25 slides from VEON Ltd. ORD's investor presentation, Sep 26, 2016
Slide 1: VimpelCom investor presentation
VimpelCom investor presentation © VimpelCom Ltd 2016 26 September 2016 1
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements 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 historica
Slide 3: VimpelCom at a glance – a leading international communications provider
VimpelCom at a glance – a leading international communications provider Top 7 mobile operator in the world Diversified geographic footprint FY 2015 consolidated financials Including 100% of Italy JV and Warid Excluding Italy customers as of 30 June 2016 Revenue USD 9.6 billion Mobile customers Count
Slide 4: Free float increased as a result of Telenor's share sale in September 2016
Free float increased as a result of Telenor’s share sale in September 2016 Before Telenor equity offering After equity offering (21 September 2016) (142.5 mln ADS) 8.3% 8.3% © VimpelCom Ltd 2016 10.8% 18.9% 47.9% 47.9% 33.0% 24.9% Free float Telenor LetterOne The Stichting 4
Slide 5: Financial performance reaching inflection
Financial performance reaching inflection Total revenue (USD billion) VIP Coin1 vs USD Total revenue organic2 YoY growth 3.7% 100 98 2.5% 94 82 73 76 0.7% 1.0% 70 66 64 66 0.1% 3.5 3.5 3.5 3.0 2.3 2.6 2.4 2.3 2.0 2.2 (0.6%) (0.9%) (1.6%) (3.4%) (4.0%) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q1
Slide 6: Key achievements over the past year
Key achievements over the past year Re-engineer the fundamentals – fixing the basics and uniting to become a truly global company • Strategic framework defined and launched, vision & values rolled out across the footprint • Governance improved, Uzbekistan case settled and operating license renewed •
Slide 7: Key investment highlights and strategic priorities
Key investment highlights and strategic priorities 6 1 Digital leadership World class operations ► Build a new model: digital ► A unique footprint with leadership positions ► Operating in markets with significant upside potential ► Strong leadership team with united culture and robust governance © V
Slide 8: A unique footprint with leadership positions
1 A unique footprint with leadership positions World class operations Market position by mobile customers1 Eastern Europe/Eurasia Emerging markets Italy joint venture © VimpelCom Ltd 2016 • Russia (3) • Algeria (2) • Italy (1) • Uzbekistan (1) • Pakistan (1) • Ukraine (1) • Bangladesh (2) • Kazakhst
Slide 9: Operating in markets with significant upside potential
1 Operating in markets with significant upside potential Key reporting countries World class operations Mobile data penetration1 (%) Data usage3 (MB/user) US Average2: 96% US Average4: 3,381 MB/User 82% Western Europe Average2: 86% 59% 1,905 1,907 46% 47% 50% 40% Western Europe Average4: 2,070 MB/Us
Slide 10: Strong leadership with united culture and robust governance
1 Strong leadership with united culture and robust governance World class operations World class leadership Cultural transformation Robust governance and compliance framework © VimpelCom Ltd 2016 • Acceleration towards world class leadership • New global vision rolled out: • World class systematic a
Slide 11: Capital structure with strong liquidity
2 Capital structure with strong liquidity Structural Improvements As of 30 June 2016 Significant cash position in USD Sufficient credit facilities (unused RCF /VF/CF headroom): VimpelCom - syndicate USD 1.8 billion Other 42% PJSC VimpelCom - Sberbank RUB 15 billion (USD 0.2 billion ) USD ~4 bn Vimpe
Slide 12: Balance sheet further strengthened by Italy JV
2 Balance sheet further strengthened by Italy JV Structural Improvements Deleverage – Key events Italy tower Italy JV with subsequent Italy JV: Algeria transaction sale deconsolidation of WIND EC approval April May July January March August October November December April September 2014 2014 2014 20
Slide 13: Creating the leading mobile operator in Italy
Creating the leading mobile operator in Italy Strengthening position in Europe’s 4th largest economy and telecom market 3 Portfolio and Asset Optimisation Approval by European Strategic fit for VimpelCom Key benefits Commission $ $ $ © VimpelCom Ltd 2016 • On 1 September 2016, the European • Leadin
