Scandinavian Gambling Files: Finland

EUR/capita

Singapore 379.51

Uruguay 231.78

Spain 207.73

Norway 185.47

Gibraltar 176.18

Finland 173.91

Italy 157.77

USA 156.24

Sweden 147.53

Island 137.63

Canada 137.19

Denmark 131.31

Finland

Key figures

Currency: Markka (FIM)

1 Euro = 5,94573 FIM
1 US Dollar = 1.09750 Euro
1 US Dollar = 6.52544 FIM

The Republic of Finland is a country with about 5 million inhabitants and an economic global success story. The blue-cross flagship is of course the mobile phone manufacturer Nokia. Nokia accounts for 20 percent of Finnish exports. Finland, a European Union member, has a strategic location, bridging eastern and western markets in northern Europe. About 3,000 foreign companies are based in Finland, 2,500 of them around the capital Helsinki.

From January 1, 2002, Finland will introduce the Euro as its monetary unit, together with Austria, Belgium, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain, creating a one-currency market of 292 million people (larger than the United States).

Population: 5,181,115 (end 2000)

Age Structure:
0-14 years: 18.1 percent
15-64 years: 66.9 percent
65 years and over: 15 percent

Total GDP ($bn); 126.6 in 2000 (est.)
Real GDP growth (annual percent change): 5.0
GDP per head ($000): 24.4

Mobile Telephones

According to the Finnish Ministry of Transport and Communications, the number of mobile phones is 3,909,000 (estimated in April 2001)

Internet Penetration

TNS Interactive - Global eCommerce Report - June 2001
Percentage of total population that are Internet users
Year 2001 = 45 percent
Male = 49 percent
Female = 41 percent

Legislation

In Finland gambling and lotteries are illegal to operate for private purposes. Only the government can permit a license, and only one license is valid at a time for each type of "gaming". At this moment only three organisations hold a license. The National Lottery of Finland, Oy Veikkaus Ab, which is totally owned by the state, may operate lotteries. Toto games may only be organised by Fintoto Oy, which is owned by the central organisation of trotting and horse breeding in Finland (Suomen Hippos ry). Casinos are operated by Rahaautomaattiyhdistys, the Slot Machine Association, which is a public company better known as RAY.

The basic statute governing money games is the Lottery Act (491/65), which came into force on January 1, 1966. According to legislation, bingo, casino and slot machines offering money and commodities as prizes are also classified as lotteries.

In Finland, money games have a prominent role in funding non-profit activities. The Lottery Act prescribes how the proceeds of all three game operators arranging money games are to be used. It also stipulates the basis of lottery activities, whereas details are stipulated by decrees.

The law reform has been prepared since 1993, and in 2000, the proposal was introduced at Parliament. The new proposal is based on the current tripartite monopoly system. The division of tasks between the operators in the money gaming field will thus not change essentially. The contents of the new law will be laid down in 2002.

The proceeds from money games for charitable purposes amounted to a total of FIM 4.5 billion (about US $700 million) in 1999.

Internet

In Finland Internet gambling was launched in 1996. The National Lottery of Finland, Oy Veikkaus Ab, was then given a license by the government to operate its games on the Internet. Fintoto has also a license to operate games on the Internet and launched its tote operations in January 2001 under the name Fintoto Oy. Internet betting will be launched in May 2002.

In Finland, the important precondition for receiving a license for operating Internet games was to arrange game operations so that those games could not be sold cross-border and that playing with credits was not permitted. The purpose was to make sure that the principle of the national treatment established by the EC Court of Justice in connection with the Schindler case in 1994 will work and that the injuries caused by gambling will not increase.

The National Lottery of Finland requires a personal identity code and an account with a Finnish financial institution before someone may register as a player. This is a way to restrict the group of players to persons living in Finland or having other ties to Finland.

Playing on credit is prohibited by opening an account for the registered player in the National Lottery of Finland. The player may deposit a maximum of FIM 30,000 (about US $4,700) into the account. The lottery company charges the playing account according to the stakes the player has chosen. If the player wins, the company transfers the profit into the playing account. If the balance in the playing account exceeds FIM 30,000, the exceeding amount is automatically transferred into the player’s account with the financial institution.

