AB LIETUVOS TELEKOMAS: AB LIETUVOS TELEKOMAS


Content (Part 1): Content (Part 1) AB Lietuvos Telekomas Development of events in 1990-2002 Vision, mission and values of AB Lietuvos Telekomas 2.1. Vision of Lietuvos Telekomas 2.2. Mission of Lietuvos Telekomas 2.3. Values of Lietuvos Telekomas Company overview 3.1. Major shareholders of AB Lietuvos Telekomas 3.2. Structure of AB Lietuvos Telekomas 3.3. Structure of Lietuvos Telekomas Group 3.4. Management structure of AB Lietuvos Telekomas 3.5. Our business 3.6. Our strategy 3.7. Lietuvos Telekomas is one of the best employers in Lithuania 3.8. Our Internet business (Part 1) 3.9. Our Internet business (Part 2) 3.10. Regulatory matters in Lithuania 3.11. Period of exclusive rights 3.12. Tariff re-balancing


Content (Part 2): Content (Part 2) 3.13. Key indicators of AB Lietuvos Telekomas Group 3.14. Revenues (IAS) 3.15. Growth rates of main indicators 3.16. Profit before tax 3.17. Lietuvos Telekomas employees (full time in core business) 3.18. Penetration/ Number of applicants on the waiting list (thou) 3.19. Digitalisation 3.20. Analogue/ Digital lines 3.21. Digitalisation of business subscribers in Lithuania 3.22. Digitalisation of main lines in 5 largest cities 3.23. Digitalisation of business subscribers in 5 largest cities 3.24. Modern network of Lietuvos Telekomas (9 months 2002) 3.25. Capacity of digital exchanges (9 months 2002) 3.26. Transmission and Access Network (9 months 2002) 3.27. Coverage of data communication network


1. Development of events in 1990-2002: 1. Development of events in 1990-2002 11 March 1990 – restoration of an independent state of Lithuania 6 February 1992 – establishment of state enterprise Lietuvos Telekomas 16 June 1997 – registration of joint stock company AB Lietuvos Telekomas 9 June 1998 – new Telecommunications Law 7 July 1998 – privatization of Lietuvos Telekomas; Telia and Sonera acquired 60% of shares for 510 million USD 23 August 1999 – employees of Lietuvos Telekomas acquired almost 5% of Company’s shares 29 March 2000 – the State Property Fund announced the initial public offering of AB Lietuvos Telekomas’ shares 12 June 2000 – AB Lietuvos Telekomas’ shares are traded on the National Stock Exchange of Lithuania and GDRs on the London Stock Exchange


1. Development of events in 1990-2002: 1. Development of events in 1990-2002 9 March 2001 – Lietuvos Telekomas issued its debut EuroLitasNote of LTL 150 million with the maturity of three years 1 May 2001 – UAB Voicecom, a daughter company of Lietuvos Telekomas, started provision of international calls over IP 6 May 2002 - UAB Comliet, the biggest subsidiary of AB Lietuvos Telekomas, signed an agreement on the purchase of 75 per cent of the Latvian company Datu Tikli SIA shares 16 May 2002 - TietoEnator Oyj and AB Lietuvos Telekomas have signed agreements on the sale of part of Lietuvos Telekomas’ stake in its IT service providing subsidiaries to TietoEnator 4 July 2002 – UAB Comliet, a subsidiary of AB Lietuvos Telekomas, signed an agreement on the purchase of 55 per cent of Estonian company AC Telegrupp shares 5 July 2002 – the new Law on Telecommunications (will enter into force on 1 January 2003)


2. Vision, mission and values: 2. Vision, mission and values Lietuvos Telekomas is the leading telecommunications provider in the region 2.1. Vision of Lietuvos Telekomas


2. Vision, mission and values: 2. Vision, mission and values Lietuvos Telekomas provides business and residential customers in Lithuania with communications solution that meet their needs. Lietuvos Telekomas is a customer oriented company which is driving changes and creating the future, thus paving the way for society’s development and it’s citizens’ well being. Lietuvos Telekomas will create short term and long term profitability that will continuously increase the value of the company. 2.2. Mission of Lietuvos Telekomas


2. Vision, mission and values: 2. Vision, mission and values Customer orientation Courteous, Attentive and Caring Improved performance Self-development, Commercial success and Excellence Business orientation All services, investments, activities should contribute to profit of the company Leadership Responsibility and Trust, Pro-active and Creative Professional Pro-active, Keeping promises and Innovative 2.3. Values of Lietuvos Telekomas


