113 slides from VEON Ltd. ORD's earnings presentation, Feb 17, 2016
Slide 1: Pioneering towards the digital frontier
Pioneering towards the digital frontier © VimpelCom Ltd 2016 London, February 17, 2016 1
Slide 2: Agenda
Agenda ► 2:00pm Introduction: Bart Morselt – Group Director & Head of IR ► 2:10pm 2015 key achievements : Jean-Yves Charlier – Chief Executive Officer ► 2:20pm Group FY2015 results: Andrew Davies – Chief Financial Officer ► 3:00pm The vision & World class operations: Jean-Yves Charlier – Chief Execu
Slide 3: Disclaimer
Disclaimer These presentations contain “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 state
Slide 4: Key achievements in 2015
Key achievements in 2015 Jean-Yves Charlier © VimpelCom Ltd 2016 Chief Executive Officer VimpelCom London, February 17, 2016 4
Slide 5: VimpelCom delivered on its 2015 targets despite difficult backdrop
VimpelCom has delivered on its 2015 targets despite a difficult backdrop of currency devaluations and economic challenges New strategic © VimpelCom Ltd 2016 Progress visible framework 2015 financial against USD 750 launched in 2015 results in line million cash flow to reinvent with expectations impr
Slide 6: 2015 Key achievements
2015 Key achievements ► Refinancing for USD 5 billion ► Implementing a global operating model ► Reduction in interest costs by ~200 million ► Strengthened the management team ► Algeria transaction completed ► Focus on NPS with leadership position in 7 ► Prospective settlement with SEC, DOJ, OM count
Slide 7: Currency devaluation and economic turmoil remain challenging
Currency devaluation and economic turmoil remain challenging in emerging markets 2014 2015 Forex impact -11% -30% © VimpelCom Ltd 2016 -14% -29% Reported total revenue USD 13.4 billion USD 9.6 billion Organic total revenue -3% +0.6% Against this backdrop, 2015 revenue stabilized, on an organic basis
Slide 8: Group results FY15 - overview
Group results FY15 - overview Service revenue and Total revenue YoY organic1 development Underlying2 EBITDA Margin development Service revenue Total revenue 41.6% 40.8% 0.6% -0.2% © VimpelCom Ltd 2016 -1.5% FY14 FY15 -3.0% FY14/13 FY 15/14 Capex/revenue development OCF Margin = (Underlying EBITD
Slide 9: 2015 key targets delivered
2015 key targets delivered Targets 20151 Actual1 Flat to low single digit Service Revenue -0.2% decline YoY © VimpelCom Ltd 2016 40.8% EBITDA Margin2 Flat to minus one p.p. YoY (from 41.6% in 2014) CAPEX / Revenue 18-20% 18.2% Leverage (Net Debt / EBITDA) ~1.6x 1.4x 1 Key targets for 2015 as
Slide 10: 2015 Results
2015 Results Andrew Davies © VimpelCom Ltd 2016 Chief Financial Officer London, February 17, 2016 10
Slide 11: 2015 group service revenue
2015 group service revenue USD MILLION -29.5% (70) (402) 379 20 (28) (3,797) 13,231 13,161 13,129 9,332 Reported revenue decline… © VimpelCom Ltd 2016 Service Disposals1 Service Voice Data Interconnect Other Organic FOREX Service revenue revenue and MFS and roaming service revenue 2014 2014 excl. re
Slide 12: 4Q15 group service revenue
4Q15 group service revenue USD MILLION -25.0% (81) 89 (15) (17) (706) 2,922 2,899 2,193 Reported revenue decline… © VimpelCom Ltd 2016 Service Voice Data Interconnect Other Organic FOREX Service revenue and MFS and roaming service revenue 4Q2014 revenue 4Q2015 4Q2015 -0.8% (59) (10) 9 36 (706) 2,922
Slide 13: 2015 group EBITDA
2015 group EBITDA USD MILLION -2,703 65 12 80 (80) (9) (38) (2) (1,069) 5,560 5,625 (1,662) © VimpelCom Ltd 2016 Reported EBITDA decline… 2,857 EBITDA Exceptionals Underlying Total Service Customer Network HR costs Other structural Exceptionals 2 FOREX EBITDA 2014 and disposals 1 EBITDA 2014 revenue
Slide 14: 4Q15 group EBITDA
4Q15 group EBITDA USD MILLION -281 27 33 37 (47) 5 3 (105) 77 (313) 1,074 1,151 793 © VimpelCom Ltd 2016 Reported EBITDA decline… EBITDA Exceptionals 1 Underlying EBITDA Total Service Customer Network HR costs Other structural Exceptionals2 FOREX EBITDA 4Q14 4Q14 revenue costs associated and IT cost