Market

In 2000, the turnover of the three biggest game operators, Veikkaus, RAY and Suomen Hippos, totaled EUR 1,742 million, of which the share of Veikkaus was EUR 1,083 million, that of Raha-automaattiyhdistys was EUR 541 million (prizes paid for players have been reduced from the RAY proceeds) and that of Suomen Hippos EUR 119 million. The net profit of money game companies amounted to EUR 743 million in 2000. The net profit of Veikkaus was EUR 379 million, whereas that of Raha-automaattiyhdistys was EUR 359 million and that of Suomen Hippos EUR 6 million.

Money Game field in Finland

Veikkaus: 1,083 EUR million (61.5 percent)
RAY: 541 EUR million (31.7 percent)
Hippos: 119 EUR million (6.8 percent)

Almost all Finns (92 percent) play Veikkaus' games. In 2000, 86 percent of the Finnish citizens played the lotto, half of them every week. The main reason for playing it is that it is a simple game and that there is a possibility of hitting jackpots. People in the older age groups play the lotto more than others (81 percent of those over 50 years of age).

Operators

OY VEIKKAUS AB www.veikkaus.fi

Sales FY 1999: FIM 6.0 billion
Sales FY 2000: FIM 6.4 billion
Number of Employees: 341
Beneficiaries: Arts, sports, youth work, science
Jurisdiction: Finland

The State owns 100 percent of the shares of Veikkaus. The Council of State grants the license to Veikkaus and the Ministry of the Interior supervises its activities. Veikkaus is the largest of the three organisations licensed to conduct money games in Finland.

Key information

Veikkaus was founded by Finnish sports organisations under the name of Oy Tippaustoimisto Ab in the spring of 1941. The company was finally given its present name Oy Veikkaus Ab in 1971. At the end of 1975, the shares of the company were sold to the Finnish state.

Veikkaus, now a state-owned limited company, operates money games in order to fund Finnish national culture. Veikkaus has exclusive rights for operating lotteries, off-track horse betting and betting games. Veikkaus returns its gross profits to the Ministry of Education, which distributes the funds in order to promote Finnish culture: arts, sports, science and youth work. The players of betting games are the single largest group to fund the Finnish national culture.

Veikkaus' sixtieth year of operations, 2000, was successful. The company achieved the greatest turnover and the best result of its entire history. The turnover was EUR 1,082.7 million, with an increase of EUR 73.2 million, i.e. 7.2 percent. There was growth in all games groups. The gross margin on sales increased to EUR 425.0 million, being 9.4 percent larger than the year before. As the operating profit grew even more, i.e. 10.1 percent, the prize money was EUR 504.5 million.

Veikkaus is a member of several international organisations: the World Lottery Association (WLA), the European State Lotteries and Toto Association EL and the European Football Pool EFP.

Products

Veikkaus has altogether 17 different money games, which are divided into Lotto games, other online games, games of skill and instant games. The different game groups in 2000:

Lotto games
EUR 507.4 million (47 percent)
Lotto, Viking Lotto

Games of skill
EUR 334.4 million (31 percent)
Football Pools, V65 Off-track Horse Betting, V5 Off-track Horse Betting, Odds Betting

Instant games
EUR 152.8 million (14 percent)
Ässä instant, Casino instant, African Star instant, Luontoarpa instant, Theme instant

Other online games
EUR 88.2 million (8 percent)
Joker, Spedes’s TV games, Bingolotto, Around the World

On the Internet since 1996

The number of registered OnNet-players was 107,641 at the end of 2000 (the respective number at the end of 1999 was 57,498). Turnover of OnNet playing in 2000 was EUR 25.5 million, which is more than four percent of the total weekly turnover of the online games.

Veikkaus has a solid basis for the competition on the digital market. It started to offer Internet games from December 1996 and claims in its Year Report 2000 that it is "the first national internet lottery in the world."* Playing by push-button phone was launched at the same time, but its share has remained unimportant. By contrast, a growing number of Veikkaus' customers, especially betters, choose to play through the Internet. The number of Lotto-players on the Net is increasing as well. The turnover of Internet gaming has doubled yearly, and the end of the year 2000 the weekly sales exceeded EUR 0.7 million.

From June 14, 2001, Risto Nieminen is the Managing Director of Veikkaus.

Visions of TV gaming

Digital TV will be the market of the near future, and Veikkaus has charted its possibilities in connection with many research projects, as well as developed its own demos and prototypes to model the gaming transactions. The objective of Veikkaus' strategy for the digital TV is to start interactive gaming activities through the new media as soon as possible after its introduction in the autumn of 2001. Veikkaus has already developed a new electronic instant game, which can be played both on the Internet and the digital TV.

