TDC confirms 2012 guidance

Transcription

1 TDC confirms 2012 guidance Q1 revenue up 0.5% and EBITDA bpi (before pension income) down 1.2%, in line with our expectations; EBITDA bpi is flat adjusted for a Q one-off (DKK 25m) Equity free cash flow down 59.8%, driven by different timing of interest payments, income taxes and capex as well as negative development in net working capital partly due to financing of smartphones (TDC Rate) Net interest-bearing debt to EBITDA bpi ratio of 2.1x Proceeds from settlement of the dispute between DPTG and TPSA distributed through a share buy-back of DKK 750m completed on 19 April 2012, representing DKK 0.92 per share Best quarterly pay-tv subscriber growth ever (+37k) driven by HomeTrio Mini and YouSee following market changes Strong EBITDA bpi growth in Nordic fuelled by TDC Sweden (+53% in local currency) and TDC Hosting (+24%) Domestic mobile subscribers up by 17k compared with Q Business ARPU drop in broadband and mobile voice due to new public sector SKI contracts and large enterprise contracts being won or renewed at reduced prices Consumer mobile ARPU dropped as price decreases over the past 18 months were phased in. The price war had only had limited ARPU impact in Q Lowest YoY organic landline (voice and internet) gross profit loss in recent years; 37% better than in Q Customer satisfaction achieved the highest score since tracking commenced three years ago Search for new CEO has started 2012 guidance confirmed: Revenue: DKK bn EBITDA bpi: DKK bn Capex: DKK bn Dividends per share: DKK 4.60 (after share buy-back) TDC Group, Key financial data Q Q Change in % Statements of Income Revenue 6,644 6, Gross profit 4,705 4,839 (2.8) EBITDA bpi 2,571 2,602 (1.2) Operating profit (EBIT) excluding special items 1,380 1,404 (1.7) Profit for the period excl. special items (15.2) Profit for the period 1, Equity free cash flow 496 1,235 (59.8) Key financial ratios Earnings Per Share (EPS) DKK Gross profit margin % EBITDA bpi margin % Capital expenditure (915) (784) (16.7) Capex-to-revenue ratio % Net interest-bearing debt (21,818) (21,791) (0.1) Net interest-bearing debt/ebitda bpi x For terminology, see For additional data, see TDC Fact Sheet Q on TDC A/S CVR No Copenhagen

2 Comments by Henrik Poulsen, CEO and President TDC is off to a solid start in Based on our Q1 results, we maintain our full-year guidance. Revenue is up by 0.5% and EBITDA bpi is down by 1.2% compared with 2011, in line with our expectations. Adjusted for a one-off item in Q1 2011, EBITDA bpi was flat. In a quarter where we face some of the steepest YoY mobile price decreases ever, this is in our view a testimony to the strength and resilience of the TDC business. Equity free cash flow is significantly below last year, however, due mostly to timing differences, and we have not changed our full-year cash flow expectations. Nordic and YouSee produced strong results in Q1 and we also saw a strong quarterly performance from our landline business. Mobile ARPUs in both Consumer and Business were under pressure from price competition. During the quarter, we increased our pay-tv subscriber base by 37k, driven by YouSee adding a large antenna association to its portfolio and not least TDC TV (HomeTrio) seeing strong growth prompted by the MPEG2 switch-off and TV2 becoming a pay channel. This is the highest quarterly subscriber growth in pay TV ever. Growth in ondemand and over-the-top viewing continues. The number of VoD sessions in Q1 rose more than 400% on Q and YouSee has seen a strong pick-up in customer usage of its ipad app. Growth in Nordic was fuelled by TDC Sweden and TDC Hosting delivering YoY EBITDA growth of 53% (in local currency) and 24%, respectively. We continue to gain market share in these two business areas. Mobility services gross profit decreased by 5.3% as a consequence of intense price competition in both residential and business markets and a one-off adjustment of discounts in Q Our domestic mobile subscription base grew by 17k but ARPUs dropped as the price decreases were phased in over the past 18 months. In Q we are up against a first quarter of 2011 where the price war had only had a limited impact on ARPUs. We expect the YoY ARPU decrease to peak during the first half of 2012 before the erosion slows down during the second half of Competition remains fierce driven by promotional mechanics but value erosion is not occurring at the pace we saw during Business saw its mobile ARPU drop due to the new public sector SKI contracts being implemented, a number of large enterprise contracts being won or retained at reduced prices and spill over effects from the very competitive residential market on the small and medium accounts. featuring a number of advanced convergent functionalities. Its features include allowing TDC customers to programme their TDC TV from their smartphone and stream the movie, photo, and music content on their TDC server at home (HomeDisk) onto TV screens or wireless music devices anywhere they go. All these activities support a new marketing approach for the TDC brand under the heading "My TDC". We see this as the beginning of a longer-term positioning of the TDC brand as a value added experience catering for the entire household and offering distinct benefits for customers bundling their purchases with TDC. Organic domestic landline voice and internet gross profit declined by DKK 136m which is 37% better than in Q and the lowest decline since Q This bears witness to the profit drag from the landline business gradually diminishing. The retail broadband subscriber base grew by 10k in Q1. This is the best quarterly performance since Q Loss of broadband customers to the utilities is continuing at a stable pace but is more than offset by a net gain from other major xdsl players. Cost savings continue to materialise with organic operating expenses down by DKK 147m compared with Q driven by productivity gains and lower SAC spending. As an example of the productivity improvements, we spent 16% fewer hours on fault handling than in Q YoY SAC savings will slow down in Q2 and subsequently decline to zero as the benefits from last year's launch of TDC Rate, our smartphone payment scheme, have been exhausted. Customer satisfaction scores reached their highest levels since the survey was introduced three years ago and at the same time we have seen an upward trend in our image rating. This is obviously very important for TDC and the sustainability of our business. On 18 April, it was announced that I will be stepping down as CEO later this year to take on new challenges. While a CEO s departure is always a significant event it will not change the course of the company. I would encourage investors to stay focused on the company's ability to deliver on its targets year after year. TDC delivered on its guidance in 2010 and 2011 and we maintain our 2012 guidance. TDC is in good shape not least considering the current market environment and TDC's management team is perfectly capable of moving the company forward with no loss of momentum. The Board is currently conducting a search for my successor spanning both internal and external candidates. In February, Consumer launched an entirely new brand communications platform and a new loyalty scheme that rewards customers for buying both landline and mobile products from TDC. Parallel to this, a new app was launched Page 2 of 31

