VEON Ltd. · NASDAQ:VEON
VEON — VimpelCom — Q3 2015 Earnings Presentation
40 slides from VEON's earnings presentation, Nov 6, 2015
Slide 1: 3Q15 Results Presentation
3Q15 Results Presentation Amsterdam – November 6, 2015 Jean-Yves Charlier – CEO Andrew Davies – CFO
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 Group results and targets Andrew Davies Q&A All
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 Uz
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 USD 44 million
Slide 6: 3Q15 financial highlights
3Q15 financial highlights 1 Revenue and EBITDA organic growth are non-GAAP financial measures that exclude the effect of foreign currency translation and certain items such as liquidations and disposals 2 Underlying EBITDA and net result exclude the provisions for investigations (related to SEC/DOJ/
Slide 7: Performance by country
Performance by country 3Q15 = VimpelCom
Slide 8: Russia: continued operational improvements
RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile Fixed-line -2% YoY EBITDA and EBITDA margin CAPEX excl. licenses and LTM CAPEX/revenue Russia: continued operational improvements -16% YoY 71.0 69.6 +3% YoY 66.2 Mobile customers (million) Improving churn and customer growth YoY Mobile serv
Slide 9: Algeria: transformation program starting to deliver
Algeria: transformation program starting to deliver -4% YoY Service revenue positively impacted in 3Q15 by change in interconnect rates (+2%); underlying decline was 4% EBITDA Margin increased YoY mainly due to favorable change in interconnect rates Data revenue doubled YoY, with QoQ growth at 20% C
Slide 10: Pakistan: revenue and EBITDA YoY growth
Pakistan: revenue and EBITDA YoY growth -33% YoY -9% YoY +26% YoY Mobilink has retained its market position in 3Q15 Strong YoY data revenue increase of 78% and MFS revenue increase of 61%. MFS represents 2.7% of service revenue Successfully growing EBITDA margin through performance transformation in
Slide 11: Bangladesh: continued strong performance
Continued lead in NPS Sustained strong growth in data revenue of 82% YoY Continued improvement in underlying EBITDA margin to 43.5%; one-offs were mainly related to reversal of certain provisions on handsets and utility costs Expanding 3G coverage (currently at 31% of population) Bangladesh: continu
Slide 12: Ukraine: robust results supported by successful 3G launch
+14% YoY Ukraine: robust results supported by successful 3G launch +75% YoY -2% YoY 3.2 3.3 3.6 Market leadership continues to strengthen, notwithstanding the macro environment Successful 3G launch, ahead of competition and offering widest coverage Strong YoY growth in mobile data revenues Robust mo
Slide 13: Kazakhstan: heightened competitive pressure
Mobile Fixed-line Kazakhstan: heightened competitive pressure -1% YoY 35.9 31.4 32.8 -16% YoY Mobile service revenue decreased by 5% YoY, excluding MTR reductions Excluding currency headwinds, EBITDA would have declined 8% YoY Beeline continues to gain market share, despite intensifying competition
Slide 14: Italy: solid performance driven by mobile data
Mobile Fixed-line Italy: solid performance driven by mobile data -9% YoY -18% YoY (reported) -7% YoY (underlying)1 -2% YoY 1,054 998 1,024 Mobile service revenue trend shows further sequential improvement: -1.5% YoY (2Q15 -2.2%, 1Q15 -3.3%) Double digit growth in mobile internet revenue, +13% YoY, d
Slide 15: Group results
. Group results + 3Q15 E 5 — VimpelCom
Slide 16: Group results 3Q15 - overview
Group results 3Q15 - overview Service revenue YoY organic1 development Capex/revenue (LTM) development OCF Margin = (EBITDA – CAPEX)/revenue Underlying2 EBITDA Margin development 1 Revenue organic growth are non-GAAP financial measures that exclude the effect of foreign currency translation and cert
Slide 17: 3Q15 revenue composition and dynamics
3Q15 revenue composition and dynamics …organic revenue growth 1 Organic growth excludes CAR and Burundi contribution in Service revenue 3Q14, due to disposal in 4Q14 -31.7% Reported revenue decline… +0.7% 1 1
Slide 18: 3Q15 EBITDA composition and dynamics
…underlying2 EBITDA broadly stable organically 3Q15 EBITDA composition and dynamics 1 Organic growth excludes CAR and Burundi contribution in Service revenue 3Q14, due to disposal in 4Q14 2 Exceptionals of USD 960 million in 3Q15 consist of the provisions for investigations (related to SEC/DOJ/OM) a
Slide 19: 3Q15 income statement
3Q15 income statement 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 sale of Wind Canada Significantly lower due to refinancing activities and the positive effect of the ruble weakening again
Slide 20: 3Q15 cash flow statement
3Q15 cash flow statement USD million 3Q15 3Q14 YoY EBITDA 58 1,520 (1,462) Changes in working capital and other 1,053 178 875 Net interest paid (206) (305) 99 Income tax paid (99) (139) 40 Net operating cash flow from discontinued operations 283 356 (73) Net cash from operating activities 1,089 1,61
Slide 21: 3Q15 net debt evolution
