REPORT OF THE BOARD OF DIRECTORS

In 2003, Telenor established a good platform for further value creation. The year was characterised by profitable growth in the international mobile activities, a solid position in the competitive domestic market and continued efficiency improvements in operations.

At the end of 2003, Telenor’s financial position was solid, with improved margins and strong cash flow in 2003. Revenues amounted to NOK 53.1 billion in 2003. This represents a growth of NOK 4.3 billion, or approximately 9%, compared to 2002.

The Board of Directors notes that the Telenor share has performed better than average in the sector.

The Board is satisfied with the efforts that have been made in the Delta4 programme for operational efficiency. In addition to improving the efficiency of operations beyond what was set out in the Delta4 programme, a new cost awareness has been installed in all parts of the Group.

In 2003, Telenor simplified the international mobile portfolio and continued its work of creating synergies. The acquisition of the Danish mobile company Sonofon has formed the basis for a further strengthening of Telenor’s position in the Nordic region, with regard to customers, but also by creating synergy effects and improvement benefits in the mobile activities. The acquisition of Sonofon required approval from the Danish authorities and the EU, and the takeover was completed in February 2004, once such approvals were granted.

For the purpose of strengthening and coordinating Telenor’s mobile operations, a separate management area, Nordic mobile, was established at the time of the takeover of Sonofon.

In line with the Board’s directions for development of the mobile portfolio, Telenor sold 9% of the shares in the Greek mobile company Cosmote in 2003, as well as its minority shareholding in the Russian mobile operator StavTeleSot. The remaining 9% of the Cosmote shares were sold in February 2004. The ownership share in GrameenPhone (Bangladesh) was increased in 2003. The total number of subscriptions in the mobile companies in which Telenor’s has ownership shares was 34.8 million at the turn of the year, a figure that makes Telenor the twelfth largest mobile company in the world.

In order to provide seamless services and improve roaming capabilities in Europe, Telenor was, in October 2003, involved in forming a new mobile alliance, the Starmap Alliance. The alliance had as at 31 December 2003 nine members.

The organisational steps that were taken in the domestic market to strengthen customer orientation has, together with efficiency improvements, secured good market shares and margins despite tough competition. The market organisation Norge has been further developed during the course of the year. It is now split into two main units, which are responsible for the residential market and the business market respectively. The Board regards these changes as key to increasing customer satisfaction by making Telenor more distinct, simpler and more customer-friendly.

The Board is also satisfied with the activities in Broadcast, being stable and profitable, and holding a strong position in the Norwegian and Nordic markets.

The Board is working systematically to develop Telenor’s strategy and will continuously assess the business portfolio in order to ensure that long-term earnings and future value creation are maintained. The main emphasis in the future will continue to be on retaining the strong position in Norway, securing profitable growth in the international operations, creating synergies across the mobile portfolio and on maintaining a continuous and high level of productivity.

The Board has continued its work on the company’s governing structures and monitors the development of all legislation and standards that shall secure transparency and accountability in all areas, and which form the basis for the trust on which Telenor is dependent.

Telenor ASA shall create value for its owners. Based on Telenor’s financial position and expected capital requirements, the Board has revised the dividend policy for Telenor. The new policy states that Telenor intends to distribute an annual dividend equal to 40%–60% of a normalised net income. The goal is to have a stable increase in the annual ordinary dividend per share.

The Board will propose to the Annual General Meeting (AGM) that a dividend for the financial year 2003 be set at NOK 1 per share. The dividend approved at the AGM will be paid on 25 May 2004 to the shareholders on the date of the AGM. The shares will be traded on the Oslo Stock Exchange, exclusive of dividends, from Friday 7 May 2004. The Board has also decided that the company, as from January 2004, acquires own shares in the open market. As at 19 March 2004, the company had purchased 12,810,000 shares in the market. This is a part of the repurchase authorisation adopted and approved by Telenor’s AGM on 8 May 2003. As Telenor’s largest shareholder, the Norwegian State has undertaken to participate in the repurchase by cancelling a proportionate part of its shares, whereby the State’s ownership share will remain unchanged.