3 Performance in Q Revenue The TDC Group s revenue increased by 0.5% or DKK 35m compared with Q Revenue was positively affected by: The acquisition of Onfone in May 2011 and the hosting business DIR in March (DKK 145m) 1 Continued strong performance in Nordic with solid growth rates in organic revenue. TDC Sweden and TDC Hosting in particular showed a strong performance. (DKK 124m) Growth in organic revenue from domestic terminal equipment, which increased as a result of the continued demand for smartphones, sold without SAC subsidies. (DKK 96m) Decreasing organic revenue from domestic internet and network stemming from fierce competition in the broadband market negatively affected ARPUs. However, TDC managed to increase its retail RGUs. In fact, in Q alone, retail broadband increased by 10k subscribers a result achieved mainly by Business and YouSee. (DKK 60m) Gross profit Gross profit in the TDC Group declined by 2.8% or DKK 134m in spite of the revenue increase. This was a result of a continued shift away from product areas with high gross profit contributions (such as landline telephony and internet) to areas with lower contributions (such as Nordic, TV and terminal equipment). Increasing organic revenue from domestic TV stemming from a 3.6% increase in subscribers (TDC TV and YouSee). In fact, TDC showed historic high net adds in Q following TV2 becoming a pay channel and the MPEG2 shutdown. (DKK 79m) Overall gross profit margins within product areas remained stable compared with Q1 2011, but the significant growth in terminal equipment with a low margin caused a gross profit margin decrease from 73.2% to 70.8%. A favourable exchange rate development. (DKK 6m) Revenue was negatively affected by: Decreasing organic revenue from domestic mobility services driven by continued intense price competition and heavy campaigning in the residential market. The business market was affected by contracts being won or renegotiated at lower prices, which had a negative effect on ARPU. In addition, Q was positively affected by a one-off adjustment of discounts relating to prior years (DKK 25m), which negatively affected growth. The decline was partly offset by organic growth in the mobile subscriber base driven by Business and Wholesale. (DKK 148m) Continued negative effects following the regulation of mobile termination rates for voice and SMS, international roaming charges and PSTN resale. (DKK 105m) Declining organic revenue from domestic landline telephony resulting from the continuous decline in market size. (DKK 101m) 1 The figure indicated in brackets following each bullet is the variance between Q and Q EBITDA bpi EBITDA bpi decreased by 1.2% or DKK 31m, which was considerably less than the gross profit decline. This was achieved through continuous savings in operating expenses as a result of efficiency improvements throughout the organisation. Wages, salaries and pension costs declined by 3.2% 2 following a reduction in employees. The reductions were made possible through improvements in processes, fewer faults and outsourcing. Despite fewer employees, the customer satisfaction score reached the highest level since 2009 and employee satisfaction was maintained at a high level. (Organic variance, DKK 32m) The introduction of TDC Rate in May 2011 and of a new mobile portfolio in July 2011 resulted in a significant reduction in subscriber acquisition costs, which had a full YoY effect in Q Marketing costs were kept at a lower level than in Q (Organic variance, DKK 104m) A continued focus on cost reductions and process improvements was reflected in the decrease in IT and 2 The development is impacted by the changed presentation regarding seconded civil servants. See also note 1 to the Consolidated Financial Statements. Page 3 of 31

4 facility costs. Savings on facility costs related mainly to the consolidation of locations, which were, however, offset by rent and electricity costs on mobile sites. (Organic variance, DKK 17m) The increased activities in Nordic, and exchange rate effects combined with the completed acquisitions negatively affected costs. (Organic variance, DKK 50m) The EBITDA bpi margin decreased from 39.4% to 38.7% in Q Profit for the period Profit for the period, excluding special items, totalled DKK 740m, down by DKK 133m or 15.2%. The decrease resulted mainly from the development in fair value adjustments due to losses in Q on cross-currency swaps, which are partly a reversal of gains in H Amortisation costs decreased, however, offset by lower pension income. Profit for the period, including special items, amounted to DKK 1,268m, corresponding to an increase of DKK 564m or 80.1%.The development reflected the net income from special items in Q following the settlement of the dispute between DPTG and TPSA. Comprehensive income The decrease in total comprehensive income from DKK 1,408m in Q to DKK 711m in Q reflected mainly the negative development in actuarial gains and losses, which totalled a loss of DKK 775m in Q compared with a gain of DKK 868m in Q The actuarial losses in Q were primarily the result of a decreasing discount rate. The actuarial gains in Q covered favourable returns on the domestic pension fund assets and an increasing discount rate. Cash flows Equity free cash flow decreased by DKK 739m or 59.8% to DKK 496m due mainly to a DKK 304m decrease in change in net working capital, higher interest paid, higher income tax paid and higher investments in PPE and intangible assets. The negative effect from income tax and investments in PPE and intangible assets relates mainly to the change in timing compared with the previous year: The negative change in net working capital in Q (DKK 304m) was caused by the increased receivables following introduction of TDC Rate, less advance invoicing resulting from fewer subscriptions as well as reduced trade payables from savings on operating expenses. The negative cash flow effect from TDC Rate will decrease gradually as an agreement with an external financing partner has been made. Higher interest paid (DKK 193m) was a result of the refinancing in Q1 2011, resulting in a changed payment profile. This effect was partly offset in Q by the early termination of interest-rate swaps with negative market values (related to the refinanced Senior Loans). Cash flow key figures TDC Group Q Q Change in % EBITDA bpi 2,571 2,602 (1.2) Adjustment for non-cash items Pension contributions (35) (39) 10.3 Payments related to provisions (29) (73) 60.3 Change in net working capital excl. special items (445) (141) - Interest paid, net (560) (367) (52.6) Income tax paid (180) 0 - Investment in PPE and intangible assets excl. mobile licences (899) (778) (15.6) Equity free cash flow 496 1,235 (59.8) Cash flow from operating activities 1,165 1,753 (33.5) Cash flow from investing activities 1 (758) Cash flow from financing activities 1,396 (1,258) - Total cash flow from continuing operations 2,562 (263) - Page 4 of 31

