VEON Ltd. · NASDAQ:VEON

VEON — VimpelCom — FY2014 Earnings Presentation

50 slides from VEON's earnings presentation, Feb 26, 2015

  1. Slide 1: 4Q14 and FY14 Earnings Presentation

    © VimpelCom Ltd 2015 4Q14 and FY14 Earnings Presentation London – February 25, 2015 Jo Lunder – CEO Andrew Davies – CFO 1 VimpelCom Focusing Loyalty Empowering People Connecting Globally

  2. Slide 2: Disclaimer

    © 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, the Company’s anticipated performance

  3. Slide 3: Delivered on 2014 targets

    © VimpelCom Ltd 2015 Delivered on 2014 targets Targets1 2014 Actuals 2014 Revenue Low to mid single digit decline YoY -4% YoY EBITDA Low to mid single digit decline YoY -6% YoY Leverage (Net Debt / EBITDA) ~2.4x 2.5x CAPEX excl. licenses / Revenue ~21% 20% 1. The annual targets for 2014 assumed cons

  4. Slide 4: Strategic highlights

    © VimpelCom Ltd 2015 Strategic highlights Algeria transaction signed and closed Portfolio clean up almost complete Improved capital structure with USD 21 billion in financing activities USD 0.5 billion annualized net income enhancement from refinancing of Italy and use of proceeds from Algeria Russi

  5. Slide 5: Successful investment in high-speed networks

    © VimpelCom Ltd 2015 Successful investment in high-speed networks Russia: Leading NPS in mobile Internet in 4Q14 Accelerated roll out and network sharing agreement on 4G/LTE Italy: 97% coverage HSPA+ & 37% coverage 4G/LTE Africa & Asia: 3G launched and 21 regions covered in Algeria 2G network modern

  6. Slide 6: Leading in customer experience

    © VimpelCom Ltd 2015 Leading in customer experience #1 Co-leader Improving Bangladesh Kazakhstan Algeria Pakistan Kyrgyzstan Italy Russia Ukraine Uzbekistan Beeline banglalink DJEZZY MOBILINK KYIVSTAR WIND Beeline TM NOTE: Independent agency research 6 VimpelCom Focusing Loyalty Empowering People Co

  7. Slide 7: 4Q14 Financial highlights

    © VimpelCom Ltd 2015 4Q14 Financial highlights Service revenue Mobile customers1 (USD billion) (million) 4.2 222 -2% organic3 YoY -20% reported YoY + 4.7 million YoY EBITDA EBITDA margin2 (USD billion) (%) 1.6 36.4 -8% organic3 YoY + 18.2 p.p. YoY + 58% reported YoY Better YoY trajectory in 4Q14 com

  8. Slide 8: FY14 Financial highlights

    © VimpelCom Ltd 2015 FY14 Financial highlights Service revenue Net loss (USD billion) (USD million) 18.7 691 - 4% organic2 YoY - 13% reported YoY +74% YoY EBITDA EBITDA margin1 (USD billion) (%) 8.0 40.6 - 6% organic2 YoY - 4% reported YoY +4.0 p.p. YoY Revenue declined 4% YoY organically, well with

  9. Slide 9: Business Units Performance 4Q14

    © VimpelCom Ltd 2015 Business Units Performance 4Q14 9 VimpelCom Focusing Loyalty Empowering People Connecting Globally

  10. Slide 10: Russia: Delivering on plans

    © VimpelCom Ltd 2015 Russia: Delivering on plans RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) +3% YoY +1% YoY 68.7 71.0 70.6 56.5 57.2 12.4 13.2 14.2 56.3 57.8 56.4 4Q13 3Q14 4Q14 4Q13 4Q14 Mobile Fixed-line EBITDA and CAPEX and EBITDA margin CAPEX/revenue -5% YoY

  11. Slide 11: Russia: Continued adjustments to a new reality

    © VimpelCom Ltd 2015 Russia: Continued adjustments to a new reality FOREX management Hedged all USD cash costs for the first six months Renegotiated FOREX denominated contracts for equipment, rental and IT 4G 4G/LTE network sharing ~3,000 base stations in 36 regions Substantial savings in constructi

  12. Slide 12: Italy: Solid performance in a challenging market

    © VimpelCom Ltd 2015 Italy: Solid performance in a challenging market EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) -7% YoY -3% YoY 1,120 1,054 1,038 22.3 21.6 320 291 292 800 763 746 4Q13 3Q14 4Q14 4Q13 4Q14 Mobile Fixed-line EBITDA and CAPEX and EBITDA margin CAPE

  13. Slide 13: Italy: Preparing for the future

    © VimpelCom Ltd 2015 Italy: Preparing for the future WIND digital transformation WIND Digital innovative offering with customer interaction exclusively through digital channels DIGITAL HOME&LIFE “Digital Home & Life” WIND closer to its customer through “Digital Home & Life” concept WIND customers ca