3Q15 net debt evolution 1 Normalized LTM EBITDA excluding one-off charges related to the Algeria closing transaction in 4Q14 and provisions for investigations (related to SEC/DOJ/OM) and other legal costs of USD 916 million, as well as transformation costs of USD 44 million in 3Q15 Net Debt LTM EBIT
Slide 22: 2015 key targets confirmed
2015 key targets confirmed Service Revenue EBITDA Margin2 Targets 20151 Flat to low single digit decline YoY Flat to minus one 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 change to the asset portf
Slide 23: Conclusion
Conclusion Continued improvements in operational performance Exceptional items caused net loss in 3Q15 2015 key targets confirmed
Slide 24: = VimpelCom
= VimpelCom St0z pr wosjaduin ©
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 Visit our awards winning website www.vimpelcom.com No.1 CORPORATE WEBSITE 2014 -2015 in the Netherlands
Slide 26: Appendix
= VimpelCom St0z pr wosjaduin ©
Slide 27: Uzbekistan: solid results
Mobile Fixed-line Uzbekistan: solid results +84% YoY -3% YoY 445 442 478 +0.5% YoY Healthy growth in mobile service revenue of 8% YoY Annualized churn improved 2 percentage points to 47% Rational competition from 3rd and 4th entrant UZS BILLION, UNLESS STATED OTHERWISE Service revenue EBITDA and EBI
Slide 28: Armenia: strengthened market position
Mobile Fixed-line Armenia: strengthened market position +13% YoY +13% YoY 15.6 12.9 13.9 -1% YoY Growing customer and revenue market share Mobile data revenue growth of 21% YoY driven by promotion of data bundles -12% YoY AMD BILLION, UNLESS STATED OTHERWISE Service revenue EBITDA and EBITDA margin
Slide 29: Kyrgyzstan: clear market leader
Mobile Kyrgyzstan: clear market leader +62% YoY +2% YoY 2.7 2.6 2.9 +17% YoY Clear market leader, #1 in NPS as a result of network quality and value proposition Mobile data revenue growth of 32% YoY +8% YoY KGS BILLION, UNLESS STATED OTHERWISE Service revenue EBITDA and EBITDA margin CAPEX and LTM C
Slide 30: Tajikistan: challenging environment
Mobile Tajikistan: challenging environment +22% YoY -8% YoY 41 30 35 +23% YoY Network quality improved Lower incoming international traffic due to less migrants living abroad -16% YoY Service revenue EBITDA and EBITDA margin CAPEX and LTM CAPEX/revenue Mobile customers (million) USD MILLION, UNLESS
Slide 31: Georgia: continued pressure on results
Mobile Fixed-line Georgia: continued pressure on results +13% YoY +10% YoY 37 34 35 -34% YoY Service revenue pressure mainly due to cancellation of the asymmetrical MTR Mobile data revenue growth of 15% YoY driven by 4G/LTE launch -5% YoY Service revenue EBITDA and EBITDA margin CAPEX excl. licenses
Slide 32: Italy: debt
Italy: debt As at 30 September 2015, EUR million (unless otherwise stated) Outstanding debt (millions) Type of debt/lender Entity Bonds Loans RCF Vendor Financing Other Total WIND Telecomunicazioni S.p.A. - 830 - - 19 849 WIND Acquisition Finance S.A. 10,047 - - - - 10,047 Gross Debt 10,047 830 - -
Slide 33: Reduced net debt offset by FOREX impact on EBITDA
Reduced net debt offset by FOREX impact on EBITDA September 30, 2015 June 30, 2015 Net debt / underlying LTM EBITDA
Slide 34: Credit facilities
Credit facilities Available RCF headroom at the end 3Q15: VimpelCom USD 1.8 billion 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)
Slide 35: Debt maturity profile
Debt maturity profile Group debt maturity schedule by currency1 As at 30 September 2015, in USD billion Group debt maturity schedule by Business Units 1 After effect of cross currency swaps 2015 2016 2017 2018 2019 2020 2021 2022 >2022 USD 0.1 0.7 1.5 0.6 1.0 0.1 0.7 1.3 1.0 71% RUB 0.5 0.5 0.4 0.3
Slide 36: Debt by entity
Debt by entity As at 30 September 2015, USD million Outstanding debt (millions) Type of debt/lender Entity Bonds Loans RCF Vendor Financing Other Total VimpelCom Holdings B.V. 3,364 - - - - 3,364 VimpelCom Amsterdam B.V. - 1,000 - 679 - 1,679 PJSC VimpelCom 1,985 1,128 - 133 38 3,284 Pakistan Mobile
Slide 37: Currency FX rates versus USD
Currency FX rates versus USD Algeria DZD 92.0 Armenia AMD 415.0 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 FOREX rates used in annual targets for 2015
Slide 38: FOREX development
Source: National Banks of the respective countries, Company calculations 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 62.978400000000001 36.190899999999999 0.74017225324598179 59.27770000000000
Slide 39: Reconciliation of EBITDA
Reconciliation of EBITDA USD mln 3Q15 3Q14 9M15 9M14 Unaudited EBITDA 57.996670282294303 1,519.8906104176199 2,064.1631904711999 4,485.575528507297 Depreciation -,402.14264444787597 -,507.62401501029802 -1,186.1855473912399 -1,574.21998062749 Amortization -,126.747913464768 -,176.67460385842298 -,38
Slide 40: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt USD mln 30 September 2015 30 June 2015 31 December 2014 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 22,349 26,443 Interest accrued related to financial liabilities 12