At the AGM on 6 May 2004, the Board will propose that the shares held by the company be cancelled, and request that a new authorisation to purchase shares be adopted.

In July 2003, the Norwegian State reduced its shareholding in Telenor from 77.6% to 62.6%.

At year-end 2003, Telenor ASA had 55,234 shareholders. The ten largest owners represented 75.83% of outstanding shares. The company had a share capital of NOK 10,824,127,686, distributed between 1,804,021,281 shares. The Telenor share is quoted on the Oslo Stock Exchange and Nasdaq.

As at 31 December 2003, Telenor’s shares were quoted at NOK 43.50 on the Oslo Stock Exchange, compared to NOK 27.00 the previous year. This represents an increase of 61% and the market value of Telenor was NOK 78.5 billion compared to NOK 48.7 billion at the beginning of the year.

During the same period, the Dow Jones European Telecom Index rose by 14%, and the OSE Benchmark Index by 46%. The Telenor share was among the most traded shares on the Oslo Stock Exchange in 2003.

RESULTS
Key figures
In 2003, net income for the Telenor Group was NOK 4,560 million, equal to NOK 2.57 per share. The corresponding figures for 2002 were a net loss of NOK 4,298 million and a loss of NOK 2.42 per share.

In 2003, profit before taxes and minority interests was NOK 7,426 million, compared to a loss of NOK 5,136 million in 2002. The profit before taxes and minority interests was positively affected by special items (gains and losses on disposals, write-downs, expenses for workforce reductions, loss contracts and exit from activities) by a total of NOK 1.1 billion in 2003, whilst the result in 2002 was correspondingly negatively affected by a total of NOK 7.6 billion. Adjusted for special items the result before taxes and minority interests increased by NOK 3.8 billion to NOK 6.3 billion in 2003. This increase was largely related to increased revenues and improved margins from cost reductions, and a positive effect from the consolidation of former associated companies. Telenor’s program for improving operational efficiency, Delta4, continued in 2003 and progressed better than originally planned.

A gain of NOK 1.5 billion before taxes was realized in 2003 from the sale of 9% of the shares in the formerly associated mobile company Cosmote. The market values of Telenor’s operations experienced a general increase during 2003. No major write-downs were therefore made in 2003. In 2002, Telenor made write-downs of approximately NOK 6.6 billion as a result of decrease in value of which NOK 4 billion was related to international mobile companies. Approximately NOK 0.3 billion was expensed in 2003 in connection with workforce reductions, loss contracts and exit from activities, compared to NOK 1 billion in 2002.

The operating profit for 2003 was NOK 7,560 million compared to an operating loss of NOK 320 million in 2002. Adjusted for special items, the operating profit increased by NOK 3.7 billion to NOK 8 billion in 2003. The increase was related to underlying growth, cost reductions, and the positive effect of consolidating companies. All business areas and other units improved their operating results. The Mobile business area made up 69% of the operating profit in 2003 and contributed with the largest increase compared to 2002. The increase in operating profit in the Fixed business area was mainly generated in Norway. Broadcast had an operating profit of NOK 181 million in 2003 compared to an operating loss in 2002. The total operating loss in other units was significantly reduced compared to 2002.

The result from associated companies was a profit of NOK 1,231 million compared to a loss of NOK 2,450 million in 2002. The increase was mainly due to sales gains in 2003 and lower depreciation and write-downs of excess values compared to 2002. There was a considerable increase in the result from the mobile company VimpelCom, while the result in the mobile company Sonofon was negatively affected by write-downs of fixed assets. Additionally, the installation company Bravida experienced increased losses, to a large extent due to restructuring costs.

Net financial expenses decreased by NOK 1,001 million to NOK 1,365 million in 2003 as a result of currency losses and write-downs of shareholdings in 2002, compared to a net positive effect on these items in 2003.