5 In addition, higher investments in PPE and intangible assets (DKK 121m) and higher income tax paid (DKK 180m), as a result of mandatory on-account tax payments in Q1 2012, contributed to the decrease in the EFCF. Cash inflow of DKK 1m from investing activities in Q was positively impacted by the proceeds from the settled dispute between DPTG and TPSA of DKK 1,010m before tax. The related income tax of approximately DKK 250m is expected to be paid in Q The net proceeds were applied for the DKK 750m share buy-back programme, which was initiated in Q and completed in Q Cash inflow from financing activities in Q of DKK 1,396m was positively impacted by the issuance of EMTN bonds in February This was only partly 4 counterbalanced by the payment of dividends and the share buy-back programme. The proceeds from the bond issuance were used to fully repay the EMTN bond that matured in April Capital expenditure Capital expenditure totalled DKK 915m in Q1 2012, which was an increase of 16.7% compared with Q This was due mainly to: Increased activity following the highest gross intake of HomeTrio subscriptions in five quarters. Continued investments in high-speed mobile network, with build-out of the 3G and 4G networks, resulting in increased spending compared with Q Increasing expenses regarding capacity enlargement in the coax network to ensure improved customer experiences added to the spending. An unusually low capital expenditure in Q as a consequence of unfavourable weather conditions. Employees At 31 March 2012, TDC had 9,395 full-time employee equivalents, with domestic operations accounting for 8,145. This is a decline of 8.2% or 836 FTEs YoY. Since Q1 2011, TDC has carried out three outsourcing initiatives, which has resulted in the outsourcing of 135 FTEs and a number of redundancies. TDC has implemented a number of redundancy programmes in recent years. During Q1 2012, 127 redundancies were recorded in the domestic TDC workforce. Adjusted for the acquisitions of enterprises and the changed presentation regarding seconded civil servants 5, the number of FTEs declined by 7.8% or 788 FTEs YoY. Guidance 2012 TDC's guidance is based on comprehensive financial plans for each individual business line. However, by their very nature, forward-looking statements involve certain risks and uncertainties that are described in more detail in the section on Risk Factors and in the Forward-looking Statement. TDC confirms its guidance for 2012 expressed in the Annual Report 2011: Revenue: DKK bn EBITDA bpi: DKK bn Capex: DKK bn Dividends per share: DKK 4.60 The dividend of DKK 4.60 per share corresponds to DKK 4.50 per share prior to the share buy-back programme. The expected dividend of DKK 4.60 per outstanding share is expected to be distributed with DKK 2.30 in August 2012 and the remainder in the first quarter of In addition, TDC has returned DKK 750m of the proceeds from the settlement of the dispute between DPTG and TPSA to its shareholders in the form of a one-off share buy-back programme. This represents an additional payment of DKK 0.92 per share on top of the expected dividend of DKK 4.60 per share. The Board of Directors has adopted a dividend pay-out policy of 80% to 85% of Equity free cash flow in a given year with 40% to 50% of the full-year amount to be distributed in the third quarter of the year, and the remainder to be distributed following approval of the Annual Report in the first quarter of the subsequent year. 5 See also note 1 to the Consolidated Financial Statements. As a consequence of the continued decline in the legacy landline business combined with efficiency improvements, 3 This income tax payment will reduce Dividends received from joint ventures and associates. 4 The payments in Q exclude dividend withholding taxes of DKK 394m, which were paid on 10 April Page 5 of 31

6 Financial review of business lines TDC Group Q Q Change in % Revenue 6,644 6, Consumer 2,289 2, Business 1,788 1,954 (8.5) Nordic 1,227 1, Wholesale (6.5) YouSee 1,125 1, Operations & HQ (4.1) Eliminations (361) (349) (3.4) Transmission costs and cost of goods sold (1,939) (1,770) (9.5) Gross profit 4,705 4,839 (2.8) Consumer 1,423 1,496 (4.9) Business 1,314 1,389 (5.4) Nordic Wholesale (7.6) YouSee Operations & HQ (7.1) Eliminations (8.7) External expenses (1,048) (1,126) 6.9 Wages, salaries and pension costs (1,111) (1,148) 3.2 Other income and expenses (32.4) EBITDA bpi 2,571 2,602 (1.2) Consumer (1.1) Business (3.7) Nordic Wholesale (10.1) YouSee Operations & HQ (85) (70) (21.4) Eliminations (1) 4 (125.0) Gross profit margin (%) EBITDA bpi margin (%) Organic revenue¹ 6,644 6,656 (0.2) Organic EBITDA bpi¹ 2,571 2,645 (2.8) ¹ Reported revenue and EBITDA bpi excluding impact from acquisitions and divestments, currency effects, sale of property, plant and equipment as well as the impact of regulatory price adjustments. Page 6 of 31

7 Consumer Q at a glance Strong TV net add performance following TV2 becoming a pay-channel and MPEG2 switch-off driven by the successful entry product HomeTrio Mini launched in Q HomeTrio Mini increases customer loyalty and total ARPU per household but ARPUs on individual product areas were affected in Q1 by introductory and bundling discounts No signs of mobile competition slowing down. Onfone and M1 retained market momentum Launch of My TDC ; a communication platform based on different ambassadors use of TDC products; brand tracking performance indicators showed very positive trends Lower external expenses, down by 17.5%, through mainly savings in SAC and marketing Revenue Consumer s revenue increased by 2.5% compared with Q Landline telephony The migration from landline to mobile continued to negatively affect revenue by reducing both the number of customers and the minutes of use. PSTN ARPU has remained stable whereas VoIP ARPU declined due to the increased bundling discount. Mobility services The intense competition and heavy campaigning in the residential market continued in Q1 2012, resulting in an 8.3% ARPU drop, as the price decreases were phased in over the past 18 months. The no-frills online brands, Onfone and M1, continued to gain subscribers, and the total mobile subscription base increased by 210k compared with Q Internet and network In Q1 2012, despite fierce competition in the broadband market, TDC brand and Fullrate had positive net adds. As a result, Consumer had the highest level of broadband net adds in two years. Broadband ARPU declined by 6.3% as a result of the increased bundling discount, including impact from HomeTrio Mini. Terminal equipment Revenue increased by 137.2% following continued high demand for smartphones sold without SAC subsidies. Financial highlights Consumer Excluding special items Q Q Change in % Revenue 2,289 2, Landline telephony (13.8) Mobility services 992 1,031 (3.8) Internet and network (8.8) Terminal equipment, etc Operator services (33.3) TV Other¹ (10.7) Transmission costs and cost of goods sold (866) (737) (17.5) Gross profit 1,423 1,496 (4.9) External expenses (340) (412) 17.5 Wages, salaries and pension costs (203) (194) (4.6) Other income and expenses EBITDA bpi (1.1) Gross profit margin % EBITDA bpi margin % Organic revenue² 2,289 2,293 (0.2) Organic EBITDA bpi² (6.2) ¹ Including reminder and invoicing fees, etc. ² Reported revenue and EBITDA bpi excluding impact from acquisitions and divestments as well as the impact of regulatory price adjustments. TV The intake of TV customers continued and in Q1 2012, 16k RGUs joined the TDC brand subscriber base when TV2 became a pay channel. Compared with Q1 2011, total TV RGUs increased by 36.9%. ARPU decreased 7% as a result of the large intake on HomeTrio Mini. Gross profit Consumer s gross profit decreased by 4.9%, and the gross profit margin decreased from 67.0% to 62.2% in Q The margin decrease was a result of a mix shift with particular large increase in low margin area terminal equipment whereas higher margin areas such as landline telephony, mobility services and internet and network decreased. This was only partly offset by lower transmission costs following efficiency improvements in Operations, and the regulatory determined MTR decreases. EBITDA bpi Consumer s EBITDA bpi declined by 1.1% and the EBITDA bpi margin decreased from 39.9% to 38.4%. Consumer succeeded in almost offsetting the gross profit decline by significantly reducing external expenses. The savings stemmed mainly from lower subscriber acquisition costs due to TDC Rate and lower marketing costs, which were very high in Q The acquisition of Onfone resulted in increased wages. Page 7 of 31

