VEON Ltd. · NASDAQ:VEON
VEON — VimpelCom — Investor Day (February 2014)
123 slides from VEON's investor day presentation, Feb 7, 2014
Slide 1: A&I Conference 2014
Program A&I Conference 2014 Gerbrand Nijman Group Director & Head of Investor Relations London, January 28-29, 2014
Slide 2: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go
Slide 3: A&I conference program
A&I conference program Tuesday 28 January Time Presenter Opening 16:00 Presentations CEO & CFO incl. Q&A 16:05 Jo Lunder, Andrew Davies Drinks 17:30 Sit-down dinner 18:30 Wednesday 29 January Russia incl. Q&A 09:00 Mikhail Slobodin Italy incl. Q&A 10:00 Maximo Ibarra Break 11:00 Africa & Asia incl.
Slide 4: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: Investor_Relations@vimpelcom.com Install VimpelCom iPad App Visit our new website www.vimpelcom.com
Slide 5: Creating Value: Investing in the future
Creating Value Investing in the future London, January 28-29, 2014 Jo Lunder CEO
Slide 6: Strategic value agenda to create value
Strategic value agenda to create value Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence
Slide 7: Last three years' performance
Last three years' performance Market developments and regulatory measures have not been favorable in 2013 2011 2012 9M 2013 EBITDA EBITDA Margin 0% YoY 42.6% +8% YoY 42.4% -1% YoY 40.6% Revenue 0% YoY +4% YoY +4% YoY Note: numbers represent organic growth 1 2010 - LTM 3Q13 2 EM= Emerging Markets = B
Slide 8: Future growth drivers
Future growth drivers Subscriber growth from increase in mobile penetration Mobile data revenue growth; investing in high quality networks, 3G and 4G Continued emerging markets growth General economic recovery, particularly in Italy Global partnership agreements in the new eco system Uniquely positi
Slide 9: VimpelCom has an attractive emerging markets portfolio
VimpelCom has an attractive emerging markets portfolio Solid market positions Strong cash flow generation Low leverage LTM 3Q13 Revenues USD 15.8 bn EBITDA USD 6.9 bn CAPEX USD 2.9 bn Cash Flow1 USD 4.0 bn Leverage2 1.2 1 EBITDA - CAPEX 2 Net Debt / LTM 3Q13 EBITDA Note: Our Emerging Markets portfol
Slide 10: 2013 Emerging markets progress: Russia
2013 Emerging markets progress Russia Substantially improved mobile data network: at par in key regions Tripled number of owned mono-brand stores Launched LTE in Moscow Oblast and six regions Completed Phase 1 of the transformation process New management to implement Phase 2 of the transformation wi
Slide 11: 2013 Emerging markets progress: Algeria, Pakistan, Bangladesh
Algeria Solid performance and market leadership 3G license awarded Import of 3G equipment Negotiated settlement is preferred option International Arbitration: First hearing expected 1H14 Verdict expected by end 2014 Pakistan Stable market position Network modernization Rapid growth of MFS Robust per
Slide 12: 2013 Emerging markets progress: Ukraine
Ukraine Pressure on results, whilst taking measures to improve performance Solid growth of mobile data revenues Ongoing network modernization Operational excellence program continues Transformation program launched Solid cash flow generation 2013 Emerging markets progress Clear market leader
Slide 13: 2013 Emerging markets progress: Kazakhstan, Uzbekistan, CIS
Kazakhstan Market share gain Successful transition to bundles Improved value proposition Strengthened performance Uzbekistan Transitioned to a 2-player market Improved network quality Strong performance Other CIS Strong mobile data growth Moved to value based commissions in all OpCos Introduced regi
Slide 14: Italy provides a strong value creation opportunity
Italy provides a strong value creation opportunity Italy General macro economic recovery MTR reductions completed Continued outperformance with growing revenue market share Strong management team & WIND brand Carefully watching: Industry developments Financing options Strategic opportunities
Slide 15: Going forward we will give annual targets
Going forward we will give annual targets The objectives 2013-2015 and targets 2014 assume: constant currency, no major regulatory changes, current asset portfolio mix and a stable macro economic environment. Targets 2014 Revenue Stable YoY Mid single-digit CAGR EBITDA Stable YoY Mid single-digit CA
Slide 16: More long-term value in deleveraging and investing in networks
More long-term value in deleveraging and investing in high quality, 3G and 4G networks to capture high mobile data growth Paid ordinary DPS USD 0.8 per share for last 3 years, supported by strong operational cash flows Paid already USD 0.45 DPS for 2013; no further dividend for 2013 Future dividends
Slide 17: Conclusion
Conclusion Strong emerging markets portfolio Solid cash flow generation New dividend policy to support deleverage and investments We will invest in high quality mobile data networks for the future Italy provides a strong value creation opportunity Algeria: negotiated settlement preferred option; now
Slide 18: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures USD bln. 2011 pro-forma 2012 LTM 3Q13 4Q12 9m 2013 EBITDA EM @ average Q3 2013 exchange rate 6 6.8 6.9 Italy @ average Q3 2013 exchange rate 2.8 2.7 2.6 Total @ average Q3 2013 exchange rate 8.8 9.5 9.5 Effect of recalculation using average Q3 2013 excha
