VEON Ltd. ORD · RUS:VEON-RX

VEON Ltd. ORD — VimpelCom — Q3 2008 Earnings Presentation

29 slides from VEON Ltd. ORD's earnings presentation, Nov 25, 2008

  1. Slide 1: 3Q08 Financial and Operating Results

    VimpelCom 3Q08 Financial and Operating Results November 25, 2008

  2. 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, in part, to the Company’s strategy and development plans. The forward- looking st

  3. Slide 3: Participants

    Participants Alexander Izosimov, CEO Presentation Elena Shmatova, CFO will be joined by: Q&A Session Jean-Pierre Vandromme, Executive VP, Russian Operations Dmitry Pleskonos, Executive VP, CIS Operations November 2008 3 © Beeline 2008

  4. Slide 4: 3Q08 in Brief

    3Q08 in Brief • Increased revenue and subscriber base in all markets where we operate. Our quarterly revenues reached $2.8 billion • Consolidated OIBDA margin improved to 48.8% and OIBDA amounted to approximately $1.4 billion • Started construction of networks in Vietnam and Cambodia November 2008 4

  5. Slide 5: Quarterly Financial Dynamics

    Quarterly Financial Dynamics Net Revenues, $ mln Net Income, $ mln +45.3% -41.3% 601 458 470 1,717 1,956 2,010 2,108 2,611 2,843 359 368 269 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 OIBDA, $ mln OIBDA Margin +36.7% 918 1,223 1,388 52.2% 51.9% 45.7% 53.4% 46.8% 48.8% 89

  6. Slide 6: Strong Financials

    Strong Financials OIBDA vs Short-term Debt, $ mln Balance Sheet 4,654 4,282 Sept 30, Dec 31, Dec 31, 3,956 ($ mln) 3,597 1.81 1.72 2008 2007 2006 3,368 1.69 3,071 Cash and Cash Equivalents 727 1,004 344 Total Assets 17,310 10,569 8,437 0.85 1,748 0.81 0.77 Total Debt 8,003 2,767 2,489 1,248 969 -Sho

  7. Slide 7: Current Debt Profile

    Current Debt Profile* Debt Maturity Schedule, $ mln 2,002 354 1,839 581 1,511 1,109 1,000 400 600 504 356 263 15 4Q08 1Q09 2Q09 3Q09 4Q09 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Debt Composition Vendors, EUR, 8% 3% RUR, 16% Floating, Bonds, Banks, 44% 44% 53% Fixed, 56% USD, 76% November 2

  8. Slide 8: Sources of Revenue Growth

    Sources of Revenue Growth* 2,843 424 462 1,956 463 38 2,381 1,918 3Q 07 Mobile Fixed 3Q 08 2,843 120 1,956 425 767 305 2,418 1,651 3Q 07 Russia CIS 3Q 08 * Segment revenues exclude intercompany transactions November 2008 8 © Beeline 2008

  9. Slide 9: Russia: Total Operations

    Russia: Total Operations Revenue*, $ mln CAPEX, $ mln 2,426 2,239 445 1,797 414 132 1,653 1,702 1,675 1,862 2,037 1,460 189 217 467 213 425 506 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 OIBDA ($ mln) and OIBDA Margin CAPEX / Revenue LTM 1,213 992 1,059 871 780 773 1104

  10. Slide 10: Russia: Mobile Highlights

    Russia: Mobile Highlights Active Subscribers, mln Revenue, $ mln +7.9% +23.2% 2 0 0 0 1 5 0 0 1,862 2,037 1 0 0 0 40.1 41.8 42.5 45.1 1,653 1,702 1,675 42.2 42.1 1,460 5 0 0 0 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 Mobile ARPU & MOU OIBDA & OIBDA Margin 15.2 300 7 0

  11. Slide 11: Russia: Fixed Revenue

    Russia: Fixed Revenue Business Segment, $ mln 192 68 193 207 213 172 Fixed Revenue, $ mln 151 124 +37.3% 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 362 376 324 Wholesale Segment, $ mln 273 132 144 414 445 50 244 186 129 139 160 109 94 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08

