14 03 2007

RESULTS FOR THE YEAR 2006

TEO LT, AB

14 03 2007

HIGHLIGHTS - YEAR 2006

• Changed its name to TEO LT, AB

• Introduced new sub-brands for its main activities

• Completed streamlining of the Group structure

• Reorganised sales units structure

• Simplified product portfolio and introduced new

services

• Launched digital TV services

• Started provision of new IT services

• Became a full member of ETNO (European

Telecommunication Network Operator) association

• World Communication Awards 2006 award “Best

changemaker”

14 03 2007

RESULTS - YEAR 2006

• Continuous leadership on broadband internet, fixed voice, data communication, leased lines and Call Center market

• Rapid growth of broadband internet users’ number

• Stopped customers’ churn

• Increased speed at and number of WiFi hot spots

• Continued revenue growth in spite of sale of Comliet

• Strong EBITDA and cash flows

• Continued growth of net profit

• Repaid EBRD loan

14 03 2007

TEO VISION AND MISSION

• VISION

Your best partner in communicating with the constantly changing world

By employing the most modern technologies we enable our customers to

reach people, knowledge and entertainment

• MISSION

To create value for shareholders and customers by providing professional

and high-quality telecommunications, TV and IT services

14 03 2007

TEO GROUPTEO LT, AB(voice, internet, wholesales, data communication, digital TV services; Internet portal Zebra)

UAB Lintel (directory inquiry 118, contact center services, treasury stocks)

UAB Baltic Data Center(IT infrastructure services)

UAB Voicecom(NMT-450 network)

UAB Kompetencijos Ugdymo Centras(training and consultancy)

100%

100%

100%

100%

• In 2006, sold UAB Comliet (construction business), UAB MicroLink Lietuva, UAB Baltijos Kompiuterių Akademija and 26% in UAB TietoEnator Consulting

• Acquired remaining 40% in UAB Baltic Data Center

• Completed liquidation of UAB Verslo Portalas

• In January 2006 acquired 100% stake in OOO Comliet-Kaliningrad (Russian Federation) was sold in February 2007 VšĮ TEO Sportas (women’s basketball

team TEO, fitness club ZEBRA SPORT)

100%

14 03 2007

TEO BUSINESSES

VOX - voice services for residential customers

ZEBRA - internet services for residential customers

GALA – digital television services

TEO VERSLAS - voice, internet, data communication and IT services for business customers

14 03 2007

VOX - VOICE TELEPHONY SERVICES

• Number of main lines: -1.7% (or 13.6 thousand lines)

• From September number of main lines is growing

• 53 thousand new lines installed and 66.6 thousand disconnected

• Increased number of revenue generating lines

• Number of subscribed payment plans: 607 thousand

• Total traffic: -2.1%

• Number of alternative operators customers: 53 thousand (end of 2006)

Number of main lines (thou.)

812 807 802 799 791 786 782 785

600

650

700

750

800

850

Q12005

Q2 Q3 Q4 Q12006

Q2 Q3 Q4

14 03 2007

ZEBRA - INTERNET SERVICES

• Number of broadband internet connections: +72.5% (y-o-y)

• 176.1 thousand retail DSL, 2.2 thousand – wholesales DSL and 2.5 thousand LAN DSL connections

• 3 major ZEBRA internet payment plans: - Basic (up to 256 kbps during off-peak and weekend time for 26 LTL), - Optimum (up to 1 Mbps without limitations for 49 LTL),- Premium (up to 4 Mbps without limitations for 79 LTL).

• 804 wireless internet (Wi-Fi) access points with connection speed up to 4Mbps and more (287 hot spots in 2005)

• 1,135 ZEBRA VoIP services users

Number of ADSL access points

180,774

156,803

135,274

118,560

104,798

84,60669,804

61,928

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Q12005

Q2 Q3 Q4 Q12006

Q2 Q3 Q4

14 03 2007

GALA – NEW GENERATION TELEVISION

• Digital TV over IP launched in October

• Basic package - 40 TV programs

• 4 additional packages: news, cinema, leisure and knowledge

• Basic monthly fee – 35 LTL

• 4,902 GALA service users

• Digital video and audio quality

• Selection of broadcasting language

• Internet and e-mail on TV screen

• More IP TV functionalities in 2007

14 03 2007

DIGITAL TERRESTRIAL TELEVISION

• July 2006: TEO started transmission of

digital terrestrial television (DVB-T)

signals in Vilnius area

• Licence for construction of 2 out of 4

national DVB-T networks for

transmission of 10 TV programs per

network

• By 2012 DVB-T should completely

substitute analogue terrestrial

transmission of TV programs in

Lithuania

14 03 2007

OTHER NEW SERVICES

• August 2006: consultancy service on PC

and internet usage by short number all

around the clock provided by Lintel

• First virtual Call Center for insurance

company implemented by Lintel, Baltic

Data Center (BDC) and TEO

• September 2006: PC maintenance

service for small and medium size

companies provided by TEO

• November 2006: a new and the largest

in Lithuania data center opened by BDC

and TEO

14 03 2007

TELECOMMUNICATIONS MARKET IN LITHUANIA (YEAR 2006)

