ELISA COMMUNICATIONS CORPORATION’S
INTERIM REPORT, JANUARY 1 – MARCH 31, 2001

Mobile business
Fixed network
Other operations
German operations
Corporate arrangements
Financial position
Investments
Share
Personnel
Legal issues
Annual general meeting on April 20, 2001
Events taking place after the review period
2001 prospects
Interim Report Table

Elisa Communications Group’s January-March revenue amounted to EUR 333 million (294), up 13 per cent on the corresponding figure for the previous year. Compared to the previous year, the growth of revenue slowed down slightly during the 1Q, but it was still faster than the market growth in general.

Breakdown of revenue by principal group companies (EURm):

*) Figures of sub-group financial statements.
**) In the 1Q Interim Report, diverging from the official financial statements, HPY Holding Corporation and Helsinki Telephone Corporation have been consolidated for comparability to form the year 2000 comparison material and their mutual business transactions have been eliminated. Hereinafter Elisa Communications Group is referred to as the Group.

Radiolinja’s January-March revenue amounted to EUR 161 million (146), up 11 per cent on the corresponding figure for the previous year. Elisa Communications Corporation’s January-March revenue was EUR 126 million (127). The developments in the parent company and Datatie’s revenues were due to incorporation procedures and structural changes. Comptel’s revenue was EUR 19 million, an increase of 37 per cent on the corresponding figure for the previous year.

The Group’s foreign business operations accumulated a revenue of EUR 38 million (18). The German operations yielded a revenue of EUR 14 million, the increase of which was due to the start-up of operations and structural changes in the latter half of 2000. Comptel’s exports grew by 76 per cent and amounted to EUR 14 million. Radiolinja’s foreign business operations accrued a revenue of EUR 9 million.

The Group’s operating profit (EBIT) for January-March was EUR 19 million (36). The decrease in the Group’s 1Q EBIT was due to the expected operating loss generated by Elisa Kommunikation GmbH Group during the 1Q, which amounted to EUR 11 million.

Breakdown of EBIT by principal group companies (EURm):

	January- March 2001	January- March 2000	Change%	Year 2000
Elisa Communications Group	19,1	36,4	-47,5	149
Elisa Communications Corporation	10,0	5,4	85,2	188
Radiolinja*	28,0	33,6	-16,7	4
Mäkitorppa Yhtiöt*	-2,6	-1,6	-62,5	-4
Comptel*	7,6	4,9	55,1	22
Datatie	-0,1	0,8		7
Elisa Kommunikation GmbH*	-10,7	-1,3		-26
Other group companies	-1,6	-0,1		11
Consolidated entries**	-11,5	-5,3		-53
	19,1	36,4		149

*) Figures of sub-group financial statements.
**) The consolidated entries mainly consist of depreciation on consolidated goodwill and elimination of internal mark-ups.

The Group’s other income, EUR 11 million, includes an approximately EUR 8 million sales profit from the sales of shares.

The decrease in Radiolinja’s January-March EBIT was due to a value adjustment concerning the GSM network and an increase in depreciation on fixed assets, among others.

Elisa Kommunikation GmbH Group’s loss amounted to EUR 11 million and the share of profits of associated companies generated a further loss of EUR 7 million. The losses generated by the German operations during the 1Q remained at the estimated level.

The Group’s planned depreciation on fixed assets amounted to EUR 46 million (35). The depreciation includes a EUR 2 million one-off value adjustment concerning the GSM network.

At the end of the period under review, the consolidated goodwill generated by acquisition of subsidiaries was EUR 561 million (EURm 533 at the beginning of 2001). The depreciation on subsidiaries’ consolidated goodwill amounted to EUR 11 million (5).

In January-March, the share of the profits of associated companies was EUR –9 million. Most of the loss was generated by the associated companies of Elisa Kommunikation GmbH Group.

The Group’s other financial income and expenses totaled at EUR –10 million (–2). The increase in financial expenses was due to share acquisitions, which were mainly financed with loan capital.

The Group’s taxes were calculated so that they are in line with the result of the period under review. The effect of the losses generated was taken into account according to the prudence concept.

The consolidated result after taxes and minority interests stood at EUR –8 million (9).

The consolidated earnings per share (EPS) amounted to EUR –0.06 (0.11) and shareholders’ equity per share was EUR 5.23 (5.59).

MOBILE BUSINESS

According to Radiolinja’s estimate, the company’s position in the mobile market remained unchanged in January-March. At the end of March, Radiolinja’s network in Finland hosted about 1,255,482 (1,106,142) subscriptions.

