2013:facts and figures

Business leadership, i. e.,

profitable performance or the

largest market share is not

enough today. Ethical leadership

and an impeccable reputation are

equally important.

Kęstutis Šliužas,of TEO LT, AB General Manager

TEO is the largest integrated telecommunication, IT and television services provider for business and private customers in Lithuania.

TEO is a part oftelecommunication serviceprovider TeliaSonera Group.

Through its subsidiary UAB Lintel, the Company owns the biggest, in terms of business volumes, and the most modern, in terms of technologies and management, call center in Lithuania. Another subsidiary, UAB Baltic Data Center (BDC), is a leading provider of data center and information system management services in the Baltic States.

Number of TEO shareholders – 12,000

11.85%

88.15%

Other shareholders

TeliaSonera AB(Sweden)

Create value for customers and shareholders by providing professional, high-quality and easy to use telecommunications, TV and IT services.

How do we implement our mission? Through values: creating value, respect, goal orientation and personal responsibility.

Our mission

Ourvision

Creating value

Respect Responsibility

Your best partner in communicating with the constantly changing world. By constantly introducing the most advanced technologies we aim at enabling our customers to reach people, knowledge and entertainment simply and easily.

p. 8 p. 20 p. 36

We create and provide

services that bring benefits

to customers, the company

and its shareholders.

Creating value

Lithuania is No. 1 in Europe by fiber-optic Internet network penetration.

Our network is used by

90%

51%

24%

customers in Lithuania.

of voice telephony

of Internet

of pay-TV

9

Crea

ting

val

ue

of Lithuanianfamilies use TEO services

1/ 2Lithuanian companies are TEO customers

7 of 10

of Lithuanian families can use TEO fiber-optic access

2 /3

11

Crea

ting

val

ue

In 2013 TEO was recognized the

MOST VALUABLE Lithuanian

company by the value of

investment and benefits to the

country*.

* Magazine “Veidas” Survey

We constantly invest into technological progress

122

453105

27LTL million

LTL million

LTL million

LTL million

for network development

for ITsystems

is invested into the development of fiber-optic network access since 2007

of taxes and contributions paid to the State

In 2013 TEO allocated:

13

Crea

ting

val

ue In 2013 we have

created new and improved the existing services for customer security and convenience, taking their needs into account

“Interneto.tv“ (Internet TV) – a new generation TV for smart devices

Cloud computing self-serviceBDC Enterprise Cloud

Internet security solutions forprivate and business customers

HD voice service for IPtelephony businesscustomers

Video surveillance (CCTV) for companies, organizations andsecurity of citizens

15

Crea

ting

val

ue In 2013 we generated profit and value for shareholders

TEO market capitalization

Average share price

Dividends for 2013

Revenue

Net profit

EBITDA margin

2057LTL million

LTL

LTL million

LTL million

%

LTL million721

2.69

149

40.6

148

17

Crea

ting

val

ue We provided services during the events of Lithuania’s Presidency of the Council of EU

PROJECT

Events have been equipped with:

22 high level meetings,160 expert events

Nearly 500 network-connected workplaces

More than 800 ministers, approximately 1,000 members of delegations, more than 1,500 media representatives.

The value of services provided free of charge – LTL 203,000

cables for Internet and TV

fixed-linetelephones

6 TB 165 26 kmcapacity BDC cloud data storage

speed fiber-optic Internet

simultaneous Wi-Fi connections

2 Gbps 2,000

19

We consistently adhere to

the principle of equality, and

treat others as we would like

to be treated ourselves: with

respect and honesty.

Respect

We respect our customers’ freedom of expression, right to privacy and keep their confidential information safe.

of fixed telephone lines in service

of broadband Internet customers

of TV service customers

565.3

TEO is:

430.9172.3

thousand

thousand

thousand

21

Our aim is touse smart technologies securely and ethically

Res

pect

We aim to protect children and youth from potential threats of electronic space: we train how to prevent data thefts, create safe social profiles and prevent Internet addiction or electronic bullying.

The Safer Internet project is implemented for the 5th year now together with the partner association ”Langas Į Ateitį“ (Window into the Future).

For many years TEO cooperats with “Jaunimo Linija“ (Youth Line) and “Vaikų Linija“ (Children’s Line) and contributes to addressing youth communication and electronic bullying problem.

visitors

attendees

children

In 2013 TEO joined the pro-fessional volunteering project www.kamtoreikia.lt, where em-ployees share their knowledge on ethical and safe internet.

of test “Are you Safe on the Internet?“6,3351,427227

of training “Safer Internet for Educators“

at 9 seminars “Safer Internet for Our Children“ at fosters

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2013 activities:

We take care of customer

protection against computer

hacking, cheating, improper

content distribution, we

familiarize customers with

equipment user manuals and

its potential health impact.

We encourage taking care of safety!R

espe

ct

To pay attention to IT security, together with partners in 2013 we have organized a conference “Cyber Security: Global Challenges for State Institutions and Organisations of National Importance”.