8 Business Q at a glance Highest total net adds in several years driven by strong mobile performance and low loss of landline RGUs Won and renegotiated contracts resulted in lower prices producing a large negative ARPU impact in the mobile and broadband areas in particular A one-off adjustment of discounts in mobility services (DKK 25m) in Q negatively affected growth in revenue, gross profit and EBITDA Customer satisfaction (ECSI) remained on the high level that was achieved in Q Revenue Revenue in Business decreased by 8.5% compared with Q Landline telephony Business implemented a number of commercial initiatives in Q4 2011, which affected ARPU positively. Business also continued its success with Scale, the VoIP converged solution, which has a relatively high ARPU and low churn. As a consequence of these effects, Business had the best landline telephony revenue development in recent years with a decline of only 2.1%. Mobility services Revenue in mobility services was negatively affected by the one-off adjustment of discounts (DKK 25m). In addition, mobile voice ARPU decreased due to significantly lower prices in renegotiated contracts and spill over effect from the very competitive residential market on the small and medium accounts, which had a negative impact on revenue. Growth in mobile broadband contributed positively to revenue and was driven by increased smartphone penetration and data usage. All in all, revenue from mobility services decreased by 13.0%. Internet and network The internet market has been characterised by an increased focus on price, and Business has seen a change in its broadband RGU mix with customers migrating from high ARPU products towards products with lower ARPU. Consequently, revenue from internet and network decreased by 7.3%. Financial highlights Business Excluding special items Q Q Change in % Revenue 1,788 1,954 (8.5) Landline telephony (2.1) Mobility services (13.0) Internet and network (7.3) Terminal equipment, etc (11.6) Other¹ Transmission costs and cost of goods sold (474) (565) 16.1 Gross profit 1,314 1,389 (5.4) External expenses (164) (191) 14.1 Wages, salaries and pension costs (191) (202) 5.4 Other income and expenses EBITDA bpi (3.7) Gross profit margin % EBITDA bpi margin % Organic revenue² 1,788 1,927 (7.2) Organic EBITDA bpi² (3.8) ¹ Includes operator services, etc. ² Reported revenue and EBITDA bpi excluding impact from regulatory price adjustments as well as impact from acquisitions and divestments. Gross profit Gross profit decreased by 5.4% and the gross profit margin increased from 71.1% in Q to 73.5% in Q The large increase in the gross profit margin was a consequence of the fact that the negative regulatory impact on mobility service revenue was gross profit neutral combined with the efficiency improvements in Operations resulting in lower network costs allocated to Business. EBITDA bpi Business EBITDA bpi decreased by 3.7%. Excluding the oneoff adjustment of discounts, and negative development in sales of terminal equipment in NetDesign, EBITDA bpi growth was flat in Business. EBITDA bpi margin increased from 51.0 to 53.6% in Q The negative development in gross profit was partly offset by savings in external expenses due to lower subscriber acquisition costs. Wages, salaries and pension costs decreased as a consequence of fewer employees. Terminal equipment and system integration NetDesign remained challenged in Q Declining revenue reflected lower sales of hardware/software resulting in a decrease of 11.6%. Page 8 of 31

9 Nordic Q at a glance Continued strong performance with double-digit growth rates in both revenue and EBITDA bpi Very solid development in revenue in TDC Sweden with a historically strong quarter in local currency Large account wins such as Handelsbanken in Sweden, Bergen municipality in Norway, ProAgria in Finland and the Danish Agency for Digitisation in Hosting Initiatives launched in Norway and Finland to ensure fully optimised processes across all functions such as strengthened salesforce and reduced operating expenses Revenue Revenue in Nordic increased by 12.4% and organic growth by 11.2%. Landline telephony Landline revenue continued to be affected by the trend away from traditional landline telephony towards mobile only. MoU was under pressure, especially in Norway, which, combined with continued price erosion, led to a revenue decrease of 2.3%. Mobility services Mobile subscriptions in Nordic were up 32%, resulting in a 14.9% revenue increase in mobile services. The development in Norway affected revenue negatively, with ARPU declining due mainly to lower termination prices. Internet and network The customer intake in landline internet continued to grow with IP-VPN in particular showing solid growth following the continued implementation of major contracts. Growth was achieved in all geographic areas, resulting in a total revenue increase of 7.3%. The hosting business also succeeded in increasing its activities, driven mainly by a clearer focus on managed hosting. The acquisition of DIR A/S, in March 2011, added further to the positive revenue development. Financial highlights Nordic Excluding special items Q Q Skatteverket and the continued high demand for smartphones. As a result, revenue from terminal sales increased by 27.0%. Change in % Revenue 1,227 1, TDC Sweden TDC Norway (0.7) TDC Finland TDC Hosting Other, incl. eliminations (33) (32) (3.1) Landline telephony (2.3) Mobility services Internet and network Terminal equipment, etc Other¹ Transmission costs and cost of goods sold (720) (639) (12.7) Gross profit External expenses (96) (80) (20.0) Wages, salaries and pension costs (244) (227) (7.5) Other income and expenses EBITDA bpi Gross profit margin % EBITDA bpi margin % Organic revenue² 1,227 1, Organic EBITDA bpi² ¹ Includes operator services, etc. ² Reported revenue and EBITDA bpi excluding impact from currency effects, acquisitions and divestments and sale of property, plant and equipment. Gross profit Gross profit in Nordic increased by 11.9% compared with Q The gross profit margin decreased slightly reflecting that the largest increase in revenue stemmed from sales of terminal equipment, which has a relatively low margin. EBITDA bpi EBITDA bpi in Nordic increased by 12.8% and organic EBITDA bpi rose by 10.5%. The growth was driven by the increase in gross profit. Terminal equipment The strong growth in the Direct 6 and Project 7 businesses was driven mainly by the public sector in Sweden among them 6 Direct business comprises sales of handsets, conference telephones, headsets, tablets etc. sold online and by our sales force. 7 Project business consists of sales and installation of communications systems, i.e. PBX/PABC solutions, switches, videoconferencing etc. Page 9 of 31