Radiolinja’s churn rate adapted to annual figures was 13.9 (14.8) per cent during the period under review. In the first quarter of the year, the churn rate is usually higher than in the other quarters due to Christmas sales, among other things.

Radiolinja’s customers can use their mobiles in 101 countries and in 208 mobile operators’ networks. During the period under review, Radiolinja concluded six roaming agreements.

In January-March, traffic originating from Radiolinja’s network amounted to 465 (400) million minutes. The average monthly use per line was 126 (122) minutes. 94 (78) million text messages were sent in Radiolinja’s network during the period under review, on the average 26 (24) per line a month. In March, 63 (62) per cent of Radiolinja’s subscriber customers used text messages and 23 (16) per cent content services.

The average revenue per subscription (ARPU) amounted to EUR 42 (41) a month. The share of value-added services of the revenue was 12 (10) per cent.

In 1990-1999, Radiolinja leased significant parts of the mobile network it uses from telcos. The leasing was based on long-term financial agreements and, in line with those agreements, the renting expenses focused on the latter part of the term of lease.

During the financial period under review, Radiolinja used EUR 21.9 million to buy a part of the network it had leased earlier in the aforementioned manner, i.e. the company bought back the delivery agreements from six different telcos. EUR 9 million of the aforementioned acquisitions, i.e. that part of the sales price that exceeds the network’s balance sheet value after planned depreciation, will be entered under expenses. During the period under review, EUR 2 million of this sum was entered under depreciation.

Radiolinja’s rental liability remaining of the lease agreements is expected to be EUR 138.6 million more than the network’s balance sheet value after planned depreciation. Part of the difference is due to the interest included in the rental liability and the other part to the retroactive payment of the rent.

Radiolinja’s direct investments in January-March amounted to EUR 35.3 million (16.2). Among others, the investments focused on a new office building and new production facilities in Raisio and Espoo.

In March, Radiolinja sold its holding, i.e. 50 per cent of Globalstar Northern Europe Ltd’s share capital to an Italian company called Elsacom.

Radiolinja Eesti AS, Radiolinja’s Estonian subsidiary had a revenue of approximately EUR 8.8 million in January-March, up 73 per cent on the previous year. The company had 137,000 (97,000) subscriptions by the end of March.

FIXED NETWORK

The revenue generated by the fixed network business increased by approximately 10 per cent.

Elisa Communications Corporation’s January-March revenue was EUR 126 million (127). The revenue was affected by incorporation procedures and structural changes. The fixed network business includes also Kolumbus Oy, Direktia Ltd and Oy Datatie Ab, among others.

By the end of the 1Q, the total number of fixed-line subscriptions was 747,968 (728,968), of which 213,811 (181,873) were ISDN channels. The increase in subscriptions was mainly due to the fact that Lounet Oy became the Group’s subsidiary. Including the subscriptions of the Group’s Finnish associated companies, the number of subscriptions totals at approximately one million.

The sales of ADSL subscriptions continued to grow strongly, and the number of subscriptions amounted to 8,300 in the end of the 1Q. During the period under review, the sales of ADSL subscriptions was begun in Turku and its surrounding areas.

The most extensive renewal by Kolumbus in January-March was the introduction of a totally new e-mail system. The new system has the capacity to relay over ten million messages per day.

Direktia Ltd, the Group’s wholly-owned subsidiary began operations in the beginning of 2001. The company engages in directory media business, and its leading articles include the printed, local HEL telephone directory covering the Helsinki area, the personnel-assisted 118 number inquiries service and the www.0100100.com e-directory service.

Datatie’s revenue in the 1Q amounted to EUR 28.8 million (20.2). The increase in business operations is partly due to the business transfer realized on March 1, 2000, in which the data service business of Elisa Communications Corporation was integrated with Datatie. Thus the figures are not directly comparable.

The growth of data services continued as expected during the 1Q. The customers keep updating their networks for increased speed and subscribe to new services, such as e.g. telework solutions. However, the new technologies, among others, have brought on a trend of sinking prices to the general price level of corporate networks. At the beginning of 2001, Datatie launched LanLink corporate network services built on a new IP-based network.

OTHER OPERATIONS

Comptel

Comptel Corporation’s revenue amounted to EUR 18.9 million (13.8) in January-March, up 37.2 per cent on the previous year. EBIT increased by 54.4 per cent to stand at EUR 7.6 million (4.9). Exports generated 72.5 (56.2) per cent of revenue.

Comptel’s growth and profitability during the first quarter continue to rank the company among the top performers in the industry. Growth of the product-based business (MDS) was much faster than market growth as a whole, and Comptel further strengthened its position as global market leader in the mediation software market.