In cooperation with Kaspersky Lab we have developed a service which, among other functions, allows parents to control time their children spend surfing Internet and pages they visit.

“Interneto Apsauga”(Internet Protection)protects against viruses, hacking, spyware, spam, ensures computer, identity and financial data safety, secure use of electronic banking, e-commerce websites.

The first standardized “Saugumo Sprendimai” (Security Solutions) service for companies protects against hacking, spam, blocks access to virus-infected or undesirable websites.

“Triguba Apsauga” (Triple Security) protects against internet viruses, hacking, data thefts, emails aiming user to provide his/her confidential information to third party websites.

25

1 2 3

We closely monitor customer needsand cooperate

Res

pect

Having noticed that Wi-Fi popularity grows fast, we have simplified the access and decreased tariffs for the service.

3,000+

Customers had possibility to suggest where to install new TEO Wi-Fi access points – they just needed to specify a location in the city and a specific object where TEO wireless connection is required.

In Lithuania there are more than 3,000 TEO Wi-Fi access points, including 400 of them in Vilnius.

In 2013 TEO modified voice telephony plans giving more free minutes for calls to both fixed and mobile networks.

Employees of TEO customer care units get annual skills improvement trainings on serving special needs customers. Special telephone call discounts are applicable to retired, disabled people, families with many children and other special needs persons.

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We are grateful to

our employees for

creating our success

through their hard

daily work

Res

pect

A collective agreement is applicable to all the employees of TEO AB, LT.

Employees are annually interviewed to discuss their competence improvement and career aspects. In 2013 more than 80 TEO employees were promoted.

TEO focus a lot on integration of our new employees, organizes New Employee Days and trainings for them. In 2013, 127 new employees joined TEO, and there were 70 student apprentices.

We are happy to be among the most attractive employers in Lithuania!

as of December of 2013

Employees work in TEO Group

Men

Men in managementpositions

Unlimited term jobs

Women

Women in management positions

Fixed-term labor contracts

3,03454%

64%

2,741

46%

36%

293

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We take care of our employees and aim to be among the best employers

Res

pect

We pay 50% of Master’s degree tuition fees for our employees. In 2013 we had 18 such employees. 50%

36.8hrs

In 2013 the average training time in TEO Group was 36.8 hrs per employee.

1,044 employees attended in-house or out-house professional competence improvement trainings, additional 130 employees attended conferences related to professional activities.

In 2013, 143 managers attended coaching trainings to encourage independence in making their activity-related decisions and increase their involvement.

We provide a health insurance package to our employees, which includes health improvement services. In 2013 1,747 employees had a health insurance package. Employee‘s families may use additional health insurance on similar terms.

Our employees may choose to start their business day at 7.00 to 11.00 and finish it at 16.00 to 20.00. They have opportunities to work remotely.

31

Cooperation and partnerships with

NGOs, higher education establish-

ments and COMMUNITIES in which we

operate strengthen our relations and

help to create a safe and smart future

society together.

For SOCIETY:socialpartnerships 1.2 LTL million

was TEO social investment in 2013

support and cooperation projects were imple-mented

LTL thousand

150

500

Res

pect

Academic education and promotion of innovation are among the key social partnership areas for TEO.

In 2013 we kept consistent cooperation with:

Nacionalinė Moksleivių Akademija, (National Student Academy), whitch is engaged in educating children with exceptional talent.

The 10th IT contest “Bebras” (Beaver).

Public institution Global Lithuanian Leaders. Thanks to which Lithuanian representatives of science, business, arts and culture were honoured at the President‘s Office for the second time.

National Committee of the United World Colleges, providing support to students wishing to study in foreign colleges.

23 short numbers were given to charity projects (Save the Children, Caritas, Order of Malta Relief Organization, “Algojimas”, TV3 “Išsipildymo akcija“ (“Dreams Come True” campaign etc.), and they fundraised nearly

just using TEO lines

33

Towards the Smart Society: Wi-Fi for Schools

Res

pect

In 2013 TEO installed fast Wi-Fifor free in more than 450 Lithuanian schools, which may be accessed by laptops, tabs and smart phones.

“The school has to disseminatethe most novel things.”

Educologist Austėja Landsbergienė

450 schools

A unique Wi-Fi solution was applied at the school of Karalienė Morta (Queen Morta) enabling 200 users to use Wi-Fi at the same time. TEO provided fiber-optic access, Wi-Fi network equipment and special security solutions for free.

This school is now the most technologically advanced in Lithuania using tablets, Internet and education programs based on the new technologies for their routine education activities.

PROJECT

35

We take personal responsibility

for the decisions, promises

made to customers and

partners and the outcome.

Responsibility

When introducing responsible business culture we take account of social, society and environmental aspects and accept responsibility for short- and long-term consequences of our activities as a market player, employer, consumer and member of the society.

Environmentalresponsibility

responsibility

responsibilityEconomic

Social

37

TEO aims reduce used energy

volumes and introduces new

technologies every year.