3. Company overview: 3. Company overview On 12 June 2000, AB Lietuvos Telekomas launched Global Depository Receipt (GDR) program. According to the program one GDR represents 10 ordinary registered shares of AB Lietuvos Telekomas; shares are held by depository –Deutsche Bank Trust Company Americas. Note: * UAB Lintkom, a daughter company of AB Lietuvos Telekomas, holds shares of AB Lietuvos Telekomas. 3.1. Major shareholders of AB Lietuvos Telekomas


3. Company overview: 3. Company overview 3.2. Structure of AB Lietuvos Telekomas


Slide11: UAB Voicecom UAB Lietuvos Telekomo Verslo Sprendimai VšĮ Lietuvos Telekomo Sporto Klubas UAB Baltijos Telekomunikacijų Konsultacinis Centras UAB Comliet UAB Lintkom UAB Lintel UAB Verslo Portalas UAB Verslo Žinios Nexcom Telecommunications LLC 100% 100% 100% 60% 100% 30% 70% UAB Baltijos Informacinių Duomenų Valdymo Centras 26% 60% 100% 75% RBS Skals AS 25 % 40% TietoEnator Oyj 74% 40% 3. Company overview 3.3. Structure of Lietuvos Telekomas Group 55% Telegrupp AS 45 % Merko Ehitus Ltd. AS Datu Tikli SIA


Slide12: 3. Company overview 3.4. Management structure of AB Lietuvos Telekomas Secretariat Human Resources Department Services Development Department Executive Vice-President President General Manager Project Division Customer Service Department Public Relations Department Procurement Department Finance Department     Legal Division Corporate Security Division Strategic Development Division Wholesales Department Process Division Network Department


Slide13: Wire telephony local domestic long distance international fixed to mobile value-added services Internet Takas ISP & Portals E-commerce/Multimedia Wholesale to operators transit service outgoing & incoming international call routing mobile to fixed Call centre Lintel Call Centre services Telemarketing Networks & data PBX/Centrex ISDN Leased lines (broadband and digital) ADSL Telephony based on Modern Technologies UAB Voicecom - outgoing & incoming international calls group Technical support UAB Comliet – planning /design/construction, maintenance, installation, fault repair 3. Company overview 3.5. Our business IT infrastructure & professional services data center service system hosting and support Help desk service application development other services


Slide14: continued digitalisation city fibre optic rings high capacity backbone LT’s strategy is to develop from a traditional provider of basic voice telephony services into a provider of a wide range of technologically advanced communications products and services process re-engineering upgrade of IT systems continued cost cutting Call Centres Increase of line penetration and usage new products and higher value-added services continued tariff rebalancing multiple portals development e-commerce development on the new VAS platform network modernisation for multimedia services wide ADSL services penetration Modernisation of network infrastructure Increase in market orientation, productivity and operational efficiency Revenue growth Exploitation of Internet and multimedia opportunities 3. Company overview 3.6. Our strategy


Slide15: A set of Human Resources management tools developed during the year 2000 is successfully functioning. Purposeful staff development as one of the highest priorities is carried out through targeted training programmes and developed by working in teams. 1st Graduate Trainee Programme for Lithuanian graduates with University background was successfully implemented during the year 1999 – 2001 and the second one started 1 October 2001. 3. Company overview 3.7. Lietuvos Telekomas is one of the best employers in Lithuania


Slide16: 2 SBAs: access and portals Products and Services: ADSL to business and residential customers (from 2 April 2002 launched plan A4 with highest internet connection speed over ADSL – 1Mbps/ 512 kbps) New VAS (value-added services) platform Intranet solutions (Tako biuras 1&2 – dial-up VPN’s) DSL VPN service (from 1 March 2002) Internet networks service (24-hours flatrate over ISDN line) – for customers that would like to have ADSL, but there is no technical possibilities (from 1 May 2002) Takas iD – ADSL based metered service for residential customers (from 20 September 2002) 3. Company overview 3.8. Our Internet business (Part 1)


Slide17: Number of unauthorized Internet dial-up customers and amount of unauthorized Internet dial-up traffic (thou. min.) 3. Company overview 3.9. Our Internet business (Part 2)


Slide18: Lietuvos Telekomas up to December 31, 2002 will have the right to be the sole operator of public fixed telephone network and sole provider of the public fixed telephone network services. Head of the Communication Regulatory Authority (CRA) was appointed on 26 February 2001 and members of the Council of the Communication Regulatory Authority were appointed on 30 May 2001. From this date CRA officially started its activities. The Company must interconnect with all other licensed operators. Lietuvos Telekomas has signed the Interconnection Agreements with all three Lithuanian mobile operators. On 6 June 2001, the Government approved the National Numbering Plan. Implementation of the Plan started in September 2001 and the main implementation activities were finished in September 2002. The new Law on Telecommunications was approved on 5 July 2002 and will enter into force on 1 January 2003. Preparation of the secondary legislation is in the process. 3. Company overview 3.10. Regulatory matters in Lithuania