Comptel’s first 3G mediation delivery was started in January-March. By the end of the period under review, the company had signed agreements for more than 15 deliveries for GPRS networks. Comptel published its 1Q interim report on April 23, 2001.

Mäkitorppa Yhtiöt

Mäkitorppa Yhtiöt Oy’s revenue in January-March amounted to EUR 17.4 million (21.7), and the company’s EBIT was EUR –2.6 million (–1.6). The subscription sales by the company’s own distribution chains increased by approximately 52 per cent in Finland and by as much as 230 per cent in Estonia on the previous year.

The 1Q revenue remained at a lower level than in the previous year, due to structural changes in the foreign business operations, among others. These structural changes included the closedown of wholesale business in Latvia and Lithuania and the transfer of the German operations of Mäkitorppa to Elisa Kommunikation GmbH Group. The company’s revenue was also affected by the slower than expected growth of mobile resale and the increasing price competition in the Finnish market.

EPStar

During the first quarter of 2001, EPStar Ltd, a telecommunications consulting and engineering company continued to recruit more personnel, create international customer relationships and work with domestic projects that increase the company’s competence. By the end of March, the company had a total of 35 employees. New projects were initialized in Hungary and Sweden, among others.

GERMAN OPERATIONS

The German operations developed as planned. The aggregate revenue of Elisa Kommunikation GmbH Group’s subsidiaries and associated companies was EUR 40 million in January-March.

The consolidated 1Q revenue of Elisa Kommunikation GmbH Group and its subsidiaries was EUR 14 (EUR 17 million per the whole year 2000). EBITDA was EUR -7 million (EUR -15 million per the whole year 2000) and EBIT EUR -11 million (EUR -18 million per the whole year 2000 without writedowns). The financial performance was also affected by the share of profit of associated companies and depreciation on goodwill of the associated companies, EUR –7 million in total (EUR -15 million per the whole year 2000 without writedowns).

Demand for ISDN connections increased in the SOHO segment (small offices/house offices). In the small office segment, demand for DSL connections went up as well.

During the review period, Elisa Kommunikation acquired majority shareholdings in the following city carriers: Mainova Telekommunikation (Frankfurt, Hessen), HU-KOM (Hanau, Hessen), MAINZ-KOM (Mainz, Rhineland-Palatines) and JelloCom (Jena, Thuringia). The acquisition of JelloCom still requires a final approval by the German competition authorities.

The merger process with JelloCom and Encotel (Gera), a fully-owned subsidiary to Elisa Kommunikation’s, was started. The telecommunications company to be established in the merger will cover the four largest cities in Thuringia.

In the 1Q, TIMe start-up management GmbH’s business was integrated into that of Elisa Kommunikation. The TIMe subgroup contains holdings in 12 telecommunications companies, which primarily operate within the area of Rein-Main and cities of new German federal states. TIME also owns 50 per cent of TIMe City Link AG, a national data network operator.

Hansacom’s operations in Greifswald in the Mecklenburg-Vorpommern area were started during the 1Q. Construction of the national TIMe CityLink broadband network was concluded and connecting customers to the network commenced.

During the current year, Elisa Kommunikation’s objective is to acquire management control in strategically important companies. At the same time, minority holdings in selected companies will be jettisoned.

All local operators acquired by Elisa Kommunikation will concentrate on expansion of the customer base and enhancement of customer loyalty. In addition, their aim is to reduce operational costs and make only the necessary investments required by their operations.

Mäkitorppa GmbH aims for improving its production by concentrating on the sales of mobile subscriptions in its present territories and on the profitability of the chain of stores.

CORPORATE ARRANGEMENTS

In fall 2000, a decision was made to incorporate the directory media business and Kolumbus business. Direktia Ltd and Kolumbus Oy started their operations on January 1,2001.

Lounais-Suomen Puhelin Oy and Liedon Puhelin Oy sold the Group the majority of shares in Lounet Oy. After the transaction, Elisa’s holding in Lounet’s shares rose to 51 per cent, and Lounet became a subsidiary to Elisa.

Elisa Communications Corporation and Riihimäen Puhelin Oy (RPO) agreed on combining their network and service operator businesses during 2001. A share exchange offer, whereby RPO will become Elisa's subsidiary, is a prerequisite for combining the business operations.

The Finnish Competition Authority (FCA) accepted on March 30, 2001 an arrangement, according to which Elisa Communications Corporation will achieve actual authority in RPO.

