87 slides from VEON Ltd. ORD's investor day presentation, Apr 1, 2015
Slide 1: Creating value by investing in the future
Georgia & Kazakhstan Site Visit 2015 © VimpelCom Ltd. 2015 Creating value by investing in the future Gerbrand Nijman Group Director & Head of Investor Relations < 1>
Slide 2: Disclaimer
Georgia & Kazakhstan Site Visit 2015 © VimpelCom Ltd. 2015 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,
Slide 3: Program April 1, 2015
Georgia & Kazakhstan Site Visit 2015 © VimpelCom Ltd. 2015 Program April 1, 2015 Time Kazakhstan analyst & investor site visit – Almaty 10:00-10:05 Gerband Nijman Head of IR VimpelCom 10:05-10:30 Taras Parkhomenko CEO Kazakhstan 10:30-11:10 Alexander Komarov CCO Kazakhstan 11:10-11:30 Break 11:30-12
Slide 4: Kazakhstan Analyst & Investor Site Visit
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Kazakhstan Analyst & Investor Site Visit Taras Parkhomenko Chief Executive Officer < 4>
Slide 5: Welcome to Kazakhstan
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Welcome to Kazakhstan < 5>
Slide 6: Country with long-term ambition (Kazakhstan 2050)
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Country with long-term ambition (Kazakhstan 2050): • Joining the top-30 developed countries • GDP per capita: growth to USD 60K in 2050 • Share of SME: 2 times increase by 2020 • Volume of transit services increase: x2 by 2020,
Slide 7: Kazakhstan at a glance
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Kazakhstan at a glance Key facts Key indicators Population: 17.4 million • Consistent economic growth • High sovereign credit rating: • Risk of currency devaluation ► S&P: BBB (negative) Area: 2,724,900 square km • Minerals (oil
Slide 8: Well diversified economy
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Well diversified economy 15% Mining industry Manufacturing industry 38% 10% Other industries Wholesale and retail trade 12% Operations with real estate Other services 8% 17% < 8>
Slide 9: Growing population and high share of youth
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Growing population and high share of youth Population Age distribution (million) (%) 20 +1.6% 10% 15 33% <20 17% 20 - 29 10 30 - 44 45 - 59 5 >60 21% 19% 0 2007 2008 2009 2010 2011 2012 2013 2014 Source: National Statistic Commi
Slide 10: The fastest growing economy in CIS
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 The fastest growing economy in CIS 3 years average GDP per capita growth Real GDP growth (%) (%) 14.5 10 9 12.8 11.9 8 7.5% 11.3 11.1 10.9 10.9 7.3% 10.2 7 9.5 9.2 6.0% 6 5.0% 5 4.3% 4 3.9 3 2 1 0 Belarus Armenia Republic Ukrain
Slide 11: Regional break down
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Regional break down Population GDP share (million) 1.6 (%) 5 Astana 1.6 0.8 4 0.9 5 0.6 12 5 1.4 6 0.6 0.8 1.4 11 5 8 0.8 3.6 23 0.6 4 1.1 Almaty 6 3 2.8 6 Average salary per month Beeline market share (KZT x 1,000) 93 (%) 50%+
Slide 12: Market is highly penetrated with multi-SIM and increasing competition
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Market is highly penetrated, with big share of multi-SIM and increasing competition ALTEL Beeline KСell Tele2 160% Population Addressable market penetration 28 mln SIM 17.5 mln people 1994 1995 … 1999 … 2003 2004 2005 2006 2007
Slide 13: Market growth is slowing down while spending per person increases
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Market growth is slowing down while spending per person increases Market SIM, K Market revenue Market revenue, KZ billion Penetration evolution Market penetration, % (KZT billion) YoY growth, % Population, K 400 180 30 180 350 1