Slide 15: 2015 EBITDA exceptional items
2015 EBITDA exceptional items FY15 Exceptional items breakdown 4Q15 Exceptional items breakdown (USD million) (USD million) © VimpelCom Ltd 2016 112 900 1,069 105 156 13 -7 Uzbekistan provision Transformation costs Other Transformation costs Other 15
Slide 16: Russia: continued operational improvements
Russia: continued operational improvements RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Improved quality of the customer base, NPS gap vs #1 (million) -3.9% YoY +4.5% YoY (among big 3) further reduced 14.2 11.3 11.3 • Customer base grew YoY for fifth consecutive quarter 57
Slide 17: Algeria: transformation program ongoing
Algeria: transformation program ongoing DZD BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Transformation program ongoing, however market (million) -7% YoY -3.9% YoY remains challenging with aggressive price competition • Service revenue declined YoY due to high-value customer c
Slide 18: Pakistan: continued revenue and EBITDA growth
Pakistan: continued revenue and EBITDA growth PKR BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Mobile customers declined due to market SIM (million) +4.2% YoY -5.9% YoY verification process (underlying customer base +3% YoY) • Successful launch of co-branded handsets and smart
Slide 19: Bangladesh: continued strong performance
Bangladesh: continued strong performance BDT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Customer growth 5% YoY driven by attractive simple (million) +5.7% YoY +4.9% YoY tariff offering • Strong lead in NPS due to strengthened network and attractive data offers 30.8 32.3 © Vi
Slide 20: Ukraine: robust results supported by 3G launch
Ukraine: robust results supported by successful 3G launch UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Market leadership continues to strengthen, despite (million) +12.1% YoY -3.1% YoY challenging macro-economic environment 0.2 0.2 0.3 • Successful 3G launch with most exte
Slide 21: Italy: ongoing sequential improvement
Italy: ongoing sequential improvement EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Further YoY improvement in mobile service revenue (million) -3.3% YoY -2.2% YoY trend 292 272 268 • Mobile ARPU stable, confirming the trend seen throughout 2015 21.6 21.1 © VimpelCom Ltd 20
Slide 22: 2015 income statement
2015 income statement USD million FY15 FY14 YoY Organic YoY Revenue 9,625 13,517 (29%) +0.6% Service Revenue 9,332 13,231 (29%) (0.2%) EBITDA underlying 3,926 5,625 (30%) (0.6%) • © VimpelCom Ltd 2016 EBITDA reported 2,857 5,560 (49%) (18.3%) Due to local currencies depreciation of USD 1,662 million
Slide 23: FY15 net debt evolution
FY15 net debt evolution (13,260) © VimpelCom Ltd 2016 19,992 2,207 (1,201) (969) (2,857) 671 155 758 6,732 5,496 Net Debt 31 Italy debt Net Debt 31 EBITDA Change Net Interest Taxes CAPEX 2 Algeria FOREX and Net Debt December December December in WC Transaction Other 31 2014 2014 2014 (excl. December
Slide 24: Vision & World class operations
Vision & World class operations Jean-Yves Charlier © VimpelCom Ltd 2016 Chief Executive Officer VimpelCom London, February 17, 2016 24
Slide 25: Vision
Vision To be a pioneer, working at © VimpelCom Ltd 2016 the frontier to unlock new opportunities for customers as they navigate the digital world 25
Slide 26: World class operations
World class operations Creating a superior Next generation Strengthened customer experience operating model management team © VimpelCom Ltd 2016 A B C 26
Slide 27: Strong Net Promoter Score and market positions
A Strong Net Promoter Score and market positions 2015 Mobile customers market position (share)1 NPS leader Algeria © VimpelCom Ltd 2016 Algeria, Bangladesh, Italy, 7 Pakistan2 Kazakhstan Russia Ukraine, Kyrgyzstan Countries Ukraine Armenia Bangladesh2 Uzbekistan Italy2 NPS co-leader Armenia, Uzbekis
Slide 28: Next-generation operating model
