom only in a minor point. As many methodological flaws in
  the Regulators costing model have been approved with this ruling it may
  prove difficult to deduce future landline interconnection costs from this ruling
  which covers the years 2000  2003.

Our
  business plan and earnings forecasts, particularly in relation to expected broadband
  and triple play sales, anticipate that the Swiss legislature will enact legislation
  requiring Swiss telecommunications operators to open their local loop networks
  to other operators. Such regulations would allow TDC Switzerland to lease network
  capacity on Swisscoms ULL and gain access to Swisscoms customers.
  A revised telecommunications law providing for such opening of ULL networks
  was passed by the Swiss Parliament on March 24, 2006. A 100-day referendum period
  expires on July 13, 2006. If there is no referendum and the ordinances implementing
  the new law are finalized, the new law enters into force probably on January
  1, 2007. Although unlikely, it is possible that organizations opposed to the
  law could force a public vote, which would further delay enactment by at least
  a year and could potentially result in enactment being prevented. Once the law
  is enacted, vested interests may attempt to prevent, impede or delay access
  to the ULL networks through other measures. If

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ULL terms and conditions
  are not set and enforced in a favourable way, we might have to adjust our business
  plan and earnings forecast.

Substantial
  parts of TDC Switzerlands backbone consist of leased dark fibres situated
  in the guard wire of high-voltage power lines. In a pending court case the use
  of the power line for telecommunication purposes is disputed by an owner of
  a property over which a power line is situated. Dependent on the outcome of
  the pending and potential similar future cases,TDC Switzerland might be forced
  to find alternative facilities (e.g. build pipes and lay dark fibre cables)
  to secure certain parts of its backbone at substantial costs.

Licenses - Denmark
  and Switzerland

We are licensed by NITA
  to provide mobile telecommunications services in Denmark and by the Swiss regulator
  to provide mobile telecommunications services in Switzerland. For example, we
  have UMTS licenses to provide 3G services in Denmark and Switzerland, three
  GSM licenses in Denmark (including licenses for DCS1800, DC56 and GSM) and one
  GSM license in Switzerland. Our Danish and Swiss UMTS licenses are valid until
  October 31, 2021 and December 31, 2016, respectively. Our Danish GSM licenses
  are valid until June 12, 2007, January 1, 2011 and March 1, 2012, respectively,
  and our Swiss GSM license is valid until May 31, 2008. There can be no assurance
  that NITA or the Swiss regulator will not withdraw our existing licenses if
  we can not meet license conditions, including obtaining the regulators
  consent in the event of a change of control. An application for renewal of our
  Swiss GSM license is due two years before expiry of the license and will be
  sent out in due time accordingly. After their respective expiration dates, we
  will also have to reapply for a new Danish UMTS license and new Swiss UMTS licenses.
  There can be no assurance that any application for renewal of such licenses
  will be successful. The three Danish GSM licenses will be extended automatically
  for periods of 10 years unless NITA, at its discretion, issues a decision not
  to extend such licenses which decision must be made one year before the scheduled
  expiry date.

Recent developments

TDC reduces its
  work force in domestic operations according to plan

On
  January 20, 2006, TDC decided to implement a redundancy program covering up
  to 570 employees in the period until year-end 2006. The redundancy program will
  be initiated through voluntary retirement to limit the extent of involuntary
  retirement. Total costs related to work-force reductions are estimated at DKK
  342m after tax. The amount will be expensed in the first quarter of 2006.

Change of ownership

On
  February 1, 2006, NTC settled its tender offer for TDC A/S and thereby became
  the owner of 88.2% of the shares of TDC A/S entailing that a change of ownership
  has occurred.

Polkomtel

On
  February 2, 2006, due to this change of ownership described above and in accordance
  with the existing shareholder agreement with Polkomtel as well as the companys
  bylaws, TDC has offered to sell its 19.6% ownership share to the other shareholders
  of Polkomtel at a price of EUR 214.04 per share, reflecting a market value of
  EUR 4.388bn for 100% of the companys common shares. The result and the
  time frame of the selling process depend on the shareholders response
  to TDCs offer. On March 10, 2006, the Polish shareholders representing
  approximately 76% of TDCs shares in Polkomtel and 14.8% of the total share
  capital of Polkomtel, accepted TDC offer. The only remaining shareholder,
  Vodafone has contested the procedure initiated by TDC and the offer price. TDC
  and the Polish shareholders believe that the procedure followed is in conformity
  with the statute. However, Vodafone has in Polish courts obtained an injunction
  against the transfer of TDC’s shares in Polkomtel. In order to maintain the
  injunction Vodafone has initiated arbitration

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proceedings. It is a condition
  for the closing of the sale to the Polish shareholders that such closing is
  not prevented by the legal actions taken by Vodafone.

Extraordinary General
  Meeting and Legal Proceedings against the Danish Commerce and Companies Agency

Following
  completion of the public tender offer for the shares in TDC and upon the request
  of NTC, the Board of Directors of TDC convened an Extraordinary General Meeting
  to be held on February 28, 2006. The Extraordinary General Meeting adopted among
  other things the proposals from NTC regarding (i) new Board of Directors, (ii)
  an authorization to the Board of Directors to distribute interim dividend, and
  (iii) the amendments of the Articles of Association enabling NTC, who owns 88.2%
  of TDCs equity, to compulsorily redeem the remaining shareholders. On
  March 8, 2006, the Danish Commerce and Companies Agency rejected the request
  to register these amendments, and on April 5, 2006, TDC decided to bring the
  decision of the Danish Commerce and Companies Agency before the courts. TDC
  has filed a writ with the Eastern High Court against the Danish Commerce and
  Companies Agency seeking an acknowledgment of the registration of the squeeze-out
  provision in the articles of association.

Senior Facilities
  Agreement

On
  March 3, 2006 TDC A/S entered into a senior facilities agreement as borrower
  and guarantor (the Senior Facilities Agreement) originally entered into between,
  amongst others, NTCH as original borrower and original guarantor and Barclays
  Capital, Credit Suisse First Boston International, Deutsche Bank AG, London
  Branch, J.P. Morgan plc and The Royal Bank of Scotland plc as original lenders.

The
  Senior Facilities Agreement is a secured multi-currency term facility originally
  in an amount of up to EUR 9,600,000,000. It is composed of three term loan facilities
  of originally up to EUR 7,800,000,000 in aggregate, a revolving credit facility
  of up to EUR 700,000,000 and a term loan facility (the Cash Bridge Facility)
  of up to EUR 1,100,000,000 (together the Senior Facilities). The scheduled
  repayment dates of the Senior Facilities (other than the Cash Bridge Facility
  which has now been cancelled) range from seven years to nine years as from January
  30, 2006.

Until
  now, TDC has used the Senior Facilities for refinancing certain existing interest
  bearing debt and for financing certain dividend payments.

Interim dividends
  April 2006

Based
  on an authorization adopted at the Extraordinary General Meeting on February
  28, 2006 TDCs Board of Directors at its meeting on April 5, 2006, decided
  to pay out interim dividends of DKK 219.50 per share of a nominal value of DKK
  5 each, totaling DKK 43,481m, excluding dividends of treasury shares. The dividend
  was paid on April 11, 2006.

To
  finance this dividend, TDC drew down DKK 35.5bn under the Senior Facility Agreement
  on April 11, 2006 and reduced cash and disposed of marketable securities.

Updated TDC credit
  rating by Standard & Poors and Moodys as well as new credit
  rating by Fitch Ratings

On
  April 11, 2006 Standard & Poors changed the credit rating of TDC.
  The credit rating regarding long-term debt for TDC A/S has been adjusted downwards
  to BB- with a stable outlook from BB with a negative
  outlook. The Senior Facilities Agreement, cf. above, were valued at BB-.
  The credit rating regarding TDCs outstanding unsecured EMTN programme
  has been adjusted downwards to B from BB. The credit
  rating regarding the long term debt is unchanged at B.

On
  April 12, 2006 Fitch Ratings published their credit rating of TDC. Fitch assigned
  TDC A/S a rating of BB- with stable outlook and a short-term rating of B.
  The Senior Facilities Agreement, cf. above, was assigned BB+, and the unsecured
  long-term rating of the outstanding bonds under TDCs EMTN programme was assigned
  a BB- rating.

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On
  April 13, 2006 Moodys downgraded TDCs long-term corporate credit rating to
  Ba3 with stable outlook from Ba1 on review for downgrade. The Senior Facilities
  Agreement , cf. above, was assigned Ba2, while the unsecured long-term rating
  of the EMTN bonds was lowered to Ba3 from Ba1. TDCs short term credit rating
  was withdrawn by Moodys.

The
  credit ratings by Standard & Poors, Moodys and Fitch Ratings are
  reflecting the new leveraged capital structure of TDC following the completion
  of the tender offer by NTC to TDCs shareholders in January 2006.

Delisting from the
  New York Stock Exchange

On
  April 19, 2006, the Securities and Exchange Commission (SEC) approved
  TDC application to withdraw TDCs American Depository Shares (ADSs)
  and ordinary shares from listing and registration on the New York Stock Exchange.
  On June 21, TDC instructed the Bank of New York, as Depositary under the Deposit
  Agreement, to stop offering ADSs as of June 26, 2006. On June 21, 2006 ADSs
  represented 0.16% of TDCs share capital. Under the amended Deposit Agreement
  the Bank of New York will sell all remaining ADSs 30 Days after a 90-Day notice
  period expires. As a result, TDC expects the ADS programme will be terminated
  by the end of October 2006. TDC is still registered with the SEC and accordingly
  has obligations to disclose certain information.

Note issue and disclosure
  of certain estimates for Q1 2006

On
  April 19, 2006, NTCH initiated a private note issue and in that connection published
  an Offering Memorandum, which among other things included information on TDC
  and certain estimates for Q1 2006, cf. the Stock Exchange announcements of April
  19 and 26, 2006.

The
  notes have a maturity period of 10 years and are issued in 3 series that were
  valued on April 26, 2006 as follows:

| |  | EUR 800,000,000
      8 1/4%                                                  
| | - | ------------------------------------------------------------------------------
| |   |                                                                               
| |  | USD 600,000,000
      8 7/8%                                                  
| |   |                                                                               
| |  | EUR 750,000,000
      in floating rate notes (EURIBOR + 5.50% interest margin)

Ordinary General
  Meeting 2006

TDC
  A/Ss annual ordinary general meeting 2006 was held on April 26, where
  among other things, a series of amendments to the articles were adopted and
  Vagn Ove Sørensen was elected as new member of the board of directors.
  At a subsequent board meeting the Board of Directors elected Kurt Björklund
  as Chairman and Vagn Ove Sørensen as Vice Chairman.

All decisions are included
  in the Stock Exchange announcement as of April 26, 2006.

First quarter 2006
  Earnings Release

On
  May 4, 2006, we issued our first quarter 2006 Earnings Release, reporting net
  income for the first quarter of 2006 amounting to DKK 515 million, same as net
  income for the first quarter of 2005.

TDC Switzerland
  to reduce workforce by 145 employees

On
  May 17, 2006, TDC decided to implement a redundancy program covering 145. In
  collaboration with employee representatives and labour unions, TDC Switzerland
  has created a social compensation plan. Total costs related to work-force reductions
  are estimated at DKK 72m before tax. The amount will be expensed in the second
  quarter of 2006.

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Interim dividends
  June 2006

Based
  on an authorization adopted at the Annual Ordinary General Meeting on April
  26, 2006, TDCs Board of Directors at its meeting on June 21, 2006, decided
  to pay out interim dividends of DKK 4.35 per share of a nominal value of DKK
  5 each, totaling DKK 862m, excluding dividends of treasury shares. The dividend
  will be paid on June 29, 2006.

Future management

On
  June 22, 2006 the President and Chief Executive Officer (CEO) of TDC, Henning
  Dyremose, accepted an offer to become Chairman of the Board of TDC. Jens Alder,
  who left as President and CEO of Swisscom at the end of January, is expected
  to become new President and CEO of TDC. Senior Executive Vice President (SEVP)
  and Chief Financial Officer (CFO), Hans Munk Nielsen, will continue on the Executive
  Committee of TDC.

Jens
  Alder is expected to take on his new position as of November 1, 2006 when he
  will no longer have any contractual obligations vis-a-vis Swisscom. The company
  expects to conclude a final agreement to that effect in the near future. Henning
  Dyremose is expected to be elected new Chairman in connection with TDCs Annual
  General Meeting in March 2007. Henning Dyremose will continue as President and
  CEO until Jens Alder takes over. After that Henning Dyremose will, as a non-executive
  director of TDC, be at the companys disposal as advisor for Jens Alder until
  the Annual General Meeting.

President
  and CEO Henning Dyremose will receive a retirement bonus in accordance with
  his current contract, cf. Employment Agreements for Members of the Executive
  Committee in Item 5, and as further described in the companys stock exchange
  release dated November 30, 2005. Henning Dyremose will in addition receive a
  special bonus of between DKK 7.5 and 15 million, depending on the companys
  financial performance in 2006.

In
  accordance with his current contract, SEVP and CFO Hans Munk Nielsen will receive
  DKK 11.4 million as a consequence of the change of control in the company. Furthermore,
  SEVP and CFO Hans Munk Nielsen has been granted a Stay-On bonus of up to DKK
  13.3 million payable no later than July 1, 2008. The company has in addition
  granted SEVP and CFO Hans Munk Nielsen a bonus of up to DKK 4.3 million, depending
  on the companys financial performance in 2006.

NTC
  plans to implement an incentive program for top managers in TDC which will also
  include President and CEO Henning Dyremose as well as SEVP and CFO Hans Munk
  Nielsen.

Liquidity and Capital
  Resources

Cash Flows

TDCs
  historical liquidity needs have arisen primarily from the need to finance capital
  expenditures for the maintenance and expansion of its operations, both in terms
  of new technologies and maintaining the quality of its service, and for working
  capital. TDCs principal source of funds has been cash flow from operating
  activities.

|TDC Group                  |         |   |        |   |                |  
|-------------------------- | ------- | - | ------ | - | -------------- | -
|                           |         |   |        |   |                |  
|                           |         |   |        |   | 2005
      vs. |  
|DKK M                      | 2004    |   | 2005   |   | 2005           |  
|                           |         |   |        |   |                |  
|Cash flow                  |         |   |        |   |                |  
|Operating
      activities | 11,084  |   | 8,691  |   | (8.8           | )
|Investing
      activities | 2,889   |   | (1,226 | ) | (25.8          | )
|Financing
      activities | (12,573 | ) | (4,229 | ) | (23.8          | )
|                           |         |   |        |   |                |  
|Total Cash flow            | 1,400   |   | 3,236  |   | (14.8          | )
|                           |         |   |        |   |                |  

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Cash
  flow from operating activities was DKK 8,691 million in 2005, representing a
  decrease of DKK 2,393 million compared with 2004. This decrease related primarily
  to increased tax payments and an adverse development of working capital in 2005
  of DKK (527) million compared with a favorable development in 2004. This was
  partly offset by improved operating income.

Cash
  flow from investing activities was DKK (1,226) million in 2005 compared with
  DKK 2,889 million in 2004, due primarily to investments in non-current assets,
  an increased ownership share in HTCC and acquisitions of Dotcom Solutions, sunrise
  business communications and Telelet, partly offset by the disposal of TDC Directories.
  Investing activities in 2004 related mainly to dividends received in connection
  with the divestment of Belgacom, partly offset by the acquisitions of TDC Song,
  NetDesign and the remaining 80% stake in Telmore.

Cash
  flow from financing activities was DKK (4,229) million in 2005 compared with
  DKK (12,573) million in 2004. The development related mainly to repayment of
  long-term debt and the repurchase of shares from SBC in 2004, which were held
  as treasury shares and cancelled in June 2005. TDCs cash and cash equivalents
  increased from DKK 6,827 million as of January 1, 2005 to DKK 10,063 million
  as of December 31, 2005.

Capital Expenditures

In
  2005, capital expenditures, including share acquisitions, decreased by DKK 3,715
  million to DKK 6,277 million compared with DKK 9,992 million in 2004. This decrease
  related mainly to the acquisition of TDC Song and NetDesign in 2004, which totalled
  DKK 4,564 million, and was partly offset by the impact of the acquisitions of
  HTCC, Dotcom Solutions and sunrise business communications in 2005 totalling
  DKK 625 million.

Capital
  expenditures, excluding share acquisitions, rose DKK 476 million or 9.2% to
  DKK 5,624 million in 2005 compared with 2004. The increase stemmed mainly from
  increased capital expenditure by TDC Mobile International, which increased DKK
  233 million due primarily to the expansion of the UMTS network and capital expenditures
  in relation to Bité. Capital expenditures in TDC Solutions rose DKK 177
  million due mainly to capital expenditures in the acquired companies. The capex-to-revenue
  ratio was 12.1% in 2005 compared with 12.2% in 2004. The following table depicts,
  by business line, our capital expenditures for the periods indicated:

|TDC Group                                   |        |   |        |   |                |  
|------------------------------------------- | ------ | - | ------ | - | -------------- | -
|                                            |        |   |        |   |                |  
|                                            |        |   |        |   | 2005
      vs. |  
|DKK M                                       | 2004   |   | 2005   |   | 2005           |  
|                                            |        |   |        |   |                |  
|Capital expenditures                        |        |   |        |   |                |  
|TDC
      Solutions                         | (2,447 | ) | (2,624 | ) | (7.2           | )
|TDC
      Mobile International              | (1,023 | ) | (1,256 | ) | (22.8          | )
|Domestic
      operations                   | (747   | ) | (831   | ) | (11.2          | )
|Talkline
      etc.                         | (112   | ) | (73    | ) | 34.8           |  
|Bité                                        | (164   | ) | (352   | ) | (114.6         | )
|TDC
      Switzerland                       | (1,196 | ) | (1,352 | ) | (13.0          | )
|TDC
      Cable TV                          | (223   | ) | (231   | ) | (3.6           | )
|Other
      activities1                     | (259   | ) | (161   | ) | 37.8           |  
|TDC
      excluding share acquisitions      | (5,148 | ) | (5,624 | ) | (9.2           | )
|Share
      acquisitions in other companies | (4,844 | ) | (653   | ) | 86.5           |  
|TDC
      including share acquisitions      | (9,992 | ) | (6,277 | ) | 37.2           |  
|                                            |        |   |        |   |                |  

---

|1 | Includes TDC A/S,
      TDC Services and eliminations.
|- | ------------------------------------------------------



TDC
  Solutions capital expenditures increased by DKK 177 million to DKK 2,624
  million in 2005 resulting mainly from capital expenditures by the acquired companies
  TDC Song and HTCC. Capital expenditures in domestic

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operations decreased due
  to, among other factors, lower unit costs for DSL equipment. Adjusted for acquired
  enterprises, capital expenditures decreased by DKK 175 million, or 7.5%, compared
  with 2004.

TDC
  Mobile Internationals capital expenditures increased by DKK 233 million
  or 22.8% compared with 2004 to DKK 1,256 million in 2005. Capital expenditures
  relating to domestic operations were DKK 831 million, representing an increase
  of DKK 84 million or 11.2% compared with 2004. The increase mainly resulted
  from the expansion of the UMTS network. The remaining growth mainly resulted
  from the expansion of the GSM network of Bité Lithuania, the license
  fee in Latvia and the roll out of GSM and UMTS networks of Bité Latvia.

TDC
  Switzerlands capital expenditures were DKK 1,352 million in 2005, representing
  an increase of DKK 156 million or 13.0% compared with 2004, due primarily to
  the upgrading of the GSM network with EDGE network technology and higher capitalization
  of asset retirement obligations (non-cash items).

TDC
  Cable TVs capital expenditures increased by DKK 8 million compared with
  2004 to DKK 231 million and mainly reflected higher investments in network expansion,
  TVoIP and VoD in 2005, partly offset by lower expenses for return path upgrades
  after a large part of the roll out of the cable network was completed.

Capital Resources

|Net interest-bearing
      debt and financial resources, DKKm             | 2004    |   | 2005    |  
|------------------------------------------------------------------------- | ------- | - | ------- | -
|                                                                          |         |   |         |  
|                                                                          |         |   |         |  
|Cash, marketable securities
      and interest-bearing receivables        | 10,333  |   | 13,857  |  
|Short-term debt                                                           | (1,337  | ) | (5,442  | )
|                                                                          |         |   |         |  
|Net liquid assets                                                         | 8,996   |   | 8,415   |  
|Long-term debt                                                            | (29,142 | ) | (24,890 | )
|                                                                          |         |   |         |  
|Net interest-bearing
      debt                                           | (20,146 | ) | (16,475 | )
|                                                                          |         |   |         |  
|                                                                          |         |   |         |  
|Cash, marketable securities
      and interest-bearing receivables        | 10,333  |   | 13,857  |  
|                                                                          |         |   |         |  
|Undrawn committed
      short- and long-term credit lines                 | 10,185  |   | 7,366   |  
|                                                                          |         |   |         |  
|Total cash, marketable
      securities, interest-bearing receivables and |         |   |         |  
|undrawn credit lines
      (Capital resources)                          | 20,518  |   | 21,223  |  
|                                                                          |         |   |         |  

Overall,
  our financial position reflects the cash flows generated by our operating activities
  and investments in companies and assets, net of dividends paid out.

At
  December 31, 2005, cash, marketable securities and interest-bearing receivables
  aggregated DKK 13,857 million compared with DKK 10,333 million at December 31,
  2004, while short-term debt totalled DKK 5,442 million compared with DKK 1,327
  million at December 31, 2004. This resulted in a DKK 581 million decrease in
  net liquid assets from DKK 8,996 million at December 31, 2004 to DKK 8,415 million
  at December 31, 2005. Long-term debt amounted to DKK 24,890 million compared
  with DKK 29,142 million at December 31, 2004.

Net
  interest-bearing debt totalled DKK 16,475m at December 31, 2005, a decrease
  of DKK 3,671m over the year due mainly to positive cash flows from operations
  and disposal of TDC Directories, partly offset by capital expenditures, an increased
  ownership share in HTCC and the acquisition of Dotcom Solutions and sunrise
  business communications.

At
  December 31, 2005, our capital resources totalled DKK 21,223 million compared
  with DKK 20,518 million at December 31, 2004, reflecting a DKK 3,524 million
  increase in cash, marketable securities etc. partly offset by a DKK 2,819 million
  decrease in committed credit lines.

As
  described under Senior Facilities Agreement and Interim dividends
  in the Recent developments section, TDC A/Ss capital structure
  and resources has changed following the acquisition of TDC by NTC. On March
  3, 2006, TDC entered into a senior facility agreement as borrower and guarantor.
  The senior facilities include a revolving credit facility of

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up to EUR 700,000,000
  which replaced existing undrawn short and long term credit lines. In connection
  with the payment of an interim dividend on April 11, 2006, TDC disposed of its
  marketable securities etc.

It
  is TDCs belief that the companys operating cash flows, together with
  borrowings under the senior facility agreement, will be sufficient to fund our
  working capital requirement, anticipated capital expenditures and debt service
  requirement as they become due for the foreseeable future.

Credit Ratings

TDC
  is rated by Standard & Poors and Moodys Investor Services (Moodys).
  As of April 12, 2006 TDC is also rated by Fitch Ratings (Fitch). Until November
  2005, TDC had a long-term credit rating of BBB+/Baa1 and a short-term credit
  rating of A2/P-2 from Standard & Poors and Moodys, respectively.

On
  November 30, 2005, Moodys downgraded TDCs long-term and short-term
  credit ratings to Ba1 and NP. On January 25, 2006, Standard & Poors
  also decided to downgrade TDCs long-term and short-term ratings to BB
  on negative watch and B, respectively. The downgradings reflect
  NTCs announcing on November 30, 2005 that it was making an equity tender
  offer to the shareholders of TDC A/S, and announcing on January 25, 2006 that
  the offer would be completed. On February 1, 2006, NTC settled and paid for
  the shares and ADSs, thereby becoming the owner of 88.2% of the common shares.

On
  April 11, 2006 Standard & Poors changed the credit rating of TDC.
  The credit rating regarding long-term debt for TDC A/S has been adjusted downwards
  to BB- with a stable outlook from BB with a negative
  outlook. The Senior Facilities Agreement, were valued at BB-. The
  credit rating regarding TDCs outstanding unsecured EMTN programme has
  been adjusted downwards to B from BB. The credit rating
  regarding the short term debt is unchanged at B.

On
  April 12, 2006 Fitch published their credit rating of TDC. Fitch assigned TDC
  A/S a rating of BB- with stable outlook and a short-term rating of B. The
  Senior Facilities Agreement, was assigned BB+, and the unsecured long-term
  rating of the outstanding bonds under TDCs EMTN programme was assigned a BB-
  rating.

On
  April 13, 2006 Moodys downgraded TDCs long-term corporate credit rating to
  Ba3 with stable outlook from Ba1 on review for downgrade. The Senior Facilities
  Agreement , was assigned Ba2, while the unsecured long-term rating of the
  EMTN bonds was lowered to Ba3 from Ba1. TDCs short term credit rating was
  withdrawn by Moodys.

The
  changed credit ratings in April 2006 by Standard & Poors, Moodys
  and Fitch reflect the new leveraged capital structure of TDC following the completion
  of the tender offer by NTC to TDCs shareholders.

Contingent assets

The
  TDC Group is awaiting the outcome of certain cases brought against other telecommunications
  companies. A potential favorable outcome for TDC of one or more of these cases
  could result in substantial income.

Contingent liabilities

The
  TDC Group is party to certain pending lawsuits and cases pending with public
  authorities and complaints boards. Based on a legal assessment of the possible
  outcome of each of these lawsuits and cases, Management is of the opinion that
  these will have no significant adverse effect on the TDC Groups financial
  position.

In
  connection with capital sale and leaseback agreements, the Group has provided
  guarantees covering intermediary leasing companies payment of the total
  lease commitments. The Group has made legally releasing non-

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recurring payments to
  the intermediary leasing companies of an amount corresponding to the total lease
  commitments. At December 31, 2005, the guarantees amounted to DKK 3,291million,
  compared with DKK 3,030 million at December 31, 2004. The guarantees provided
  by the TDC Group are economically defeased by means of payment instruments issued
  by creditworthy obligors unrelated to the TDC Group that secure or otherwise
  provide for payment of the regular lease payments and purchase-option prices
  due from the intermediary leasing companies. These instruments are lodged as
  security for payment of the regular lease payments by the intermediary leasing
  companies.

In
  accordance with Section 32 of the Danish Civil Servants Act, the Group has a
  termination benefit obligation to former Danish civil servants and to employees
  with civil-servant status hired before April 1, 1970 who are members of the
  related Danish pension funds.

The
  Group has provided the usual guarantees in favor of suppliers and partners.
  These guarantees amounted to DKK 90 million at December 31, 2005, compared with
  DKK 135 million at December 31, 2004.

Off-Balance Sheet Arrangements

We have no off-balance
  sheet arrangements.

Contractual Obligations
  and Commitments

|                                                     | Payments
      Due by Period
|---------------------------------------------------- | ----------------------------
|                                                     |                             
|Contractual
      obligations, DKK million           |                             
|                                                     |                             
|                                                     | Total                       
|                                                     |                             
|Current
      maturities of long-term debt           | 5,425                       
|Long-term
      debt                                 | 24,890                      
|Operating
      leases                               | 4,606                       
|Purchase
      obligations regarding fixed assets    | 81                          
|Commitments
      related to outsourcing contracts   | 746                         
|Other
      purchase commitments                     | 360                         
|Currency
      swaps, FX swaps and forward contracts | (488                        
|Interest
      rate swaps                            | 31                          
|                                                     |                             
|Total
      contractual cash obligations             | 35,651                      
|                                                     |                             

The
  three Danish pension funds related to TDC are operating defined benefit plans.
  In accordance with existing legislation, bylaws and the pension regulations,
  TDC is required to make contributions to meet the premium reserve requirements.
  See note 28 to our consolidated financial statements.

The
  following table discloses aggregate information about our commercial commitments.
  Commercial commitments are items that we could be obliged to pay in the future.
  They are not included in the consolidated balance sheet.

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|                                                                                                                | Amount
      of Commitment Expiration per Period | 
|--------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | 
|                                                                                                                |                                                  | 
|Other commercial commitments,
      DKK million                                                                 |                                                  | 
|                                                                                                                |                                                  | 
|                                                                                                                | Total                                            | 
|                                                                                                                |                                                  | 
|Undrawn lines of credit                                                                                         | 7,366                                            | 
|                                                                                                                |                                                  | 
|Guarantees, DKK million                                                                                         |                                                  | 
|                                                                                                                |                                                  | 
|                                                                                                                |                                                  | 
|Guarantee
      obligation in connection with capital sale and leaseback arrangements (see
      note 30 to our |                                                  | 
|consolidated
      financial statements for further information)                                                |                                                  | 
|Guarantees in favor
      of suppliers and partners                                                             |                                                  | 
|                                                                                                                |                                                  | 
|Total guarantees                                                                                                |                                                  | 
|                                                                                                                |                                                  | 

Discussion of Accounting
  Policies

IFRS Compared With
  US GAAP

For
  information on the significant differences between IFRS and US GAAP see note
  33 to our consolidated financial statements.

Critical Accounting
  Estimates and Judgments

For information on critical
  accounting estimates and judgments see note 2 to our consolidated financial
  statements.

Changed Accounting
  Policies

As
  of January 1, 2005, we have changed our accounting policies to comply with the
  International Financial Reporting Standards as adopted by the EU (IFRS). For
  further information on the changed accounting policies see note 1 to our consolidated
  financial statements.

Transition to IFRS

IFRS
  1, First-time adoption of International Financial Reporting Standards
  requires us to determine our accounting policies according to IFRS and apply
  these retrospectively to determine our consolidated opening balance sheet under
  IFRS at the date of transition (January 1, 2004). However, IFRS 1 allows a number
  of optional exemptions as well as requires the application of a number of mandatory
  exceptions to this general principle. The exemptions and exceptions relevant
  for us are set out below, including a short description and our decisions where
  applicable:

Business combinations
  (IFRS 3)

We
  have applied the business combination exemption in IFRS 1. Goodwill amortization
  was discontinued with effect as from January 1, 2002. As a consequence, in the
  consolidated opening balance sheet, the new cost of goodwill is equal to the
  carrying amount under Danish GAAP at January 1, 2002.

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Employee benefits (IAS
  19)

We
  elected the exemption not to retrospectively recalculate the pension liabilities
  under IAS 19, Employee Benefits and to recognize all cumulative
  actuarial gains and losses in relation to employee benefit schemes in retained
  earnings at January 1, 2004.

Cumulative translation
  differences (IAS 21)

IFRS
  1 allows a first-time adopter not to comply with requirements to recalculate
  cumulative translation differences that existed at the data of transition to
  IFRS in accordance with IAS 21, The Effects of Changes in Foreign Exchanges
  Rates. We elected to set the cumulative translation differences for all
  foreign operations at zero on the date of transition to IFRS. As a result, the
  gain or loss on a subsequent disposal of any foreign operation excludes translation
  differences that arose prior to January 1, 2004 and includes translation differences
  that arose subsequent to this date.

Share-based payments
  (IFRS 2)

We
  elected to apply IFRS 2, Share-based payment to all relevant share-based
  payment transactions granted before January 1, 2004. The fair value of options
  at grant date is changed to income over the vesting period of the options.

Exemptions not applied

The
  exemptions on Compound financial instruments, Assets and liabilities
  for subsidiaries, associates and joint ventures, Designation of
  previously recognized financial instruments, Insurance contracts,
  Leases, Fair value measurement of financial assets and financial
  liabilities and Changes in existing decommissioning, restoration
  and similar liabilities included in the cost of property, plant and equipment.
  Further, we have decided not to apply the exemptions on Fair value or
  revaluation as deemed cost.

Exceptions

In
  accordance with the IFRS 1 mandatory exception, we apply IFRS 5, Non-current
  Assets Held for Sale and Discontinued Operations as from January 1, 2005.

New Accounting Pronouncements

International Financial
  Reporting Standards as adopted by the EU (IFRS)

For
  information on new standards, amendments and interpretations see note 3 to our
  consolidated financial statements.

New Accounting Pronouncements

International Financial
  Reporting Standards as adopted by the EU (IFRS)

For
  information on new standards, amendments and interpretations see note 3 to our
  consolidated financial statements.

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New US GAAP Accounting
  Pronouncements

In
  May, 2005 the FASB issued Statement 154 (SFAS 154), Accounting Changes and
  Error Corrections. SFAS 154 replaces APB Opinion No. 20, Accounting Changes
  and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial
  Statements. SFAS 154 applies to all voluntary changes in accounting principles
  and changes the accounting for and reporting of a change in accounting principle,
  and requires the retrospective application to prior periods financial
  statements of a voluntary change in accounting principle unless it is impracticable.
  We are required to adopt SFAS 154 as of January 1, 2006. The adoption of SFAS
  154 will only affect us when we implement changes in accounting principles that
  are addressed by the standard or correct accounting errors in future periods.

In
  February 2006, the FASB issued Statement 155, Accounting for Certain Hybrid
  Financial Instruments (SFAS 155), which amends SFAS No. 133, Accounting
  for Derivative Instruments and Hedging Activities (SFAS 133) and SFAS No.
  140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments
  of Liabilities (SFAS 140). SFAS 155 provides guidance to simplify the accounting
  for certain hybrid instruments by permitting fair value remeasurement for any
  hybrid financial instrument that contains an embedded derivative, as well as,
  clarifies that beneficial interests in securitized financial assets are subject
  to SFAS 133. In addition, SFAS 155 eliminates a restriction on the passive derivative
  instruments that a qualifying special-purpose entity may hold under SFAS 140.
  SFAS 155 is effective for all financial instruments acquired, issued or subject
  to a new basis occurring after the beginning of an entitys first fiscal year
  that begins after September 15, 2006. We believe that the adoption of this statement
  will not have a material effect on our results of operations, financial position
  and cash flows.

In
  March 2006, the FASB issued Statement 156, Accounting for Servicing of Financial
  Assets (SFAS 156), which amends SFAS No. 140. SFAS 156 provides guidance
  addressing the recognition and measurement of separately recognized servicing
  assets and liabilities, common with mortgage securitization activities, and
  provides an approach to simplify efforts to obtain hedge accounting treatment.
  SFAS 156 is effective for all separately recognized servicing assets and liabilities
  acquired or issued after the beginning of an entitys fiscal year that begins
  after September 15, 2006, with early adoption being permitted. We believe that
  the adoption of this statement will not have a material effect on our results
  of operations, financial position and cash flows.

Cautionary Statement
  Regarding Forward-Looking Statements

Reference
  is made to the Cautionary Statement Regarding Forward-Looking Statements contained
  in the Introduction to this Annual Report on page 2.

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Item
  6 Directors, Senior Management and Employees

Directors and Senior
  Management

Management Structure

The Board of Directors
  consists of ten members, of whom six are elected at a general meeting of shareholders.
  In addition, Danish law grants the employees of a company the right to elect
  a number of directors equal to one half the numbers of directors elected by
  shareholders at a general meeting (currently four directors).

Following
  the completion of the tender offer for the shares of TDC Thorleif Krarup, Niels
  Heering, Kurt Anker Nielsen, Preben Damgaard, Christine Bosse and Per-Arne Sandström
  resigned as members of the Board on the Extraordinary General Meeting held on
  February 28, 2006. At the Extraordinary General Meeting Kurt Björklund,
  Lawrence H. Guffey, Oliver Haarmann, Gustavo Schwed and Ricard Wilson were elected
  as members of the board of directors of TDC. Subsequently, the board of directors
  appointed Kurt Kjörklund as Chairman.

At the Annual General
  Meeting held on April 26, 2006, Kurt Björklund, Vagn Ove Sørensen,
  Lawrence H. Guffey, Oliver Haarmann, Gustavo Schwed and Ricard Wilson were elected
  as members of the board of directors. Subsequently, the board of directors appointed
  Kurt Björklund as Chairman and Vagn Ove Sørensen as Vice Chairman.

The
  directors elected by the shareholders serve terms of one year, terminating at
  the next Annual General Meeting. Directors elected by employees are elected
  for a period of four years. Current directors elected by employees were elected
  in April 2004. There is no restriction on the re-election of directors.

Set
  forth below is a list of the current members of the Board of Directors, their
  business experience and the year of their initial election as Directors.

|Name               | Age | Title                            
|------------------ | --- | ---------------------------------
|                  
|Kurt Björklund     | 37  | Chairman                         
|Vagn Sørensen      | 46  | Vice-Chairman                    
|Lawrence H. Guffey | 38  | Director                         
|Oliver Haarmann    | 38  | Director                         
|Gustavo Schwed     | 44  | Director                         
|Richard Wilson     | 40  | Director                         
|Jan Bardino        | 53  | Director  Employee
      elected
|Leif Hartmann      | 62  | Director  Employee
      elected
|Steen Jacobsen     | 56  | Director  Employee
      elected
|Bo Magnussen       | 58  | Director  Employee
      elected

The
  Annual General Meeting of shareholders held on April 26, 2006, elected Ola Nordquist
  as alternate for Kurt Björklund, Jan Nielsen as alternate for Lawrence
  H. Guffey, Nicolas Gheysens as alternate for Oliver Haarmann, Torsten Winkler
  as alternate for Gustavo Schwed, and Andrew Sillitoe as alternate for Richard
  Wilson.

On
  June 22, 2006 the President and Chief Executive Officer of TDC, Henning Dyremose,
  accepted an offer to become Chairman of the Board of TDC. He is expected to
  be elected new Chairman in connection with TDCs Annual General Meeting in March
  2007. See Recent Developments in Item 5.

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Our Management

The
  Executive Committee manages our daily operations and is appointed by the Board
  of Directors. Set forth below is information regarding the members of the Executive
  Committee as of June 21, 2006, along with their business experience and date
  of initial appointment.

