Telenor’s Global Impact - Digi Telecommunications

2 Introduction2.1Telenor and its role in the global telecommunications marketTelenor is one of the largest 500 companies globally by market value 1.It was founded in Norway in 1855 when the first Norwegian telegraph line was opened by theNorwegian Telegraph Administration (Telegrafverket) 2. It is now an international provider of tele, dataand media communication services, operating mobile services in 13 markets across the Nordics,Central and Eastern Europe and Asia and fixed telecommunication services in Norway. 3Telenor’s international expansion of operations has happened relatively recently in its history. Forexample, Telenor:———————launched operations in Bangladesh in 1997;launched operations in Thailand and Denmark in 2000;became the majority owner in Malaysia’s Digi in 2001;purchased an initial licence in Pakistan in 2004;launched in Sweden and Serbia in 2006;acquired the second largest mobile operator in Bulgaria, GLOBUL, in 2013; andsigned an agreement with the Union Government of Myanmar for a nationwidetelecommunications licence in 2014.As of end 2015, Telenor had nearly 203 million connections with over 185 million unique subscribersacross its 13 markets, approximately 4% of all global mobile telecoms subscribers.Its expansion has resulted in a substantial contribution by Telenor to rising global mobile penetrationrates and increased coverage of 3G and 4G services. The GSMA 4 estimates that in Q4 2015 therewere 4.6 billion unique subscribers globally, which is expected to rise at a compound annual growthrate (CAGR) of 3.9% between 2015 and 2020 to reach approximately 5.6 billion global uniquesubscribers (almost 75% of the world’s population).As the largest mobile operator in Norway, Montenegro, Hungary, Malaysia, Myanmar and Bangladeshin terms of connections, the second largest operator in Serbia, Denmark, Bulgaria, Pakistan, andThailand in terms of connections, and with operations in Sweden and India, Telenor is expected tomake a significant contribution to this growth.Although mobile telephony use continues to grow globally, the growth is expected to slow as manymarkets, particularly in developed countries, reach saturation. However, the accelerating technologyshift towards 3G and 4G and increasing digitisation across most industry sectors is changing thedynamics of the market and connectivity is of increasing importance and value.Telenor has played a part in this technological movement. In 2015, LTE (a 4G communicationsstandard) network services were launched in Bulgaria and expanded across markets including1Financial Times, Global 500, 2015.In 1969 the Norwegian Telegraph Administration changed its name to Norwegian Telecommunications (Televerket), becoming Telenor in 1995after another name change.3Telenor is also present in 14 further markets through ownership of VimpelCom Ltd. Telenor has an interest of 33% in VimpelCom Ltd.VimpelCom Ltd provides mobile services in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Laos, Algeria,Bangladesh, Pakistan, Zimbabwe and Italy.4GSMA, The Mobile Economy 2016.2Document Classification - KPMG Public 2016 KPMG United Kingdom Plc, a UK public limited company and a member firm of the KPMG network ofindependent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.8

Norway, Malaysia and Thailand. And after launching services in Myanmar in late 2014, TelenorMyanmar experienced a 347% increase in its 3G connections, which is the highest increase across allTelenor markets in 2015.Across all markets, on average, Telenor’s 3G services reach over 40% of the population, with 4Greaching 7%.Figure 1: Telenor connections split by 2G/3G/4G, 2015Telenor’s AsianmarketsTelenor’s Europeanmarkets2%25%23%37%75%38%2G3G4GSource: Telenor dataThe expansion of 3G and 4G networks and increased smartphone penetration is enabling societies tobe more connected and access a wider range of digital services. In 2015, 588,387 terabytes of datawas used on Telenor’s network in Asia and 256,634 terabytes of data was used on Telenor networksin Europe. This means a total of 845,020 terabytes of data was used across all 13 Telenor markets,giving an average of 1.4GB of data used per subscriber per month.Data usage is growing exponentially, particularly in developed markets. It is forecast that data trafficvolumes will grow by 49% a year between 2015 and 2020 5. In Europe, the average subscriber willconsume 12 GB of mobile data per month by 2020 6.Analysis from Cisco suggests that each percentage point increase in 4G adoption leads toapproximately a 2% increase in forecast data usage over the next 5 years 7. Therefore, as Telenorcontinues to expand its 4G networks across its markets, the value associated with customers’increased data usage is also likely to grow.In addition to Telenor’s telephony and broadcast services, it has substantial activities in thesubsidiaries and joint venture operations that form part of the Telenor Group business. These include:— Telenor Connexion, a global provider of connected business solutions, which develops connectedsolutions that fully leverage the opportunities of digital technology. These include Machine-toMachine (M2M) and Internet of Things (IoT) solutions, cloud service solutions and managedconnectivity.5GSMA, The Mobile Economy 2016GSMA, The Mobile Economy 20167GSMA, Asia Pacific Mobile Economy 2015.6Document Classification - KPMG Public 2016 KPMG United Kingdom Plc, a UK public limited company and a member firm of the KPMG network ofindependent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.9