  14. Slide 14: Algeria: Transaction kick starts transformation

    © VimpelCom Ltd 2015 Algeria: Transaction kick starts transformation DZD BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) –7 % YoY +5% YoY 35.9 33.9 33.5 17.6 18.4 4Q13 3Q14 4Q14 4Q13 4Q14 EBITDA1 and CAPEX and EBITDA1 margin CAPEX/revenue –22% YoY +114% YoY 21.6 109 60.1%

  15. Slide 15: Pakistan: Network modernization completed

    © VimpelCom Ltd 2015 Pakistan: Network modernization completed PKR BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) –2 % YoY +2% YoY 37.6 38.5 24.7 23.0 24.3 4Q13 3Q14 4Q14 4Q13 4Q14 EBITDA and CAPEX and EBITDA margin CAPEX/revenue +6 % YoY -1% YoY 9.5 10.1 90 89 8.5 37% 3

  16. Slide 16: Bangladesh: Market position continued to improve

    © VimpelCom Ltd 2015 Bangladesh: Market position continued to improve BDT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) +18 % YoY +7% YoY 11.2 10.9 30.8 9.5 28.8 4Q13 3Q14 4Q14 4Q13 4Q14 EBITDA and CAPEX and EBITDA margin CAPEX/revenue +38 % YoY -37% YoY 94 4.4 4.6 3.4

  17. Slide 17: Ukraine: Good progress of transformation program

    © VimpelCom Ltd 2015 Ukraine: Good progress of transformation program UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) -2% YoY +2% YoY 3.1 3.2 3.1 25.8 26.2 0.3 0.3 0.2 2.9 2.9 2.9 4Q13 3Q14 4Q14 4Q13 4Q14 Mobile Fixed-line EBITDA and CAPEX and EBITDA margin CAPEX/reve

  18. Slide 18: CIS: Continued solid results

    © VimpelCom Ltd 2015 CIS1: Continued solid results USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) Reported Organic +4% -4% YoY YoY +4% YoY 497 494 475 25.4 26.5 42 42 41 455 452 434 4Q13 3Q14 4Q14 4Q13 4Q14 Mobile Fixed-line EBITDA2 and CAPEX and EBITDA2 margin CAPEX

  19. Slide 19: Financial Highlights

    © VimpelCom Ltd 2015 Financial Highlights 19 VimpelCom Focusing Loyalty Empowering People Connecting Globally

  20. Slide 20: 4Q14 Income statement

    © VimpelCom Ltd 2015 4Q14 Income statement USD million 4Q14 4Q13 YoY Revenue 4,391 5,551 -21% of which service revenue 4,207 5,290 -20% EBITDA 1,600 1,013 58% EBITDA Margin 36.4% 18.2% 18.2 p.p. D&A2 (970) (1,325) -27% Impairment loss (1,051) (2,906) -64% EBIT (421) (3,218) 87% Financial expenses (4

  21. Slide 21: FY14 Income statement

    © VimpelCom Ltd 2015 FY14 Income statement USD million FY14 FY13 YoY Revenue 19,627 22,546 -13% of which service revenue 18,725 21,529 -13% EBITDA 7,970 8,260 -4% EBITDA Margin 40.6% 36.6% 4.0 pp D&A2 (4,392) (4,941) -11% Impairment loss (992) (2,973) -67% EBIT 2,586 346 n.m. Financial expenses (1,9

  22. Slide 22: FY14 Cash flow statement

    © VimpelCom Ltd 2015 FY14 Cash flow statement USD million FY14 FY13 YoY EBITDA 7,970 8,260 -4% Changes in working capital and other 150 1,403 -89% Net interest paid (2,111) (2,047) 3% Income tax paid (730) (1,265) -42% Net cash from operating activities 5,279 6,351 -17% Purchase of assets (4,467) (3

  23. Slide 23: Capital Structure Optimization

    © VimpelCom Ltd 2015 Capital Structure Optimization 23 VimpelCom Focusing Loyalty Empowering People Connecting Globally

  24. Slide 24: Capital structure a year ago

    © VimpelCom Ltd 2015 Capital structure a year ago WIND PIK becoming cash payable in Summer 2014 High leverage Unfriendly maturity profile Investments to be made in high speed data networks High interest expenses Cash trapped in Algeria 24 VimpelCom Focusing Loyalty Empowering People Connecting Globa

  25. Slide 25: Capital structure optimization: 2014 progress

    C VimpelCom Ltd 2015 Capital structure optimization: 2014 progress Refinanced Italy in 2 phases with PIK repayment $$$ Secured new credit facilities USD 21 billion financing activities Substantial dividend reduction to delever and support investments 25 VimpelCom Focusing Locally Empowering People C