The following table presents
  information about the members of the Executive Committee of TDC:

|Name              | Age |  | Title                                                                                               
|----------------- | --- |  | ----------------------------------------------------------------------------------------------------
|                 
|Henning Dyremose  | 60  |  | President and Chief
      Executive Officer; member of the Executive Committee                      
|Hans Munk Nielsen | 59  |  | Senior Executive
      Vice President and Chief Financial Officer; member of the Executive Committee

On
  June 22, 2006 TDC announced that Jens Alder, former President and CEO of Swisscom,
  is expected to become the new President and Chief Executive Officer of TDC,
  effective November 1, 2006. See Recent Developments in Item 5.

Set forth below is certain
  biographical information concerning the above individuals:

Henning
  Dyremose has been Chief Executive Officer of TDC since 1998. Mr. Dyremose
  also serves as Chairman of the Confederation of Danish Industries and the Danish
  Trade Council, as Vice Chairman of the boards of Brødrene A. O. Johansen
  A/S and A.O. Invest A/S and as a member of the board of Carlsberg A/S.

Hans
  Munk Nielsen has been Chief Financial Officer of TDC since 1991. Mr.
  Nielsen also serves as Chairman of the board of CMO-Denmark Fonden and as a
  member of the boards of Nordea Invest A/S and OMX A.B. (Publ.).

Kurt
  Björklund is a Partner with Permira. Prior to joining Permira in
  1996, Mr. Björklund worked for the Boston Consulting Group in Stockholm
  and prior to that for an IT reseller in Finland.

Vagn
  Sørensen has been President and Chief Executive Officer of Austrian
  Airlines in the period 2001 - 2006. Mr. Sørensen is also a director of
  a number of other companies, and is the chairman of the board of directors of
  Codan, Brandtex, DeSter B.V and Select Service Partner Plc..

Lawrence
  H. Guffey is a Senior Managing Director with Blackstone and is in the
  firms Private Equity group, leading its activities in the media and communications
  sector. Prior to joining Blackstone in 1991, Mr. Guffey worked in the Acquisitions
  Group at Trammell Crow Ventures, the principal investment arm of Trammell Crow
  Company. He is a member of the board of directors of Axtel, Kabel BW, Cine UK,
  Centennial Communications, iPCS/AirGate, Fibernet, Corp Group, LiveWire Systems
  and PaeTec.

Oliver
  Haarmann is a Member of KKR. Prior to joining KKR in 1999, Mr. Haarmann
  was a principal of private equity funds affiliated with Dillon Read & Co.
  and, prior to that, worked in corporate finance at Lazard Frères and
  Bankers Trust Co. He is a member of the board of A.T.U. Auto-Teile-Unger Holding
  GmbH.

Gustavo
  Schwed is a Managing Director of Providence. Prior to joining Providence
  in 2004, Mr. Schwed served as managing director of Morgan Stanley, where he
  was one of the managing directors leading Morgan Stanleys European private
  equity activities and was Chairman of the firms Global Emerging Markets
  Fund. Prior to Morgan Stanley, Mr. Schwed was a principal at Bassini, Playfair
  and Associates, an emerging markets private equity firm, and held several positions
  in the private equity and venture capital units of Donaldson, Lufkin & Jenrette.

Richard
  Wilson is a Partner with Apax. He is responsible for Apaxs technology
  and telecoms team in Europe. Prior to joining Apax in 1995, Mr. Wilson served
  as a consultant with Scientific Generics, a business and technology

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management consulting
  company and also worked for Marconi Space Systems in computer simulation. He
  is a member of the boards of Digital Bridges Ltd. and Corvil Ltd.

Jan
  Bardinois a systems developer at TDC. He was first elected to the Board
  of Directors by TDCs employees in 2004.

Leif
  Hartmann is a systems technician at TDC. He was first elected to the
  Board of Directors by TDCs employees in 1996.

Steen
  Jacobsen is a specialist technician at TDC. He was first elected to
  the Board of Directors by TDCs employees in 1996.

Bo
  Magnussen is a senior clerk at TDC. He is also Chairman of the Association
  of Managers and Employees in Special Positions of Trust (Lederforeningen) at
  TDC. He was first elected to the Board of Directors by TDCs employees
  in 1996.

The business address of
  each director and member of the Executive Committee is TDC A/S, Nørregade
  21, DK-0900 Copenhagen C, Denmark.

Aggregate Compensation
  of Directors and Officers

In
  2005, compensation to the Board of Directors and the Executive Committee amounted
  to DKK 9 million and DKK 22 million, respectively, aggregating DKK 31 million.
  The compensation to the Board of Directors included special compensation to
  the Board of Directors of DKK 6 million for a heavy workload with 16 extra board
  meetings during the period leading up to the Acquisition, and the compensation
  to the Executive Committee included special compensation for an extraordinary
  workload in connection with the Acquisition. For further disclosures regarding
  Board of Directors and the Executive Committee compensation information, including
  compensation elements on an individual basis, please see note 6 to our Consolidated
  Financial Statements.

Performance
  based bonuses have been paid to the Executive Committee and are included in
  the above amount. Approximately 300 top managers participate in a bonus program
  called the Top Managers Compensation Program, and approximately 2,200
  managers and specialists participate in a bonus program called the Managers
  Compensation Program.

The
  bonus programs are based on specific, individual annual targets, including personal,
  financial and operational targets. These targets depend on the individual employees
  organizational position within TDC and are weighted in accordance with specific
  rules. All targets must support improved profitability and business development
  at TDC.

Bonus
  payments are calculated as the individual employees basic salary times
  the bonus percentage times the degree of target fulfillment. The bonus percentage
  achieved when targets are met is called the on-target bonus percentage. For
  the Top Managers Compensation Program, this percentage is fixed in the
  contract of employment with the individual employee and usually varies within
  a range of 10-25%. The on-target bonus percentage is somewhat lower for the
  Managers Compensation Program. The bonus could be a maximum of 200% of
  the on-target bonus.

The
  bonus program for the members of the Executive Committee is based on the same
  principles as those for other managers.

In
  2005, 52,040 options to purchase our shares were granted to members of the Executive
  Committee at an average exercise price of DKK 292 per share. This brought the
  total number of outstanding options held by members of the Executive Committee
  to 340,742 with an average exercise price of DKK 298 per share. One third of
  the options vested annually and consequently each grant vested fully in three
  years. Share options could, however, be exercised in the event of change of
  control of TDC whether they were vested or unvested. The options expired 10
  years after the date of grant. In connection with NTCs equity tender offer
  for acquiring the Company and conditional on the completion thereof, TDC gave
  the members of the Executive Committee an offer to exercise existing share options
  and offered to buy certain existing share options. The members of the Executive
  Committee accepted both offers for all their share options. Consequently, they

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currently do not hold
  any share options. Since 2003, members of the Board of Directors have not received
  share options. For further disclosures regarding the Executive Committees
  share options, please see note 6 to our Consolidated Financial Statements.

Board Practices

The
  members of the Board of Directors do not have service contracts providing for
  termination benefits. The contracts of the members of the Executive Committee
  provide for notice periods of 12-18 months in the event of termination by TDC;
  the employment agreement of the Chief Executive Officer cannot be terminated
  by TDC before March 31, 2008. In the event of a change of control of TDC, and
  for a period of 24 months thereafter, members of the Executive Committee are
  entitled to a prolonged termination notice of 36 months with full rights to
  salary and pensions, as well as compensation for benefits, bonuses and share
  options. The members of the Executive Committee also have the right to voluntarily
  terminate their employment in a period between three and six months following
  the first change of control of TDC after November 30, 2005 (which occurred in
  connection with the completion of the Tender Offer) and receive the benefits
  of the prolonged termination period.

Until
  the completion of the tender offer by NTC, the committees of the Board of Directors
  of TDC included an Audit Committee and a Compensation Committee. Following completion
  of the tender offer by NTC, the Board of Directors itself now functions as the
  Audit Committee. In 2005, the Audit Committee held five meetings. The primary
  purposes of the Audit Committee were to assist the Board of Directors in fulfilling
  its oversight of:

| | o | the integrity
      of TDCs annual report and financial reporting process and TDCs
      systems of internal accounting and financial controls;                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                         
| | o | the engagement
      of the independent registered public accounting firm and the evaluation
      of the independent registered public accounting firms qualifications
      and independence;        
| |   |                                                                                                                                                                                                         
| | o | the TDC
      Groups compliance with legal and regulatory requirements relating
      to the annual report and financial reporting, including the Groups
      disclosure controls and procedures; and
| |   |                                                                                                                                                                                                         
| | o | the performance
      of the internal audit function and oversight of the performance of the independent
      registered public accounting firm.                                                       

The Board of Directors
  and the Executive Committee now effectively fulfill these functions.

Employees

Overview

We
  place a high priority on training our employees. We have established an extensive
  management training program. Approximately 200 of our managers participate in
  this program. We believe that the management training program has enhanced the
  skill base of our managers. As a result, even as the skills we need to operate
  our business evolve, in 2005 we have been able to recruit 75% of all candidates
  for managerial positions internally and to retain approximately 90% of the existing
  managers. In addition, we have an incentivized salary system. Approximately
  2,500 managers and specialists participate in our bonus plan. In addition, approximately
  550 sales employees get paid on a commission basis.

We
  monitor employee satisfaction each year by conducting an employee survey. After
  receiving the results of the survey, we engage in dialogue with our employees
  to identify ways to improve the work environment for our staff.

We
  have recently begun to reduce our domestic workforce. Customers are switching
  from traditional landline telephony to mobile and IP-based broadband solutions,
  which are less labor intensive than traditional landline telephony.

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In
  recent years, we have implemented two domestic redundancy programs and initiated
  a third: the first covering the period from 2003-2004 and the second covering
  2005. During these periods, we achieved workforce reductions partly through
  our redundancy programs and partly from attrition. In 2004, 494 employees were
  covered by the redundancy programs and 630 employees in 2005. In 2005, we reduced
  the number of domestic full-time employees from 14,437 to 13,876. However, our
  domestic workforce reduction has been offset by the addition of employees in
  our international operations as a result of our international acquisition activity
  and our recruitment of new employees with sought after skills. At year-end 2005,
  we had 20,225 full-time employee equivalents compared with 19,497 in 2004. The
  after-tax cost related to the redundancy programs was DKK 410 million in 2004
  and DKK 320 million in 2005. In 2006, we have initiated a redundancy program
  with respect to up to 570 employees through voluntary resignations in accordance
  with our agreements with certain unions involving voluntary termination, as
  described below in Unions. The total costs related to workforce
  reductions in 2006 are estimated at DKK 342 million after tax.In 2006,
  we have also initiated a reduction in the workforce in Switzerland by 145 employees,
  corresponding to 5.7 pct. The aim is to strengthen TDC Switzerlands cost structure
  to the competitive environment. The total costs associated with the workforce
  reduction are estimated at approximately CHF 15m pre-tax (corresponding to approximately
  DKK 72m). The total costs will be expensed in the second quarter of 2006.

The following table shows
  our full-time employee equivalents by business line inclusive of all affiliates:

|                               | As
      of December 31 | 
|------------------------------ | ----------------------- | 
|Business
        line          | 2004                    | 
|                               |                         | 
|TDC Solutions                  | 11,432                  | 
|Domestic
      Operations      | 10,072                  | 
|International
      Operations | 1,360                   | 
|TDC Mobile International       | 2,464                   | 
|Domestic
      Operations      | 1,113                   | 
|International
      Operations | 1,352                   | 
|TDC Switzerland                | 2,307                   | 
|TDC Cable TV                   | 862                     | 
|Other                          | 2,432                   | 
|Domestic
      Operations      | 2,390                   | 
|International
      Operations | 42                      | 
|                               |                         | 
|Total                          | 19,497                  | 
|Domestic
      Operations      | 14,437                  | 
|International
      Operations | 5,060                   | 

Unions

We
  estimate that more than 70% of our employees are members of unions. We believe
  that we have a good relationship with our unions.

We
  have in place collective labor agreements with the telecommunications department
  of the Danish Metal workers Union (Dansk Metal), the Association of Managers
  and Employees in Special Positions of Trust in TDC (Lederforeningen i TDC)(LTD),
  the Danish Confederation of Professional Associations (AC-organisationerne)
  (AC), 3F and Radiotelegrafistforeningen. Our agreement with LTD
  prohibits striking and other industrial actions.

We
  have entered into Borgfredsaftaler, collective agreements, with
  the telecommunication departments of Dansk Metal,, LTD and AC (collectively,
  the Borgfredsaftale unions). In these Borgfredsaftaler we have agreed
  to follow certain procedural guidelines in connection with the implementation
  of reductions in our workforce including providing redundant employees with
  training that would make them suitable for reassignment within TDC in certain
  circumstances. Pursuant to our Borgfredsaftale with Dansk Metal, the parties
  have agreed to enter into dialogue within 24 hours of an imminent conflict in
  order to prevent industrial action. The Borgfredsaftaler expire at the end of
  2007, however they may be terminated by us or the unions subject to three months
  notice in the event the assumptions behind the agreements lapse or change.

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We
  also have entered into collective agreements with the Borgfredsaftale unions
  regarding the terms and conditions of voluntary resignations by employees as
  an incentive to encourage voluntary resignations. These agreements may be terminated
  by either party subject to two months notice.

Employment Agreements
  for Members of the Executive Committee

The
  contracts of the members of the Executive Committee provide for notice periods
  of 12-18 months in the event of termination by TDC; the employment agreement
  of the Chief Executive Officer cannot be terminated by TDC before March 31,
  2008. In the event of a change of control of TDC, and for a period of 24 months
  thereafter, members of the Executive Committee are entitled to a prolonged termination
  notice of 36 months with full rights to salary and pensions, as well as compensation
  for benefits, bonuses and share options. The members of the Executive Committee
  also have the right to voluntarily terminate their employment in a period between
  three and six months following the first change of control of TDC after November
  30, 2005 (which occurred in connection with the completion of the NTCs
  Equity Tender Offer for acquiring the Company) and receive the benefits of the
  prolonged termination period.

Share Purchase and
  Option Plans

TDC
  had a revolving share-option program for employees in TDCs Danish enterprises
  until the Purchaser acquired control of TDC. TDCs revolving share-option
  program covered about 200 managers employed in Denmark and stationed in TDCs
  foreign enterprises. After the earnings release for the year was published,
  share options were granted to participants in accordance with contracts of employment.
  The number of options was based on an agreed percentage of the employees
  basic salary and a calculated price per option (number of options = basic salary
  times option percentage divided by price per option). The option percentage
  varied for the different employees within a range of 20-35%. In addition, share
  options were granted on an individual basis in special cases. The price per
  option to be used only to calculate the number of options to be granted was
  calculated at the time of granting using the Black-Scholes formula. The exercise
  price of each option was determined as TDCs share price on the Copenhagen
  Stock Exchange on the day of granting.

In
  connection with Nordic Telephone Company ApS equity tender offer for acquiring
  the Company, TDC gave participants in TDCs revolving share-option program
  an opportunity to exercise their options and offered to buy certain existing
  share options. The offers were accepted by most option holders, including the
  members of the Executive Committee. For share-option holders who did not accept
  the offers, the share options granted before 2005in total 201,065continue
  unchanged.

Furthermore,
  following the completion of NTCs equity tender offer, TDC offered share-option
  holders employed in foreign subsidiaries the opportunity to exercise their share
  options or receive cash settlement of their share options. The offers were accepted
  by most option holders. If employees did not accept either offer, their share
  options lapsed.

The
  share-option program has now been discontinued. At the annual general meeting
  of TDC held on April 26, 2006, the meeting passed resolutions that authorize
  the Board of Directors, without any preemption rights for the shareholders of
  TDC, to issue warrants to managers of TDC or its subsidiaries and the chairman
  and vice-chairman of TDC entitling the holders to subscribe for TDC shares for
  a nominal value of up to DKK 49,593,790, and to implement the capital increases
  relating to the warrants. However, no decision has yet been taken as to the
  form of any option program at TDC or elsewhere. ATP has reserved the right to
  challenge authorizations adopted at the annual general meeting of TDC on April
  26, 2006, as illegal, in particular authorizations (i) to issue warrants to
  management and others and (ii) to repurchase shares. TDC and NTC have responded
  to these claims by ATP.

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Item
  7 Major Shareholders and Related Party Transactions

Major Shareholders
  and Brief History of Share Capital

At
  December 31, 2005 our share capital amounted to DKK 991,875,885, consisting
  of 198,375,177 shares with a nominal value of DKK 5 per share.

From
  the date of our international share issue, in April 1994, until February 28,
  1997, the Danish State owned the majority of our class A shares, corresponding
  to 51.0% of our share capital as of February 28, 1997. The remaining privately
  held class A shares were purchased by the Danish State on March 1, 1997, at
  a predetermined price of DKK 125 per share. After the purchase, the Danish State
  owned 51.73% of our share capital and the remaining 48.27% was split among the
  class B shareholders.

When
  the class A shares were purchased by the Danish State on March 1, 1997, the
  previous owners of the class A shares retained their right to receive dividends
  with respect to their shareholdings in 1996 (which were to be paid after the
  Annual General Meeting in 1997) and the first two months of 1997 (which were
  to be paid after the Annual General Meeting in 1998). Dividends on the class
  A shares were limited to DKK 10 per share (10% of their nominal value) until
  March 1, 1997, after which dividends on one class A share equaled dividends
  paid on ten class B shares, until June 1998.

At
  the end of October 1997, we announced a strategic partnership with Ameritech,
  a leading American telecommunications company. Ameritech supported the partnership
  by acquiring, on January 12, 1998, 4,500,000 of our class A shares from the
  Danish State, representing 34.4% of our share capital.

At
  an Extraordinary General Meeting on January 19, 1998, shareholders approved
  a repurchase of the Danish States remaining 2,277,023 class A shares.
  Each such share was purchased for DKK 4,381.77. After canceling the repurchased
  shares on April 24, 1998, our share capital was reduced to DKK 1,082 million,
  composed of 4,500,000 class A shares, nominal value DKK 100 per share, and 63,229,770
  class B shares, nominal value DKK 10 per share.

On
  June 1, 1998 each class A share was converted into ten class B shares.

At
  an Extraordinary General Meeting on May 21, 1999, our shareholders approved
  a 2 for 1 stock split. As of June 2, 1999, the number of our shares outstanding
  has equaled 216,459,540, each with a nominal value of DKK 5.

Following
  a change in our Memorandum of Association,after April 24, 1998, no person
  or depositary has been allowed to control, through ownership or otherwise, shares
  representing more than 9.5% of our share capital without the consent of the
  Board of Directors. At the time of the announcement of our strategic partnership
  with Ameritech, this consent was granted.

In
  October 1999, Ameritech merged into SBC Communications. As a result, as of December
  31, 2003, SBC Communications owned 41.58% of our share capital.

In
  June 2004 SBC reduced its shareholding in TDC to 9.5% and in November 2004,
  SBC sold its remaining 9.5%. As a result, TDC shareholder structure comprised
  mainly North American and European institutional investors as well as private
  individuals. In connection with SBCs selling of TDC shares in June 2004, TDC
  bought 18,084,363 of its own shares or equivalent to approximately 8.4% of the
  outstanding shares. Upon the completion of the transaction TDC held approximately
  10% of its share capital.

At
  the Annual General Meeting held on March 17, 2005 it was resolved to reduce
  our share capital by cancellation of a part of our own shares equal to the number
  acquired from SBC, i.e. approximately 8.4% of TDCs share capital.

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Following
  the expiration of a 3 month advertisement period in which no creditors had proven
  their claims, the share reduction was completed on June 30, 2005.

At
  the Annual General Meeting held on March 17, 2005 it was also resolved to amend
  the Articles of Association by lifting the provision according to which no shareholder
  should be entitled to own and/or control shares corresponding to more than 9.5%
  of the authorized share capital of the company, unless the Board of Directors
  had consented.

On
  November 30, 2005, TDC announced a tender offer made by NTC for the shares in
  TDC A/S, which tender offer was completed on February 1, 2006. Following completion
  of the tender offer, NTC hold 175,013,648 shares corresponding to 88.2% of the
  authorized share capital of TDC A/S.

Shareholders
  owning more than 5% of our shares at any time since January 1, 2001, and their
  respective holdings at the end of 2001, 2002, 2003, 2004 and 2005, are set forth
  in the table below.

|                  |                          |  |                |  |                            |  |         |  |            |  |         | 
|----------------- | ------------------------ |  | -------------- |  | -------------------------- |  | ------- |  | ---------- |  | ------- | 
|                  |                          |  |                |  | Arbejdsmarkedets           |  |         |  |            | 
|                  | SBC
      Communications |  | Tillægspension |  | Franklin
      / Templeton | 
|                  |                          |  |                |  |                            | 
|                  | Shares                   |  | Percent        |  | Shares                     |  | Percent |  | Shares     |  | Percent | 
|                  |                          |  |                |  |                            |  |         |  |            |  |         | 
|                  |                          |  |                |  |                            |  |         |  |            |  |         | 
|December 31, 2001 | 90,000,000               |  | 41.58          |  | 16,871,300                 |  | 7.79    |  | 1,554,000  |  | 0.72    | 
|December 31, 2002 | 90,000,000               |  | 41.58          |  | 14,708,000                 |  | 6.79    |  | 8,229,000  |  | 3.80    | 
|December 31, 2003 | 90,000,000               |  | 41.58          |  | 12,885,254                 |  | 5.95    |  | 9,750,154  |  | 4.50    | 
|December 31, 2004 | 0                        |  | 0              |  | 11,576,967                 |  | 5.35    |  | 11,166,758 |  | 5.16    | 
|December 31, 2005 | 0                        |  | 0              |  | 10,923,113                 |  | 5,51    |  | 10,728,175 |  | 5,41    | 



|                  |  |            |  |         |  |            |         |  |            |         | 
|----------------- |  | ---------- |  | ------- |  | ---------- | ------- |  | ---------- | ------- | 
|                  |  | Capital    |  | TDC     |  | NTC        |        
|                  |  |            |  |         |  |            |        
|                  |  | Shares     |  | Percent |  | Shares     | Percent |  | Shares     | Percent | 
|                  |  |            |  |         |  |            |         |  |            |         | 
|                  |  |            |  |         |  |            |         |  |            |         | 
|December 31, 2001 |  | 0          |  | 0.00    |  | 1,206,059  | 0.56    |  | 0          | 0       | 
|December 31, 2002 |  | 0          |  | 0.00    |  | 1,671,471  | 0.77    |  | 0          | 0       | 
|December 31, 2003 |  | 6,719,702  |  | 3.10    |  | 3,167,764  | 1.46    |  | 0          | 0       | 
|December 31, 2004 |  | 17,514,399 |  | 8.09    |  | 21,582,145 | 9.97    |  | 0          | 0       | 
|December 31, 2005 |  | 0          |  | 0       |  | 3,661,655  | 1.85    |  | 20,000,000 | 10,1    | 

The major
  shareholders listed above do not have voting rights different from other shareholders.

We are not
  currently aware of any arrangements that may, at a subsequent date, result in
  a change of control of TDC Group.

Related Party Transactions

Danish
  companies in the TDC Group have entered into certain lease transactions with
  their related Danish pension funds. For further information about related party
  transactions, please see note 31 to our consolidated financial statements.

Interests of Experts
  and Counsel

Not applicable.

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Item
  8 Financial Information

Consolidated Statements
  and Other Financial Information

See Item 17, Financial
  Statements.



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Item
  9 The Offer and Listing

Offer and Listing

The
  table below sets forth, for the calendar periods indicated, the high and low
  prices for our shares, as reported by the Copenhagen Stock Exchange in Danish
  kroner, and our ADSs, as reported on the New York Stock Exchange Composite Tape
  in US dollars.

|     |                     |       |                   |       |  |       |  |       | 
|---- | ------------------- | ----- | ----------------- | ----- |  | ----- |  | ----- | 
|     | DKK
      per share |       | USD
      per ADS |      
|     |                     |       |                   |       | 
|Year |                     | High  |                   | Low   |  | High  |  | Low   | 
|     |                     |       |                   |       |  |       |  |       | 
|2001 |                     | 440   |                   | 250   |  | 27.13 |  | 15.46 | 
|2002 |                     | 305   |                   | 150.5 |  | 18.35 |  | 10.19 | 
|2003 |                     | 218.5 |                   | 144   |  | 18.16 |  | 10.56 | 
|2004 |                     | 255   |                   | 188.5 |  | 21.64 |  | 15.43 | 
|2005 |                     | 378.5 |                   | 236   |  | 30.31 |  | 20.56 | 

|               |  |                     |  |                   |  |       |  |       | 
|-------------- |  | ------------------- |  | ----------------- |  | ----- |  | ----- | 
|Year           |  | DKK
      per share |  | USD
      per ADS | 
|               |  |                     |  |                   | 
|2003           |  | High                |  | Low               |  | High  |  | Low   | 
|               |  |                     |  |                   |  |       |  |       | 
|First quarter  |  | 193                 |  | 144               |  | 13.80 |  | 10.56 | 
|Second quarter |  | 196                 |  | 160               |  | 15.49 |  | 11.84 | 
|Third quarter  |  | 216.5               |  | 183               |  | 16.30 |  | 14.07 | 
|Fourth quarter |  | 218.5               |  | 199               |  | 18.16 |  | 15.74 | 
|               |  |                     |  |                   |  |       |  |       | 
|2004           |  |                     |  |                   |  |       |  |       | 
|First quarter  |  | 255                 |  | 217               |  | 21.56 |  | 18.31 | 
|Second quarter |  | 226.5               |  | 188.5             |  | 18.66 |  | 15.43 | 
|Third quarter  |  | 223                 |  | 196               |  | 18.42 |  | 15.93 | 
|Fourth quarter |  | 237                 |  | 210.25            |  | 21.64 |  | 17.4  | 
|               |  |                     |  |                   |  |       |  |       | 
|2005           |  |                     |  |                   |  |       |  |       | 
|First quarter  |  | 258.5               |  | 236               |  | 23.02 |  | 20.56 | 
|Second quarter |  | 271                 |  | 241.5             |  | 23.07 |  | 20.86 | 
|Third quarter  |  | 339                 |  | 261               |  | 27.92 |  | 20.91 | 
|Fourth quarter |  | 378.5               |  | 327.5             |  | 30.31 |  | 26.33 | 
|               |  |                     |  |                   |  |       |  |       | 
|2006           |  |                     |  |                   |  |       |  |       | 
|First quarter  |  | 397                 |  | 370               |  | 33.1  |  | 30.63 | 

|              |  |                     |  |                   |  |       |   |       |  
|------------- |  | ------------------- |  | ----------------- |  | ----- | - | ----- | -
|              |  | DKK
      per share |  | USD
      per ADS | 
|              |  |                     |  |                   | 
|Month         |  | High                |  | Low               |  | High  |   | Low   |  
|              |  |                     |  |                   |  |       |   |       |  
|November 2005 |  | 378.5               |  | 349               |  | 29.85 |   | 27.53 |  
|December 2005 |  | 377.5               |  | 375               |  | 30.31 |   | 29.41 |  
|January 2006  |  | 397                 |  | 370               |  | 33.1  |   | 29.88 |  
|February 2006 |  | 394                 |  | 384               |  | 31.84 |   | 30.63 |  
|March 2006    |  | 395                 |  | 383               |  | 31.48 |   | 31.30 |  
|April 2006    |  | 391                 |  | 183.5             |  | 31.69 | * | 15.53 | *
|              |  |                     |  |                   |  |       |  

|* | The ADSs where delisted
      on NYSE effective April 19, 2006.
|- | ---------------------------------------------------------------

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Fluctuations
  in exchange rates between the Danish kroner and the US dollar will affect the
  US dollar equivalents of the Danish kroner price of our shares on the Copenhagen
  Stock Exchange and, as a result, will affect the market prices of our ADSs in
  the United States.

Plan of Distribution

Not
  applicable.

Markets

Our
  shares are listed for trading on the Copenhagen Stock Exchange (ISIN DK00-1025333-5)
  and our American Depositary Shares ("ADSs") were previously listed on the New
  York Stock Exchange ("NYSE").

At
  the Extraordinary General Meeting held on 28 February 2006, NTC, inter alia
  proposed that TDC seek to delist its shares and ADSs from the Copenhagen Stock
  Exchange and from the NYSE, respectively, and subsequently seek to deregister
  all securities from the U.S. Exchange Act. This proposal attained an affirmative
  vote of over 90% of the share capital of TDC represented at the Extraordinary
  General Meeting and the resolution was declared passed by the Extraordinary
  General Meeting. ATP, a Danish pension fund holding 5.5% of the shares in TDC,
  has filed a writ with the Copenhagen City Court (which has been passed on to
  the Eastern High Court) against both TDC and NTC seeking an acknowledgment of
  the invalidity of inter alia the authorization to delist from the Copenhagen
  Stock Exchange and the NYSE granted at the Extraordinary General Meeting. TDC
  has proceeded with its intention to delist its ADSs from the NYSE, which delisting
  occurred on April 19, 2006. TDC and NTC have responded to the claims by ATP.

Selling Shareholders

Not
  applicable.

Dilution

Not
  applicable.

Expenses of the Issue

Not
  applicable.

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Item
  10 Additional Information

Share Capital

Not
  applicable.

Memorandum and Articles
  of Association

TDC
  A/S is registered as a public limited company at the Danish Commerce and Companies
  Agency with the registration no. CVR 1477 3908.

Our Objects

Our
  objects are, according to Article 3(1) of our Articles of Association, to conduct
  business within communications, services, directories and media, investment,
  financing, advisory services, trade and any other related business, whether
  in Denmark or abroad, if appropriate in the form of joint ventures with other
  Danish or foreign-based companies.

Powers of the Directors

All
  members of our Board of Directors have equal voting rights, and all resolutions
  are passed by a simple majority of votes. However, in the event of a tie, the
  Chairman, or in his absence, the Vice-Chairman, shall have the casting vote.
  The Board of Directors forms a quorum when a majority of its members is present.

According
  to the Danish Companies Act, no member of the Board of Directors or the Executive
  Committee may take part in the consideration of any business involving agreements
  between any member of the group and himself, legal actions brought against himself,
  or any business involving agreements between any member of the group and any
  third party or legal actions brought against any third party, if he has a major
  interest therein that might conflict with our interests.

The
  Danish Companies Act also prohibits us from granting loans or providing securities
  to any members of the Board of Directors or the Executive Committee. This prohibition
  also applies to anyone particularly close to such a member of the Board of Directors
  or the Executive Committee.

In
  legal transactions, we are bound by the joint signatures of the Chairman of
  the board and a director or a manager, by the joint signatures of any two members
  of the Executive Committee or by the joint signatures of the entire Board of
  Directors.

Compensation
  of the Board of Directors must be approved by the shareholders at a General
  Meeting.

Neither
  our constituent documents nor the Danish Companies Act requires our directors
  to retire when a certain age is reached, and there are no shareholding requirements
  for our directors; however the Board of Directors has resolved that the directors
  must retire at the age of 67.

Dividends

If
  the shareholders at an Annual General Meeting approve a suggestion from the
  Board of Directors to pay dividends, then all shareholders and holders of ADSs
  are entitled to receive dividends pro rata to their shareholding in TDC A/S.

At the Extraordinary
  General Meeting held on February 28, 2006, the general meeting authorized the
  Board of Directors until the next general meeting in 2006 to resolve to distribute
  interim dividend, provided that TDC and the groups financial position
  warrants such distribution.

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At
  the Annual General Meeting held on April 26, 2006, the general meeting authorized
  the Board of Directors to revolve to distribute interim dividend, provided that
  TDC and the groups financial position warrants such distribution.

The
  shares rank equal in the event of a return on capital by the company, upon a
  winding-up, liquidation or otherwise.

Voting Rights

All
  the ordinary shares carry equal rights to vote at general meetings.

Except
  as otherwise provided, decisions that shareholders are entitled to make pursuant
  to Danish law or our Articles of Association may be made by a simple majority
  of the votes cast. In the case of elections, the persons who obtain the most
  votes cast are deemed elected. However, certain decisions, including resolutions
  to waive preferential rights in connection with any share issue, to approve
  a merger or demerger, to amend our Articles of Association or to authorize an
  increase or reduction in our share capital must receive the approval of at least
  two thirds of the aggregate number of votes cast as well as two thirds of share
  capital represented at a shareholders meeting.

Redemption Provisions

At
  the Extraordinary General Meeting held on February 28, 2006, NTC proposed the
  introduction of a new clause into the articles of association of TDC permitting
  the compulsory acquisition of the shares of minority shareholders. This proposal
  attained an affirmative vote of over 90% of the share capital of TDC represented
  at the Extraordinary General Meeting and such resolution was declared passed
  by the Extraordinary General Meeting. Subsequently, the Danish Commerce and
  Companies Agency ruled that it would not register the new articles of association.
  TDC has filed a writ with the Eastern High Court against the Danish Commerce
  and Companies Agency seeking an acknowledgment of the registration of the squeeze-out
  provision in the articles of association.

Further, ATP, a Danish pension fund holding 5.5% of the shares in TDC, has filed
  a writ with the Copenhagen City Court (which has been passed on to the Eastern
  High Court) against both TDC and the NTC seeking an acknowledgment of the invalidity
  of inter alia the squeeze-out provisions in the articles of association. On
  April 5, TDC and NTC announced that they would challenge the ruling from the
  Danish Commerce and Companies Agency in the Danish courts. If ATP succeeds in
  its litigation, we will be unable to proceed with the compulsory acquisition.
  TDC and NTC have responded to the claims by ATP.

Convening of Shareholder
  Meetings and Admission

General
  Meetings shall be convened by the Board of Directors and shall be held in Greater
  Copenhagen. The meetings shall be convened by a letter sent to all shareholders
  entered in the Companys Register of Shareholders who have so requested
  and by a notice inserted in one or more Danish or foreign daily newspapers as
  directed by the Board of Directors.

The
  Annual General Meeting is held every year before the end of April and shall
  be called by not less than 14 days or more than 28 days notice.

Extraordinary
  General Meetings, which may be called by resolution of either the Board of Directors,
  our Auditors, or by the shareholders at an Annual General Meeting shall be called
  by not less than 8 days or more than 28 days notice. Furthermore, an Extraordinary
  General Meeting shall be convened whenever, for the consideration of a specified
  subject, a shareholder holding at least one-tenth of our share capital requests
  such a meeting in writing. The Extraordinary General Meeting shall be convened
  within 14 days of receipt of the pertinent request.

Every
  shareholder is entitled to attend a General Meeting provided that he has obtained
  an admission card from our head office during ordinary office hours at least
  five days before the date of the General Meeting.

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Shareholders
  may appoint proxies by a written and dated instrument. Proxies may not be appointed
  for a period exceeding one year.

According
  to the Danish Companies Act, the affirmative vote of two thirds of the votes
  cast as well as two thirds of the aggregate share capital represented at the
  general meeting is required to amend our Articles of Association. Furthermore,
  any amendment which would reduce any shareholders right in respect of
  dividend payments or rights upon liquidation, or restrict the transferability
  of shares, requires a majority vote of at least 90%. Any amendment which will
  alter the legal relationship between shares that were previously equal or make
  any issued shares redeemable needs the consent of all shareholders affected
  thereby.

Limitations on Rights
  to Own Securities

No
  limitations on the rights of nonresident or foreign owners to hold or vote our
  shares or ADSs are imposed by the laws of Denmark, our Articles of Association,
  nor any of our other constituent documents.

Ownership Disclosure

According
  to the Danish Companies Act, a shareholder must disclose its ownership if it
  owns more than 5% of our nominal share capital.

Changes in Capital

The
  conditions imposed by our Articles of Association and other constitutive documents
  regarding changes in capital are no more stringent than those required by the
  Danish Companies Act.

Exchange Controls

There
  are no governmental laws, decrees, regulations or other legislation in Denmark,
  including but not limited to foreign exchange controls, that restrict the export
  or import of capital, or that affect the remittance of dividends, interest or
  other payments to nonresident holders of our shares or ADSs.

There
  are no limitations on the rights of nonresident or foreign owners to hold or
  vote our shares or ADSs imposed by the laws of Denmark, our Articles of Association,
  or any of our other constituent documents.

With
  effect from April 19, 2006 TDCs ADSs were delisted from the New York Stock
  Exchange.

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Taxation

The
  following is a summary of certain Danish and United States federal income tax
  consequences of the ownership and disposition of shares or ADSs as of the date
  hereof. The summary does not purport to be a comprehensive description of all
  of the tax considerations that may be relevant to the ownership or disposition
  of shares or ADSs. YOU ARE STRONGLY ENCOURAGED TO CONSULT YOUR OWN TAX ADVISERS
  REGARDING THE TAX CONSEQUENCES TO YOU OF ACQUIRING, OWNING OR DISPOSING OF SHARES
  OR ADSs IN THE COMPANY. This summary applies to you only if you hold shares
  or ADSs as capital assets for tax purposes. This summary does not apply to you
  if you are a member of a class of holders subject to special rules, such as:

| |  | a dealer
      in securities or currencies;                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | a trader
      in securities that elects to use a mark-to-market method of accounting for
      securities holdings;                         
| |  | a financial
      institution;                                                                                                               
| |  | a real
      estate investment trust;                                                                                                        
| |  | a regulated
      investment company;                                                                                                        
| |  | an insurance
      company;                                                                                                                  
| |  | a tax-exempt
      organization;                                                                                                             
| |  | a person
      that holds shares or ADSs as part of a hedging, integrated or conversion
      transaction, a constructive sale or a straddle;
| |  | a person
      liable for the alternative minimum tax;                                                                                       
| |  | a partnership
      or other pass-through entity for United States federal income tax purposes;                                              
| |  | a person
      whose functional currency for tax purposes is not the US dollar;
      or                                                   
| |  | a person
      that owns or is deemed to own ten percent or more of our voting stock.                                                        

The
  summary is based on Internal Revenue Code of 1986, as amended (the Code),
  other laws, treaties, judicial decisions and regulatory interpretations in effect
  on the date hereof, all of which are subject to change, possibly on a retroactive
  basis. You should consult your own tax advisers regarding the tax consequences
  of purchasing, owning, or disposing of shares or ADSs in the light of your particular
  circumstances, including the effect of any state, local, or other national laws.
  In addition, this summary is based, in part, upon representations made by the
  depositary to the company and assumes such deposit agreement, and all other
  related agreements, will be performed in accordance with their terms.

