Slide 1: Strategic Framework and Q2 2018 Results
S T R AT E G I C F R A M E W O R K A N D Q 2 2 0 1 8 R E S U LT S Amsterdam, 2 August 2018
Slide 2: Agenda
Agenda OPENING Richard James - Head of IR OVERVIEW AND PRIORITIES Ursula Burns - Executive Chairman COUNTRY RESULTS Kjell Johnsen - COO GROUP FINANCIAL RESULTS Trond Westlie - CFO FINAL REMARKS Ursula Burns - Executive Chairman Q&A Q2 2018 RESULTS 2
Slide 3: 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 “m
Slide 4: Agenda
Agenda OPENING Richard James - Head of IR OVERVIEW AND PRIORITIES Ursula Burns - Executive Chairman COUNTRY RESULTS Kjell Johnsen - COO GROUP FINANCIAL RESULTS Trond Westlie - CFO FINAL REMARKS Ursula Burns - Executive Chairman Q&A Q2 2018 RESULTS 4
Slide 5: H1 2018 results; Full Year 2018 guidance reaffirmed
Full Year 2018 guidance reaffirmed H1 2018 4.5bn 1.7bn 540m TOTAL REVENUE EBITDA EQUITY FCF (USD) (USD) EXCL. LICENSES2 (USD) +3.1% organic1 YoY +5.5% organic1 YoY -3.8% reported YoY -4.5% reported YoY +71.7% reported YoY 1 Organic change is a non-IFRS measure and reflects changes in revenue and EBI
Slide 6: Executing at pace on our near term priorities
Executing at pace on our near term priorities Sale of Italy joint venture for a total cash consideration of EUR 2.45 billion (~USD 2.9 billion1) expected to complete in Q3 or early Q4 2018 Offer to acquire businesses in Pakistan and Bangladesh Emerging Simplified markets structure focus Lean, high-l
Slide 7: Strengthening our balance sheet to support our progressive dividend policy
Strengthening our balance sheet to support our progressive dividend policy Net leverage Target ratio 2.0x VEON is committed to paying a 2.5x sustainable and progressive dividend based on the evolution of the 1.8x Company’s equity free cash flow Interim FY 2018 dividend of USD 0.12 Note: Pro forma le
Slide 8: Agenda
Agenda OPENING Richard James - Head of IR OVERVIEW AND PRIORITIES Ursula Burns - Executive Chairman COUNTRY RESULTS Kjell Johnsen - COO GROUP FINANCIAL RESULTS Trond Westlie - CFO FINAL REMARKS Ursula Burns - Executive Chairman Q&A Q2 2018 RESULTS 8
Slide 9: Q2 2018 revenue and EBITDA country trends
Q2 2018 revenue and EBITDA country trends Figures and trends in local currency RUSSIA PAKISTAN ALGERIA BANGLADESH UKRAINE UZBEKISTAN (RUB BILLION) (PKR BILLION) (DZD BILLION) (BDT BILLION) (UAH BILLION) (UZS BILLION) Revenue + 6.0 % + 4.9% - 8.5% - 8.4% + 11.4% + 10.3% 78,000 YoY 43 YoY 27 YoY 13 Yo
Slide 10: Russia: EBITDA continues to grow, despite Euroset integration
Russia: EBITDA continues to grow, despite Euroset integration TOTAL REVENUE MOBILE CUSTOMERS (RUB BILLION) (MILLION) • Stable competitive environment during the quarter, + 6.0 % YoY - 3.3 % YoY challenging macro conditions 68.4 66.4 72.5 • Total revenue growth of 6.0% YoY driven by mobile service 9.