Possibilities of mobile gaming

Playing via different mobile terminals, made possible by wireless environments, will also be part of everyday life in the future. The developing of the WAP environment, started in the autumn of 1999, was finalised last year, and WAP gaming began in December 2000, at first as a pilot project by one operator. However, all the important operators joined the game at the beginning of 2001.

Veikkaus (as well as Suomen Hippos) is a minority shareholder in the digital technology-based Suomen Urheilutelevisio Oy (Finnish sports television company) established in the spring of 2000. Veikkaus is involved in the digital TV operations in order to develop its games and to make the most of the possibilities of the new distribution channel. The digital TV makes it possible to offer real-time games in connection with TV programmes.

Veikkaus' Board of Directors decided to end its betting operations in the province of Åland from 2 October 2000. The reason for this was a position statement by the Provincial Government of Åland on the gaming operations conducted by Veikkaus in Åland. The Provincial Government announced that the exclusive right to offer betting games in the province of Åland since 1993 belonged to PAF, the Slot Machine Association of Åland. At the same time, Veikkaus decided to file an application to the Provincial Government for a license to continue other pools and lottery activities in the province. Veikkaus has offered its games in the autonomous Åland Islands since Veikkas founding in 1940.

Another significant question from the point of view of the task of Veikkaus was the dispute between the Finnish State and Ålands Landskapsstyrelse, the Åland Islands' autonomous government. The gaming operator PAF from the islands of Åland did not consider marketing of Internet games in the Finnish mainland illegal. The Ministry for the Interior has asked the Supreme Court to make a statement on the matter and other related questions. This year, twice, the Supreme Court of Finland decided that the autonomous Åland Islands and its government had the rights to operate the PAF betting site.

The Lottery Act reform, begun in 1993, will come into force on January 1, 2002.

* PLUS Lotto, national lottery of Liechtenstein, also claims to be the world's first Internet lottery. The first draw took place on October 7, 1995. (www.pluslotto.com) And according to Cynthia R. Janower in "Gambling on the Internet": "The world's first virtual online casinos, Inc. (ICI), opened its doors on August 18, 1995 with 18 different casino games and online access to the National Indian Lottery..."(www.casino.org)

Who knows any other "firsts"?

Fintoto Oy www.fintoto.fi

Fintoto Oy, a Finnish non-proft joint-stock company, commenced horse betting operations in the beginning of 2001. It is a fully owned subsidiary of Suomen Hippos ry, the Finnish Trotting and Breeding Association. Fintoto's objective is to sponsor horse racing and horse breeding in Finland by operating and marketing horse betting in an efficient way. Fintoto arranges tote betting on 43 racetracks and at more than 350 betting shops throughout Finland. In the year 2000, the combined turnover of tote betting was 709.2 MFIM (119 MEUR). During the past year, as well as this year, the gross turnover has increased by 9 percent. The budgeted turnover of the company during its first year of operation is approximately 800 MFIM (135 MEUR).

The revision process of the Finnish lottery legislation began in 1993 and is still ongoing in the Parliament. The new law is based on the highly national arrangement which divides horse betting between the two companies, Oy Veikkaus and Fintoto Oy. Veikkaus will operate the big pools (V75 on Saturdays, V5 on Wednesdays and Daily Double on Mondays and Fridays) and Fintoto Oy is responsible for the pari-mutuel betting in two categories: bets with several winning classes (Veikkaus) and pari-mutuel (Fintoto). The law is expected to come into force on January 1, 2002.

The total turnover in horse betting in 2000 was FIM 1,124,6 (189.2Euro). The increase was 8.6 percent as compared to the previous year. The horse betting turnover has now increased for six successive years. Only 18 percent of the turnover was bet on the track.

Future

Encouraged by the positive experiences of Veikkaus and ATG (Sweden), Fintoto has decided to launch Internet betting in May 2002. The system is currently in the specification phase and will also include (later) mobile and interactive digital TV solutions.

RAY www.ray.fi

There is a monopoly system in Finland in slot machine operations under which exclusive right is given to the Slot Machine Association, which is commonly known as "RAY" according to the abbreviated form of its Finnish name. Founded in 1938, the purpose of RAY’s gaming activities is to procure funds to support the work of voluntary health and welfare organisations.