By the end of March, the Boards of Directors of Elisa Communications Corporation and Soon Communications Plc accepted an agreement on the companies' ownership and business arrangements. These arrangements require the realization of the Group’s share exchange offer. The Group’s objective is to gain over 50 per cent of Soon's shares through the share exchange. The intention is to implement the arrangements during 2001.

Upon implementing Soon’s share exchange offer, the Group’s holding in KSP Group Plc and Finnet International Ltd will exceed 50 per cent, which means that these companies will become subsidiaries to the Group.

In March, FCA accepted a transaction in which Elisa Communications Corporation acquired Finnet Nine Ltd's IN business. At the same time, the Group sold its shareholding in Finnet Nine Ltd to the company’s other shareholders.

On January 16, 2001, the Group and Jaakko Pöyry Group established a joint venture called Inforbis to provide new kind of application outsourcing. The Group has a 30 per cent and Jaakko Pöyry Group a 70 per cent holding in the company.

FINANCIAL POSITION

The Group’s interest-bearing liabilities were EUR 822 million (446), of which EUR 696 million (430) was long-term debt. By the end of March, the equity ratio stood at 37 per cent (44).

In January, the Group issued a Bond with a face-value of EUR 300 million. The Bond is part of the EUR 1 billion Euro Medium Term Note (EMTN) Programme announced by the company on November 21, 2000. The term of the Bond is five years and it will mature on January 31, 2006.

INVESTMENTS

In January-March, gross fixed asset investments by the Group amounted to EUR 85 million (41), and EUR 38 million (330) was spent on share acquisitions.

The fixed asset investments in the parent company amounted to EUR 22 million (24), in Radiolinja to EUR 35 million (16) and in other subsidiaries a total of EUR 27 million.

SHARE

The A Share of Elisa Communications Corporation closed at EUR 15.40 on March 30, 2001. The highest quotation during the 1Q was EUR 25.01 and the lowest EUR 14.30. The average rate was EUR 17.93.

As at March 30, 2001, the company’s market capitalization was EUR 1,926 million.

All in all, 24.9 million A Shares were traded on the Helsinki Exchanges for a total price of EUR 447 million during January 2 – March 30, 2001. The volume of trade covered 19.9 per cent of the total number of A Shares.

PERSONNEL

In January-March, the Group’s amount of personnel grew by 173 people.

During the period under review, the group companies employed an average of 6,833 (5,855) people. An average of 3,077 worked for the parent company, 1,330 for Radiolinja, 483 for Mäkitorppa, 550 for Comptel, 336 for Elisa Kommunikation GmbH, 287 for Direktia, 256 for Kolumbus, 297 for Datatie and a total of 217 for other subsidiaries.

By the end of March, the Group’s personnel totaled 6,871 people (5,770).

LEGAL ISSUES

The legal proceedings described in the Company’s 2000 Annual Report are still pending with the following changes.

With regard to the redemption procedure of Oy Radiolinja Ab’s minority shares under Chapter 14, Section 19 of the Finnish Companies Act, the arbitration court noted on February 8, 2001 that Elisa Communications Corporation is entitled to redeem the shares. The right of ownership to the shares to be redeemed was transferred to Elisa Communications Corporation on February 27, 2001, when Elisa Communications Corporation gave the security accepted by the arbitration court. The arbitration court has informed that it is to give a decision on the redemption price of the shares on May 29, 2001.

A decision by the court of appeal, in which a claim for damages by a member of Helsinki Telephone Association was abandoned, remained in force, when the Supreme Court did not grant leave to appeal in the matter. The member demanded that Elisa Communications return her investment in a Certificate that was cancelled due to unpaid telephone bills.

ANNUAL GENERAL MEETING ON APRIL 20, 2001

In accordance with the Board of Director's proposal, Elisa Communications Corporation's Annual General Meeting decided on April 20, 2001 to pay a dividend of EUR 0.07 per A Share. The record date for the dividend is April 25, 2001. Dividends will be paid into shareholders' accounts as of May 3, 2001. The AGM adopted the parent company's income statement and balance sheet, and the consolidated income statement and consolidated balance sheet. The AGM discharged the members of the Board of Directors and the Supervisory Board, and the President and CEO from liability for the year 2000.

Keijo Suila and Matti Aura were re-elected for the company's Board of Directors for the next three-year term, and Pekka Ketonen, President and CEO, Vaisala Oyj, was elected for the Board as a new member. The following persons, who were not to retire by rotation in this AGM, continue in the Board of Directors: Ossi Virolainen, Riitta Backas, Arto Ihto, Rauno Kousa, Linus Torvalds and Paavo Uronen. Keijo Suila, President and CEO for Finnair, will continue as chairman and Ossi Virolainen, CEO for AvestaPolarit Oyj Abp, as deputy chairman to the Board of Directors.