Current and deferred income taxes totaled NOK 2,376 million in 2003, which is 32% of the result before taxes and minority interests. In 2003, Telenor accrued deferred taxes on retained earnings in individual companies outside Norway. Additionally, the effective tax rate was increased due to losses in individual associated companies and subsidiaries outside Norway and amortization and write-downs of goodwill where deferred tax assets have not been recorded. This was partly offset by tax losses from the liquidation and sale of companies. As a result of tax losses carried forward in Norway, current taxes in 2003 was related to subsidiaries abroad.

The minority interest share of net income was NOK 490 million in 2003, compared to a share of net losses in 2002 of NOK 358 million. The results in 2003 were mainly related to Kyivstar and GrameenPhone.

The cash flow from operating activities increased by NOK 0.8 billion from 2002 to NOK 13.7 billion in 2003. Increased revenues and operating margins had a positive effect on the cash flow. The full-year effect of consolidation of companies also made a positive contribution. The increase was partly offset by higher payments of financial items and taxes in subsidiaries abroad. In 2002, there was also a higher positive effect of accrual items.

Telenor invested NOK 7 billion in 2003, of which NOK 6.5 billion was capital expenditure (capex). The investments outside Norway totaled NOK 4 billion. Capex was NOK 2.4 billion lower in 2003 than in 2002, mainly due to lower investments in the new head office at Fornebu, which was completed in 2002, and in the networks in Norway.
On 12 February 2004, Telenor purchased the remaining 46.5% of the shares in Sonofon for NOK 3.66 billion. As of 26 February 2004, Telenor agreed to sell the remaining shareholdings in Cosmote for cash consideration of approximately NOK 3.1 billion, with a gain of NOK 2.6 billion before taxes.

At the end of 2003, Telenor’s total assets were NOK 86.1 billion and the equity ratio (including minority interests) was 47.5%, compared to NOK 89.5 billion and 41.7% respectively in 2002. Net interest-bearing liabilities totaled NOK 17.8 billion, a decrease of NOK 9.1 billion during the year. In the opinion of the Board, Telenor’s financial position is satisfactory.

Pursuant to Section 3-3 of the Norwegian Accounting Act we confirm that the accounts have been prepared on the basis of a going concern assumption.

Key figures 2001–2003, Telenor Group (in NOK millions) 2003 2002 2001 Revenues 53,121 48,826 46,040 EBITDA 18,302 13,469 14,250 Operating profit (loss) 7,560 (320) 3,177 Associated companies 1,231 (2,450) 8,237 Investments 7,017 21,300 18,846 No. of man-years 19,450 22,100 21,000

Comments regarding the business areas
As from 1 January 2003, Telenor has three business areas, covering mobile activities (Mobile), fixed network activities (Fixed) and TV operations (Broadcast), as well as Other activities. Comparable figures have been prepared in the financial statements as if the new structure was in place on 1 January 2001.

Mobile
Total revenues increased by NOK 3,464 million to NOK 23,810 million in 2003. There was a good underlying growth in the activities outside Norway due to the increase in the number of subscriptions and the full-year effect of the consolidation of Kyivstar and Pannon GSM, partially offset by the strengthening of the Norwegian Krone compared to some other currencies. Revenues in Norway for 2003 and the number of subscriptions at the end of 2003 were roughly the same as in 2002.

The operating profit increased by NOK 3,810 million to NOK 5,224 million in 2003. This increase was related to write-downs that were made in 2002 and to growth in the operations outside Norway, including the consolidation of previously associated companies.

The result from Telenor Mobile’s associated companies and joint ventures in 2003 was a profit of NOK 1,639 million compared to a loss of NOK 2,030 million in 2002. This increase was related to gains from the sale of shares in Cosmote in 2003 and lower amortization and write-downs of excess values compared to 2002. There was a strong growth in 2003 in the number of subscriptions in the existing associated companies, particularly in VimpelCom in Russia and DTAC in Thailand.

