VEON Ltd. · NASDAQ:VEON
VEON — VimpelCom — Q3 2014 Earnings Presentation
40 slides from VEON's earnings presentation, Nov 12, 2014
Slide 1: 3Q 2014 Results Analyst & Investor Presentation
3Q 2014 Results Analyst & Investor Presentation Amsterdam - November 12, 2014 Jo Lunder - CEO Andrew Davies - CFO
Slide 2: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to, among other things, the Company's anticipated performance, its expectation to
Slide 3: Continued sequential improvements in 3Q14
Continued sequential improvements in 3Q14 Following the sale of the interest in Wind Canada in September 2014 the numbers exclude Wind Canada customers EBITDA margin is EBITDA divided by total revenue; EBITDA and EBITDA margin are non-GAAP financial measures - reconciliations are included in the App
Slide 4: Key recent developments
Key recent developments Macro-economic slow down and material currency devaluation in Russia and Ukraine, due to geopolitical unrestResolution in Algeria is on track for closing by end of 2014Successful commercial 3G launch in Algeria and PakistanStreamlined portfolio with sale of Canada, CAR and Bu
Slide 5: Business Units Performance
Business Units Performance 5 Svimpelcom
Slide 6: Russia: 3Q14 results in line with expectations
(CHART) (CHART) (CHART) RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile Fixed-line -4% YoY EBITDA and EBITDA margin CAPEX and CAPEX/revenue -7% YoY Russia: 3Q14 results in line with expectations Mobile data revenue grew 22% YoYMobile service revenue decreased 5% YoY, driven by measures t
Slide 7: Russia: Continued improvements in network quality and customer experience
Russia: Continued improvements in network quality and customer experience #1 or #2 in 75% of regions1 in mobile data speedMoscow Oblast: #1 in voice quality & #2 in mobile data speed1Rolling out 4G/LTE - offering in 24 regions91% of all customers >2Mb/s Continued investments in high- speed data netw
Slide 8: Russia: Continued improvements QoQ in 3Q14
(CHART) (CHART) (CHART) RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile Fixed-line +6% QoQ EBITDA and EBITDA margin Mobile customers (million) +5% QoQ Russia: Continued improvements QoQ in 3Q14 Customer satisfaction increased, with higher Net Promoter Score, leading to improvement in chu
Slide 9: Italy: Solid performance in a weak, but improving market
(CHART) (CHART) (CHART) EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile Fixed-line -8% YoY CAPEX and CAPEX/revenue Italy: Solid performance in a weak, but improving market Mobile service revenue decreased 9% YoY: Intense price competition 2013SMS disintermediationMobile ARPU increased 5%
Slide 10: Italy: Strong operational and financial progress
Italy: Strong operational and financial progress Mobile broadband revenue up 14% YoY Mobile broadband customer base up 24% YoY to 10.2 million Mobile broadband double digit growth continues "MyWind" App for smart-phones and tablets downloaded 5.6 million timesWIND is the only operator in Italy with
Slide 11: Africa & Asia: Successful 3G launches to drive future revenue growth
EBITDA and EBITDA margin(CHART) (CHART) (CHART) USD MILLION, UNLESS STATED OTHERWISE Service revenue -4% YoY CAPEX and CAPEX1/revenue -11% YoY Africa & Asia: Successful 3G launches to drive future revenue growth Revenue and EBITDA organically declined:Competitive pressure in Algeria and PakistanPart
Slide 12: Algeria: Focus on commercial 3G launch
Algeria: Focus on commercial 3G launch Smartphone and dongle promotions with data bonusRouters promotion for B2BPostpaid pack promotion with voice & data bonusHandset migration promotion 3G services currently in 14 main provinces, including Algiers and main citiesEoY14: 19 provinces coverage Faceboo
Slide 13: Bangladesh: Successful turnaround and 3G roll out