Danish Tax Considerations

The
  following discussion applies to holders of shares or ADSs that are not resident
  in Denmark for tax purposes (or otherwise subject to full Danish tax liability),
  and do not hold shares or ADSs in connection with a trade or business conducted
  through a permanent establishment in Denmark.

Dividends.
  Dividends paid by us to you are generally subject to Danish withholding tax
  at a 28 percent rate. You may, however, qualify for a reduced rate of taxation
  under an applicable income tax treaty. If you so qualify, you may be able to
  claim a reduced rate of withholding or a refund of the difference between the
  amount initially withheld and the amount determined by applying the applicable
  treaty rate. The income tax treaty between Denmark and the United States (the
  Treaty) generally provides for Danish withholding tax on dividends
  at a reduced rate of 15 percent. You should consult your own tax advisers regarding
  the specific procedures for claiming a reduced rate of withholding or refund
  of Danish withholding tax.

Sales
  of Shares or ADSs. Capital gain realized by you on a sale of shares or ADSs
  will be exempt from Danish taxation.

Estate,
  Gift and Wealth Taxes.No Danish estate taxes will be payable in respect
  of shares or ADSs held by an individual non-resident of Denmark whose estate
  is not administered in Denmark. No Danish gift taxes will be payable if

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neither the donor nor
  the donee of shares or ADSs is resident in Denmark. No Danish wealth tax will
  be payable in respect of shares or ADSs held by a non-resident of Denmark.

US Federal Income
  Tax Considerations

The
  following summary describes certain United States federal income tax consequences
  of the ownership of our shares and ADSs as of the date hereof. The discussion
  set forth below is applicable to United States Holders (as defined below) (i)
  who are residents of the United States for purposes of the Treaty, (ii) whose
  shares or ADSs are not, for purposes of the Treaty, effectively connected with
  a permanent establishment in Denmark and (iii) who otherwise qualify for the
  full benefits of the Treaty. As used herein, the term United States Holder
  means a holder of a share or ADR that is for United States federal income tax
  purposes:

| |  | an individual
      citizen or resident of the United States;                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a corporation
      (or other entity treated as a corporation for United States federal income
      tax purposes) created or organized in or under the laws of the United States,
      any state thereof or the District of Columbia;                                                                                                                                
| |  | an estate
      the income of which is subject to United States federal income taxation
      regardless of its source; or                                                                                                                                                                                                                                             
| |  | a trust
      if it (1) is subject to the primary supervision of a court within the United
      States and one or more United States persons have the authority to control
      all substantial decisions of the trust or (2) has a valid election in effect
      under applicable United States Treasury regulations to be treated as a United
      States person.

If
  a partnership holds shares or ADSs, the tax treatment of a partner will generally
  depend upon the status of the partner and the activities of the partnership.
  If you are a partner of a partnership holding shares or ADSs, you should consult
  your tax advisors.

This
  summary does not contain a detailed description of all the United States federal
  income tax consequences to you in light of your particular circumstances and
  does not address the effects of any state, local or non-United States tax laws.
  If you are considering the purchase, ownership or disposition of shares or
  ADSs, you should consult your own tax advisors concerning the United States
  federal income tax consequences to you in light of your particular situation
  as well as any consequences arising under the laws of any other taxing jurisdiction.

The
  U.S. Treasury has expressed concerns that parties to whom ADSs are released
  may be taking actions that are inconsistent with the claiming of foreign tax
  credits for United States holders of ADSs. Such actions would also be inconsistent
  with the claiming of the reduced rate of tax, described below, applicable to
  dividends received by certain non-corporate holders. Accordingly, the analysis
  of the creditability of Danish taxes and the availability of the reduced tax
  rate for dividends received by certain non-corporate holders, each described
  below, could be affected by actions taken by parties to whom the ADSs are released.

ADSs

If
  you hold ADSs, for United States federal income tax purposes, you generally
  will be treated as the owner of the underlying shares that are represented by
  such ADSs. Accordingly, deposits or withdrawals of shares for ADSs
  will not be subject to United States federal income tax.

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Taxation of Dividends

The
  gross amount of distributions on the ADSs or shares (including amounts withheld
  to reflect Danish withholding taxes) will be taxable as dividends, to the extent
  paid out of our current or accumulated earnings and profits, as determined under
  United States federal income tax principles. Such income (including withheld
  taxes) will be includable in your gross income as ordinary income on the day
  actually or constructively received by you, in the case of the shares, or by
  the depositary, in the case of ADSs. Such dividends will not be eligible for
  the dividends received deduction allowed to corporations under the Code.

With respect to non-corporate United States investors, certain dividends received
  before January 1, 2011 from a qualified foreign corporation may be subject to
  reduced rates of taxation. A qualified foreign corporation includes a foreign
  corporation that is eligible for the benefits of a comprehensive income tax
  treaty with the United States which the United States Treasury Department determines
  to be satisfactory for these purposes and which includes an exchange of information
  provision. The United States Treasury Department has determined that the current
  income tax treaty between the United States and Denmark meets these requirements,
  and the Company believes it is eligible for the benefits of that treaty. However,
  non-corporate holders that do not meet a minimum holding period requirement
  during which they are not protected from a risk of loss or that elect to treat
  the dividend income as "investment income" pursuant to Section 163(d)(4) of
  the Code will not be eligible for the reduced rates of taxation. In addition,
  the rate reduction will not apply to dividends if the recipient of a dividend
  is obligated to make related payments with respect to positions in substantially
  similar or related property. This disallowance applies even if the minimum holding
  period has been met. You should consult your own tax advisors regarding the
  application of this legislation to your particular circumstances.

The
  amount of any dividend paid in Danish kroner will equal the United States dollar
  value of the Danish kroner received calculated by reference to the exchange
  rate in effect on the date the dividend is received by you, in the case of shares,
  or by the Depositary, in the case of ADSs, regardless of whether the Danish
  kroner are converted into United States dollars. If the Danish kroner received
  as a dividend are not converted into United States dollars on the date of receipt,
  you will have a basis in the Danish kroner equal to their United States dollar
  value on the date of receipt. Any gain or loss realized on a subsequent conversion
  or other disposition of the Danish kroner will be treated as United States source
  ordinary income or loss.

The
  maximum rate of withholding tax on dividends paid to you pursuant to the Treaty
  is 15 percent. You may be required to properly demonstrate to the company and
  the Danish tax authorities your entitlement to the reduced rate of withholding
  under the Treaty. Subject to certain conditions and limitations, Danishwithholding
  taxes on dividends may be treated as foreign taxes eligible for credit against
  your United States federal income tax liability. For purposes of calculating
  the foreign tax credit, dividends paid on the ADSs or shares will be treated
  as income from sources outside the United States and will generally constitute
  passive income. Further, in certain circumstances, if you:

| |  | have
      held ADSs or shares for less than a specified minimum period during which
      you are not protected from risk of loss, or
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | are obligated
      to make payments related to the dividends,                                                                        

you will not be allowed
  a foreign tax credit for foreign taxes imposed on dividends paid on ADSs or
  shares. The rules governing the foreign tax credit are complex. You are urged
  to consult your tax advisors regarding the availability of the foreign tax credit
  under your particular circumstances.

To
  the extent that the amount of any distribution exceeds our current and accumulated
  earnings and profits for a taxable year, as determined under United States federal
  income tax principles, the distribution will first be treated as a tax-free
  return of capital, causing a reduction in the adjusted basis of the ADSs or
  shares (thereby increasing the amount of gain, or decreasing the amount of loss,
  to be recognized by you on a subsequent disposition of the ADSs or shares),
  and the balance in excess of adjusted basis will be taxed as capital gain recognized
  on a sale or exchange. Consequently, such distributions in excess of our current
  and accumulated earnings and profits would generally not give rise to foreign
  source income and you would generally not be able to use the foreign tax credit
  arising from any Danish withholding tax imposed

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on such distributions
  unless such credit can be applied (subject to applicable limitations) against
  United States federal income tax due on other foreign source income in the appropriate
  category for foreign tax credit purposes. However, we do not expect to keep
  earnings and profits in accordance with United States federal income tax principles.
  Therefore, you should expect that a distribution will generally be treated as
  a dividend (as discussed above).

Passive
  Foreign Investment Company

We
  do not believe that we are, for United States federal income tax purposes, a
  passive foreign investment company (a PFIC), and we expect to operate
  in such a manner so as not to become a PFIC. If, however, we are or become a
  PFIC, you could be subject to additional United States federal income taxes
  on gain recognized with respect to the ADSs or shares and on certain distributions,
  plus an interest charge on certain taxes treated as having been deferred under
  the PFIC rules. Non-corporate United States Holders will not be eligible for
  reduced rates of taxation on any dividends received from us prior to January
  1, 2011, if we are a PFIC in the taxable year in which such dividends are paid
  or in the preceding taxable year.

Information
  reporting and backup withholding

In
  general, information reporting will apply to dividends in respect of our ADSs
  or sharesand the proceeds from the sale, exchange or redemption
  of our ADSs or shares that are paid to you within the United States (and in
  certain cases, outside the United States), unless you are an exempt recipient
  such as a corporation. A backup withholding tax may apply to such payments if
  you fail to provide a taxpayer identification number or certification of other
  exempt status or fail to report in full dividend and interest income.

Any
  amounts withheld under the backup withholding rules will be allowed as a refund
  or a credit against your United States federal income tax liability provided
  the required information is furnished to the Internal Revenue Service.

Dividends and Paying
  Agents

Not
  applicable.

Statement by Experts

Not
  applicable.

Documents on Display

We
  are subject to the informational requirements of the Securities Exchange Act
  of 1934. We file annual and special reports and other information with the Securities
  and Exchange Commission. You may read and copy this information at the following
  location:

Public
  Reference Room
  450 Fifth Street, N.W.Room 1024
  Washington, D.C. 20549

Please
  call the SEC at 1-800-SEC-0330 for further information on the public reference
  room. Copies of these materials can also be obtained by mail at prescribed rates
  from the Public Reference Section of the Securities and Exchange Commission,
  450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.

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Copies
  of this Annual Report on Form 20-F can be obtained upon request from TDC, Investor
  Relations, Nørregade 21, DK-0900 Copenhagen C, Denmark. Copies can also
  be downloaded from the Investor Relations pages on tdc.com. The Form 20-F is
  also filed and can be viewed via EDGAR on www.sec.gov.

Subsidiary Information

Not
  applicable.

Item
  10C Material Contracts

Not
  applicable.

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Item
  11 Qualitative and Quantitative Disclosures about Market Risk

Our
  business is exposed to certain market and credit risks related to our financial
  portfolio, investments in foreign companies, and purchases and sales of goods
  and services denominated in foreign currencies. As a result, we have established
  risk management policies and procedures to identify, monitor and control each
  of these risks. Our Management approves these policies and procedures, and the
  Board of Directors defines the highest acceptable levels of exposure.

The
  market values of financial assets and liabilities and of interest-rate, exchange-rate,
  credit and share-price exposures are computed on a daily basis.

Generally,
  we hold or issues derivatives for economic hedging purposes only.

Market RiskTDC
  is exposed to certain market and credit risks related to its financial portfolios,
  investments in foreign companies, and purchases and sales of goods and services
  denominated in foreign currencies.

TDC
  identifies, monitors and controls each of these risks through risk management
  policies and procedures approved by Management. The market values of financial
  assets and liabilities and interest-rate, exchange-rate, credit and share price
  exposures are computed on a daily basis. The Board of Directors defines the
  highest acceptable levels of exposure.

RefinancingIn
  order to reduce its refinancing risk, TDC aims to even out the maturity profile
  of the loan portfolio. To further reduce its refinancing risk, TDC had committed
  credit lines of DKK 7.4bn at year-end 2005.

Liquidity risk
  TDC is exposed to liquidity
  risk only to a small degree as TDC places cash resources exclusively in highly
  marketable securities.

Interest rate
  TDC has raised floating
  and fixed interest-rate loans with maturities of up to 10 years.

Interest-rate
  risk management involves surveillance of TDCs interest-bearing assets,
  liabilities and financial instruments. The interest-rate risk is calculated
  according to the value-at-risk method and is managed using interest-rate swaps.

Exchange rateThe
  net exchange-rate exposure in domestic companies from trade accounts payable
  and receivable is hedged on the date on which it is known.

The
  exchange-rate exposure from TDCs business activities relates materially
  to the net income in foreign subsidiaries, as their income and expenses are
  denominated mainly in local currencies.

Currency
  swaps and forward-exchange contracts are used to minimize exposures from financial
  activities in foreign currencies. However, TDC does not consider positions in
  euro (EUR) to constitute a major risk because of the fixed-exchange-rate policy
  of the Danish government in terms of the euro.

TDC
  does not hedge investments in foreign enterprises, but has decided to hedge
  the investment in TDC Switzerland. Currency gains/losses resulting from this
  activity are reflected in currency translation adjustments under shareholders
  equity.

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Value at risk

Market
  risk is the risk of fluctuations in the market value of a financial instrument
  as a result of changes in market factors. Statistical models based on fluctuations
  in historical prices can estimate potential losses that could arise from changes
  in market conditions. The estimates are calculated using a probability-based
  approach for measuring TDCs exposure to market risks.

TDC
  performs daily value-at-risk analyses (VaR) of all its significant financial
  instruments based on volatilities of and correlations between exchange rates
  and interest rates respectively. The VaR calculations are based on the portfolios
  held and express how adverse changes in market prices affect the market value
  of TDCs financial instruments.

The
  daily estimates represent the maximum potential financial loss to TDC, at a
  95% confidence level, from adverse changes in either interest rates or foreign
  exchange rates over a one-year period.

The
  interest rate VaR for net interest-bearing debt amounted to DKK 873m at year-end
  2005 compared with DKK 1,165m at year-end 2004.

The
  average interest VaR for 2005 totaled DKK 1,042m and moved within an interval
  between DKK 871m and DKK 1,167m. In its financial strategy TDCs has established
  a maximum of DKK 2,000m for interest VaR. The highest interest VaR observed
  was 58% of the maximum approved amount.

Foreign
  exchange VaR for net interest-bearing debt, the investment in TDC Switzerland
  as well as trade accounts payable and receivable amounted to DKK 3m at year-end
  2005 compared with DKK 4m at year-end 2004.

The
  average foreign-exchange VaR for 2004 amounted to DKK 3m and moved within an
  interval between DKK 1m and DKK 7m. In its financial strategy TDCs has
  established maximum of DKK 300m for foreign-exchange. The highest foreign-exchange
  VaR observed was 2% of the approved maximum.

In
  TDCs opinion, its approved maximum amounts for interest-rate and currency exposures
  are acceptable compared with its expected future earnings, equity and market
  capitalization.

|                                                                                                         |       |  |       |  |       |  |       |  |       |      |       |  |      |  |     
|-------------------------------------------------------------------------------------------------------- | ----- |  | ----- |  | ----- |  | ----- |  | ----- | ---- | ----- |  | ---- |  | ----
|Value
        at risk amounts from adverse changes in interest rates and foreign exchange
        rates1 |       |  |       |  |       |  |       |  |       | DKKm
|                                                                                                        
|                                                                                                         | 1Q04  |  | 2Q04  |  | 3Q04  |  | 4Q04  |  | 1Q05  |      | 2Q05  |  | 3Q05 |  | 4Q05
|                                                                                                         |       |  |       |  |       |  |       |  |       |      |       |  |      |  |     
|Interest rate value-at-risk
      on net interest-bearing debt                                           | 1.291 |  | 1.218 |  | 1.089 |  | 1.165 |  | 1,109 |      | 1,058 |  | 980  |  | 873 
|Foreign exchange rate
      value-at-risk on net interest-bearing debt, the                              |       |  |       |  |       |  |       |  |       |      |       |  |      |  |     
|investment in TDC
      Switzerland and net trade accounts                                               | 5     |  | 5     |  | 3     |  | 4     |  | 2     |      | 1     |  | 2    |  | 3   

|1 | End-of-period figures
      for TDC A/S, TDC Solutions A/S, TDC Mobile International A/S, TDC Mobil
      A/S, TDC Directories A/S, TDC Services A/S and TDC Cable TV A/S. TDC
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | Directories is not
      included in fourth quarter 2005 due to the disposal.                                                                                                 



Credit risk

TDC
  is exposed to credit risks in a variety of areas: as a supplier of services
  to Danish and international customers and business partners, as counterparty
  to financial contracts, and as a holder of securities.

Credit
  risks associated with TDCs financial contracts are managed by a set of
  policies and procedures stating approved maximum credit limits based on e.g.
  credit ratings of counterparties.

New capital structure

Following
  the acquisition of TDC by NTC, TDCs capital structure has changed as described
  in Recent developments in Item 5. On March 3, 2006 TDC entered into
  a Senior Facility Agreement including term loans and a revolving credit facility
  of originally approximately EUR 9.6 billion, which replaced our previous credit
  facilities. The facilities provided under the Senior Credit Facilities have
  subsequently been reduced to term loans of EUR 6.5 billion and a revolving credit
  facility of EUR 700m.

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Further,
  the new capital structure has affected interest and foreign exchange value at
  risk. As of May 30, 2006 the interest value at risk amounted to DKK 1,192m.
  Due to economic interest rate hedging of the senior facilities the interest
  value at risk has not changed significantly compared to December 31, 2005. As
  of May 30, 2006 the foreign-exchange value at risk amounted to DKK 166m. The
  foreign-exchange value at risk has increased significantly compared to December
  31, 2005 as the senior facilities are denominated in EUR, but in part due to
  the limited bank of movement of the Danish kroner against the euro due to the
  Exchange Rate Mechanism II system applicable to the Danish kroner, is still
  significantly below the maximum of DKK 300m previously employed in our financial
  strategy prior to the adoption of the new capital structure.

The
  Board of Directors is expected to approve an updated Financial Strategy with
  defined levels of acceptable exposures during the second half of 2006.

TDC
  no longer has a significant exposure to liquidity risk on marketable securities
  etc. as these have been disposed in connection with the payment of dividends
  as described in Interim dividends under Recent developments
  in Item 5.

SharesTDC
  has no significant shareholdings other than shares held in subsidiaries and
  associated enterprises.

TDC
  held 3,661,655 treasury shares or almost 2% of TDCs outstanding shares
  at year-end 2005. TDCs portfolio of treasury shares was intended to cover
  the commitments under TDCs share option program.

TDCs pension
  funds

TDCs
  pension funds invest in a variety of marketable securities, including equities.
  The rate of return on these investments has implications for TDCs financial
  results and pension plan funding requirements. TDC is obliged to cover any shortfall
  in these pension funds ability to comply with the premium reserve requirements
  under the Danish Act on Company Pension Funds.

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Item
  12 Description of Securities Other than Equity Securities

Not
  applicable.

Item
  13 Defaults, Dividend Arrearages and Delinquencies

None.

Item
  14 Material Modifications to the Rights of Security Holders and Use of Proceeds

In
  respect to the redemption of shares, please cf. Additional Information.

Item
  15 Controls and Procedures

Evaluation of disclosure
  controls and procedures

We
  carried out an evaluation under the supervision and with the participation of
  our management, including our chief executive officer and our chief financial
  officer, of the effectiveness of the design and operation of our disclosure
  controls and procedures as of December 31, 2005. 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 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 our evaluation, our chief executive officer and our chief financial
  officer have concluded that the disclosure controls and procedures as of December
  31, 2005 were effective to provide reasonable assurance that information required
  to be disclosed in the reports we file and submit under the Securities Exchange
  Act of 1934, as amended, is recorded, processed, summarized and reported as
  and when required.

There
  have been no changes in our internal control over financial reporting during
  2005 that has materially affected, or is reasonably likely to materially affect,
  our internal control over financial reporting.

Item
  16A Audit committee financial expert

At
  the Extraordinary General Meeting in TDC A/S held on February 28, 2006, Kurt
  Anker Nielsen resigned as audit committee financial expert within the meaning
  of Item 16A.

Following the Extraordinary
  General Meeting the Board of Directors of TDC did not include directors that
  satisfied the "independence" standards under the New York Stock Exchange Corporate
  Governance Standards. TDC was therefore unable to comply with Subsection 303A.06
  of the New York Stock Exchange Listed Company Manual, which requires that the
  Company have an audit committee, each member of which satisfies the independence
  standards of the New York Stock Exchange. Consequently, the Board of Directors
  of TDC decided not to form an audit committee. As a result, TDC was in material
  non-compliance with the New York Stock Exchange Corporate Governance Standards
  applicable to foreign private issuers. Following delisting from the NYSE on
  19 April 2006, the New York Stock Exchange Corporate Governance Standards do
  not apply to TDC and TDC is, consequently, no longer in material non-compliance
  therewith.

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Item
  16B Code of Ethics

We
  have not adopted a code of ethics, as defined in Item 16B of Form 20-F under
  the Securities Exchange Act of 1934, as amended, because our senior executive
  and financial officers are bound by Danish mandatory ethics rules and a number
  of internal rules and guidelines, which we believe have collectively a purpose
  and function that is substantially similar to a code of ethics within the meaning
  of Item 16B.

Item
  16C Principal Accountant Fees and Services

Audit fees

The
  aggregate audit fees for 2005 amounted to DKK 24 million compared with DKK 15
  million in 2004.

Audit
  fees consist of fees billed for the annual audit of our consolidated financial
  statements and the financial statements of the parent company, TDC A/S. They
  also include fees billed for other audit services, which are those services
  that only the statutory auditor can provide, and include the review of documents
  filed with the SEC.

Audit-related fees

The
  aggregate audit-related fees for 2005 amounted to DKK 38 million compared with
  DKK 13 million in 2004.

Audit-related
  fees consist of fees billed for assurance and related services that are reasonably
  related to the performance of the audit or review of our financial statements
  and include consultations concerning financial accounting and reporting standards,
  internal control reviews and due diligence services.

Tax fees

The
  aggregate tax fees for 2005 amounted to DKK 7 million compared with DKK 6 million
  in 2004.

Tax
  fees include fees billed for tax compliance services, including assistance on
  the preparation of tax returns and claims for refund; tax consultation and -assistance,
  tax advice related to mergers and acquisitions, transfer pricing, and requests
  for rulings or technical advice from tax authorities; tax planning services;
  and expatriate tax compliance, consultation and planning services.

All other fees

For
  2005, all other fees to the independent auditor amounted to DKK 0 million compared
  with DKK 3 million in 2004.

All
  other fees included fees for risk management advisory services and actuarial
  services.

Pre-approval policies

Under
  Danish law, a companys independent auditor must be elected and can only
  be removed by the shareholders at the Annual General Meeting. The Board of Directors
  is responsible for the appointment, compensation and oversight of the work of
  TDCs independent auditor. The Board of Directors is furthermore responsible
  for pre-approving all audit and non-audit services to be performed by TDCs
  independent auditor. The Board of Directors has adopted guidelines for the pre-approval
  of these services. Under these guidelines, TDCs independent auditor may
  not perform any audit or permitted non-audit service unless the Board of Directors
  or a designated member of the Board of Directors has pre-approved the engagement.
  The pre-approval policy requires the Board of Directors to assess the nature
  and scope of the proposed services including engagement terms and fees for all
  audit and non-audit services prior to the engagements in order to assure that
  the provision of such services does not impair the auditors independence in
  light of applicable Danish and

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international law, as
  well as the principles and other guidance enunciated by the Securities and Exchange
  Commission and the Public Company Accounting Oversight Board. The Board of Directors
  will also take into account other factors in this determination, such as the
  ratio of audit to non-audit services for a given period and whether the level
  of non-audit services, even if permissible under applicable law, is appropriate
  in light of the independence of the auditor.

The
  guidelines also set forth policies and procedures for the pre-approval of audit
  and permitted non-audit services. Under these policies and procedures, TDCs
  independent auditor may be engaged to perform designated services in each of
  four categories: audit services, audit-related services, tax services and other
  services. The policies and procedures provide that the fee for each individual
  engagement in respect of a particular designated service may not exceed an amount,
  which varies in accordance with the services. In addition, the policies and
  procedures limit the total amount of fees that may be charged for services pre-approved
  in each of the four categories.

None
  of the accountant services listed above were approved by the Board of Directors
  pursuant to any de minimis exception from the pre-approval policy.

Item
  16E Purchase of Equity Securities by the Issuer and Affiliated Purchasers

|                  |                        |  |                    |  | (c)
      Total    |  |                    | 
|----------------- | ---------------------- |  | ------------------ |  | ------------------ |  | ------------------ | 
|                  |                        |  |                    |  | Number
      of    |  | (d)
      Maximum  | 
|                  |                        |  |                    |  | Shares             |  | Number
      of    | 
|                  |                        |  |                    |  | Purchased
      as |  | Shares
      that  | 
|                  |                        |  |                    |  | Part
      of      |  | may
      yet be   | 
|                  |                        |  | (b)
      Average  |  | Publicly           |  | purchased          | 
|                  | (a)
      Total Number |  | Price
      Paid   |  | Announced          |  | under
      the    | 
|                  | of
      Shares        |  | per
      Share in |  | Plans
      or     |  | Plans
      or     | 
|2005              | Purchased              |  | DKK                |  | Programs           |  | Programs
      (1) | 
|                  |                        |  |                    |  |                    |  |                    | 
|December 1-31 (2) | 820,379                |  | 377,60             |  | 820,379            |  | 16,175,662         | 
|                  |                        |  |                    |  |                    |  |                    | 
|Total             | 820,379                |  | 377,60             |  | 820,379            |  | -                  | 
|                  |                        |  |                    |  |                    |  |                    | 

|(1) | The Board
      of Directors may direct TDC to acquire its own shares at a nominal value
      of up to 10 percent of the share capital in accordance with section 48 of
      the Danish Companies Act. The Board of Directors was authorized by TDCs
      shareholders at its April 9, 2003 Annual General Meeting to acquire up to
      10 percent of the share capital of TDC. Such shareholder authorization must
      be renewed at each subsequent Annual General Meeting, and on March 29, 2004,
      on March 17, 2005 as well as on April 26, 2006 the Annual General Meeting
      approved such an authorization until the next Annual General Meeting.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The treasury
      shares purchased in December 2005 at an average price per share of DKK 377.60
      (USD 59.95) were primarily purchased to hedge our commitments under the
      share option program for the Executive Committee and other management employees.                                                                                                                                                                                                                                                                                                                                                                                                   

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Item
  17 Financial Statements

Index to Consolidated
  Financial Statements

|                                                              | Page
|------------------------------------------------------------- | ----
|                                                              |     
|Report of Independent
      Registered Public Accounting Firm | F-2 
|Balance Sheets                                                | F-3 
|Statements of Income                                          | F-5 
|Statements of Cash
      Flow                                 | F-6 
|Statement of Changes
      in Equity                          | F-7 
|Notes                                                         | F-8 

Item
  18 Financial Statements

The
  Registrant has responded to Item 17 in lieu of responding to this item.

Item
  19 Exhibits

The following documents
  are being filed as exhibits to this annual report:

| | 1.   | Articles
      of Association of TDC A/S (filed in English translation).                      
| | ---- | ----------------------------------------------------------------------------------------------
| | 8.   | Subsidiaries
      of TDC A/S (set forth in note 32 to our consolidated financial statements).
| | 12.. | CEO Certification                                                                             
| | 12.2 | CFO Certification.                                                                            
| | 13.1 | Section
      906 Certification.                                                              

---

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Signatures

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.

TDC A/S (Registrant)

By: /S/ Hans Munk Nielsen

Name: Hans Munk Nielsen

Title: Executive Vice-President
  and Chief Financial Officer

Dated: June 23, 2006.

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|Exhibit
        12.1                      
|------------------------------------------
|CEO
        CERTIFICATION                 
|I,
        Henning Dyremose, certify that:
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          

|June 23, 2006 |                                
|------------- | -------------------------------
|              | /S/
        Henning Dyremose   
|              |                                
|              | Henning
        Dyremose       
|              | Chief
        Executive Officer

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|Exhibit
      12.2                       
|-----------------------------------------
|CFO
        CERTIFICATION                
|I,
      Hans Munk Nielsen, certify that:
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         

|June 23,
      2006 |                              
|------------------- | -----------------------------
|                    | /S/
        Hans Munk Nielsen
|                    |                              
|                    |                              
|                    | Hans Munk Nielsen            
|                    | Chief Financial Officer      

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Exhibit 13.1

Certification

Pursuant
  to Section 906 of the Sarbanes Oxley Act of 2002

(Subsections (a) and
  (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant
  to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of
  section 1350, chapter 63 of title 18, United States Code), each of the undersigned
  officers of TDC A/S, a Danish corporation (the "Company") does hereby certify,
  to such officers knowledge, that:

The
  Annual Report on Form 20-F for the year ended December 31, 2005 (the Form 20-F)
  of the Company fully complies with the requirements of section 13(a) or 15(d)
  of the Securities Exchange Act of 1934 and information contained in the Form
  20-F fairly presents, in all material respects, the financial condition and
  results of operations of the Company.

Dated: June 23, 2006

| | /S/
        Hans Munk Nielsen
| | -----------------------------
| |                              
| |                              
| | Hans Munk Nielsen            
| | Chief Financial Officer      

Dated June 23, 2006

| | /S/
        Hans Munk Nielsen
| | -----------------------------
| |                              
| |                              
| | Hans Munk Nielsen            
| | Chief Financial Officer      

A
  signed original of this written statement required by Section 906 has been provided
  to TDC A/S and will be retained by TDC A/S and furnished to the Securities and
  Exchange Commission or its staff upon request.

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CONSOLIDATED FINANCIAL STATEMENTS OF TDC A/S

|Report of Independent Registered Public Accounting Firm | F-2
|------------------------------------------------------- | ---
|                                                        |    
|Balance Sheets                                          | F-3
|                                                        |    
|Statements of Income                                    | F-5
|                                                        |    
|Statements of Cash Flow                                 | F-6
|                                                        |    
|Statement of Changes in Equity                          | F-7
|                                                        |    
|Notes                                                   | F-8

The Financial Statements of 50 percent or less owned companies which are accounted for by the equity method have not been included even though the registrants proportional share of
income from continuing operations before income taxes from its investment in Belgacom SA/NV exceeded 20% of consolidated income from continuing operations before income taxes in fiscal year 2004 due to the gain on the sale of the investment in March
2004 because the registrant would not have been able to obtain separate financial statements as required under rule 3-09 of Regulation S-X for Belgacom SA/NV without undue difficulty and expense and accordingly requested and obtained a waiver from
the SEC Staff from separate financial statement requirements under rule 3-09 of Regulation S-X for its investment in Belgacom SA/NV in Form 20-F filings with the Securities and Exchange Commission.

The Consolidated Financial Statements listed below are presented in Danish Kroner (DKK).

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and shareholders of TDC A/S

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flow and changes in equity present fairly, in all material
respects, the financial position of TDC A/S and its subsidiaries at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2005 in conformity with International
Financial Reporting Standards as adopted by the European Union. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

International Financial Reporting Standards as adopted by the European Union vary in certain significant respects from accounting principles generally accepted in the United States of
America. Information relating to the nature and effect of such differences is presented in Note 33 to the consolidated financial statements.

/S/ PricewaterhouseCoopers

PricewaterhouseCoopers



February 21, 2006 
Copenhagen, Denmark

F - 2

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BALANCE SHEETS AS OF DECEMBER 31

|                                             |      |      |        |  | DKKm   | 
|-------------------------------------------- | ---- | ---- | ------ |  | ------ | 
|                                             |      |      |        |  |        | 
|                                             | Note | 2005 | 2004  
|                                             |      |      |       
|Assets                                       |      |      |        |  |        | 
|                                             |      |      |        |  |        | 
|Non-current assets                           |      |      |        |  |        | 
|Intangible assets                            | 14   |      | 33,118 |  | 33,495 | 
|Property, plant and equipment                | 15   |      | 26,054 |  | 26,252 | 
|Investments in associates and joint ventures | 16   |      | 2,126  |  | 1,579  | 
|Minority passive investments                 |      |      | 9      |  | 44     | 
|Deferred tax assets                          | 11   |      | 784    |  | 993    | 
|Pension assets                               | 28   |      | 5,645  |  | 5,435  | 
|Receivables                                  | 17   |      | 464    |  | 1,190  | 
|Derivative financial instruments             | 27   |      | 90     |  | 470    | 
|Pre-paid expenses                            | 19   |      | 325    |  | 407    | 
|                                             |      |      |        |  |        | 
|Total non-current assets                     |      |      | 68,615 |  | 69,865 | 
|                                             |      |      |        |  |        | 
|Current assets                               |      |      |        |  |        | 
|Inventories                                  | 20   |      | 650    |  | 534    | 
|Receivables                                  | 17   |      | 8,617  |  | 8,472  | 
|Income tax receivable                        | 11   |      | 9      |  | 19     | 
|Derivative financial instruments             | 27   |      | 1,042  |  | 474    | 
|Pre-paid expenses                            | 19   |      | 654    |  | 650    | 
|Marketable securities                        |      |      | 3,687  |  | 3,412  | 
|Cash                                         |      |      | 10,063 |  | 6,838  | 
|Assets held for sale                         | 12   |      | 187    |  | 0      | 
|                                             |      |      |        |  |        | 
|Total current assets                         |      |      | 24,909 |  | 20,399 | 
|                                             |      |      |        |  |        | 
|Total assets                                 |      |      | 93,524 |  | 90,264 | 
|                                             |      |      |        |  |        | 

F - 3

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BALANCE SHEETS AS OF DECEMBER 31

|                                                      |      |      |        |  | DKKm   | 
|----------------------------------------------------- | ---- | ---- | ------ |  | ------ | 
|                                                      |      |      |        |  |        | 
|Note                                                  | 2005 | 2004
|                                                      |      |     
|Equity
          and liabilities                      |      |      |        |  |        | 
|                                                      |      |      |        |  |        | 
|Equity                                                |      |      |        |  |        | 
|Common
        shares                                 |      |      | 992    |  | 1,082  | 
|Reserves                                              |      |      | 78     |  | 261    | 
|Retained
        earnings                             |      |      | 42,450 |  | 35,044 | 
|Proposed
        dividends                            |      |      | 0      |  | 2,436  | 
|Equity
          attributable to Company shareholders |      |      | 43,520 |  | 38,823 | 
|Minority
        interests                            |      |      | 275    |  | 27     | 
|                                                      |      |      |        |  |        | 
|Total
          equity                                | 21   |      | 43,795 |  | 38,850 | 
|                                                      |      |      |        |  |        | 
|Non-current
          liabilities                     |      |      |        |  |        | 
|Deferred
        tax liabilities                      | 11   |      | 3,494  |  | 4,677  | 
|Provisions                                            | 24   |      | 1,274  |  | 1,190  | 
|Pension
        liabilities, etc.                     | 28   |      | 332    |  | 264    | 
|Loans                                                 | 22   |      | 24,890 |  | 29,142 | 
|Deferred
        income                               | 23   |      | 1,141  |  | 1,052  | 
|                                                      |      |      |        |  |        | 
|Total
          non-current liabilities               |      |      | 31,131 |  | 36,325 | 
|                                                      |      |      |        |  |        | 
|Current
          liabilities                         |      |      |        |  |        | 
|Loans                                                 | 22   |      | 5,425  |  | 1,337  | 
|Trade
        and other payables                      | 25   |      | 9,210  |  | 9,535  | 
|Income
        tax payable                            | 11   |      | 295    |  | 675    | 
|Derivative
        financial instruments              | 27   |      | 500    |  | 531    | 
|Deferred
        income                               | 23   |      | 2,661  |  | 2,573  | 
|Provisions                                            | 24   |      | 436    |  | 438    | 
|Liabilities
        concerning assets held for sale   | 12   |      | 71     |  | 0      | 
|                                                      |      |      |        |  |        | 
|Total
          current liabilities                   |      |      | 18,598 |  | 15,089 | 
|                                                      |      |      |        |  |        | 
|Total
          liabilities                           |      |      | 49,729 |  | 51,414 | 
|                                                      |      |      |        |  |        | 
|Total
          equity and liabilities                |      |      | 93,524 |  | 90,264 | 
|                                                      |      |      |        |  |        | 

F - 4

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STATEMENTS OF INCOME

|                                                         |      |  |         |   | DKKm    |  
|-------------------------------------------------------- | ---- |  | ------- | - | ------- | -
|                                                         |      |  |         |   |         |  
|                                                         | Note |  | 2005    |   | 2004    |  
|                                                         |      | 
|Revenue                                                  | 4, 5 |  | 46,588  |   | 42,339  |  
|                                                         |      |  |         |   |         |  
|Transmission costs and cost of goods sold                |      |  | (17,164 | ) | (15,630 | )
|Other external expenses                                  |      |  | (9,536  | ) | (8,091  | )
|Wages, salaries and pension costs                        | 6    |  | (8,073  | ) | (7,417  | )
|                                                         |      |  |         |   |         |  
|Total operating expenses before depreciation, etc        |      |  | (34,773 | ) | (31,138 | )
|Depreciation, amortization and impairment losses         |      |  | (6,827  | ) | (6,661  | )
|                                                         |      |  |         |   |         |  
|Total operating expenses                                 |      |  | (41,600 | ) | (37,799 | )
|                                                         |      |  |         |   |         |  
|Other income and expenses                                | 7    |  | 257     |   | 1,180   |  
|                                                         |      |  |         |   |         |  
|Operating income                                         |      |  | 5,245   |   | 5,720   |  
|                                                         |      |  |         |   |         |  
|Income from associates                                   | 16   |  | 334     |   | 5,632   |  
|                                                         |      |  |         |   |         |  
|Fair value adjustments                                   | 8    |  | (184    | ) | 178     |  
|Financial income                                         | 9    |  | 2,454   |   | 2,547   |  
|Financial expenses                                       | 10   |  | (3,326  | ) | (3,441  | )
|                                                         |      |  |         |   |         |  
|Net financials                                           |      |  | (1,056  | ) | (716    | )
|                                                         |      |  |         |   |         |  
|Income before income taxes                               |      |  | 4,523   |   | 10,636  |  
|Income taxes                                             | 11   |  | (1,026  | ) | (1,041  | )
|                                                         |      |  |         |   |         |  
|Net income from continuing operations                    |      |  | 3,497   |   | 9,595   |  
|Net income from discontinued operations                  | 12   |  | 3,953   |   | 315     |  
|                                                         |      |  |         |   |         |  
|Net income                                               |      |  | 7,450   |   | 9,910   |  
|                                                         |      |  |         |   |         |  
|Attributable to:                                         |      |  |         |   |         |  
|Shareholders of the Parent Company                       |      |  | 7,474   |   | 9,912   |  
|Minority interests                                       |      |  | (24     | ) | (2      | )
|                                                         |      |  |         |   |         |  
|Total                                                    |      |  | 7,450   |   | 9,910   |  
|                                                         |      |  |         |   |         |  
|Earnings per share (DKK)                                 | 13   |  |         |   |         |  
|Earnings per share, basic                                |      |  | 38.3    |   | 48.4    |  
|Earnings per share, diluted                              |      |  | 38.1    |   | 48.3    |  
|Earnings per share from continuing operations, basic     |      |  | 18.0    |   | 46.9    |  
|Earnings per share from continuing operations, diluted   |      |  | 17.9    |   | 46.8    |  
|Earnings per share from discontinued operations, basic   |      |  | 20.3    |   | 1.5     |  
|Earnings per share from discontinued operations, diluted |      |  | 20.2    |   | 1.5     |  

