40 slides from VEON Ltd. ORD's earnings presentation, Nov 6, 2015
Slide 1: 3Q15 Results Presentation
3Q15 Results Presentation © VimpelCom Ltd 2015 Amsterdam – November 6, 2015 Jean-Yves Charlier – CEO Andrew Davies – CFO 1
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. Forward-looking statements are not historical facts, and include statem
Slide 3: 3Q15 agenda
3Q15 agenda • Highlights Jean-Yves Charlier • Performance by country Andrew Davies © VimpelCom Ltd 2015 • Group results and targets Andrew Davies • Q&A All 3
Slide 4: Investigations by SEC/DOJ/OM
Investigations by SEC/DOJ/OM • As previously disclosed, the U.S. Securities and Exchange Commission (“SEC”), the U.S. Department of Justice (“DOJ”), and the Dutch Public Prosecution Service (Openbaar Ministerie) (“OM”) are conducting investigations relating primarily to VimpelCom Ltd.’s business in
Slide 5: 3Q15 highlights
3Q15 highlights • Reported net loss of USD 1,005 million, including exceptional items of USD 1,196 million: • USD 916 million charges for investigations (USD 900 million) and other legal costs (USD 16 million) • USD 236 million goodwill write off and tax reversal on Italy tower transaction © VimpelC
Slide 6: 3Q15 financial highlights
3Q15 financial highlights Service revenue Net debt/ (USD billion) underlying2 LTM EBITDA • Revenue in 3Q15 back to organic growth 2.4 1.3x • Results in line with management expectations © VimpelCom Ltd 2015 + 1% organic1 YoY • 22% YoY mobile data revenue - 32% reported YoY organic growth • Underlyin
Slide 7: Performance by country
Performance by country © VimpelCom Ltd 2015 3Q15 7
Slide 8: Russia: continued operational improvements
Russia: continued operational improvements RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -2% YoY (million) • Improving churn and customer +3% YoY growth YoY 71.0 66.2 69.6 57.3 59.0 • Mobile service revenue growth of 1% YoY © VimpelCom Ltd 2015 • Excluding currency headwinds,
Slide 9: Algeria: transformation program starting to deliver
Algeria: transformation program starting to deliver DZD BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -2% YoY (million) • Service revenue positively impacted in -4% YoY 3Q15 by change in interconnect rates 33.9 32.0 33.1 17.6 16.9 (+2%); underlying decline was 4% • EBITDA Margin
Slide 10: Pakistan: revenue and EBITDA YoY growth
Pakistan: revenue and EBITDA YoY growth PKR BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers1 (million) +6% YoY • Mobilink has retained its market -9% YoY position in 3Q15 38.7 35.2 23.1 24.9 24.5 • Strong YoY data revenue increase of 78% and MFS revenue increase of 61%. MFS represe
Slide 11: Bangladesh: continued strong performance
Bangladesh: continued strong performance BDT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) +8% YoY • Continued lead in NPS +8% YoY 10.9 11.6 11.8 29.8 32.3 • Sustained strong growth in data revenue of 82% YoY • Continued improvement in underlying © VimpelCom Ltd 2015 EB
Slide 12: Ukraine: robust results supported by successful 3G launch
Ukraine: robust results supported by successful 3G launch UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers +14% YoY (million) • Market leadership continues to -2% YoY strengthen, notwithstanding the 3.2 3.3 3.6 26.3 25.7 macro environment • Successful 3G launch, ahead of competi
Slide 13: Kazakhstan: heightened competitive pressure
Kazakhstan: heightened competitive pressure KZT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -9% YoY (million) • Mobile service revenue decreased by -1% YoY 5% YoY, excluding MTR reductions 35.9 32.8 31.4 9.8 9.8 • Excluding currency headwinds, EBITDA would have declined 8% YoY
Slide 14: Italy: solid performance driven by mobile data