• Total revenue: LTL 2,695 million

(LTL 2,516 million in 2005)

• Growth: 7.14 % (y-o-y)

• Penetration per 100 residents:

fixed voice – 23.4

mobile voice – 139.2

internet – 45.3

broadband internet – 10.9

• Investments: LTL 526 million

Revenue breakdown by segments

9.8%1.7%22.5%

3.3%

1.0%

15.8%45.9%

Mobile telephonyFixed-line telephonyLeased linesInternet accessData communicationNetw ork's interconnectionCable TV and other

Source: Report of Communications Regulatory Authority

14 03 2007

FIXED VOICE TELEPHONY MARKET IN LITHUANIA (YEAR 2006)• Total revenue: LTL 425 million

(LTL 444 million in 2005)

• 52 companies are providing fixed voice services: 27 provide national and international calls, 19 only international, 5 only wholesales (transit) and one only call center services

• 27 companies are using IP network, 13 of them CATV networks

• Total fixed voice traffic (y-o-y): -3.9%

• TEO market share (Q4 2006) in terms of: - total customers: 93.7%- total traffic: 96.4%- local calls minutes: 99.5%- domestic long distance calls minutes: 89.1%- international calls minutes: 72.3%

Source: Report of Communications Regulatory Authority

14 03 2007

INTERNET ACCESS MARKET IN LITHUANIA (YEAR 2006)

• Total revenue: LTL 265 million (LTL 213 million in 2005)

• TEO share of broadband internet market in terms of revenue – 48,5%

• 115 internet service providers

• 418 thousand internet users: - DSL: 179 thousand- via CATV networks: 66 thousand - wireless access: 53 thousand - LAN: 46 thousand - via mobile network: 37 thousand- fiber optics: 24 thousand- dial-up: 11 thousand

Revenue by service providers for Q4 2006

3.8%

3.5%3.2%29.0%

5.2%

10.1%45.2%

TEOOmnitelBitė LietuvaBalticum TVLRTCPenki kontinentaiOther

Source: Report of Communications Regulatory Authority

14 03 2007

TEO COMPETES IN ALL AREAS EXCEPT MOBILE VOICE

• CATV market is very fragmented: 50 players, market revenue LTL 66 million, only 2 operators with market share above 10%.

• Radio and TV program transmission is dominated by one player. Market revenue LTL 21 million.

Market Market revenue in 2006 (LTL million)

Market growth y-o-y (%)

Number of players

Share of TEO in Q4 2006 (%)

Fixed voice 425 -4.3 52 96.0

Leased lines 25 -2.9 15 51.7

Internet access 265 24.2 115 45.2

Data communication 47 16.9 14 50.4

Network interconnection 607 14.3 4+ 19.1

Mobile voice 1,238 5.2 7 --

Source: Report of Communications Regulatory Authority

14 03 2007

MAJOR FINANCIAL INDICATORS BY YEARS

• 2006 vs 2005 (restated):- revenue: +0.7%- expenses: +0.4%- EBITDA: -1.0%- EBITDA margin: 47.7% (48.5%)- EBIT: +49.8%- net profit: +55.3%- net profit margin: 17.8% (11.5%)- investments: +32.9%- investments: LTL 98 million

968

808721 730 735

504

386 337 354 352

67-35 34 84 131

-200

0

200

400

600

800

1,000

1,200

2002 2003 2004 2005 2006

Revenue EBITDA Profit

Revenue, EBITDA and Net Profit (LTL million)

14 03 2007

REVENUE AND EXPENSES

Breakdown of revenue in 2006

71.4%

0.1%2.8% 1.3%24.4%

Voice telephonyInternet & datacomOtherIT servicesTV services

Breakdown of expensesin 2006

32.5%40.6%

26.9%

Employee related

Interconnection

Other

14 03 2007

EMPLOYEES

Breakdown of TEO Group employees

35 18690

92

2263

TEO LT, AB

UAB Lintel

UAB Baltic Data Center

VsI TEO Sportas

UAB Kompetencijos Ugdymo Centras

Number of TEO Group employees

3,066 3,023 2,978 3,0052,774

2,826 2,963 3,098

600

1,100

1,600

2,100

2,600

3,100

3,600

Q12005

Q2 Q3 Q4 Q12006

Q2 Q3 Q4

• During Q1 2006 UAB Comliet (175 employees), UAB MicroLink Lietuva (89) and UAB Baltijos Kompiuteriu Akademija (5) were sold.

