Pair Trade: Long TeliaSonera - Short Tele2 Tuesday, October 23rd 2012Companies Description Investment Case TeliaSonera (TLSN SS) faces a number of potential cash inflows that could support the shares: TeliaSonera sold its 8% indirect stake in Megafon in Q2, but only received 20% of the total proceeds ($1.45bn). The rest should be paid in four annual installments. Megafon is due to list via an IPO; In Spain, according to the press, TeliaSonera hired banks to advise it on the sale of its Spanish business Yoigo;Market Price Data In Kazakhstan, TeliaSonera could also be planning to IPO a stakeTeliaSonera in its local company.Last Price (SEK) 44.480YTD Change -4.90% TeliaSonera intends to deleverage its Balance Sheet (although the company’s net debt/EBITDA is not especially high by the standards of EUMkt Cap (SEK bn) 192.602 telcos). But, will the company also return some cash through a specialTele2 dividend or a buyback? Key risk is market focus to shift back to theLast Price (SEK) 113.90 fundamental story. Q3 2012 highlighted a deteriorating trend in Telia´sYTD Change -10.30% Nordic assets.Mkt Cap (SEK bn) 50.794Source: Bloomberg Tele2 (TEL2B SS) has a solid business model. However, there are some operational headwinds that could continue to hold back the stock:Analysts Recommendations: No near-term award of spectrum in Russia. Will Tele2 fall behind on mobile data, in Russia? The company has not yet decided whether to bid for a 4th license and roll out a mobile network in the Netherlands; Investments in Russian and Kazakhstan could penalize Tele2’s FCF yield.Source: Bloomberg The TeliaSonera / Tele2 ratio has a current value of 0.3905. We’ll defineMarket Multiples as our price target 0.4033 (+3.27%). 0.3831 will be our stop-loss level (-1.90%). P/E EPS DY Net Debt/ 2013 CAGR 2013 EBITDA Technical Comment Est. Est. Est. Est. 2012TeliaSonera 10.38 0.61% 7.76% 1.59Tele2 9.79 7.70% 10.64% 1.35Source: BloombergNext Report Date & EventsTeliaSonera YE Report: January 31th, 2013Tele2 Cap. Mark. Day: Dec. 12th, 2012 Interim Rep.: February 5th, 2013Source: Companies web sitewww.fincor.ptwww.facebook.com/FincorAnnouncement: Fincor—Sociedade Corretora, S.A. provides services of reception, execution, and transmission of orders. The contents men-tioned in this document do not constitute (nor should they be interpreted as to form) any kind of counselling, or investment recommendation, or arecord of our trading prices, or an offer or solicitation to trade in any financial instrument. Fincor—Sociedade Corretora, S.A. Will not accept anyresponsibility resulting from any use referring to said content or about any resulting effect that could have occurred.