Fixed
Total revenues increased by NOK 487 million to NOK 20,509 million in 2003. The increase was mainly generated from the activity in Sweden, which was principally related to the consolidation of Utfors AB from 31 December 2002. Revenues in Norway were largely unchanged compared to 2002. Reduced traffic revenues in Norway were offset by increased revenues from ADSL and from wholesale. The number of traffic minutes in the fixed network in the Norwegian market fell by approximately 8% in 2003 as a result of the migration to mobile traffic and the increase in the use of ADSL, where the volume of traffic is not measured. Fixed-Norway’s market share of traffic minutes fell by three percentage points to 69% by the end of 2003.

The increase in the operating profit in Fixed in 2003 compared to 2002 came mainly in Norway, and was related to improved operational efficiency, reduced write-downs and reduced expenses for workforce reductions and loss contracts.

Broadcast
Total revenues increased by NOK 1,215 million to NOK 4,820 million in 2003, primarily as a result of the full-year effect of the consolidation of Canal Digital, and the increase in the number of subscribers. The number of subscribers with satellite dish and cable TV increased by a total of 95,000 to 1,367,000, while the number of subscribers in households with small antenna TV networks decreased by 35,000, to 1,098,000.

The operating profit in 2003 was NOK 181 million, compared to a loss of NOK 475 million in 2002. The improvement was due to increased revenues, cost reductions, reduced write-downs, expenses for workforce reductions and loss contracts.

Other activities
Total revenues were reduced by NOK 829 million to NOK 10,811 million. The reduction in revenues was mainly due to the disposal of units in 2002 and 2003. The total operating loss in “Other activities” was NOK 488 million in 2003 compared to an operating loss of NOK 2,076 million in 2002. The improvement was a result of cost reductions, reduced write-downs and expenses for workforce reductions, loss contracts and exit from activities.

Operating profit (loss) 2001–2003 (in NOK millions) 2003 2002 2001 Mobile 5,224 1,414 2,495 Fixed 2,531 731 1,035 Broadcast 181 (475) (726) Other units (488) (2,076) 589 Eliminations 112 86 (216) Total 7,560 (320) (3,177)

ALLOCATIONS
Net income for the year for the parent company Telenor ASA was NOK 5,115 million after receipt of group contributions of NOK 2,000 million before taxes.

The Board of Directors proposes that the Shareholder’s meeting approve the payment of a dividend of NOK 1.00 per share for 2003.

Dividends	1,776
Transferred to other equity	3,339
Total	5,115

After these allocations, the company’s distributable equity as at 31 December 2003 totaled NOK 11,611 million.

NON-FINANCIAL INFORMATION
Working environment
The Board of Directors was satisfied that in 2003 Telenor has been working consistently and systematically towards its objectives with regard to sickness absence, ergonomics, fire prevention, the follow-up of subcontractors and the continuous improvement of the working environment at all levels in the group. A total of 42 HES audits were carried out in order to monitor these areas in the Group’s companies. Sickness absence was 5% in 2003, almost the same as in 2002. Along with a number of other major businesses in Norway, Telenor signed an agreement in April 2003 for an including working life. The agreement shall contribute to a reduction in sickness absence, better adaptation of the working conditions for employees with special needs, and to raise the actual retirement age in the Group. In 2003, 18 injuries leading to absence were reported, none of which were serious. 11 injuries that did not lead to absence and 17 near accidents were also registered.

External environment
The environmental impact per employee in Telenor is low. The Group has an impact on its surroundings primarily as a result of its size, an impact which is largely associated with energy consumption, travel and installation activities.

The Board of Directors regards Telenor’s environmental accounting to be an important element in its management system and is satisfied that the energy consumption in Telenor’s activities in Norway was reduced by 6.2% in 2003.With regard to energy consumption linked to Telenor’s buildings, energy-saving measures were implemented in 72 buildings in 2003 leading to annual savings of 5 GWh. The project will continue in 2004. When measures have been implemented for all buildings, an annual energy reduction of approximately 6% is expected, compared to the current level (200 GWh). This corresponds to annual savings of approximately NOK 6 million. An effort to strengthen the awareness of efficient energy consumption is also being made.