F - 5

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STATEMENTS OF CASH FLOW

|                                                                  |      |  |        |   | DKKm    |  
|----------------------------------------------------------------- | ---- |  | ------ | - | ------- | -
|                                                                  |      |  |        |   |         |  
|                                                                  | Note |  | 2005   |   | 2004    |  
|                                                                  |      | 
|Operating income                                                  |      |  | 5,245  |   | 5,720   |  
|Reversal of depreciation, amortization and impairment losses      |      |  | 6,827  |   | 6,661   |  
|Reversal of items without cash flow effect                        | 36   |  | (236   | ) | (1,472  | )
|Change in working capital                                         | 37   |  | (149   | ) | 1,212   |  
|                                                                  |      |  |        |   |         |  
|Cash flow from operating activities before net financials and tax |      |  | 11,687 |   | 12,121  |  
|Interest received                                                 |      |  | 2,325  |   | 2,493   |  
|Interest paid                                                     |      |  | (3,268 | ) | (3,723  | )
|Realized currency adjustments                                     |      |  | 77     |   | 108     |  
|                                                                  |      |  |        |   |         |  
|Cash flow from operating activities before tax                    |      |  | 10,821 |   | 10,999  |  
|Corporate income tax paid                                         |      |  | (2,296 | ) | (364    | )
|Cash flow from operating activities in continuing operations      |      |  | 8,525  |   | 10,635  |  
|Cash flow from operating activities in discontinued operations    |      |  | 166    |   | 449     |  
|                                                                  |      |  |        |   |         |  
|Total cash flow from operating activities                         |      |  | 8,691  |   | 11,084  |  
|                                                                  |      |  |        |   |         |  
|Investment in subsidiaries                                        | 38   |  | (514   | ) | (4,761  | )
|Investment in property, plant and equipment                       |      |  | (4,460 | ) | (4,426  | )
|Investment in intangible assets                                   |      |  | (1,087 | ) | (909    | )
|Investment in marketable securities                               |      |  | (1,022 | ) | (2,442  | )
|Investment in other non-current assets                            |      |  | (10    | ) | (80     | )
|Divestment of subsidiaries                                        | 39   |  | 48     |   | 1,152   |  
|Sale of property, plant and equipment                             |      |  | 120    |   | 117     |  
|Divestment of associates                                          |      |  | 5      |   | 867     |  
|Sale of marketable securities                                     |      |  | 596    |   | 1,084   |  
|Sale of other non-current assets                                  |      |  | 18     |   | 820     |  
|Change in loans to associates                                     |      |  | 189    |   | (32     | )
|Dividends received from associates                                |      |  | 156    |   | 11,525  |  
|                                                                  |      |  |        |   |         |  
|Cash flow from investing activities in continuing operations      |      |  | (5,961 | ) | 2,915   |  
|Cash flow from investing activities in discontinued operations    | 40   |  | 4,735  |   | (26     | )
|                                                                  |      |  |        |   |         |  
|Total cash flow from investing activities                         |      |  | (1,226 | ) | 2,889   |  
|                                                                  |      |  |        |   |         |  
|Proceeds from long-term loans                                     |      |  | 1      |   | 55      |  
|Repayments of long-term loans                                     |      |  | (871   | ) | (6,707  | )
|Change in short-term bank loans                                   |      |  | (693   | ) | 151     |  
|Change in interest-bearing receivables                            |      |  | 80     |   | 398     |  
|Change in minority interests                                      |      |  | 16     |   | 14      |  
|Dividends paid                                                    |      |  | (2,440 | ) | (2,555  | )
|Acquisition and disposal of treasury shares, net                  |      |  | (194   | ) | (3,531  | )
|                                                                  |      |  |        |   |         |  
|Cash flow from financing activities in continuing operations      |      |  | (4,101 | ) | (12,175 | )
|Cash flow from financing activities in discontinued operations    |      |  | (128   | ) | (398    | )
|                                                                  |      |  |        |   |         |  
|Total cash flow from financing activities                         |      |  | (4,229 | ) | (12,573 | )
|                                                                  |      |  |        |   |         |  
|Total cash flow                                                   |      |  | 3,236  |   | 1,400   |  
|Cash and cash equivalents at January 1                            | 41   |  | 6,827  |   | 5,438   |  
|                                                                  |      |  |        |   |         |  
|Cash and cash equivalents at December 31                          |      |  | 10,063 |   | 6,838   |  
|                                                                  |      |  |        |   |         |  

F - 6

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STATEMENT OF CHANGES IN EQUITY

|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   | DKKm   |  
|---------------------------------------------------------------------------- | ------------------------------------------------- | ----------- | ----------------- | --------- | ------ | --------- | ------ | - | ------ | - | --- | - | ------ | -
|                                                                             | Equity
      attributable to Company shareholders |             |                   |           |       
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |       
|                                                                             |                                                   |             | Reserve
      for |           |        |           |        |   |        |   |     |   |       
|                                                                             |                                                   | currency    |                   |           |        |           |       
|                                                                             | Common                                            | translation | Retained          | Proposed  |        | Minority  |       
|                                                                             | shares                                            | adjustments | earnings          | dividends | Total  | interests | Total 
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Equity
      at January 1, 2004                                              | 1,082                                             |             | 0                 |           | 29,331 |           | 2,560  |   | 32,973 |   | 2   |   | 32,975 |  
|Adjustment relating to changes in accounting policies                        |                                                  |             | 0                 |           | 2,956  |           | 0      |   | 2,956  |   | 0   |   | 2,956  |  
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Adjusted equity at January 1, 2004 after changes in accounting policies      | 1,082                                             |             | 0                 |           | 32,287 |           | 2,560  |   | 35,929 |   | 2   |   | 35,931 |  
|Changes
        in accounting policies at January 1, 2004 regarding pensions |                                                  |             |                  |           | (1,137 | )         |       |   | (1,137 | ) | 0   |   | (1,137 | )
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Adjusted
      equity at January 1, 2004                                     | 1,082                                             |             | 0                 |           | 31,150 |           | 2,560  |   | 34,792 |   | 2   |   | 34,794 |  
|Changes
      in equity in 2004                                              |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Currency
        translation adjustment, foreign enterprises                 |                                                  |             | 193               |           | (96    | )         |       |   | 97     |   | 0   |   | 97     |  
|Tax
      related to changes in equity                                       |                                                  |             | 68                |           | (12    | )         |       |   | 56     |   | 0   |   | 56     |  
|Net
      gain/(loss) recognized directly in equity                          |                                                  |             | 261               |           | (108   | )         |       |   | 153    |   | 0   |   | 153    |  
|Net
      income                                                             |                                                  |             |                  |           | 7,476  |           | 2,436  |   | 9,912  |   | (2  | ) | 9,910  |  
|Total
      comprehensive income                                             |                                                  |             | 261               |           | 7,368  |           | 2,436  |   | 10,065 |   | (2  | ) | 10,063 |  
|Distributed
      dividends                                                  |                                                  |             |                  |           | 0      |           | (2,598 | ) | (2,598 | ) |    |   | (2,598 | )
|Dividends,
      treasury shares                                             |                                                  |             |                  |           | 5      |           | 38     |   | 43     |   |    |   | 43     |  
|Acquisition
      of treasury shares                                         |                                                  |             |                  |           | (3,573 | )         |       |   | (3,573 | ) |    |   | (3,573 | )
|Disposal
      of treasury shares                                            |                                                  |             |                  |           | 42     |           |       |   | 42     |   |    |   | 42     |  
|Share-based
      payment                                                    |                                                  |             |                  |           | 52     |           |       |   | 52     |   |    |   | 52     |  
|Additions
      during the year, minority interests                          |                                                  |             |                  |           |       |           |       |   |       |   | 27  |   | 27     |  
|Total
      changes in equity in 2004                                        |                                                  |             | 261               |           | 3,894  |           | (124   | ) | 4,031  |   | 25  |   | 4,056  |  
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Equity
      at December 31, 2004                                            | 1,082                                             |             | 261               |           | 35,044 |           | 2,436  |   | 38,823 |   | 27  |   | 38,850 |  
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Changes
      in equity in 2005                                              |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Currency
        translation adjustment, foreign enterprises                 |                                                  |             | (176              | )         | 0      |           |       |   | (176   | ) | (8  | ) | (184   | )
|Reversal
        of currency translation adjustment, foreign enterprises     |                                                  |             | 27                |           | 0      |           |       |   | 27     |   | 0   |   | 27     |  
|Tax
      related to changes in equity                                       |                                                  |             | (34               | )         | 0      |           |       |   | (34    | ) | 0   |   | (34    | )
|Net
      gain/(loss) recognized directly in equity                          |                                                  |             | (183              | )         | 0      |           |       |   | (183   | ) | (8  | ) | (191   | )
|Net
      income                                                             |                                                  |             |                  |           | 7,474  |           | 0      |   | 7,474  |   | (24 | ) | 7,450  |  
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Total
      comprehensive income                                             |                                                  |             | (183              | )         | 7,474  |           | 0      |   | 7,291  |   | (32 | ) | 7,259  |  
|Distributed
      dividends                                                  |                                                  |             |                  |           | 0      |           | (2,706 | ) | (2,706 | ) |    |   | (2,706 | )
|Dividends,
      treasury shares                                             |                                                  |             |                  |           | (4     | )         | 270    |   | 266    |   |    |   | 266    |  
|Cancellation
      of treasury shares                                        | (90                                               | )           |                  |           | 90     |           |       |   | 0      |   |    |   | 0      |  
|Acquisition
      of treasury shares                                         |                                                  |             |                  |           | (310   | )         |       |   | (310   | ) |    |   | (310   | )
|Disposal
      of treasury shares                                            |                                                  |             |                  |           | 116    |           |       |   | 116    |   |    |   | 116    |  
|Share-based
      payment                                                    |                                                  |             |                  |           | 40     |           |       |   | 40     |   |    |   | 40     |  
|Additions
      during the year, minority interests                          |                                                  |             |                  |           |       |           |       |   |       |   | 280 |   | 280    |  
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Total
      changes in equity in 2005                                        | (90                                               | )           | (183              | )         | 7,406  |           | (2,436 | ) | 4,697  |   | 248 |   | 4,945  |  
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  
|Equity
      at December 31, 2005                                            | 992                                               |             | 78                |           | 42,450 |           | 0      |   | 43,520 |   | 275 |   | 43,795 |  
|                                                                             |                                                   |             |                   |           |        |           |        |   |        |   |     |   |        |  

Retained earnings include capital in excess of par value of DKK 8,652m, which is no longer to be transferred to a special undistributable reserve due to
amendments to the Danish Companies Act.


F - 7

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NOTES

|Overview |  |                                                                                         
|-------- |  | ----------------------------------------------------------------------------------------
|         |  |                                                                                         
|1        |  | Significant
      Accounting Policies                                                   
|         |  |                                                                                         
|2        |  | Critical
      accounting estimates and judgments                                       
|         |  |                                                                                         
|3        |  | New
      accounting standards                                                          
|         |  |                                                                                         
|4        |  | Segment
      reporting                                                                 
|         |  |                                                                                         
|5        |  | Revenue                                                                                 
|         |  |                                                                                         
|6        |  | Wages,
      salaries and pension costs                                                 
|         |  |                                                                                         
|7        |  | Other
      income, expenses and government grants                                      
|         |  |                                                                                         
|8        |  | Fair
      value adjustments                                                            
|         |  |                                                                                         
|9        |  | Financial
      income                                                                  
|         |  |                                                                                         
|10       |  | Financial
      expenses                                                                
|         |  |                                                                                         
|11       |  | Income
      taxes                                                                      
|         |  |                                                                                         
|12       |  | Discontinued
      operations and assets held for sale                                  
|         |  |                                                                                         
|13       |  | Earnings
      per share                                                                
|         |  |                                                                                         
|14       |  | Intangible
      assets                                                                 
|         |  |                                                                                         
|15       |  | Property,
      plant and equipment                                                     
|         |  |                                                                                         
|16       |  | Investments
      in associates and joint ventures                                      
|         |  |                                                                                         
|17       |  | Receivables                                                                             
|         |  |                                                                                         
|18       |  | Contract
      work in process                                                          
|         |  |                                                                                         
|19       |  | Pre-paid
      expenses                                                                 
|         |  |                                                                                         
|20       |  | Inventories                                                                             
|         |  |                                                                                         
|21       |  | Equity                                                                                  
|         |  |                                                                                         
|22       |  | Loans                                                                                   
|         |  |                                                                                         
|23       |  | Deferred
      income                                                                   
|         |  |                                                                                         
|24       |  | Provisions                                                                              
|         |  |                                                                                         
|25       |  | Trade
      and other payables                                                          
|         |  |                                                                                         
|26       |  | Research
      and development costs                                                    
|         |  |                                                                                         
|27       |  | Financial
      instruments, etc.                                                       
|         |  |                                                                                         
|28       |  | Pension
      assets and pension obligations                                            
|         |  |                                                                                         
|29       |  | Other
      financial commitments and lease receivables                                 
|         |  |                                                                                         
|30       |  | Contingent
      assets and contingent liabilities                                      
|         |  |                                                                                         
|31       |  | Related
      parties                                                                   
|         |  |                                                                                         
|32       |  | Overview
      of Group companies at December 31, 2005                                  
|         |  |                                                                                         
|33       |  | Reconciliation
      to United States Generally Accepted Accounting Principles (US GAAP)
|         |  |                                                                                         
|34       |  | Auditors remuneration                                                                  
|         |  |                                                                                         
|35       |  | Net
      interest-bearing debt                                                         
|         |  |                                                                                         
|36       |  | Reversal
      of other items without effect on cash flow                               
|         |  |                                                                                         
|37       |  | Change
      in working capital                                                         
|         |  |                                                                                         
|38       |  | Investments
      in subsidiaries                                                       
|         |  |                                                                                         
|39       |  | Divestment
      of subsidiaries                                                        
|         |  |                                                                                         
|40       |  | Cash
      flow from investing activity in discontinued operations                      
|         |  |                                                                                         
|41       |  | Cash
      and cash equivalents                                                         
|         |  |                                                                                         
|42       |  | Post
      balance sheet events                                                         

F - 8

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NOTES

Note
  1   Significant Accounting Policies

The Consolidated Financial Statements 2005 of TDC have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted
by the European Union and additional Danish disclosure requirements for annual reports of listed companies. The additional Danish disclosure requirements are provided in the IFRS Executive Order issued by the Danish Commerce and Companies Agency in
pursuance of the Danish Financial Statements Act. The Consolidated Financial Statements of TDC have also been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by IASB.


These Consolidated Financial Statements are the first to be prepared in accordance with IFRS. When adopting these standards we have applied IFRS 1 on the
presentation of first-time financial statements under IFRS.


The Consolidated Financial Statements have been based on the historical cost convention. When preparing the Consolidated Financial Statements, Management
makes assumptions that affect the reported amount of assets and liabilities at the balance sheet date and the reported revenue and expenses during the accounting period. The accounting estimates and judgments considered material to the preparation
of the Consolidated Financial Statements appear from note 2 below.


Changes
  in accounting policies

In accordance with IFRS 1, the opening balance sheets at January 1, 2004 and comparative figures for 2004 have been prepared in accordance with
IFRSs/IASs and IFRICs/ SICs effective at December 31, 2005. The opening balance sheets at January 1, 2004 have been prepared as if these standards and interpretations had always been applied, except for the specific transition and implementation
provisions described below. Comparative figures and selected financial and operational data for previous years have been restated accordingly.


The accounting policies have been changed in relation to:


| | • | Goodwill Goodwill is no longer amortized. Previously,
      goodwill was amortized over the estimated economic
      life. Goodwill amortization was discontinued with retroactive effect from
      January 1, 2002. Since this date, TDC has performed impairment tests annually and if events
      or changes in circumstances indicate that an asset
      is impaired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | • | Pensions Pension costs relating to defined benefit
      plans are now calculated in accordance with IAS 19. Previously,
      such costs were calculated in accordance with US GAAP FAS Nos. 87-88. The
      recognition of pensions has been changed with retroactive effect from January
      1, 2004. In accordance with IFRS 1, unrecognized
      actuarial losses are recognized directly in equity. TDC still applies the
      corridor method for recognizing
      actuarial gains and losses incurred after January 1, 2004. In addition,
      in the Opening Balance Sheets at January 1, 2004,
      unrecognized transition obligation arising in connection with the implementation
      of FAS
      87 and unrecognized prior service cost have been recognized. Previously,
      these liabilities were recognized in
      the Statements of Income by amortization over the average expected remaining
      service lives of the employees
      concerned
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | • | Share-based
      payment The value of services received from
      employees as compensation for incentives is recognized
      in the Statements of Income over the vesting period and is measured at the
      fair value at the grant date of the share options. Previously, no expenses relating
      to share-based payment were recognized, except for any
      differences between the market price of TDC A/Ss shares at the grant
      date and the exercise price of the share-based
      incentives recognized over the vesting period as wages, salaries and pension
      costs                                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | • | Indirect
      production costs related to development projects Certain
      indirect production costs related to development
      projects, including computer software, are expensed. Previously, such costs
      were capitalized and amortized over their estimated economic lives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | • | Jubilee
      benefits Jubilee benefits provided for employees
      are recognized in the Statements of Income over the
      vesting period. Previously, such benefits were expensed as paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | • | Sale
      and leaseback agreements with pension funds Gains
      from the sale of property to pension funds related
      to TDC and subsequent lease expenses resulting from such agreements are
      not recognized. The                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F
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NOTES



| |   | properties
          are recognized in the Balance Sheets as assets and the amount payable
          to the pension funds as liabilities. Previously, the resulting gains
          were recognized in the Statements of Income at the date of the sales
          agreement, and the lease
payments were expensed                                                                                                                                                           
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Currency
          adjustments regarding translation of foreign enterprises financial
          statements Currency adjustments
          regarding translation of foreign enterprises statements of income
          and balance sheets are as previously recognized directly
          in equity under a separate reserve. In accordance with IFRS 1, currency translation
          adjustments occurring before January 1, 2004 are not recognized in
    this reserve

Besides changes in accounting policies, the following reclassifications and changes of reporting format have been made:


| | • | Statements
          of Income Work
          performed for own purposes and capitalized is no longer included
          as revenue.
          The related cost items are reduced correspondingly. Previously, Work
          performed for own purposes and capitalized was included as income at an amount corresponding
          to the costs incurred. These costs were included
          under the respective items in the
Statements of Income. A new item Other income and expenses includes
income, which was previously included under Other operating income,
as well as
losses from e.g. the sale
of non-current assets, which were previously included under Other external
expenses. And Income from associates is
now
shown net after corporate income taxes. Previously, income taxes in associates
were included under Income
taxes
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | • | Balance
          Sheets The
          classification of assets and liabilities as non-current or current
          assets, as well as non- current
          or current liabilities, respectively, has been changed in some respects.
          Deferred tax liabilities, pensions and similar liabilities
          as well as provisions are no longer presented as a separate main category
          in the Balance Sheets,
    but are included under current or non-current liabilities                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | • | Statements
          of Cash Flow Cash
          and cash equivalents now comprises only cash and
marketable securities with
an insignificant risk of changes in value. An insignificant risk is assumed to
exist when the remaining life does not exceed three months
at the time of purchase. Therefore, purchase and sale of securities with a remaining
life exceeding 3 months at the time of purchase are reclassified to cash flow
from investing activities.
Previously,
cash and cash equivalents included all securities                                                                                                                                                                                                                                                                                                                             

Except for the changes mentioned above, accounting policies are unchanged from last year.


Impact on Consolidated Financial Statements 2004

|           |                               |       |            |    |                   |       |            |       | DKKm | 
|---------- | ----------------------------- | ----- | ---------- | -- | ----------------- | ----- | ---------- | ----- | ---- | 
|           |                               |       |            |    |                   |       |            |       |      | 
|           |                               |       |            |    |                   |       | Effect of  |       |      | 
|           |                               |       | Previous   |    |                   |       | change in  |       |      | 
|           |                               |       | accounting |    |                   |       | accounting |       |      | 
|           |                               |       | policies   |    | Reclassifications |       | policies   |       | IFRS | 
|           |                               |       |            |    |                   |       |            |       |      | 
|Net income |                               | 8,742 |            | (2 | )                 | 1,170 |            | 9,910 |     
|           | Goodwill                      |       |            |    |                   |       | 1,507      |       |      | 
|           | Pensions                      |       |            |    |                   |       | 130        |       |      | 
|           | Indirect production costs     |       |            |    |                   |       | (5         | )     |      | 
|           | Share-based payment           |       |            |    |                   |       | (62        | )     |      | 
|           | Jubilee benefits              |       |            |    |                   |       | 5          |       |      | 
|           | Sale and leaseback agreements |       |            |    |                   |       | 8          |       |      | 
|           | Divestment of enterprises1    |       |            |    |                   |       | (413       | )     |      | 

| 
|-
| 
|1

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NOTES

Impact on Consolidated Financial Statements 2004

|                                           |                                                  |        |            |     |                   |       |            |        | DKKm    |  
|------------------------------------------ | ------------------------------------------------ | ------ | ---------- | --- | ----------------- | ----- | ---------- | ------ | ------- | -
|                                           |                                                  |        |            |     |                   |       |            |        |         |  
|                                           |                                                  |        |            |     |                   |       | Effect of  |        |         |  
|                                           |                                                  |        | Previous   |     |                   |       | change in  |        |         |  
|                                           |                                                  |        | accounting |     |                   |       | accounting |        |         |  
|                                           |                                                  |        | policies   |     | Reclassifications |       | policies   |        | IFRS    |  
|                                           |                                                  |        |            |     |                   |       |            |        |         |  
|Total
    assets at December 31, 2004      |                                                  | 87,546 |            | 0   |                   | 2,718 |            | 90,264 |        
|                                           | Goodwill                                         |        |            |     |                   |       | 4,088      |        |         |  
|                                           | Pensions                                         |        |            |     |                   |       | (1,296     | )      |         |  
|                                           | Indirect production costs                        |        |            |     |                   |       | (109       | )      |         |  
|                                           | Sale and leaseback agreements                    |        |            |     |                   |       | 35         |        |         |  
|                                           |                                                  |        |            |     |                   |       |            |        |        
|Total
    equity at December 31, 2004      |                                                  | 35,963 |            | 27  |                   | 2,860 |            | 38,850 |        
|                                           | Goodwill                                         |        |            |     |                   |       | 4,082      |        |         |  
|                                           | Pensions                                         |        |            |     |                   |       | (1,009     | )      |         |  
|                                           | Indirect production costs                        |        |            |     |                   |       | (78        | )      |         |  
|                                           | Share-based payment                              |        |            |     |                   |       | 31         |        |         |  
|                                           | Jubilee benefits                                 |        |            |     |                   |       | (73        | )      |         |  
|                                           | Sale and leaseback agreements                    |        |            |     |                   |       | (93        | )      |         |  
|                                           |                                                  |        |            |     |                   |       |            |        |        
|Total
    liabilities at December 31, 2004 |                                                  | 51,583 |            | (27 | )                 | (142  | )          | 51,414 |        
|                                           | Goodwill                                         |        |            |     |                   |       | 6          |        |         |  
|                                           | Pensions                                         |        |            |     |                   |       | (287       | )      |         |  
|                                           | Indirect production costs                        |        |            |     |                   |       | (31        | )      |         |  
|                                           | Share-based payment                              |        |            |     |                   |       | (31        | )      |         |  
|                                           | Jubilee benefits                                 |        |            |     |                   |       | 73         |        |         |  
|                                           | Sale and leaseback agreements                    |        |            |     |                   |       | 128        |        |         |  
|                                           |                                                  |        |            |     |                   |       |            |        |        
|Cash
    flows                             |                                                  |        |            |     |                   |       |            |        |        
|                                           | Cash flow from operating activities              |        | 11,134     |     | 0                 |       | (50        | )      | 11,084  |  
|                                           | Cash flow from investing activities              |        | 4,243      |     | (1,415            | )     | 61         |        | 2,889   |  
|                                           | Cash flow from financing activities              |        | (12,562    | )   | 0                 |       | (11        | )      | (12,573 | )
|                                           |                                                  |        |            |     |                   |       |            |        |         |  
|                                           | Increase/(decrease) in cash and cash equivalents |        | 2,815      |     | (1,415            | )     | 0          |        | 1,400   |  
|                                           |                                                  |        |            |     |                   |       |            |        |         |  

Consolidation policies

The Consolidated Financial Statements include the Financial Statements of the Parent Company and subsidiaries in which TDC A/S has a direct or indirect
controlling influence. Associates in which the Group has a significant influence are recognized using the equity method.


The Consolidated Financial Statements have been prepared on the basis of the Financial Statements of TDC A/S and its consolidated enterprises, which have
been restated to Group accounting policies combining items of a uniform nature.


On consolidation, intra-group income and expenses, shareholdings, dividends, internal balances and realized and unrealized profits and losses on
transactions between the consolidated enterprises have been eliminated.


On acquisition of subsidiaries and associates, the purchase method is applied, and acquired assets, liabilities and contingent liabilities are measured
on initial recognition at fair values on the date of acquisition. Identifiable intangible assets are recognized if they can be separated and the fair value can be reliably measured. Deferred tax of the revaluation made is recognized.


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NOTES

Any remaining positive differences between cost and fair value of the assets, liabilities and contingent liabilities acquired on acquisition of
subsidiaries are recognized in the Balance Sheets under Intangible assets as goodwill. Positive differences on acquisition of associates are recognized in the Balance Sheets under Investments in associates. Goodwill is not amortized, but tested
annually for impairment.


Acquired enterprises are recognized in the Consolidated Financial Statements from the time of acquisition, whereas divested enterprises are recognized up
to the time of disposal. However, enterprises that meet the criteria for discontinued operations are presented separately.


Gains and losses related to disposal of subsidiaries and associates are recognized as the difference between the proceeds and the carrying value of net
assets with the addition of goodwill and accumulated currency translation adjustments recognized in equity at the time of disposal with the addition of disposal expenses.


Foreign currency translation

A functional currency is determined for each of the Groups enterprises. The functional currency is the currency applied in the primary economic
environment of each enterprises operations. Transactions in currencies other than the functional currency are transactions in foreign currencies. The Consolidated Financial Statements are presented in Danish kroner (DKK), which is the Parent
Companys functional and presentation currency.


Transactions in foreign currencies are translated at the transaction-date rates of exchange. Foreign exchange gains and losses arising from differences
between the transaction-date rates and the rates at the date of settlement are recognized as net financials in the Statements of Income.


Cash, marketable securities, loans and other amounts receivable or payable in foreign currencies are translated into Danish kroner at the official rates
of exchange quoted at the balance sheet date. Currency translation adjustments are recognized as net financials in the Statements of Income.


The balance sheets and group goodwill of consolidated foreign enterprises are translated into Danish kroner at the official rates of exchange quoted at
the balance sheet date, whereas the statements of income of the enterprises are translated into Danish kroner at monthly average rates of exchange. Currency translation adjustments arising from the translation of equity at the beginning of the year
into Danish kroner at the official rates of exchange quoted at the balance sheet date are recognized directly in equity under a separate reserve for currency translation adjustments. This also applies to adjustments arising from the translation of
the statements of income from the monthly average rates of exchange to the rates of exchange quoted at the balance sheet date.


Currency translation adjustments of receivables from foreign subsidiaries and associates that are considered to be part of the overall investment in the
enterprise are recognized directly in equity.


Derivative financial instruments

On initial recognition, derivative financial instruments are recognized in the Balance Sheets on inception at fair values and subsequently remeasured
also at fair values. Quoted market prices are used for derivative financial instruments traded in an active market. A number of different, recognized measurement methods, depending on type of instrument, are applied for derivative financial
instruments not traded in an active market. Measurement of financial assets is based on bid prices, and offer prices are applied for financial liabilities.


Changes in the fair values of derivative financial instruments that qualify as hedges of future cash flows are recognized directly in equity net of tax.
Gains and losses from hedges of future cash flows are transferred from equity and are as a general rule recognized in the same item as the hedged transaction when the cash flow is realized (for example when the hedged sale has been effected). If the
hedged transaction results in recognition of a non-monetary item (such as inventories) or a liability, gains or losses from equity are, however, included in the cost of the asset or liability.


Fair value changes of derivative financial instruments that do not qualify for hedge accounting are recognized immediately in the Statements of
Income.


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NOTES

Changes in the fair values of derivative financial instruments that qualify as net investment hedges in foreign subsidiaries or associates, and that effectively hedge exchange rate changes in these enterprises, are recognized directly in equity net of tax.


Revenue recognition

Revenue comprises goods and services provided during the year after deduction of VAT and rebates relating directly to sales.


The significant
sources of revenue are recognized in the Statements of Income as follows:


| | • | Revenue
      from telephony is recorded at the time the call is made                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                    
| | • | Sales
        related to pre-paid products are deferred, and revenue is recognized
      at the time of use                                                                                                        
| |   |                                                                                                                                                                                                                    
| | • | Revenue
      from leased lines is recognized over the rental period                                                                                                                                               
| |   |                                                                                                                                                                                                                    
| | • | Revenue
      from subscription fees is recognized over the subscription period                                                                                                                                    
| |   |                                                                                                                                                                                                                    
| | • | Revenue
        from non-refundable up-front connection fees is deferred and amortized
      over the expected term of the related customer relationship                                                           
| |   |                                                                                                                                                                                                                    
| | • | Revenue
        from printed directories is recognized when the directory is distributed.
        Revenue from online directory services is recognized over the period during which the services
      are provided
| |   |                                                                                                                                                                                                                    
| | • | Revenue
        from the sale of equipment is recognized on delivery. Revenue from the
      maintenance of equipment is recognized over the contract period                                                       

Revenue arrangements with multiple deliverables are recognized as separate units of accounting, independent of any contingent element related to the delivery of additional items or other performance conditions.


Revenue is recognized gross when TDC acts as principal in a transaction. For agreements involving the resale of third-party services in which TDC acts as
agent, revenue is recognized net of direct costs.


The percentage of completion method is used to recognize revenue from contract work in process based on an assessment of the stage of completion.


Share options

The value of services received from employees as compensation for incentives is measured at the grant date at the fair value of the share options granted
and is recognized over the vesting period in the Statements of Income under wages, salaries and pension costs. The set-off item is recognized directly in equity.


For initial recognition of share options, the number of options that employees are expected to be entitled to is based on an estimate. Changes in the
estimated number of legally acquired options are subsequently adjusted so that the total recognition is based on the actual number of legally acquired options.


Calculations of fair values of share options granted have been based on the Black-Scholes option-pricing model, taking into account the terms and
conditions attached to the granted share options.


Employee shares

When employees are given the opportunity of purchasing shares at a price below market price, the discount is recognized as a cost under wages, salaries and pension costs at the time of acquisition. The set-off item is recognized directly in equity. The discount is measured at the time of acquisition as the difference between fair value and purchase price.


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NOTES

Research

Research costs are expensed as incurred. Contributions received from third parties in connection with research projects are recognized as income concurrently with the incurrence of related expenses.


Intangible assets

Goodwill is recognized at cost less accumulated write-downs. As of January 1, 2002, goodwill is no longer amortized. The carrying value of goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable, and is subsequently written down to the recoverable amount in the Statements of Income if exceeded by the carrying value.


Licenses, customer-related assets, proprietary rights, patents, etc. are measured at cost less accumulated amortization and impairment losses and are amortized on a straight-line basis over their estimated economic lives.


Development projects, including costs of computer software purchased or developed for internal use, are recognized as intangible assets if the cost can
be calculated reliably and if they are expected to generate future economic benefits. Costs of development projects include wages, external charges, depreciation and amortization that are directly attributable to the development activities as well
as interest expenses in the production period. Development projects that do not meet the criteria for recognition in the Balance Sheets are expensed as incurred in the Statements of Income.


The main amortization periods are as follows:


|UMTS licenses           | 12-16 years
|----------------------- | -----------
|Other licenses          | 3-10 years 
|Customer-related assets | 3-5 years  
|Other rights,
etc.      | 2-26 years 
|Development projects    | 3-5 years  

Development projects in process and intangible assets of indefinite useful lives are tested for impairment at least annually and written down to recoverable amount in the Statements of Income.


Intangible assets are recorded at the lower of recoverable amount or carrying value.


Property, plant and equipment

Property, plant and equipment, including improvements, are measured at cost less accumulated depreciation and write-down for impairment.


Cost comprises purchase price and costs directly attributable to the acquisition until the date on which the asset is ready for use. The cost of self-constructed assets includes direct and indirect payroll costs, materials, parts purchased and services rendered by sub-suppliers or contractors, indirect production costs as well as interest expenses in the construction period. Cost also includes estimated asset retirement costs if the related obligation meets the conditions for recognition as a provision.


Indirect production costs comprise wages, salarie and pension costs together with other external expenses calculated in terms of time consumed on
self-constructed assets in the relevant departments.


The depreciation base is measured while observing the assets residual value less any write-downs. The residual value is reviewed regularly. If the
residual value exceeds the assets carrying value, depreciation is discontinued. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. The main depreciation periods are as follows:


|Buildings                        | 20 years  
|-------------------------------- | ----------
|Telecommunications installations | 5-20 years
|Other installations              | 3-8 years 

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NOTES

Non-current assets that have been disposed of or scrapped are eliminated from accumulated cost and accumulated depreciation. Gains and losses arising from sale of property, plant and equipment are measured as the difference between the sales price less selling expenses and the carrying value at the time of sale. The resulting gain or loss is recognized in the Statements of Income under Other income and expenses.


Software that is an integral part of for example telephone exchange installations is presented together with the related assets. Useful lives are estimated individually.


Installation materials are measured at the lower of weighted average cost and recoverable amount.


Leased property, plant and equipment that qualify as capital leases are recognized as assets acquired. The cost of capital leases are measured at the lower of the assets fair value and the present value of future minimum lease payments. Lease payments on operating leases are accrued and expensed over the term of the lease.


Property, plant and equipment are recognized at the lower of recoverable amount and carrying value.


Investments in associates

Investments in associates are recognized under the equity method.


A proportional share of the enterprises income after income taxes is recognized in the Statements of Income. Proportional shares of intra-group
profits and losses are eliminated.


Investments in associates are recognized in the Balance Sheets at the proportional share of the associates equity value calculated in accordance
with Group accounting policies with addition of goodwill.


Associates with negative equity value are measured at DKK 0, and any receivables from these enterprises are written down by the share of the negative equity value. If a legal or constructive obligation exists to cover the associates negative balance, a provision for that obligation is recognized.


Minority passive investments

Interest-bearing securities are classified as loans and receivables and are recognized at amortized cost. Annual amortization is recognized as interest income.


Other investments whose fair value cannot be reliably determined are classified as available for sale and recognized at cost. When a reliable fair value is determinable, such investments are measured accordingly, and fair value adjustments are recognized in the Statements of Income.


Inventories

Inventories are measured at the lower of weighted average cost and net realizable value. The cost of merchandise covers purchase price and delivery costs.


Receivables

Receivables are measured at amortized cost. Write-downs for anticipated uncollectibles are based on individual assessments of major receivables and historically experienced write-down for anticipated losses on other receivables.


Contract work in process

Contract work in process is measured at the selling price of the work performed and recognized under receivables. The selling price is measured at cost
of own labor, materials, etc., the share of indirect production costs and the addition of a share of the profit based on the stage of completion. The stage of completion is measured by comparing costs incurred to date with the estimated total costs for each contract.


Write-downs are made for anticipated losses on work in process based on assessments of estimated losses on the individual contracts through to completion.


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NOTES

Payments on account are offset against the value of the individual contract to the extent that such billing does not exceed the amount capitalized.
Received payments on account exceeding the amount capitalized are recognized under prepayments from customers.


Marketable securities

Marketable securities recognized under current assets are measured at fair value at the balance sheet date. All fair value adjustments (except principal
repayments) are recognized in the Statements of Income.


Treasury shares

The cost of treasury shares is deducted from equity under retained earnings on the date of acquisition. Payments received in connection with the disposal
of treasury shares are similarly recognized directly in equity.


Dividends

Dividends expected to be distributed for the year are recognized under a separate item in equity. Dividends are recognized as a liability at the time of
adoption by the annual general meeting.


Currency translation reserve

Currency translation reserve comprises exchange rate differences arising from translation into Danish kroner of the functional currency of foreign
enterprises financial statements. Translation adjustments are recognized in the Statements of Income when the net investment is realized.


On the preparation of the opening balance sheets at January 1, 2004, currency translation adjustments occurring before January 1, 2004 have not been
recognized in the currency translation reserve in accordance with IFRS 1.