In a judgment on September 21, 1999, the European Court of Justice stated that RAY's exclusive right to operate slot machines in Finland is not in contravention of EU legislation and does not violate the freedom to supply services. The Community provisions relating to freedom to provide services do not preclude national legislation that grants to a single public body exclusive rights to operate slot machines, in view of the public interest objectives which justify it.

The Court's view is that the Finnish legislation involves no discrimination on grounds of nationality, in as much as it applies without distinction to all economic operators, whether they are established in Finland or in another member state. The Court also considers that it is for each member state to assess whether it is necessary to adopt regulations imposing a code of conduct on the economic operators concerned or, alternatively, to grant an exclusive operating right to a licensed public body. Whichever option is chosen, it must, if it is to comply with community law, be proportionate to the aim pursued.

RAY recorded a profit of FIM 1.11 billion in the first six months of this year, a 5.6 percent improvement on the same period last year. Turnover increased by 2.9 percent and was negatively affected by a 2 percent increase in the lottery tax.

As international research shows, here is how Finns and Norwegians answered the question, "When did you last play on a slot/fruit machine?"

The results were:

Casino Ray

Casino RAY is the only international Casino in Finland. It was established in 1991. The Casino is owned by RAY, the Finnish Slot Machine Association, which was established in 1938 to raise funds for charitable purposes. Casino Ray offers Poker favourites like 7 Card Stud, Texas Hold'em, Omaha Hold'em and 5 Card Stud(Soko). They also have 134 different slot machines as well as 6 American roulettes, 5 blackjack tables, Punto Banco, Red Dog and Oasis Poker. (Located in Helsinki, Finland.)

The Åland Islands, an autonomous region in Finland

The Åland Islands are a group of more than 6,500 islands in the eastern part of the Baltic Sea between Sweden and Finland, east of Stockholm. The total area is about 1500 sq. km and there are approximately 26,000 inhabitants. Their official language is Swedish. Although the islands have a certain form of autonomy, they still form a province in Finland.

For centuries the Åland Islands belonged to the crown of Sweden, as was the case with Finland as a whole. Finland--and the Åland islands--came in the possession of Russia in 1809. During the Chrimean War (1853 - 1856) the islands of Åland were of great strategical importance for Russia, but after this the islands were demilitarised. To quiet a strong movement on the islands for Sweden, the islands got a form of autonomy, but the Finnish sovereignty over the islands was confirmed in 1921 by a decision of the League of Nations.

In 1951 the autonomy of the islands was renounced by the Finnish parliament, but the inhabitants got special rights, including their own flag. Since 1984 the Islands have their own postage stamps. And since April 2001, the islands have their own Internet gambling site: www.paf.fi. The gaming company PAF was, however, established as early as 1967.

Legislation

In December 1999 PAF launched its first sportsbetting games for online gaming, and the casino opened in June 2000. In April 2001, PAF added lotteries to its game portfolio. The Finnish Ministry of the Interior questioned the permit of the Internet games granted to PAF by the Åland Provincial Government. In Mid-April 2001 the Finnish Supreme court decided that PAF, the Åland Islands’ Slot Machine Association, is allowed to set up an online gambling site. The site, www.paf.fi, was (re)launched on 12 April 2001, after the affirmative decision the day before. "However," adds Lars Porko, PAF's CEO, "we never stopped our Internet gambling operations since we started at 3 December 1999."

PAF has said that the association will provide online betting, lottery and casino functions.

The decision means that PAF will be able to look for sponsorship contracts and market the site. It also means competition for the Finnish “mainland” gambling monopoly.

The case was taken to court when the Ålandic government gave PAF the right to open the site, interpreting the law as saying that Internet gambling takes place where the gaming license, game administration and server are located, not at the player's location. The Finnish government and the gambling monopoly Veikkaus did not agree with this interpretation, but the Supreme Court decided that the Åland Islands were right.

On July 18, 2001, the Finnish President, Tarja Halonen, decided not to ratify a disputed new Finnish gambling law. The law, which bans Finnish moneylenders from gambling at the Internet site maintained by the Ålandic Slot Machine Association, has been criticised as being against the Ålandic autonomy law.

The president has apparently asked the Finnish Supreme Court to investigate whether the law would be in conflict with the autonomy of the Åland Islands and on August 30, 2001, the Supreme Court, with a unanimous decision, decided the Finnish Law was not in conjunction with the Finnish constitution. This decision was very well received on the Åland Islands and it means that Internet gaming will continue to develop in accordance with the license of the Åland Islands.

