VEON Ltd. · NASDAQ:VEON
VEON — VimpelCom — Investor Day (January 2013)
126 slides from VEON's investor day presentation, Jan 17, 2013
Slide 1: It's all about Creating Value
Exhibit 99.2 Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value th London, January 16 2013
Slide 2: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 3: Agenda 16 January 2013
Analyst & Investor Day © VimpelCom Ltd. 2013 Agenda 16 January 2013 Presentation Time Speaker Creating Value 13:00 Jo Lunder Operational Value Creation 13:25 Jan Edvard Thygesen Creating Value in Russia (+Q&A) 13:45 Anton Kudryashov Creating Value in Italy (+Q&A) 14:15 Maximo Ibarra Break 14:45 Crea
Slide 4: Further information
Analyst & Investor Day © VimpelCom Ltd. 2013 Further information: Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: Investor_Relations@vimpelcom.com < 4> It’s all about Creating Value
Slide 5: Creating Value
Analyst & Investor Day © VimpelCom Ltd. 2013 Creating Value Profitable Growth Strategy 2013 - 2015 th London, January 16 2013 Jo Lunder CEO
Slide 6: Delivering on the Value Agenda Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 Delivering on the Value Agenda Objectives FY 11 Objectives 2012 – 2014 YTD 3Q12 (announced 15 November 2011) Revenue +5 % * CAGR of around mid single digit +6 % * EBITDA 0 %* CAGR of around mid single digit +8 % * Capex / Revenue Below 15% 21 % 19 % ** (e
Slide 7: It's all about Creating Value by Delivering Results
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value by Delivering Results • Total mobile subscriber base increased 7% to 212 million th 6 largest global mobile operator based on subscribers • Profitable growth delivered as result of implementation of Value Agenda EBITDA margin
Slide 8: M&A, Governance and Partnerships Initiatives Accomplished
Analyst & Investor Day © VimpelCom Ltd. 2013 M&A, Governance and Partnerships Initiatives Accomplished M&A Governance Partnerships • Sale of the Vietnamese • Full functional global HQ operations • Strengthened senior • Acquiring control of Wind management Mobile in Canada • Shareholder dispute • Neg
Slide 9: The Global Environment is Changing
Analyst & Investor Day © VimpelCom Ltd. 2013 The Global Environment is Changing • Global economic recession • OTT players challenging voice and text messaging revenues • Regulation will continue to have effect on business • Movement from a voice centric to a data centric telecom world • Monetization
Slide 10: Clearly Defined Strategic Initiatives to Deliver Next Stage of Value Creation
Analyst & Investor Day © VimpelCom Ltd. 2013 Clearly Defined Strategic Initiatives to Deliver Next Stage of Value Creation Value Agenda Stakeholder Value 4 Win in mobile data Profitable Growth 5 Grow beyond the core (MFS, OTTs) Create superior 1 Customer Increase Operational customer experience 6 Dr
Slide 11: Achieving Business Excellence
Analyst & Investor Day © VimpelCom Ltd. 2013 Achieving Business Excellence The VimpelCom Way Passionate Professional Leadership Admired for customer Empower employees to perform Passion and commitment to experience and operational at the highest level and lead achieve exceptional results excellence
Slide 12: Operations Cash Flow Improvement Potential
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value Operations Cash Flow Improvement Potential Improve cash flow * by USD 2 billion in 2013 – 2015 Operational value creation plans in all BU’s Profitable growth Operational excellence USD 1.5 billion Customer excellence Capex ef
Slide 13: Finance Cash Flow Improvement Potential
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value Finance Cash Flow Improvement Potential Improve cash flow by USD 0.6 - 0.9 billion per year over 2013 - 2015 In-house bank USD 200 – 250 million per year Debt optimization USD 100 – 175 million per year Gross debt reduction U
Slide 14: Achieving Ambitious Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value by Achieving Ambitious Objectives Group Objectives: 2013-2015 Revenue Mid single digit CAGR EBITDA Mid single digit CAGR CAPEX /revenue ~ 15% * Net debt / EBITDA <2 * At least USD 0.80 dividend Dividend guideline ** per commo
Slide 15: Clear Group Strategy for 2013-2015
Analyst & Investor Day © VimpelCom Ltd. 2013 Clear Group Strategy for 2013 - 2015 Mobile-focused company with selective presence in fixed-line Focus on operations and execution Deleverage and optimize group financial structure Strong cash flow creation potential Passionate performance culture Creati
Slide 16: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 17: Operational Value Creation
Analyst & Investor Day © VimpelCom Ltd. 2013 Operational Value Creation th London, January 16 2013 Jan Edvard Thygesen Deputy CEO and COO
Slide 18: Mobile Access Core Product but New Mindset Needed
Analyst & Investor Day © VimpelCom Ltd. 2013 Mobile Access Core Product but New Mindset Needed Winners will be Mobile Telcos with the right cost base and greater capital efficiency Data services must be priced on speed of access with volume Tower sharing, outsourcing and network sharing are a new re
Slide 19: It's all about Creating Value
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value What it IS about What it IS NOT about A shared Controlling details operational Centralized decision strategy to drive making execution Boundaries to Achieving initiatives synergies Rewarding performance < 3> Operational Value
Slide 20: How? OpCo performance board as a governance tool