10 Wholesale Q at a glance Revenue and EBITDA bpi under pressure. Focus on strategic initiatives to secure future improvements Pan-Nordic demand continued to grow with Q1 revenue up by 22% Customer satisfaction reached the highest score recorded in more than a year The NGO organisation Ældresagen marketed landline telephony through its partner, FastnetNu, thereby reducing Wholesale landline subscriber churn significantly Revenue Revenue in Wholesale decreased by 6.5% compared with Q Landline telephony Changed price regulation as of Q continued to negatively impact ARPU and, combined with lower revenue on interconnect traffic, revenue from landline telephony decreased by 24.0%. Mobility services Despite ongoing competition in the Danish mobile market, Wholesale managed to increase its mobile voice subscriber base by 5k, driven by external SPs (e.g. Nettalk and CoopMobil) operating on TDC s mobile network. However, reduced revenue from national mobile roaming continued and ARPU remained under significant pressure, resulting in a revenue decline of 3.4%. Financial highlights Wholesale Excluding special items Q Q Change in % Revenue (6.5) Landline telephony (24.0) Mobility services (3.4) Internet and network Other¹ (14.8) Transmission costs and cost of goods sold (201) (211) 4.7 Gross profit (7.6) External expenses (46) (49) 6.1 Wages, salaries and pension costs (28) (24) (16.7) Other income and expenses EBITDA bpi (10.1) Gross profit margin % EBITDA bpi margin % Organic revenue² (3.4) Organic EBITDA bpi² (6.5) 1 Includes rent of mobile sites. 2 Reported revenue and EBITDA bpi excluding impact of regulatory price adjustments. EBITDA bpi EBITDA bpi decreased by 10.1%, and the EBITDA bpi margin decreased from 47.5% to 45.7%. EBITDA bpi decreased by more than gross profit as a consequence of increasing wages, salaries and pension costs due partly to the transfer of staff functions from Operations to Wholesale and the acquisition of Zitcom. Savings in external expenses stemmed from lower IT costs. Internet and network Increased ARPU on the regulated products BSA and resale broadband as well as strong growth in Pan-Nordic activities more than outweighed a negative broadband subscriber development in Wholesale. Overall the revenue growth totalled 4.2% for internet and network. Gross profit Wholesale's gross profit decreased by 7.6%. The gross profit margin decreased from 61.0% to 60.3% due to a shift in product mix with higher revenue in areas with lower margin. On the positive side, efficiency improvements in Operations reduced the level of network costs allocated to Wholesale. Page 10 of 31

11 YouSee Q at a glance Double-digit growth in EBITDA bpi Financial highlights YouSee Excluding special items Q Q Change in % Basic TV revenue growth of 7.3% with the highest net adds in several years Strong broadband performance with the highest YoY RGU growth in six consecutive quarters Revenue Revenue in YouSee increased by 5.6% compared with Q Basic TV The alteration of the status of TV2 as a pay channel positively affected the market and YouSee pay TV RGUs in Q Combined with the addition of a large antenna association (13k RGUs) and churn kept at the lowest level in three quarters, Basic TV revenue increased by 7.3%. As a consequence of the increased content costs reflecting the inclusion of TV2, YouSee raised its subscription fees at the beginning of the year. Premium TV The rise in subscription fees positively affected ARPU, although the effects from downward migration to cheaper packages are evident. Premium TV customers constitute a slightly increasing percentage of the Basic TV customers, prompting expectations of continued upselling. The demand for value added services such as VoD continued and VoD events increased by more than 250%. YouSee s freedom of choice product Extra channels continued the positive net adds development in Q Premium TV revenue increased by 4.8%. Revenue 1,125 1, Basic TV Premium TV Internet services Landline telephony (8.3) Other¹ Transmission costs and cost of goods sold (461) (432) (6.7) Gross profit External expenses (108) (119) 9.2 Wages, salaries and pension costs (137) (139) 1.4 Other income and expenses EBITDA bpi Gross profit margin % EBITDA bpi margin % Organic revenue 1,125 1, Organic EBITDA bpi Includes installation fees and TDC TV. from 59.4% to 59.0% due to increased programme costs following the inclusion of TV2 and more content in TV packages with a lower margin. EBITDA bpi EBITDA bpi in YouSee rose by 11.4% compared with Q The EBITDA bpi margin rose from 35.3% to 37.2%. Despite increased activity, YouSee succeeded in maintaining cost focus and external expenses were reduced by 9.2%. Marketing costs in particular fell due to different timing. Wages, salaries and pension costs fell by 1.4% reflecting the decrease in the number of employees. Internet services YouSee recorded solid momentum in the saturated broadband market, with the highest YoY RGU increase in six quarters. The ability to watch TV directly on ipads, iphones and PCs has been a major success, and the number of active web TV users increased by 60% in just three months. At the same time, lower broadband churn added to the success. As a result of these effects, revenue from internet services rose by 3.3%. Gross profit Gross profit in YouSee increased by 4.9% or DKK 31m compared with Q The gross profit margin decreased Page 11 of 31

12 Operations & HQ Q at a glance The focus on improving and optimising processes continued through the targeted TAK, TDC 2.0 and TDC PRO transformation programmes Customer satisfaction for the TDC Group reached the highest score recorded since the TAK programme was launched TDC IT has terminated contracts with CSC and migrated its IT outsourcing to Tata Consultancy Services. The transition and transformation will have high priority throughout 2012 Operational excellence Operations & HQ continued to focus on cost reductions and eliminating complexity in both production and IT through the TAK, TDC 2.0 and TDC PRO programmes. For example, TDC 2.0 is introducing different and more efficient ways of organising daily work routines by focusing on the most critical KPIs and goals and implementing much more disciplined performance management. The efficiency gains achieved by Operations & HQ were reallocated to other business lines, and as a result of the improvements, operating expenses allocated to other business lines fell by 6.4%. Wages, salaries and pension costs decreased by 14.1% compared with Q as a result of 560 fewer FTEs in Operations and HQ (adjusted for change in presentation of seconded civil servants). The continued reduction in FTEs resulted from three outsourcing projects completed in 2011, further efficiency improvements and the continued decline in the legacy landline business. Financial highlights Operations & HQ Excluding special items Q Q affected the expense level. However, external expenses in Operations & HQ remained level with Q due to increased expenses related to site rentals and outsourcing initiatives. Despite this continued reduction in costs and employees, Operations managed to reduce the number of unacceptable customer experiences, which reached the lowest level ever recorded. At the same time, customer satisfaction reached the highest level since the survey was introduced three years ago. The average delivery time was higher than targeted in Q due primarily to increased sales of HomeTrio. Operations is working continuously to reduce the extra workload and the lead times. Change in % Revenue (4.1) Transmission costs and cost of goods sold (18) (17) (5.9) Gross profit (7.1) External expenses (520) (516) (0.8) Wages, salaries and pension costs (310) (361) 14.1 Operating expenses allocated to other business divisions (6.4) Other income and expenses (33.3) EBITDA bpi (85) (70) (21.4) Organic revenue¹ (4.1) Organic EBITDA bpi¹ (85) (71) (19.7) ¹ Reported EBITDA bpi excluding impact from sale of property, plant and equipment. The 3.5% reduction in fault handling hours in the field force, down 6,000 hours compared with Q1 2011, has positively Page 12 of 31

