VEON Ltd. · NASDAQ:VEON
VEON — Q3 2020 Earnings Presentation
33 slides from VEON's earnings presentation, Oct 29, 2020
Slide 1: 3Q20 Results
3Q20 RESULTS 29 October 2020 1
Slide 2: Agenda
AGENDA 1. OPENING Nik Kershaw: Head of IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioğlu: Co-CEO Sergi Herrero: Co-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 2
Slide 3: Disclaimer
DISCLAIMER This presentation contains “forward-looking statements”, as the phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by words such as “ma
Slide 4: Agenda
AGENDA 1. OPENING Nik Kershaw: Head of IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioğlu: Co-CEO Sergi Herrero: Co-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 4
Slide 5: Financial Results: 3Q20 Results
FINANCIAL RESULTS 3Q20 Results1 REVENUE EBITDA1 OPERATIONAL CAPEX3 $2.0bn $0.9bn $0.4bn -1.3% local currency2 YoY +9.3% reported YoY -10.4% reported YoY 21.8% LTM Operational Capex ratio3 NET PROFIT EBITDA NET DEBT/ BEFORE ONE-OFF ITEMS4 MARGIN1 LTM EBITDA5 $145mn 45.1% 1.9X Reported Net Profit -$64
Slide 6: Key Highlights
KEY HIGHLIGHTS ► KKJwith 8m more users (+14% QoQ) added in 3Q20 Acceleration of 4G adoption, 20m more users (+37% YoY) ► KKJ Growing digital verticals: JazzCash wallets +46% YoY, BeelineTV users +41% YoY, Toffee +1.5m users since Nov’19 ► KKJ Strategic investment in ShopUp (Oct’20) boosts our e-comm
Slide 7: Key financial highlights
FINANCIAL RESULTS Key financial highlights USD million YoY% YoY% YoY% YoY% 3Q20 3Q19 QoQ% in local 9M20 9M19 in local reported reported currency currency1 Revenue 1,993 2,223 (10.4%) 5.4% (1.3%) 5,981 6,609 (9.5%) (2.7%) EBITDA 898 987 (9.0%) 11.1% 0.1% 2,627 3,280 (19.9%) (14.6%) EBITDA Margin 45.1
Slide 8: Encouraging sequential improvements in revenue and EBITDA
ENCOURAGING SEQUENTIAL IMPROVEMENTS IN REVENUE AND EBITDA • Normalization in the Group revenues throughout 3Q20 as lockdowns eased across all operating markets TOTAL REVENUE YOY PERFORMANCE IN LOCAL CURRENCY1 (in %) • Organic growth compensates for the loss in roaming revenue (roaming revenue went f
Slide 9: 3Q20 Revenue breakdown
FINANCIAL RESULTS 3Q20 Revenue breakdown USD MILLION (-10.4%) YoY reported 33 27 17 1 (11) (11) (79) (4) (202) 2,223 2,195 1,993 3Q19 reported Pakistan Ukraine Kazakhstan Bangladesh Uzbekistan Algeria Russia Other1 3Q20 local FOREX 3Q20 reported total revenue currency total total revenue revenue 3 Y
Slide 10: 3Q20 EBITDA breakdown
FINANCIAL RESULTS 3Q20 EBITDA breakdown USD MILLION (-9.0%) YoY reported 59 25 10 5 (4) (29) (96) 32 (90) 987 988 898 3Q19 reported Pakistan Ukraine Kazakhstan Bangladesh Algeria Uzbekistan Russia Other 3 3Q20 local 4 FOREX 3Q20 reported EBITDA currency EBITDA EBITDA EBITDA 1 2 margin 44.4% 45.0% 67
Slide 11: Capital structure
FINANCIAL RESULTS Capital structure 3Q20 GROUP CASH 3Q20 GROUP DEBT CURRENCY MIX 3Q20 GROUP DEBT CURRENCY MIX CURRENCY MIX BEFORE HEDGING AFTER HEDGING1 14% 7% 1% 7% 1% 4% USD USD USD 7% USD RUB PKR USD RUB USD RUB 31% PKR PKR 1.1bn BDT 7.0bn OTHER 7.0bn 50% OTHER 8% 57% EUR OTHER 42% 61% 10% GROUP
Slide 12: Net debt and leverage trends
FINANCIAL RESULTS Net debt and leverage trends USD MILLION 96 (5) (108) 104 (186) 394 (784) 6,390 5,901 1 Net debt 1 Cash capex (incl. Taxes Financial Other investing Working capital FOREX EBITDA Net debt 1 30 June licenses) charges activities and provisions and other 2 30 September 2020 2020 NET DE
