VEON Ltd. · NASDAQ:VEON
VEON — Q1 2018 Earnings Presentation
27 slides from VEON's earnings presentation, May 14, 2018
Slide 1: Q1 2018 Results
Q 1 2 0 1 8 R E S U LT S Amsterdam, 14 May 2018
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. These forward- looking statements may be identified by words such as “m
Slide 3: Key developments
Key developments • VEON reports good revenue and EBITDA organic growth in Q1 2018; USD 334 million in equity free cash flow excluding licenses; FY 2018 guidance confirmed • Russia saw normalization in EBITDA, returning to trend • Pakistan, Ukraine and Uzbekistan continued their strong performance •
Slide 4: Good revenue and EBITDA organic growth, FY 2018 guidance on track
Good revenue and EBITDA organic 1 growth, FY 2018 guidance on track • Total revenue organic 1 growth of 3.2% YoY, mainly driven by Russia, 2.3 854 Pakistan, Ukraine; reported total revenue -1.4% due to Uzbekistan TOTAL EBITDA and Pakistan currencies devaluation REVENUE (USD MILLION) (USD BILLION) •
Slide 5: Revenue development
Revenue development Solid organic growth in most countries, partially offset by decrease in Algeria and Bangladesh USD MILLION +3.2% YoY organic 15 (107) 14 103 (56) 2,357 2,281 2,250 Total Equipment & Voice Data and MFS Other 1 Organic total revenue FOREX Total revenue accessories 1Q18 revenue 1Q17
Slide 6: EBITDA development
EBITDA development Good organic growth USD MILLION +6.3% YoY organic (7) 61 (60) 915 861 854 EBITDA 1Q17 Service Total costs Organic FOREX and Other 1 EBITDA revenue EBITDA 1Q18 1Q18 -0.8% YoY reported 31 13 3 23 29 (21) (60) (20) (4) 915 861 854 EBITDA 1Q17 Russia Pakistan Ukraine Uzbekistan Bangla
Slide 7: Q1 2018 - Corporate costs
Q1 2018 - Corporate costs • In Q1 2018, corporate costs were at USD 80 million, up ~5% YoY ► Year-on-year increase mostly due to severance costs, partially offset by a release of a provision for long term management incentive plans • All the initiatives to address the corporate costs are progressing
Slide 8: Revenue and EBITDA country trends
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 +2.9% +5.7% -9.3% -10.6% +10.1% +20.1% 74,000 YoY 41.5 YoY 27 YoY 13 YoY 44 YoY 700
Slide 9: Russia: good results, with EBITDA returning to trend
Russia: good results, with EBITDA returning to trend TOTAL REVENUE MOBILE CUSTOMERS (RUB BILLION) (MILLION) • Mobile service revenue increased by 3.7% YoY, mainly +2.9% YoY -1.2% YoY driven by 8.9% mobile data revenue growth 70.4 64.5 9.6 66.4 ► Mobile ARPU grew by 4.4% YoY 9.7 8.9 57.0 56.3 • Fixed
Slide 10: 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) • Continued revenue YoY growth in Q1, despite the +5.7% YoY +5.0% YoY competitive market conditions, fuelled by strong data revenue growth (+34% YoY) 38.7 40.3 40.9 2.5
Slide 11: Algeria: challenging macro and competitive environment vs. sequential customer growth
Algeria: challenging macro and competitive environment vs. sequential customer growth TOTAL REVENUE MOBILE CUSTOMERS (DZD BILLION) (MILLION) • Continuing macroeconomic and regulatory challenges -9.3% YoY -4.5% YoY ► Economic slowdown and high inflation continue, 25.5 0.5 24.5 along with import restr
Slide 12: Bangladesh: continued competitive pressure impacting results, 4G/LTE successfully launched
Bangladesh: continued competitive pressure impacting results, 4G/LTE successfully launched TOTAL REVENUE MOBILE CUSTOMERS • Banglalink acquired additional spectrum in the 1800 and (BDT BILLION) (MILLION) 2100 MHz bandwidth and 4G/LTE license -10.6% YoY +5.6% YoY ► 4G/LTE launched in February, roll-o
Slide 13: Ukraine: sustained strong data and ARPU performance alongside 4G/LTE launch
Ukraine: sustained strong data and ARPU performance alongside 4G/LTE launch TOTAL REVENUE MOBILE CUSTOMERS (UAH BILLION) (MILLION) • Kyivstar secured 4G/LTE license in the 2,600 MHz and +10.1% YoY +1.9% YoY 1,800 MHz bandwidth and launched 4G/LTE from April 3.9 4.3 4.3 2018 0.3 0.3 0.3 26.0 26.5 • I
Slide 14: Uzbekistan: strong revenue growth, tax and cost pressure impacting EBITDA margin