B Next-generation operating model Shared service centers © VimpelCom Ltd 2016 Lean HQ Simplification Digitalization Globalization Centers of excellence Contact centers Managed 28 services
Slide 29: Strengthened management team
C Strengthened management team Group Executive Committee Andrew Davies Chief Financial Officer = speaking today Jon Eddy Scott Dresser Emerging Markets CEO General Counsel = < 2 years at VimpelCom © VimpelCom Ltd 2016 Jeremy Roffe-Vidal Mikhail Gerchuk Chief Human Resources Eurasia CEO Officer Maxim
Slide 30: New revenue streams and digital leadership
New revenue streams and digital leadership Christopher Schlaeffer $ $ © VimpelCom Ltd 2016 $ $ Chief Digital Officer London, February 17, 2016 30
Slide 31: New revenue streams and digital leadership - three core elements
New revenues streams and digital leadership – three core elements Revenue acceleration Top line turnaround and service revenue market share growth © VimpelCom Ltd 2016 Digital engagement model Creating a digital pure play engagement model Digital products and services Introducing new digital product
Slide 32: Revenue acceleration program focus areas
Revenue acceleration program to focus on four core areas Data Realize full potential Voice / messaging © VimpelCom Ltd 2016 Increase share of wallet Revenue acceleration program B2B Fixed broadband Unlock opportunities Capture the household Leading in customer experience 32
Slide 33: Voice/messaging - increase share of wallet
Voice/messaging – increase share of wallet Grow revenue market share through increasing share of wallet More granular and Upgrade pricing and tariff Use of machine learning dynamic customer © VimpelCom Ltd 2016 portfolio to increase share to derive insights and segmentation for of usage and improve
Slide 34: Data - realize full potential
Data – realize full potential Ensure well- Increase balanced distribution device presence and © VimpelCom Ltd 2016 portfolio control Outperform data revenue market Stimulate data Integrate usage via customer mobile data in engagement app group pricing and OTT strategy 34
Slide 35: Fixed broadband - capture the household
Fixed broadband – capture the household Progressively expand our fixed value proposition targeting households © VimpelCom Ltd 2016 2P 3P 4P ‘xP’ Smartly expand fixed footprint, leveraging large mobile customer base and existing backbone 35
Slide 36: B2B - unlock opportunities
B2B – unlock opportunities Ambition to become one of VimpelCom’ major growth engines, delivering recognized global B2B ICT services for Large Enterprise, SME and SoHo Key goals Growth levers Keyenablers Key enablers © VimpelCom Ltd 2016 Strengthening our Untapped customer Dedicated B2B BU and CoE mo
Slide 37: Tech and media attention up for grabs
User behavior The total tech and media attention up for grabs is enormous: more than half the waking day is spent on tech and media Average employed adult daily behavior, U.S., 2014, hours: minutes TOTAL: 31 HOURS 28 MINUTES © VimpelCom Ltd 2016 Sleep 7:06 Media & consumer tech activity 11:05 (video
Slide 38: Behaviors dominating people's attention worldwide
These behaviors dominate people’s attention worldwide 8h44m UK 4h40m © VimpelCom Ltd 2016 11h05m JAPAN USA 5h25m CHINA 10h34m BRAZIL Video Audio Social media Sources: Edison, eMarketer, Nielsen, Sandvine, US Media Consulting, Cisco, Experientia, Media UK, Global Web Index, Secom, Ofcom, 38 GroupM, A
Slide 39: Digital Strategy
Digital Strategy VimpelCom’s digital strategy will be built from the Customer Experience outwards © VimpelCom Ltd 2016 39
Slide 40: Digital engagement model
Digital engagement model © VimpelCom Ltd 2016 Full digitization of the customer journey allows a drastic simplification of the service model, while offering the convenience of 24/7 digital services 40
Slide 41: New digital products and services
New digital products and services © VimpelCom Ltd 2016 Key principles Sizable in the short/ Effective use Drive customer Asset-light mid-term of own assets base stickiness Capture untapped opportunities in emerging markets • Lower level of international competition • Strong need for localization to