Slide 13: Agenda
AGENDA 1. OPENING Nik Kershaw: Head of IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioğlu: Co-CEO Sergi Herrero: Co-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 13
Slide 14: Key growth driver: 4G adoption
KEY GROWTH DRIVER: 4G ADOPTION 4G USERS BASE AND PENETRATION1 +20M +8M +10M (users in million and penetration in percentages, %) 4G users 4G users self-care 73 +14% QoQ app users 64 65 +37% YoY 59 53 35% +77% YoY 32% 30% 28% 25% 2x to 4x higher MBOU versus average data consumption 3Q19 4Q19 1Q20 2Q2
Slide 15: VEON Ventures
VEON VENTURES Building businesses in fast growing digital verticals reaching 600m people FINANCIAL ADTECH AND CONTENT SERVICES BIG DATA Beeline TV AdTech Pakistan Bangladesh Russia Russia 9.68M 1.57Tn PKR 1.5M+ 2.5M 71% Monthly active wallets YTD processed funds, MAUs since launch MAUs, 6% YoY reven
Slide 16: Russia: Encouraging subscriber trends, investing in customer experience
RUSSIA Encouraging subscriber trends, investing in customer experience ► Improved customer base dynamics supported by 1.6 million more 4G users in the quarter1 ► Good progress in network deployment; 4G data speed in Moscow +18%; 4G first phase in metro with traffic up 4.5x ► Stricter content service
Slide 17: Russia: Sequential improvement in both revenue and EBITDA
RUSSIA Sequential improvement in both revenue and EBITDA REVENUE DATA REVENUE KEY OPERATIONAL METRICS (RUB Billion) (RUB Billion) -6.8% YoY +4.5% YoY 69.2 72.6 74.7 73.4 69.6 16.2 16.2 16.3 16.2 16.9 50 million -9.2% 67.5 15.0 15.4 Total mobile subscribers 65.5 YoY 32% +4.5 p.p. Data revenue % of mo
Slide 18: Kazakhstan: 4G penetration reaches 50%
KAZAKHSTAN 4G penetration reaches 50% driving double-digit revenue growth ► Acceleration in 4G subscriber growth coupled with expansion of 4G ARPU driving data revenue ► Beeline 4G network has covered 1.3 million new residents over the past nine months ► Network sharing partnership secured to furthe
Slide 19: Kazakhstan: Data revenue remains key growth driver
KAZAKHSTAN Data revenue remains key growth driver REVENUE DATA REVENUE KEY OPERATIONAL METRICS (KZT Billion) (KZT Billion) +14.4% YoY +35.3% YoY 10 million -5.4% 70 57.0 50.9 60 19.9 21.0 44.5 45.5 46.0 46.4 17.4 18.6 Total mobile subscribers YoY 15.5 50 39.0 14.3 12.7 40 30 51% +10 p.p. Data revenu
Slide 20: Pakistan: Recovery continues as lockdown restrictions ease
PAKISTAN Recovery continues as lockdown restrictions ease ► Subscriber market share continued growth after ease in lockdown measure ► Acceleration in 4G net additions (+3 million new users in Q3) supporting long-term ambitions ► Continued network investment, with 4G base stations increasing by 19% Y
Slide 21: Pakistan: Strong recovery in operational and financial metrics
PAKISTAN Strong recovery in both operational and financial metrics REVENUE DATA REVENUE KEY OPERATIONAL METRICS (PKR Billion) (PKR Billion) +11.5% YoY +25.4% YoY 70.0 50.6 51.1 45.4 50.5 49.3 47.1 50.7 60.0 15.9 16.0 17.9 64.2 million +8.5% 14.3 15.1 13.6 Total mobile subscribers 50.0 40.0 12.5 YoY
Slide 22: Ukraine: Acceleration in 4G subscribers driving growth
UKRAINE Acceleration in 4G subscribers driving growth ► Growth in 4G subscribers resumed (21% QoQ growth) as lockdown restrictions ease during the quarter ► Progressing on 4G rollout with base stations +65% YoY, 4G network now covers 8 stations in Kyiv subway ► Increase in MyKyivstar users to 2.3 mi