13 Consolidated Financial Statements Income Statements TDC Group Note Q Q Change in % Revenue 2 6,644 6, Transmission costs and cost of goods sold (1,939) (1,770) (9.5) Gross profit 4,705 4,839 (2.8) External expenses (1,048) (1,126) 6.9 Wages, salaries and pension costs 3 (1,111) (1,148) 3.2 Other income and expenses (32.4) Operating profit before pension income, depreciation, amortisation and special items (EBITDA bpi) 2,571 2,602 (1.2) Pension income (80.9) Operating profit before depreciation, amortisation and special items (EBITDA) 2 2,592 2,712 (4.4) Depreciation (663) (676) 1.9 Amortisation (542) (621) 12.7 Impairment losses (7) (11) 36.4 Depreciation, amortisation and impairment losses 4 (1,212) (1,308) 7.3 Operating profit (EBIT), excluding special items 1,380 1,404 (1.7) Special items 5 (318) (211) (50.7) Operating profit (EBIT) 1,062 1,193 (11.0) Profit from joint ventures and associates 762 (2) - -of which special items Fair value adjustments (77) 153 (150.3) Currency translation adjustments (4) (28) 85.7 Interest income and expenses (273) (321) 15.0 Net financials 6 (354) (196) (80.6) Profit before income taxes 1, Income taxes related to profit, excluding special items (288) (333) 13.5 Income taxes related to special items Total income taxes (202) (291) 30.6 Profit for the period 1, Profit for the period, excluding special items (15.2) Earnings per share (EPS) (DKK) EPS EPS, diluted Page 13 of 31

14 Statements of Comprehensive Income TDC Group Q Q Profit for the period 1, Currency translation adjustments, foreign enterprises 13 (6) Fair value adjustments of cash flow hedges (103) 59 Fair value adjustments of cash flow hedges transferred to the Income Statement Actuarial gains/(losses) related to defined benefit pension plans (775) 868 Income tax relating to components of other comprehensive income 190 (217) Other comprehensive income (557) 704 Total comprehensive income 711 1,408 Page 14 of 31

15 Balance Sheets TDC Group Note 31 March, 31 December, March, 2011 Assets Non-current assets Intangible assets 33,257 33,543 34,423 Property, plant and equipment 15,441 15,343 15,450 Investments in joint ventures and associates Other investments Deferred tax assets Pension assets 7 7,275 8,060 8,402 Receivables Derivative financial instruments Prepaid expenses Total non-current assets 56,923 58,030 59,089 Current assets Inventories Receivables 4,540 4,773 4,025 Derivative financial instruments Prepaid expenses Cash 4,051 1, Total current assets 9,680 7,135 5,573 Total assets 66,603 65,165 64,662 Equity and liabilities Share capital Reserves (476) (500) (568) Retained earnings 20,276 20,129 22,012 Proposed dividends - 1,790 - Total equity 20,625 22,244 22,269 Non-current liabilities Deferred tax liabilities 6,250 6,476 6,352 Provisions Pension liabilities Loans 8 23,089 19,404 22,113 Derivative financial instruments Deferred income Total non-current liabilities 31,168 27,746 30,589 Current liabilities Loans 8 3,515 3, Trade and other payables 6,742 6,914 5,902 Income tax payable ,519 Derivative financial instruments Deferred income 3,018 3,043 3,075 Provisions Total current liabilities 14,810 15,175 11,804 Total liabilities 45,978 42,921 42,393 Total equity and liabilities 66,603 65,165 64,662 Page 15 of 31

16 Statements of Cash Flows TDC Group Q Q Change in % EBITDA bpi 2,571 2,602 (1.2) Adjustment for non-cash items Pension contributions (35) (39) 10.3 Payments related to provisions (29) (73) 60.3 Cash flow related to special items (227) (266) 14.7 Change in net working capital excl. special items (445) (141) - Cash flow from operating activities before net financials and tax 1,908 2,114 (9.7) Interest paid, net (560) (367) (52.6) Realised currency translation adjustments (3) 6 (150.0) Cash flow from operating activities before tax 1,345 1,753 (23.3) Income tax paid (180) - - Cash flow from operating activities in continuing operations 1,165 1,753 (33.5) Cash flow from operating activities in discontinued operations Total cash flow from operating activities 1,165 1,753 (33.5) Investment in enterprises (117) (74) (58.1) Investment in property, plant and equipment (693) (598) (15.9) Investment in intangible assets (206) (180) (14.4) Investment in other non-current assets (1) (1) - Divestment of enterprises Sale of property, plant and equipment Sale of other non-current assets 2 90 (97.8) Dividends received from joint ventures and associates 1, Cash flow from investing activities in continuing operations 1 (758) Cash flow from investing activities in discontinued operations - (61) - Total cash flow from investing activities 1 (819) Proceeds from long-term loans 3,672 16,674 (78.0) Repayments of long-term loans (20) (17,875) 99.9 Change in short-term bank loans (302) (57) - Change in interest-bearing debt (1) - - Dividends paid (1,361) - - Acquisition and disposal of treasury shares, net (592) - - Cash flow from financing activities in continuing operations 1,396 (1,258) - Cash flow from financing activities in discontinued operations Total cash flow from financing activities 1,396 (1,258) - Total cash flow 2,562 (324) - Cash and cash equivalents (beginning-of-period) 1, Cash and cash equivalents (end-of-period) 4, Page 16 of 31

17 Statements of Changes in Equity TDC Group Share capital Reserve for currency translation adjustments Reserve for cash flow hedges Retained earnings Proposed dividends Total Equity at 1 January (621) - 20,484-20,855 Profit for the period Currency translation adjustments, foreign enterprises - (6) (6) Fair value adjustments of cash flow hedges Fair value adjustments of cash flow hedges transferred to the Income Statement Actuarial gains/(losses) related to defined benefit pension plans Income tax relating to components of other comprehensive income (217) - (217) Total comprehensive income - (6) 59 1,355-1,408 Cancellation of treasury shares (167) Share-based remuneration Equity at 31 March (627) 59 22,012-22,269 TDC Group Share capital Reserve for currency translation adjustments Reserve for cash flow hedges Retained earnings Proposed dividends Total Equity at 1 January (616) ,129 1,790 22,244 Profit for the period ,268-1,268 Currency translation adjustments, foreign enterprises Fair value adjustments of cash flow hedges - - (103) - - (103) Fair value adjustments of cash flow hedges transferred to the Income Statement Actuarial gains/(losses) related to defined benefit pension plans (775) - (775) Income tax relating to components of other comprehensive income - - (4) Total comprehensive income Declaration of dividends (1,790) (1,790) Dividends, treasury shares Acquisition of treasury shares (592) - (592) Share-based remuneration Equity at 31 March (603) ,276-20,625 Page 17 of 31