Slide 42: Transforming from a telecom to a digital company
Transforming from a telecom to a digital company Personalizing the user experience © VimpelCom Ltd 2016 Customer- Product facing Process Culture Development operations Enabled by technology 42
Slide 43: Q&A
New Revenu Streams $ $ $ Q&A First Performance Transformation 43 © VimpelCom Ltd 2016
Slide 44: Digital leadership - Portfolio and asset optimization
Digital leadership - Portfolio and asset optimization © VimpelCom Ltd 2016 Yogesh Malik Chief Technology Officer London, February 17, 2016 44
Slide 45: Digital technology leadership
Digital technology leadership Spearhead new architecture principles © VimpelCom Ltd 2016 Technology Unleash and own critical technologies Leadership Ensure execution 45
Slide 46: Thinking differently in the new technology age
Thinking differently in the new technology age Traditional telco pitfalls Digital company © VimpelCom Ltd 2016 • Relying on external vendors for innovation • ‘Own’ critical customer facing technologies • Sticking too much to classic industry standards • Grow and foster own development capabilities •
Slide 47: Spearheading new architecture principles
Spearheading new architecture principles Challenges Our architecture principles Transaction Separate data from the © VimpelCom Ltd 2016 volume application logic Demand for Make data seamlessly real-time accessible Extensive use Fully elastic of data infrastructure 47
Slide 48: Launching global initiatives across technology layers
Launching global initiatives across technology layers Retail Shop Call center web User interfacing Clean-sheet thinking about systems customer experience © VimpelCom Ltd 2016 Flexible IT stack enabling OSS/BSS Stack new products and services Foundation for contextually Real-time data sensitive inter
Slide 49: Implementing OSS/BSS transformation on a global scale
Implementing OSS/BSS transformation on a global scale • Unprecedented scale of transformation across 11 countries • Designed to bring IT costs © VimpelCom Ltd 2016 substantially down by sun- setting the legacy • Open interfaces enabling new business partnerships • Flexibility/configurability to enab
Slide 50: Moving to next generation IT operating model
Moving from local to the next generation IT operating model Local operating model Next generation IT operating model IT strategy and integration • Runs part of IT as a shared service center Group level activities are defined on a • Sets architectural priorities and timelines high level • Runs develo
Slide 51: Harnessing the power of data and analytics
Harnessing the power of data and analytics Utilize our data assets © VimpelCom Ltd 2016 Customer profiling Network optimization Offer personalization 51
Slide 52: Ensuring execution by establishing strong technology talent
Ensuring execution by establishing strong technology talent © VimpelCom Ltd 2016 Facts Results achieved • Majority of our regions have appointed new CTO • Hands-on, delivery-oriented team culture leadership in 2015 • Instant innovation and close-knit cooperation • HQ Technology team was completely r
Slide 53: Ensuring execution by ramping up internal capabilities
Ensuring execution by ramping up internal capabilities • Emphasizing front-end application development © VimpelCom Ltd 2016 • Opening mobile App development centers • Growing internal data science competence 53
Slide 54: Portfolio and asset optimization
Portfolio and asset optimization Next-generation operating model © VimpelCom Ltd 2016 Portfolio On track with CAPEX efficiency and asset optimization Structural OPEX reduction 54
Slide 55: Pioneering the next-generation operating model
Pioneering the next-generation operating model • Consolidating Network Operating Centers © VimpelCom Ltd 2016 • Raising efficiency by establishing service centers/hubs • Partnering with key vendors toward a lean operating model NOC’s in planning Current NOC’s 55