Slide 23: Ukraine: Double digit growth in revenue & EBITDA resumes
UKRAINE Double digit growth in revenue & EBITDA resumes REVENUE DATA REVENUE KEY OPERATIONAL METRICS (UAH Billion) (UAH Billion) +11.6% YoY +23.0% YoY 6.0 6.5 3.1 3.4 25.8 million -2.2% 5.8 6.0 3.0 07 5.8 2.8 2.8 2.8 Total mobile subscribers 5.1 5.6 2.5 YoY 06 05 56.8% +5.6 p.p. 04 03 Data revenue %
Slide 24: Executing on 4G growth opportunities in other markets
EXECUTING ON 4G GROWTH OPPORTUNITIES IN OTHER MARKETS UZBEKISTAN ALGERIA BANGLADESH ARMENIA, GEORGIA & KYRGYSTAN • 1.9% YoY decrease in • 15.4% YoY increase in • 20.2% YoY increase in • 2.4% YoY increase in data revenue1 data revenue1 data revenue1 data revenue1 • 10.4% YoY increase in • 27.4% YoY i
Slide 25: Agenda
AGENDA 1. OPENING Nik Kershaw: Head of IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioğlu: Co-CEO Sergi Herrero: Co-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 25
Slide 26: 2020 Financial Guidance confirmed
GUIDANCE 2020 Financial Guidance confirmed 9M20 Actual FY 2020 Guidance -2.7% YoY Total Revenue Low to mid-single-digit in local currency1 local currency1 decline in -3.1% YoY revenue and EBITDA EBITDA in local currency1 Capex intensity 21.8% 22%-24% MANAGEMENT ANTICIPATES NO DIVIDEND PAYMENT FOR FY
Slide 27: Summary
SUMMARY ► KKJ recover from lockdowns Normalization in operational performance as our businesses ► 4G users growth is accelerating, driving double-digit data KKJrevenue growth and higher ARPUs ► Russia’s investments on track and revenue and operational KPIs expect to show positive YoY growth in 1H21
Slide 28: Appendix
SS + ~ S é SS SS ~ ree ‘ XN ~N . S&S > a ’ ~ = ae SX gq ARPENDIX = SS 2
Slide 29: 3Q20 Impairments
3Q20 IMPAIRMENTS VEON has recognised a non-cash impairment charges of $790 million for 3Q20, of which $723 million against goodwill in Russia. Goodwill is tested for impairment annually (at October 1) or when circumstances indicate the carrying value may be impaired. When reviewing for indicators of
Slide 30: EBITDA exceptional items
FINANCIAL RESULTS EBITDA exceptional items USD million 3Q20 3Q19 YoY% 9M20 9M19 YoY% EBITDA 898 987 (9.0%) 2,627 3,280 (19.9%) Reversal of a provision in Pakistan (52) - - (52) - - Provision in Uzbekistan 15 - - 15 - - Reclass of Pakistan license amortization - - - 10 - Vendor settlement - - - - (35
Slide 31: Cash flow breakdown
FINANCIAL RESULTS Cash flow breakdown USD MILLION (8) (10) (279) (456) (230) 2,627 (1222) 1,644 8 (65) 365 EBITDA 9M 2020 Changes in Movements in Income tax Net interest paid Non-cash Cash flow from Capex excl. licenses Disposals of capital Licenses Equity free cash working capital provision paid ad
Slide 32: Capital expenditure
FINANCIAL RESULTS Capital expenditure OPERATIONAL CAPEX (EXCL. LICENSES) & LTM CAPEX INTENSITY1 9M20 OPERATIONAL CAPEX (EXCL. LICENSES) (USD million) 800 40.00% 5.3% 6.4% 700 579 35.00% Russia 600 492 5.3% 450 30.00% Pakistan 500 389 368 354 324 21.8% 5.7% Ukraine 400 25.00% 20.8% 19.6% 19.5% 52.0%
Slide 33: Debt by entity
DEBT BY ENTITY1 30 SEPTEMBER 2020 USD MILLION EQUIVALENT Outstanding debt Type of debt Cash-pool Entity Bonds Loans overdrafts2 and Total other VEON Holdings B.V. 4,155 1,757 152 6,065 PJSC VimpelCom 271 - - 271 Pakistan Mobile Communications Limited - 514 - 514 Banglalink Digital Communications Ltd