Pensions

The Groups pension plans include defined benefit plans and defined contribution plans.


The Group has an obligation to pay a specific benefit to defined benefit plans at the time of retirement. A pension asset or pension obligation
corresponding to the present value of the obligations less the defined pension plans assets and adjustment for unrecognized actuarial gains and losses is recognized for these benefit plans.


The obligations are determined annually by independent actuaries using the Projected Unit Credit Method assuming that each year of service
gives rise to an additional unit of benefit entitlement, and each unit is measured separately to build up the final obligations.


Estimation of future obligations is based on the Groups projected future developments in mortality, early retirement, future wages, salaries and
benefit levels, interest rate, etc. The defined pension plans assets are estimated at fair value at the balance sheet date.


Differences between the projected and realized developments in pension assets and pension obligations are referred to as actuarial gains and losses. In
connection with the adoption of IFRS, accumulated actuarial gains and losses are fully recognized in the opening balance sheets at January 1, 2004. If the value of subsequent accumulated actuarial gains and losses at the beginning of a fiscal year
exceeds 10% of the higher of the pension obligations value and the fair value of the pension plans assets, the excess amount is recognized in the Statements of Income in accordance with the corridor method over the projected average
remaining service lives of the employees concerned. Actuarial gains and losses not exceeding the above-mentioned limits are not recognized, but disclosed in the notes.


Estimated net assets are recognized if they offset unrecognized actuarial losses, future repayments from the pension plan, or if future payments to the
plan are reduced.


In case of changes in benefits relating to employees previous service period, a change in the estimated present value of the pension obligations
will occur, which will be recognized immediately if the employees have acquired a final


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NOTES

right to these changed benefits. If not, the change is recognized over the period in which the employees become entitled to the changed benefit.

For the pension plan for former civil servants, the onetime payment in 1994 to the Danish government is recognized in the Statements of Income over the
expected remaining service lives of the employees concerned.


For the defined contribution plans, the Group will pay in a fixed periodic contribution to separate legal entities and will have no further obligations
after the payment has been made. Recognition in the Statements of Income is made in the vesting period.


Current and deferred corporate income taxes

Tax for the year comprises current tax, changes in deferred tax and adjustments from prior years.


Current tax liabilities and current tax receivables are recognized in the Balance Sheets as tax payable or tax receivable.


Deferred tax is measured under the balance-sheet liability method on the basis of all temporary differences between the carrying values and the tax bases
of assets and liabilities at the balance sheet date except for temporary differences arising from goodwill where amortization for tax purposes is disallowed. Tax computed on expected dividends from associates is also recognized as deferred
tax.


Deferred tax assets including the tax value of tax loss carry-forwards are recognized at the value at which they are expected to be realized. Realization
is expected to be effected either by elimination in tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity.


Adjustment of deferred tax is made concerning elimination of unrealized intra-group profits and losses.


Deferred tax is measured on the basis of the tax rules and tax rates in the respective countries that will be effective under the legislation at the
balance sheet date when the deferred tax is expected to be realized as current tax. Changes in deferred tax as a result of changes in tax rates are recognized in the Statements of Income.


Provisions

Provisions are recognized when  as a consequence of an event occurring before or on the balance sheet date  the Group has a legal or
constructive obligation, where it is probable that economic benefits must be sacrificed to settle the obligation, and the amount of the obligation can be estimated reliably.


Provisions for restructuring etc. are recognized when a final decision thereon has been made before or on the balance sheet date and has been announced
to the parties involved, provided that the amount can be measured reliably. Provisions for restructuring are based on a defined plan, which means that the restructuring is commenced immediately after the decision has been made.


When the Group is under an obligation to demolish an asset or re-establish the site where the asset was used, a liability corresponding to the present
value of estimated future costs is recognized in the Statements of Income.


Financial liabilities

Interest-bearing
    loans are recognized initially at the proceeds received net of transaction
    expenses incurred. In subsequent periods, loans are measured  at amortized
    cost so that the difference between the proceeds and the nominal value is
    recognized in the Statements of Income over the term of the loan.


Other financial liabilities are measured at amortized cost.


Deferred income

Deferred income recognized as liabilities comprises payments received covering income in subsequent years.


F - 17

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NOTES

Disclosure of discontinued operations

Discontinued operations constitute entities comprising separate major lines of business or geographical areas, whose activities and cash flows for
operating and accounting purposes can be clearly distinguished from the rest of the entity, and where the entity has been disposed of or classified as held for sale, and it seems highly probable that the disposal is expected to be effected within
twelve months in accordance with a single coordinated plan.


Income/loss after tax of discontinued operations is presented in a separate line in the Statements of Income with restated comparative figures. Revenue,
costs and taxes relating to the discontinued operation are disclosed in the notes. Assets and accompanying liabilities are presented in separate lines in the Balance Sheets without restated comparative figures, and the principal items are specified
in a note.


Cash flows from operating, investing and financing activities of discontinued operations are presented in separate lines in the Statements of Cash Flow
with restated comparative figures.


Statements of Cash Flow

Cash flow from operating activities is presented under the indirect method and is based on operating income adjusted for non-cash operating items,
changes in working capital, interest received and paid as well as income taxes paid.


Cash flow from investing activities comprises acquisition and divestment of enterprises, purchase and sale of intangible assets, property, plant and
equipment as well as other non-current assets, and purchase and sale of securities that are not recognized as cash and cash equivalents. Cash flows from acquired enterprises are recognized from the time of acquisition, while cash flows from
enterprises disposed of are recognized up to the time of disposal.


Cash flow from financing activities comprises changes in interest-bearing debt, purchase of treasury shares and dividends to shareholders.


Cash and cash equivalents cover cash and marketable securities with a remaining life not exceeding 3 months at the time of acquisition, and with an
insignificant risk of changes in value.


Segment reporting

Segment information is disclosed in respect of business activities and geographical markets. The segmentation is based on the segments risk profile
and the Groups internal financial reporting system.


Segment assets comprise assets directly attributable to the segments, including intangible assets and property, plant and equipment, inventories, as well
as trade and other receivables.


Segment liabilities cover liabilities that result from the segments operating activities, including pension liabilities, provisions, prepayments
from customers, trade and other payables and deferred income.


United States Generally Accepted Accounting Principles (US GAAP)

As a consequence of the registration of American Depository Shares (ADSs) with the United States Securities and Exchange Commission, the Group has
prepared a summary of the effect on net income and equity as if the Consolidated Financial Statements had been prepared in accordance with generally accepted accounting principles in the United States.


F - 18

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NOTES

Note 2   Critical accounting estimates and judgments

The preparation of TDCs Annual Report requires Management to make assumptions that affect the reported amount of assets and liabilities at the
balance sheet date and the reported amounts of revenue and expenses during the fiscal period. Estimates and judgments used in the determination of reported results are continuously evaluated.


Estimates
    and judgments are based on historical experience and on various other factors
    that are believed to be reasonable in the circumstances. Actual  results
    may differ from these estimates under different assumptions or conditions.
    Full details of our Significant Accounting Policies are set out in note 1.
    The following estimates and judgments are considered important when portraying
    our
financial condition:


| | • | Useful
        lives for non-current assets are assigned based on periodic studies of
        actual useful
lives and the intended use for those assets. Such studies are completed or updated
when new events occur that have the potential to impact
the determination of the useful life of the asset, such as when events or circumstances
have occurred that indicate
the carrying value of the asset may not be recoverable and should therefore be
tested for
impairment. Any
change in the estimated useful lives of these assets is recognized in the financial
statements as soon as any such change is determined. The estimated useful lives of certain
types of buildings, telecommunications installations,
other installations and software were changed in 2005. These changes have reduced
depreciation and
amortization by DKK 71m                                                                                                                                                                                                                                                                                                         
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Intangible
        assets, including goodwill and other rights, comprise a significant portion
        of our total assets. Impairment tests on these intangible assets are performed
        at least annually and, if necessary, when events or changes
        in circumstances indicate that their carrying value may not be recoverable.
        The measurement of intangibles
        is a complex process that requires significant Management judgment in
        determining various assumptions, such
        as cash-flow projections, discount rate and terminal growth rates. The
        sensitivity of the estimated measurement to these assumptions, combined or individually,
        can be significant. Furthermore, the use
        of different estimates or assumptions when determining the fair values
        of such assets may result in different values
        and could result in impairment charges in future periods. The assumptions
        for significant
goodwill amounts
are set out in note 14                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Net
        periodic pension cost for defined benefit plans is estimated based on
        certain actuarial assumptions, the most significant of which relate to returns on plan assets, discount
        rate, wage inflation and demography (mortality, disability,
        etc.). As shown in note 28, both the assumed rate of return on plan assets
        and the assumed discount rate
        have been reduced in 2005 to reflect changes in market conditions and
        in the mix of assets held by
our pension
funds. Our assumptions for 2006 reflect a further reduction in the discount rate
from 4.50% to 4.30%, and unchanged assumptions for wage inflation and assumed return
on plan assets. We believe these assumptions
illustrate current market conditions and expectations for market returns in the
long term. The demographic
assumptions used for 2005 reflect an expected longer life than previously assumed.
With these changed assumptions,
TDCs total pension costs excluding redundancy programs are expected to
increase approximately DKK 10m in 2006 compared with 2005, assuming
all other factors remain unchanged
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Estimates
        of deferred income taxes and significant items giving rise to the deferred
        assets and liabilities are shown in note 11. These reflect the assessment of actual future
        taxes to be paid on items in the financial statements,
        giving consideration to both the timing and probability of these estimates.
        In addition, such estimates
        reflect expectations about the amount of future taxable income and, where
        applicable, tax planning strategies.
        Actual income taxes and net income could vary from these estimates as
        a result of changes in expectations about future taxable income, future changes in
        income tax law or results from the final review of our
      tax returns by tax authorities                                                                                                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | The
        determination of the treatment of contingent assets and liabilities in
        the financial statements is based on the expected outcome of the applicable contingency. Legal counsel
        and other experts are consulted both within and outside
        the Company. An asset or a liability is recognized if the certainty or
        likelihood of a positive or adverse outcome
        is probable of occurring and the amount is estimable. If not, we disclose
        the matter. Resolution of
such matters
in future periods may result in realized gains or losses deviating from the amounts
recognized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Estimates
        of the fair values of financial instruments (including derivative financial
        instruments) for which quoted market prices are not available are based on the best
        information available in the circumstances.Methods
        of recognition used for such purposes include discounting estimated expected
      future cash flows, and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



F - 19


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NOTES

| |   | fundamental
          analysis. Such methods incorporate assumptions about discount rate,
    risk premium, default, prepayment, volatility and other factors                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Revenue
        is recognized when realized or realizable and earned. Revenue from non-refundable
        up-frontconnection
        fees is deferred and recognized as income over the expected term of the
        related customer relationship.
        The term is estimated using historical customer churn rates. Change of
        Management estimates may have
        a significant impact on the amount and timing of our revenue for any
    period

Note
3   New accounting standards

IASB and the EU have approved the following new accounting standards that become effective for 2006 or later, and are judged relevant for TDC:


| | • | IAS
        19 Employee Benefits is effective for fiscal years starting on January
        1, 2006 or later. This revised standardintroduces an option for actuarial gains and losses to be
        recognized in equity, just as the standard requires detailed
        note disclosures on defined benefit plans and similar obligations. TDC
        does not expect to use the equity
        recognition option and intends to proceed with the recognition of actuarial
        gains/losses according to
the corridor
method in 2006. Furthermore, TDC does not expect the standard to result in any
changes in the scope of note disclosures in the Annual Report
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | • | IAS
        39 Financial Instruments: Recognition and Measurement including the provisions
        for the use of the fairvalue option will become effective for fiscal years starting
        on January 1, 2006 or later. The standard limits situations
        where the fair value adjustments can be recognized in the statement of
        income. TDC does not expect this
        change to be of any material significance to the recognition of fair
        value adjustments in the Statements
of Income
in 2006                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | • | IFRS
          7 Financial Instruments: Disclosures and Amendments to IAS 1 Presentations
          of Financial Statements:Capital Disclosures is effective for fiscal years starting
          on January 1, 2007 or later. The implementation of the standard
          will have no impact on the recognition and measurement of financial
          instruments, and TDC does not expect
          the standard to result in any changes in the scope of disclosures of
          financial instruments in the Annual Report                                                                                                                                        

IASB and the EU have approved the following new interpretations (IFRICs) that become effective for 2006 or later, and are judged relevant for
TDC:


| | • | IFRIC
        4 Determining whether an Agreement contains a Lease, which comes into
        effect for fiscal years startingon January 1, 2006 or later. In connection with a review of
        contracts in force at December 31, 2005 it was established
        that TDC has no contracts or other arrangements that would be classified
        as lease contracts in accordance
    with IFRIC 4
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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NOTES

Note
4   Segment reporting

Activities  primary segment

|                                    |               |               |                 |      |                   |      |        |   |        |   | DKKm   |  
|----------------------------------- | ------------- | ------------- | --------------- | ---- | ----------------- | ---- | ------ | - | ------ | - | ------ | -
|                                    |               |               |                 |      |                   |      |        |   |        |  
|                                    |               |               |                 |      | TDC
	      Mobile |      |        |   |        |  
|                                    | TDC Solutions | International | TDC Switzerland
|                                    |               |               |                 |      |                   |      |        |   |       
|                                    | 2005          |               | 2004            | 2005 |                   | 2004 | 2005   |   | 2004  
|                                    |               |               |                 |      |                   |     
|External revenue                    | 20,491        |               | 17,416          |      | 14,304            |      | 13,304 |   | 9,574  |   | 9,681  |  
|Intra-group revenue1                | 1,140         |               | 1,174           |      | 1,735             |      | 1,801  |   | 8      |   | 11     |  
|Revenue                             | 21,631        |               | 18,590          |      | 16,039            |      | 15,105 |   | 9,582  |   | 9,692  |  
|Operating income                    | 2,394         |               | 2,808           |      | 1,698             |      | 1,455  |   | 1,044  |   | 1,040  |  
|Write-downs2                        | (181          | )             | (355            | )    | (37               | )    | (202   | ) | (69    | ) | (22    | )
|Reversal of write-downs2            | 10            |               | 0               |      | 1                 |      | 0      |   | 0      |   | 0      |  
|Income from associates              | 14            |               | 4               |      | 317               |      | 231    |   | 0      |   | 0      |  
|Segment assets3                     | 23,701        |               | 22,834          |      | 9,251             |      | 9,234  |   | 33,396 |   | 33,318 |  
|Capital expenditures4               | 4,631         |               | 7,387           |      | 1,256             |      | 1,573  |   | 1,580  |   | 1,196  |  
|Investments in associates           | 61            |               | 53              |      | 2,010             |      | 1,205  |   | 0      |   | 0      |  
|Segment liabilities3                | (7,738        | )             | (7,702          | )    | (2,377            | )    | (2,282 | ) | (3,295 | ) | (3,282 | )
|Cash flow from operating activities | 4,333         |               | 5,275           |      | 1,953             |      | 2,301  |   | 2,187  |   | 2,176  |  
|Cash flow from investing activities | (2,746        | )             | (5,871          | )    | (939              | )    | (1,032 | ) | (1,446 | ) | (1,263 | )
|Cash flow from financing activities | (1,393        | )             | 750             |      | (1,166            | )    | (1,523 | ) | (921   | ) | (748   | )



|                                               | TDC Cable TV |   | Other 5 |      | TDC Group |     
|---------------------------------------------- | ------------ | - | ------- | ---- | --------- | ----
|                                               |              |   |         |      |           |     
|                                               | 2005         |   | 2004    | 2005 |           | 2004
|                                               |              |   |         |      |           |     
|External revenue                               | 2,096        |   | 1,748   |      | 123       |     
|Intra-group revenue1                           | 11           |   | 18      |      | (2,894    | )   
|Revenue                                        | 2,107        |   | 1,766   |      | (2,771    | )   
|Operating income                               | 225          |   | 130     |      | (116      | )   
|Write-downs2                                   | (37          | ) | 0       |      | 11        |     
|Reversal of write-downs2                       | 0            |   | 0       |      | 0         |     
|Income from associates                         | 0            |   | 0       |      | 3         |     
|Segment assets/undistributed assets3           | 1,838        |   | 1,686   |      | 25,338    |     
|Capital expenditures4                          | 266          |   | 267     |      | 161       |     
|Investments in associates                      | 0            |   | 0       |      | 55        |     
|Segment liabilities/undistributed liabilities3 | (1,185       | ) | (1,035  | )    | (35,134   | )   
|Cash flow from operating activities            | 378          |   | 450     |      | (160      | )   
|Cash flow from investing activities            | (261         | ) | (266    | )    | 4,166     |     
|Cash flow from financing activities            | (85          | ) | (185    | )    | (664      | )   

| 
|-
|1
|2
|3
|4
|5

F - 21

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NOTES

TDC Mobile International, primary segmentation

|                                         |            |   |                  |   |                  |   |       |   |       |   |       |   |        |   | DKKm   |  
|---------------------------------------- | ---------- | - | ---------------- | - | ---------------- | - | ----- | - | ----- | - | ----- | - | ------ | - | ------ | -
|                                         |            |   |                  |   |                  |   |       |   |       |  
|                                         | Domestic   |   | European network |   | European service |   |       |   |       |  
|                                         | operations |   | operators        |   | providers        |   | Total |  
|                                         |            |   |                  |   |                  |   |       |   |       |   |       |   |        |   |        |  
|                                         | 2005       |   | 2004             |   | 2005             |   | 2004  |   | 2005  |   | 2004  |   | 2005   |   | 2004   |  
|                                         |            |   |                  |   |                  |   |       |   |       |   |       |   |        |   |        |  
|External revenue                         | 7,154      |   | 6,504            |   | 1,122            |   | 926   |   | 7,763 |   | 7,675 |   | 16,039 |   | 15,105 |  
|Intra-group revenue1                     | (3         | ) | (1               | ) | 3                |   | 1     |   |      |   |      |   |       |   |       |  
|Revenue                                  | 7,151      |   | 6,503            |   | 1,125            |   | 927   |   | 7,763 |   | 7,675 |   | 16,039 |   | 15,105 |  
|Operating income                         | 1,375      |   | 1,057            |   | (2               | ) | 13    |   | 325   |   | 385   |   | 1,698  |   | 1,455  |  
|Write-downs2                             | (20        | ) | (182             | ) | (1               | ) | (6    | ) | (16   | ) | (14   | ) | (37    | ) | (202   | )
|Reversal of write-downs2                 | 0          |   | 0                |   | 1                |   | 0     |   | 0     |   | 0     |   | 1      |   | 0      |  
|Income from associates                   | 0          |   | 11               |   | 317              |   | 220   |   | 0     |   | 0     |   | 317    |   | 231    |  
|Segment assets3                          | 6,651      |   | 5,810            |   | 1,151            |   | 1,811 |   | 1,449 |   | 1,613 |   | 9,251  |   | 9,234  |  
|Capital expenditures4                    | 831        |   | 1,297            |   | 352              |   | 164   |   | 73    |   | 112   |   | 1,256  |   | 1,573  |  
|Investments in associates                | 0          |   | 0                |   | 2,010            |   | 1,205 |   | 0     |   | 0     |   | 2,010  |   | 1,205  |  
|Segment liabilities3                     | (1,346     | ) | (1,267           | ) | (197             | ) | (144  | ) | (834  | ) | (871  | ) | (2,377 | ) | (2,282 | )
|Cash
	    flow from
operating activities | 1,279      |   | 1,659            |   | 228              |   | 207   |   | 446   |   | 435   |   | 1,953  |   | 2,301  |  
|Cash flow from
investing activities      | (517       | ) | (748             | ) | (389             | ) | (174  | ) | (33   | ) | (110  | ) | (939   | ) | (1,032 | )
|Cash flow from
financing activities      | (840       | ) | (826             | ) | 110              |   | 3     |   | (436  | ) | (700  | ) | (1,166 | ) | (1,523 | )

|  |                                                                                                                                                      
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| 
|1 | Transactions between segments are carried out on an arms length basis.                                                                              
|2 | Comprises write-downs of intangibles and property, plant and equipment, and inventories.                                                             
|3 | See the definition under Significant Accounting Policies.                                                                                            
|4 | Capital expenditures include additions of property, plant and equipment and intangible assets, including additions relating to business combinations.

Geographical markets  secondary segment

|                      |            |  |             |  |            |  |                     |  |        |  |        |  |        |  | DKKm   | 
|--------------------- | ---------- |  | ----------- |  | ---------- |  | ------------------- |  | ------ |  | ------ |  | ------ |  | ------ | 
|                      |            |  |             |  |            |  |                     |  |        |  |        | 
|                      | Domestic   |  |             |  |            |  | Other international |  |        |  |        | 
|                      | operations |  | Switzerland |  | operations |  | TDC Group           | 
|                      |            |  |             |  |            |  |                     |  |        |  |        |  |        |  |        | 
|                      | 2005       |  | 2004        |  | 2005       |  | 2004                |  | 2005   |  | 2004   |  | 2005   |  | 2004   | 
|                      |            |  |             |  |            |  |                     |  |        |  |        |  |        |  |        | 
|Revenue               | 23,739     |  | 22,516      |  | 9,582      |  | 9,692               |  | 13,267 |  | 10,131 |  | 46,588 |  | 42,339 | 
|Segment assets        | 50,094     |  | 46,916      |  | 33,396     |  | 33,318              |  | 10,034 |  | 10,030 |  | 93,524 |  | 90,264 | 
|Capital expenditures1 | 3,411      |  | 3,895       |  | 1,580      |  | 1,196               |  | 2,903  |  | 5,591  |  | 7,894  |  | 10,682 | 

| 
|-
| 
|1
| 

F - 22

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NOTES

Note
5   Revenue

|                  |        |  | DKKm   | 
|----------------- | ------ |  | ------ | 
|                  |        |  |        | 
|                  | 2005   |  | 2004   | 
|                  |        |  |        | 
|Sales of goods    | 4,319  |  | 3,867  | 
|Sales of services | 42,269 |  | 38,472 | 
|                  |        |  |        | 
|Total             | 46,588 |  | 42,339 | 
|                  |        |  |        | 

Note
6   Wages, salaries and pension costs

|                                                    |        |   | DKKm   |  
|--------------------------------------------------- | ------ | - | ------ | -
|                                                    |        |   |        |  
|                                                    | 2005   |   | 2004   |  
|                                                    |        |   |        |  
|Wages and salaries                                  | (7,695 | ) | (6,859 | )
|Pensions                                            | (644   | ) | (869   | )
|Share-based payment                                 | (40    | ) | (52    | )
|Social security                                     | (419   | ) | (332   | )
|                                                    |        |   |        |  
|Total                                               | (8,798 | ) | (8,112 | )
|                                                    |        |   |        |  
|Of which capitalized as non-current assets          | 725    |   | 695    |  
|                                                    |        |   |        |  
|Total                                               | (8,073 | ) | (7,417 | )
|                                                    |        |   |        |  
|Average number of full-time employee equivalents1,2 | 20,059 |   | 19,130 |  

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|1 | Denotes the average number of full-time employee equivalents including permanent employees, trainees and temporary employees. Employees in acquired enterprises are included as the
average number of full-time employee equivalents from the time of acquisition until December 31. Employees in divested enterprises are included as the average number of full- time employee equivalents from January 1 to the time of
disposal.
|2 | The figure covers only continuing operations. Calculated including discontinued operations, the average number of full- time employee equivalents amounted to 20,930 in 2005, and
20,200 in 2004.                                                                                                                                                                                                                                   

The average number of full-time employee equivalents covers approximately 100 persons employed by TDC entitled to pensions on conditions similar to those
provided for Danish Civil Servants, who have been outsourced to external parties in connection with outsourcing of tasks or disposal of operations.


Remuneration for the Board of Directors and Executive Committee

|                    |                    |  |                     |  |      |  | DKKm | 
|------------------- | ------------------ |  | ------------------- |  | ---- |  | ---- | 
|                    |                    |  |                     | 
|                    | Board of Directors |  | Executive Committee | 
|                    |                    |  |                     |  |      |  |      | 
|                    | 2005               |  | 2004                |  | 2005 |  | 2004 | 
|                    |                    |  |                     |  |      |  |      | 
|Wages and salaries  | 9                  |  | 3                   |  | 17   |  | 12   | 
|Pensions            | 0                  |  | 0                   |  | 2    |  | 2    | 
|Share-based payment | 0                  |  | 0                   |  | 3    |  | 2    | 
|Social security     | 0                  |  | 0                   |  | 0    |  | 0    | 
|                    |                    |  |                     |  |      |  |      | 
|Total               | 9                  |  | 3                   |  | 22   |  | 16   | 
|                    |                    |  |                     |  |      |  |      | 

F - 23

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NOTES

Remuneration for the Board of Directors

The yearly remuneration for the Chairman of the Board, Thorleif Krarup, amounted to DKK 750,000. The yearly remuneration for the Vice Chairman of the
Board, Niels Heering, amounted to DKK 500,000, and DKK 250,000 for the other members of the Board of Directors, which is unchanged compared with 2004.


In addition, the remuneration for 2005 included one years additional remuneration for the Board of Directors for a heavy workload with 16 extra
board meetings before Nordic Telephone Company ApS acquisition of TDC. Furthermore, the remuneration comprised twice the yearly remuneration for the Chairman and the Vice Chairman of the Board who coordinated the process, completed all the
negotiations and maintained all contact with the bidders on behalf of the Board of Directors. The total special remuneration amounted to DKK 5,750,000.


In addition, the yearly remuneration for the Chairman of the Audit Committee, Kurt Anker Nielsen, amounted to DKK 250,000 compared with DKK 150,000 in
2004. The yearly remuneration for the other members of the Audit Committee amounted to DKK 100,000, which is unchanged compared with 2004.


Remuneration for the Executive Committee1

|                  |      |  | DKKm | 
|----------------- | ---- |  | ---- | 
|                  |      |  |      | 
|                  | 2005 |  | 2004 | 
|                  |      |  |      | 
|Henning Dyremose  | 11.3 |  | 8.4  | 
|Hans Munk Nielsen | 7.7  |  | 5.7  | 

| 
|-
| 
|1

Remuneration for 2005 includes discretionary remuneration for Henning Dyremose and Hans Munk Nielsen for an extraordinary workload in connection with
Nordic Telephone Company ApS equity tender offer for acquiring the Company according to the Statement from the Board of Directors of TDC A/S dated December 2, 2005.


The Executive Committees contracts include notices of 12-18 months in the event of termination by the Company. In the event of change of control of
the Company, the members of the Executive Committee are entitled to 36 months salary for a period of 24 months from the change of control, plus pensions as well as compensation for benefits, bonuses and share options. The Executive Committee
has the right to exercise this provision as of the fourth month and until six months following the first change of control of the Company after November 30, 2005.


Share-option program for certain employees in Danish enterprises

To date, TDC has had a revolving share-option program for employees in TDCs Danish enterprises. The present share-option program is not expected to
continue after Nordic Telephone Company ApS has acquired control of the Company.


In connection with Nordic Telephone Company ApS equity tender offer for acquiring the Company, TDC A/S has given share-option holders in Danish
enterprises an opportunity to exercise these options and has offered to buy certain existing share options. Furthermore, TDC A/S has offered share-option holders employed in foreign subsidiaries cash settlement of existing share options. The offers
are conditional on completion of the equity offer.


TDCs revolving share-option program comprised about 200 managers employed in Denmark and stationed in TDCs foreign enterprises. After the
Earnings Release for the year has been published, share options are granted to participants in accordance with contracts of employment. Each share option gives the holder the right to purchase one share. The number of options allocated was based on
an agreed percentage of the employees basic salary and a calculated price per option (number of options = basic salary times option percentage divided by price per option). The option percentage varies for the different employees within a
range of 20-35%. In addition, share options are granted on an individual basis in special cases. The option price was calculated at the time of granting using the Black-Scholes formula. The share option exercise price was determined as TDCs
share price on the Copenhagen Stock Exchange on the grant date.


F - 24

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NOTES

One third of the options granted for a given year may be exercised one year after the granting, another third one year later, and the last third one year
after that. Share options may, however, be exercised in the event of change of control of the Company. Share options that are not exercised within ten years of granting are canceled.


Share options were also granted to the members of the Executive Committee according to the above-mentioned principles.


Until 2003, the Chairman of the Board received 2,500 share options a year, and other Danish members of the Board received 500 share options annually.
Board members will no longer receive share options.


Bonus program

Around 300 top managers participate in a bonus program called the Top Managers Compensation Program, and around 2,200 managers and specialists
participate in a bonus program called the Managers Compensation Program.


The bonus program is based on specific, individual annual targets including personal, financial and operational targets. These targets depend on the
organizational position within the Group and are weighted in accordance with specific rules. All targets must support improved profitability and business development at TDC.


Bonus payments are calculated as the individual employees basic salary times the bonus percentage times the degree of target fulfillment. The bonus
percentage achieved when targets are met is called the on-target bonus percentage. For the Top Managers Compensation Program, this percentage is fixed in the contract of employment with the individual employee and usually varies within a range
of 10-25%. The on-target bonus percentage is somewhat lower for the Managers Compensation Program. In 2005, the bonus could be maximum 200% of the on-target bonus.


The bonus program for the members of the Executive Committee is based on the same principles as those for other managers.


Share-option program for employees in foreign subsidiaries

In November 2004, employees in 100% owned foreign subsidiaries were granted options that give the right to purchase 90 shares in TDC A/S at an exercise
price of DKK 78 per share. For tax purposes, employees in the USA were offered options entitling them to purchase 113 shares in TDC A/S at an exercise price of DKK 108 per share. Each share option entitles the holder to purchase one
share.


The share options may be exercised during a four-week period following the publication of the third Quarterly Report in 2009, or in the first window
after October 1, 2009, provided the employee has been continuously employed in one of the 100% owned subsidiaries or in a company controlled by TDC A/S. The options may, however, be exercised in the event of change of control of the company. 3,095
employees were granted 278,711 options with a total fair value of DKK 27m. The calculations of fair values have been based on the Black-Scholes option pricing model.


F - 25

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NOTES

Share
  options for certain employees in domestic enterprises

|                                                                        |                |   |           |   | Other      |   |           |   | Average              |  | Average          |  |                  |  
|----------------------------------------------------------------------- | -------------- | - | --------- | - | ---------- | - | --------- | - | -------------------- |  | ---------------- |  | ---------------- | -
|                                                                        | Board
      of |   | Executive |   | management |   |           |   | exercise
      price |  | fair
      value |  | Total            |  
|                                                                        | Directors      |   | Committee |   | employees  |   | Total     |   | per
      option     |  | per
      option |  | fair
      value |  
|                                                                        | (number)       |   | (number)  |   | (number)   |   | (number)  |   | in
      DKK         |  | in
      DKK 1   |  | in DKKm1         |  
|                                                                        |                |   |           |   |            |   |           |   |                      |  |                  |  |                  |  
|Outstanding
      at January 1, 2004                                    | 12,500         |   | 265,615   |   | 3,010,994  |   | 3,289,109 |   | 252                  |  | 48               |  | 159.0            |  
|Change
      of Board of Directors                                      | (2,000         | ) |          |   | 2,000      |   |          |   |                     |  |                 |  |                 |  
|Share
      options issued in March
      2004                          | 0              |   | 18,040    |   | 781,463    |   | 799,503   |   | 245                  |  | 50               |  | 42.2             |  
|Share
      options issued in September 2004                            | 0              |   | 47,651    |   | 0          |   | 47,651    |   | 216                  |  | 37               |  | 1.8              |  
|Exercised
      in 2004                                                 | 0              |   | (9,700    | ) | (263,337   | ) | (273,037  | ) | 153                  |  | 72               |  | (19.6            | )
|Canceled
      in 2004                                                  | 0              |   | 0         |   | 0          |   | 0         |   |                     |  |                 |  |                 |  
|Value
      adjustment                                                  |               |   |          |   |           |   |          |   |                     |  |                 |  | (33.9            | )
|                                                                        |                |   |           |   |            |   |           |   |                      |  |                  |  |                  |  
|Outstanding
      at December 31, 2004                                  | 10,500         |   | 321,606   |   | 3,531,120  |   | 3,863,226 |   | 257                  |  | 39               |  | 149.5            |  
|Share
      options issued in March 2005                                | 0              |   | 20,957    |   | 822,261    |   | 843,218   |   | 258                  |  | 47               |  | 39.8             |  
|Share
      options issued in September 2005                            | 0              |   | 31,083    |   | 0          |   | 31,083    |   | 316                  |  | 60               |  | 1.9              |  
|Exercised
      in 2005                                                 | 0              |   | (32,904   | ) | (596,014   | ) | (628,918  | ) | 184                  |  | 84               |  | (52.6            | )
|Canceled
      in 2005                                                  | 0              |   | 0         |   | (4,417     | ) | (4,417    | ) | 246                  |  | 70               |  | (0.3             | )
|Disposals
      relating to disposals of subsidiaries                   |               |   |          |   | (82,579    | ) | (82,579   | ) |                     |  |                 |  | (10.0            | )
|Value
      adjustment                                                  |               |   |          |   |           |   |          |   |                     |  |                 |  | 375.6            |  
|                                                                        |                |   |           |   |            |   |           |   |                      |  |                  |  |                  |  
|Outstanding
      at December 31, 2005                                  | 10,500         |   | 340,742   |   | 3,670,371  |   | 4,021,613 |   | 269                  |  | 125              |  | 503.9            |  
|                                                                        |                |   |           |   |            |   |           |   |                      |  |                  |  |                  |  
|Options
            that may be exercised at December 31, 2005          | 10,500         |   | 229,387   |   | 1,898,932  |   | 2,138,819 |   | 306                  |  |                 |  |                 |  
|                                                                        |                |   |           |   |            |   |           |   |                      |  |                  |  |                  |  
|Average
            remaining option lives at December 31, 2005 (years) | 6.1            |   | 5.7       |   | 7.0        |   | 6.9       |   |                     |  |                 |  |                 |  
|                                                                        |                |   |           |   |            |   |           |   |                      |  |                  |  |                  |  
|Average
        remaining option lives at December 31, 2004 (years)     | 7.1            |   | 6.3       |   | 7.5        |   | 7.4       |   |                     |  |                 |  |                 |  

|  |                                                                                                                                                                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|1 | Calculations
      of fair values at issuance and at year-end have been based on the Black-Scholes
      option-pricing model. The following assumptions have been used for the calculation
      at year-end 2005: a dividend per share of DKK 12.50, a volatility of 21%,
      a risk-free interest rate of 2.8%-3.0% and expected remaining option lives
      of 0-5 years.

The expected volatility is based on the historic volatility (calculated as the weighted average remaining lives of granted share options) adjusted for
the expected change hereof due to publicly available information. Expenses in relation to the share-option program for employees in foreign subsidiaries amounted to DKK 5m in 2005 compared with DKK 0m in 2004. Expenses in relation to the Danish
share-option program amounted to DKK 24m in 2005 compared with DKK 43m in 2004.