Slide 56: On track with CAPEX efficiency
On track with CAPEX efficiency despite macroeconomic headwinds What we achieved What we are planning to do • Clear NPV-based CAPEX • Maximizing traffic to 4G and 21% minimizing 3G capacity © VimpelCom Ltd 2016 framework applied across 18% 17-18% all OpCos • Network sharing in key • Improved sourcing
Slide 57: Ambitious infrastructure sharing plans
Ambitious infrastructure sharing plans • Joint project with MegaFon to cover 10 Russian regions for more than © VimpelCom Ltd 2016 1,300 4G/LTE base stations • Joint deal with MTS in Russia to share mobile spectrum in addition to SHARE infrastructure sharing agreement • Network sharing negotiations
Slide 58: Taking tower monetization to the next level
Taking tower monetization to the next level • Tower monetization program is being deployed across the footprint, driven © VimpelCom Ltd 2016 by an NPV-based approach • Several formal processes have already started • The industrial driver of tower transactions is the asset light strategy 58
Slide 59: Reducing structural OPEX
Reducing structural OPEX in spite of growing traffic and increased number of sites Examples of levers pulled: Technical OPEX (USD billion) FX change Organic reduction 1. Renegotiation of site rental © VimpelCom Ltd 2016 agreements (e.g. in Russia) 2.05 -20% 2. Energy saving measures 1.6 (e.g. Pakist
Slide 60: Example Russia: site rental costs
1 Example Russia keeping site rental costs flat despite heavy inflationary trends Total site rental cost Total number of sites Avg. rental cost per site Measures taken: (RUB billion) (thousand) (RUB thousand) • Renegotiation of © VimpelCom Ltd 2016 +7% +4% 34.1 agreements 7.0 31.7 6.8 -3% • New moti
Slide 61: Example Pakistan: generator fuel costs
2 Example Pakistan reducing generator fuel costs despite increased number of sites Fuel and refueling costs Total number of sites Reduced fuel consumption Measures taken (PKR billion) (thousand) (million liters) • Modernized © VimpelCom Ltd 2016 -30% -21% 46 equipment 4.2 • Lower power 3.3 32 consum
Slide 62: Example Algeria: maintenance costs
3 Example Algeria reducing maintenance costs Maintenance costs Total number of sites Avg. maintenance cost Measures taken (DZD billion) (thousand) per site (DZD thousand) • 2G site dismantling © VimpelCom Ltd 2016 -21% • Maintenance 4.2 in-sourcing 3.3 -16% • Leased line -6% rationalization 6.9 6.5
Slide 63: Performance transformation
Performance transformation Alexander Matuschka © VimpelCom Ltd 2016 Chief Performance Officer London, February 17, 2016 63
Slide 64: Performance transformation aspirations
Performance transformation aspirations Create the next-generation operating model © VimpelCom Ltd 2016 To reinvent • Save and reinvest VimpelCom with • Drive 750 million cash improvement substantially lower cost base • Create local champions and local ownership 64
Slide 65: Performance transformation - three core elements
Performance transformation – three core elements © VimpelCom Ltd 2016 Russia Eurasia Italy Emerging HQ Markets Next-generation operating model Procurement Supply Chain 65
Slide 66: Next-generation operating model
Next-generation operating © VimpelCom Ltd 2016 model 66
Slide 67: Next-generation operating model
Next-generation operating model Shared service centers © VimpelCom Ltd 2016 Lean HQ Simplification Digitalization Globalization Centers of excellence Contact centers Managed 67 services
Slide 68: Next-generation operating model
Next-generation operating model From To 14 companies with separate Next-generation operating operating models model © VimpelCom Ltd 2016 Amsterdam HQ Lean HQ with strategy focus administrative oversight Patchwork of local Global competencies and skills competencies & skills 68
Slide 69: Shared service centers