Italy: solid performance driven by mobile data EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) -3% YoY • Mobile service revenue trend shows -2% YoY further sequential improvement: 1,054 1,024 21.8 21.3 -1.5% YoY (2Q15 -2.2%, 1Q15 -3.3%) 998 • Double digit growth in mo
Slide 15: Group results
© VimpelCom Ltd 2015 15 3Q15 Group results
Slide 16: Group results 3Q15 - overview
Group results 3Q15 - overview Service revenue YoY organic1 development Underlying2 EBITDA Margin development 2.2% 0.7% 43.2% 41.9% 42.9% 40.6% 41.6% 41.7% 37.5% -0.2% -0.6% -1.6% -3.0% -2.6% © VimpelCom Ltd 2015 1Q 14/13 2Q 14/13 3Q 14/13 4Q 14/13 1Q 15/14 2Q 15/14 3Q 15/14 1Q14 2Q14 3Q14 4Q14 1Q15
Slide 17: 3Q15 revenue composition and dynamics
3Q15 revenue composition and dynamics -31.7% (24) (99) 97 17 10 (1,099) 3,462 3,438 3,463 Reported revenue decline… © VimpelCom Ltd 2015 2,364 Service Disposals 1 Service Voice Data Interconnect Other Organic FOREX Service revenue revenue and MFS and roaming service revenue 3Q14 3Q14 excl. revenue 3
Slide 18: 3Q15 EBITDA composition and dynamics
3Q15 EBITDA composition and dynamics -1,462 (7) 7 25 6 5 (10) 3 (32) (14) 1,520 1,513 (960) Reported EBITDA decline… (477) © VimpelCom Ltd 2015 58 2 EBITDA Disposals 1 EBITDA Service Other Service Customer Network HR costs Other Exceptionals FOREX EBITDA 3Q14 3Q14 excl. revenue revenue costs associa
Slide 19: 3Q15 income statement
3Q15 income statement USD million 3Q15 3Q14 YoY Revenue 2,442 3,544 (31%) EBITDA reported 58 1,520 n.m. D&A and other (538) (647) (17%) • In 3Q15 local currencies depreciation offset by higher depreciation in Pakistan, due to the equipment swap. In 3Q14 gain of USD 110 million booked from the EBIT (
Slide 20: 3Q15 cash flow statement
3Q15 cash flow statement USD million 3Q15 3Q14 YoY EBITDA 58 1,520 (1,462) • Mainly due to FOREX and exceptionals Changes in working capital and other 1,053 178 875 • Impact of provisions Net interest paid (206) (305) 99 • Result of refinancing activity Income tax paid (99) (139) 40 • Decrease due t
Slide 21: 3Q15 net debt evolution
3Q15 net debt evolution (12,075) (58) 537 (123) (1,053) 99 © VimpelCom Ltd 2015 206 17,904 5,830 5,437 Net Debt Italy Net Debt EBITDA Change Net Taxes CAPEX FOREX and Net Debt 30 June (Held for 30 June in WC Interest Other 30 Sept 2015 Sale) 2015 2015 (incl. Italy) Net Debt LTM EBITDA1 2.6x 1.3x 1.3
Slide 22: 2015 key targets confirmed
2015 key targets confirmed Targets 20151 Flat to low single digit Service Revenue decline YoY © VimpelCom Ltd 2015 Flat to minus one EBITDA Margin2 p.p. YoY CAPEX / Revenue 18-20% Leverage (Net Debt / EBITDA) ~1.6x 1 Key targets for 2015 assume constant currency, no major regulatory changes, no chan
Slide 23: Conclusion
Conclusion • Continued improvements in operational performance © VimpelCom Ltd 2015 • Exceptional items caused net loss in 3Q15 • 2015 key targets confirmed 23
Slide 24: Q&A
© VimpelCom Ltd 2015 24 Q&A
Slide 25: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: ir@vimpelcom.com © VimpelCom Ltd 2015 Visit our awards winning website www.vimpelcom.com No.1 CORPORATE WEBSITE 2014 -2015 in the Netherlands 25
Slide 26: Appendix
© VimpelCom Ltd 2015 26 Appendix
Slide 27: Uzbekistan: solid results
Uzbekistan: solid results UZS BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers +7% YoY (million) • Healthy growth in mobile service -3% YoY 478 revenue of 8% YoY 445 442 10.5 10.2 • Annualized churn improved 2 percentage points to 47% © VimpelCom Ltd 2015 • Rational competition from
Slide 28: Armenia: strengthened market position
Armenia: strengthened market position AMD BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -12% YoY (million) • Growing customer and revenue +13% YoY market share 15.6 0.84 13.9 0.75 12.9 • Mobile data revenue growth of 21% YoY driven by promotion of data bundles © VimpelCom Ltd 201