Analyst & Investor Day © VimpelCom Ltd. 2013 How? OpCo performance board as a governance tool Who • Group’s COO, CCO, CTO, Business Control • BU CEO and management When Monthly or bi-monthly meetings Where HQ travels to the BUs • Operational and financial KPIs What • Specific deep-dives • Strategic
Slide 21: Cash-flow Creation Framework
Analyst & Investor Day © VimpelCom Ltd. 2013 Cash-flow Creation Framework Cash-flow scheme Levers to be used % Revenue Superior pricing and Cost of traffic A 15-20% profitable growth Service margin 80-85% Commercial costs ~20% Optimize distribution B and reduce churn Business margin 60-65% Structura
Slide 22: Profitable Growth with Integrated Bundles
Analyst & Investor Day © VimpelCom Ltd. 2013 Profitable Growth with Integrated Bundles Priorities for mitigation • Offer integrated bundles (voice/SMS/data) EXAMPLE - WIND EXAMPLE - KYIVSTAR EXAMPLE - BEELINE < 6> Operational Value Creation
Slide 23: Mobile Data and Churn Reduction Key Priorities
Analyst & Investor Day © VimpelCom Ltd. 2013 B Mobile Data and Churn Reduction Key Priorities Guiding principles 1 Drive smartphone and tablet data Guiding principles 2 Promote tiered pricing (speed/time) to achieve fair share in mobile data 3 Partner with internet players 4 Improve network quality
Slide 24: Operations Cash Flow Improvement Potential
Analyst & Investor Day © VimpelCom Ltd. 2013 C Operations Cash Flow* Improvement Potential USD 2 billion in 2013 – 2015 Procurement/ • Holistic approach, Economies of covering all company’s scale Shared processes Infrastructure service sharing • Typical impact can range centers from 10-15% cost redu
Slide 25: Leverage Global Scope through Technology Procurement
Analyst & Investor Day © VimpelCom Ltd. 2013 D Leverage Global Scope through Technology Procurement Outsourcing perimeter enlargement: Network Maintenance Managed Field Maintenance Network Build + Operation Center Capacity # of OpCo’s 13 4 3 1 2012 Growth +1 +2 +2 +1 Example of Price level improveme
Slide 26: From CAPEX to CAPEX Efficiency: Sweat the Assets
Analyst & Investor Day © VimpelCom Ltd. 2013 D From CAPEX to CAPEX Efficiency: “Sweat the Assets” Improved Network Utilization, Performance and Quality Better site utilization 3% Capacity utilization at busy hour Increase 50.0% Overall improvement by 3% Stable 40.0% 94.1% 94.1% 30.0% 1% % of sites Q
Slide 27: Conclusion
Analyst & Investor Day © VimpelCom Ltd. 2013 Conclusion • Mobile Access Core • Mobile Data and Churn Reduction Key Priorities • Performance Culture • Empowered BU Management • “Sweat the Assets” • Improve Operational Cash Flows Operational Value Creation < 11 > Operational Value Creation
Slide 28: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 29: Creating Value in Russia
Analyst & Investor Day © VimpelCom Ltd. 2013 Creating Value in Russia th London, January 16 2013 Anton Kudryashov Group Executive Vice President and Head of Russia
Slide 30: It's all about Creating Value
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value What it IS about VimpelCom‘s value • Focus on profitable growth creation philosophy is based on Grow in mobile data Performance Management and Increase efficiencies by strong execution of Empowered BU the operational excellen
Slide 31: Mobile Data to Grow in Russia with 30% CAGR
Analyst & Investor Day © VimpelCom Ltd. 2013 Mobile Data to Grow in Russia with 30% CAGR Russian Telecoms Market Dynamics* (Revenues in RUB billion) 1,557 CAGR, % 1,509 1,459 2012-2015 1,406 Telecom Market +3.5% 757 758 730 749 Mobile voice + messaging +1% 334 Fixed Voice -3 % 345 370 358 123 161 20
Slide 32: Competitive Situation and Market Trends
Analyst & Investor Day © VimpelCom Ltd. 2013 Competitive Situation and Market Trends Mobile market share * Mobile * • ~83 % pre-paid market (on Revenues), % • 164% penetration 28.4 26.4 26.3 25.4 • 3 major players (Megafon, MTS and VimpelCom) with comparable VimpelCom market shares • ARPU USD 10 Meg
Slide 33: Operational Performance Turnaround in 2012
Analyst & Investor Day © VimpelCom Ltd. 2013 Operational Performance Turnaround in 2012 Revenues EBITDA and EBITDA Margin (RUB billion) (RUB billion) 74.5 32.2 71.0 30.3 69.6 70.2 27.1 27.9 26.4 27.7 67.0 25.4 65.2 12.6 43.2% 43.1% 60.3 11.5 12.0 12.3 42.1% 41.5% 11.4 41.3% 10.8 40.0% 10.3 61.8 37.1
Slide 34: Progress on Actions Announced
Analyst & Investor Day © VimpelCom Ltd. 2013 Progress on Actions Announced Achievements in 2012 • On net traffic share increased by 2 p.p. up to 59% Revenues • Launch of “all inclusive” price plan in 4Q11, growing to 4% share of subscribers in 3Q12 • Data share in mobile service revenue grew by 2.5
Slide 35: Strategic Initiatives Pursued to Achieve Group Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 10 Strategic Initiatives Pursued to Achieve Group Objectives Create Superior Win in Mobile Data Customer Experience Value Agenda 4 Focus on small & medium screens 1 Improve network quality and launched a comprehensive Customer Experience Program Stakehold
Slide 36: Customer Excellence: Create superior customer experience
Analyst & Investor Day © VimpelCom Ltd. 2013 1 Customer Excellence Value Agenda Stakeholder Value Create superior customer experience Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency • Set Superior Client Experience as a key strategic goal VimpelCom C
Slide 37: Customer Excellence: Improve network quality
Analyst & Investor Day © VimpelCom Ltd. 2013 1 Customer Excellence Value Agenda Stakeholder Value Improve network quality Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency VimpelCom Culture, World-Class Organization, and effective Business Steering ...
