Telenor: Annual review 2006

THE NORDIC REGION

Norway

THE MOBILE MARKET

Our wholly-owned Norwegian mobile subsidiary, which operates under the Telenor name, is the country’s leading provider of mobile telecommunications services, with an estimated market share of 55%.

We offer a broad range of digital services to the Norwegian corporate and consumer markets and we have extensive experience in providing mobile services and operating mobile communication networks.

GSM network and EDGE technology

Telenor currently holds three licenses for GSM-based services in Norway (two GSM 900 licenses and one GSM 1800 license). Our GSM network currently covers 99.8% of Norway’s population and 85.2% of the geographical area. Upgrade to EDGE technology commenced in June 2004, and Mobile Norway now uses EDGE technology on all GSM-900 sites in Norway.

Highly developed and competitive market

The Norwegian market is highly developed and competitive, and is characterised by increased churn levels, consolidation among service providers and increased marketing efforts by various providers targeting both low and high value segments. In recent years, Mobile Norway’s marketing and distribution efforts have become increasingly segment-oriented in order to ensure strength in both the business and consumer markets. Other marketing initiatives have focused on improving network quality and customer service levels.

Retail and outlets

Mobile Norway distributes its mobile telecommunications services through its own retail stores, the Internet and independent distributors. The total number of distribution outlets was approximately 12,000 at 31 December 2006.

Telenor Mobile	2004	2005	2006
No. of mobile susbscriptions (in millions)	2.65	2.73	2.72
- of witch prepaid	1.23	1.22	1.05
Av. traffic min. per subscription per month (AMPU)	184	184	197
Av. revenue per subscription per month (ARPU)	323	309	319
EBITDA/Total revenues (%)	36.7	36.5	42.1
Operating profit/Total revenues (%)	27.5	29.1	35.2
Capex	973	1218	764
Market share GSM (%)			55
Mobile penetration (%)	102	107	107

> Regulatory matters

> Further discussion and analysis

THE FIXED-LINE MARKET

Retail market

Telenor provides voice services on a traditional public switched telephone network (PSTN), an integrated services digital network (ISDN) and via broadband Voice over Internet Protocol (VoIP). Telenor also provides Internet access via narrowband (PSTN/ISDN) and broadband (xDSL) to homes and businesses and leased lines to businesses. As at 31 December 2006, we had 965,000 PSTN subscriptions, 406,000 ISDN basic rate access subscriptions, 7,000 ISDN primary rate access subscriptions and 102,000 VoIP subscriptions. In addition, we provide integrated voice and data telecommunications and access and network services to the business market in Norway.

Wholesale market

Telenor provides a range of interconnection and capacity services, including leased lines, in the Norwegian market. Our interconnection and capacity services allow other network operators, Internet service providers and other service providers to connect to our network or use our infrastructure in order to facilitate their own service offerings. Telenor also provides international operators with transit and capacity services for international voice and data traffic into or through Norway. We provide unbundled telephony access (PSTN and ISDN) and xDSL access, to other operators and service providers. Further, we provide local loop unbundling (LLUB) and shared access to the local loop, which enables other operators to provide end-users with broadband.

Fixed-Norway	2004	2005	2006
EBITDA/Total revenues (%)	36.1	33.8	34.2
Operating profit/Total revenues (%)	17.5	17.9	19.9
Capex	1473	2169	1732
Retail market
No. of Telephony subscriptions (in thousands)	1,800	1,622	1,480
- of which PSTN subscriptions (in thousands)	1,182	1,089	965
- of which ISDN subscriptions (in thousands)	618	509	413
- of which VoIP subscriptions (in thousands)		24	102
No. of xDSL subscriptions (in thousands)	326	475	572
Wholesale market
No. of Telephony subscriptions (in thousands)	301	314	289
- of which PSTN subscriptions (in thousands)	188	202	192
- of which ISDN subscriptions (in thousands)	113	112	97
No. of xDSL subscriptions (in thousands)	91	109	141
No. of LLUB (in thousands)	145	235	290