Slide 14: Key pillars of profitable growth and Big Idea
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Key pillars of profitable growth and Big Idea Leadership Data push and in sales to grow traffic-revenue the base balance Unique management customer experience More value Operational for base lock-in Excellence and monetization f
Slide 15: Beeline has been growing revenue share driven by customer generated revenue growth
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Beeline has been growing revenue share driven by customer generated revenue growth Revenue mobile market share Customer base market share (Actual) (Actual) VIP Kcell 38.1% 36.3% 34.6% 35.1% Tele2 33.7% 34.9% 37.5% 40.8% 56.0% 54
Slide 16: High growth of mobile data
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 High growth of mobile data Smartphone penetration 3G customers evolution (%) +3x +1.3x 30 21 10 14 2011 2012 2013 2014 2011 2012 2013 2014 3G traffic +23x 2011 2012 2013 2014 < 16>
Slide 17: The successful turnaround
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 The successful turnaround Mobile revenue evolution YoY Voice&VAS Interconnect (KZT million) Data 2 323 2 764 2 312 1 054 1 784 490 1 746 1 373 670 346 743 860 -310 -365 -621 -314 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Slide 18: Regulatory environment and developments
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Regulatory environment and developments Ongoing top relevant topics Future topics (2015) (2016-2019) Eurasian Economic Commission may 4G/LTE Only 1 operator has 4G/LTE in the market International introduce “zero roaming rate” in
Slide 19: Overall telecom market is expected to grow by 1% CAGR
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Overall telecom market is expected to grow by 1% CAGR Total telecom market in Kazakhstan (USD million; Latest estimates) +1% Fixed-line internet 553 568 4.1% # 2015-2019 CAGR 464 493 515 536 435 425 -2.6% Fixed voice 485 472 459
Slide 20: Profitable growth after successful turnaround
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Profitable growth after successful turnaround Leading market position Strong management team Attractive growth of mobile data Leading in customer experience (NPS) < 20>
Slide 21: Thank you
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Thank you Questions please! < 21>
Slide 22: Kazakhstan Analyst & Investor Site Visit
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Kazakhstan Analyst & Investor Site Visit Alexander Komarov Chief Commercial Officer < 22>
Slide 23: Market share development 2014
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Market share development 2014 < 23>
Slide 24: A successful turnaround in 2014
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 A successful turnaround in 2014 Revenue market share 2014 vs 2013 (%) (Percentage points) 57.9 56.9 56.4 57.3 56.7 56.2 55.4 55.9 55.9 55.4 54.3 53.3 -1.3 37 36.9 36.4 35.6 35.9 34.9 34.4 34.5 35.1 34.4 34.3 34.8 +0.6 9.3 9.5 9.
Slide 25: Customer market share growing from 2013
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Customer market share growing from 2013 Customer market share 2014 vs 2013 (%) (percentage points) 54.1 53.9 54.6 52.6 52.1 52.9 53.1 53.1 51.6 50.6 50.2 49.9 -4.7 39.4 37.5 37.6 37.8 37.5 35.3 34.9 36.0 33.7 33.8 34.2 32.8 +2.6
Slide 26: Data revenue market share turnaround from 2H14
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Data revenue market share turnaround from 2H14 Data revenue market share 2014 vs 2013 (%) (percentage points) 67.1 66.4 67.8 68.1 66.0 64.6 64.8 66.2 63.7 63.7 64.3 57.6 -1.1 42.4 36.3 35.4 36.3 35.2 35.7 +1.1 32.9 34.0 33.8 33.