Bangladesh: Successful turnaround and 3G roll out (CHART) (CHART) The fastest 3G Smartphonepromotion MFS growth opportunities LG G3 smartphone:option to pay in installments3GB for free High growth potential as smartphone penetration currently only 4% TicketingPaymentsRemittanceMobile money transfer
Slide 14: Pakistan: Challenging environment and strong competition
Pakistan: Challenging political and macro-economic environment and strong competition Fastest growing 3G service1 million 3G customers within 90 days of commercial launch Notifications with unsubscription informationDaily usage reportSelf service menu for managing subscriptionTransparency complaints
Slide 15: Ukraine: Transformation showing operational improvements
Transformation program on track:#1 in NPSSubstantial improvement in annualized churnIncreased customersMobile data revenue growth 5% YoYEBITDA margin declined due to doubling of frequency fees and higher utility costsResilient operating cash flow1, with cash flow margin of 31%Environment expected to
Slide 16: CIS: Continued organic growth
Increased market shares in most countries Mobile service revenue increased organically 5% YoYMobile data revenue growth of 27% YoYMobile customers increased by 1.4 million YoY, primarily due to growth in KazakhstanEBITDA increased 12% organically YoY, mainly due to Kazakhstan and Uzbekistan. LTM 3Q1
Slide 17: Kazakhstan: Completion of successful turnaround
Kazakhstan: Completion of successful turnaround (CHART) (CHART) 3G Coverage 3G coverage 2G coverage 3G download speed 2 Mb/s>220 cities covered by 3G: ~60% population ~3% territory 92% 2G pop. coverage #1 in NPS Network qualityBest value proposition New data tariff offerings All inclusive: new integ
Slide 18: Financial Highlights
Financial Highlights
Slide 19: Financial performance negatively impacted by one-off costs related to WIND refinancing and FOREX
Financial performance negatively impacted by one-off costs related to WIND refinancing and FOREX Net income attributable to VimpelCom shareholders EBITDA declined organically 4% YoY, due to revenue decline and higher infrastructure costs as a result of network investments, partly offset by one- off
Slide 20: Resilient cash flow
Resilient cash flow Investments in high-speed data networks Inflow from the sale of interest in Wind Canada of ~ USD 110 million and inflow from deposits of USD 140 million 3Q14 is the net result of the July 2014 WIND refinancing, drawdown under RCF and bond repayment 3Q13 bond repayment As a result
Slide 21: Financing activities and available headroom
Financing activities and available headroom USD 18.6 billion financing activities YTD: Refinancing WIND USD 10.6 billion new SNs and SSNs banglalink USD 0.3 billion Senior Notes (SNs) Financing VIP Holdings USD 1.8 billion RCF USD 1.0 billion CF AlfaBank OJSC VimpelCom USD 0.8 billion Sberbank loan
Slide 22: Interest savings from WIND's refinancing & Algeria resolution
Interest savings from WIND's refinancing & Algeria resolution Refinanced WIND's debt, annual interest savings of ~USD 0.4 billion and improved debt maturity profileNet proceeds from Algeria resolution targeted for repayment of gross debt, annual interest savings of ~USD 0.3 billion Total annual inte
Slide 23: Improved debt maturity profile
Improved debt maturity profile Group debt maturity schedule by unit Other includes the effect of cross currency swaps. Gross debt excluding effect of cross currency swaps is USD 27.7bn (USD 27.3bn including swaps) Group debt maturity schedule by currency As at 30 September 2014, in USD billion In US
Slide 24: Lower leverage and average cost of debt
