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Guide to share redemption program

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  • 1. Tele2’s Share RedemptionProgramMarch 27, 2013
  • 2. Tele2’s Share Redemption Program • Through the sale of Tele2 Russia, if the deal is completed, Tele2 will receive capital that will be partly distributed directly to the shareholders through a planned share redemption program. • The share redemption program involves a share split, meaning that one ordinary share is split into two shares, one of which is a redemption share. The redemption share is automatically redeemed for cash. • The proposed share redemption program is mandatory, meaning that shareholders do not need to take any action in order to receive redemption shares and subsequent redemption. All this will be done automatically without the involvement of shareholders. • For more information regarding taxes, please see page 5.2
  • 3. Share split Before After Time frame 5-6 weeks 1 Ordinary share 1 Ordinary share 1 Ordinary share 1 Redemption share Can be traded* Cash Each share is split into Each redemption Possibility to trade* two shares, one of which share is redeemed for redemption shares is a redemption share SEK 28** As a shareholder, you do not need to take any action in order to receive redemption shares and subsequent redemption. All this will be handled automatically. * might be beneficial to foreign shareholders3 ** provided that the deal is completed and that the Board’s proposal regarding the share redemption program is approved at the shareholders’ meeting
  • 4. Time plan Shareholders’ meeting Share split Expected date for payment of redemption amount Time frame 5-6 weeks Last day of trading in shares before share split and right to receive redemption Trading in shares redemption shares4
  • 5. Taxes and income tax return • When stating the sale of or redemption of redemption shares, an Example acquisition cost is needed. The Swedish Tax Agency will determine a A couple of years ago you percentage split of the original acquisition cost. This split entails that the purchased a share in a company. ordinary share is assigned a part of the acquisition cost, and the Acquisition cost was SEK 70 redemption share is assigned the remaining part of the acquisition cost. In this way it is possible to calculate the acquisition cost for the redemption The share price is now share in SEK (see example). When doing your taxes, this transaction SEK 110 (before split) should be stated just as if you were selling ordinary shares. The company conducts a share split with redemption shares. • The difference between redemption shares and an ordinary dividend is that Redemption amount is SEK 30 in this process shareholders receive the entire redemption amount and are then taxed on the capital gain, which should be stated when doing one’s The taxing authority determines the split allocation taxes. Ordinary share: 73% • For more information from the Swedish Tax Agency: www.skatteverket.se Redemption share: 27% • The tax effects on you as a shareholder depend on your specific situation. All Acquisition cost for the ordinary shareholders are accordingly referred to the tax authorities to research their share is respective responsibility to pay taxes. SEK 70 x 73% = SEK 51 • Foreign shareholders normally have to pay withholding tax in Sweden on the Acquisition cost for the amount disbursed on the redemption of shares. However, for foreign shareholders redemption share is no withholding tax is payable when selling redemption shares. SEK 70 x 27% = SEK 19 • In general, the share split does not entail any extra taxation. However, selling of The capital gain from the redemption shares or redemption of these entail taxation, like when selling redemption share is then ordinary shares. 30 – 19 = SEK 115
  • 6. Q&A Why is Tele2 planning to conduct a share redemption program? Through the sale of Tele2 Russia, if the deal is completed, Tele2 will receive capital that will be partly distributed to the shareholders. This is done through a share redemption program. The share redemption program is a beneficial way of carrying out the “special dividend” and disbursing capital to shareholders. Why is Tele2 using a share redemption program instead of a one-time dividend? The share redemption program includes a trading period during which shareholders may sell their redemption shares. From a tax perspective, it might be advantageous to foreign shareholders to sell the redemption shares instead of having them redeemed for cash. As a shareholder, do I need to do anything? No. Your redemption shares will automatically be redeemed for the redemption amount of SEK 28 per share*. For foreign shareholders it might be beneficial to sell the redemption shares during the trading period. How many shares will I have when the share split and redemption procedure are completed? When the share split and redemption are completed, you will have the same number of shares as you had before the share split and redemption. When will I receive the redemption amount? Redemption shares are planned to be redeemed for cash approximately 5 to 6 weeks after the shareholders’ meeting that is deciding on the matter of the share redemption program. Is the ordinary dividend affected by the share split and redemption procedure? No, the ordinary dividend is a separate issue and will, provided that the Annual General Meeting decides in accordance with the proposal of the Board, be disbursed with SEK 7.10 per share shortly after the Annual General Meeting. For questions, please contact redemption@tele2.com * provided that the deal is completed and that the Board’s proposal regarding the share redemption program is6 approved at the shareholders’ meeting.