18 Notes to Consolidated Financial Statements Note 1 Accounting policies The Interim Financial Report for Q was prepared in accordance with IAS 34 Interim Financial Reporting and additional Danish disclosure requirements for listed companies. The preparation of TDC's Consolidated Financial Statements requires that the Management makes assumptions affecting the reported amount of assets and liabilities at the balance sheet date, and the reported revenues and expenses for the accounting period. The critical accounting estimates and judgements considered material to the preparation of TDC's Consolidated Financial Statements are e.g. in connection with the calculation of pension expenses, valuation of investments including goodwill, amortisation of intangible assets, depreciation of property, plant and equipment, restructuring provisions, provision for bad debts, customer churn, and the likely outcome of tax cases and lawsuits, etc. The critical accounting estimates and judgements are summarised in note 2 to the Consolidated Financial Statements for 2011, cf. TDC's Group Annual Report The accounting policies are unchanged from the Consolidated Financial Statements for 2011, cf. TDC's Group Annual Report Changed presentation TDC has changed presentation in relation to employees who have been seconded to external parties in connection with outsourcing of tasks or divestment of operations and who are entitled to pensions on conditions similar to those provided for Danish civil servants. TDC pays the wages, etc. for the employees in question, and the payment is subsequently refunded by the outsourcing partner. With effect from 1 January 2012, wages, etc. for the employees in question are not reflected in TDC s income statements. Previously, wages, etc. were recognised in Wages, salaries and pension costs and the corresponding refund was recognised in Other income. In addition, the employees in question are not included in the number of full-time employee equivalents. Previously, the employees were included. The comparative figures for previous periods have not been restated accordingly. Page 18 of 31

19 Note 2 Segment reporting In Q1 2012, the principles for allocating revenues to the respective segments (business lines) were adjusted. All revenue generated by the segments customer relationships is now allocated to the segment responsible for the customer relationship 1. Previously, revenue generated by using certain products from other segments was allocated to the segment offering the services and products. Comparative figures for previous periods have been restated accordingly. 1 With few exceptions, e.g. revenue in shops. Activities Q Consumer Business Nordic Wholesale Q Q Q Q Q Q Q Q External revenue 2,252 2,183 1,749 1,904 1,152 1, Revenue across segments Revenue 2,289 2,233 1,788 1,954 1,227 1, Total operating expenses before depreciation, etc. (1,409) (1,343) (829) (958) (1,060) (946) (275) (284) Other income and expenses EBITDA bpi YouSee Operations & HQ Total Q Q Q Q Q Q External revenue 1,066 1, ,644 6,609 Revenue across segments Revenue 1,125 1, ,005 6,958 Total operating expenses before depreciation, etc. (706) (690) (179) (179) (4,458) (4,400) Other income and expenses EBITDA bpi (85) (70) 2,572 2,598 Reconciliation of revenue, Q Q Reportable segments 7,005 6,958 Elimination of revenue acrosssegment items (361) (349) Consolidated amounts 6,644 6,609 Reconciliation of profit before pension income, depreciation, amortisation and special items (EBITDA bpi), Q Q EBITDA bpi from reportable segments 2,572 2,598 Elimination of EBITDA bpi (1) 4 Unallocated: Pension income Depreciation, amortisation and impairment losses (1,212) (1,308) Special items (318) (211) Profit from joint ventures and associates 762 (2) Net financials (354) (196) Consolidated profit before income taxes 1, Page 19 of 31

20 Note 3 Employees FTEs (EoP) Q Q Q Change in Change in % Q % Q vs. Q vs. Q Consumer¹ 1,954 1,996 1,964 (0.5) (2.1) Business 2 1,352 1,344 1,458 (7.3) 0.6 Nordic 1,465 1,472 1, (0.5) - of which in Denmark Wholesale (0.5) YouSee 1,197 1,218 1,243 (3.7) (1.7) Other 3 4 3,238 3,596 3,977 (18.6) (10.0) TDC Group 9,395 9,816 10,231 (8.2) (4.3) TDC Group, domestic 8,145 8,552 9,014 (9.6) (4.8) Average number of FTEs Q Q Q Change in % Q vs. Q Change in % Q vs. Q Consumer¹ 1,971 2,003 2,004 (1.6) (1.6) Business 2 1,351 1,400 1,460 (7.5) (3.5) Nordic 1,471 1,430 1, of which in Denmark Wholesale YouSee 1,205 1,235 1,241 (2.9) (2.4) Other 3 4 3,296 3,860 4,045 (18.5) (14.6) TDC Group 9,482 10,106 10,321 (8.1) (6.2) TDC Group, domestic 8,223 8,875 9,099 (9.6) (7.3) 1 Includes Onfone as of Q Includes BluePosition as of Q Includes Operations, HQ, Expats and personnel on leave, etc. ⁴ From Q Danish civil servants seconded to external parties are excluded in the calculation of FTEs. 156 seconded civil servants were included in FTE figures EOP Page 20 of 31

21 Note 4 Depreciation, amortisation and impairment losses The DKK 96m or 7.3% decline in Depreciation, amortisation and impairment losses from Q to Q reflected primarily lower amortisation of the value of customer relationships according to the diminishing balance method. Note 5 Special items The table below shows the TDC Group s Special items. Special items are shown together with a reconciliation of profit for the period excluding and including Special items. Special items include significant amounts that cannot be attributed to normal operations such as restructuring costs and special write-downs for impairment of intangible assets and property, plant and equipment. Special items also include gains and losses related to divestment of enterprises and properties, as well as transaction costs and adjustments of purchase prices relating to the acquisition of enterprises. Special items amounted to an income after tax of DKK 528m in Q1 2012, compared with an expense after tax of DKK 169m in Q In Q1 2012, Special items in joint ventures and associates comprised the effect of the settlement between DPTG and TPSA of the dispute over unaccounted traffic revenue for the period Other restructuring costs, etc. included primarily costs due to the new IT outsourcing agreement with Tata Consultancy Services and the termination of the former contract with CSC, i.e. termination, transition and transformation costs (DKK 261m). The total payments related to the change of vendor are expected to amount to DKK 317m. Hereof, DKK 64m impacted Q1 2012, additional payments of DKK 50m are expected in Q2-Q4 2012, and the remaining payments are expected in the period Income from rulings comprised a VAT refund for the period In Q1 2011, Other restructuring costs, etc. included primarily accelerated amortisation of borrowing costs (DKK 106m) due to the refinancing of TDC's Senior Loans in February Gains from divestments of enterprises and property comprised the divestment of shares in Nawras. TDC Group Q Q Profit for the period excl. special items Consolidated enterprises: Costs related to redundancy programmes and surplus office capacity (104) (197) Other restructuring costs, etc. (267) (112) Gains from divestments of enterprises and property 0 87 Impairment losses (16) 11 Income from rulings 82 0 Loss from rulings (13) 0 Special items before income taxes (318) (211) Income taxes related to special items Special items after income taxes in consolidated enterprises (232) (169) Joint ventures and associates Special items 528 (169) Profit for the period 1, Page 21 of 31