F - 26

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NOTES

Share options for employees in foreign subsidiaries

|                                                                  |         |   | Average              |  | Average
      fair |  |                  |  
|----------------------------------------------------------------- | ------- | - | -------------------- |  | ------------------ |  | ---------------- | -
|                                                                  |         |   | exercise
      price |  | value
      per    |  | Total            |  
|                                                                  |         |   | per
      option     |  | option             |  | fair
      value |  
|                                                                  | Number  |   | in
      DKK         |  | in
      DKK 1     |  | in
      DKKm 1  |  
|                                                                  |         |   |                      |  |                    |  |                  |  
|Outstanding
      at January 1, 2004                              | 0       |   |                     |  |                   |  |                 |  
|Share
      options issued in November 2004                       | 277,920 |   | 78                   |  | 97                 |  | 27.0             |  
|Share
      options issued in the USA in November 2004            | 791     |   | 108                  |  | 77                 |  | 0.1              |  
|Value
      adjustment                                            | 0       |   |                     |  |                   |  | 4.3              |  
|Outstanding
      at December 31, 2004                            | 278,711 |   | 78                   |  | 113                |  | 31.4             |  
|Canceled
      in 2005                                            | (22,630 | ) | 78                   |  | 142                |  | (3.2             | )
|Disposals
      relating to disposals of subsidiaries             | (33,750 | ) | 78                   |  | 264                |  | (8.9             | )
|Value
      adjustment                                            |        |   |                     |  |                   |  | 39.2             |  
|                                                                  |         |   |                      |  |                    |  |                  |  
|Outstanding
      at December 31, 2005                            | 222,331 |   | 78                   |  | 263                |  | 58.5             |  
|                                                                  |         |   |                      |  |                    |  |                  |  
|Options
      that may be exercised at December 31, 2005          | 0       |   |                     |  |                   |  |                 |  
|                                                                  |         |   |                      |  |                    |  |                  |  
|Average
      remaining option lives at December 31, 2005 (years) | 3.8     |   |                     |  |                   |  |                 |  
|                                                                  |         |   |                      |  |                    |  |                  |  
|Average
      remaining option lives at December 31, 2004 (years) | 4.8     |   |                     |  |                   |  |                 |  
|                                                                  |         |   |                      |  |                    |  |                  |  

| 
|-
|1

Number of share options

|                                                                          | At               |  | Issued         |  | Exercised      |   |  | Canceled       |  | At                 |  | Fair          
|------------------------------------------------------------------------- | ---------------- |  | -------------- |  | -------------- | - |  | -------------- |  | ------------------ |  | --------------
|                                                                          | January
      1, |  | during         |  | during         |   |  | during         |  | December
      31, |  | value
      in
|                                                                          | 2005             |  | the
      year |  | the
      year |   |  | the
      year |  | 2005               |  | DKKm
      1  
|Board
      of Directors2                                                 |                  |  |                |  |                |   |  |                |  |                    |  |               
|Thorleif
      Krarup                                                     | 2,500            |  | 0              |  | 0              |   |  | 0              |  | 2,500              |  | 0.51          
|Leif
      Hartmann, Niels Heering, Steen Jacobsen and Bo Magnussen, each | 2,000            |  | 0              |  | 0              |   |  | 0              |  | 2,000              |  | 0.21          
|                                                                          |                  |  |                |  |                |   |  |                |  |                    |  |               
|Executive
      Committee                                                 |                  |  |                |  |                |   |  |                |  |                    |  |               
|Henning
      Dyremose                                                    | 219,400          |  | 31,083         |  | (23,204        | ) |  | 0              |  | 227,279            |  | 21.3          
|Hans
      Munk Nielsen                                                   | 102,206          |  | 20,957         |  | (9,700         | ) |  | 0              |  | 113,463            |  | 11.3          
|                                                                          |                  |  |                |  |                |   |  |                |  |                    |  |               

| 
|-
|1
|2

F - 27

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NOTES

The exercise prices of outstanding share options are specified as follows

|                                           |  | 2005      |  | 2004      | 
|------------------------------------------ |  | --------- |  | --------- | 
|                                           |  |           |  |           | 
|Share options (numbers)                    |  |           |  |           | 
|Exercise price in the interval DKK 150-200 |  | 815,133   |  | 1,263,234 | 
|Exercise price in the interval DKK 200-250 |  | 820,771   |  | 900,913   | 
|Exercise price in the interval DKK 250-300 |  | 1,690,165 |  | 1,022,525 | 
|Exercise price in the interval DKK 300-400 |  | 384,713   |  | 365,631   | 
|Exercise price in the interval DKK 400-500 |  | 120,108   |  | 119,381   | 
|Exercise price in the interval DKK 500-600 |  | 9,830     |  | 9,830     | 
|Exercise price in the interval DKK 600-700 |  | 180,893   |  | 181,712   | 
|                                           |  |           |  |           | 
|Total                                      |  | 4,021,613 |  | 3,863,226 | 
|                                           |  |           |  |           | 

Number of shares in TDC A/S

|                    |  | 2005   |  | 2004   | 
|------------------- |  | ------ |  | ------ | 
|                    |  |        |  |        | 
|Board of Directors1 |  |        |  |        | 
|Thorleif Krarup     |  | 260    |  | 260    | 
|Niels Heering       |  | 848    |  | 348    | 
|Jan Bardino         |  | 161    |  | 159    | 
|Leif Hartmann       |  | 451    |  | 449    | 
|Steen Jacobsen      |  | 251    |  | 249    | 
|Bo Magnussen        |  | 101    |  | 99     | 
|Kurt Anker Nielsen  |  | 2,446  |  | 2,446  | 
|                    |  |        |  |        | 
|Total               |  | 4,518  |  | 4,010  | 
|                    |  |        |  |        | 
|Executive Committee |  |        |  |        | 
|Henning Dyremose    |  | 36,380 |  | 31,674 | 
|Hans Munk Nielsen   |  | 251    |  | 249    | 
|                    |  |        |  |        | 
|Total               |  | 36,631 |  | 31,923 | 
|                    |  |        |  |        | 

| 
|-
|1

Note
7   Other income, expenses and government grants

|                                           |  |      |   | DKKm  |  
|------------------------------------------ |  | ---- | - | ----- | -
|                                           |  |      |   |       |  
|                                           |  | 2005 |   | 2004  |  
|                                           |  |      |   |       |  
|Other income                               |  | 272  |   | 1,183 |  
|Other expenses                             |  | (15  | ) | (3    | )
|                                           |  |      |   |       |  
|Total                                      |  | 257  |   | 1,180 |  
|                                           |  |      |   |       |  
|Government grants                          |  |      |   |       |  
|Government grants received during the year |  | 0    |   | 1     |  

Other income comprises mainly income from leases as well as profit relating to disposal of subsidiaries, intangible assets and property, plant and
equipment.


F - 28

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NOTES

Note
8   Fair value adjustments

|                                                |  |      |   | DKKm |  
|----------------------------------------------- |  | ---- | - | ---- | -
|                                                |  |      |   |      |  
|                                                |  | 2005 |   | 2004 |  
|                                                |  |      |   |      |  
|Fair value adjustments of marketable securities |  | (65  | ) | (19  | )
|Other fair value adjustments                    |  | (119 | ) | 197  |  
|                                                |  |      |   |      |  
|Fair value adjustments before tax               |  | (184 | ) | 178  |  
|                                                |  |      |   |      |  
|Income taxes related to fair value adjustments  |  | 47   |   | (37  | )
|                                                |  |      |   |      |  
|Fair value adjustments after tax                |  | (137 | ) | 141  |  
|                                                |  |      |   |      |  

Note
9   Financial income

|                                      |  |       |  | DKKm  | 
|------------------------------------- |  | ----- |  | ----- | 
|                                      |  |       |  |       | 
|                                      |  | 2005  |  | 2004  | 
|                                      |  |       |  |       | 
|Interest income                       |  | 2,331 |  | 2,515 | 
|Interest from associates              |  | 22    |  | 32    | 
|Currency translation adjustments, net |  | 101   |  | 0     | 
|                                      |  |       |  |       | 
|Total                                 |  | 2,454 |  | 2,547 | 
|                                      |  |       |  |       | 

Note
10   Financial expenses

|                                      |  |        |   | DKKm   |  
|------------------------------------- |  | ------ | - | ------ | -
|                                      |  |        |   |        |  
|                                      |  | 2005   |   | 2004   |  
|                                      |  |        |   |        |  
|Interest expenses                     |  | (3,326 | ) | (3,414 | )
|Currency translation adjustments, net |  | 0      |   | (27    | )
|                                      |  |        |   |        |  
|Total                                 |  | (3,326 | ) | (3,441 | )
|                                      |  |        |   |        |  

F - 29

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NOTES

Note
11   Income taxes

|                                                                                      |              |              |              |            |              |              |                  |   |      |   | DKKm     |  
|------------------------------------------------------------------------------------- | ------------ | ------------ | ------------ | ---------- | ------------ | ------------ | ---------------- | - | ---- | - | -------- | -
|                                                                                      |              |              |             
|                                                                                      | 2005         |              | 2004        
|                                                                                      |              |              |             
|                                                                                      | Income taxes |              |              |            | Deferred     |              | Income
    taxes |   |      |   | Deferred
|                                                                                      | cf. the      | Income tax   | tax          | cf. the    | Income tax   | tax         
|                                                                                      | Statements   | payable/     | liabilities/ | Statements | payable/     | liabilities/
|                                                                                      | of Income    | (receivable) | (assets)     | of Income  | (receivable) | (assets)    
|                                                                                      |              |              |              |            |              |              |                  |   |      |   |          |  
|At January 1                                                                          |             |              | 656          |            | 3,684        |              |                 |   | 407  |   | 3,490    |  
|Transferred to discontinued operations                                                |             |              | (130         | )          | 49           |              | 104              |   |     |   |         |  
|Currency translation adjustments, net                                                 |             |              | 3            |            | 6            |              |                 |   | 8    |   | (7       | )
|Additions
	      and disposals relating toacquisition
    and disposal of enterprises |             |              | (9           | )          | (27          | )            |                 |   | (68  | ) | (126     | )
|Income taxes                                                                          | (1,212       | )            | 1,982        |            | (770         | )            | (1,105           | ) | 903  |   | 202      |  
|Adjustment of tax for previous years                                                  | 186          |              | 46           |            | (232         | )            | (40              | ) | (70  | ) | 110      |  
|Tax related to changes in equity                                                      |             |              | 34           |            | 0            |              |                 |   | (71  | ) | 15       |  
|Tax paid/refunded relating to prior years.                                            |             |              | (847         | )          |             |              |                 |   | 138  |   |         |  
|Tax
    paid on account relating to present year                                      |             |              | (1,449       | )          |             |              |                 |   | (591 | ) |         |  
|                                                                                      |              |              |              |            |              |              |                  |   |      |   |          |  
|Total                                                                                 | (1,026       | )            | 286          |            | 2,710        |              | (1,041           | ) | 656  |   | 3,684    |  
|                                                                                      |              |              |              |            |              |              |                  |   |      |   |          |  
|which can be specified as follows:                                                    |              |              |              |            |              |              |                  |   |      |   |          |  
|Tax payable/deferred tax liabilities                                                  |             |              | 295          |            | 3,494        |              |                 |   | 675  |   | 4,677    |  
|Tax receivable/deferred tax assets                                                    |             |              | (9           | )          | (784         | )            |                 |   | (19  | ) | (993     | )
|                                                                                      |              |              |              |            |              |              |                  |   |      |   |          |  
|Total                                                                                 |             |              | 286          |            | 2,710        |              |                 |   | 656  |   | 3,684    |  
|                                                                                      |              |              |              |            |              |              |                  |   |      |   |          |  

Reconciliation of effective tax rate

|                                                                         |  | 2005 |   | 2004  |  
|------------------------------------------------------------------------ |  | ---- | - | ----- | -
|                                                                         |  |      |   |       |  
|Danish corporate income tax rate                                         |  | 28.0 |   | 30.0  |  
|Associates                                                               |  | (2.0 | ) | (15.5 | )
|Other non-taxable income and non-tax deductible expenses                 |  | 3.4  |   | (2.6  | )
|Tax value of non-capitalized tax losses and utilized tax losses, net     |  | 1.6  |   | 0.4   |  
|Different tax rates in foreign subsidiaries                              |  | (1.2 | ) | (0.9  | )
|Adjustment of tax for previous years                                     |  | (4.1 | ) | 0.4   |  
|Change of tax legislation, including change of corporate income tax rate |  | (5.4 | ) | 0.0   |  
|Other                                                                    |  | 2.4  |   | (2.0  | )
|                                                                         |  |      |   |       |  
|Effective tax rate                                                       |  | 22.7 |   | 9.8   |  
|                                                                         |  |      |   |       |  

F - 30

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NOTES

Specification of deferred tax liabilities

|                                            |  |            |   |                 |  |       |   | DKKm   |  
|------------------------------------------- |  | ---------- | - | --------------- |  | ----- | - | ------ | -
|                                            |  |            |   |                 | 
|                                            |  | 2005       |   |                 | 
|                                            |  |            |   |                 |  |       |   |        |  
|                                            |  | Deferred   |   | Deferred        |  |       |   |        |  
|                                            |  | tax assets |   | tax
liabilities |  | Total |   | 2004   |  
|                                            |  |            |   |                 |  |       |   |        |  
|Allowances for uncollectibles               |  | (2         | ) | 0               |  | (2    | ) | (56    | )
|Provisions for redundancy payments          |  | (92        | ) | 0               |  | (92   | ) | (135   | )
|                                            |  |            |   |                 |  |       |   |        |  
|Current                                     |  | (94        | ) | 0               |  | (94   | ) | (191   | )
|                                            |  |            |   |                 |  |       |   |        |  
|Intangible assets                           |  | (27        | ) | 318             |  | 291   |   | 474    |  
|Property, plant and equipment               |  | (330       | ) | 2,420           |  | 2,090 |   | 2,669  |  
|Pension assets and pension liabilities, etc |  | 0          |   | 1,645           |  | 1,645 |   | 1,747  |  
|Tax value of tax loss carry-forwards        |  | (791       | ) | 0               |  | (791  | ) | (1,195 | )
|Other                                       |  | (559       | ) | 128             |  | (431  | ) | 180    |  
|                                            |  |            |   |                 |  |       |   |        |  
|Non-current                                 |  | (1,707     | ) | 4,511           |  | 2,804 |   | 3,875  |  
|                                            |  |            |   |                 |  |       |   |        |  
|Deferred tax liabilities at December 31     |  | (1,801     | ) | 4,511           |  | 2,710 |   | 3,684  |  
|                                            |  |            |   |                 |  |       |   |        |  

The Groups capitalized tax loss carry-forwards are expected to be utilized before the end of 2009.


Furthermore, the Group has tax losses to carry forward against future taxable income that have not been recognized in these Financial Statements due to
uncertainty of their recoverability. At December 31, 2005, these tax losses amount to a tax value of DKK 466m, compared with DKK 499m at December 31, 2004.


All of the Danish Group companies participate in joint taxation. Joint taxation with foreign Group companies is no longer expected to take place due to
the changed Danish tax legislation effective January 1, 2005. For Group companies, which previously participated in the joint taxation, re-taxation of formerly deducted losses will be effected concurrently with profits in the respective companies
and in connection with potential divestment of the companies. Provisions for re-taxation liabilities related to formerly deducted losses have been made.


The income tax effect from the Danish joint taxation for the years 2001-2003 is based on an estimated tax value of goodwill related to Talkline. Income
taxes for 2004 have been positively impacted by DKK 218m from an adjustment to the value of goodwill following a decision from the National Assessment Council in October 2004. TDC has appealed the decision. The outcome could result in additional
income.


TDC A/S has committed to contributing, if necessary, additional capital to TDC Switzerland in order to generate taxable income sufficient to utilize the
accumulated tax loss carry-forwards prior to their expiration.


F - 31

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NOTES

Note 12   Discontinued operations and assets held for sale

Discontinued operations

|                                                                  |  |       |   | DKKm  |  
|----------------------------------------------------------------- |  | ----- | - | ----- | -
|                                                                  |  |       |   |       |  
|                                                                  |  | 2005  |   | 2004  |  
|                                                                  |  |       |   |       |  
|Revenue                                                           |  | 1,090 |   | 1,230 |  
|Total operating costs                                             |  | (677  | ) | (757  | )
|Income taxes                                                      |  | (118  | ) | (104  | )
|Results from discontinued operations excluding gain from disposal |  | 245   |   | 315   |  
|Gain relating to disposal of discontinued operations              |  | 3,708 |   | 0     |  
|                                                                  |  |       |   |       |  
|Net income from discontinued operations                           |  | 3,953 |   | 315   |  
|                                                                  |  |       |   |       |  

Discontinued operations comprise the former business line TDC Directories, which publishes printed, electronic and internet-based directories in Denmark,
Sweden, and Finland.


Assets held for sale

|                                                    |  | 2005 |  | 2004 | 
|--------------------------------------------------- |  | ---- |  | ---- | 
|                                                    |  |      |  |      | 
|Intangible assets and property, plant and equipment |  | 123  |  | 0    | 
|Receivables                                         |  | 49   |  | 0    | 
|Pre-paid expenses                                   |  | 3    |  | 0    | 
|Cash and cash equivalents                           |  | 12   |  | 0    | 
|                                                    |  |      |  |      | 
|Total assets held for sale                          |  | 187  |  | 0    | 
|                                                    |  |      |  |      | 
|Loans                                               |  | 7    |  | 0    | 
|Provisions                                          |  | 2    |  | 0    | 
|Deferred income                                     |  | 6    |  | 0    | 
|Trade and other payables                            |  | 56   |  | 0    | 
|                                                    |  |      |  |      | 
|Total liabilities concerning assets held for sale   |  | 71   |  | 0    | 
|                                                    |  |      |  |      | 

Assets held for sale and related liabilities are related to Contactel s.r.o., which is included in the segment TDC Solutions.


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NOTES

Note 13   Earnings per share

|                                                              |  | 2005        |   | 2004        |  
|------------------------------------------------------------- |  | ----------- | - | ----------- | -
|                                                              |  |             |   |             |  
|Net income (DKKm)                                             |  | 7,450       |   | 9,910       |  
|Minority interests share of consolidated income (DKKm)       |  | 24          |   | 2           |  
|                                                              |  |             |   |             |  
|Shareholders share of net income (DKKm)                      |  | 7,474       |   | 9,912       |  
|                                                              |  |             |   |             |  
|Average number of shares                                      |  | 208,112,911 |   | 216,459,540 |  
|Average number of treasury shares                             |  | (12,933,204 | ) | (11,825,833 | )
|                                                              |  |             |   |             |  
|Average number of outstanding shares                          |  | 195,179,707 |   | 204,633,707 |  
|Average dilutive effect of outstanding share options (number) |  | 1,067,535   |   | 387,283     |  
|                                                              |  |             |   |             |  
|Average number of diluted outstanding shares                  |  | 196,247,242 |   | 205,020,990 |  
|                                                              |  |             |   |             |  
|Earnings per share, basic (DKK)                               |  | 38.3        |   | 48.4        |  
|Earnings per share, diluted (DKK)                             |  | 38.1        |   | 48.3        |  

Calculations of earnings per share from continuing operations were based on net income from continuing operations attributable to Company shareholders
and amounted to DKK 3,521m in 2005 compared with DKK 9,597m in 2004.


Note 14    Intangible assets

|                                                                             |  |          |   |           |   | DKKm         |  
|---------------------------------------------------------------------------- |  | -------- | - | --------- | - | ------------ | -
|                                                                             |  |          |  
|                                                                             |  | 2005     |  
|                                                                             |  |          |  
|                                                                             |  |          |   |           |   | Software     |  
|                                                                             |  |          |   | Rights,   |   | developed    |  
|                                                                             |  |          |   | software, |   | for internal |  
|                                                                             |  | Goodwill |   | etc.      |   | use          |  
|                                                                             |  |          |   |           |   |              |  
|Accumulated cost at January 1, 2005                                          |  | 31,731   |   | 6,413     |   | 2,419        |  
|Transferred to discontinued operations                                       |  | (1,191   | ) | (114      | ) | 3            |  
|Currency translation adjustments                                             |  | (153     | ) | (15       | ) | 0            |  
|Additions during the year                                                    |  | 0        |   | 624       |   | 408          |  
|Additions relating to changed consolidation                                  |  | 157      |   | 0         |   | 0            |  
|Additions relating to the acquisition of subsidiaries                        |  | 464      |   | 660       |   | 0            |  
|Disposals relating to the divestment of subsidiaries                         |  | (36      | ) | (21       | ) | 0            |  
|Assets disposed of or fully amortized during the year                        |  | 0        |   | (33       | ) | (346         | )
|Transferred to assets held for sale                                          |  | (425     | ) | (99       | ) | 0            |  
|                                                                             |  |          |   |           |   |              |  
|Accumulated cost at December 31, 2005                                        |  | 30,547   |   | 7,415     |   | 2,484        |  
|                                                                             |  |          |   |           |   |              |  
|Accumulated
 amortization and write-downs for impairment at January
 1, 2005 |  | (2,535   | ) | (2,919    | ) | (1,614       | )
|Transferred to discontinued operations                                       |  | 191      |   | 69        |   | (2           | )
|Currency translation adjustments                                             |  | (30      | ) | 6         |   | 0            |  
|Amortization for the year                                                    |  | 0        |   | (1,078    | ) | (325         | )
|Write-downs for impairment during the year                                   |  | 0        |   | (12       | ) | (68          | )
|Additions relating to changed consolidation                                  |  | (73      | ) | 0         |   | 0            |  
|Disposals relating to the divestment of subsidiaries                         |  | 8        |   | 16        |   | 0            |  
|Assets disposed of or fully amortized during the year                        |  | 0        |   | 173       |   | 347          |  
|Transferred to assets held for sale                                          |  | 425      |   | 93        |   | 0            |  
|                                                                             |  |          |   |           |   |              |  
|Accumulated
amortization and write-downs for impairment at December 31, 2005 |  | (2,014   | ) | (3,652    | ) | (1,662       | )
|                                                                             |  |          |   |           |   |              |  
|Carrying value at December 31, 2005                                          |  | 28,533   |   | 3,763     |   | 822          |  
|                                                                             |  |          |   |           |   |              |  
|Carrying value of capitalized interest at December 31, 2005                  |  |         |   | 176       |   | 10           |  
|                                                                             |  |          |   |           |   |              |  

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NOTES

|                                                                             |          |   |           |   |              |   | DKKm   |  
|---------------------------------------------------------------------------- | -------- | - | --------- | - | ------------ | - | ------ | -
|                                                                             |          |  
|                                                                             | 2004     |  
|                                                                             |          |   |           |   |              |   |        |  
|                                                                             |          |   |           |   | Software     |   |        |  
|                                                                             |          |   | Rights,   |   | developed    |   |        |  
|                                                                             |          |   | software, |   | for internal |   |        |  
|                                                                             | Goodwill |   | etc.      |   | use          |   | Total  |  
|                                                                             |          |   |           |   |              |   |        |  
|Accumulated cost at January 1, 2004                                          | 28,964   |   | 5,286     |   | 1,961        |   | 36,211 |  
|Currency translation adjustments                                             | 265      |   | 18        |   | 0            |   | 283    |  
|Additions during the year                                                    |         |   | 461       |   | 480          |   | 941    |  
|Additions relating to the acquisition of subsidiaries                        | 2,632    |   | 804       |   | 0            |   | 3,436  |  
|Additions relating to increased ownership shares of subsidiaries             | 76       |   | 0         |   | 0            |   | 76     |  
|Disposals relating to the divestment of subsidiaries                         | (115     | ) | (108      | ) | 0            |   | (223   | )
|Assets disposed of or fully amortized during the year                        | (91      | ) | (48       | ) | (22          | ) | (161   | )
|                                                                             |          |   |           |   |              |   |        |  
|Accumulated cost at December 31, 2004                                        | 31,731   |   | 6,413     |   | 2,419        |   | 40,563 |  
|                                                                             |          |   |           |   |              |   |        |  
|Accumulated
 amortization and write-downs for impairment at January
 1, 2004 | (2,507   | ) | (2,151    | ) | (1,121       | ) | (5,779 | )
|Currency translation adjustments                                             | (42      | ) | (8        | ) | 0            |   | (50    | )
|Amortization for the year                                                    | 0        |   | (851      | ) | (307         | ) | (1,158 | )
|Write-downs for impairment during the year                                   | (100     | ) | (20       | ) | (209         | ) | (329   | )
|Disposals relating to the divestment of subsidiaries                         | 23       |   | 67        |   | 0            |   | 90     |  
|Assets disposed of or fully amortized during the year                        | 91       |   | 44        |   | 23           |   | 158    |  
|                                                                             |          |   |           |   |              |   |        |  
|Accumulated
amortization and write-downs for impairment at December 31, 2004 | (2,535   | ) | (2,919    | ) | (1,614       | ) | (7,068 | )
|                                                                             |          |   |           |   |              |   |        |  
|Carrying value at December 31, 2004                                          | 29,196   |   | 3,494     |   | 805          |   | 33,495 |  
|                                                                             |          |   |           |   |              |   |        |  
|Carrying value of capitalized interest at December 31, 2004                  |         |   | 176       |   | 9            |   | 185    |  
|                                                                             |          |   |           |   |              |   |        |  

The carrying value of UMTS licenses in countries where the UMTN network is not in operation amounted to DKK 0m compared with DKK 1,184m in
2004.


The carrying value of software amounted to DKK 1,660m, compared with DKK 1,513m in 2004.


Interest capitalized during 2005 amounted to DKK 4m, compared with DKK 61m in 2004.


The carrying value of mortgaged intangible assets amounted to DKK 366m at December 31, 2005, compared with DKK 0m in 2004.


TDC acquired a UMTS license in 2001 in Denmark. The carrying value of the license amounted to DKK 929m in 2005, compared with DKK 943m in 2004.
Amortization was initiated in 2005. The remaining amortization period totals 16 years.


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NOTES

Goodwill impairment tests

The carrying value of goodwill is tested for impairment annually at July 1, and if events or changes in circumstances indicate impairment.


The impairment test is an integrated part of the Groups budget and planning process, which, as the acquisition of enterprises, is based on ten-year
business plans. The discount rates applied reflect specific risks relating to the individual cash-generating unit. The recoverable value is based on the value in use determined on expected cash flows based on ten-year business plans approved by
Management.


Goodwill of DKK 28,533m at December 31, 2005 relates primarily to TDCs investments in TDC Switzerland and TDC Song. The assumptions for calculating
the value in use for the most significant goodwill amounts are given below. Any reasonably possible changes in the key assumptions are deemed not to cause the carrying value of goodwill to exceed the recoverable value.


TDC Switzerland

The carrying value of goodwill relating to TDC Switzerland amounted to DK 24,068m at December 31, 2005. The recoverable value is sensitive primarily to
changes in the expected revenue growth. The projected revenue growth will stem mainly from an increased market share, partly offset by falling prices. The growth rate applied to extrapolate projected future cash flows for the period following 2014
is 4.0% . The growth rate is not deemed to exceed the long-term average growth rate in TDC Switzerlands markets. A discount rate of 6.6% has been applied.


TDC Song

The carrying value of goodwill relating to TDC Song amounted to DK 2,057m at December 31, 2005. The recoverable value is sensitive primarily to changes
in the projected revenue growth. The projected revenue growth will stem primarily from customer base growth and increased revenue per customer. The growth rate applied to extrapolate projected future cash flows for the period following 2014 is 2.0%
.. The growth rate is not deemed to exceed the long-term average growth rate in TDC Songs markets. A discount rate of 9.6% has been applied.


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NOTES

Note
15   Property, plant and equipment

|                                                               |           |               |               |              |               |       |      |   |                 |   | DKKm    |  
|-------------------------------------------------------------- | --------- | ------------- | ------------- | ------------ | ------------- | ----- | ---- | - | --------------- | - | ------- | -
|                                                               |           |               |               |              |               |       |      |   |                 |   |         |  
|                                                               | 2005      |              
|                                                               |           |               |               |              |               |       |      |   |                 |   |        
|                                                               |           |               |               |              |               |       |      |   | Property, plant |   |        
|                                                               |           | Telecom-      |               |              | and equipment |      
|                                                               | Land and  | munications   | Other         | Installation | under         |      
|                                                               | buildings | installations | installations | materials    | construction  | Total
|                                                               |           |               |               |              |               |      
|Accumulated cost at January 1, 2005                            | 3,286     |               | 60,641        |              | 5,668         |       | 361  |   | 1,437           |   | 71,393  |  
|Transferred to discontinued operations                         | (23       | )             | 0             |              | (99           | )     | 0    |   | 0               |   | (122    | )
|Currency translation adjustments                               | 1         |               | (44           | )            | (4            | )     | (1   | ) | (1              | ) | (49     | )
|Transfers to/(from) other items                                | 21        |               | 1,702         |              | 397           |       | (291 | ) | (1,829          | ) | 0       |  
|Additions
 relating to the acquisition of subsidiaries         | 55        |               | 902           |              | 52            |       | 0    |   | 53              |   | 1,062   |  
|Work
 performed for own purposes and capitalized               | 0         |               | 1,116         |              | 20            |       | 2    |   | 108             |   | 1,246   |  
|Acquisitions from third parties                                | 12        |               | 1,101         |              | 439           |       | 321  |   | 1,464           |   | 3,337   |  
|Disposals
 relating to the divestment of subsidiaries          | 0         |               | 0             |              | (41           | )     | 0    |   | 0               |   | (41     | )
|Assets disposed of during the year                             | (79       | )             | (355          | )            | (450          | )     | (34  | ) | (217            | ) | (1,135  | )
|Transferred to assets held for sale                            | 0         |               | (221          | )            | (49           | )     | 0    |   | (13             | ) | (283    | )
|                                                               |           |               |               |              |               |       |      |   |                 |   |         |  
|Accumulated
 cost at December 31, 2005                         | 3,273     |               | 64,842        |              | 5,933         |       | 358  |   | 1,002           |   | 75,408  |  
|                                                               |           |               |               |              |               |       |      |   |                 |   |         |  
|Accumulated
 depreciation and write-downs
 at January 1, 2005  | (2,264    | )             | (38,657       | )            | (4,060        | )     | (147 | ) | (13             | ) | (45,141 | )
|Transferred to discontinued operations                         | 6         |               | 0             |              | 73            |       | 0    |   | 0               |   | 79      |  
|Currency translation adjustments                               | 0         |               | (16           | )            | (2            | )     | 0    |   | (1              | ) | (19     | )
|Transfers to/(from) other items                                | 0         |               | 16            |              | (21           | )     | 0    |   | 5               |   | 0       |  
|Depreciation for the year                                      | (34       | )             | (4,470        | )            | (669          | )     | 0    |   | 0               |   | (5,173  | )
|Write-downs
 for impairment during the year                    | 0         |               | (147          | )            | (2            | )     | (38  | ) | 0               |   | (187    | )
|Disposals
 relating to the divestment of subsidiaries          | 0         |               | 0             |              | 35            |       | 0    |   | 0               |   | 35      |  
|Assets disposed of during the year                             | 55        |               | 318           |              | 422           |       | 12   |   | 0               |   | 807     |  
|Transferred to assets held for sale                            | 0         |               | 191           |              | 45            |       | 0    |   | 9               |   | 245     |  
|                                                               |           |               |               |              |               |       |      |   |                 |   |         |  
|Accumulated
 depreciation and write-downs at December 31, 2005 | (2,237    | )             | (42,765       | )            | (4,179        | )     | (173 | ) | 0               |   | (49,354 | )
|                                                               |           |               |               |              |               |       |      |   |                 |   |         |  
|Carrying value at December 31, 2005                            | 1,036     |               | 22,077        |              | 1,754         |       | 185  |   | 1,002           |   | 26,054  |  
|                                                               |           |               |               |              |               |       |      |   |                 |   |         |  
|Carrying
 value of capital leases at December 31, 2005         | 22        |               | 676           |              | 50            |       |     |   |                |   | 748     |  
|                                                               |           |               |               |              |               |       |      |   |                 |   |         |  
|Carrying
 value of capitalized interest at December 31, 2005   | 0         |               | 143           |              | 4             |       |     |   | 0               |   | 147     |  

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NOTES

|                                                                  |              |   |               |   |               |   |              |   |                 |   | DKKm    |  
|----------------------------------------------------------------- | ------------ | - | ------------- | - | ------------- | - | ------------ | - | --------------- | - | ------- | -
|                                                                  |              |  
|                                                                  | 2004         |  
|                                                                  |              |   |               |   |               |   |              |   |                 |   |         |  
|                                                                  |              |   |               |   |               |   |              |   | Property, plant |   |         |  
|                                                                  |              |   | Telecom-      |   |               |   |              |   | and equipment   |   |         |  
|                                                                  | Land
    and |   | munications   |   | Other         |   | Installation |   | under           |   |         |  
|                                                                  | buildings    |   | installations |   | installations |   | materials    |   | construction    |   | Total   |  
|                                                                  |              |   |               |   |               |   |              |   |                 |   |         |  
|Accumulated cost at January 1, 2004                               | 3,223        |   | 56,771        |   | 5,406         |   | 471          |   | 942             |   | 66,813  |  
|Currency translation adjustments                                  | 0            |   | 60            |   | 15            |   | 2            |   | 8               |   | 85      |  
|Transfers to/(from) other items                                   | 17           |   | 1,530         |   | (325          | ) | (144         | ) | (1,078          | ) | 0       |  
|Additions
 relating to the acquisition of subsidiaries            | 49           |   | 1,892         |   | 64            |   | 22           |   | 7               |   | 2,034   |  
|Work performed
 for own purposes and
 capitalized                 | 0            |   | 791           |   | 336           |   | 0            |   | 50              |   | 1,177   |  
|Acquisitions from third parties                                   | 32           |   | 911           |   | 510           |   | 107          |   | 1,510           |   | 3,070   |  
|Additions
 relating to increased ownership
 shares of enterprises | 0            |   | 0             |   | 20            |   | 0            |   | 0               |   | 20      |  
|Disposals
 relating to the divestment of subsidiaries             | 0            |   | 0             |   | (102          | ) | 0            |   | 0               |   | (102    | )
|Assets disposed of during the year                                | (35          | ) | (1,314        | ) | (256          | ) | (97          | ) | (2              | ) | (1,704  | )
|                                                                  |              |   |               |   |               |   |              |   |                 |   |         |  
|Accumulated
 cost at December 31, 2004                            | 3,286        |   | 60,641        |   | 5,668         |   | 361          |   | 1,437           |   | 71,393  |  
|                                                                  |              |   |               |   |               |   |              |   |                 |   |         |  
|Accumulated
 depreciation and write-downs at January 1, 2004      | (2,154       | ) | (35,543       | ) | (3,641        | ) | (164         | ) | (13             | ) | (41,515 | )
|Currency translation adjustments                                  | 0            |   | (12           | ) | (11           | ) | (2           | ) | 0               |   | (25     | )
|Transfers to/(from) other items                                   | 3            |   | (566          | ) | 563           |   | 0            |   | 0               |   | 0       |  
|Disposals
 relating to the divestment of subsidiaries             | 0            |   | 0             |   | 55            |   | 0            |   | 0               |   | 55      |  
|Additions
 relating to increased ownership
 shares of enterprises | 0            |   | 0             |   | (8            | ) | 0            |   | 0               |   | (8      | )
|Assets disposed of during the year                                | 19           |   | 1,227         |   | 240           |   | 76           |   | 0               |   | 1,562   |  
|Depreciation for the year                                         | (132         | ) | (3,693        | ) | (1,245        | ) | 0            |   | 0               |   | (5,070  | )
|Write-downs
 for impairment during the
 year                      | 0            |   | (70           | ) | (13           | ) | (57          | ) | 0               |   | (140    | )
|                                                                  |              |   |               |   |               |   |              |   |                 |   |         |  
|Accumulated
 depreciation and write-downs at December 31, 2004    | (2,264       | ) | (38,657       | ) | (4,060        | ) | (147         | ) | (13             | ) | (45,141 | )
|                                                                  |              |   |               |   |               |   |              |   |                 |   |         |  
|Carrying value
at December 31, 2004                               | 1,022        |   | 21,984        |   | 1,608         |   | 214          |   | 1,424           |   | 26,252  |  
|                                                                  |              |   |               |   |               |   |              |   |                 |   |         |  
|Carrying value
 of capital leases at December
 31, 2004           | 0            |   | 947           |   | 45            |   |             |   |                |   | 992     |  
|Carrying value
 of capitalized interest at
 December 31, 2004     | 0            |   | 177           |   | 0             |   |             |   | 0               |   | 177     |  

Interest capitalized during 2005 amounted to DKK 12m compared with DKK 11m in 2004.


The TDC Group has recourse guarantee obligations of payment and performance in connection with lease contracts. Reference is made to note 30 Contingent
assets and contingent liabilities.


The carrying value of mortgaged property, plant and equipment amounted to DKK 1,577m at December 31, 2005, compared with DKK 312m at December 31,
2004.


In 2005, damages received relating to property, plant and equipment of DKK 42m have been recognized as income compared with DKK 28m in 2004.


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NOTES

Note
16   Investments in associates and joint ventures

|                                                                |        |   | DKKm    |  
|--------------------------------------------------------------- | ------ | - | ------- | -
|                                                                |        |   |         |  
|                                                                | 2005   |   | 2004    |  
|                                                                |        |   |         |  
|Accumulated cost at January 1                                   | 6,251  |   | 6,226   |  
|Currency translation adjustments                                | 47     |   | 141     |  
|Additions during the year                                       | 3      |   | 83      |  
|Additions relating to the acquisition of enterprises            | 0      |   | 39      |  
|Conversion of receivable                                        | 536    |   | 0       |  
|Disposals relating to increased ownership shares of enterprises | (283   | ) | (117    | )
|Disposals relating to the divestment of enterprises             | 0      |   | (31     | )
|Disposals during the year                                       | (40    | ) | (90     | )
|                                                                |        |   |         |  
|Accumulated cost at December 31                                 | 6,514  |   | 6,251   |  
|                                                                |        |   |         |  
|Accumulated write-ups and write-downs at January 1              | (4,672 | ) | 1,054   |  
|Currency translation adjustments                                | 47     |   | 0       |  
|Changes in equity in investments                                | 0      |   | 99      |  
|Disposals relating to increased ownership shares of enterprises | 21     |   | 3       |  
|Write-ups and write-downs for the year:                         |        |   |         |  
|• Share of income/loss                                          | 334    |   | 5,632   |  
|• Dividends                                                     | (156   | ) | (11,525 | )
|Disposals during the year                                       | 38     |   | 65      |  
|                                                                |        |   |         |  
|Accumulated write-ups and write-downs at December 31            | (4,388 | ) | (4,672  | )
|                                                                |        |   |         |  
|Carrying value at December 31                                   | 2,126  |   | 1,579   |  
|                                                                |        |   |         |  

The carrying value of associates and joint ventures included goodwill of DKK 62m at December 31, 2005, compared with DKK 135m at December 31, 2004.
Additions during the year amounted to DKK 2m, and write-downs for the year totaled DKK 0m.


Associates

At December 31, 2004, the TDC Groups investments in associates concerned mainly the ownership share of 42.6% in Hungarian Telephone and Cable Corp.
The ownership share in Hungarian Telephone and Cable Corp. was increased to 63.4% at December 31, 2005, and the enterprise is now a subsidiary.


Financial summary for major associates (TDCs share)

|                                   |  |         |  |              |  |        |  |             |   | DKKm   | 
|---------------------------------- |  | ------- |  | ------------ |  | ------ |  | ----------- | - | ------ | 
|                                   |  |         |  |              |  |        |  |             |   |        | 
|                                   |  | 2004    | 
|                                   |  |         |  |              |  |        |  |             |   |        | 
|                                   |  |         |  | Net income   |  | Total  |  | Total       |   | Market | 
|Name                               |  | Revenue |  | for the year |  | assets |  | liabilities |   | value  | 
|                                   |  |         |  |              |  |        |  |             |   |        | 
|Hungarian Telephone and Cable Corp |  | 141     |  | 56           |  | 448    |  | (258        | ) | 426    | 

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NOTES

Joint ventures

| | The
    TDC Groups significant investments in joint ventures are as follows:
| | -----------------------------------------------------------------------------
| |                                                                              
| | •                                                                            
| |                                                                              
| | •                                                                            

Financial summary for joint ventures (TDCs share)

|                                                  |        |   | DKKm   |  
|------------------------------------------------- | ------ | - | ------ | -
|                                                  |        |   |        |  
|                                                  | 2005   |   | 2004   |  
|                                                  |        |   |        |  
|Revenue                                           | 3,095  |   | 2,594  |  
|Total operating expenses before depreciation, etc | (2,052 | ) | (1,773 | )
|Total non-current assets                          | 3,166  |   | 3,058  |  
|Total current assets                              | 734    |   | 698    |  
|Total current liabilities                         | (877   | ) | (818   | )
|Total non-current liabilities                     | (1,064 | ) | (737   | )

Contingent liabilities in the joint ventures amounted to DKK 21m at December 31, 2005, compared with DKK 20m at December 31, 2004.