SVH Pricewaterhouse Coopers Oy, authorized public accountants, and Leo Laitinmäki (APA) were appointed the company's auditors. Jaana Salmi (APA) was appointed deputy auditor.

In accordance with the Board of Director's proposal, the AGM authorized the Board of Directors to decide on increasing the Company's share capital through one or more new issues, one or more convertible bonds and/or warrants so that in a new issue or when issuing convertible bonds or warrants, a maximum aggregate of 25 million of the Company's A Shares can be issued for subscription, and the Company's share capital can be increased by a maximum of EUR 12.5 million in total. The authorization shall enter into force on October 21, 2001 and is valid until April 20, 2002. The authorization entitles the Board of Directors to disapply the pre-emptive rights of existing shareholders to subscribe for new shares and to decide on the issue prices for the new shares and the terms and conditions for subscribing. The Board of Directors is entitled to decide that the shares to be issued in a new issue can be subscribed for in kind or otherwise on certain conditions or by using the right of set-off.

EVENTS TAKING PLACE AFTER THE REVIEW PERIOD

Riihimäen Puhelin Oy's (RPO) Board of Directors decided in a meeting on April 3, 2001 to issue a private placing for Elisa Communications Corporation, which on April 5, 2001 subscribed a total of 3,810 RPO shares, whereupon the Group’s holding in RPO increased to 16.67 per cent.

The Group’s Board of Directors decided on April 20, 2001 to make a share exchange offer to RPO’s shareholders. The RPO shareholders have the right to subscribe for 127 Elisa Communications shares with the nominal value of EUR 0.50 in exchange for each RPO share with the nominal value of FIM 200 they own.

On April 6, 2001, FCA accepted a transaction in which Elisa Communications Corporation acquired the actual authority in Joensuun Puhelin Oy.

Elisa Communications Corporation will introduce a new interconnection price list on July 1, 2001, which it has delivered to the Telecommunications Administration Centre (TAC) according to the decision given by the TAC on January 18, 2001. Depending on the type of traffic, Elisa's interconnection fees are lowered approximately by 20 per cent. The new price list was delivered to other telcos in April.

On April 20, 2001, Radiolinja selected Nokia and Siemens to supply its third generation (UMTS) mobile phone systems. Radiolinja estimates to spend approximately EUR 350-700 million for 3G-network technology during the next five years.

The Group’s Board of Directors decided on April 20, 2001 to make a share exchange offer to Soon Communications Plc's shareholders. In the offer, the Soon shareholders have the right to subscribe for 0.452 Elisa Communications Corporation’s A Shares with the nominal value of EUR 0.50 in exchange for each Soon share they own. The listing prospectus concerning the Share Exchange Offer was disclosed on April 25.

On March 21, the Group made a decision to incorporate its Operator Network Services (ONS), a strategic business area that operates telecommunications networks.

Merita Bank Plc of the Nordea Group and Elisa Communications Corporation signed on April 23, 2001 a significant continuity agreement on enhancing the services of Merita's branch network in Finland. The agreement includes planning, development and supply of data transmission services of Merita's branch network. The value of the agreement is almost EUR 17 million and it is divided over several years.

On April 30, the Ministry of Justice of Finland and Elisa Communications Corporation decided to continue the framework agreement on telecommunications services originally concluded in 1998 by two years. Elisa Communications Corporation will thus continue as the Ministry’s nationwide telecommunications provider.

2001 PROSPECTS

The Group's revenue is expected to grow faster than the market in general. EBITDA without one-off items is estimated to improve, but the profit in 2001 is forecast to remain at the previous year's level.

Radiolinja's annual-level operative EBIT without one-off items is expected to be at the previous year's level.

The annual growth of Comptel's MDS business is estimated to continue strong. Profitability is expected to be good in 2001.

The revenue of Elisa Kommunikation GmbH is forecast to continue its sharp rise on the year 2000. The accumulation of loss from the German business is expected to diminish in the latter half of the year 2001.

If the share exchange offer to Soon Communication Plc's shareholders is realized, it will have a positive effect on the Group's key financial indicators.

Helsinki, May 3, 2001

ELISA COMMUNICATIONS CORPORATION

Board of Directors

ELISA COMMUNICATIONS GROUP

FINANCIAL STATEMENTS FOR JANUARY 1 - MARCH 31, 2001 (EUR million)
(Figures in this interim report are not audited)