Indexes
Based on evaluations of its social, ethical and environmental achievements, Telenor is listed and well placed on prestigious international indexes. The most important of these are the Dow Jones Sustainability Indexes, FTSE4Good and Storebrand’s “Best in Class”.

Skills and education
Telenor considers it important to attract and retain skilled employees. Consistent efforts have been made in the last year to develop Telenor’s leadership. Leadership requirements have been introduced as a guide to all management and organisational cultures in the company. The development and guidance
of employees are key elements.

REGULATORY MATTERS
Telenor must adapt its national and international operations to regulatory framework conditions in the individual markets. Developing equal and fair competitive conditions is a major challenge for the authorities in all countries and Telenor’s Board and management will loyally and actively seek to contribute to the development of robust competitive markets.

At the same time, intervention in the markets, e.g. by price control, may affect Telenor’s revenues and profitability and thereby represent a regulatory risk. This applies both in Norway and internationally.

In order for Norway to have an efficiently run telecommunications market, it is inappropriate, in the opinion of the Board, to subject individual operators in Norway to controls that are more detailed and radical than those of other European countries. Certain features of the current regulatory regime are, in the opinion of the Board, counterproductive to the promotion of adaptation and innovation in the telecommunications markets. Such controls can also lead to uncertainty regarding the profitability of Telenor’s investments in the development of networks and services, and lead to significant socio-economic costs. In the long run, this may weaken the incentives for future investments in Norwegian infrastructure and service development. Telecommunications rates in Norway are already among the lowest in the OECD, and Norway is currently among the world leaders in mobile communications services such as SMS, MMS and mobile payment solutions.
A supplementary white paper for the development of the mobile market was passed in the Storting on 7 February 2003, and new legislation on electronic communication came into force on 25 July 2003. The Board is satisfied that an important principle of the new legislation is to create conditions for a harmonisation of the regulations in the EEA countries.

In 2003, The Ministry of Transport and Communications devised a number of resolutions which emphasize to a greater extent than before, the ensuring of long-term incentives for investments in infrastructure. The Board regards it as positive that the Ministry is following up the intentions of the new framework in this way.

Telenor pays particular attention to regulatory factors in its international portfolio. Of particular significance for more stable framework conditions is the adaptation to the EU’s legal framework for the new applicant countries in Eastern Europe. Outside of Europe, membership in WTO and adaptations to the WTO agreement are extremely important with regard to stable framework conditions in the international portfolio.

It is anticipated that we will see an increase with regard to controls for mobile operators outside Europe, including contributions to the USO fund and conditions for interconnections. Telenor will therefore further strengthen its efforts to reduce the regulatory risk in the international portfolio in 2004.

CORPORATE GOVERNANCE
The Board of Directors works to ensure that Telenor lives up to prevailing principles for corporate governance. Also in 2003, Telenor paid considerable attention to the framework for the management of the company, both as regards management practices and social responsibility, with the main focus on safeguarding the long-term interests of the owners. For many years, Telenor has made use of internal regulations and directives as management tools to supplement legally imposed regulations. In 2003, the Board approved new Codes of Conduct, which closely define Telenor’s value base. The Board has also reviewed the routines and guidelines that shall prevent the company from involvement in any forms of corruption.

In 2002, the US authorities approved the Sarbanes-Oxley legislation for stricter requirements with regard to internal controls and reporting and accounting matters. Since then the Board has made efforts to ensure that Telenor fulfils the new requirements in accordance with the US regulations.

The Board has appointed two subcommittees for the preparation of special cases prior to processing by the Board.

The Remuneration Committee will, at the request of the Board, assess the total remuneration to the CEO, as well as the policy regarding remuneration to managers at various levels. The Remuneration Committee held 3 meetings in 2003. As part of the effort to attract and retain qualified managers, the Board approved an option programme in 2002 which included about 80 employees, whilst the programme for 2003 included approximately 100 employees. Managers and key personnel did not receive salary increases from New Year 2003 as provided for in the agreements. The Board’s other subcommittee, the Audit Committee, handles such issues as rendering of accounts, reporting and auditing. The Audit Committee works in accordance with its own instructions and held 3 meetings in 2003. The Board has further approved provisions to ensure the independence of the auditor.