Note
17   Receivables

|                                                   |        |   | DKKm   |  
|-------------------------------------------------- | ------ | - | ------ | -
|                                                   |        |   |        |  
|                                                   | 2005   |   | 2004   |  
|                                                   |        |   |        |  
|Trade receivables                                  | 8,756  |   | 8,993  |  
|Allowances for uncollectibles                      | (1,062 | ) | (1,409 | )
|Trade receivables, net                             | 7,694  |   | 7,584  |  
|Receivables from associates and joint ventures     | 366    |   | 1,107  |  
|Contract work in process (see note 18 for details) | 177    |   | 79     |  
|Other receivables                                  | 844    |   | 892    |  
|                                                   |        |   |        |  
|Total                                              | 9,081  |   | 9,662  |  
|                                                   |        |   |        |  
|Recognized as follows:                             |        |   |        |  
|Non-current assets                                 | 464    |   | 1,190  |  
|Current assets                                     | 8,617  |   | 8,472  |  
|                                                   |        |   |        |  
|Total                                              | 9,081  |   | 9,662  |  
|                                                   |        |   |        |  
|Allowances for uncollectibles at January 1         | (1,409 | ) | (1,433 | )
|Transferred to discontinued operations             | 75     |   | 0      |  
|Additions                                          | (294   | ) | (531   | )
|Deductions                                         | 559    |   | 555    |  
|Transferred to assets held for sale                | 7      |   | 0      |  
|                                                   |        |   |        |  
|Allowances for uncollectibles at December 31       | (1,062 | ) | (1,409 | )
|                                                   |        |   |        |  

Of the receivables classified as current assets at December 31, 2005, DKK 85m falls due after more than one year, compared with DKK 5m at December 31,
2004.


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NOTES

Note
18   Contract work in process

|                                       |      |   | DKKm |  
|-------------------------------------- | ---- | - | ---- | -
|                                       |      |   |      |  
|                                       | 2005 |   | 2004 |  
|                                       |      |   |      |  
|Value of contract work in process      | 297  |   | 186  |  
|Billing on account                     | (120 | ) | (107 | )
|                                       |      |   |      |  
|Total                                  | 177  |   | 79   |  
|                                       |      |   |      |  
|Recognized as follows:                 |      |   |      |  
|Contract work in process (assets)      | 186  |   | 89   |  
|Contract work in process (liabilities) | (9   | ) | (10  | )
|                                       |      |   |      |  
|Total                                  | 177  |   | 79   |  
|                                       |      |   |      |  
|Recognized as total revenue            | 667  |   | 401  |  
|Prepayments from customers             | 2    |   | 3    |  

Note
19   Pre-paid expenses

|                                           |      |  | DKKm  | 
|------------------------------------------ | ---- |  | ----- | 
|                                           |      |  |       | 
|                                           | 2005 |  | 2004  | 
|                                           |      |  |       | 
|Prepayment regarding former civil servants | 201  |  | 273   | 
|Pre-paid lease payments                    | 120  |  | 131   | 
|Other pre-paid expenses                    | 658  |  | 653   | 
|                                           |      |  |       | 
|Total                                      | 979  |  | 1,057 | 
|                                           |      |  |       | 
|Recognized as follows:                     |      |  |       | 
|Non-current assets                         | 325  |  | 407   | 
|Current assets                             | 654  |  | 650   | 
|                                           |      |  |       | 
|Total                                      | 979  |  | 1,057 | 
|                                           |      |  |       | 

Note
20   Inventories

|                               |      |  | DKKm | 
|------------------------------ | ---- |  | ---- | 
|                               |      |  |      | 
|                               | 2005 |  | 2004 | 
|                               |      |  |      | 
|Raw materials and supplies     | 65   |  | 73   | 
|Contract work in process       | 0    |  | 2    | 
|Finished goods and merchandise | 585  |  | 459  | 
|                               |      |  |      | 
|Total                          | 650  |  | 534  | 
|                               |      |  |      | 

Inventories expensed amounted to DKK 4,362m in 2005, compared with DKK 3,954m in 2004.


Inventories expected to be sold after more than one year amounted to DKK 29m at December 31, 2005, compared with DKK 36m at December 31, 2004. Write-downs on inventories amounted to DKK 71m in 2005, compared with DKK 63m in 2004. Reversal of write-downs on inventories amounted to DKK 11m in 2005, compared with DKK 0m in 2004.


F - 40   Back to Contents


NOTES
Note
21    Equity
Shares
	
	Nominal valueCommon shares
	
	(number)
	
	(DKK)Holding at January 1, 2004
	
	216,459,540
	
	1,082,297,700Additions
	
	0
	
	0Disposals
	
	0
	
	0Holding at January 1, 2005
	
	216,459,540
	
	1,082,297,700Additions
	
	0
	
	0Reduction of common shares by cancellation of treasury shares
	
	(18,084,363
	)
	(90,421,815
	)Holding at December 31, 2005
	
	198,375,177
	
	991,875,885
% ofShares
	
	Nominal
value
	
	commonTreasury shares
	
	(number)
	
	(DKK)
	
	sharesHolding at January 1, 2004
	
	3,167,764
	
	15,838,820
	
	1.46Additions
	
	18,717,633
	
	93,588,165
	
	8.65Disposals
	
	(303,252
	)
	(1,516,260
	)
	(0.14
	)Holding at January 1, 2005
	
	21,582,145
	
	107,910,725
	
	9.97Cancellation of treasury shares
	
	(18,084,363
	)
	(90,421,815
	)
	(8.20
	)Additions
	
	820,379
	
	4,101,895
	
	0.41Disposals
	
	(656,506
	)
	(3,282,530
	)
	(0.33
	)Holding at December 31, 2005
	
	3,661,655
	
	18,308,275
	
	1.85


Purchase of the Groups treasury shares is used primarily to hedge the Groups commitments under the share-option program for the Board of
Directors, the Executive Committee and other management employees. In June 2004, the Group purchased 18,084,363 treasury shares in connection with SBC Communications sale of TDC shares.


F - 41

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NOTES

Note
22   Loans

|                                      |        |   | DKKm   |  
|------------------------------------- | ------ | - | ------ | -
|                                      |        |   |        |  
|                                      | 2005   |   | 2004   |  
|                                      |        |   |        |  
|Bonds, mortgages and other bank loans | 29,489 |   | 29,525 |  
|Debt relating to capital leases       | 476    |   | 578    |  
|Other long-term debt                  | 350    |   | 376    |  
|                                      |        |   |        |  
|Total                                 | 30,315 |   | 30,479 |  
|                                      |        |   |        |  
|Of which short-term loans             | (5,425 | ) | (1,337 | )
|                                      |        |   |        |  
|Long-term loans                       | 24,890 |   | 29,142 |  
|                                      |        |   |        |  
|Long-term loans fall due as follows:  |        |   |        |  
|1 – 2
years                           | 258    |   | 5,197  |  
|2 – 3
years                           | 2,172  |   | 209    |  
|3 – 4 years                           | 2,919  |   | 1,915  |  
|4 – 5 years                           | 7,765  |   | 2,635  |  
|After 5 years                         | 11,776 |   | 19,186 |  
|                                      |        |   |        |  
|Total                                 | 24,890 |   | 29,142 |  
|                                      |        |   |        |  
|Fair value                            | 30,803 |   | 32,800 |  
|                                      |        |   |        |  
|Nominal value                         | 30,736 |   | 30,975 |  

Allocation of liabilities relating to capital leases according to lease period

|                             |                  |  |               |  |      |  | DKKm | 
|---------------------------- | ---------------- |  | ------------- |  | ---- |  | ---- | 
|                             |                  |  |              
|                             | Minimum payments |  | Present value | 
|                             |                  |  |               |  |      |  |      | 
|                             | 2005             |  | 2004          |  | 2005 |  | 2004 | 
|                             |                  |  |               |  |      |  |      | 
|Mature within 1 year         | 78               |  | 82            |  | 49   |  | 64   | 
|Mature between 1 and 5 years | 221              |  | 242           |  | 132  |  | 195  | 
|Mature after 5 years         | 387              |  | 358           |  | 295  |  | 319  | 
|                             |                  |  |               |  |      |  |      | 
|Total                        | 686              |  | 682           |  | 476  |  | 578  | 
|                             |                  |  |               |  |      |  |      | 

Liabilities relating to capital leases are related primarily to sale and leaseback agreements regarding sale of property to the related Danish pension
funds and agreements regarding the renting of fiber networks.


F - 42

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NOTES

Note
  23   Deferred income

|                                                                   |       |  | DKKm  | 
|------------------------------------------------------------------ | ----- |  | ----- | 
|                                                                   |       |  |       | 
|                                                                   | 2005  |  | 2004  | 
|                                                                   |       |  |       | 
|Accrued
      profit relating to sale and leaseback                | 101   |  | 136   | 
|Accrued
      revenue from non-refundable up-front connection fees | 1,448 |  | 1,422 | 
|Deferred
      subscription revenue                                | 1,418 |  | 1,415 | 
|Other
      deferred income                                        | 835   |  | 652   | 
|                                                                   |       |  |       | 
|Total                                                              | 3,802 |  | 3,625 | 
|                                                                   |       |  |       | 
|Recognized
      as follows:                                       |       |  |       | 
|Non-current
      liabilities                                      | 1,141 |  | 1,052 | 
|Current
      liabilities                                          | 2,661 |  | 2,573 | 
|                                                                   |       |  |       | 
|Total                                                              | 3,802 |  | 3,625 | 
|                                                                   |       |  |       | 

Note
  24   Provisions

|                                                                 |             |   |               |   |            |   | DKKm  |  
|---------------------------------------------------------------- | ----------- | - | ------------- | - | ---------- | - | ----- | -
|                                                                 |             |   |               |   |            |   |       |  
|                                                                 | Asset       |   |               |   |            |   |       |  
|                                                                 | retirement  |   | Restructuring |   | Other      |   |       |  
|                                                                 | obligations |   | obligations   |   | provisions |   | Total |  
|                                                                 |             |   |               |   |            |   |       |  
|Provisions
      at January 1, 2005                              | 391         |   | 503           |   | 734        |   | 1,628 |  
|Transferred
      to discontinued operations                     | 0           |   | (2            | ) | (15        | ) | (17   | )
|Currency
      translation adjustments                           | (1          | ) | (2            | ) | (5         | ) | (8    | )
|Additions
      relating to the acquisition of subsidiaries      | 0           |   | (18           | ) | 27         |   | 9     |  
|Provisions
      made during the year                            | 44          |   | 315           |   | 363        |   | 722   |  
|Change
      in present value                                    | 73          |   | (2            | ) | 1          |   | 72    |  
|Provisions
      used during the year                            | (5          | ) | (259          | ) | (367       | ) | (631  | )
|Unused
      provisions reversed during the year                 | (2          | ) | (50           | ) | (11        | ) | (63   | )
|Transferred
      to liabilities related to assets held for sale | 0           |   | 0             |   | (2         | ) | (2    | )
|                                                                 |             |   |               |   |            |   |       |  
|Provisions
      at December 31, 2005                            | 500         |   | 485           |   | 725        |   | 1,710 |  
|                                                                 |             |   |               |   |            |   |       |  
|Recognized
      as follows:                                     |             |   |               |   |            |   |       |  
|Non-current
      liabilities                                    | 497         |   | 403           |   | 374        |   | 1,274 |  
|Current
      liabilities                                        | 3           |   | 82            |   | 351        |   | 436   |  
|                                                                 |             |   |               |   |            |   |       |  
|Total                                                            | 500         |   | 485           |   | 725        |   | 1,710 |  
|                                                                 |             |   |               |   |            |   |       |  

Other provisions are related mainly to pending lawsuits, bonuses for Management and employees, as well as jubilee benefits provided for
employees.


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NOTES

Note
  25   Trade and other payables

|                                 |       |  | DKKm  | 
|-------------------------------- | ----- |  | ----- | 
|                                 |       |  |       | 
|                                 | 2005  |  | 2004  | 
|                                 |       |  |       | 
|Trade
      payables             | 5,866 |  | 5,613 | 
|Payables
      to associates     | 3     |  | 2     | 
|Prepayments
      from customers | 355   |  | 532   | 
|Other
      payables             | 2,986 |  | 3,388 | 
|                                 |       |  |       | 
|Total                            | 9,210 |  | 9,535 | 
|                                 |       |  |       | 

Of the current liabilities at December 31, 2005, DKK 11m falls due after more than one year at December 31, 2005, compared with DKK 16m at December 31,
2004.


Note
  26   Research and development costs

Research and development costs for the year recognized in the Statements of Income amounted to DKK 23m in 2005, compared with DKK 28m in 2004.


F - 44

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NOTES

Note
  27   Financial instruments, etc.

A: Foreign-currency exposures

Interest-bearing assets and liabilities in foreign currencies and foreign-currency debtors, creditors and derivative financial instruments at December 31
are specified below:


|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   | DKKm     |  
|------------------- |  | --------------- |  | -------------------------------------- |  | ----------- | - | --------- | - | ----------- | - | ------------------- | -- | -------- | - | -------- | -
|                    |  |                 |  |                                        |  |             |   |           |   |             |  
|                    |  |                 |  | Financial
      assets and liabilities |  |             |   | 2005      |   | 2004        |  
|                    |  |                 |  |                                        |  |             |   |           |   |             |  
|Currency
      and  |  |                 |  | Interest-bearing1                      |  |             |   | Net       |   | Foreign     |   |                     |    |          |  
|year-end            |  |                 |  |                                        |  | Debtors/    |   | primary   |   | currency    |   | Net                 |    | Net      |  
|currency
      rate |  | Maturities      |  | Assets                                 |  | Liabilities |   | creditors |   | instruments |   | derivatives
      2 |    | position |   | position |  
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|EUR
      7.4605    |  | <
      1 year  |  | 358                                    |  | (5,246      | ) | (513      | ) | (5,401      | ) | 17,300              |    | 11,899   |   | 10,102   |  
|                    |  | 1-2
      years |  |                                       |  | (157        | ) |          |   | (157        | ) | 745                 |    | 588      |   | 3,421    |  
|                    |  | 2-3
      years |  |                                       |  | (1,915      | ) |          |   | (1,915      | ) | 4,041               |    | 2,126    |   | 745      |  
|                    |  | 3-4
      years |  |                                       |  | (2,834      | ) |          |   | (2,834      | ) | 2,802               |    | (32      | ) | 2,321    |  
|                    |  | 4-5
      years |  | 2                                      |  | (7,683      | ) |          |   | (7,681      | ) | 4,016               |    | (3,665   | ) | 261      |  
|                    |  | >
      5 years |  |                                       |  | (10,546     | ) |          |   | (10,546     | ) | 746                 |    | (9,800   | ) | (13,052  | )
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|Total               |  |                 |  | 360                                    |  | (28,381     | ) | (513      | ) | (28,534     | ) | 29,650              |    | 1,116    |   | 3,798    |  
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|CHF
      4.7974    |  | <
      1 year  |  | 81                                     |  | (17         | ) | (309      | ) | (245        | ) | (3,455              | )3 | (3,700   | ) | (4,663   | )
|                    |  | 1-2
      years |  |                                       |  | (18         | ) |          |   | (18         | ) |                    |    | (18      | ) | (18      | )
|                    |  | 2-3
      years |  |                                       |  | (19         | ) |          |   | (19         | ) |                    |    | (19      | ) | (20      | )
|                    |  | 3-4
      years |  |                                       |  | (21         | ) |          |   | (21         | ) |                    |    | (21      | ) | (22      | )
|                    |  | 4-5
      years |  |                                       |  | (22         | ) |          |   | (22         | ) |                    |    | (22      | ) | (23      | )
|                    |  | >
      5 years |  |                                       |  | (251        | ) |          |   | (251        | ) |                    |    | (251     | ) | (265     | )
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|Total               |  |                 |  | 81                                     |  | (348        | ) | (309      | ) | (576        | ) | (3,455              | )  | (4,031   | ) | (5,011   | )
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|DKK                 |  | <
      1 year  |  | 11,635                                 |  | (127        | ) | 2,571     |   | 14,079      |   | (13,811             | )  | 268      |   | 2,224    |  
|                    |  | 1-2
      years |  | 1                                      |  | (70         | ) | 5         |   | (64         | ) | (743                | )  | (807     | ) | (6,821   | )
|                    |  | 2-3
      years |  | 1,155                                  |  | (72         | ) |          |   | 1,083       |   | (4,289              | )  | (3,206   | ) | (915     | )
|                    |  | 3-4
      years |  | 7                                      |  | (63         | ) |          |   | (56         | ) | (2,818              | )  | (2,874   | ) | (3,142   | )
|                    |  | 4-5
      years |  |                                       |  | (60         | ) |          |   | (60         | ) | (4,048              | )  | (4,108   | ) | (2,901   | )
|                    |  | >
      5 years |  | 69                                     |  | (979        | ) |          |   | (910        | ) | (743                | )  | (1,653   | ) | (5,840   | )
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|Total               |  |                 |  | 12,867                                 |  | (1,371      | ) | 2,576     |   | 14,072      |   | (26,452             | )  | (12,380  | ) | (17,395  | )
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|Other               |  | <
      1 year  |  | 549                                    |  | (52         | ) | 73        |   | 570         |   | 2                   |    | 572      |   | 257      |  
|                    |  | 1-2
      years |  |                                       |  | (13         | ) | 1         |   | (12         | ) | 110                 |    | 98       |   | (12      | )
|                    |  | 2-3
      years |  |                                       |  | (166        | ) |          |   | (166        | ) | 164                 |    | (2       | ) | (5       | )
|                    |  | 3-4
      years |  |                                       |  | (1          | ) |          |   | (1          | ) |                    |    | (1       | ) | 3        |  
|                    |  | 4-5
      years |  |                                       |  |            |   |          |   |            |   |                    |    |         |   |         |  
|                    |  | >
      5 years |  |                                       |  |            |   |          |   |            |   |                    |    |         |   |         |  
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|Total               |  |                 |  | 549                                    |  | (232        | ) | 74        |   | 391         |   | 276                 |    | 667      |   | 243      |  
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  
|Total               |  |                 |  | 13,857                                 |  | (30,332     | ) | 1,828     |   | (14,647     | ) | 19                  |    | (14,628  | ) | (18,365  | )
|                    |  |                 |  |                                        |  |             |   |           |   |             |   |                     |    |          |   |          |  

| 
|-
|1
|2
|3

F - 45

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NOTES

Hedging of net investments in foreign enterprises

Foreign-currency hedging of net investments in foreign Group subsidiaries and associates:


|                         |              |  |         |   |         |   |             |   |              |  |         |   |         |    | DKKm        |  
|------------------------ | ------------ |  | ------- | - | ------- | - | ----------- | - | ------------ |  | ------- | - | ------- | -- | ----------- | -
|                         | 2005         |  | 2004    |  
|                         |              |  |         |   |         |   |             |   |              |  |         |   |         |    |             |  
|                         |              |  |         |   |         |   | Deferred    |   |              |  |         |   |         |    | Deferred    |  
|                         | Net          |  |         |   |         |   | recognition |   | Net          |  |         |   |         |    | recognition |  
|                         | investments, |  |         |   |         |   | of change   |   | investments, |  |         |   |         |    | of change   |  
|                         | carrying     |  |         |   | Not     |   | in fair     |   | carrying     |  |         |   | Not     |    | in fair     |  
|                         | value        |  | Hedged  |   | hedged  |   | value       |   | value        |  | Hedged  |   | hedged  |    | value       |  
|                         |              |  |         |   |         |   |             |   |              |  |         |   |         |    |             |  
|CHF                      | 26,986       |  | (26,908 | ) | (78     | ) | (7          | ) | 26,325       |  | (23,005 | ) | (3,320  | )1 | (18         | )
|SEK                      | 8,965        |  | 0       |   | (8,965  | ) | (247        | ) | 5,268        |  | 0       |   | (5,268  | )  | 2           |  
|EUR                      | 3,357        |  | 0       |   | (3,357  | ) | 10          |   | 3,365        |  | 0       |   | (3,365  | )  | (2          | )
|PLN                      | 1,948        |  | 0       |   | (1,948  | ) | 98          |   | 1,652        |  | 0       |   | (1,652  | )  | 205         |  
|Other                    | 553          |  | 0       |   | (553    | ) | (30         | ) | 367          |  | 0       |   | (367    | )  | 6           |  
|                         |              |  |         |   |         |   |             |   |              |  |         |   |         |    |             |  
|Total
    at December 31 | 41,809       |  | (26,908 | ) | (14,901 | ) | (176        | ) | 36,977       |  | (23,005 | ) | (13,972 | )  | 193         |  
|                         |              |  |         |   |         |   |             |   |              |  |         |   |         |    |             |  

| |  
| | -
| | 1

Net investments in foreign Group subsidiaries and associates are hedged for foreign currency risks only for TDC Switzerland. Net investments in foreign enterprises include goodwill.


Interest-rate swap agreements have been used to restructure interest-bearing assets and liabilities in order to achieve the intended interest-rate profile of fixed1and floating interest rates.


The maturity profile of interest-bearing assets and liabilities is allocated according to maturity period. Effective interest rates at December 31, 2005 include derivatives.


F - 46

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NOTES

|                                          | Maturity profiles and interest profiles (DKKm) | 
|----------------------------------------- | ---------------------------------------------- | 
|                                          |                                                | 
|                                          | < 1 year                                       | 
|                                          |                                                | 
|Assets                                    |                                                | 
|Cash                                      | 9,076                                          | 
|                                          | 982                                            | 
|                                          | 5                                              | 
|Marketable securities                     | 2,533                                          | 
|                                          |                                               | 
|Loans                                     | 1                                              | 
|                                          | 26                                             | 
|                                          |                                                | 
|Total interest-bearing assets             | 12,623                                         | 
|                                          |                                                | 
|Liabilities                               |                                                | 
|Long-term loans                           | 2,257                                          | 
|                                          | 3,051                                          | 
|Capital leases                            | 49                                             | 
|                                          |                                               | 
|Short-term bank loans                     | 1                                              | 
|                                          | 67                                             | 
|Other interest-bearing liabilities        | 17                                             | 
|                                          |                                               | 
|                                          |                                                | 
|Total interest-bearing liabilities        | 5,442                                          | 
|                                          |                                                | 
|Net interest-bearing assets/(liabilities) | 7,181                                          | 
|                                          |                                                | 

| 
|-
|1



|                             |  | Effective
            interest rates at December 31, 2005 (% per annum) | 
|---------------------------- |  | ----------------------------------------------------------------------- | 
|                             |  |                                                                         | 
|                             |  |                                                                         | 
|                             |  | < 1
          year                                                      | 
|                             |  |                                                                         | 
|Fixed                        |  | 2.32                                                                    | 
|Floating                     |  | 2.05                                                                    | 
|Non
        interest-bearing |  |                                                                        | 
|Fixed                        |  | 5.46                                                                    | 
|Floating                     |  |                                                                        | 
|Fixed                        |  | 1.85                                                                    | 
|Floating                     |  | 2.32                                                                    | 
|                             |  |                                                                         | 
|                             |  | 2.93                                                                    | 
|                             |  |                                                                         | 
|Fixed                        |  | 6.74                                                                    | 
|Floating                     |  | 3.50                                                                    | 
|Fixed                        |  | 5.50                                                                    | 
|Floating                     |  |                                                                        | 
|Fixed                        |  | 3.70                                                                    | 
|Floating                     |  | 2.95                                                                    | 
|Fixed                        |  | 4.25                                                                    | 
|Floating                     |  |                                                                        | 
|                             |  |                                                                         | 
|                             |  | 4.85                                                                    | 
|                             |  |                                                                         | 

C: Undrawn credit lines

F - 47

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NOTES

The undrawn credit lines at December 31, 2005 are specified as follows:


|           |  |              |  |              |  |              |  | DKKm  | 
|---------- |  | ------------ |  | ------------ |  | ------------ |  | ----- | 
|           |  |              |  | Committed    |  | Unutilized   |  |       | 
|           |  | Committed    |  | syndicated   |  | part of bond |  |       | 
|Maturities |  | credit lines |  | credit lines |  | program      |  | Total | 
|           |  |              |  |              |  |              |  |       | 
|< 1 year   |  | 2,523        |  | 0            |  | 0            |  | 2,523 | 
|> 1 year   |  | 0            |  | 4,843        |  | 0            |  | 4,843 | 
|           |  |              |  |              |  |              |  |       | 
|Total      |  | 2,523        |  | 4,843        |  | 0            |  | 7,366 | 
|           |  |              |  |              |  |              |  |       | 

The TDC Group holds a European Commercial Paper program of nominal EUR 1.5bn (translated into DKK 11,191m). Amounts drawn from the program must be
secured 1:1 by committed credit lines and in this way do not increase the above-mentioned credit lines.


D: Credit risks

Financial instruments are entered only with counterparties holding the credit rating of A-/A-3 or higher from Standard & Poors or Moodys
Investor Service. Each counterparty credit line is determined by the counterpartys credit rating and is of a size that spreads the credit risks of the TDC Groups total credit lines over several counter-parties. The counterparty risk is
therefore considered to be minimal.


Note
28   Pension assets and pension obligations

A: Domestic defined benefit plans

At December 31, 2005, approximately 3,850 of the TDC Groups employees were entitled to a pension from the three pension funds related to TDC under
conditions similar to those provided by the Danish Civil Servants Pension Plan. In addition, 7,750 members of the pension funds receive or are entitled to receive pension benefits. Since 1990, no new members have joined the pension fund plans,
and the pension funds are prevented from admitting new members in the future due to the bylaws.


The pension funds operate defined benefit plans and, in accordance with existing legislation, bylaws and the pension regulations, TDC is required to make
contributions to meet the premium reserve requirements. Future pension benefits are based primarily on years of credited service and on participants compensation at the time of retirement.


Specification of (pension costs)/income

|                                                             |  |       |   | DKKm  |  
|------------------------------------------------------------ |  | ----- | - | ----- | -
|                                                             |  | 2005  |   | 2004  |  
|                                                             |  |       |   |       |  
|Service cost1                                                |  | (230  | ) | (181  | )
|Interest cost2                                               |  | (736  | ) | (740  | )
|Expected return on plan assets                               |  | 1,210 |   | 1,240 |  
|Recognized net actuarial (gain)/loss                         |  | 0     |   | 0     |  
|                                                             |  |       |   |       |  
|Net periodic (pension cost)/income                           |  | 244   |   | 319   |  
|Domestic redundancy programs                                 |  | (230  | ) | (432  | )
|                                                             |  |       |   |       |  
|(Pension cost)/income recognized in the Statements of Income |  | 14    |   | (113  | )
|                                                             |  |       |   |       |  

| 
|-
|1
| 
|2

F - 48

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NOTES

Assets and obligations

|                                                |  |         |   | DKKm    |  
|----------------------------------------------- |  | ------- | - | ------- | -
|                                                |  |         |   |         |  
|                                                |  | 2005    |   | 2004    |  
|                                                |  |         |   |         |  
|Specification of pension assets                 |  |         |   |         |  
|Fair value of plan assets                       |  | 22,694  |   | 21,165  |  
|Projected benefit obligations                   |  | (19,222 | ) | (16,707 | )
|                                                |  |         |   |         |  
|Funded status                                   |  | 3,472   |   | 4,458   |  
|Unrecognized net actuarial (gain)/loss          |  | 2,173   |   | 977     |  
|                                                |  |         |   |         |  
|Pension assets recognized in the Balance Sheets |  | 5,645   |   | 5,435   |  
|                                                |  |         |   |         |  
|Change in present value of benefit obligations  |  |         |   |         |  
|Projected benefit obligations at January 1      |  | (16,707 | ) | (15,403 | )
|Service cost                                    |  | (230    | ) | (181    | )
|Interest cost                                   |  | (736    | ) | (740    | )
|Curtailment in connection with redundancies     |  | 0       |   | 14      |  
|Special termination benefit                     |  | (230    | ) | (447    | )
|Actuarial gain/(loss)                           |  | (2,162  | ) | (765    | )
|Benefit paid                                    |  | 843     |   | 815     |  
|                                                |  |         |   |         |  
|Projected benefit obligations at December 31    |  | (19,222 | ) | (16,707 | )
|                                                |  |         |   |         |  
|Change in fair value of plan assets             |  |         |   |         |  
|Fair value of plan assets at January 1          |  | 21,165  |   | 20,417  |  
|Actual return on plan assets                    |  | 2,175   |   | 1,028   |  
|TDCs contribution                              |  | 197     |   | 535     |  
|Benefit paid                                    |  | (843    | ) | (815    | )
|                                                |  |         |   |         |  
|Fair value of plan assets at December 31        |  | 22,694  |   | 21,165  |  
|                                                |  |         |   |         |  

Plan assets include property used by TDC companies with a fair value of DKK 1,993m at December 31, 2005, compared with DKK 1,933m at December 31,
2004.


Pension asset allocation by the following categories at December 31

|                  |  |      |  | (%)  | 
|----------------- |  | ---- |  | ---- | 
|                  |  |      |  |      | 
|                  |  | 2005 |  | 2004 | 
|                  |  |      |  |      | 
|Equity securities |  | 18   |  | 13   | 
|Debt securities   |  | 62   |  | 71   | 
|Real estate       |  | 15   |  | 14   | 
|Other             |  | 5    |  | 2    | 
|                  |  |      |  |      | 
|Total             |  | 100  |  | 100  | 
|                  |  |      |  |      | 

F - 49

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NOTES

Weighted-average assumptions used to determine benefit obligations

|                        |  |      |  | (%)  | 
|----------------------- |  | ---- |  | ---- | 
|                        |  |      |  |      | 
|                        |  | 2005 |  | 2004 | 
|                        |  |      |  |      | 
|Discount rate           |  | 4.30 |  | 4.50 | 
|General wage inflation  |  | 2.25 |  | 2.25 | 
|General price inflation |  | 2.25 |  | 2.25 | 

Weighted-average assumptions used to determine net periodic pension cost

|                               |  |      |  | (%)  | 
|------------------------------ |  | ---- |  | ---- | 
|                               |  |      |  |      | 
|                               |  | 2005 |  | 2004 | 
|                               |  |      |  |      | 
|Discount rate                  |  | 4.50 |  | 4.80 | 
|Expected return on plan assets |  | 5.80 |  | 6.10 | 
|General wage inflation         |  | 2.25 |  | 2.25 | 
|General price inflation        |  | 2.25 |  | 2.25 | 

The basis for determining the overall expected rate of return is the pension funds long-term strategic asset allocation of approximately 35% as
equity securities, 50% as debt securities and 15% as real estate. The overall expected rate of return is based on the average long-term yields on the plan assets invested or to be invested.


The expected return on plan assets for 2006 amounts to 5.80% .


In 2005, the assumed rate of return on plan assets and the assumed discount rate have been reduced to reflect changes in market conditions and in the mix
of assets held by our pension funds. The assumptions for 2006 reflect a further reduction of the discount rate and unchanged assumptions with respect to general wage inflation and expected return on plan assets. The demographic assumptions used for
2005 reflect an expected longer life than previously assumed. The changed assumptions have resulted in increased pension benefit obligations compared with 2004. With these changed assumptions, TDCs total pension costs excluding redundancy
programs are expected to increase approximately DKK 10m in 2006 compared with 2005, assuming all other factors remain unchanged.


The average remaining service periods of active plan participants expected to receive benefits were estimated to be 13.2 years at December 31, 2005,
compared with 13.5 years at December 31, 2004.


Cash flows

TDCs current contributions were DKK 143m in 2005, against DKK 65m in 2004. Furthermore, extraordinary contributions were DKK 54m following a
reduced work force in 2005, compared with DKK 470m in 2004. For 2006 the projected current contributions amounted to DKK 131m. As in 2005, extraordinary contributions are expected to be paid in connection with retirements.


Other information

Approximately 600 members of the defined benefit plans will ultimately have part of their pension payment reimbursed by the Danish government. The
related benefit obligations, approximately DKK 530m, have been deducted, arriving at the projected benefit obligation.


TDC A/S has assumed all pension obligations for the members of the three Danish pension funds. Accordingly, the net periodic pension cost/income and the
plan assets for the three Danish pension funds are related to TDC A/S. Subsidiaries employing the members pay contributions to TDC A/S, which are included in the pension costs of the respective subsidiary.


B: Foreign defined benefit plans

F - 50

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NOTES

Pension costs for members of foreign Group enterprises operating defined benefit plans are determined on the basis of the development in the actuarially
determined pension obligations and on the yield on the pension funds assets. The difference between the actuarially determined pension obligations and the fair value of the pension funds assets is recognized in the Balance Sheets under
pension provisions, etc.


TDCs foreign defined benefit plans concern primarily TDC Switzerland.


C: Pensions for former Danish civil servants

In addition to the defined benefit plans, the Group has paid annual pension contributions to the Danish government. The pension contributions were paid
for employees who have retained their rights as civil servants to defined pension benefits from the Danish government due to previous employment agreements.


In 1994, the Group reached an agreement with the Danish government to make a one-time payment of DKK 1,210m, of which DKK 108m was considered interest
compensation for the period July 1, 1994, to August 1, 1995. This agreement was in respect of the Groups pension obligation to employees who participated in the Danish civil servants pension plan. Under the agreement, the Groups
pension contributions to the Danish Government ceased at July 1, 1994. The agreed non-recurring payment is treated as a pre-paid expense, which will be amortized and expensed over the average expected remaining service lives of the active employees
concerned.


In connection with the reduction in the number of employees in 2005 and previous years, some retired employees have retained their rights to civil
servant pensions from the Danish government. It is deemed that the retirements will not cause further payments on the part of the Company.


Note
29   Other financial commitments and lease receivables

|                                                                       |  |       |   | DKKm  |  
|---------------------------------------------------------------------- |  | ----- | - | ----- | -
|                                                                       |  |       |   |       |  
|                                                                       |  | 2005  |   | 2004  |  
|Lease commitments                                                      |  |       |   |       |  
|Rental expense relating to properties in the period of interminability |  | 3,894 |   | 4,317 |  
|Accumulated lease commitments for machinery, equipment, computers, etc |  | 712   |   | 1,208 |  
|                                                                       |  |       |   |       |  
|Total                                                                  |  | 4,606 |   | 5,525 |  
|                                                                       |  |       |   |       |  
|which can be specified as follows:                                     |  |       |   |       |  
|Not later than 1 year                                                  |  | 812   |   | 924   |  
|Later
    than 1 year and not later than 5 years                       |  | 2,048 |   | 2,442 |  
|Later than 5 years                                                     |  | 1,746 |   | 2,159 |  
|                                                                       |  |       |   |       |  
|Total                                                                  |  | 4,606 |   | 5,525 |  
|                                                                       |  |       |   |       |  
|Total rental expense for the year for all operating leases             |  |       |   |       |  
|Minimum lease payments                                                 |  | 1,064 |   | 920   |  
|Contingent lease payments                                              |  | 2     |   | 79    |  
|Sublease payments                                                      |  | (17   | ) | (11   | )
|                                                                       |  |       |   |       |  
|Total                                                                  |  | 1,049 |   | 988   |  
|                                                                       |  |       |   |       |  
|Capital and purchase commitments                                       |  |       |   |       |  
|Investments in property, plant and equipment                           |  | 7     |   | 198   |  
|Investments in intangible assets                                       |  | 74    |   | 6     |  
|Commitments related to outsourcing agreements                          |  | 746   |   | 356   |  
|Other purchase commitments                                             |  | 360   |   | 412   |  

Total future minimum sublease payments expected for interminable subleases on balance sheet dates amounted to DKK 35m at December 31, 2005, compared with
DKK 51m at December 31, 2004.


F - 51

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NOTES

Operating leases, for which TDC is the lessee, are related primarily to agreements on fiber networks, sea cable and agreements on property leases,
including agreements with the related Danish pension funds. The lease agreements terminate in 2020 at the latest.


|                                                         |  | 2005 |  | 2004 | 
|-------------------------------------------------------- |  | ---- |  | ---- | 
|                                                         |  |      |  |      | 
|Lease
    receivables                                    |  |      |  |      | 
|Total lease receivables in the period of interminability |  | 42   |  | 30   | 
|                                                         |  |      |  |      | 
|which can be specified as follows:                       |  |      |  |      | 
|Not later than 1 year                                    |  | 32   |  | 25   | 
|Later than 1 year and not later than 5 years             |  | 10   |  | 5    | 
|Later than 5 years                                       |  | 0    |  | 0    | 
|                                                         |  |      |  |      | 
|Total                                                    |  | 42   |  | 30   | 
|                                                         |  |      |  |      | 

Total contingent lease amounts recognized as income amounted to DKK 101m in 2005, compared with DKK 16m in 2004.


Operating leases, for which the TDC Group is the lessor, are related primarily to agreements on telecommunications installations.


Note 30   Contingent assets and contingent liabilities

Contingent assets

The TDC Group is awaiting the outcome of certain cases brought against other telecommunications companies. A potential favorable outcome for TDC of one
or more of these cases could result in substantial income.


Contingent liabilities

The TDC Group is party to certain pending lawsuits and cases pending with public authorities and complaints boards. Based on a legal assessment of the
possible outcome of each of these lawsuits and cases, Management is of the opinion that these will have no significant adverse effect on the TDC Groups financial position.


In connection with capital sale and leaseback agreements, the Group has provided guarantees covering intermediary leasing companies payment of the
total lease commitments. The Group has made legally releasing non-recurring payments to the intermediary leasing companies of an amount corresponding to the total lease commitments. At December 31, 2005, the guarantees amounted to DKK 3,291m,
compared with DKK 3,030m at December 31, 2004. The guarantees provided by the TDC Group are economically defeased by means of payment instruments issued by creditworthy obligors unrelated to the TDC Group that secure or otherwise provide for payment
of the regular lease payments and purchase-option prices due from the intermediary leasing companies. These instruments are lodged as security for payment of the regular lease payments by the intermediary leasing companies.