Shared service centers From To Wide Range Standardized, consolidated of non-standardized processes global support processes © VimpelCom Ltd 2016 Almost no Lean, automated automation processes Fragmented operating model Global operating model 69
Slide 70: Centers of excellence
Centers of excellence From To Local pockets Global expertise of expertise © VimpelCom Ltd 2016 Limited Agile replication of intelligence Knowledge sharing across the group 0 >15 Global centers of excellence Global centers of excellence 70
Slide 71: Managed services
Managed services From To Country-based Cross-border Managed service solution Managed service solutions © VimpelCom Ltd 2016 Network Centric Service oriented Operational model, obsolete tooling Operating model, Customer experience Multiple In-country Consolidated Network Operation Centers Network Ope
Slide 72: Contact centers
Contact centers From To No big data One customer view analytics In real time © VimpelCom Ltd 2016 Silo-view First contact resolution Non-standardized Standardized call centers contact centers Customer service oriented 72
Slide 73: Procurement
© VimpelCom Ltd 2016 73 Procurement
Slide 74: Procurement
Procurement From To Local Global Vendor strategy Vendor agreements © VimpelCom Ltd 2016 Vendors in control VimpelCom in control Through localised decisions Traditional approach Innovative approach Close to incumbents We expect disruptive behaviour 74
Slide 75: Procurement
Procurement From To >40% price difference Same price across OpCos across OpCos © VimpelCom Ltd 2016 <5% >70% Global purchasing Global purchasing 30% 10% FOREX exposure FOREX exposure 75
Slide 76: Procurement
Procurement From To Local 26 Vendor relationship Binding global relationship agreements © VimpelCom Ltd 2016 No 14 Global price books Global price books Local vendor Global vendor model With local terms & conditions Best in class, compliant 76
Slide 77: Supply chain
© VimpelCom Ltd 2016 77 Supply chain
Slide 78: Supply chain
Supply chain From To Budget-driven Demand-driven Ordering ordering © VimpelCom Ltd 2016 Manual System-based Planning Planning with harmonized master data 40% 95% Supplier deliveries on time Supplier deliveries on time 78
Slide 79: Supply chain
Supply chain From To >150 warehouses <50 warehouses © VimpelCom Ltd 2016 >180 days stock <90 days stock 3 months updated Real time Inventory level Inventory data 79
Slide 80: Why we will succeed
Why we will succeed © VimpelCom Ltd 2016 80
Slide 81: One project management
One project management One global PMO, satellite in each OpCo © VimpelCom Ltd 2016 Every initiative based on a business case Every business case linked to P&L Every business case validated by 4 eye principle 81
Slide 82: Stringent governance
Stringent governance © VimpelCom Ltd 2016 Every OpCo reviewed monthly Every global initiative reviewed monthly Every local initiative reviewed monthly Reviews held locally & in person 82
Slide 83: One project management tool
One project management tool Every initiative is tracked in the tool © VimpelCom Ltd 2016 Every initiative is linked to structural KPI’s Every initiative is linked to financial KPI’s Weekly progress updates Monthly reconciliation of impact with financial results 83
Slide 84: Implemented so far
Implemented so far 150 full time employees managing program © VimpelCom Ltd 2016 1,200 transformation measures 1,700 trackable actions 330 measure owners 84
Slide 85: One big data mining tool
One big data mining tool Total no. of internal HC Sales cost base Non-HC-driven costs Hotel category ratio Ramp-downs Network maintenance costs (mobile) HC driven costs per internal HC # of miles Ramp-ups Network maintenance costs (fixed) Employee benefit per internal HC Red Book Opex HC/ non-HC dri
Slide 86: Structural KPI methodology
Structural KPI methodology From To Desk sharing ratio Desk sharing ratio -25% © VimpelCom Ltd 2016 of space 1.0 1.4 = 86
Slide 87: Structural KPI methodology
Structural KPI methodology From To Micro-teams Micro-teams Agile 3,300 300 © VimpelCom Ltd 2016 Lean = Upgrade Span of Control Span of Control admin functions admin functions 9 6 87