PAF www.paf.fi

Currently PAF accepts customers from Finland and Sweden only. Early next year, however, an English version will be added. PAF has about 35,000 customers and about half of them playing Internet games on a monthly basis. PAF is furthermore working closely together with strategic partners within the media industry and in October the first specially created version of the gaming service will be launched together with a leading international media partner.

PAF is also seeking partners providing Internet and digital television to be able to launch online gaming through these channels. Discussions are going on with major operators both in Finland and Sweden

Ålands Penningautomatörening (Åland Islands Slot Machine Association, PAF) has, besides Internet gaming, approximately 40 shipboard and land-based casino operations and holds shares in:

• Fastighets Ab Möckelöbrinken (77.5 percent);
• Bellatrix Ab (14.8 percent);
• EGET Ltd Ab (41.5 percent).

PAF Consulting Ab (100 percent owned by PAF) manages the following international operations:

• PAF Consulting AB (100%), which owns 75 percent in Lottericentralen AB;
• NLD Sverige AB (97 percent);
• PAFER A/S, Estonia (99.3 percent);
• PAF Eesti A/S, Estonia (85 percent).

The PAF Group, since 1967 is managed and administrated from the head office in Mariehamn. The operations in Sweden and Estonia are controlled through subsidiaries. The gaming operation onboard the cruise ships in the Mediterranean and Caribbean are administrated by local management with support from the head office in Mariehamn, Finland. Since 1974 Lars Porko has been the CEO of the PAF group of companies

The consolidated facts in brief of the year 2000 (PAF & PAF Consulting Ab Group) in millions FIM;

• turnover : 222.4;
• profit before appropriations and taxes: 29.8;
• average number of PAF employees: 179;
• PAF had an average of 1,899 gaming machine in operation;
• PAF operated an average of 65 gaming tables.

Competition

U.K.'s Ladbrokes is aiming to offer Scandinavian punters an alternative to state-run betting and gaming operations. The first phase of its Nordic strategy is a Swedish service from Ladbrokes.com--its online betting and casino arm. Customers will be able to bet on the popular English Premiership and European football betting markets, as well as have access to products that appeal to the Nordic market such as ice hockey and Swedish, Danish, Finnish and Norwegian league football.

Although based in the U.K., the localised site will be maintained by Swedish content providers and customer support teams, and odds on local sports will be compiled by specialist experts. Another "bookie" with a Finnish language site is William Hill. Eurobet is also targeting Scandinavia. All look-a-likes.

Supporting Industry

Nokia www.nokia.com

Nokia is the world leader in mobile communications, supplying mobile phones and almost every aspect of the new mobile world. This ranges from corporate and personal innovations, through to mobile, fixed, IP networks. Above that, Nokia adds mobility to the Internet. Nokia has listings on six major exchanges.

Key figures 2000

• Nokia's net sales totaled EUR 30.4 billion (USD 27.0 billion)
• Nokia employs over 60,000 people
• By the end of the year Nokia had a global network of distribution, sales and customer services
• Production locations in 10 countries
• Research and development in 15 countries
• Sales to over 130 countries
• Nokia net sales in 2000 increased by 54% compared to 1999 and totaled EUR 30,376 million
• Operating profit (IAS, International Accounting Standards) grew by 48 percent and totaled EUR 5,776 million (EUR 3,908 million in 1999). Operating margin was 19.0 percent (19.8 percent in 1999).
• Financial income totaled EUR 102 million (financial expenses of EUR 58 million 1999).
• Net profit was EUR 3,938 million (EUR 2,577 million).

Global reach

In 2000, Europe accounted for 52 percent of Nokia's net sales (53 percent in 1999), the Americas 25 percent (25 percent in 1999) and Asia-Pacific 23 percent (22 percent in 1999).

The 10 largest markets were the U.S., China, the U.K., Germany, Italy, France, Brazil, the Philippines, Australia and Spain, together representing 64 percent of total sales.

Research and Development

In 2000, Nokia continued to invest in its worldwide research and development network and co-operation. Investments in research and development increased by 47 percent and totaled EUR 2,584 million, representing 8.5 percent of net sales.

People

In 2000, Nokia increased its personnel by a total of 7,864 new employees (12,367 in 1999), excluding the businesses sold in 2000. At the end of 2000, Nokia employed 60,289 people worldwide.