Slide 27: Market revenue growth driven by growth in customers and ARPU
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Market revenue growth driven by growth in customers and ARPU Beeline KCell Tele2 (KZT billion) +0.4 +4.0 +3.1% 0.0% +48.7% +10.9% 182.0 187.6 187.6 115.5 116.0 120.6 +2.4% Total mobile 31.4 34.8 revenue 21.1 (KZT billion) 343.0
Slide 28: Strategy
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Strategy < 28>
Slide 29: Five strategic pillars
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 (1) Get more (2) Drive mobile data (5) CEM (4) Operational Excellence (3) Drive sales to grow the base to ensure OCF < 29>
Slide 30: Value proposition - Get more
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 (2) Enforce mobile data (1) Get more Actions Achieved/Expected RESULTS Actions Achieved/Expected RESULTS On-net Lock-in «Freestyle» PP Family Data users growth Daily, weekly, monthly and Real Unlim launches Bundles transitio
Slide 31: Get More – Attractive flat regional offers
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 1. Get More – Attractive “flat” regional offers 7+ for Almaty ► Onnet – 7 tg/min ► Offnet – 7 tg/min ► Free Whatsapp «Simple+» for Karaganda ► Onnet – 7 tg and then 1 tg per minute ► Offnet – 7 tg/min ► Free Whatsapp < 31>
Slide 32: Get More – FreeStyle family price plan as main network lock-in tool
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 1. Get More – FreeStyle family price plan as a main network “lock-in” tool «Freestyle» Family ► Onnet – Unlimited / 300 min/day ► Top up/fee – 200 tg/week or 790 tg/month / 29 tg/day ► Offnet - 18 tg/min < 32>
Slide 33: Get More – based on new Inspiring for More brand platform
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 1. Get More – based on new “Inspiring for More” brand platform < 33>
Slide 34: Get More – All Inclusive On-net integrated bundle
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 1. Get More – “All Inclusive” On-net integrated bundle «All Inclusive» ► 49/59/79/89 Tg per day. ► 100 min/sms on-net per day ► 15/45/100/150 mb per day, after 1 tg for 1 mb. ► Free soc. networks < 34>
Slide 35: Get More – All Inclusive 2 On-net/off-net integrated bundle
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 1. Get More – “All Inclusive 2” On-net/off-net integrated bundle «All Inclusive 2» ► Fee - 350 tg, 450 tg, 550 tg, 650 tg weekly ► Onnet - unlimited ► Offnet – 30 minutes per week, over package 18 tg/min ► 150 MB, 350 MB, 700 MB
Slide 36: Transitioning customer base to bundles
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Transitioning customer base to bundles Bundled price plan 49.4% 49.8% 47.9% (% of customer base) 43.0% 45.4% 39.9% 34.6% 27.5% 19.2% 8.8% 10.1% 10.8% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Bundled price plan
Slide 37: Get More – All Inclusive family price plan
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 1. Get More – ”All Inclusive” family price plan M L L+ XL Onnet, min • 100/day 100/day 100/day 100/day “All inclusive” Offnet, min •- - - - as is SMS, min • 100/day 100/day 100/day 100/day Data, Mb • 15/day 45/day 100/day 150/da
Slide 38: Drive mobile data
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 (2) Enforce mobile data (1) Get more Actions Achieved/Expected RESULTS Actions Achieved/Expected RESULTS On-net Lock-in «Freestyle» PP Family Data users growth Daily, weekly, monthly and Real Unlim launches Bundles transitio
Slide 39: Drive mobile data – new data price plan portfolio
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 2. Drive mobile data – new data price plan portfolio Data portfolio Long-term Monthly Weekly Daily 1 time Unlimited Packs 12M 6M 3M 15 6 600 10 150 100M GB 5 1 2 300 45 GB GB 1 MB 150 MB 15 B GB GB* GB MB MB GB MB MB 11 990tg 8
Slide 40: Drive mobile data
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 2. Drive mobile data Giga+ daily packs ► 15/45/150 Mb for 29/39/69 tg per day ► Free social networks < 40>
Slide 41: Gigabyte+ based on Inspiring for More brand platform
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 2. Gigabyte+ based on new “Inspiring for More” brand platform < 41>
Slide 42: Drive mobile data – the most attractive market offer
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 2. Drive mobile data – the most attractive market offer Affordable Android smartphone «Keneksi» ► With 3,000 min/sms and 450 Mb for free < 42>