— Telenor Global Wholesale, an international mobile carrier focusing on wholesale voice and dataservices and mobile and connectivity services such as GSM Roaming Signalling and LTERoaming Exchange.— Telenor Maritime, a global maritime telecommunications operator focused on providingcommunications solutions specially created to fulfil the requirements of the shipping industry. Itprovides connectivity via personal mobile phones to both passengers and crew on board cruiseships, ferries and other vessels worldwide.— Telenor Digital Businesses, a unit that seeks investment opportunities that have synergies withTelenor’s existing businesses 8. Telenor entered the AdTech industry in 2016 through theacquisition of New York-based Tapad Inc., a cross device marketing company.These additional services help to support and develop the core business of Telenor and expand therange of communication and connectivity services available to its global customer base.As we continue to move towards a digitised world with greater demand for data connectivity, highspeeds and greater capacity, Telenor plans to evolve into an increasingly digital company with abroader set of products and services, rooted in its core telecoms operations.2.2About the studyTelenor commissioned KPMG United Kingdom Plc (KPMG) to conduct an independent studyassessing a number of the economic and social impacts it has across the 13 markets in which itdirectly operates.The economic framework we have applied to assess these impacts captures a wide range of differenteffects, reflecting the way in which Telenor as a company contributes to the economy, as well as thewider impacts generated through the use of its services by its business and consumer subscribers.The study does not attempt to measure all possible social and economic impacts, positive andnegative, of Telenor’s business. The environmental impacts of Telenor’s activities and services arealso not included within the scope of this report.The socio-economic effects captured in this study were agreed with Telenor at the outset of the projectbased on the areas where it was possible to quantify its impacts and with a focus on the key areasthat Telenor considers it has an important impact. These include 9:— Gross Value Added (GVA) contribution: the total GVA impact of Telenor’s operations, split bydirect 10, indirect 11 and induced 12 GVA.— Employment contribution: the total employment in full time equivalent (FTE) terms generated byTelenor’s operations, split by direct, indirect and induced employment.— Investment: the level of investment, including capital expenditure (capex), made by Telenor andits capex intensity (capex as a proportion of direct GVA).— Fiscal contributions: the total fiscal contributions to governments generated by Telenor in eachmarket, split by the direct fiscal contributions, the fiscal contributions made through the supplychain and induced economic activity and employees’ fiscal contributions.— Digital inclusion: the net GDP contribution generated by use of Telenor services through theincrease in mobile penetration overall and 3G and 4G penetration.8Telenor, Telenor Digital Businesses. Accessed at growth-areas/Details of the methodology to estimate each of the impacts is set out in detail in Appendix 1.10Direct GVA measures Telenor’s economic output relative to its inputs. It is calculated using the following formula: GVA Revenues less cost ofbought in goods and services11Indirect GVA captures the wider economic activity that is generated through Telenor’s spending with suppliers.12Induced GVA captures the additional economic activity that is generated as a result of Telenor’s direct and indirect employees.9Document Classification - KPMG Public 2016 KPMG United Kingdom Plc, a UK public limited company and a member firm of the KPMG network ofindependent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.10

— Financial inclusion: the value of mobile money transactions that are enabled by Telenor’snetwork, including Telenor’s own mobile money and Over the Counter (OTC) services offered insome of its markets.— Entrepreneurship and innovation: the role Telenor plays in boosting entrepreneurship andinnovation in its markets of operation through provision of its services and a range of specificinitiatives.— Gender equality: Telenor’s own efforts to improve gender equality in its workforce and the netGDP contribution generated by females’ use of Telenor services through the increase in mobilepenetration overall and 3G and 4G penetration.— Responsible supply chain: the number of employees in Telenor’s supply chain working forcompanies with high standards of labour rights and working conditions, following Telenor’sSupplier Conduct Principles.— Contribution in emergency situations: Examples of the role Telenor has played in disastersituations in a number of its markets.The methodology employed to measure each, and the results of our analysis, are set out in sections 4to 6 of this report and in Appendix 1.We report the contributions to the economy and society that Telenor makes in each individual countryas well as in aggregate for Telenor as a whole across its 13 markets and for Europe and Asia. Wecapture the in-market contributions of Telenor in each country, excluding the ‘leakage’ of contributionsto other markets, for example, those arising from purchasing from overseas suppliers. Therefore, thefull global impact of Telenor is not captured, only

4.5 Telenor’s role in supporting improved gender equality 46 5 Sustainability in the supply chain 53 5.1 The positive socio -economic impacts associated with sustainable sourcing 53 5.2 Telenor’s Supply Chain Sustainability policy 56 5.3 The impact of Telenor’s Supply Chain Sustainability policy 57