Slide 14: Completion of Mobilink and Warid transaction
Completion of Mobilink and Warid transaction Strengthening the leading position in Pakistan 3 Portfolio and Asset Optimisation Pakistan: among the fastest Strategic fit for VimpelCom Key benefits growing telecom markets $ $ $ © VimpelCom Ltd 2016 • Population of ~200 million people • Strengthening
Slide 15: Moving towards an asset-light model
Moving towards an asset-light model Supported by recent initiatives of network sharing and tower sale 3 Portfolio and Asset Optimisation Network sharing Tower monetization © VimpelCom Ltd 2016 • Joint project with MegaFon to cover 10 out of 83 • Tower monetization program is being deployed Russian r
Slide 16: Performance and cost transformation to drive further cash flow growth
Performance and cost transformation to drive further cash flow growth 4 Performance Transformation VimpelCom in 2014 VimpelCom 2019 ambitions © VimpelCom Ltd 2016 Complex business model with inefficient cost structure: Agile global operating model: • 13 separate country operating models with non-sta
Slide 17: H1 2016: Performance transformation accelerating and on track
H1 2016: Performance transformation accelerating and on track 4 Performance Transformation • 14%1 net reduction of headcount • 30%1 reduction of line managers • 8%1 of office space eliminated Agile operating model • Global Shared Services launched: ► Yaroslavl (covering Russia) ► Lviv (covering 7 Eu
Slide 18: Revitalizing the core business with new revenue streams
5 Revitalizing the core business with new revenue streams $ New revenue streams Voice/messaging Data Fixed broadband B2B Increase share of wallet Realize full potential Capture the household Unlock opportunities © VimpelCom Ltd 2016 Mobile customers Mobile data revenue FBB customers B2B 236 million1
Slide 19: Build a new model: digital
6 Build a new model: digital Digital leadership Re-invent customer Re-engage with customers Monetize the experience and IT via a digital platform customer base © VimpelCom Ltd 2016 • Reinventing IT to enable digital • Drive marketing communications, • Create a “market place” for the leadership custo
Slide 20: Clarity of direction has delivered rapid progress in one year
Clarity of direction has delivered rapid progress in one year… 6 1 Digital leadership World class operations ► Build a new model: digital ► A unique footprint with leadership positions ► Operating in markets with significant upside potential ► Strong leadership team with united culture and robust go
Slide 21: Conditions to introduce new dividend policy
Our financial goal: a company that returns to profitable growth and is able to share that with its shareholders through a meaningful dividend policy Conditions to introduce new dividend policy 1 Completion of Italy transaction in Q4 2016 Allowing the © VimpelCom Ltd 2016 VimpelCom Board to consider
Slide 22: FY 2016 guidance
FY 2016 guidance Actual FY 2015 Targets FY 2016 H1 2016 Flat to low single digit Service revenue1 USD 9.3 billion growth YoY +0.8% YoY USD 3.9 billion EBITDA underlying (margin)1 © VimpelCom Ltd 2016 Flat to +1 p.p. YoY Organic +0.1 pp YoY (40.9%) (40.8%) Capex / revenue1 18.2% 17-18% LTM: 17.3% (1H
Slide 23: Appendix I: Non GAAP reconciliation tables
Appendix I © VimpelCom Ltd 2016 Non GAAP reconciliation tables 23
Slide 24: Reconciliation of adjusted EBITDA
Reconciliation of adjusted EBITDA USD mln 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 1H16 1H15 FY15 Adjusted EBITDA 1,495 1,470 1,520 1,075 938 1,068 58 811 758 795 1,553 2,006 2,875 Depreciation (542) (524) (508) (422) (398) (386) (402) (364) (332) (391) (723) (784) (1,550) Amortization (175
Slide 25: Reconciliation of underlying EBITDA
Reconciliation of underlying EBITDA 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 FY15 Adjusted EBITDA 1,496 1,470 1,520 1,074 938 1,069 58 811 758 795 2,875 Site capitalization in Russia - - - - - - - (30) - - (30) A/R inventory and provision in Russia - - - - - - - 2 - - 2 PT - - - - - - - 12