Slide 38: Customer Excellence: Self owned monobrand stores and smart pricing
Analyst & Investor Day © VimpelCom Ltd. 2013 Customer Excellence Value Agenda Stakeholder Value Roll out self owned monobrand stores and smart pricing Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency 2 • Introduced revenue sharing model with dealers w
Slide 39: Profitable growth: Driving mobile data
Analyst & Investor Day © VimpelCom Ltd. 2013 4 Profitable growth Value Agenda Stakeholder Value Driving mobile data; Focus on small & medium screens Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency • Focus on small and medium screen VimpelCom Culture,
Slide 40: Profitable growth: Grow beyond the core
Analyst & Investor Day © VimpelCom Ltd. 2013 Profitable growth 5 Grow beyond the core; Leading by innovation Value Agenda Stakeholder Value Profitable Growth Customer Increase Operational Mobile Financial Services Excellence Net Cash Excellence Capital Efficiency • Partnership with Alfa Bank: RURU a
Slide 41: Operational Excellence: Initiatives continue in 2013
Analyst & Investor Day © VimpelCom Ltd. 2013 6 Operational Excellence Value Agenda Stakeholder Value Initiatives continue in 2013 Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency Financial & VimpelCom Culture, World-Class Organization, and effective B
Slide 42: Capital Efficiency: Network sharing and efficiency projects
Analyst & Investor Day © VimpelCom Ltd. 2013 8 Capital Efficiency Value Agenda Stakeholder Value Network sharing and efficiency projects Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency • Realize synergies in infrastructure transport network sharing a
Slide 43: Achieving sustainable profitable growth
Analyst & Investor Day © VimpelCom Ltd. 2013 Achieving sustainable profitable growth • Sustainable turnaround in Russia • Catching up in network quality in 2013 • Optimize distribution to support data strategy and customer experience • Strong growth of data revenues, targeting small and medium scree
Slide 44: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 45: Creating Value in Italy
Analyst & Investor Day © VimpelCom Ltd. 2013 Creating Value in Italy th London, January 16 2013 Maximo Ibarra Group Executive Vice President and Head of Italy
Slide 46: It's all about Creating Value: Italy
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value Italy What it IS about VimpelCom‘s value • Value for money positioning characterised by simple and transparent creation philosophy tariff plans, excellence in customer operations, good network quality, is based on leveraging
Slide 47: Market Expected to Return to Growth in 2015
Analyst & Investor Day © VimpelCom Ltd. 2013 Market Expected to Return to Growth in 2015 Italian Telecoms Market Dynamics * (Revenues in EUR billion) CAGR, % 2012-2015 31.4 29.6 29.3 29.5 Telecom Market ** -2.1% Mobile Voice -6% 14.2 11.8 12.4 12.0 + messaging 7.3 6.9 6.5 6.1 Fixed Voice -6% 4.1 4.4
Slide 48: Regulatory Environment and Expected Development
Analyst & Investor Day © VimpelCom Ltd. 2013 Regulatory Environment and Expected Development Local Loop Unbundling (LLU) • EU seeking to stabilize LLU copper prices in the upcoming recommendation on “costing and non discrimination” that is to be published • New LLU prices expected in 1H13 following
Slide 49: Competitive Situation and Market Trends
Analyst & Investor Day © VimpelCom Ltd. 2013 Competitive Situation and Market Trends 1 Challenging Macro-Economic Scenario Mobile Market Share (on Revenues), % • GDP expected to contract by -2.1% in 2012 and -1.1% in 2013 but with growth resuming from 2H 2013 17.3 18.8 19.9 20.5 7.8 8.1 8.0 3 • Unem
Slide 50: Operational Performance
Analyst & Investor Day © VimpelCom Ltd. 2013 Operational Performance Mobile Service Rev. 3Q12 vs 3Q11 Revenues WIND -7.8% EBITDA and EBITDA Margin (EUR million) TIM -13.0% (EUR million) Vodafone -13.6% 565 526 533 524 537 1,351 1,399 1,397 1,424 1,346 1,383 496 487 1,329 40.5% 40.4% 369 370 371 387
Slide 51: Delivering on Announced Actions and Main 2012 Achievements
Analyst & Investor Day © VimpelCom Ltd. 2013 Delivering on Announced Actions and Main 2012 Achievements Achievements in 2012 • Continued outperformance in market, leading to increase in revenue share Revenues • Mobile broadband revenues increased 43% YoY in 9 months 2012 • Postpaid segment share inc
Slide 52: Strategic Initiatives Pursued to Achieve Group Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 10 Strategic Initiatives Pursued to Achieve Group Objectives Win in Mobile Data Create Superior 4 Over performing market on Mobile Data in order to close the gap with the Customer Experience Value Agenda competitors 1 Confirming WIND leadership in Custome