14 03 2007

BALANCE SHEET AND CASH FLOW(YEAR 2006)

• Total assets: LTL 1,249 million (-0.8%)

• Cash and short term financial investments: LTL 307 million (+1.9%)

• Loan granted: LTL 150 million

• Borrowings: LTL 8.6 million (-46.6%)

• Net debt: LTL -299 million

• Gearing ratio: -26.9%

• Equity to assets ratio: 89%

• ROA: 12.3%

• ROE: 11.8%

• Paid-out dividends: LTL 124 million

Cash Flow

298345

276

218178

202

050

100150200

250300350400

2004 2005 2006

Net cash from operating activities (LTL million)Net cash before f inancing activities (LTL million)

14 03 2007

DIVIDEND PAYOUT

• Following the Lithuanian Law on Company dividends should be paid from the Parent company’s retained earnings

• TEO LT, AB retained earnings 2006:

LTL 211 million

• Consolidated TEO Group retained earnings 2006 : LTL 333 million

• The Board proposed to the meeting of shareholders to pay from distributable profit 0.26 litas dividend for the year 2006.

Earnings and Dividends per Share

0.110.04

-0.05

0.090.17

0.26

0.160.13

0.060.06

-0.1

-0.05

0

0.05

0.1

0.15

0.2

0.25

0.3

2002 2003 2004 2005 2006

Earnings per share (LTL) Dividend paid per share (LTL)

14 03 2007

SHAREHOLDERS OF TEO

• Amber Teleholding A/S is a subsidiary of TeliaSonera AB, Sweden.

• During 2006 State of Lithuania reduced its stake from 2.05% to 1.66%

• The last (eight) stage of State of Lithuania giving TEO shares to the citizens of Lithuania as a compensation for realty redeemable by (realty seized during the Soviet times) started in February 2007

• UAB Lintel, a member of TEO Group, holds the treasury stocks.

• Total number of shareholders: 12,872

Structure of shareholders (31 December 2006)

1.66%

28.10% 60.00%

4.67%

5.57%

Amber Teleholding A/SEast Capital Asset Management ABState of LithuaniaTreasury StocksOther Shareholders

14 03 2007

TEO Market Capitalisation at the end of period (LTL million)

2,2492,208

1,752

1,279

733

1,019

1,711

0

500

1,000

1,500

2,000

2,500

2000 2001 2002 2003 2004 2005 2006

TEO MARKET CAPITALISATION

• Shares listed on Vilnius Stock Exchange

(VSE ticker: TEO1L)

• 10.5% of shares are represented by

GDRs (1 GDR = 10 shares)

• GDRs are listed on London Stock

Exchange (LSE ticker: TEOL).

• Share price on VSE in 2006 (in Litas):

- start of the year: 2.71

- year low: 2.10

- year high: 2.80

- end of the year: 2.76

• Shares turnover on VSE in 2006: 132.8

million (+59%) or LTL 318 million (+58%)

14 03 2007

TRADING IN TEO SHARES ON VSE IN 2006

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

6,000,000

6,500,000

7,000,000

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00

Volume (units) Price (in litas)

14 03 2007

OUTLOOK - YEAR 2007• Maintain leadership position on voice services

market

• Stop the customers’ churn and maintain the same traffic levels

• Active acquisition of new internet and IP TV customers

• Increase of ARPU by selling additional services

• Finding a new sources of revenue by entering new markets and through M&A

• Extension of IT services portfolio

• Rapid development of WiFi network (up to 4,800 new hot spots during 2007)

• Continued revenue and net profit growth

• EBITDA at the same level

• Capital investments: LTL 164 million

14 03 2007

NEW TEO HEAD OFFICEBUILDING

• On 8 February 2006 the Board approved construction of a new head office building in Vilnius at Lvovo str. 21A

• Value of the project – LTL 84 million

• Main contractor – AB YIT Kausta

• 14 storey building with bulkhead and 3-4 storey for underground parking

• Customer care halls will be on 1st floor, meeting rooms and Technical museum on 2nd floor, office premises on the other floors

• Total area – about 16 thousand sq. m

• Beginning of construction in Q1 2007

• Duration – 18 months

14 03 2007

THANK YOU FOR YOUR ATTENTION

WWW.TEO.LT