Slide 43: Drive mobile data – Beeline Smart
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 2. Drive mobile data – Beeline Smart Affordable Android smartphone «Beeline» ► With 3,000 min/sms and 450 Mb for free < 43>
Slide 44: Drive mobile data first Money Back initiative
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 2. Drive mobile data first “Money Back” initiative Affordable Android smartphone «Beeline» ► Buy HTC and get 50,000 tg back to balance. ► 4,200 tg monthly bonus ► Bonus can be used for on-net minutes, sms and Internet < 44>
Slide 45: Drive mobile data – OTT partnerships
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 2. Drive mobile data – OTT partnerships < 45>
Slide 46: Drive sales to grow the base
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 (2) Enforce mobile data (1) Get more Actions Achieved/Expected RESULTS Actions Achieved/Expected RESULTS On-net Lock-in «Freestyle» PP Family Data users growth Daily, weekly, monthly and Real Unlim launches Bundles transitio
Slide 47: Drive sales to grow the base
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 3. Drive sales to grow the base Sales structure Monobrand: Multi-brand: POS ~ 400 POS ~ 16,000 Share in sales – 18% Share in sales – 82% < 47>
Slide 48: Overall distribution strategy
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 3. Drive sales to grow the base – overall distribution strategy • № 1 in distribution: widest POS coverage in Kazakhstan • Exclusive sales team: direct delivery to independent retail • SIM Tracing System (STS): Kazakhstan is the
Slide 49: Drive sales to grow the base – key focus points 2014
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 3. Drive sales to grow the base – key focus points 2014 • Increase of POS coverage in Multibrand channel by 50% via direct delivery • Implementation of revenue-based KPIs in monobrand channel • Azbuka Svyazy turnaround • Renovat
Slide 50: Operational Excellence to ensure OCF improvement
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 (2) Enforce mobile data (1) Get more Actions Achieved/Expected RESULTS Actions Achieved/Expected RESULTS On-net Lock-in «Freestyle» PP Family Data users growth Daily, weekly, monthly and Real Unlim launches Bundles transitio
Slide 51: Strategic pillars and actions
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 (2) Drive mobile data (1) Get more On-net lock-in Data users growth Bundles transition Data usage growth Regional VP approach (5) CEM1 Customer care (3) Drive sales to grow the base NPS (4) OE to ensure OCF as
Slide 52: CEM - Customer care
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 5. CEM - Customer care • Digitalization • Cost optimization • Transformation to profit center • Create superior Customer Experience New web site and self service portals Users of self service portals B2C users of self Penetratio
Slide 53: CEM - Customer care focus on digitalization and automization
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 5. CEM - Customer care focus on digitalization and automization Tuned segmentation & solid agent motivation increased sales Dedicated team to sell data services on outbound sales productivity on outband calls Number of data serv
Slide 54: CEM - Improving Net Promoter Score
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 5. CEM- Improving Net Promoter Score Where did we start in 4Q13? … from unstable position Net Promoter Score Comments • Based on root cause analysis there were two 70 60 main focus areas: 50 ► Network as a main reason for detrac
Slide 55: CEM Net Promoter Score – Actions taken
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 5. CEM Net Promoter Score – Actions taken (1) Commercial tariffs for (2) eNPS measurement and (3) Rollout prioritization employees results methodology 33% • Flexible & transparent approach ► Incorporates both business +28 and te
Slide 56: CEM - Solid leader in Net Promoter Score
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 5. CEM- Solid leader in Net Promoter Score Net Promoter Score Comments • Beeline keeps NPS leadership 70 60 • Network as a main reason for detraction 50 decrease from 63% to 28% 40 • Employee’s attitude significantly improved: 3
Slide 57: CEM - Anti churn efforts