Slide 53: Customer Excellence: WIND Leadership in Customer Satisfaction
Analyst & Investor Day © VimpelCom Ltd. 2013 Customer Excellence Value Agenda Stakeholder Value 1 Confirming WIND Leadership in Customer Satisfaction Profitable Growth Increase Customer Operational Excellence Net Cash Excellence • Clear positioning based on “value for Capital Efficiency VimpelCom Cu
Slide 54: Customer Excellence - Mobile
Analyst & Investor Day © VimpelCom Ltd. 2013 Value Agenda 2a Customer Excellence - Mobile Stakeholder Value Profitable Growth Focus on Distribution, Customer Retention and High Value Growth Customer Excellence Increase Net Cash Operational Excellence • Capital Efficiency • Focus on owned shops and s
Slide 55: Customer Excellence – Fixed & Corporate
Analyst & Investor Day © VimpelCom Ltd. 2013 2b Customer Excellence – Fixed & Corporate Pushing on Inbound Channel and Focus on SAC Optimization FIXED • No commercial push on indirect with de-focus from push channels also on LLU acquisitions • Focus on inbound channels leveraging strong synergies wi
Slide 56: Customer Excellence: All Inclusive Concept
Analyst & Investor Day © VimpelCom Ltd. 2013 3 Customer Excellence “All Inclusive” Concept, Value for Money Proposition, LLU Focus WIND is the Right Choice Against the Economic Downturn Infostrada Focus on LLU and “All Inclusive” • Continuous push on voice, Internet and SMS bundle concept • “All-Inc
Slide 57: Profitable Growth: Mobile Data
Analyst & Investor Day © VimpelCom Ltd. 2013 Value Agenda 4 Profitable Growth Stakeholder Value Profitable Growth Over Performing Market on Mobile Data Customer Excellence Increase Net Cash Operational Excellence Capital Efficiency Strong Focus on Small Screen Internet Growth Through: VimpelCom Cult
Slide 58: Profitable Growth: New Business Models and Content Revenue Sharing
Analyst & Investor Day © VimpelCom Ltd. 2013 5 Profitable Growth Exploiting new Business Models and Content Revenue Sharing 3Q 11 1Q 12 2013 and beyond «Digital Goods» Operator Pre-paid NFC Cross-operator Mobile Ticketing Payment Card Consortium Mobile Ticketing on main Telephony and banking Short-r
Slide 59: Operational Excellence: Network Transformation and Cost Efficiency
Analyst & Investor Day © VimpelCom Ltd. 2013 Value Agenda 6 Operational Excellence Stakeholder Value Profitable Growth Network Transformation Project and Cost Efficiency Project Customer Excellence Increase Net Cash Operation Excellenc • Network Transformation Project Capital Efficiency VimpelCom Cu
Slide 60: Capital Efficiency: Site Sharing and Network Projects
Analyst & Investor Day © VimpelCom Ltd. 2013 Value Agenda 8 Capital Efficiency Stakeholder Value Profitable Growth Site Sharing and Network Projects Customer Excellence Increase Net Cash Operational Excellence • Aggressive site sharing program with other operators for new infrastructure Capital Effi
Slide 61: Continue Outperforming the Market, Delivering Solid Cash Flow
Analyst & Investor Day © VimpelCom Ltd. 2013 Continue Outperforming the Market, Delivering Solid Cash Flow • WIND continues to outperform its competitors and strengthen its position in the Italian market (mobile revenue share up from 19.9% as at the end of 2011 to 20.5% as the end of 3Q12) • Solid f
Slide 62: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 63: Creating Value in Africa & Asia
Analyst & Investor Day © VimpelCom Ltd. 2013 Creating Value in Africa & Asia th London, January 16 2013 Ahmed Abou Doma Group Executive Vice President and Head of Africa & Asia
Slide 64: It's all about Creating Value
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value What it IS about VimpelCom‘s value • Maintain market leadership in key markets creation philosophy is based on • Expanding non-voice revenues especially in data and VAS Performance • Network CAPEX and OPEX efficiency by moder
Slide 65: Competitive Situation and Market Trends: Market leadership
Analyst & Investor Day © VimpelCom Ltd. 2013 Competitive Situation and Market Trends: Market leadership Geographic Footprint Algeria 1 Pakistan 1 Bangladesh 1 Pop:37 M Pop:190 M Pop:161 M Pen:89% Pen:63% Pen:60% GDP:7,400 GDP:2,800 GDP:1,700 Central African Zimbabwe 1 Laos 1 Republic 1 Pop:12 M Pop:
Slide 66: Djezzy - Overview
Analyst & Investor Day © VimpelCom Ltd. 2013 Djezzy - Overview • GDP growth rate for 2012 stood at 2.5% • Young population with 24% of the population under 15 years of age Macro • Government, trade and agriculture sectors account for over 60% of Algeria’s GDP Environment • Hydrocarbons have long bee