Slide 88: New mode of operation
New mode of operation From To Advanced flights Booked time Advanced flights Booked time 25 % © VimpelCom Ltd 2016 3 days cost 14 days reduction = 88
Slide 89: Structural improvements & targets 2016
Structural improvements & targets 2016 Andrew Davies © VimpelCom Ltd 2016 Chief Financial Officer London, February 17, 2016 89
Slide 90: Group delivery on structural improvements (1/2)
Group delivery on structural improvements (1/2) Deleverage – Key events Italy tower Italy JV with subsequent Algeria transaction sale deconsolidation of WIND © VimpelCom Ltd 2016 April May July January March August October November December 2014 2014 2014 2015 2015 2015 2015 2015 2015 Italy refinanc
Slide 91: Group delivery on structural improvements (2/2)
Group delivery on structural improvements (2/2) • In 2014, USD 21 billion in total financing Net Debt and Net Leverage Ratio1 activities at group level were completed o/w Italy USD 13.3 bln2 20.0 5.0 20 © VimpelCom Ltd 2016 • In 2015, we managed to further Net Debt, USD million Net leverage Ratio 16
Slide 92: Progress on debt optimization
Progress on debt optimization Group gross debt (currency breakdown and evolution) 2014 2014 excl. Italy, pro-forma 2015 (USD 26.4 billion) (USD 12.9 billion) (USD 9.5 billion) © VimpelCom Ltd 2016 0.5 0.9 8.2 3.0 Average Average 1.7 Average cost: cost: cost: 6.3% 14.6 7.1% 7.3% 6.9 0.5 9.4 3.0 USD R
Slide 93: Liquidity analysis
Liquidity analysis Group Cash breakdown by currency Unused RCF headroom at the end 4Q15: (December 31, 2015) VimpelCom - syndicate USD 1.8 billion PJSC VimpelCom - Sberbank RUB 15 billion (USD 0.2 billion ) © VimpelCom Ltd 2016 36% Unused VF/CF headroom at the end 4Q15: 64% VimpelCom - CDB/BoC USD 1
Slide 94: Capital structure and capital allocation priorities
Capital structure and capital allocation priorities Closing of Italy transaction GTH refinancing © VimpelCom Ltd 2016 Improving cash upstream Optimization of local debt structures Global capital allocation model Paving the way to return to a meaningful dividend policy Asset light strategy Create fle
Slide 95: Expect to deliver >50% of cash flow target in 2016
Expect to deliver >50% of USD 750 mln p.a. cash flow target in 2016 2015-2016E Operating Cash flow improvement1 (USD, million) Target2 ~750 © VimpelCom Ltd 2016 2016E ~100-200 2015 +318 ~(250) 2016E 389 (156) 2015 125 352 31 (33) Personnel cost (severance) Others 2015 D 2015 D 2016E D OCF 2015/16E 2
Slide 96: 2016 guidance
2016 guidance Targets 2015 Actual 2015 Targets Service Revenue1 Flat to low single digit decline YoY (0.2%) Flat to low single digit growth YoY © VimpelCom Ltd 2016 EBITDA Margin1 Flat to minus one p.p. YoY 40.8% Flat to +1 p.p. CAPEX / Revenue1 18-20% 18.2% 17-18% OCF margin1 Not used as a ta
Slide 97: Q&A
New Revenu Streams $ $ $ Q&A Final Performance Transformation 97 © VimpelCom Ltd 2016
Slide 98: Appendix
© VimpelCom Ltd 2016 98 Appendix
Slide 99: Reconciliation of EBITDA from reported to underlying
Reconciliation of EBITDA from reported to underlying USD mln, unaudited 4Q15 4Q14 FY15 FY14 EBITDA 793 1,074 2,857 5,560 Transformation costs, of which 112 156 © VimpelCom Ltd 2016 severance (restructuring) costs 31 31 other transformation costs at OpCo level 16 16 other transformation costs at HQ l
Slide 100: Kazakhstan: heightened competitive pressure
Kazakhstan: heightened competitive pressure KZT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Mobile service revenue decreased by (million) -9.1% YoY -3.1% YoY 6% YoY, excluding MTR reductions 3.8 4.1 • Fixed-line service revenue growth of 22% YoY 4.6 9.8 9.5 • Beeline continue
Slide 101: Uzbekistan: good growth in mobile data
Uzbekistan: good growth in mobile data UZS BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Strong growth in mobile service revenue of 12% YoY +11.6% YoY (million) -6.4% YoY driven by mobile data and VAS revenue 4 3 3 • Mobile data ARPU increased 30% YoY 441 475 493 10.6 • Rationa
