VEON Ltd. · NASDAQ:VEON

VEON — Non-Deal Roadshow (March 2017)

55 slides from VEON's roadshow presentation, March 2017

  1. Slide 1: Non-Deal Roadshow Europe & US

    NON-DEAL ROADSHOW EUROPE & US March 2017 ©VimpelCom Ltd

  2. Slide 2: 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

  3. Slide 3: Reinventing VimpelCom

    REINVENTING VIMPELCOM ©VimpelCom Ltd 2017

  4. Slide 4: Months ago, we announced a strategy to transform VimpelCom

    18 MONTHS AGO, WE ANNOUNCED A STRATEGY TO TRANSFORM VIMPELCOM… Performance Transformation New Revenue Streams $ $ $$ 4

  5. Slide 5: Transformation Progress

    TRANSFORMATION PROGRESS 1 STRUCTURAL IMPROVEMENTS 2 WORLD CLASS OPERATIONS 3 TRANSFORMING THE COST BASE ► Algeria transaction ► New global vision & values ► Reduced legacy costs by USD 402 ► Uzbekistan settlement million, enabling re-investment in our ► New leadership team and talent digital strateg

  6. Slide 6: Transformation Progress

    TRANSFORMATION PROGRESS 4 PORTFOLIO OPTIMIZATION 5 NEW REVENUE STREAMS 6 DIGITAL LEADERSHIP ► In-market consolidation: Italy and ► Returned to organic growth ► Changing the business model Pakistan transactions from bricks and mortar to digital ► 26% organic growth in mobile data ► Disposal of non-st

  7. Slide 7: These initiatives have allowed us to deliver robust results in 2016

    THESE INITIATIVES HAVE ALLOWED US TO DELIVER ROBUST RESULTS IN 2016 ALL NUMBERS EXCLUDE WARID CONTRIBUTION Organic1 service revenue2 development Underlying EBITDA3 margin development -0.3 p.p. +0.2 p.p. organically 40.9% 40.6% 0.5% -0.2% FY 2015 FY 2016 FY 2015 FY 2016 LTM capex (excl. licenses)/rev

  8. Slide 8: Currency headwinds are receding

    AT THE SAME TIME, THE CURRENCY HEADWINDS ARE RECEDING… 110 100 100 98 94 90 82 80 76 73 70 70 67 66 67 64 67 60 50 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 8 VimpelCom currency weightings calculated from the sum of the individual countries’ relative contribution to total countries

  9. Slide 9: The company delivered on 2016 targets

    AND THE COMPANY DELIVERED ON 2016 TARGETS USD MILLION UNLESS OTHERWISE STATED FY 20151 FY 2016 target2 FY 2016 pro-forma (excl. Warid) 8,402 Service revenue 9,313 Flat to low single digit +0.5% YoY organically EBITDA margin 40.6% 40.9% Flat to +1 p.p. YoY underlying +0.2 p.p. YoY organically CAPEX /

  10. Slide 10: 3 major financial announcements on the back of robust results

    3 MAJOR FINANCIAL ANNOUNCEMENTS ON THE BACK OF THESE ROBUST RESULTS DIVIDEND POLICY EURONEXT LISTING EXPECTED STRONGER OUTLOOK PROJECTED ► Announcement of a meaningful ► Logical second listing in Amsterdam ► Returned to financial health with strong dividend policy ► Listing expected Q2 2017 2016 pro

  11. Slide 11: Transformation Progress: telecoms facing a growth challenge

    TRANSFORMATION PROGRESS GROWTH HAS BEEN LAGGING BEHIND OTHER NO MEANINGFUL ENGAGEMENT WITH CUSTOMERS DIGITAL SECTORS TELECOMS IS FACING A GROWTH CHALLENGE YESTERDAY TODAY IDATE digiworld yearbook 2016, Citi research – 2013-2015 revenue CAGR (Euro constant currency) Internet services 20.0% IT service

  12. Slide 12: Digital strategy: from telco to tech

    DIGITAL STRATEGY: FROM TELCO TO TECH NEW INTERNET PLATFORM RE-INVENTING BRICKS RE-ENGINEERING LEGACY & MORTAR MODEL SYSTEMS & DATA ARCHITECTURE ► Zero rating as a fundamental component of the service , allowing ► Smooth, easy, fun & intuitive ► Strong data and analytics fuelling users to stay connec