Uzbekistan: strong revenue growth, tax and cost pressure impacting EBITDA margin TOTAL REVENUE MOBILE CUSTOMERS (UZS BILLION) (MILLION) • Revenue grew 20.1% YoY driven by increased tariffs, +20.1% YoY which were fixed at the foreign exchange rate of UZS +0.4% YoY 628 617 4,210 to the US dollar after
Slide 15: Italy: continued competitive pressure weighs on top-line
Italy: continued competitive pressure weighs on top-line TOTAL REVENUE MOBILE CUSTOMERS (EUR MILLION) (MILLION) • Service revenue -7.1% YoY, of which: -5.5% YoY -8.9% YoY ► Mobile service revenue -7.8% YoY, mainly due to 1,548 1,556 1,410 continued competitive pressure in the market, 234 270 270 272
Slide 16: Q1 2018 income statement
Q1 2018 income statement USD MILLION Reported Organic1 1Q18 1Q17 YoY YoY Revenue 2,250 2,281 (1.4%) 3.2% Service revenue 2,156 2,202 (2.1%) 2.9% EBITDA 854 861 (0.8%) 6.3% ► EBITDA decreased 0.8% YoY to USD 854 million due to currency devaluation in Uzbekistan and Pakistan, and Euroset integration c
Slide 17: Cash flow reconciliation table
Cash flow reconciliation table USD MILLION 1Q18 1Q17 YoY EBITDA 854 861 (0.8%) Changes in working capital 96 108 (11.1%) Movement in provisions 32 (66) n.m. ► The year on year movement in provisions is mainly due to payment of USD 69 million related to Iraqna claim in Q1 2017 Net interest paid-recei
Slide 18: Q1 2018 net debt development
Q1 2018 net debt development USD MILLION (67) 286 676 (854) License payments of USD 303 million 104 176 8,966 8,741 (96) Net debt EBITDA Change in working Financial Taxes Cash capex incl. licenses Dividend FOREX and Other 1 Net debt 31 December capital charges 31 March 2017 2018 NET DEBT EBITDA 2.4x
Slide 19: FY 2018 targets confirmed
FY 2018 targets confirmed Q1 2018 FY 2018 actual targets3 Flat-to-low Total revenue 3.2% single digit organic organic growth1 growth Flat-to-low EBITDA 6.3% single digit organic organic growth1 growth USD 334 USD ~1 FY 2018 equity free cash flow target is calculated at Equity free cash flow2 ► milli
Slide 20: Appendix
Appendix
Slide 21: IFRS 9 and IFRS 15: 2018 impact for VEON
IFRS 9 and IFRS 15: 2018 impact for VEON IFRS 9 IFRS 15 • The scope of IFRS 9 includes new guidance to classify financial • The scope of IFRS 15 includes the timing of revenue instruments on the balance sheet recognition and costs of obtaining contracts with customers • VEON introduced the concept o
Slide 22: Group debt structure
Group debt structure AS AT 31 MARCH 2018 Group debt structure Group debt currency mix1 7% 8% 13% HQ - guaranteed USD 6% 14% HQ - unguaranteed RUB PJSC 54% EUR Other 25% 74% Other Gross Debt USD 10.4billion • Average cost of debt: 6.6% (31 March 2017: 7.3%) • Average maturity: 3.8 years (31 March 201
Slide 23: Group debt maturity schedule
Group debt maturity schedule AS AT 31 MARCH 2018, USD BILLION Group debt maturity schedule HQ Pakistan Other GTH Russia 2.8 2.6 1.7 1.6 1.2 0.6 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2018 2019 2020 2021 2022 >2022 USD 0.3 1.0 0.6 0.4 0.7 2.6 54% R UB 0.0 0.0 0.5 1.2
Slide 24: Liquidity overview
Liquidity overview Group cash breakdown by currency 31 MARCH, 2018 Unused RCF headroom at the end of Q1 2018: VEON – syndicate USD 1.69 billion 32% Unused CF headroom at the end of Q1 2018: 68% VEON – Sberbank RUB 15 billion (USD 0.26 billion) Pakistan – credit facilities PKR 15 billion (USD 0.13 bi
Slide 25: Debt by entity
Debt by entity AS AT 31 MARCH 2018, USD MILLION Outstanding debt Type of debt Entity Bonds Loans Other Total VEON Amsterdam B.V. - 210 - 210 VEON Holdings B.V. 3,682 3,261 - 6,943 GTH Finance B.V. 1,200 - - 1,200 GTH - 98 - 98 PJSC VimpelCom 562 - 60 622 Pakistan Mobile Communications Limited 35 742
Slide 26: Forex
Forex Target rates Average rates Closing rates FY 2018 1Q18 1Q17 YoY 1Q18 1Q17 YoY Russian ruble 60.00 56.88 58.84 (3.3%) 57.26 56.38 1.6% Algerian dinar 110.00 114.08 109.93 3.8% 114.14 110.07 3.7% Pakistan rupee 105.00 111.41 104.79 6.3% 115.71 104.83 10.4% Bangladeshi taka 79.00 83.08 79.50 4.5%
Slide 27: Forex YoY impact on Revenue and EBITDA
Forex YoY impact on Revenue and EBITDA Revenue EBITDA Q1 2018 Q1 2018 Russia 38 15 Algeria (7) (3) Pakistan (23) (10) Bangladesh (6) (1) Ukraine (2) (1) Uzbekistan (108) (48) Other 0 (2) Total (107) (51) Q1 2018 RESULTS 27