In 2003, Telenor continued to provide active communication with the financial market. All information that is essential for the evaluation of the company was issued in accordance with applicable rules and guidelines.

Throughout 2003, the Board closely followed the company’s strategic planning, placing particular emphasis on the monitoring of financial performance, cost-reducing measures and investment matters. Earlier investments have been followed up by way of special evaluation reports.

The Board
In 2003, all shareholder-elected Board members were up for election. On 6 May 2003, the Corporate Assembly of Telenor elected Thorleif Enger, Bjørg Ven, Hanne de Mora, Jørgen Lindegaard, Einar Førde, John Giverholt and Liselott Kilaas as new shareholder-elected members of the Board of Telenor ASA for a period of 2 years. At the same time, Thorleif Enger was re-elected as Chairman of the Board and Bjørg Ven was elected as Vice Chairman. Åshild Bendiktsen left the Board.

On 3 December 2002, Tom Vidar Rygh stepped down as Chairman of the Board of Telenor ASA to take up the position as CEO of Enskilda Securities AB. Vice Chairman Åshild Bendiktsen acted as chairman until the new Chairman, Thorleif Enger, was appointed on 6 March 2003 for a period of 2 years. With the exception of the Board members elected by the employees, no Board members are employed by Telenor or engaged in work for Telenor. The Board of Telenor works in accordance with guidelines for its work and procedures. With external assistance, the Board undertook an evaluation of its activity and competence in 2003.

The Board held 11 Board meetings in 2003.

ORGANISATION AND PERSONNEL
At the end of 2003, the Telenor Group had 20,190 employees (19,450 man-years) whereof 12,706 worked in Norway and 7,484 outside Norway. Since the end of 2002, the total workforce has been reduced by 2,650 man-years.

Based on the general development in the market in recent years, there was a need to reduce costs and rationalise operations. As part of the company’s efforts to achieve this, a significant workforce reduction was implemented in the Norwegian operations in 2003. To ensure the greatest possible consideration for those affected, the company has provided financial support and counselling, in addition to Telenor’s internal labour market initiatives. The company has also practiced a partial recruitment freeze, and greatly reduced its use of consultants. The Board is satisfied with the way in which the reorganisation and manpower reductions have been carried out.

Cooperation between the management and the employees’ organisations functioned well within the framework of the general agreement between the employers’ association, the Norwegian Association of Publicly Owned Companies (NAVO), and the central organisations/SAN. Membership in NAVO has given Telenor good support in relevant negotiations and employer matters. It is becoming increasingly important for the company to co-operate with other international, competitive companies. In January 2004, Telenor was offered membership in the Confederation of Norwegian Business and Industry (NHO) and the trade association Abelia, which it accepted.

Effective from 1 January 2003, Telenor reformed its organisational structure with the aim of reinforcing the company and form the best possible starting point for continued development of activities in Norway, while at the same time ensuring continued international growth in the mobile operations.

Telenor’s business activities are now run through three business areas, Mobile, Fixed and Broadcast, which, with the addition of Other activities, form the basis for the company’s financial reporting structure, A separate market organisation, Telenor Norge, has been established to simplify and reinforce Telenor’s position in the domestic market.

The organisation in Norway was developed in 2003 in order to further increase customer adaptation and market efficiency. This was i.a. achieved by creating two units which were responsible for both the fixed network products and mobile products aimed at the residential market and business market respectively. The changes, which will take full effect during 2004, have already resulted in improvements with regard to customers.

A joint management area, Nordic Mobile, was created, encompassing the mobile operations in Norway, Denmark and Sweden.

EQUAL OPPORTUNITIES
Telenor has traditionally had a gender-divided labour market. This has gradually changed as a result of the changing organisational structure, specific equality initiatives by the company and, not least, as the basis for recruitment has changed.