  13. Slide 13: VimpelCom is now…

    VIMPELCOM IS NOW… 13

  14. Slide 14: From telco to tech

    FROM TELCO TO TECH Grow equity free cash flow to more than REVITALIZE USD 1 billion for 2018 REINVENT to support a sustainable dividend policy REVITALIZING OUR BUSINESS TO REINVENTING A GLOBAL ACHIEVE WORLD CLASS STANDARDS COMMUNICATIONS PIONEER INTO Aggressively grow B2B + FMC A GLOBAL TECH COMPANY

  15. Slide 15: 2016 Results & Corporate Finance Initiatives

    2016 RESULTS & CORPORATE FINANCE INITIATIVES ©VimpelCom Ltd 2017

  16. Slide 16: FY2016 targets achieved

    FY2016 TARGETS ACHIEVED USD MILLION FY 20151 FY 2016 target2 FY 2016 pro-forma UNLESS OTHERWISE STATED (excl. Warid) 8,402 Service revenue 9,313 Flat to low single digit +0.5% YoY organically Underlying EBITDA 40.6% 40.9% Flat to +1 p.p. YoY margin +0.2 p.p. YoY organically CAPEX/revenue 18.5% 17-18

  17. Slide 17: FY 2016 service revenue evolution

    FY 2016 SERVICE REVENUE EVOLUTION FOREX HEADWINDS PARTIALLY MITIGATED BY CONTRIBUTION FROM WARID USD MILLION -8.2% 56 (258) (81) 331 (958) 151 9,313 9,361 8,553 Service Voice Interconnect Data and MFS Other 1 Organic service FOREX Warid Service revenue FY15 and roaming revenue FY16 revenue FY16 (exc

  18. Slide 18: FY 2016 EBITDA evolution

    FY 2016 EBITDA EVOLUTION EBITDA IMPACTED BY FOREX HEADWINDS ... USD MILLION -9.7% 48 402 (341) (394) 29 1,051 (438) 3,926 3,544 2,875 3,232 EBITDA Exceptional Underlying Service Performance Re-investment in FOREX Underlying EBITDA Exceptional Warid EBITDA 1 2 FY15 items EBITDA FY15 revenue transform

  19. Slide 19: FY 2016 income statement

    FY 2016 INCOME STATEMENT Organic USD MILLION FY16 FY15 YoY YoY Revenue 8,885 9,606 (7.5%) 1.0% Service revenue 8,553 9,313 (8.2%) 0.5% EBITDA 3,232 2,875 12.4% 26.6% Depreciation & amortization (1,936) (2,067) (6.3%) Lower depreciation due to FOREX headwinds Impairments and other (212) (283) (25%) E

  20. Slide 20: FY 2016 net debt evolution

    FY 2016 NET DEBT EVOLUTION USD MILLION 608 335 1,092 166 165 1,486 (3,581) 420 7,162 5,496 5,831 248 726 5,461 Net debt Warid Net debt EBITDA Change in Net interest Taxes Cash capex Licenses Dividend Net debt Exceptionals FOREX and Net debt 1 31 December net debt 31 December underlying working excl.

  21. Slide 21: 2016 structural improvements

    2016 STRUCTURAL IMPROVEMENTS Closing of Italy transaction GTH refinancing Improving cash upstream Optimization of local debt structures Global capital allocation model Asset light strategy Create flexibility for re-investing 21

  22. Slide 22: Corporate finance transactions

    CORPORATE FINANCE TRANSACTIONS Italy tower Pakistan transaction sale announcement Italy JV closing and full deconsolidation Pakistan transaction of WIND debt Algeria Italy JV announcement closing and Warid transaction and subsequent debt consolidation Disposal of deconsolidation of Zimbabwe M&A and

  23. Slide 23: Capital structure improved

    CAPITAL STRUCTURE IMPROVED 2014 Group gross debt 2016 (USD 26.4 billion) (currency breakdown and evolution) (USD 10.5 billion) 0.8 8.2 2.0 14.6 0.5 7.7 3.0 USD RUB Net leverage ratio1: 2.5x Other EUR Net leverage ratio1: 2.0x Gross debt and leverage ratio reduced, annual interest savings ~USD 150 mi

  24. Slide 24: Equity free cash flow improvement in 2016

    EQUITY FREE CASH FLOW IMPROVEMENT IN 2016 UNDERLYING EQUITY FREE CASH FLOW1 EVOLUTION USD MILLION UNLESS OTHERWISE STATED 828 588 40 FY 2015 FY 2016 (280) Net cash from Net cash used operating in investing activities2 activities2 …driven by robust capital efficiency improvements 24 1 Underlying equi