Slide 67: Resilient Market Leadership in Algeria
Analyst & Investor Day © VimpelCom Ltd. 2013 Resilient Market Leadership in Algeria Revenues EBITDA and EBITDA Margin (DZD billion) (DZD billion) 20.4 21.0 20.6 21.6 21.0 36.0 19.0 20.1 35.8 35.0 34.4 34.3 33.9 32.0 60.0% 60.3% 59.4% 59.2% 59.1% 59.5% 58.6% 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12
Slide 68: Mobilink - Overview
Analyst & Investor Day © VimpelCom Ltd. 2013 Mobilink - Overview • GDP growth rate in 2012 stood at 2.4% Macro • 35% of the population is under 15 years of age Environment • Devaluation of the Pakistani Rupee against the US Dollar continues • Security and political situation remains tense • 3G launc
Slide 69: Successful Cost Savings Initiatives in Pakistan
Analyst & Investor Day © VimpelCom Ltd. 2013 Successful Cost Savings Initiatives in Pakistan Revenues EBITDA and EBITDA Margin (PKR billion) (PKR billion) 12.0 27.2 10.4 10.9 11.0 9.6 10.0 10.0 25.9 26.0 24.9 25.0 24.0 44.1% 23.5 41.0% 41.7% 42.2% 43.0% 40.6% 40.2% 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 1
Slide 70: banglalink - Overview
Analyst & Investor Day © VimpelCom Ltd. 2013 banglalink - Overview • GDP growth rate in 2012 stood at 6.1% Macro • Bangladesh has the world’s highest population density Environment • 57% of population below 25 years of age • Continuous devaluation of local currency against US Dollar Population: 161
Slide 71: Healthy Subscriber Growth Momentum in Bangladesh
Analyst & Investor Day © VimpelCom Ltd. 2013 Healthy Subscriber Growth Momentum in Bangladesh Revenues EBITDA and EBITDA Margin (BDT billion) (BDT billion) 4.4 11.6 12.0 4.0 10.7 3.7 9.4 10.0 9.9 3.2 3.0 3.0 9.0 42.8% 35.7% 2.1 38.0% 33.1% 34.0% 29.3% 20.8% 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12
Slide 72: Progress on Actions and Main Achievements: Profitable Growth
Analyst & Investor Day © VimpelCom Ltd. 2013 Progress on Actions and Main Achievements: Profitable Growth Areas Products Action Achievements in 2012 announced Mobile Voice Value-driven pricing • Increased APPM in Pakistan and Bangladesh & Messaging • Revamped corporate offers to serve the value base
Slide 73: Progress on Actions and Main Achievements: Operational Excellence
Analyst & Investor Day © VimpelCom Ltd. 2013 Progress on Actions and Main Achievements: Operational Excellence Achievements in 2012 Revenues • Growth in revenues is mainly attributed to subscriber growth • Increased APPM in Pakistan and Bangladesh Service • Applied dual market strategy in Bangladesh
Slide 74: Progress on Actions and Main Achievements: Operational Excellence
Analyst & Investor Day © VimpelCom Ltd. 2013 Progress on Actions and Main Achievements: Operational Excellence Achievements in 2012 Revenues • Djezzy continued to reinforce its brand leadership through several initiatives including new communication platform, consolidation of brand architecture, a l
Slide 75: Strategic Initiatives Pursued to Achieve Group Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 10 Strategic Initiatives Pursued to Achieve Group Objectives Value Agenda Stakeholder Value 4 Win in mobile data Profitable Growth 5 Grow beyond the core (MFS, OTTs) Create superior 1 Customer Increase Operational customer experience 6 Drive cost efficien
Slide 76: Customer Excellence: Enhance Leadership Positions
Analyst & Investor Day © VimpelCom Ltd. 2013 Customer Excellence: Enhance Leadership Positions Value Agenda Stakeholder Value and Create Superior Customer Experience Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency VimpelCom Culture, World-Class Strat
Slide 77: Profitable Growth: Realize data potential and grow beyond the core
Analyst & Investor Day © VimpelCom Ltd. 2013 Profitable Growth: Realize data potential and grow Value Agenda Stakeholder Value beyond the core Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency VimpelCom Culture, World-Class Strategic initiative Descrip
Slide 78: Operational Excellence: Focus on Structural Costs Improvements
Analyst & Investor Day © VimpelCom Ltd. 2013 Operational Excellence: Focus on Structural Costs Value Agenda Stakeholder Value Improvements Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency VimpelCom Culture, World-Class Strategic initiative Description
Slide 79: Capital Efficiency: Leverage Group Size to Achieve CAPEX Efficiencies
Analyst & Investor Day © VimpelCom Ltd. 2013 Capital Efficiency: Leverage Group Size to Achieve Value Agenda Stakeholder Value CAPEX Efficiencies Profitable Growth Customer Increase Operational Excellence Net Cash Excellence Capital Efficiency VimpelCom Culture, World-Class Strategic initiative Desc