  12. Slide 12: Russia: Residential Broadband Development

    Russia: Residential Broadband Development Broadband Revenue, $ mln FTTB* Households Passed (mln) & Take-up Rate 7 .0 2 2 % 5.9 5.5 2 0% 6 .0 1 8 % 4.1 5 .0 3.8 1 6 % 9 4 .0 1 4 % 3.0 29 30 2.6 10.3% 1 2 % 9.2% 3 .0 8.4% 8.9% 8.6% 8.0% 1 0% 19 2 .0 13 8 % 10 15 1 .0 6 % 0 .0 4 % 2Q 07 3Q 07 4Q 07 1Q

  13. Slide 13: Strengthening Distribution

    Strengthening Distribution • Network of own and • Influence over a key distribution exclusive outlets channel for traditional services • Long-term contract with • Promotion of new products and other key players services (3G, fixed and wireless broadband, etc) • Acquisition of a minority stake in a l

  14. Slide 14: Kazakhstan: Operating & Financial Highlights

    Kazakhstan: Operating & Financial Highlights Mobile Active Subscribers, mln Revenues* ($ mln) & OIBDA Margin 199 +29.3% 2 2 0 . 0 0 185 6 % 175 2 0 0 . 0 0 163 5 167 1 8 0 . 0 0 149 1 % 183 196 1 6 0 . 0 0 162 1 4 0 . 0 0 % 53.8% 52.0% 53.4% 1 2 0 . 0 0 52.7% 52.8% 3.9 4.3 4.6 4.8 5.1 5.6 % 50.4% 1

  15. Slide 15: Ukraine: Operating & Financial Highlights

    Ukraine: Operating & Financial Highlights Mobile Active Subscribers, mln Revenues* ($ mln) & OIBDA Margin +8.7% 94.2 1 0 0 71.2 32.5 8 5 7 0 . 0 % 7 0 28.4 2.2 2.4 34.5 44.8 5 5 2.0 2.1 37.0 8.9 68.2 1.8 1.9 23.8 45.7 4 0 17.6% 10.4% 36.4 13.2% 2 5 7.1% 2 0 . 0 % 1 0 -12.9% -1.7% - 5 2Q 07 3Q 07 4Q

  16. Slide 16: Armenia: Operating & Financial Highlights

    Armenia: Operating & Financial Highlights Mobile Active Subscribers, 000 Revenues* ($ mln) & OIBDA Margin +75.4% 9 0 . 0 % 63.4 64.7 68.8 8 0 . 0 % 58.4 59.8 59.1 6 0 . 0 0 37.2 37.6 38.3 7 0 . 0 % 35.2 36.3 36.2 4 0 . 0 0 6 0 . 0 % 51.9% 54.3% 655 784 51.5% 49.2% 46.8% 48.7% 471 0.4 0.4 442 520 447

  17. Slide 17: Uzbekistan: Operating & Financial Highlights

    Uzbekistan: Operating & Financial Highlights Mobile Active Subscribers, mln Revenues* ($ mln) & OIBDA Margin 58.4 +98.4% 2.9 6 0 . 0 0 52.0 2.6 39.5 56.0% 0.8 53.5% 56.5% 4 0 . 0 0 52.9% 49.1% 48.8% 3.1 2 0 . 0 0 2.4 2.8 2.1 23.2 30.2 36.5 38.7 49.5 55.5 1.6 1.2 0 . 0 0 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08

  18. Slide 18: Building of the South-East Asian Cluster

    Building of the South-East Asian Cluster VIETNAM Vietnam Population: 86.1 mln. • Joint-Venture agreement to establish GTEL-Mobile signed Penetration: ~40%* GDP per capita: $2,600** • GSM licenses and frequencies received CAMBODIA • Testing network launched. Licenses and frequencies activated • The r

  19. Slide 19: Management's Operational Focus

    Management’s Operational Focus • Cut all non-essential costs • Execute hiring freeze and identify further headcount optimization opportunities • Aggressively re-negotiate contracts with key vendors • Put on hold non-critical CAPEX orders • Scale back CAPEX plans going forward • Protect against curre

  20. Slide 20: Summary

    Summary • Strong 3Q08 results with revenues up across all geographies and improved consolidated OIBDA margin • Steps taken to maximize cash flow in strained market environment • Measures worked out to meet our obligations without significant disruptions to current operations November 2008 20 © Beeli