Slide 11: Euroset integration progressing well
Euroset integration progressing well • Euroset integration on track: ► Targeting 1,600 rebranded Euroset stores in0+ August 2018 ► ~1,400 stores already integrated and rebranded as Beeline at end-June 2018 ► Medium-term target of ~5,500 monobrand Beeline stores (owned and franchise) • Integration is
Slide 12: Pakistan: continued data-driven revenue growth and further margin expansion
Pakistan: continued data-driven revenue growth and further margin expansion TOTAL REVENUE MOBILE CUSTOMERS (PKR BILLION) (MILLION) • The market during Q2 remained competitive, in particular on + 4.9 % YoY + 5.6 % YoY data and social network offers • Despite market conditions, revenue grew YoY, drive
Slide 13: Algeria: improving trends with sequential customer growth and revenue stability
Algeria: improving trends now visible with sequential customer growth and revenue stability TOTAL REVENUE MOBILE CUSTOMERS (DZD BILLION) (MILLION) • Despite Q2 characterized by intense price competition, - 8.5 % YoY - 0.2 % YoY signals of turnaround are now evident 25.3 • Continuing macroeconomic an
Slide 14: Bangladesh: 4G/LTE rollout progressing well, competitive pressure still weighing
Bangladesh: 4G/LTE rollout progressing well, competitive pressure still weighing on results TOTAL REVENUE MOBILE CUSTOMERS (BDT BILLION) (MILLION) • The market during Q2 was characterized by accelerated price - 8.4 % YoY + 4.1 % YoY pressure from competition 12.0 • The revenue trend was affected by
Slide 15: Ukraine: sustained strong data and ARPU performance
Ukraine: sustained strong data and ARPU performance TOTAL REVENUE MOBILE CUSTOMERS (UAH BILLION) (MILLION) • Kyivstar strengthened its market position in a growing + 11.4 % YoY + 1.4 % YoY market, driven by strong growth in mobile data 4.3 4.1 4.5 • Mobile service revenue growth of 11.4% YoY, mainly
Slide 16: Uzbekistan: strong revenue growth, external cost pressure on EBITDA
Uzbekistan: strong revenue growth, external cost pressure on EBITDA TOTAL REVENUE MOBILE CUSTOMERS (UZS BILLION) (MILLION) • Overall market growth, with Unitel commencing repricing + 10.3% YoY activities from March 2018 635 -3.1% YoY 617 5 • Revenue grew by 10.3% YoY driven by repricing activities 5
Slide 17: Agenda
Agenda OPENING Richard James - Head of IR OVERVIEW AND PRIORITIES Ursula Burns - Executive Chairman COUNTRY RESULTS Kjell Johnsen - COO GROUP FINANCIAL RESULTS Trond Westlie - CFO FINAL REMARKS Ursula Burns - Executive Chairman Q&A Q2 2018 RESULTS 17
Slide 18: Q2 2018 good revenue and EBITDA organic growth
Q2 2018 good revenue and EBITDA organic 1 growth • Total revenue organic 1 growth of 3.0% YoY, mainly driven by Russia, • Pakistan, Ukraine and Uzbekistan; reported total revenue down 6.1% primarily due to Uzbekistan and Pakistan currency devaluation Mobile data revenue organic growth of 24.5% YoY,
Slide 19: Revenue and EBITDA development
Revenue and EBITDA development Data revenue and lower costs driving organic growth in revenue and EBITDA USD MILLION +3.0% YoY organic 24 32 (99) 116 (220) 2,490 2,417 2,270 Reported total Equipment & Voice Data and MFS Other 1 Organic total revenue FOREX and Other 2 Reported total revenue accessori
Slide 20: Corporate costs
Corporate costs Progress to significantly reduce corporate costs over time is under way • In Q2 2018, corporate costs were USD 54 million, representing a decrease of ~43% YoY ► Q2 trend driven by a decrease in personnel costs, external cost for services and the release of certain provisions ► H1 201
Slide 21: Q2 2018 income statement
Q2 2018 income statement USD MILLION Reported Organic1 2Q18 2Q17 YoY YoY Revenue 2,270 2,417 (6.1%) 3.0% Service revenue 2,136 2,331 (8.4%) 1.6% EBITDA 857 931 (8.0%) 4.8% ► EBITDA decreased 8.0% YoY to USD 857 million due to currency devaluation in Uzbekistan and Pakistan, and Euroset integration c
Slide 22: Continued strong cash flow generation in Q2 2018
Continued strong cash flow generation in Q2 2018 USD MILLION 18 (49) 42 60 24 59 (292) 118 456 226 206 Russia Pakistan Algeria Bangladesh Ukraine Uzbekistan Other countries OpCF Group OPCF Working capital Interest, taxes Equity free OpCF OpCF OpCF OpCF OpCF OpCF (incl.HQ) and provision and other cas