Slide 80: Conclusion
Analyst & Investor Day © VimpelCom Ltd. 2013 Conclusion • Data opportunities with the deployment of 3G services • Growth potentials throughout Africa & Asia BU due to relatively low penetration rates • Defend market leadership in Algeria and Pakistan • Continuous focus on profitable growth and cost
Slide 81: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 82: Creating Value in Ukraine
Analyst & Investor Day © VimpelCom Ltd. 2013 Creating Value in Ukraine th London, January 16 2013 Artem Nitz Chief Financial Officer of Ukraine
Slide 83: It's all about Creating Value
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value What it IS about VimpelCom‘s value • Focus on ensuring leadership in mobile creation philosophy is based on • Growth in mobile data and fixed broadband Performance Management and • Differentiate as true integrated operator Em
Slide 84: A Market with Substantial Growth Opportunities
Analyst & Investor Day © VimpelCom Ltd. 2013 A Market with Substantial Growth Opportunities Ukrainian Telecoms Market Dynamics * (Revenues in UAH billion) CAGR, % 42.4 2012-2015 41.0 39.6 37.9 Telecom Market +3.8% Mobile voice +3% / messaging Fixed Voice -6% Mobile Data +15% Fixed Data +13% 2012 201
Slide 85: Competitive Situation and Market Trends
Analyst & Investor Day © VimpelCom Ltd. 2013 Competitive Situation and Market Trends 1 Mobile Mobile Market Share • Kyivstar, MTS and Astelit (brand “Life”) are the major players (on Revenues), % • Kyivstar is the leading integrated operator in Ukraine with #1 in mobile and #2 in fixed residential b
Slide 86: Improvements in Operational Performance
Analyst & Investor Day © VimpelCom Ltd. 2013 Improvements in Operational Performance Revenues EBITDA and EBITDA Margin (UAH billion) (UAH billion) 3.485 3.613 3.287 3.326 3.247 1.870 1.849 2.981 3.079 1.802 1.672 1.630 1.609 1.574 54.0% 54.8% 53.7% 3.042 3.227 3.070 3.329 50.3% 51.1% 50.2% 51.2% 2.7
Slide 87: Progress on Actions and Main Achievements
Analyst & Investor Day © VimpelCom Ltd. 2013 Progress on Actions and Main Achievements Achievements in 2012 • Major transition from pay-as-you-go to bundles on target (75% share using bundles), revenue market share at ~50% and Revenues subscribers MS ~ 48% in 2012. Upsell of low and middle ARPU subs
Slide 88: Strategic Initiatives Pursued to Achieve Group Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 10 Strategic Initiatives Pursued to Achieve Group Objectives Win in Mobile Data Create Superior Value Agenda 4 Data bundles for small-screen users Customer Experience together with promotion of smartphones 1 Improved “value for money”, set up dedicated Cu
Slide 89: Customer Excellence: Advanced customer understanding
Analyst & Investor Day © VimpelCom Ltd. 2013 Customer Excellence Value Agenda Stakeholder Value Advanced customer understanding Profitable Growth Customer Increase Operational Net Cash Excellence Excellence Strategic initiative Description of initiative Capital Efficiency VimpelCom Culture, World-Cl
Slide 90: Profitable Growth: Realize upside potential in profitable mobile data
Analyst & Investor Day © VimpelCom Ltd. 2013 Profitable Growth Realize upside potential in profitable mobile data Strategic initiative Description of initiative • Data bundles for small-screen users together with promotion of smartphones helped increase data users to >40% of total base with 18% smar
Slide 91: Operational Excellence: Continuous cost efficiency improvement
Analyst & Investor Day © VimpelCom Ltd. 2013 Operational Excellence Continuous and sustainable cost efficiency improvement 6 Based on 9 month 2012 results more than UAH 200 million structural OPEX savings realized Key cost improvement initiatives identified for 2013 across all business unit function
Slide 92: Capital Efficiency: Support growing traffic efficiently
Analyst & Investor Day © VimpelCom Ltd. 2013 Capital Efficiency Value Agenda Stakeholder Value Support growing traffic efficiently Customer Profitable Growth Increase Operational Excellence Net Cash Excellence 8 CAPEX to Revenue ratio • Improving trend in CAPEX/Revenue Capital Efficiency ratio, with
Slide 93: Ensure Leading Position and Maximize Cash Flows
Analyst & Investor Day © VimpelCom Ltd. 2013 Ensure Leading Position and Maximize Cash Flows • #1 mobile operator • Growing market share in fixed broadband • Win in mobile data market share • Maintain superior profitability • Maintain unique performance culture Creating Value in Ukraine < 12 > Creat
Slide 94: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 95: Financial Value Creation