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 5. CEM - Anti churn efforts Annualized churn (%) 58 55 52 2012 2013 2014 < 57>
Slide 58: Increasing competition in 2015
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Increasing competition in 2015 Drive «Get More» concept Drive mobile data + Digitalization of customer journey NPS leadership < 58>
Slide 59: Thank you
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Thank you Questions please! < 59>
Slide 60: Kazakhstan Analyst & Investor Site Visit
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Kazakhstan Analyst & Investor Site Visit Gulnar Kulybekova Chief Financial Officer < 60>
Slide 61: Agenda
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Agenda 1.Financial overview 2.CAPEX and OPEX efficiency programs 3.Working capital improvements 4.KZT devaluation – hedging policy 5.Cash position < 61>
Slide 62: Customer and mobile data growth driving revenue
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Customer and mobile data growth driving revenue Revenue Mobile data revenue (KZT billion) +3.3% +5.9% (KZT billion) • Solid revenue +39% +32% 18.4 growth driven by: 135.3 123.7 127.7 13.9 ► Mobile customer 10.0 growth ► Mobile d
Slide 63: Strong EBITDA driven by revenue growth and Operational Excellence
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Strong EBITDA driven by revenue growth and Operational Excellence EBITDA EBITDA w/o one-off (KZT billion) (KZT billion) • Strong 2014 +1.0% +5.2% +1.0% +9.2% EBITDA margin 64.9 58.8 59.4 62.5 58.8 59.4 despite devaluation KZT •
Slide 64: Robust operating cash flows
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Robust operating cash flows CAPEX CAPEX / Revenue (KZT Billion) (%) • Declining trend in -2.3% -19% -5.4% -23% CAPEX due to 24.8 24.2 20.1% increasing capital 19.7 19.0% 14.5% efficiencies • Increasing OCF and OCF margins 2012 2
Slide 65: Fixed-line service revenue supported by FTTB growth
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Fixed-line service revenue is supported by FTTB growth, driven by significant increase in FTTB customers Fixed-line service revenue FTTB revenue (KZT billion) (KZT billion) +45% +24% +72% +15% 14.6 11.7 7.6 6.6 8.1 3.8 2012 2013
Slide 66: Strong EBITDA growth
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Strong EBITDA growth EBITDA 2014 vs 2013 (KZT in millions) +5.1% 62,473 59,434 EBITDA Total Network Cost of Other Customer Other Profit/loss Network HR cost 3rd party G&A EBITDA 2013 operating variable content direct associated
Slide 67: Procurement savings 2014 vs 2013
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Procurement savings 2014 vs 2013 EBITDA CAPEX Initiative effect effect IT Network Commercial Media & marketing Real estate Professional services Logistic services Travel & fleet < 67>
Slide 68: More cash held in USD at highly rated banks
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 More cash held in USD at highly rated banks Cash position 2012 Cash position 2013 Cash position 2014 (%) (%) (%) 6% USD 21% 17% KZT 79% 83% 94% Cash at high Year credit rating banks 2012 35% 2013 61% 2014 80% < 68>
Slide 69: Improvements in most working capital ratios
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Improvements in most working capital ratios Description 2014 Effect Days sales outstanding -55% Supports B2B sales Days in inventory 29% Positive Days purchase outstanding 13% Positive Days advance payment outstanding 45% Positi
Slide 70: We strive to excel in SOX, building an efficient control environment
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 We strive to excel in SOX, building an efficient and effective control environment Control environment Risk assessment Risk standard VimpelCom Control Monitoring in business processes Information flow and communication Operation
Slide 71: Thank you
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Thank you Questions please! < 71>
Slide 72: Kazakhstan Analyst & Investor Site Visit
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Kazakhstan Analyst & Investor Site Visit Oleg Snimschikov Acting Chief Operating Officer < 72>
Slide 73: Widest 2G and 3G coverage
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Widest 2G and 3G coverage • 2G coverage: ► 45% territory ► 91% population • 3G coverage: ► 3% territory ► 63% population • > 8,500 2G/3G base stations < 73>