EnergyefficiencyR

espo

nsib

ility

The new generation fiber-optic (FTTH) Internet network enables data transmission with close to zero energy losses. The total volume of electricity used by TEO reduced by 13% during the last 5 years, even with activity expansion and building new data centres.

BDC (Baltic Data Centre), a TEO subsidiary, manages7 modern data centres of TIER II standard.

The highest environmental impact caused by data centres is because of their energy used for cooling, thus TEO is highly focused on efficient technologies. During 2013 BDC KyotoCooling technologies saved more than 700,000 kWh of electricity, equal to annual electricity consumption of more than 540 Lithuanian families. Compared to usual cooling technologies, BDC reduces annual CO2 emissions by 700 tonnes.

91

-13%

%Since 2014 TEO uses green Lithuanian electricity to provide services. Electricity generated of renewable energy sources will represent more than 91% of total electricity volume consumed by TEO Group. TEO uses more than 35 million kWh of electricity per year.

39

Acting sustainably means for us

doing more than prescribed by

Law, introducing sustainable and

responsible business culture and

practice in the company and its

environment.

Sustainability: environmental responsibility

Res

pons

ibili

ty

Our employees are invited to acquire at least one new environmentally friendly habit per year: saving paper, water, heat, sorting waste, replacing a car by office bicycle, stop using plastic coffee cups, replacing business trips by business conferences.

Sustainability is more than just an economic benefit, it is also a major environmental policy achievement of TEO Group to improve environmental awareness of employees, business and NGO partners and the society.

How do we do it?

We encourage our customers to stop using paper bills, and use only organic paper for bills and envelopes. Customer care units have boxes for collecting small electronics waste and encourage waste sorting.

41

Since 2008 we consistently

develop an in-house environmental

project “Tausok ir keiskis“ aiming

to reduce energy consumption, CO2

emissions, save resources and sort

waste. During 5 years this project

enabled us to save more than LTL

5 million.

“Save Resources and Change Yourself”

5Saved more than

LTLmillion

Res

pons

ibili

ty

PROJECT

43

In 2013 we used by 8.15% less office paper compared to 2012. All the paper used for in-house purposes of the Group is organic, and nearly all the in-house documents are signed electronically.

Compared to 2012, the number of paper bills reduced by 7.79%, and only recycled paper was used for bills and envelopes.

We used 11.73% less electricity for administrative purposes than in 2012. The total electricity consumption reduced by 2.25%, compared to 2012.

We used 11% less water than in 2012.

We encourage eco-driving. 76 cars were replaced by new, more efficient ones, resulting in 7.66% less fuel consumption compared to 2012.

Supply chain responsibility

Res

pons

ibili

ty

In 2013 environmental requirements were consistently included into technical requirements.

The extent to which environmental requirements are met influences decisions on whether to buy goods and services, enabling to sustain the environment and save natural resources.

TEO is among co-initiators of establishing a transparent business initiative Clear Wave. The patroness of Clear Wave is the President of the Republic of Lithuania H. E. Dalia Grybauskaitė, the initiative is supported by the Ministry of Finance of the Republic of Lithuania and the State Tax Inspectorate.

The goal of Clear Wave is to encourage transparent Lithuanian business practice.

In 2013 the initiative Clear Wave was awarded for promoting transparency in Lithuania by the Seimas of the Republic of Lithuania.

TEO Supplier Code of Ethics defines our attitude to contractor‘s safety at work, sustainability and origin of materials used.

TEO suppliers have to meet

environmental requirements, and

their responsible behaviour and

environmental sustainability are

encouraged.

45

TEO has a long history of success as

a result of fair and ethical business

practices. We support international

standards on human rights, labour

conditions, the environment and

anticorruption.

Ethics and transparencyR

espo

nsib

ility

We familiarize employees with principles of socially responsible business and ethical standards and encourage fair business policy and transparent cooperation with Governmental institutions, and support organizations, which promote a socially responsible business attitude in Lithuania.

In 2013, 98.7% of TEO Group employees attended an on-line training, introducing principles of Ethics and Code of Conduct.

NASDAQ OMX Vilnius, Riga and Tallinn stock exchanges: Baltic Marcet Awards TEO was recognizedfor the Best Investor Relations in the Baltics according to analysts.

Baltic Corporate Excellence Awards 2013: The best listed company in the Baltics.

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Business leadership isnot enough today

Res

pons

ibili

ty

It should be complemented with responsible daily operations: being ethical, fair and transparent in terms of market, society and employees, to develop a long-term value for them.

Because we care how our business, environment and people will live tomorrow.

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Ethical

Transparent Honest

Environmental

Mar

ket

Society

TEO LT, AB

Lvovo str. 25

LT-03501 Vilnius

Lithuania

www.teo.ltBy printing this booklet TEO joins the tree planting

project to compensate carbon dioxide excreted in the

paper production and transportation.

© 2014