Slide 102: Armenia: strengthened market position
Armenia: strengthened market position AMD BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Growing customer and revenue market share in a (million) -10.3% YoY +8.6% YoY declining market • Mobile data revenue growth of 16% YoY driven by 7.4 7.2 promotion of data bundles 6.5 © Vimpe
Slide 103: Kyrgyzstan: remained clear market leader
Kyrgyzstan: remained clear market leader KGS BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Remained clear market leader with leading NPS (million) +6.8% YoY -1.1% YoY position due to high quality network and attractive value proposition • Strong mobile data revenue growth of 19
Slide 104: Georgia: continued customer improvement
Georgia: continued customer improvement GEL MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Customer growth of 5% YoY due to attractive value (million) -23.8% YoY +5.1% YoY proposition and improving churn 3.3 4.0 • NPS continues to improve 2.3 1.3 1.3 • Service revenue pressure m
Slide 105: Tajikistan: outperformed a challenging market
Tajikistan: outperformed a challenging market USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Environment remains challenging with increasing (million) -17.4% YoY -10% YoY competition and currency headwinds • Continued improvements in network quality 35 1.3 • Service revenue
Slide 106: Reduced net debt offset by FOREX impact on EBITDA
Reduced net debt offset by FOREX impact on EBITDA Net debt / EBITDA1 Net debt / EBITDA1 (September 30, 2015) (December 31, 2015) © VimpelCom Ltd 2016 2.8 2.9 1.3 1.4 Group Including Italy Group Including Italy 1 Underlying EBITDA 106
Slide 107: Debt maturity schedule
Debt maturity schedule As at 31 December 2015, in USD billion Group debt maturity schedule by Business Units Russia GTH HQ 2.6 © VimpelCom Ltd 2016 1.5 1.3 1.1 1.2 1.0 0.7 0.1 2016 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2016 2017 2018 2019 2020 2021 2022 >2022
Slide 108: Debt by entity
Debt by entity As at 31 December 2015, USD million Outstanding debt (millions) Type of debt/lender Entity Bonds Loans RCF Vendor Financing Other Total VimpelCom Holdings B.V. 3,347 - - - - 3,347 © VimpelCom Ltd 2016 VimpelCom Amsterdam B.V. - 1,000 - 638 - 1,638 PJSC VimpelCom 2,229 832 - 114 41 3,2
Slide 109: 4Q15 cash flow statement
4Q15 cash flow statement USD million 4Q15 4Q14 YoY EBITDA 793 1,074 (281) Changes in working capital and other (62) 122 (184) Net interest paid (120) (172) 52 © VimpelCom Ltd 2016 Income tax paid (126) (108) (18) Net operating cash flow from discontinued operations 422 482 (60) Net cash from operati
Slide 110: 2015 cash flow statement
2015 cash flow statement USD million FY15 FY14 YoY EBITDA 2,857 5,560 (2,703) Changes in working capital and other (324) 451 (775) Net interest paid (758) (956) 198 © VimpelCom Ltd 2016 Income tax paid (671) (442) (229) Net operating cash flow from discontinued operations 929 666 263 Net cash from o
Slide 111: FOREX development
FOREX development Rates of functional currency to USD Average rates Average rates Closing rates FY16 4Q15 4Q14 YoY FY15 FY14 YoY 4Q15 3Q15 QoQ Targets Russian Ruble 65.94 47.42 39.0% 70.00 60.96 38.42 58.7% 72.88 66.24 10.0% Euro 0.91 0.80 14.1% 0.88 0.90 0.75 19.5% 0.92 0.89 2.9% © VimpelCom Ltd 20
Slide 112: Reconciliation of EBITDA
Reconciliation of EBITDA USD mln 4Q15 4Q14 FY15 FY14 Unaudited EBITDA 793 1,074 2,857 5,560 Depreciation (363) (421) (1,550) (1,996) Amortization (129) (131) (517) (647) Impairment loss (136) (1,037) (245) (976) Loss on disposals of non-current assets (16) (21) (38) (68) © VimpelCom Ltd 2016 EBIT 14
Slide 113: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt Reconciliation of consolidated net debt 31 December 2015 30 September 2015 31 December 2014 USD mln Net debt 5,496 5,437 19,992 © VimpelCom Ltd 2016 Cash and cash equivalents 3,614 3,930 6,342 Long - term and short-term deposits 434 375 109 Gross debt 9,544 9,