Slide 74: Beeline the only mobile operator with own fiber optic lines
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Beeline the only mobile operator with own fiber optic lines Capacity, Point of connection Uralsk – Ozinki -103 km Uralsk – B.Chernigovka -144 km Gbit/s to data group to VimpelCom 1 Kyrgyzstan 32.5 to V-net 2 Russia (Petropavlovs
Slide 75: Extensive own FTTB network
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Extensive own FTTB network Number of > 5 level buildings <1,000 of buildings <2,000 of buildings >2,001 of buildings No construction connected / % penetration • FTTB Beeline is presented in 25 cities of Kazakhstan. Average penet
Slide 76: Network quality constantly measured and evaluated
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Network quality constantly measured and evaluated (1) Analysis of network (2) Signaling links statistics (CuSR) monitoring (Astelia) (3) Drive test measurement (4) Comparative end-to-end measurement (MQA) • Continuous quality mo
Slide 77: Best voice quality and improving over the years
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Best voice quality and improving over the years 2.3% 2.1% 2.0% 1.7% 1.1% 0.9% 1.0% 0.9% 0.9% 0.8% 0.6% 0.5% 2009 2010 2011 2012 2013 2014 Call Unsuccessfull Rate 2G Call Drop Rate 2G Number Of Base stations Network availability
Slide 78: Mobile data quality improving while network expands
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Mobile data quality improving while network expands Avarage Download Throughput per Subscriber, Mb/s Quantity of NodeB 2,823 2,614 2,502 2,421 2,173 2,222 2,055 2,125 1,940 1,603 1,352 1,388 2012 (I) 2012 (II) 2013 (I) 2013 (II)
Slide 79: Improving returns on investment by innovative network optimization
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Improving returns on investment by innovative network optimization Other 30% Mobile Network Capex 70% RAN < 79>
Slide 80: Main network challenges
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Main network challenges • Multiple technologies and layers (GSM, UMTS, small cells) • Big numbers of cells • Fast changes on radio environment • Growing quality and capacity demand • Labour intensive work with limited human reso
Slide 81: Innovative network optimization: Self Optimizing Network (SON)
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Innovative network optimization: Self Optimizing Network (SON) • Fully automatic RAN optimization tool • Closed loop controlling mechanisms • 24x7 data collection and analysis • Automatic decision making • Instant decision execu
Slide 82: SON mechanism
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 SON mechanism Collecting Configuration Data Sensing Optimization Collecting Detecting Cycle Report Event Generation Recordings Optimizing SON Results Implementation system Parsing and Provisioning Provisioning Aggregation ~50,00
Slide 83: Global Optimization Kazakhstan (16 regions)
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Routine optimization 1 region – 1 engineer x 1 week 16 regions / (4+3) engineers – 4 weeks = 28 days 7 people: 16 regions – 28 days x 7 engineers = 196 (engineer x days) 4 – Optimization 3 – Provisioning Global Optimization Kaza
Slide 84: SON improvements Before and after
0.4 0.6 0.8 1.2 0 0.2 1 2013-07-15 2013-07-29 2013-08-12 2013-08-26 2013-09-09 2013-09-23 2013-10-07 Kazakhstan Site Visit 2015 2013-10-21 2013-11-04 2013-11-18 2013-12-02 2013-12-16 Before and after 2013-12-30 VK_3G_U_CunSR_PS_R13(%) 2014-01-13 VK_3G_PS_Data_Vol_DL(MB) 2014-01-27 2014-02-10 3G data
Slide 85: SON Multiple efficiencies
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 SON Multiple efficiencies Improve OPEX efficiency CAPEX efficiency Customer Experience • Less sites • Less call drops • Better coverage and • Less manual work • Better perceived throughput for the same download speed CAPEX • Les
Slide 86: Conclusion
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Conclusion • Efficient network coverage • Competitive advantage with own fiber optic and FTTB network • Widest voice network with high quality • Highest quality and expanding mobile data network • Innovative initiatives to impro
Slide 87: Thank you
Kazakhstan Site Visit 2015 Almaty, April 1st 2015 © VimpelCom Ltd. 2015 Thank you Questions please! < 87>