  25. Slide 25: Future priorities and ambitions

    FUTURE PRIORITIES AND AMBITIONS Further improve: Debt structure … to structurally Tax efficiency support dividends and broaden the Portfolio and asset light strategy investor base Equity free cash flow + Dual listing in Amsterdam 25

  26. Slide 26: Dual listing in Amsterdam

    DUAL LISTING IN AMSTERDAM Increased free float allows us to launch a second listing1 on Euronext Amsterdam, broadening the investor base Amsterdam listing will be in Euro-denominated common shares, fully fungible with NASDAQ ADSs Listing will be launched in Q2 2017 with the ticker “VEON” Likely incl

  27. Slide 27: Equity free cash flow improvement

    EQUITY FREE CASH FLOW IMPROVEMENT UNDERLYING EQUITY FREE CASH FLOW1 EVOLUTION USD MILLION UNLESS OTHERWISE STATED ~700-800 >1,000 588 FY 2016 FY 2017E FY 2018E …coupled with further improvements to cash upstreaming 27 1 Underlying equity free cash flow is defined as free cash flow from operating act

  28. Slide 28: FY 2017 targets

    FY 2017 TARGETS USD MILLION UNLESS OTHERWISE STATED FY 2016 actual FY 2016 pro-forma (incl. Warid for 6 months) (incl. Warid for 12 months) FY 2017 targets1 Total revenue 8,885 9,040 Low single digit growth Underlying EBITDA margin 40.3% 40.0% Low single digit accretion Underlying equity free cash f

  29. Slide 29: New dividend policy on back of robust results & outlook

    NEW DIVIDEND POLICY ON BACK OF ROBUST RESULTS & OUTLOOK For the financial year ended 31 December 2016, the Company intends to pay a dividend in the aggregate amount of USD 23 cents per share comprised of USD 3.5 cents per share paid as an interim dividend in Thereafter, VimpelCom is committed to Dec

  30. Slide 30: VEON

    VEON

  31. Slide 31: Industry evolution

    INDUSTRY EVOLUTION 2G 3G 4G 1995 2000 2005 2010 2015

  32. Slide 32: Moving beyond the app economy

    MOVING BEYOND THE APP ECONOMY 2007 2008 Now A revolutionary A dominating Emerging phone operating system ecosystems

  33. Slide 33: Slide 33

  34. Slide 34: A new internet platform

    A NEW INTERNET PLATFORM PERSONAL FREE SECURE OPEN CONTEXTUAL

  35. Slide 35: VEON

    VEON All you need in one place A single account – and you stay in control Totally free Messaging – with chat and voice calling News, music and video entertainment – personalized for you Everything the internet has to offer - from a given context Beautifully delivered – in the “VEON Stream”

  36. Slide 36: Free. Even when you are out of credit.

    FREE. EVEN WHEN YOU ARE OUT OF CREDIT.

  37. Slide 37: Secure. Putting the user in control.

    SECURE. PUTTING THE USER IN CONTROL.

  38. Slide 38: Contextual. What you need. When you need it.

    CONTEXTUAL. WHAT YOU NEED. WHEN YOU NEED IT.

  39. Slide 39: Global partnerships

    GLOBAL PARTNERSHIPS

  40. Slide 40: Open. Everything the internet has to offer.

    OPEN. EVERYTHING THE INTERNET HAS TO OFFER.

  41. Slide 41: Economics

    ECONOMICS CUSTOMER IMPACT ON NEW REVENUE ENGAGEMENT CORE BUSINESS MODEL DIGITAL GROSS ADDS SUBSCRIBER ACQUISITION COST DIGITAL TOP-UPS MONTHLY ACTIVE USERS VALUE SHARING WITH (MAU) PARTNERS CUSTOMER CARE CALLS CHURN SUBSCRIBER MARKET SHARE

  42. Slide 42: Italy: > 1 million downloads

    ITALY > 1 million Downloads

  43. Slide 43: Be truly free

    VEON BE TRULY FREE

  44. Slide 44: Appendix

    VEON APPENDIX

  45. Slide 45: Debt maturity schedule

    DEBT MATURITY SCHEDULE As at 31 December 2016, USD BILLION Group debt maturity schedule by Business Units Russia GTH HQ 2.9 1.8 1.8 1.3 1.3 0.8 0.7 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2017 2018 2019 2020 2021 2022 >2022 USD 1.5 0.7 1.1 0.7 0.7 1.3 1.7 73% RU

  46. Slide 46: Liquidity analysis

    LIQUIDITY ANALYSIS Group Cash breakdown by currency Unused RCF headroom at the end 4Q16: (December 31, 2016) VimpelCom - syndicate USD 1.8 billion PJSC VimpelCom - RUB 15 billion (USD 0.2 billion ) Sberbank Unused VF/CF headroom at the end 48% 52% 4Q16: VimpelCom - CDB RMB 0.6 billion (USD 0.1 billi