Slide 29: Kyrgyzstan: clear market leader
Kyrgyzstan: clear market leader KGS BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) +8% YoY • Clear market leader, #1 in NPS as a +2% YoY result of network quality and value 2.7 2.6 2.9 proposition 2.7 2.7 • Mobile data revenue growth of 32% YoY © VimpelCom Ltd 2015 3Q14
Slide 30: Tajikistan: challenging environment
Tajikistan: challenging environment USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -16% YoY (million) • Network quality improved -8% YoY 41 35 • Lower incoming international traffic 30 due to less migrants living abroad 1.3 1.2 © VimpelCom Ltd 2015 3Q14 2Q15 3Q15 3Q14 3Q15 M
Slide 31: Georgia: continued pressure on results
Georgia: continued pressure on results GEL MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -5% YoY (million) • Service revenue pressure mainly due +10% YoY 37 34 35 to cancellation of the asymmetrical 1.3 1.4 MTR • Mobile data revenue growth of 15% YoY driven by 4G/LTE launch © Vim
Slide 32: Italy: debt
Italy: debt As at 30 September 2015, EUR million (unless otherwise stated) Outstanding debt (millions) Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing © VimpelCom Ltd 2015 WIND Telecomunicazioni S.p.A. - 830 - - 19 849 WIND Acquisition Finance S.A. 10,047 - - - - 10,047 Gross
Slide 33: Reduced net debt offset by FOREX impact on EBITDA
Reduced net debt offset by FOREX impact on EBITDA Net debt / underlying LTM EBITDA June 30, 2015 September 30, 2015 © VimpelCom Ltd 2015 2.6 2.8 1.3 1.3 Excluding Group Excluding Group Italy Italy 33
Slide 34: Credit facilities
Credit facilities Available RCF headroom at the end 3Q15: VimpelCom USD 1.8 billion © VimpelCom Ltd 2015 PJSC VimpelCom USD 0.2 billion (RUB 15 billion) Available VF/CF headroom at the end 3Q15: VimpelCom – CDB/BoC USD 1.0 billion Algeria - syndicate USD 0.3 billion (DZD 32 billion) 34
Slide 35: Debt maturity profile
Debt maturity profile As at 30 September 2015, in USD billion Group debt maturity schedule by Business Units Russia GTH HQ 2.1 1.5 1.3 1.1 1.2 1.0 0.8 0.7 0.1 © VimpelCom Ltd 2015 2015 2016 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2015 2016 2017 2018 2019 2020 20
Slide 36: Debt by entity
Debt by entity As at 30 September 2015, USD million Outstanding debt (millions) Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing VimpelCom Holdings B.V. 3,364 - - - - 3,364 © VimpelCom Ltd 2015 VimpelCom Amsterdam B.V. - 1,000 - 679 - 1,679 PJSC VimpelCom 1,985 1,128 - 133 38
Slide 37: FOREX rates used in annual targets for 2015
FOREX rates used in annual targets for 2015 Currency FX rates versus USD Algeria DZD 92.0 Armenia AMD 415.0 © VimpelCom Ltd 2015 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 37
Slide 38: FOREX development
FOREX development Rates of functional currency to USD Average rates Average rates Closing rates 3Q15 3Q14 YoY 9M15 9M14 YoY 3Q15 2Q15 QoQ Russian Ruble 62.98 36.19 74.0% 59.28 35.39 67.5% 66.24 55.52 19.3% Euro 0.90 0.76 19.1% 0.90 0.74 21.6% 0.89 0.90 -0.4% © VimpelCom Ltd 2015 Algerian Dinar 102.9
Slide 39: Reconciliation of EBITDA
Reconciliation of EBITDA USD mln 3Q15 3Q14 9M15 9M14 Unaudited EBITDA 58 1,520 2,064 4,485 Depreciation (402) (508) (1,186) (1,574) Amortization (127) (177) (388) (517) Impairment loss 3 58 (109) 61 Loss on disposals of non-current assets (12) (20) (23) (46) © VimpelCom Ltd 2015 EBIT (480) 873 358 2
Slide 40: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt Reconciliation of consolidated net debt 30 September 2015 30 June 2015 31 December 2014 © VimpelCom Ltd 2015 USD mln Net debt 5,437 17,904 19,992 Cash and cash equivalents 3,930 4,220 6,342 Long - term and short-term deposits 375 225 109 Gross debt 9,742 22,34