Slide 19: Definition of the EBITDA
Definition of the EBITDA EBITDA is a non-GAAP financial measure. EBITDA is defined as earnings before interest, tax, depreciation and amortization. EBITDA is defined as operating income before depreciation, amortization, loss from disposal of non- current assets and impairment loss and includes cert
Slide 20: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go
Slide 21: Financial Value Creation
Financial Value Creation London, January 28, 2014 Andrew Davies CFO
Slide 22: Finance organization to create value
Finance organization to create value The role of the finance organization... ...is to create a more valuable company
Slide 23: The role of finance
The role of finance... ... is to provide proactive support to decision making while being the financial steward and conscience of the business and its assets A delicate balance of: Policeman Coach Supporter
Slide 24: Profitable organic growth
1 All numbers are at average 3Q13 FX rate for comparability reasons, 2011 numbers are pro-forma due to Wind Telecom acquisition 2 CAGR: 2010 - LTM 3Q13 3 For organic growth and EBITDA definitions, please refer to the "Glossary" at the Investor Relations/Shareholder-center part of our website 4 EM= O
Slide 25: Strong EBITDA margins versus our global peers
Strong EBITDA margins versus our global peers EBITDA Margin (9M 2013) VIP WE Telcos with CIS / CEE Exposure Emerging Market Others1 1 Others include a sample of more than 80 listed telecom operators in Developed, Emerging and Mixed Markets 2 Vodafone reported for 6M2013
Slide 26: Group value add
Group value add Best practices sharing Procurement advantages $ Capex synergies $ Global partnerships
Slide 27: Sharing best practices
Sharing best practices MNP experiences Store design eBusiness: self-care harmonization B2B campuses Sales incentive schemes Customer experience programs Learnings from 3G and LTE launches Call centre processes
Slide 28: Solid progress against financial management objectives
Solid progress against financial management objectives Improvement in working capital realized Successfully secured external funding USD 2.5 billion In-house finance company delivered first savings
Slide 29: Optimum funding model
Optimum funding model VimpelCom Ltd. Other operating entities VimpelCom Amsterdam In-house finance company IC loan funding External parties Cash generating entities Dividends Equity Group Debt VimpelCom Holding Dividends Dividends to minorities Equity Dividends Dividends to VIP shareholders Minimal
Slide 30: Improve financial standing
Improve financial standing Maintain BB rating short term Secure operating performance Secure cash flow up-streaming Gross debt to be around 3 times EBITDA maximum Grow to BB+ / BBB- Increase cash flow generation Deleveraging gross debt Moving towards ~ 2 times Net Debt to EBITDA, Investment Grade Fl
Slide 31: Cash flow potential from financing improvements
Cash flow potential from financing improvements Debt optimization In-house finance company Gross debt reduction Withholding tax saving Updated potential 2013-2015 USD 50 million USD 150 million USD 150 million USD 50 million Assumptions: Resolution of Algeria, lowering Gross Debt, Italy continues to
Slide 32: Leverage
Leverage Total Group 2.3x net debt/LTM EBITDA1 Factors in Decision Making Macro economic environment Competitive environment Operational performance Potential interest savings Continued focus on delivering value in Italy Leverage VimpelCom EM2 1.2x net debt/LTM EBITDA1 1 As of September 30, 2013 2 E
Slide 33: New dividend policy to support deleverage and investments
Per share New dividend policy to support deleverage and investments Dividends (USD billion) Extraordinary dividend Ordinary dividend 1.3 1.2 0.79 0.80 0.79 0.80 1.4 More long-term value in deleveraging and investing in high quality, 3G and 4G networks to capture high mobile data growth Paid ordinary
Slide 34: Conclusion
Conclusion Finance optimization opportunity Group value add New dividend policy to support deleverage and investments Solid cash flow generation
Slide 35: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures USD bln. 2011 pro-forma 2012 LTM 3Q13 4Q12 9m 2013 EBITDA EM @ average Q3 2013 exchange rate 6 6.8 6.9 Italy @ average Q3 2013 exchange rate 2.8 2.7 2.6 Total @ average Q3 2013 exchange rate 8.8 9.5 9.5 Effect of recalculation using average Q3 2013 excha
Slide 36: Definition of the EBITDA
Definition of the EBITDA EBITDA is a non-GAAP financial measure. EBITDA is defined as earnings before interest, tax, depreciation and amortization. EBITDA is defined as operating income before depreciation, amortization, loss from disposal of non- current assets and impairment loss and includes cert
Slide 37: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go
Slide 38: Creating Value in Russia
Creating Value in Russia Mikhail Slobodin Group Executive Vice President and Head of Russia London, January 28-29, 2014
Slide 39: Russia: strong free cash flow generation
Strong free cash flow generation Good quality mobile network Strong mobile data revenue growth High EBITDA margin Robust cash flow generation Customer focus