Lower leverage and average cost of debt Normalized LTM EBITDA excluding one-off charges related to the Algeria resolution 2.5 -0.1 QoQ Net Debt/ EBITDA1 With a cash position of USD 6 billion, additional financial facilities, no major refinancing obligation until 2020 and solid cash flow generation,
Slide 25: Sensitivity to FOREX movements
USD billion 9M14 FOREX sensitivities1 FOREX sensitivities1 FOREX sensitivities1 USD billion 9M14 RUB vs. USD +/-10% EUR vs. USD +/-10% UAH vs. USD +/-10% Revenue 15.2 Average FOREX 4% 3% 1% EBITDA 6.4 Average FOREX 4% 2% 1% Gross Debt 27.7 Year-end FOREX 2% 5% n.a. Net Debt 21.7 Year-end FOREX 2% 6%
Slide 26: 2014 targets confirmed
2014 targets confirmed 1. The annual targets for 2014 assume constant currency, no major regulatory changes, no change to the asset portfolio and no major macro- economic changes - for assumed currencies refer to slide 36 Revenue CAPEX excl. licenses / Revenue Leverage (Net Debt / EBITDA) EBITDA Tar
Slide 27: Conclusion
Conclusion
Slide 28: Conclusion
Conclusion Results impacted by unfavorable currency movements, macro-economic headwinds and operational performance in some markets Continued sequential improvements driven by investments in high quality networks and improved customer experienceStreamlined portfolio with sale of Canada, Burundi and
Slide 29: Svimpelcom
Svimpelcom
Slide 30: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The NetherlandsT: +31 20 79 77 234 E: ir@vimpelcom.com Install VimpelCom's App iPad App Visit our awards winning websitewww.vimpelcom.com
Slide 31: Svimpelcom
Svimpelcom
Slide 32: Bangladesh analyst and investor site visit
Bangladesh analyst and investor site visit Register now for:banglalink site visitDecember 2, 2014 - Dhaka, Bangladesh Presentations by Vincenzo Nesci, CEO GTHGerbrand Nijman, Group Head of IR VimpelComZiad Shatara, CEO banglalink Ahmad Haleem, CFO banglalinkShihab Ahmad, CMO banglalinkPerihane Elham
Slide 33: Financial calendar 2015 - accelerating reporting
Financial calendar 2015 - accelerating reporting The final confirmation of the date and invitation to the earnings calls and A&I Day will be issued separately prior to each event. 4Q14 results (analyst meeting in London) Analyst and Investor Day (London) 2Q15 results (analyst meeting in London) 1Q15
Slide 34: Svimpelcom
Svimpelcom 5
Slide 35: Financing structure
Financing structure USD 2.7 bln shareholderloan (PIK) VimpelCom Ltd. VimpelCom Amsterdam B.V. VimpelCom Holdings B.V. VimpelCom Amsterdam Finance B.V. OJSC VimpelCom USD 2.7 bln WIND Telecom S.p.A. Wind AcquisitionHoldings Finance S.p.A. WIND Acquisition Finance SA WIND Telecomunicazioni S.p.A. Glob
Slide 36: Currency FX rates versus USD
Currency FX rates versus USD Algeria DZD 81 Armenia AMD 420 Bangladesh BDT 80 Canada CAD 1.05 Egypt EGP 8.0 Georgia GEL 1.7 Italy EUR 0.80 Kazakhstan KZT 155 Kyrgyzstan KGS 47 Laos LAK 8,000 Pakistan PKR 110 Russia RUB 32 Ukraine UAH 9.5 Zimbabwe ZWD 325 FOREX rates used in annual targets for 2014
Slide 37: Revenue and EBITDA development in 3Q14
Russia Italy Africa & Asia Ukraine CIS Consolidated Revenue YoY Revenue YoY EBITDA YoY EBITDA YoY Organic Reported Organic Reported (3%) (12%) (7%) (16%) (2%) (3%) 3% 3% (4%) (3%) (12%) (11%) (6%) (40%) (14%) (45%) 5% (3%) 12% 3% (3%) (9%) (4%) (11%) Revenue and EBITDA development in 3Q14 3Q14
Slide 38: FOREX development
Source: National Banks of the respective countries, Company calculations FOREX development RATES OF FUNCTIONAL CURRENCY TO USD
Slide 39: Reconciliation of EBITDA
“© Vimpeicem ts 2014 Reconciliation of EBITDA amos a sey a SVimpetcom
Slide 40: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt VimpelCom Ltd. Index sheet Consolidated VIP Ltd. Consolidated BU Russia Russia BU Europe and North America Italy BU Africa and Asia Algeria Pakistan Bangladesh Sub Saharan Africa SEA BU Ukraine Ukraine BU CIS Kazakhstan Uzbekistan Armenia Tajikistan Georgia Ky