Analyst & Investor Day © VimpelCom Ltd. 2013 Financial Value Creation th London, January 16 2013 Henk van Dalen CFO
Slide 96: VimpelCom Key Financials; Financial Value Agenda; Financial Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 • VimpelCom Key Financials 2010 – 3Q12 • Financial Value Agenda 2013 – 2015 • Financial Objectives 2013 – 2015 < 2> Financial Value Creation
Slide 97: VimpelCom Revenue and EBITDA Development
Analyst & Investor Day © VimpelCom Ltd. 2013 VimpelCom Revenue and EBITDA Development at average constant 2010 FX Revenues Actual Revenues Pro forma * (USD billion) (USD billion) +5% +3% 22.8 22.7 23.4 23.4 21.7 20.0 7.4 7.3 Italy 7.3 7.4 +7% +5% 10.5 14.4 15.4 15.3 16.1 2010 2011 LTM 3Q12 2010 2011
Slide 98: EBITDA Development YTD 3Q12 versus YTD 3Q11
Analyst & Investor Day © VimpelCom Ltd. 2013 EBITDA Development YTD 3Q12 versus YTD 3Q11 Reported EBITDA Development in USD million; organic growth +6.4% 2% 9% -4% 14% 57 112 131 12% -2% 76 29 557 344 7,764 115 7,322 7,298 YTD 3Q11 Russia Ukraine CIS Italy Italy MTR Africa EBITDA FX Other ** YTD 3Q1
Slide 99: CAPEX Basics 2010 – LTM 3Q12
Analyst & Investor Day © VimpelCom Ltd. 2013 CAPEX Basics 2010 – LTM 3Q12 CAPEX excluding licenses Pro forma (USD billion) 4.9 4.4 4.0 24% 22% 21% 22% (EBITDA – CAPEX)/Revenues % 21% 19% Depreciation & Amortization / Revenues % *** 19% CAPEX/Revenue % 18% CAPEX excl. licenses Pro forma (USD billion)
Slide 100: Simplified Legal / Financing Structure per 30-Sep-12
Analyst & Investor Day © VimpelCom Ltd. 2013 Simplified Legal / Financing Structure per 30-Sep-12 VimpelCom Group VimpelCom Ltd. VIP USD 2.2 bn OJSC Group USD 9.4 bn VimpelCom Wind Group USD 14.0 bn Amsterdam B.V. OTH Group USD 1.0 bn Gross debt USD 26.6 bn VimpelCom Holdings VimpelCom Amsterdam WIN
Slide 101: Debt Structure Elements per Ultimo 3Q12
Analyst & Investor Day © VimpelCom Ltd. 2013 Debt Structure Elements per Ultimo 3Q12 Composition EUR RUB USD Other Total Maturity schedule Bonds 4.7 1.3 10.8 0.1 18.0 9.0 Term loan 4.5 3.0 0.1 0.3 7.7 Wind OTH Other 0.2 0.2 0.2 0.2 0.9 5.5 VimpelCom / OJSC Gross 3.1 9.4 5.5 11.1 0.5 26.6 2.0 2.3 Tot
Slide 102: VimpelCom Key Financials; Financial Value Agenda; Financial Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 • VimpelCom Key Financials 2010 – 3Q12 • Financial Value Agenda 2013 – 2015 • Financial Objectives 2013 – 2015 < 8> Financial Value Creation
Slide 103: Key Initiatives Drive 2013-2015 Strategy Focus of Finance
Analyst & Investor Day © VimpelCom Ltd. 2013 10 Key Initiatives Drive Focus of Finance 2013 -2015 Strategy Function Value Agenda I. Clear strategy, delivering value to customers and shareholders Create superior Stakeholder Value Win in mobile data 1 customer 4 • Dynamic reviews and updates experienc
Slide 104: Granular P&L Focus
Analyst & Investor Day © VimpelCom Ltd. 2013 Granular P&L Focus Cash-flow scheme ambition Levers to be used VimpelCom LTM 3Q12 Revenue 100% 100% A Superior pricing and Cost of traffic 15-20% profitable growth 21% Service margin 80-85% 79% Commercial costs ~20% B Optimize distribution 17% and reduce
Slide 105: Structurally Improve Working Capital Management
Analyst & Investor Day © VimpelCom Ltd. 2013 Structurally Improve Working Capital Management Project Opportunity • Value Agenda stresses importance of capital efficiency and cash generation • Key business cycles – terms & conditions • Working capital management as cash driver requires Average invent
Slide 106: Capital Return
Analyst & Investor Day © VimpelCom Ltd. 2013 Capital Return Capital Invested per Ultimo 3Q12 (USD million) Book value Gross value Tangible assets incl. licenses and software 18,887 30,980 * Other Intangibles 6,694 10,096 Goodwill 16,754 16,754 ** Net current liabilities -4,532 -4,532 Total 37,803 53
Slide 107: Diversified Funding Structure
Analyst & Investor Day © VimpelCom Ltd. 2013 Diversified Funding Structure Sources • Eurobonds, Ruble bonds, Dollar bonds • Bilateral (local) Bank Facilities • ECA covered Facilities • Committed revolving credit facilities Balanced Maturities Flexibility Source Mix Intercompany Funding ++ < 13 > Fin
Slide 108: Financial Standing
Analyst & Investor Day © VimpelCom Ltd. 2013 Financial Standing • Maintain BB rating short term Secure operating performance • Moving towards < 2 times Net Debt to EBITDA Secure cash flow upstreaming Investment Grade Gross debt to be around 3 times EBITDA maximum • Grow to BB+ / BBB- • Flexible acce
Slide 109: Finance Optimization