22 Note 6 Net financials Interest Currency translation adjustments Q Fair value adjustments Total Euro Medium Term Notes (EMTNs) (incl. hedges) (252) (2) (108) (362) Other (21) (2) 31 8 Net financials (273) (4) (77) (354) Interest of DKK (273)m is specified as follows: Interest income, DKK 216m and interest expenses, DKK (489)m. Interest Currency translation adjustments Q Fair value adjustments Total Euro Medium Term Notes (EMTNs) (incl. hedges) (130) (22) 20 (132) Senior loans (incl. hedges) (164) (8) 133 (39) Other (27) 2 0 (25) Net financials (321) (28) 153 (196) Interest of DKK (321)m is specified as follows: Interest income, DKK 146m, and interest expenses, DKK (467)m. Net financials represented an expense of DKK 354m in Q1 2012, up DKK 158m compared with Q1 2011, driven by: A negative development of DKK 230m in fair value adjustments of derivative financial instruments related primarily to hedging of debt. The losses in Q of DKK 77m were due primarily to cross-currency swaps related to the EMTN GBP bonds, and are partly a reversal of gains in H A DKK 48m decrease in net interest expenses. Interest expenses in Q were impacted negatively by interest on interest-rate swaps related to hedging of the Senior Loans, which were not terminated upon repayment of the Senior Loans in February In addition, lower debt and lower interest rates contributed to the development. A positive development of DKK 24m in currency translation adjustments related primarily to long-term debt and hedging hereof. Approximately 30% of the issued fixed interest-rate EMTN bonds were swapped to floating interest rates. In addition, the EMTN GBP bonds were swapped to fixed EUR interest-rates. Both types of derivatives are treated as hedge accounting. Page 22 of 31

23 Note 7 Pension assets and pension obligations Specification of pension costs recognised in the Income Statements Q Q Defined benefit plans: Pension income from the domestic defined benefit plan (Operations & HQ) (16) 76 Pension cost from the Norwegian defined benefit plans (Nordic) (4) (4) Net periodic pension income/(costs) from defined benefit plans (20) 72 Defined contribution plans (121) (103) Total pension costs recognised in the Income Statements (141) (31) Net periodic pension income/(costs) from defined benefit plans is recognised in the Income Statements as follows: Service cost 1 recognised in Wages, salaries and pension costs (41) (38) Interest cost 2 (220) (213) Expected return on plan assets Net interest recognised in Pension income Total net periodic pension income/(costs) from defined benefit plans (20) The increase in the present value of the defined benefit obligation resulting from employees services in the current period. The increase in the present value of the defined benefit obligation occurs because the benefits are one period closer to settlement. The interest cost represents the unwinding of the discounting of the pension liabilities. Interest, dividends and other revenue derived from the pension fund assets. The expected return on plan assets is based on market expectations at the beginning of the period for returns over the entire life of the related pension obligation. Page 23 of 31

24 A: Domestic defined benefit plan TDC s domestic pension fund operates defined benefit plans via a separate legal entity supervised by the Danish Financial Supervisory Authority (FSA). In accordance with existing legislation, articles of association and the pension regulations, TDC is required to make contributions to meet the capital adequacy requirements. Distribution of funds from the pension fund to TDC is not possible until all pension obligations have been met. Since 1990, no new members have joined the pension fund plans, and the pension fund is prevented from admitting new members in the future due to the articles of association. For further information, see TDC s Group Annual Report 2011, note 27 to the Consolidated Financial Statements. Specification of pension (costs)/income Q Q Service cost recognised in Wages, salaries and pension costs (36) (34) Interest cost (211) (210) Expected return on plan assets Net interest recognised in Pension income Net periodic pension (costs)/income (16) 76 Domestic redundancy programmes recognised in special items (35) (76) Pension (costs)/income recognised in the Income Statements (51) 0 Assets and obligations Q Q Specification of pension assets Fair value of plan assets 28,431 28,400 25,635 Projected benefit obligations (21,156) (20,340) (17,233) Pension assets recognised in the Balance Sheets 7,275 8,060 8,402 Change in pension assets recognised in the Balance Sheets Pension assets recognised in the Balance Sheets at the beginning of the period 8,060 7,487 7,487 Pension (costs)/income recognised in the Income Statements (51) 74 0 Actuarial gain/(loss) on projected benefit obligations and plan assets recognised in other comprehensive income (775) TDC s contribution Pension assets recognised in the Balance Sheets at the end of the period 7,275 8,060 8,402 Weighted-average assumptions used to determine benefit obligations % Q Q Q Discount rate Weighted-average assumptions used to determine net periodic pension cost % Q Q Q Discount rate Expected return on plan assets Page 24 of 31

25 B: Foreign defined benefit plan TDC s foreign defined benefit plan concern TDC Norway. The difference between the actuarially determined pension obligations and the fair value of the pension funds assets is recognised in the Balance Sheets under pension liabilities, etc. Pension liabilities, etc. related to the foreign defined benefit plan amounted to DKK 102m at 31 March 2012 compared with DKK 72m at 31 March Note 8 Loans and net interest-bearing debt Net interest-bearing debt totalled DKK 21,818m at the end of Q1 2012, up by DKK 805m compared with year-end 2011 due largely to the share buyback and the dividends paid, which was partly offset by the net cash flows from operating and investing activities including the settlement in January 2012 between DPTG and TPSA. Compared with Q1 2011, Net interest-bearing debt declined DKK 27m due mainly to the share buyback and the dividends paid in August 2011 and March 2012, which was partly offset by the positive net cash flows from operating and investing activities including the settlement between DPTG and TPSA. Net interest-bearing debt to EBITDA before pension income amounted to 2.1x at the end of Q In February 2012, TDC issued an unsecured BBB/Baa2-rated bond in the total amount of EUR 500m, with a maturity of 10 years and a coupon of 3.75% under the Company s EUR 4bn EMTN Programme listed on the Luxembourg Stock Exchange. The proceeds from the bond issuance were used to fully repay the EMTN bond that matured in April Approximately 30% of the issued fixed interest-rate EMTN bonds were swapped to floating interest-rates. In addition, the EMTN GBP bonds were swapped to fixed EUR interest rates. Both types of derivatives are treated as hedge accounting. TDC Group 31 March December March 2011 Senior loans Euro Medium Term Notes (EMTN) 26,153 22,458 21,720 Debt relating to finance leases Other loans Loans 26,604 23,220 22,273 Interest-bearing payables Gross interest-bearing debt 26,606 23,222 22,275 Interest-bearing receivables (219) (226) (274) Cash and cash equivalents (4,051) (1,489) (507) Derivative financial instruments hedging fair value and currency on loans (518) (494) 297 Net interest-bearing debt 21,818 21,013 21,791 Page 25 of 31

26 Maturity profile of EMTN gross debt, nominal value 1 DKKbn 1 Nominal value at 31 March 2012 Euro Medium Term Notes (EMTN) Bonds Total Maturity 19 Apr Feb Dec Feb Mar Feb 2023 Fixed/Floating rate Fixed Fixed Fixed Fixed Fixed Fixed Coupon 6.500% 3.500% 5.875% 4.375% 3.750% 5.625% Outstanding amount¹ 31 December 2011 EURm ,331 Outstanding amount¹ 31 December 2011 GBPm Issuance February EURm Outstanding amount¹ 31 March 2012 EURm ,831 Outstanding amount¹ 31 March 2012 GBPm Outstanding amount¹ 31 March ,400 5,947 2,034 5,947 3,717 4,892 25,937 2 The proceeds from the bond issuance were used to fully repay the EMTN bond that matured in April Page 26 of 31