  47. Slide 47: Debt by entity

    DEBT BY ENTITY As at 31 December 2016, USD millions Outstanding debt (millions) Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing VimpelCom Holdings B.V. 3,380 - - 21 - 3,402 VimpelCom Amsterdam B.V. - 1,000 - 601 - 1,601 PJSC VimpelCom 1,810 1,021 - 71 63 2,965 GTH Finance B.V

  48. Slide 48: Russia: performance stabilized

    RUSSIA: PERFORMANCE STABILIZED SERVICE REVENUE MOBILE CUSTOMERS Total service revenue decreased: RUB BILLION MILLION -1.3% YoY -2.5% YoY Declining fixed-line service revenue Slight growth in mobile service revenue mobile 55.7 57.0 55.8 59.8 58.3 Continued strong mobile data revenue fixed-line growth

  49. Slide 49: Pakistan: double digit growth continues, integration ongoing

    PAKISTAN: DOUBLE DIGIT GROWTH CONTINUES, INTEGRATION ONGOING SERVICE REVENUE MOBILE CUSTOMERS (PKR BILLION) (MILLION) +42.4% YoY +45.0% YoY +14.6% YoY organic +14.0% YoY organic ► Merger integration execution ahead of schedule: 51.6 36.1 7.7 36.7 7.7 46.5 10.3 ► annual run-rate of PKR 8.2 billion (U

  50. Slide 50: Bangladesh: customer growth in a competitive market

    BANGLADESH: CUSTOMER GROWTH IN A COMPETITIVE MARKET SERVICE REVENUE MOBILE CUSTOMERS (BDT BILLION) (MILLION) -2.0% YoY -5.9% YoY ► Service revenue decreased 2% YoY: ► aggressive competition on price and offers, accelerated after the SIM-verification and in-market consolidation 11.8 12.0 11.6 32.3 30

  51. Slide 51: Algeria: continued pressure on results

    ALGERIA: CONTINUED PRESSURE ON RESULTS SERVICE REVENUE MOBILE CUSTOMERS (DZD BILLION) (MILLION) -13.7% YoY -4.2% YoY ► Service revenue continued to decrease double digit YoY, notwithstanding strong data revenue (+70% YoY) 17.0 16.3 31.2 28.9 26.9 ► New CEO on board since 26 January, leading a renewe

  52. Slide 52: Ukraine: strong results

    UKRAINE: STRONG RESULTS SERVICE REVENUE MOBILE CUSTOMERS (UAH BILLION) (MILLION) +11.8% YoY +2.6% YoY ► Clear market leader in challenging environment 25.4 26.1 ► Annual churn at historic low of 18% 3.2 3.7 3.6 ► Service revenue increased 12% YoY, with mobile data 0.3 0.3 0.3 revenue growing at 63%

  53. Slide 53: Uzbekistan: strengthened market position

    UZBEKISTAN: STRENGHTENED MARKET POSITION SERVICE REVENUE MOBILE CUSTOMERS (UZS BILLION) (MILLION) +4.3% YoY -4.1% YoY ► Clear leader in NPS 493 502 514 ► Mobile service revenue grew 4% YoY, despite 9.9 9.5 increased competition 3.4 3.3 3.2 ► Mobile data revenue grew 9% YoY 4Q15 3Q16 4Q16 4Q15 4Q16 F

  54. Slide 54: Italy: Wind Tre hits the market

    ITALY: WIND TRE HITS THE MARKET COMBINED DATA SERVICE REVENUE1 MOBILE CUSTOMERS (EUR MILLION) (MILLION) +2.1% YoY +0.4% YoY ► Wind Tre fully operational since December 30, 2016 1,091 1,110 ► The leading mobile operator in Italy with a customer 31.2 31.3 base exceeding 31 million and market share abo

  55. Slide 55: FOREX

    FOREX Target rates Average rates Average rates Closing rates FY17 4Q16 4Q15 YoY FY16 FY15 YoY 4Q16 3Q16 QoQ Russian Ruble 67.00 63.07 65.94 (4.4%) 67.03 60.96 10.0% 60.66 63.16 -4.0% Pakistan Rupee 107.00 104.78 104.94 (0.2%) 104.72 102.75 1.9% 104.37 104.46 -0.1% Algerian Dinar 118.00 110.58 106.81

VEON — Non-Deal Roadshow (March 2017) on 6ix