Slide19: Re-balancing of tariffs, both structure and levels Creating a modern cost allocation system Expanding of the network in non-profitable rural areas Rightsizing of Company’s employees and implementation of modern organization and process-thinking environment to become more efficient 3. Company overview 3.11. Period of exclusive rights


Slide20: Re-balancing of tariffs is concluded well before 1 January 2003. Tariffs are divided in two baskets in accordance to the price-cap formula basket Y is key to re-balancing basket X unlikely to be fully utilised Price-cap baskets Basket Y Basket X Local calls Local calls Monthly subscription fee Monthly subscription fee Installation fee ILD DLD (incl. Fixed to mobile) CPI+15% maximum CPI+10% maximum Less than 8% used last year (2001 07- 2002 07) Source: Company licence 3. Company overview 3.12. Tariff re-balancing App. 16% used last year (2001 07- 2002 07)


Slide21: Telephone main lines connected (thou)* 1.188 1.152 1.168 994.8 Penetration (%)* 34.0** 33.1 33.5 28.7 Revenues (MLTL) 1.038,6 1.058,5 794.8 729.2 Profit before tax (MLTL) 333.0 138.7 140.5 77.9 Net profit (MLTL) 240.4 181.7 97.2 59.2 EBITDA (MLTL) 523.6 564.4 442.4 389.5 Investments (MLTL) 517.0 368.4 264.1 173.5 EPS (Earning per share (LTL)) 0.30 0.23 0.125 0.076 Digitalisation (%)* 46.5 64.97 59.5 81.5 Full time employees (end of the period) 6,293 5,646 5,781 4,558 2000 2001 * Only parent company’s indicators ** Calculated on the basis of the population of 3.493 thousand 2001 2002 9 months 3. Company overview 3.13. Key indicators of Lietuvos Telekomas Group


Slide22: 3. Company overview 3.14. Revenues (IAS) +8% -8.3%


Slide23: 9 months results for the year 2002 3. Company overview 3.15. Growth rates of main indicators (compared to the result of the 9 months of 2001)


Slide24: * Profit before tax including the gain from sales of UAB Bite GSM and UAB Mokejimu Korteliu Sistemos shares MLTL 3. Company overview 3.16. Profit before tax


Slide25: * LT + LTVS (relative number working in the fixed telephony area) ** LT + LTVS + Comliet (relative number working in the fixed telephony area) *** LT + LTVS + Comliet + Voicecom ((relative number working in the fixed telephony area) 3. Company overview 3.17. Lietuvos Telekomas employees (full time in core business)


Slide26: * Calculated on the bases of the population of 3,493.4 thousand 3. Company overview 3.18. Penetration/ Number of applicants on the waiting list (thou)


Slide27: 3. Company overview 3.19. Digitalisation


Slide28: 3. Company overview 3.20. Analogue/ Digital lines


Slide29: 3. Company overview 3.21. Digitalisation of business subscribers in Lithuania


Slide30: 3. Company overview 3.22. Digitalisation of main lines in 5 largest cities


Slide31: 3. Company overview 3.23. Digitalisation of business subscribers in 5 largest cities


Slide32: 3. Company overview 3.24. Modern network of Lietuvos Telekomas (9 months 2002)


Slide33: 3. Company overview 3.25. Capacity of digital exchanges (9 months 2002)


Slide34: 3. Company overview 3.26. Transmission and Access Network (9 months 2002)


Slide35: 3. Company overview 3.27. Coverage of data communication network NIDA ŠILUTĖ KRETINGA SKUODAS PLUNGĖ TELŠIAI JONIŠKIS PASVALYS BIRŽAI ROKIŠKIS ZARASAI KUPIŠKIS PAKRUOJIS UTENA IGNALINA RASEINIAI JURBARKAS KAUNAS TRAKAI DRUSKININKAI RADVILIŠKIS ŠALČININKAI ŠIRVINTOS MOLĖTAI ANYKŠČIAI ŠVENČIONYS ŠAKIAI PALANGA KLAIPĖDA KELMĖ MAŽEIKIAI N.AKMENĖ ŠIAULIAI PANEVĖŽYS VILNIUS VARĖNA TAURAGĖ MEDININKAI VISAGINAS GARGŽDAI ŠILALĖ UKMERGĖ JONAVA KAIŠIADORYS ELEKTRĖNAI BIRŠTONAS LAZDIJAI PRIENAI VILKAVIŠKIS MARIJAMPOLĖ ALYTUS DLL services & FR, IP access KĖDAINIAI Kuršėnai