Slide 23: Cash flow reconciliation table
Cash flow reconciliation table USD MILLION 2Q18 2Q17 YoY EBITDA 857 931 (8.0%) Changes in working capital 66 (44) 250.6% ► Improvement mostly related to cash-in of certain settlements, partially offset by device inventory increase in Russia due to Euroset integration Movement in provisions (24) (6)
Slide 24: Q2 2018 net debt development
Q2 2018 net debt development USD MILLION (197) 502 (857) 108 189 8,966 (66) 8,645 Net debt EBITDA Change in working capital Financial Taxes Cash capex incl. licenses FOREX and Other Net debt 1 31 March charges 30 June 2018 2018 NET DEBT EBITDA 2.5x 2.5x 1 FOREX and Other mainly consist of FX impact
Slide 25: FY 2018 targets confirmed
FY 2018 targets confirmed H1 2018 FY 2018 actual targets3 Flat-to-low Total revenue 3.1% single digit organic organic growth1 growth Flat-to-low EBITDA 5.5% single digit organic organic growth1 growth USD 540 USD ~1 ► FY 2018 equity free cash flow target is calculated at Equity free cash flow2 2018
Slide 26: Agenda
Agenda OPENING Richard James - Head of IR OVERVIEW AND PRIORITIES Ursula Burns - Executive Chairman COUNTRY RESULTS Kjell Johnsen - COO GROUP FINANCIAL RESULTS Trond Westlie - CFO FINAL REMARKS Ursula Burns - Executive Chairman Q&A Q2 2018 RESULTS 26
Slide 27: Final Remarks
VEON FINAL REMARKS
Slide 28: Appendix
VEON APPENDIX
Slide 29: Revenue and EBITDA development
Revenue and EBITDA development Solid organic growth in most countries, partially offset by decrease in Bangladesh, Algeria and Uzbekistan -6.1% YoY reported 18 16 (20) (12) 7 19 45 (220) 2,490 2,417 2,270 Total reported Russia Pakistan Ukraine Uzbekistan Algeria Bangladesh Other 1 Organic total FORE
Slide 30: Italy: continued competitive pressure weighs on top-line
Italy: continued competitive pressure weighs on top-line • Service revenue -8.6% YoY, of which: TOTAL REVENUE MOBILE CUSTOMERS (EUR MILLION) (MILLION) ► Mobile service revenue -9.8% YoY, mainly due to -5.3% YoY -11.4% YoY continued competitive pressure in the market, exacerbated by the new market en
Slide 31: Group debt structure
Group debt structure 30 JUNE 2018 Group debt structure Group debt currency mix1 8% 8% 17% HQ - guaranteed USD 14% HQ - unguaranteed RUB 54% EUR Other 24% 75% Other Gross Debt USD 10.0 billion • Average cost of debt: 6.6% (30 June 2017: 6.4%) • Average maturity: 3.7 years (30 June 2017: 3.7 years) 1
Slide 32: Group debt maturity schedule
Group debt maturity schedule 30 JUNE 2018, USD BILLION Group debt maturity schedule 2.7 HQ Pakistan Other GTH Russia 2.6 1.6 1.5 1.2 0.4 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2018 2019 2020 2021 2022 >2022 USD 0.1 1.0 0.6 0.4 0.7 2.6 54% R UB 0.0 0.0 0.5 1.1 0.8 0.
Slide 33: Liquidity overview
Liquidity overview Group cash breakdown by currency 30 JUNE, 2018 Unused RCF headroom at the end of Q2 2018: VEON – syndicate USD 1.69 billion 36% Unused CF headroom at the end of Q2 2018: 64% Pakistan – credit facilities PKR 4.5 billion (USD 0.04 billion) Banglalink – syndicated TL facility BDT 17.
Slide 34: Debt by entity
Debt by entity 30 JUNE 2018, USD MILLION Outstanding debt Type of debt Cash-pool Entity Bonds Loans Other Total overdrafts1 VEON Amsterdam B.V. - 205 50 - 255 VEON Holdings B.V. 3,683 3,003 150 - 6,836 GTH Finance B.V. 1,200 - - - 1,200 PJSC VimpelCom 394 - - 55 449 Pakistan Mobile Communications Li
Slide 35: Forex
Forex Target rates Average rates Closing rates FY 2018 2Q18 2Q17 YoY 2Q18 2Q17 YoY Russian ruble 60.00 61.80 57.15 8.1% 62.76 59.09 6.2% Algerian dinar 110.00 115.80 109.04 6.2% 117.50 107.80 9.0% Pakistan rupee 105.00 116.80 104.81 11.4% 121.58 104.83 16.0% Bangladeshi taka 79.00 83.78 80.86 3.6% 8
Slide 36: Forex YoY impact on Revenue and EBITDA
Forex YoY impact on Revenue and EBITDA Revenue EBITDA Q2 2018 Q2 2018 Russia (95) (36) Algeria (12) (5) Pakistan (42) (20) Bangladesh (5) (2) Ukraine 2 1 Uzbekistan (89) (38) Other (6) (2) Total (247) (102) Q2 2018 RESULTS 36