Slide 40: Mobile data to grow in Russia with 24% CAGR
Mobile data to grow in Russia with 24% CAGR Market dynamics* (Revenues in RUB billion) * Source: Company estimates 1 Voice revenue + messaging + roaming 2 B2B voice + B2C voice 3 Mobile Data + Other VAS + Content &M-Commerce + M2M 4 B2B non-voice + RBB + Pay TV Fixed data4 Mobile core1 -0.8% 3.6% Mo
Slide 41: Russian telecom market
Russian telecom market Mobile1 ~87% prepaid market ~170% penetration 3 major players (MTS, Megafon and VimpelCom) with comparable market shares ARPU ~USD 10 Fixed1 Rostelecom is still dominant market leader Voice traffic declining due to fixed-to-mobile substitution Residential broadband penetration
Slide 42: Regulatory issues 2014
Regulatory issues 2014 MNP effective from December 2013 Moderate impact expected Content regulation Regulatory requirement to get customer approval for any VAS request Tech neutrality - 1800 band available for LTE deployment In the long-run tech neutrality is positive for all players as data growth
Slide 43: Stable EBITDA margin and strong cash flows
(CHART) Growing revenues due to strong mobile data revenue growth EBITDA margin and cash flows stabilized as savings from Operational Excellence program re-invested in data network and expansion of owned mono-brand stores Stable EBITDA margin and strong cash flows Total revenues (RUB billion) EBITDA
Slide 44: What have we delivered since last A&I Conference?
What have we delivered since last A&I Conference? Substantially improved mobile data network: at par with peers in key regions Improved distribution: tripled number of owned mono-brand stores New management appointed to implement phase 2 of the transformation Rolled out LTE in Moscow Oblast and 6 ot
Slide 45: Transformation Phase 2: Customer focus
Transformation Phase 2 : Customer focus 2012/2013 Fixing the basics Reaching par in mobile data network quality in key regions Roll-out owned mono-brand stores Operational Excellence 1.0 2014/2016 Phase 1 Phase 2 Build customer centric organization Focus on Customer Excellence Cultural transformatio
Slide 46: Strategic initiatives pursued to achieve group objectives
Strategic initiatives pursued to achieve group objectives Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence
Slide 47: Customer Excellence: NPS as primary tool
Customer Excellence NPS as primary tool for improvements and measurement Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence CUSTOMER CARE WEB SALES OFFERING Company wide NPS Strategic tool used for benchmarking KPI for management performance Customer lo
Slide 48: Customer Excellence: superior customer experience
Customer Excellence Creating a superior customer experience Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Launched employee engagement campaign: "One day with the Client" Tripled number of mono-brand stores in 2013 Closed the gap in 3G coverage and
Slide 49: Customer Excellence: network quality at par with peers
Customer Excellence Network quality at par with peers Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Russia Moscow (CHART) 4Q12 3Q13 4Q13 2Q13 1Q13 (CHART) 4Q12 3Q13 4Q13 2Q13 1Q13 +43% +30 p.p. +188% +34 p.p. HSPA+ coverage 3G base stations (K unit
Slide 50: Owned mono-brand stores tripled
(CHART) Owned mono-brand stores 400 1,240 Increased distribution via mono-brand stores 4Q12 Provide service to subscribers Stimulate data through access to devices Diversify distribution Enhance marketing communication Decrease churn Key facilitator to sell data Decrease churn and increase active sa
Slide 51: New value proposition supported by clear communication
Customer Excellence New value proposition supported by clear communication Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence New campaign to improve customer perception New value proposition New slogan for the Beeline brand New campaign to improve cust
Slide 52: Simplify pricing
Customer Excellence Simplify pricing Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Continuously shrink tariff portfolio to simplify customer choices Currently we have 4 bundle price plans and 1 on-net offering, plus special offerings for tablets, d
Slide 53: LTE network roll out plan
Today Phase I Phase II LTE network roll out plan Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence LTE commercially launched in Moscow and 6 license regions LTE to be launched in 19 regions in 1H14 (Phase 1), including St. Petersburg, Moscow Oblast, Ek
Slide 54: Profitable Growth: driving mobile data
Profitable Growth Driving mobile data Focus on small and medium screens Increase smartphone penetration and usage Improved network quality and LTE launch in Moscow and 6 regions Increased bundled price plans twofold Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operation
Slide 55: Operational Excellence 2.0
Improved decision making processes and performance management Effective personnel management and development of organizational capabilities Network sharing, network maintenance outsourcing Supply chain optimization Shared service center for Finance, HR and Procurement Improve efficiency while improv
Slide 56: Capital Efficiency