Occupational groups with technological backgrounds (chartered engineers, engineers and technicians) have been dominant and there was a predominance of men with this education and these skills. At the same time, units such as the directory enquiries services and customer services had a clear dominance of women.

During recent years, this has evened out, due to increased awareness in recruiting personnel in the various disciplines and due to changes in the basis for recruitment. Telenor is committed to being an attractive employer, attracting the best employees and has managed to recruit many highly skilled women.

The year 2003 was the first year in which Telenor accounted for gender equality in the company in accordance with the new provisions of the Norwegian Accounting Act and the Norwegian Gender Equality Act.
Customer Services, which was originally dominated by female employees, now has almost the same number of men as women. The average salary for women has increased, and this unit now employs male and female personnel on equal pay conditions.

The proportion of women in the Norwegian fixed network activities, which have traditionally been very male dominated, has increased in recent years. This is most likely due to the gradual change in the basis for recruitment as more women are taking up technical occupations. The difference between the average salary for men and women has also been reduced.

38% of the Group’s employees in Norway are today women and 62% are men. With regard to the two most senior levels of management, women make up more than 14% of the numbers. The average annual salary for women is lower than for men. This is mainly due to the number of men in senior positions outweighing the number of women.

Working time arrangements in the company depend on the position of the employee and are independent of gender. Eight per cent of Telenor’s employees work part-time, the majority of which are women.

Telenor set up a project in 2003 entitled “Equal Opportunities”. The first task of this project was to undertake a thorough analysis of the gender distribution with regard to remuneration, position, opportunities and attitudes. Further measures will be implemented to promote equality in the Group based on the results of this analysis.

Telenor has joined NHO’s Female Future programme and would like more women to join the programme in 2004 for the purpose of training them for Board work.

In 2003, the Board of Telenor ASA consisted of 40% women and 60% men.

RISK FACTORS
Telenor’s activities are exposed to a number of risk factors, being of a regulatory, legal, financial and political nature. It is important for the Board to ensure that the Group implements the measures necessary to control and reduce the risk factors, whereby the total risk always remains within commercially acceptable limits.

The Board and management of Telenor assess these risk factors thoroughly in connection with new investments, and continuously in relation to existing investments. The Board has also systematically reviewed and evaluated the company’s investments in order to assess the development of the individual projects in the light of an up-to-date risk situation.

In the Norwegian market, new and modified regulations by regulatory authorities present a considerable challenge and an element of uncertainty. In the international market, there are special risk factors in certain countries, such as political climate, exchange rate fluctuations, legal issues, regulatory conditions, partner risk in joint projects, etc.

With regard to international investments, Telenor has sought to balance the risk for investments outside Norway by distributing the portfolio between mature and immature markets.

Telenor is exposed to financial market risks related to changes in interest rates and foreign exchange rate fluctuations. Financial instruments are used to reduce such risks. The group has taken the necessary steps to maintain a satisfactory financial flexibility in the aftermath of the turbulence in the capital markets in recent years.

OUTLOOK FOR 2004
The Board will continue its efforts to maintain the company’s position in the domestic market, create synergies, particularly in the Nordic operations, and create values through the international mobile commitments.

The competition in the mature domestic market will force further rationalisation and there will be an increasing battle for market shares and customer attention, which could press the margins on the traditional services, but also reward innovation, simplicity and service.

Telenor has made good progress in its international mobile investments and through the existing portfolio has considerable opportunities for continued profitable growth and development.

Based on the starting point at the beginning of the year, the Board anticipates continued growth in revenues in 2004 driven by the international mobile operations. An unchanged EBITDA margin is expected, following the consolidation of Sonofon excluding special items. Efforts to consolidate positions in markets with declining growth will be stepped up. This could be at the expense of margins.

An increasing proportion of Telenor’s revenues and profits are being generated from international operations, which is leading to a higher degree of exposure to exchange rate fluctuations and a greater political risk than previously. Simultaneously, regulatory factors could affect the results. The Board will closely monitor developments with regard to these issues.

Oslo, 25 March 2004