  26. Slide 26: Capital structure optimization: Actions 1Q15

    C VimpelCom Ltd 2015 Capital structure optimization: Actions 1Q15 Closed transaction in Algeria Use of proceeds from Algeria transaction to retire debt $ Exploring sale of Italian towers 26 VimpelCom Focusing Locally Empowering People Connecting Globally

  27. Slide 27: Significantly improved debt maturity schedule

    C VimpelCom Ltd 2015 Capital structure optimization: Significantly improved debt maturity schedule As at December 31, 2014 (in USD billion) Group debt maturity schedule 2.2 2.0 2.7 1.9 3.2 5.8 6.0 1.5 1.1 2015 2016 2017 2018 2019 2020 2021 2022 >2022 27 VimpelCom Focusing Locally Empowering People C

  28. Slide 28: Increased credit facilities

    C VimpelCom Ltd 2015 Capital structure optimization: Increased credit facilities As at March 31, 2014 (in USD billion) 1.2 0.3 2014 2015 2016 As at December 31, 2014 pro forma1 (in USD billion) 3.1 0.6 0.4 2017 2018 2019 1 Pro forma for group as at 31 December 2014 reflects HQ repayment RCF for USD

  29. Slide 29: Reduced gross debt and leverage

    C VimpelCom Ltd 2015 Capital structure optimization: Reduced gross debt and leverage Gross debt / EBITDA December 31, 2014 2.3 3.3 Excluding Italy Group December 31, 2014 pro forma1 1.7 2.9 Excluding Italy Group 1 Pro forma for group as at 31 December 2014 reflects debt reduction from Algeria closin

  30. Slide 30: Reduced net debt and leverage

    C VimpelCom Ltd 2015 Capital structure optimization: Reduced net debt and leverage Net debt / EBITDA December 31, 2014 1.2 2.5 Excluding Italy Group December 31, 2014 pro forma1 1.1 2.4 Excluding Italy Group 1 Pro forma for group as at 31 December 2014 reflects debt reduction from Algeria closing pr

  31. Slide 31: Significantly reduced the cost of debt

    C VimpelCom Ltd 2015 Significantly reduced the cost of debt Average cost of debt 1Q14 8.3% debt Average cost of debt 4Q14 6.3% debt 31 VimpelCom Focusing Locally Empowering People Connecting Globally

  32. Slide 32: Cash flow enhancing from financing improvements

    C VimpelCom Ltd 2015 Cash flow enhancing from financing improvements In-house finance company Debt optimization Gross debt reduction Withholding tax saving Total Targeted potential Expected savings USD 50 million USD 150 million USD 150 million USD 50 million USD 400 million per year USD 20 million

  33. Slide 33: Significant financing improvements

    C VimpelCom Ltd 2015 Significant financing improvements Delivering on promises announced on the A&I day 2014: USD 21 billion of finance activities in FY14 Improved maturity schedule Increased credit facilities and liquidity Average cost of debt substantially reduced With a strong cash position as at

  34. Slide 34: Targets 2015

    C VimpelCom Ltd 2015 Targets 2015 Service Revenue EBITDA Margin EPS2 CAPEX / Revenue Leverage (Net Debt / EBITDA) Excl. Italy Targets 20151 Flat to low single digit decline YoY Flat to minus one p.p. YoY USD 0.35 – 0.40 ~20% ~3.2x ~1.7x 1. The annual targets for 2015 assume constant currency, no maj

  35. Slide 35: Conclusion

    C VimpelCom Ltd 2015 Conclusion 35 VimpelCom Focusing Locally Empowering People Connecting Globally

  36. Slide 36: Conclusion

    C VimpelCom Ltd 2015 Conclusion Delivered on targets in a challenging environment Reported results impacted by currency headwinds Closed Algeria Significantly improved capital structure Successful investments in high speed networks Building a more customer centric organization Solid mobile customer

  37. Slide 37: Q&A

    C VimpelCom Ltd 2015 Q&A 37 VimpelCom Focusing Locally Empowering People Connecting Globally

  38. Slide 38: Analyst & Investor site visit Georgia and Kazakhstan

    © VimpelCom Ltd 2015 VimpelCom Analyst & Investor site visit Georgia and Kazakhstan March 31, 2015 Tbilisi, Georgia Presentations by Head of BU CIS and local management April 1, 2015 Almaty, Kazakhstan Presentations by local management VimpelCom A&l Site Visit Georgia Kazakhstan 38 VimpelCom Focusin