Nokia in the second quarter of 2001

Nokia's second quarter margins were above 15 percent with pro forma pre-tax profit of nearly EUR 1.2 billion, sales growth of 5 percent and strong positive net operating cash flow show operational effiency while adjusting to market slowdown.

Second-quarter net sales where EUR 7 346 million, showing growth of 5 percent compared with the previous year.

In Nokia Networks, net sales declined 2% and in Nokia Mobile Phones net sales increased 10 percent
- Pro forma pre-tax operating profit was EUR 1 166 million
- Pro forma operating margin for Nokia was 15.5 percent, Nokia Networks 15.8 percent and Nokia Mobile Phones 17.9 percent
- Pro forma earnings per share (diluted) were EUR 0.17 (0.21), on a reported basis EPS (diluted) were EUR 0.12 (0.20)

WAP 2.0 standard

Nokia, Ericsson and Motorola are supporting the newest version of the Wireless Application Protocol (WAP) standard, WAP 2.0, as developed by the WAP Forum. The companies also expressed their intention to develop products, content, and services based on the new standard.

The new generation of the WAP specification together with improved handsets and other wireless devices ensure a much better development environment for advanced mobile services. Based on well-established Internet standards including TCP and HTTP as well as the necessary components specifically adapted for wireless environments, WAP 2.0 will provide a simple yet powerful tool kit for easy development and deployment of a multitude of useful and exciting new services.

The release of WAP 2.0 includes the first release of Multimedia Messaging Services (MMS), a service developed jointly together with 3GPP, which allows users to send multimedia messages, combining sounds with images and text, to each other in a fashion similar to sending SMS.

Nokia, Ericsson and Motorola co-founded the WAP Forum together with Unwired Planet (now Openwave) in 1997 and the forum has since grown to more than 450 members, representing manufacturers, carriers and content developers from all parts of the world. The primary goal of the WAP Forum is to bring together companies from all segments of the wireless industry value chain to ensure product interoperability and growth of the wireless market.

Nokia Mobile Entertainment

Nokia Mobile Entertainment Service is a preintegrated and easily deployed Nokia hosted service for operators and service providers incorporating games, betting, platform, facilitation, server hosting and a developer program. Game application developers and publishers can create interactive entertainment for WAP enabled mobile devices with the Nokia Mobile Entertainment Service. Mobile network operators can provide a vast amount of new, comprehensive value-added services for their customers via the Nokia hosted solution.

Future

By 2002, Nokia estimates that more people will access the Internet via a mobile handset than via a PC. This prediction indicates there is a tremendous potential for mobile entertainment and huge market opportunities for game developers and publishers as well as mobile network operators. Datamonitor has recently estimated that there will be close to 200 million mobile phone users playing wireless games in the United States and Europe by 2005.

Sonera www.sonera.com

Sonera is the leading mobile communications operator in Finland. Sonera had more than 2.3 million mobile subscriptions at the end of the year, and its market share of GSM subscriptions was over 60 percent. The proportion of value-added services within mobile communications revenues rose to 11 percent. On average, a Sonera GSM customer sent 25 text messages a month. Sonera pushes ahead energetically with its development of services. For example, the first services making use of positioning technology are already available.

International mobile communications

Sonera has associated companies that provide GSM services in five countries: Turkey, Estonia, Latvia, Lithuania and Russia. In addition, Sonera has a 14 percent stake in a Lebanese mobile operator Libancell. The customer base of these companies grows strongly. Through its associated companies Sonera is also present in 3G markets in Germany (Group 3G), Spain (xFera) and Italy (Ipse 2000). These market areas comprise a total of more than 180 million people in Europe.

Key figures 2000
The Group's earnings grew substantially on the previous year thanks to large capital gains. Profit before extraordinary items and taxes was EUR 1,860 million (1999: EUR 497 million), which includes a total of EUR 1,546 million (21) of capital gains and losses as well as similar items.

• Revenues were up 11 percent on the previous year, to EUR 2,057 million (1,849).
• It was a very good year for mobile communications in Finland. The company's market share strengthened and the customer churn rate diminished compared to 1999. Revenues grew by 15 percent and the number of GSM subscriptions by 18 percent. The profitability of mobile communications in Finland remained at the good level achieved in 1999.
• During the past year Sonera obtained strategic participations in four UMTS licenses outside of Finland.
• Earnings generated by Media Communications and New Services were weakened by the approximate EUR 240 million of additional outlays compared to the previous year. Revenues generated by the business area increased by 45 percent. The SmartTrust business was expanded by making two major acquisitions.
• The fixed network businesses improved their profitability compared to the previous year.
• Earnings per share rose to EUR 2.05 (0.51). The Board of Directors is proposing payment of a dividend of EUR 0.09 per share.