In accordance with Section 32 of the Danish Civil Servants Act, the Group has a termination benefit obligation to former Danish civil servants and to
employees with civil-servant status hired before April 1, 1970 who are members of the related Danish pension funds.


The Group has provided the usual guarantees in favor of suppliers and partners. These guarantees amounted to DKK 90m at December 31, 2005, compared with
DKK 135m at December 31, 2004.


F - 52

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NOTES

Note 31   Related parties

|Name of related party        |  | Nature of relationship |  | Domicile           
|---------------------------- |  | ---------------------- |  | -------------------
|                             |  |                        |  |                    
|KTAS Pensionskasse           |  | Pension fund           |  | Copenhagen, Denmark
|Jydsk Telefons Pensionskasse |  | Pension fund           |  | Århus, Denmark     
|Fyns Telefons Pensionskasse  |  | Pension fund           |  | Odense, Denmark    

Danish Group companies have entered into certain lease contracts with the related Danish pension funds. The lease contracts are interminable until 2020
at the latest. The aggregate amount payable under such agreements amounted to DKK 957m at December 31, 2005, compared with DKK 1,242m at December 31, 2004. The rental expense was DKK 122m for 2005, compared with DKK 139m in 2004. Compensation for
terminating a lease amounted to DKK 20m in 2005. In addition, annual contributions are paid to the pension funds, see note 28 Pension obligations.


Remuneration for the Board of Directors and the Executive Committee is described in note 6.


The Group has the following transactions and balances with related parties:


|            |  |          |   |            |   |         |   | DKKm  |  
|----------- |  | -------- | - | ---------- | - | ------- | - | ----- | -
|            |  |          |   |            |   |         |   |       |  
|            |  |          |   |            |   | Other   |   |       |  
|            |  | Joint    |   |            |   | related |   |       |  
|            |  | ventures |   | Associates |   | parties |   | Total |  
|            |  |          |   |            |   |         |   |       |  
|2005        |  |          |   |            |   |         |   |       |  
|Revenue     |  | 29       |   | 12         |   | 18      |   | 59    |  
|Costs       |  | (4       | ) | (12        | ) | (62     | ) | (78   | )
|Receivables |  | 365      |   | 1          |   | 10      |   | 376   |  
|Debt        |  | (2       | ) | (1         | ) | (7      | ) | (10   | )
|            |  |          |   |            |   |         |   |       |  

|            |  |          |   |            |   |         |   | DKKm  |  
|----------- |  | -------- | - | ---------- | - | ------- | - | ----- | -
|            |  |          |   |            |   |         |   |       |  
|            |  |          |   |            |   | Other   |   |       |  
|            |  | Joint    |   |            |   | related |   |       |  
|            |  | ventures |   | Associates |   | parties |   | Total |  
|            |  |          |   |            |   |         |   |       |  
|2004        |  |          |   |            |   |         |   |       |  
|Revenue     |  | 39       |   | 8          |   | 9       |   | 56    |  
|Costs       |  | (2       | ) | (3         | ) | (21     | ) | (26   | )
|Receivables |  | 1,089    |   | 18         |   | 1       |   | 1,108 |  
|Debt        |  | 0        |   | (2         | ) | (1      | ) | (3    | )

F - 53

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NOTES

Note
32   Overview of Group companies at December 31, 2005

|                                             |  |                        |  |          |  |               |  | Number of      | 
|-------------------------------------------- |  | ---------------------- |  | -------- |  | ------------- |  | -------------- | 
|                                             |  |                        |  |          |  |               |  | subsidiaries   | 
|                                             |  |                        |  |          |  | TDC Group     |  | and associates | 
|                                             |  |                        |  |          |  | ownership     |  | not listed     | 
|Company name                                 |  | Domicile               |  | Currency |  | share
    (%) |  | here1          | 
|                                             |  |                        |  |          |  |               |  |                | 
|TDC Solutions                                |  |                        |  |          |  |               |  |                | 
|TDC Solutions A/S                            |  | Copenhagen, Denmark    |  | DKK      |  | 100.0         |  | 6              | 
|Contactel s.r.o.5                            |  | Prague, Czech Republic |  | CZK      |  | 100.0         |  |                | 
|TDC Hosting A/S                              |  | Århus, Denmark         |  | DKK      |  | 100.0         |  |                | 
|TDC Dotcom AB                                |  | Stockholm, Sweden      |  | SEK      |  | 100.0         |  |                | 
|• Dotcom Solutions AB                        |  | Stockholm, Sweden      |  |          |  | 100.0         |  |                | 
|Operators Clearing House A/S2                |  | Copenhagen, Denmark    |  | DKK      |  | 33.3          |  |                | 
|Service Hosting A/S                          |  | Ballerup, Denmark      |  | DKK      |  | 100.0         |  |                | 
|TDC Call Center Europe A/S                   |  | Sønderborg, Denmark    |  | DKK      |  | 100.0         |  |                | 
|TDC Carrier Services USA, Inc                |  | New Jersey, USA        |  | USD      |  | 100.0         |  |                | 
|TDC Produktion A/S                           |  | Odense, Denmark        |  | DKK      |  | 100.0         |  |                | 
|TDC Switzerland
AG3                          |  | Zürich, Switzerland    |  | CHF      |  |               |  |                | 
|Telecom Invest A/S                           |  | Copenhagen, Denmark    |  | DKK      |  | 100.0         |  | 2              | 
|TDC Con SQOV AB                              |  | Stockholm, Sweden      |  | SEK      |  | 100.0         |  |                | 
|•  TDC
Song Holding AB                       |  | Stockholm, Sweden      |  |          |  | 100.0         |  | 28             | 
|NetDesign A/S                                |  | Farum, Denmark         |  | DKK      |  | 100.0         |  |                | 
|Hungarian Telephone and Cable Corp.4         |  | Seattle, USA           |  | USD      |  | 63.4          |  | 11             | 
|TDC Business Solution GmbH                   |  | Elmshorn, Germany      |  | EUR      |  | 100.0         |  |                | 
|                                             |  |                        |  |          |  |               |  |                | 
|TDC Mobile International                     |  |                        |  |          |  |               |  |                | 
|                                             |  |                        |  |          |  |               |  |                | 
|TDC Mobile International A/S                 |  | Copenhagen, Denmark    |  | DKK      |  | 100.0         |  | 3              | 
|TDC Mobil A/S                                |  | Taastrup, Denmark      |  | DKK      |  | 100.0         |  | 3              | 
|• TDC Mobil Center A/S                       |  | Odense, Denmark        |  |          |  | 84.9          |  |                | 
|UAB Bité Lietuva                             |  | Vilnius, Lithuania     |  | EUR      |  | 100.0         |  | 1              | 
|• SIA BITÉ Latvija                           |  | Riga, Latvia           |  |          |  | 100.0         |  |                | 
|One GmbH2                                    |  | Vienna, Austria        |  | EUR      |  | 15.0          |  |                | 
|Polkomtel S.A.2                              |  | Warsaw, Poland         |  | PLN      |  | 19.6          |  |                | 
|Talkline Management und Finance Holding GmbH |  | Elmshorn, Germany      |  | EUR      |  | 100.0         |  | 3              | 
|• Talkline GmbH & Co. KG                     |  | Elmshorn, Germany      |  |          |  | 100.0         |  |                | 

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NOTES

|                                            |                                  |          |                 | Number
      of     
|------------------------------------------- | -------------------------------- | -------- | --------------- | --------------------
|                                            |                                  |          |                 | subsidiaries        
|                                            |                                  |          | TDC
      Group | and
      associates
|                                            |                                  |          | ownership       | not
      listed    
|Company
      name                          | Domicile                         | Currency | share
      (%) | here
      1        
|                                            |                                  |          |                 |                     
|• easyMobile
      Germany Verwaltungs GmbH | Hamburg,
      Germany           |          | 100.0           |                     
|Tele
      Danmark Consult A/S              | Taastrup,
      Denmark          | DKK      | 100.0           |                     
|Telmore
      International Holding A/S     | Taastrup,
      Denmark          | DKK      | 88.9            |                     
|• easyMobile
      Limited                  | Stevenage,
      UK              |          | 100.0           |                     
|• TIH
      NL BV                           | Amsterdam,
      The Netherlands |          | 100.0           |                     
|Telmore
      A/S                           | Taastrup,
      Denmark          | DKK      | 100.0           |                     
|                                            |                                  |          |                 |                     
|TDC
      Cable TV                          |                                  |          |                 |                     
|                                            |                                  |          |                 |                     
|TDC
      Cable TV A/S                      | Copenhagen,
      Denmark        | DKK      | 100.0           |                     
|Dansk
      Kabel TV A/S                    | Taastrup,
      Denmark          | DKK      | 100.0           |                     
|Connect
      Partner A/S                   | Herlev,
      Denmark            | DKK      | 100.0           |                     
|Telelet
      A/S                           | Søborg,
      Denmark            | DKK      | 100.0           |                     
|                                            |                                  |          |                 |                     
|TDC
      Switzerland                       |                                  |          |                 |                     
|                                            |                                  |          |                 |                     
|TDC
      Switzerland AG3                   | Zürich,
      Switzerland        | CHF      | 100.0           | 6                   
|• sunrise
      business communications AG  | Zürich,
      Switzerland        |          | 100.0           |                     
|                                            |                                  |          |                 |                     
|TDC
      Services                          |                                  |          |                 |                     
|                                            |                                  |          |                 |                     
|TDC
      Services A/S                      | Copenhagen,
      Denmark        | DKK      | 100.0           |                     
|TDC
      Reinsurance A/S                   | Copenhagen,
      Denmark        | DKK      | 100.0           |                     
|Tele
      Danmark Reinsurance S.A          | Luxembourg                       | DKK      | 100.0           |                     
|                                            |                                  |          |                 |                     
|Other1                                      |                                  |          |                 |                     
|                                            |                                  |          |                 |                     
|TDC
      ADSB Invest ApS                   | Copenhagen,
      Denmark        | DKK      | 100.0           |                     
|• ADSB
      Telecommunications B.V.2       | Amsterdam,
      The Netherlands |          | 34.7            |                     
|                                            |                                  |          |                 |                     

| 
|-
|1
|2
|3
|4
|5

Note
  33   Reconciliation to United States Generally Accepted Accounting
  Principles (US GAAP)

The Consolidated Financial Statements of TDC have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the
European Union. Furthermore, the Consolidated Financial Statements of TDC have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by IASB.


IFRS differ in certain respects from generally accepted accounting principles in the United States (US GAAP). A description of the significant
differences between IFRS and US GAAP as they relate to TDC are discussed in further detail below.


a) Pensions

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NOTES

Under IFRS, pension assets, pension liabilities and expenses related to defined benefit plans are determined in a similar manner to US GAAP. However,
under IFRS, prior service cost, transition obligations and expenses resulting from plan amendments are generally recognized immediately. Under US GAAP, these expenses are generally recognized over a longer period.


In accordance
    with IFRS 1, unrecognized actuarial gains and losses as of January 1, 2004
    are recognized in equity.


As opposed to IFRS, a liability at least equal to the unfunded part of the accumulated benefit obligation (ABO) must be recognized in the balance sheet
under US GAAP, when the ABO exceeds the fair value of plan assets. To the extent that the unfunded ABO exceeds the liabilities already recognized, an additional minimum liability (AML), net of tax, must be recognized as a reduction of equity. If the
unfunded ABO is lower than the liabilities already recognized, no further liabilities are recognized.


b) Formation
    of the Group

In accordance with IFRS, certain items of property, plant and equipment acquired upon the formation of the Group were restated at fair value, whereas
goodwill and rights were capitalized. The capitalized excess values are amortized over the useful lives of the assets. Under US GAAP, the transfer of assets between parties under joint control was accounted for using the pooling-of-interests method.
Accordingly, restatement of property, plant and equipment to fair value and any capitalization of goodwill and rights related to the formation of the Group were eliminated in the Consolidated Financial Statements.


c) Reversal
    of capitalization of site costs

In accordance with IFRS, site pre-acquisition costs are expensed only in cases where no permission is obtained for a certain site. Under US GAAP, all
site pre-acquisition costs are expensed as incurred until Management receives the appropriate permission from official authorities to begin construction of the site.


d) Development costs

In accordance with IFRS, development costs are recognized as intangible assets if the cost can be calculated reliably and is expected to generate future
economic benefits. Development costs are amortized over a period of three to five years. Under US GAAP, development costs are expensed as incurred, except for computer software developed for internal use.


e) Depreciation
    in year of acquisition or construction

According to TDC Group accounting policies until year-end 1992, a full years depreciation was charged on fixed assets in the year of acquisition or
construction of the asset. Under US GAAP, such depreciation commences from the time of acquisition or from the date of the assets entry into service.


f) Revenue
    recognition

In accordance with IFRS, elements in revenue arrangements with multiple deliverables are recognized as separate units of accounting, independent of any
contingent element related to the delivery of additional items or other performance conditions. Under US GAAP, multiple element contracts as from June 15, 2003 are recorded in accordance with EITF No. 00-21 Accounting for Revenue Arrangements
with Multiple Deliverables under which the amount allocable to a delivered item is limited to the amount that is not contingent upon the delivery of additional items or meeting other performance conditions.


g) Asset
    retirement obligations

In accordance with IFRS, the effect of a change in the fair value of an asset retirement obligation is capitalized and depreciated over the remaining
useful life of the underlying asset. Under US GAAP, such asset retirement obligations are accounted for in accordance with Statement of Financial Accounting Standards no. 143, Accounting for Asset Retirement Obligations (SFAS 143).
Accordingly, the accumulated accretion and depreciation expense to December 31, 2002 is recognized in the financial statements as a cumulative catch-up adjustment.


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NOTES

Furthermore, IFRS (IFRIC Interpretation No. 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities) does not treat
changes in the estimate of undiscounted cash flows and discount rates in the same way as SFAS 143.


h) Jubilee
  obligations

In accordance with IFRS and US GAAP, jubilee benefits provided for employees are recognized in the year in which the associated services are rendered by
the employees. The liability with respect to jubilee benefits was calculated for the first time in 2004 in connection with the implementation of IFRS, thereby bringing IFRS and US GAAP in compliance.


i) Gain
  related to sale of shares

In accordance with IFRS, a gain arising from sale of shares is recognized when the inflow of economic benefits can be measured reliably. Under US GAAP, a
gain should not be recognized until the final price is established.


j) Gain
  on divestment of enterprises

Gain on divestment of enterprises includes the accumulated effect of differences between IFRS and US GAAP relating to divested enterprises at the time of
divestment.




Other consists of some minor differences between IFRS and US GAAP that are immaterial on both an individual and aggregate basis, and therefore are not
separately disclosed.


l) Deferred
  tax

This reconciliation item includes all tax effects due to the above-mentioned reconciling.


m) Capital
  sale and leaseback agreements

In accordance with IFRS, non-recurring payments that have been made to legally release future lease payments are offset against the lease commitments in
the balance sheets. Under US GAAP, in certain circumstances the non-recurring payments and the corresponding lease commitments must be shown as assets and as liabilities in the balance sheet.


n) Minority
  interests on acquisition

In accordance with IFRS, in connection with the acquisition of a less than 100% owned subsidiary, any minority interests should be stated at the
minorities proportion of the net fair value of acquired assets, liabilities and contingent liabilities assumed. In accordance with US GAAP, fair values are assigned only to the parent companys shares of the net assets acquired, and the
minority interests are valued at historical carrying value. This difference between IFRS and US GAAP has been adjusted in the footnote below showing balance sheet items from the Consolidated Balance Sheets adjusted in accordance with US GAAP. The
difference in accounting approach has no impact on the reconciliation of net income and equity attributable to Company shareholders.


o) Share-based
  payment

In accordance with IFRS, the value of services received from employees in exchange for incentives is recognized in the Statements of Income over the
vesting period and is measured at the fair value at the grant date of the share options. Under US GAAP, in 2005, TDC has applied the modified retrospective application method in Statement of Financial Accounting Standards no. 123 (revised 2004)
Share-Based Payments (SFAS 123), thereby bringing IFRS and US GAAP in compliance. Accordingly, compensation costs and the related tax effect are recognized in the financial statements as though they had been accounted for under SFAS
123(R). The impact on net income under US GAAP in 2004 amounts to DKK 52m.


The effect on net income and equity is stated below as if the Financial Statements had been prepared in accordance with US GAAP:


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NOTES

|                                                                                                                              |                         |   |                     |   |        |   | DKKm   |  
|----------------------------------------------------------------------------------------------------------------------------- | ----------------------- | - | ------------------- | - | ------ | - | ------ | -
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|                                                                                                                              | Net income              |   | Equity attributable |  
|                                                                                                                              | attributable to Company |   | to Company          |  
|                                                                                                                              | shareholders            |   | shareholders        |  
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|                                                                                                                              | 2005                    |   | 2004                |   | 2005   |   | 2004   |  
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|As reported in accordance with IFRS                                                                                           | 7,474                   |   | 9,912               |   | 43,520 |   | 38,823 |  
|a) Pensions                                                                                                                   | (420                    | ) | (281                | ) | 829    |   | 1,423  |  
|b) Reversal
of depreciation of any write-up to fair value of property, plant and equipment
arising on formation of the Group: |                         |   |                     |   |        |   |        |  
|Additions during the year/accumulated cost                                                                                    |                        |   |                    |   | (1,211 | ) | (1,211 | )
|Depreciation for the year/accumulated depreciation                                                                            | 5                       |   | 25                  |   | 1,209  |   | 1,204  |  
|c) Reversal of capitalization of site pre-acquisition costs                                                                   | (25                     | ) | 23                  |   | (109   | ) | (84    | )
|d) Reversal of capitalization of development costs                                                                            | 8                       |   | 2                   |   | (6     | ) | (14    | )
|e) Depreciation in year of acquisition or construction                                                                        | (2                      | ) | (2                  | ) | 40     |   | 42     |  
|f) Revenue recognition                                                                                                        | (2                      | ) | 7                   |   | (3     | ) | (1     | )
|g) Asset retirement obligations                                                                                               | 33                      |   | 3                   |   | (34    | ) | (67    | )
|h) Jubilee obligations                                                                                                        | 0                       |   | (111                | ) | 0      |   | 0      |  
|i) Reversal of gain related to sale of shares                                                                                 | 0                       |   | 218                 |   | 0      |   | 0      |  
|j) Difference in gain related to divestment of enterprises                                                                    | 0                       |   | (28                 | ) |       |   |       |  
|k) Other                                                                                                                      | 9                       |   | 26                  |   | (50    | ) | (60    | )
|l) Deferred tax, US GAAP adjustments                                                                                          | 149                     |   | 128                 |   | (212   | ) | (392   | )
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|Net income/equity in accordance with US GAAP                                                                                  | 7,229                   |   | 9,922               |   | 43,973 |   | 39,663 |  
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|Net income from continuing operations as reported under IFRS                                                                  | 3,497                   |   | 9,595               |   |        |   |        |  
|Minority interests share of income from continuing operations                                                                | 24                      |   | 2                   |   |        |   |        |  
|US GAAP adjustments, net                                                                                                      | (245                    | ) | 13                  |   |        |   |        |  
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|Net income from continuing operations under US GAAP                                                                           | 3,276                   |   | 9,610               |   |        |   |        |  
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|Net income from discontinued operations under IFRS                                                                            | 3,953                   |   | 315                 |   |        |   |        |  
|US GAAP adjustments, net                                                                                                      | 0                       |   | (3                  | ) |        |   |        |  
|                                                                                                                              |                         |   |                     |   |        |   |        |  
|Net income from discontinued operations under US GAAP                                                                         | 3,953                   |   | 312                 |   |        |   |        |  
|                                                                                                                              |                         |   |                     |   |        |   |        |  



|                                                                                    | 2005  |  | 2004  | 
|----------------------------------------------------------------------------------- | ----- |  | ----- | 
|                                                                                    |       |  |       | 
|Earnings per share in accordance with US GAAP (DKK)                                 |       |  |       | 
|                                                                                    |       |  |       | 
|Earnings per share, basic                                                           | 37.04 |  | 48.49 | 
|Earnings per share, diluted                                                         | 36.83 |  | 48.39 | 
|Earnings per share from continuing operations in accordance with US GAAP, basic     | 16.79 |  | 46.96 | 
|Earnings per share from continuing operations in accordance with US GAAP, diluted   | 16.69 |  | 46.87 | 
|Earnings per share from discontinued operations in accordance with US GAAP, basic   | 20.25 |  | 1.53  | 
|Earnings per share from discontinued operations in accordance with US GAAP, diluted | 20.14 |  | 1.52  | 

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NOTES

Balance sheet items

|                                            |                      |   |                        |   |        |   | DKKm   |  
|------------------------------------------- | -------------------- | - | ---------------------- | - | ------ | - | ------ | -
|                                            |                      |   |                        |  
|                                            | Balance sheet items  |   | Approximate amounts as |  
|                                            | according to IFRS at |   | adjusted to US GAAP at |  
|                                            | December 31          |   | December 31            |  
|                                            |                      |   |                        |   |        |   |        |  
|                                            | 2005                 |   | 2004                   |   | 2005   |   | 2004   |  
|                                            |                      |   |                        |   |        |   |        |  
|Intangible assets                           | 33,118               |   | 33,495                 |   | 33,010 |   | 33,481 |  
|Property, plant and equipment               | 26,054               |   | 26,252                 |   | 25,924 |   | 26,107 |  
|Minority passive investments                | 9                    |   | 44                     |   | 6      |   | 26     |  
|Plan assets                                 | 5,645                |   | 5,435                  |   | 6,552  |   | 6,750  |  
|Receivables                                 | 9,081                |   | 9,662                  |   | 12,372 |   | 12,692 |  
|Pre-paid expenses                           | 979                  |   | 1,057                  |   | 995    |   | 1,062  |  
|Minority interests                          | 275                  |   | 27                     |   | 201    |   | 27     |  
|Deferred tax, net:                          |                      |   |                        |   |        |   |        |  
|• current                                   | (94                  | ) | (191                   | ) | (95    | ) | (191   | )
|• non-current                               | 2,804                |   | 3,875                  |   | 3,011  |   | 4,267  |  
|Pension obligations                         | 332                  |   | 264                    |   | 410    |   | 156    |  
|Long-term loans                             | 24,890               |   | 29,142                 |   | 28,181 |   | 32,172 |  
|Deferred income                             | 3,802                |   | 3,625                  |   | 3,821  |   | 3,631  |  
|Trade and other current payables            | 9,210                |   | 9,535                  |   | 9,210  |   | 9,548  |  
|Equity attributable to Company shareholders | 43,520               |   | 38,823                 |   | 43,973 |   | 39,663 |  

Note
34   Auditors remuneration

|                                                                    |      |  | DKKm | 
|------------------------------------------------------------------- | ---- |  | ---- | 
|                                                                    |      |  |      | 
|                                                                    | 2005 |  | 2004 | 
|                                                                    |      |  |      | 
|The remuneration of auditors elected by the annual general meeting: |      |  |      | 
|PricewaterhouseCoopers                                              | 69   |  | 37   | 
|Other auditors                                                      | 6    |  | 9    | 
|                                                                    |      |  |      | 
|Total                                                               | 75   |  | 46   | 
|                                                                    |      |  |      | 
|Hereof fees in respect of non-audit services:                       |      |  |      | 
|PricewaterhouseCoopers                                              | 48   |  | 24   | 
|Other auditors                                                      | 1    |  | 2    | 
|                                                                    |      |  |      | 
|Total                                                               | 49   |  | 26   | 
|                                                                    |      |  |      | 

Note
35   Net interest-bearing debt

|                             |         |   | DKKm    |  
|---------------------------- | ------- | - | ------- | -
|                             |         |   |         |  
|                             | 2005    |   | 2004    |  
|                             |         |   |         |  
|Interest-bearing receivables | 107     |   | 83      |  
|Marketable securities        | 3,687   |   | 3,412   |  
|Cash                         | 10,063  |   | 6,838   |  
|Long-term loans              | (24,890 | ) | (29,142 | )
|Short-term loans             | (5,425  | ) | (1,337  | )
|Other interest-bearing debt  | (17     | ) | 0       |  
|                             |         |   |         |  
|Total                        | (16,475 | ) | (20,146 | )
|                             |         |   |         |  

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NOTES

Note
36   Reversal of items without effect on cash flow

|                                    |      |   | DKKm   |  
|----------------------------------- | ---- | - | ------ | -
|                                    |      |   |        |  
|                                    | 2005 |   | 2004   |  
|                                    |      |   |        |  
|Change in provisions                | 36   |   | (161   | )
|Change in pension assets            | (233 | ) | (331   | )
|(Gain)/loss on sale of subsidiaries | 12   |   | (943   | )
|Other adjustments                   | (51  | ) | (37    | )
|                                    |      |   |        |  
|Total                               | (236 | ) | (1,472 | )
|                                    |      |   |        |  

Note 37   Change in working capital

|                           |      |   | DKKm  |  
|-------------------------- | ---- | - | ----- | -
|                           |      |   |       |  
|                           | 2005 |   | 2004  |  
|                           |      |   |       |  
|Change in inventories      | (89  | ) | 142   |  
|Change in receivables      | (214 | ) | 1,297 |  
|Change in trade payables   | 280  |   | (198  | )
|Change in other items, net | (126 | ) | (29   | )
|                           |      |   |       |  
|Total                      | (149 | ) | 1,212 |  
|                           |      |   |       |  

Note
38   Investment in subsidiaries

2005

In 2005, TDC made the following acquisitions: At April 1, TDC increased its ownership share in Hungarian Telephone and Cable Corp. and has thereby gained control of the company. The ownership share
was 63.4% at December 31, 2005. In February 2005, HTCC changed its profile significantly when it acquired Pantel, an infrastructure company. Pantel has a nationwide fiber-optic network with direct links to the neighboring countries Rumania,
Bulgaria, Croatia, Slovenia, Austria, Slovakia, Ukraine and Serbia. The acquisition means HTCC can become a traffic link for the transmission of telephony and data traffic in the region.


At July 1 2005, TDC Solutions A/S acquired the Swedish systems integrator Dotcom Solutions AB, which offers complete communications platforms for voice,
data, video and network services for Swedish business customers.


At July 1 2005, TDC Switzerland acquired the assets of Ascoms business communications solutions unit, which is a major systems integrator in
Switzerland and a provider of LAN infrastructure.


At July 1, 2005 TDC Cable TV A/S acquired Telelet A/S, which provides specific solutions for antenna associations with miscellaneous types of cable for
TV, broadband and telephony.


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NOTES

Assets and liabilities at the time of acquisition

|                                                 |               |   | DKKm           |  
|------------------------------------------------ | ------------- | - | -------------- | -
|                                                 |               |   |                |  
|                                                 | Fair value at |   | Carrying value |  
|                                                 | the time of   |   | before         |  
|                                                 | acquisition   |   | acquisition    |  
|                                                 |               |   |                |  
|Intangible assets                                | 660           |   | 143            |  
|Property, plant and equipment                    | 1,062         |   | 1,394          |  
|Other property, plant and equipment              | 3             |   | 3              |  
|Inventories                                      | 31            |   | 32             |  
|Receivables                                      | 610           |   | 601            |  
|Deferred tax assets/(liabilities), net           | 27            |   | 31             |  
|Marketable securities                            | 17            |   | 17             |  
|Cash and cash equivalents                        | 295           |   | 295            |  
|Pension liabilities                              | (92           | ) | 0              |  
|Provisions                                       | (9            | ) | (18            | )
|Long-term debt                                   | (1,103        | ) | (1,100         | )
|Corporate income tax receivable/(payable), net   | 7             |   | 7              |  
|Short-term debt                                  | (681          | ) | (680           | )
|                                                 |               |   |                |  
|Net assets                                       | 827           |   | 725            |  
|                                                 |               |   |                |  
|Minority interests                               | (264          | ) |                |  
|Previous investments recognized under associates | (262          | ) |                |  
|                                                 |               |   |                |  
|Acquired net assets                              | 301           |   |                |  
|Goodwill                                         | 464           |   |                |  
|Goodwill, changed consolidation method           | 84            |   |                |  
|                                                 |               |   |                |  
|Acquisition cost                                 | 849           |   |                |  
|Cash in acquired subsidiaries                    | (295          | ) |                |  
|Unpaid share of acquisition cost                 | (40           | ) |                |  
|                                                 |               |   |                |  
|Net cash flow on acquisition                     | 514           |   |                |  
|                                                 |               |   |                |  

Since the acquisition in 2005, the acquired enterprises have contributed DKK 1,469m to revenue and DKK 58m to net income.


TDC Group revenue and net income calculated as if the enterprises had been acquired at January 1, 2005 amounted to DKK 2,325m and DKK 117m,
respectively.


Goodwill related to acquisitions was calculated at DKK 548m on recognition of identifiable assets, liabilities and contingent liabilities at fair value.
Goodwill represents the value of current employees and know-how as well as expected synergies arising from the combination with the TDC Group.


2004

In 2004, TDC made the following acquisitions:


At January 27, 2004, TDC Mobile International acquired the remaining 80% of the shares in Telmore A/S, a Danish mobile service provider.


At May 12, 2004, TDC Cable TV acquired the installations company Connect Partner A/S, which specializes in overall solutions within data and
telecommunications networks.


At the beginning of November 2004, TDC Solutions acquired the Swedish company Song Networks AB, which subsequently changed its name to TDC Song. TDC Song
is a pan-Nordic network operator, operating primarily on the business market.


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NOTES

At December 1, 2004, TDC Solutions acquired NetDesign A/S, a leading Danish provider of IP/LAN infrastructure for business customers.


Assets and liabilities at the time of acquisition

|                                                 |               |   | DKKm         |  
|------------------------------------------------ | ------------- | - | ------------ | -
|                                                 |               |   |              |  
|                                                 | Fair value at |   | Carrying     |  
|                                                 | the time of   |   | value before |  
|                                                 | acquisition   |   | acquisition  |  
|                                                 |               |   |              |  
|TDC
    Song                                     |               |   |              |  
|Intangible assets                                | 274           |   | 27           |  
|Property, plant and equipment                    | 1,968         |   | 1,283        |  
|Other property, plant and equipment              | 40            |   | 40           |  
|Receivables                                      | 388           |   | 393          |  
|Pre-paid expenses                                | 142           |   | 142          |  
|Deferred tax assets/(liabilities), net           | 277           |   | 80           |  
|Cash and cash equivalents                        | 283           |   | 283          |  
|Provisions                                       | (446          | ) | (289         | )
|Long-term debt                                   | (15           | ) | (15          | )
|Deferred income                                  | (40           | ) | 0            |  
|Short-term debt                                  | (686          | ) | (701         | )
|                                                 |               |   |              |  
|Net assets                                       | 2,185         |   | 1,243        |  
|                                                 |               |   |              |  
|Minority interests                               | (13           | ) |              |  
|                                                 |               |   |              |  
|Acquired net assets                              | 2,172         |   |              |  
|                                                 |               |   |              |  
|Goodwill                                         | 2,393         |   |              |  
|                                                 |               |   |              |  
|Acquisition cost                                 | 4,565         |   |              |  
|                                                 |               |   |              |  
|Cash in acquired subsidiaries                    | (283          | ) |              |  
|                                                 |               |   |              |  
|Net cash flow on acquisition                     | 4,282         |   |              |  
|                                                 |               |   |              |  
|Other acquisitions                               |               |   |              |  
|Intangible assets                                | 530           |   | 2            |  
|Property, plant and equipment                    | 66            |   | 66           |  
|Other property, plant and equipment              | 1             |   | 1            |  
|Inventories                                      | 46            |   | 46           |  
|Receivables                                      | 87            |   | 107          |  
|Pre-paid expenses                                | 2             |   | 1            |  
|Deferred tax assets/(liabilities), net           | (154          | ) | 0            |  
|Cash and cash equivalents                        | 189           |   | 189          |  
|Long-term debt                                   | (3            | ) | (3           | )
|Corporate income tax receivable/(payable), net   | (1            | ) | (1           | )
|Short-term debt                                  | (306          | ) | (323         | )
|                                                 |               |   |              |  
|Net assets                                       | 457           |   | 85           |  
|                                                 |               |   |              |  
|Previous investments recognized under associates | (92           | ) |              |  
|                                                 |               |   |              |  
|Acquired net assets                              | 365           |   |              |  
|Goodwill                                         | 239           |   |              |  
|Goodwill, changed consolidation method           | 64            |   |              |  
|                                                 |               |   |              |  
|Acquisition cost                                 | 668           |   |              |  
|Cash in acquired subsidiaries                    | (189          | ) |              |  
|                                                 |               |   |              |  
|Net cash flow on acquisition                     | 479           |   |              |  
|                                                 |               |   |              |  

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NOTES

Since the acquisition in 2004, the acquired subsidiaries contributed revenue of DKK 1,030m and net income of DKK (50)m.


If the acquisition had been completed on January 1, 2004, revenue for the year would have been DKK 3,098m and net income for the year would have been DKK
33m.


After recognition of net identifiable assets, liabilities and contingent liabilities at fair value, goodwill arising on the acquisition amounted to DKK
2,696m. Goodwill represents the value of the current employees, know-how and the anticipated future operating synergies from the combination.


Note
39   Divestment of subsidiaries

The carrying value of assets and liabilities consists of the following at the time of divestment:


|                                                            |      |   | DKKm  |  
|----------------------------------------------------------- | ---- | - | ----- | -
|                                                            |      |   |       |  
|                                                            | 2005 |   | 2004  |  
|                                                            |      |   |       |  
|Intangible assets                                           | 33   |   | 133   |  
|Property, plant and equipment                               | 6    |   | 47    |  
|Other non-current assets                                    | 0    |   | 34    |  
|Receivables                                                 | 207  |   | 138   |  
|Cash and cash equivalents                                   | 9    |   | 34    |  
|Deferred tax assets/(liabilities), net                      | 0    |   | (2    | )
|Provisions                                                  | 0    |   | (5    | )
|Corporate income tax receivable/(payable), net              | (2   | ) | (69   | )
|Short-term debt                                             | (199 | ) | (67   | )
|                                                            |      |   |       |  
|Net assets                                                  | 54   |   | 243   |  
|Gain/(loss) on disposal of subsidiaries                     | (12  | ) | 943   |  
|Received prepayments relating to divestment of subsidiaries | 15   |   | 0     |  
|Cash in divested subsidiaries                               | (9   | ) | (34   | )
|                                                            |      |   |       |  
|Net cash flow on divestment                                 | 48   |   | 1,152 |  
|                                                            |      |   |       |  

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NOTES

Note
40   Cash flow from investing activities in discontinued operations

The carrying value of assets and liabilities in discontinued operations consists of the following at the time of divestment:


|                                                                                     |       |   | DKKm |  
|------------------------------------------------------------------------------------ | ----- | - | ---- | -
|                                                                                     |       |   |      |  
|                                                                                     | 2005  |   | 2004 |  
|                                                                                     |       |   |      |  
|Intangible assets                                                                    | 1,040 |   |     |  
|Property, plant and equipment                                                        | 52    |   |     |  
|Inventories                                                                          | 8     |   |     |  
|Receivables                                                                          | 387   |   |     |  
|Cash and cash equivalents                                                            | 80    |   |     |  
|Deferred tax assets/(liabilities), net                                               | 10    |   |     |  
|Provisions                                                                           | (17   | ) |     |  
|Long-term debt                                                                       | (45   | ) |     |  
|Corporate income tax receivable/(payable), net                                       | (7    | ) |     |  
|Short-term debt                                                                      | (383  | ) |     |  
|                                                                                     |       |   |      |  
|Net assets                                                                           | 1,125 |   |     |  
|Profit relating to divestment of discontinued operations                             | 3,708 |   |     |  
|Hereof reversal of currency adjustments recognized in equity                         | 27    |   |     |  
|Sales proceeds not received and sales costs not paid, net                            | (2    | ) |     |  
|Cash in discontinued operations                                                      | (80   | ) |     |  
|                                                                                     |       |   |      |  
|Net cash flow on divestment                                                          | 4,778 |   |     |  
|Cash flow from investing activities in discontinued operations excluding divestments | (43   | ) | (26  | )
|                                                                                     |       |   |      |  
|Net cash flow from investing activities in discontinued operations                   | 4,735 |   | (26  | )
|                                                                                     |       |   |      |  

Note
41   Cash and cash equivalents

|                                                                               |       |   | DKKm  | 
|------------------------------------------------------------------------------ | ----- | - | ----- | 
|                                                                               |       |   |       | 
|                                                                               | 2005  |   | 2004  | 
|                                                                               |       |   |       | 
|Cash and cash equivalents at January 1                                         | 6,838 |   | 5,430 | 
|Cash and cash equivalents transferred relating to changed consolidation method | 0     |   | 8     | 
|Cash and cash equivalents transferred to assets held for sale                  | (12   | ) | 0     | 
|Unrealized currency translation adjustments                                    | 1     |   | 0     | 
|                                                                               |       |   |       | 
|Adjusted cash and cash equivalents at January 1                                | 6,827 |   | 5,438 | 
|                                                                               |       |   |       | 

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NOTES

Note
      42   Post balance sheet events

TDC reduces its work force in domestic operations according to plan

On January 20, 2006, TDC decided to implement a redundancy program covering up to 570 employees in the period until year-end 2006. The redundancy program
will be initiated through voluntary retirement to limit the extent of involuntary retirement. Total costs related to work-force reductions are estimated at DKK 342m after tax. The amount will be expensed in the first quarter of 2006.


Change of ownership

On February 1, 2006, Nordic Telephone Company ApS (NTC) settled its tender offer for TDC A/S and thereby became the owner of 88.2% of the
shares of TDC A/S entailing that a change of ownership has occurred.


Polkomtel

On February 2, 2006, due to this change of ownership described above and in accordance with the existing shareholder agreement with Polkomtel as well as
the companys bylaws, TDC has offered to sell its 19.6% ownership share to the other shareholders of Polkomtel at a price of EUR 214.04 per share, reflecting a market value of EUR 4.388bn for 100% of the companys common shares. The result
and the time frame of the selling process depend on the shareholders response to TDCs offer.


F - 65

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