  39. Slide 39: Financial calendar 2015

    © VimpelCom Ltd 2015 Financial calendar 2015 - accelerating reporting 20151 A&I site visit Georgia and Kazakhstan March 31 - April 1 1Q15 results May 13 A&I site visit Russia July 8 2Q15 results (analyst meeting in London) August 6 A&I Conference (London) October 8 - 9 3Q15 results November 5 1. The

  40. Slide 40: Further information

    © VimpelCom Ltd 2015 Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: ir@vimpelcom.com Visit our awards winning website www.vimpelcom.com Install VimpelCom’s App iPadApp 40 VimpelCom Focusing Loyalty Empowering People Connecting Gl

  41. Slide 41: Thank you!

    © VimpelCom Ltd 2015 Thank you! 41 VimpelCom Focusing Loyalty Empowering People Connecting Globally

  42. Slide 42: Appendices

    © VimpelCom Ltd 2015 Appendices 42 VimpelCom Focusing Loyalty Empowering People Connecting Globally

  43. Slide 43: Credit facilities

    © VimpelCom Ltd 2015 Credit facilities USD 6.2 bn credit facilities arranged in FY14: Financing USD 1.8 billion RCF VIP Holdings USD 1.0 billion CF AlfaBank USD 1.0 billion VF CDB/BoC OJSC VimpelCom USD 0.8 billion Sberbank loan and RCF WIND USD 0.3 billion RCF PMCL USD 0.4 billion new funding Alger

  44. Slide 44: Debt maturity profile

    © VimpelCom Ltd 2015 Debt maturity profile As at 31 December 2014, in USD billion Group debt maturity schedule by Business Units Italy Russia A&A HQ 5.8 6.0 3.2 2.7 2.2 2.0 1.9 1.5 1.1 2015 2016 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2015 2016 2017 2018 2019 20

  45. Slide 45: Debt by entity

    © VimpelCom Ltd 2015 Debt by entity As at 31 December 2014, in USD billion Outstanding debt Type of debt/lender Entity Bonds Loans RCF Vendor Financing Other Total VimpelCom Holdings B.V. 3,813 3,813 VimpelCom Amsterdam B.V. 1,000 500 752 2,252 OJSC VimpelCom 4,078 1,583 207 45 5,913 WIND Telecomuni

  46. Slide 46: Forex sensitivities

    © VimpelCom Ltd 2015 Forex sensitivities FOREX translation sensitivities on Group level FOREX sensitivities1 FY14 RUB vs. USD EUR vs. USD UAH vs. USD USD billion +/-10% +/-10% +/-10% Revenue 19.6 Average 4% 3% 0.5% FOREX EBITDA 8.0 4% 3% 0.6% Gross Debt 26.4 1% 5% n.a. Year-end FOREX Net Debt 20.0 1

  47. Slide 47: FOREX rates used in annual targets for 2015

    © VimpelCom Ltd 2015 FOREX rates used in annual targets for 2015 Currency FX rates versus USD Algeria DZD 92.0 Armenia AMD 415.0 Bangladesh BDT 79.0 Egypt EGP 7.5 Georgia GEL 1.8 Italy EUR 0.91 Kazakhstan KZT 190.0 Kyrgyzstan KGS 55.0 Pakistan PKR 105.0 Russia RUB 70.0 Ukraine UAH 25.0 47 VimpelCom

  48. Slide 48: Revenue and EBITDA development in 4Q14 and FY14

    © VimpelCom Ltd 2015 Revenue and EBITDA development in 4Q14 and FY14 4Q 2014 vs 4Q 2013 Revenue EBITDA Business Units Organic Reported Organic Reported FX and others FX and others Russia 3% (30%) (27%) (0%) (34%) (34%) Italy (9%) (8%) (17%) (16%) (7%) (23%) Africa & Asia (5%) (4%) (9%) (19%) (2%) (2

  49. Slide 49: Reconciliation of EBITDA

    © VimpelCom Ltd 2015 Reconciliation of EBITDA USD mln 4Q14 4Q13 FY14 FY13 Unaudited EBITDA 1,600 1,013 7,970 8,260 Depreciation (623) (810) (2,839) (3,050) Amortization (324) (458) (1,479) (1,791) Impairment loss (1,051) (2,906) (992) (2,973) Loss on disposals of non-current assets (23) (57) (74) (1

  50. Slide 50: Reconciliation of consolidated net debt and OCF

    © VimpelCom Ltd 2015 Reconciliation of consolidated net debt and OCF Reconciliation of consolidated net debt USD mln 4Q13 3Q14 4Q14 Net debt 22,604 21,736 19,992 Cash and cash equivalents 4,454 5,852 6,342 Long-term and short-term deposits 396 126 109 Gross debt 27,454 27,714 26,443 Interest accrued

VimpelCom — FY2014 Earnings Presentation on 6ix