Morgan Stanley TMT Conference, Barcelona

November 2006Elisa Corporation 1

Morgan StanleyTMT Conference, Barcelona

November 2006

Contents


• Elisa today

• Finnish telecoms market

• Q3 2006 and financial highlights, and Elisa’s segment review

• Execution of the strategy

• Outlook for 2006

Elisa at a glance


Revenue per segment in Q3 2006• Full range of telecom services− No 1 fixed network operator− No 1 broadband operator− No. 2 mobile operator in Finland and in Estonia

• Offering Pan-European and global scope through partnerships− Vodafone and Telenor

• Market cap € 3.3bn

Mobile 61%

Fixed 39%

Foreign owners

58.6% (45)

Domestic institutions 15.8%

(23)

House-holds

25.6% (32)

Shareholder structure, 30 Sept 2006

Finnish telecom market

Market shares in Q3 2006


Mobile operators 1) Fixed broadband operators 2)

Elisa 39% Elisa 35%

TeliaSonera 43%

DNA 18%

TeliaSonera 29%

Finnetcompanies

25%

Welho* 6%Others 5%

* Cable-TV company1) Company data2) Company data and Elisa estimates

Financial highlights

Elisa Q3 2006 highlights


• Sale of 3G service bundles progressed well

• Churn decreased further to 11.7%, mobile ARPU decreased slightly from the previous quarter− Lower Saunalahti interconnection fee

• Both mobile and ADSL subscription bases increased− Broadband market growth has slowed down

• Revenue and EBITDA improved clearly

• Financial position remained stable


Target to increase profitability


Revenue and EBITDA-%

371391 385 391

333 339 333 351 333 336 326 343 348382 387

22 % 23 %25 % 26 %

29 %31 % 32 %

30 %28 % 27 % 27 % 32 %30 %26 %

32 %

Q12003

Q22003

Q32003

Q42003

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

Q12006

Q22006

Q32006

Revenue, EURm Rolling 12 mths EBITDA-% excl. one-offsFAS IFRS


Financial position is strong


Net debt and Cash flow

767 742 722654 660

580513

462 489

354 363293 293

381336

25 2188

26

136

1 29 3613

14671

9-1014669

-10

90

190

290

390

490

590

690

790

890

Q12003

Q22003

Q32003

Q42003

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

Q12006

Q22006

Q32006

Net debt, EURm Cash flow, EURmFAS IFRS

Segment review, mobile business

Lower churn, ARPU at the same level


ARPU and value added services• Churn 11.7 % (27.2*)

− Shift from price competition to service competition

• ARPU EUR 30.5 (31.2*)− Lower Saunalahti interconnection tariff

• 3G service bundles increase use of services

• Growth in network usage− MOU grew by 35% and SMS 38% (increased Saunalahti

traffic)− Growth excluding Saunalahti 17% and 32%, respectively

1 483

* excluding Saunalahti

31,2 30,428,0

31,3 30,5

17 % 17 % 17 % 17 % 17 %

Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006

ARPU, € Share of non voice services

Segment review, mobile business

Lower interconnection fee affected ARPU


0

5

10

15

20

25

30

35

40

45

50

Q1/01

Q2/01

Q3/01

Q4/01

Q1/02

Q2/02

Q3/02

Q4/02

Q1/03

Q2/03

Q3/03

Q4/03

Q1/04

Q2/04

Q3/04

Q4/04

Q1/05

Q2/05

Q3/05

Q4/05

Q1/06

Q2/06

Q3/06

40

60

80

100

120

140

160

180

200

220

240

ARPU Churn Usage

ARPU (EUR) and annualised churn (%) Usage (min/sub/month)

ACN entered the market

Number-portability

Saunalahtistarted to

grow

Several new players in the

market

TeliaSoneraacquired ACN

Elisa acquired Saunalahti

Segment review, fixed network business

Broadband growth has slowed down


345 898

420 465459 827 472532 479586

37 715 39 011 39 36212 705 7 054

-80 000

20 000

120 000

220 000

320 000

420 000

520 000

Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006

Subscriptions Net adds

Broadband subscriptions• Broadband subscriptions growth

39% y-o-y

• Broadband growth 7,000 subscriptions in Q3− Elisa as a market leader in slower growth subscription

market

• Elisa introduced broadband service package to the market

• Decrease in analogue lines continued− analogue lines decreased by 11% and ISDN channels

by 19%

Segment review, fixed network business

Growth in subscriptions has stopped


0

200

400

600

800

1 000

1 200

1 400

1 600

Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06

Traditional analogue ISDN Cable TV Broadband

Thousands

Strategy execution


Integration of One Elisa

Strengthening market position in core markets

New markets and new services

2003 -

2005 -

Strategy execution

Productivity improvement


• Installation and maintenance outsourcings• Financial administration outsourcings• Reduction in personnel costs• Changes in broadband pricing

Significant profitability improvement

• 3G service bundles and wider service offering• Device management solution to corporate

customers• Elisa TV in mobile terminal: 8 TV channels• Broadband service bundles• HSDPA launch in Estonia

Customer orientation

• Tender offer of Lounet shares• Sale of TV business in Jyväskylä

Simplification of structure


3G service bundles success story• Sale of 3G packages has progressed well

− Significant amount of new subscriptions is 3G service bundles

• ARPU much higher than in traditional subscriptions− Share of data is significant

• Currently about 220,000 3G customers in Finland, estimated amount at the year end more than 300,000

• Elisa completed the world’s first commercial UMTS900 call

Ad example: Nokia N70 including 400 minutes per month + data and SMS

Finnish mobile users are going to use familiar internet applications


The most popular mobile services% of users

0

10

20

30

40

50

60

70

email Internet Mapservices

Navigation News Weather TV Search Videocalls Music No usage

Usage in March 2006 Usage in October 2006 Plans for usage in October 2006

Source: Soprano Oyj eSearch

Multimedia computer


MusicPictures Email

Applications

Internet

Calendar MapsGames Presence

3G, WLAN, DVB3G, WLAN, DVB--H and other wireless services enable these servicesH and other wireless services enable these services

Home

Source: Nokia / Anssi Vanjoki 28.3.2006

Most comprehensive mobile TV in Finland – always in your pocket


8 different TV-channels in your mobile

Device management solution


Full service for mobile handset delivery and management

Also possibility for remote services

Outlook for 2006


• Challenging market− Competition remains challenging− More focus on services

• Clear improvement in result− Revenue will clearly grow− EBITDA and EBIT excluding non-recurring items will improve clearly− Q4 EBITDA and EBIT slightly lower level than in Q3

− increased market activities− seasonality in personnel costs

• Stable CAPEX and cash flow− CAPEX 13-15 per cent of revenue− Cash flow clearly positive


Morgan StanleyTMT Conference, Barcelona

November 2006

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Morgan Stanley TMT Conference, Barcelona