  21. Slide 21: Appendices

    APPENDICES November 2008 21 © Beeline 2008

  22. Slide 22: Map of Operations

    Map of Operations Population: 46.5 mln. Population: 4.5 mln. Acquired: Nov. 2005 Acquired: Jul. 2006 Penetration: 119% Penetration: 76% GDP* 6,900 GDP* 4,700 Population: 142.2 mln. Population: 3.2 mln. Penetration: 121% Acquired: Nov. 2006 GDP*: 14,700 Penetration: 67% GDP* 4,900 Population: 15.4 ml

  23. Slide 23: FOREX Development

    FOREX Development Average quarterly FX rate to US$ Closing FX rate to US$ Currency Change from 2Q08 Change from 3Q07 Change from 2Q08 RUB -2.5% 5.2% -7.1% KZT 0.5% 2.6% 0.8% UAH 2.4% 4.2% -0.2% TJS 0.2% 0.5% 0.6% UZS -1.0% -3.7% -1.5% AMD 1.6% 11.8% 0.2% GEL 2.6% 18.1% 0.9% Source: Prime TASS, Natio

  24. Slide 24: Composition of the CIS Business

    Composition of the CIS Business Revenue, $ mln 14.8 5.4 68.8 58.4 94.2 439.8 198.6 Kazakhstan Ukraine Uzbekistan Armenia Tajikistan Georgia CIS Total OIBDA, $ mln 4.8 -1.1 33.5 33.0 -1.6 174.7 106.1 Kazakhstan Ukraine Uzbekistan Armenia Tajikistan Georgia CIS Total CAPEX, $ mln 6.4 8.9 19.1 28.4 46.

  25. Slide 25: CIS Mobile: Financial Highlights

    CIS Mobile: Financial Highlights Kazakhstan Ukraine Uzbekistan 196 175 183 167 162 149 68 56 88 94 103 46 50 80 92 82 37 35 36 37 39 24 23 30 4 11 17 18 27 32 -3 6 1 3 -9 21 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 Armenia Tajikistan

  26. Slide 26: CIS Mobile: Active Subscribers, mln

    CIS Mobile: Active Subscribers, mln Kazakhstan Ukraine Uzbekistan 5.6 5.1 4.6 4.8 3.9 4.3 2.8 3.1 2.2 2.0 2.1 2.4 2.1 2.4 1.8 1.9 1.6 1.2 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 Armenia Tajikistan Georgia 0.78 0.65 0.53 0.47 0.45 0.

  27. Slide 27: CIS Mobile: ARPU & MOU Development

    CIS Mobile: ARPU & MOU Development Kazakhstan Ukraine Uzbekistan 290 295 299 262 283 265 266 1 8 . 0 231 2 8 0 13.6 13.6 13.0 210 11.6 12.3 12.1 160 168 183 9.7 2 1 0 1 2 . 0 113 110 7.5 7.2 7.6 6.8 6.6 6.5 89 99 99 108 5.8 5.6 6.1 5.8 1 4 0 6 . 0 4.2 7 0 0 . 0 0 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08

  28. Slide 28: CIS Mobile: Subscriber Market Shares

    CIS Mobile: Subscriber Market Shares* Kazakhstan Ukraine Uzbekistan 54% 53% 51% 50% 49% 52% 48% 49% 49% 48% 47% 47% 43% 43% 42% 42% 43% 42% 47% 47% 40% 37% 46% 33% 36% 34% 40% 41% 39% 31% 30% 37% 36% 35% 35% 33% 16% 17% 18% 19% 17% 19% 12% 14% 14% 6% 6% 11% 11% 12% 5% 6% 7% 8% 5% 5% 5% 4% 4% 4% 3% 3

  29. Slide 29: Reconciliation of Consolidated OIBDA and OIBDA Margin (Unaudited)

    Reconciliation of Consolidated OIBDA and OIBDA Margin (Unaudited) Reconciliation of OIBDA and OIBDA Margin (Unaudited) Three months ended Sept 30, June 30, March 31, Dec 31, Sept 30, June 30, ($'000) 2008 2008 2008 2007 2007 2007 Reconciliation of OIBDA to operating income OIBDA 1,388 1,223 1,126 91

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