Sonera Continued to Grow in April-June 2001

• Revenues for the second quarter grew by 11% on the previous year to EUR 557 million (500).
• The sales of VoiceStream and Powertel shares were completed. Capital gains and other non- recurring items recorded for the second quarter amounted to EUR 588 million (857).
• Profit before extraordinary items and taxes was EUR 560 million (942), and earnings per share were EUR 0.69 (0.90).
• Comparable EBITDA rose by 20 percent on the first quarter to EUR 122 million (136).
• Mobile Communications Finland showed good profitability.

Sonera's vision

Sonera is the leading Finnish telecommunications company with subsidiaries or joint ventures with other operators in 14 countries. As an international pioneer in the rapidly growing mobile, data and media communications sectors, it provides both international and domestic services, and is a leading supplier of telecommunications technology. Sonera Info Communications Ltd., a subsidiary of Sonera, is specialized in providing content for its value-adding directory services focusing on provisions of mobile value-added services in all continents. Sonera Info Communications Ltd. aims to be one of the world's leading companies that innovatively combines the expertise in mobile communications, the Internet and service provision.

Sonera is involved on several levels of (future) international gambling developments, such as a gambling mobile platform, an Internet gambling platform, gambling content and SMS gambling. Sonera, however will not (yet) disclose its close relationship with the gambling industry. Nokia's Business Development Manager of New Communications Services Mika Kortelainen is not willing to give any information on those new developments: "Unfortunately I am not giving you any information," he said. "I hope you can understand that I cannot comment on any aspects of Sonera's involvement in this industry, due to the requirements of confidentiality and sensitivity of such information."

EGET (European Game & Entertainment Technology) www.eget.fi

European Game & Entertainment Technology, which provides Internet gaming technology to PAF, specialises in providing turnkey Internet solutions for government-licensed lotteries in fully regulated jurisdictions. The company is committed to establishing itself as a leading provider of interactive gaming solutions globally. The company was founded in February 1999 and currently employs 30 people in Mariehamn, Helsinki and Stockholm.

EGET represents a unique combination of gaming industry know-how and expertise in Internet, wireless communication and e-commerce technology.

EGET's WinOne^tm system is the world's first commercially available gaming system incorporating powerful personalization tools, allowing lotteries to provide their players with highly personalized services across multiple distribution media. The WinOne system has been in commercial operation in Finland since December 1999 (www.paf.fi).

Above that, it will deliver a horse betting system to Fintoto, an Internet gaming solution to the Luxembourg national lottery, and they concluded an agreement with Norkespill to deliver an Interactive Gaming System adapted to the Norwegian lottery market. The system will be based on EGET's proprietary WinOne interactive gaming platform.

EGET completed its second financing round on December 29, 2000, securing 20 million FIM in new funding. The investment was made by Slottsbacken Venture Capital, managed by ACR Capital, a leading Nordic venture capital firm focusing on investments in IT-related growth companies.

Slottsbacken www.slottsbacken.com

Slottsbacken Venture Capital (SVC) has SEK 300 million at its disposal for investments in the fields of telecoms, data and media and operates in the Scandinavian countries only, with offices in Stockholm, Copenhagen and Helsinki.

The goals of the operations include:

• investing capital in IT-related growth companies to get a market return;
• encouraging the development of relatively young, high-tech, telecoms, data and media companies;
• creating contact networks and opportunities for companies to consolidate relations with larger, more established companies.

Slottsbacken was founded in 1996 to operate a fund over a 15-year period, up to and including the year 2010. The fund expects to be fully invested sometime in 2003. The average length of commitment to a company is between 2 and 7 years. Together with reinvestments, the maximum investment in a single company may not exceed SEK 30 million. Slottsbacken tries to maintain holdings at over ten, but under 50 percent of a company's capital, but it is not its intention to hold majority shares of companies.

Investors

The fund is financed equally by two investors, Telia--on whose initiative SVC was launched in 1996--and NPI Fund, Sixth Fund Board, which made its first investment in the fund in 1998.