Analyst & Investor Day © VimpelCom Ltd. 2013 Finance Optimization Focus Measures Deleverage reduce gross debt Maximize intercompany funding Restructuring expensive debt Establish in-house bank, utilize tax losses Full tax deductibility of interest Lock in “capital losses” timely Maximize direct divi
Slide 110: Principles of In-house Bank
Analyst & Investor Day © VimpelCom Ltd. 2013 Principles of In-house Bank In-house bank structure In-house bank activities External parties VimpelCom Ltd. • Optimization of capital structure Debt Equity • (Excess) cash management • Intercompany funding for CAPEX In-house bank • Intercompany funding f
Slide 111: Group Optimum Tax and Funding Model by 2015
Analyst & Investor Day © VimpelCom Ltd. 2013 Group Optimum Tax and Funding Model by 2015 External VIP Ltd Dividends to VIP parties (NL) shareholders Dividends VIP AMS Group Equity (NL) Debt Dividends In-house bank VIP HOL (LUX) (NL) IC loan funding Equity Dividends Minimal Local debt Cash generating
Slide 112: Finance Cash Flow Improvement Potential
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value Finance Cash Flow Improvement Potential Improve cash flow by USD 0.6 - 0.9 billion per year over 2013 - 2015 In-house bank USD 200 – 250 million per year Debt optimization USD 100 – 175 million per year Gross debt reduction U
Slide 113: Risk Management, Compliance, Control
Analyst & Investor Day © VimpelCom Ltd. 2013 Risk Management, Compliance, Control Supervisory Board Group HR Audit Disclosure Group Legal Integrity / Committees Internal management Group Public Ethics VimpelCom Audit Affairs Group Operating Audit Companies Committee Supervisory Board Group Accountin
Slide 114: VimpelCom Key Financials; Financial Value Agenda; Financial Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 • VimpelCom Key Financials 2010 – 3Q12 • Financial Value Agenda 2013 – 2015 • Financial Objectives 2013 – 2015 < 20 > Financial Value Creation
Slide 115: Achieving Ambitious Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value by Achieving Ambitious Objectives Group Objectives: 2013-2015 Assumptions • Constant currency basis 2012 Revenue Mid single digit CAGR • No major regulatory changes • Current asset portfolio mix EBITDA Mid single digit CAGR •
Slide 116: Conceptual Model of Free Cash Flow Development
Analyst & Investor Day © VimpelCom Ltd. 2013 Illustrative Conceptual Model of Free Cash Flow Development Example Normalized 2016 In USD billion LTM 3Q12 Revenues 23.0 26.9 Assumptions 2016 Revenues CAGR 4% EBITDA 9.5 11.6 EBITDA CAGR 5% Net debt / EBITDA = 2 Interest 2.3 * 1.8 All cash > USD 750 mil
Slide 117: Cash Returns to Shareholders Objectives
Analyst & Investor Day © VimpelCom Ltd. 2013 Cash Returns to Shareholders Objectives Dividends (USD million) Aim to pay at least USD 0.80 per common Dividend guideline* share • Intention to pay a dividend that develops substantially in line with the development of operational performance 2012 – 2014
Slide 118: Conclusion
Analyst & Investor Day © VimpelCom Ltd. 2013 Conclusion Financially in Finance Optimization Substantial good shape Significant cash flow initiatives started growth potential < 24 > Financial Value Creation
Slide 119: Q&A
Analyst & Investor Day © VimpelCom Ltd. 2013 Q&A
Slide 120: Appendix
Analyst & Investor Day © VimpelCom Ltd. 2013 Appendix
Slide 121: VimpelCom LTM 3Q12; Currency Sensitivities
Analyst & Investor Day © VimpelCom Ltd. 2013 VimpelCom LTM 3Q12; Currency Sensitivities ** FX sensitivities Basic figures RUB vs USD EUR vs USD Total +/-10% +/-10% Revenue (USD million) * 23,000 Average +/- 825 +/- 660 +/- 1,485 * FX EBITDA (USD million) 9,549 LTM +/- 340 +/- 245 +/- 585 Gross Debt
Slide 122: Currency Sensitivities (continued)
Analyst & Investor Day © VimpelCom Ltd. 2013 VimpelCom LTM 3Q12; Currency Sensitivities (continued) • Further foreign currency sensitivities with respect to non-functional I currency denominated loans and receivables • Major exposure relates to USD loans and the CAD receivable in Egypt FX sensitivit
Slide 123: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen
Slide 124: Closing Remarks
Analyst & Investor Day © VimpelCom Ltd. 2013 It’s all about Creating Value Closing Remarks Jo Lunder CEO
Slide 125: VimpelCom is Committed to Driving and Delivering
Analyst & Investor Day © VimpelCom Ltd. 2013 VimpelCom is Committed to Driving and Delivering Financial, Operating, and Shareholder Value Attractive footprint benefitting increasingly from mobile data growth Strong presence in underpenetrated markets with significant growth potential Solid cash gene
Slide 126: Disclaimer
Analyst & Investor Day © VimpelCom Ltd. 2013 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 the Company's strategy, developmen