Growing level of CAPEX requires improvements in investment allocation & prioritization processes Increased level of accountability Improvement of quality of investment cases and decisions taken Greater focus on project management Focus on monitoring and post investment reviews Tighter control Optimi
Slide 57: Exploring new growth areas
Exploring new growth areas Mobile financial services OTT Direct billing with key OTT application store players Google Play direct billing achieved 100,000 active users Expected MFS growth in 2014: up to 5 million users and revenue growth 40% New mobile & loyalty card, cash loans, money transfers in
Slide 58: Creating value in Russia
Moving to a customer centric organization Close the customer perception gap Customer centric organization and cultural transformation Initiatives to improve efficiency while improving customer service New customer value proposition New business model to create sustainable growth base Exploring new g
Slide 59: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go
Slide 60: Creating Value in Italy
Creating Value in Italy Maximo Ibarra Group Executive Vice President and Head of Italy London, January 28-29, 2014
Slide 61: Delivering on our objectives
1 Source: AT Kearney benchmark Delivering on our objectives Market outperformer consistently increasing market share One of the most efficient operators in Europe1 delivering the highest EBITDA margin among third entrants Solid operational cash flow generation Market leader in customer satisfaction
Slide 62: Competitive positioning evolution
'PoS are King', commissions focused on acquisition quality, moving to a 'value partnership' model based on PoS quality selection 'All Inclusive' across the board Prepaid-Postpaid, Consumer-Business Full integration of mobile internet-DSL and fixed-mobile voice Single advertising format and testimoni
Slide 63: WIND: Smart value for money 2.0
WIND: Smart value for money 2.0 CUSTOMERS WIND brand perception: the best "quality to expenditure ratio" Creation of a digital sub-brand Web Long term quality commitment and innovative revenue sharing approach Point of Sale Network availability and performance in line with customer expectations Data
Slide 64: Market expected to return to growth in 2016
Market expected to return to growth in 2016 2013 market decline driven by intense mobile price competition coupled with MTR cuts Half of mobile market decline driven by regulatory impacts (MTR cuts) Data and innovative services expected to fuel future growth Market dynamics1 (Revenues in EUR billion
Slide 65: Competitive situation and market trends
(CHART) (CHART) (CHART) (CHART) Competitive situation and market trends Difficult economic environment GDP trend1 remained negative in 2013; expected to return to growth in 2014 Unemployment rate expected to remain above 12% in 2014/2015 with youth unemployment above 40%3 Family Consumption Index wa
Slide 66: 2014 market and regulatory expectations
2014 market and regulatory expectations 2014 Challenges Customer needs evolution Digital opportunities Surplus distribution New services and business opportunities arising New players coming into the market Necessary to re-think service value chain WIND and Vodafone ?700 mono-brand stores each; TIM
Slide 67: Strong operational performance despite market context
Strong operational performance despite market context (CHART) (CHART) EBITDA EBITDA Margin Revenues (EUR billion) EBITDA and EBITDA margin (EUR billion, %) Operating free cash flow1 and operating free cash flow margin (EUR billion, %) Mobile service rev. 9M13 vs 9M12 Mobile service rev. 9M13 vs 9M12
Slide 68: What have we delivered since last A&I Conference?
What have we delivered since last A&I Conference? Continued market outperformance Market leader in mobile data growth Best in class customer service Lowest SAC through efficient distribution strategy Fixed margins increased sharply Network transformation project delivered savings for more than EUR 4
Slide 69: Strategic initiatives pursued to achieve group objectives
Strategic initiatives pursued to achieve group objectives Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence
Slide 70: Customer excellence pillars
Clear positioning, simple offers and customer care as pillars for customer excellence Maintain leadership in customer satisfaction through excellence at all touch points coupled with advanced CRM activities Enhanced 'social approach' confirming WIND as best-in-class social media response Improve cus
Slide 71: Focus on high value subscribers and profitability
Customer Excellence Focus on high value subscribers and profitability SIM with at least one single bundle option (%) Mobile SME/SoHo gross adds through shops (thousands) Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence (CHART) (CHART) +39% Focus on ac
Slide 72: Enhance distribution: point of sales
Customer Excellence Enhance distribution: point of sales long term quality commitment Fixed net adds through retail distribution channels (shops) (%) Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Improved sales footprint by reducing low-performance
Slide 73: One product & one brand
Customer Excellence One product & one brand Mobile customer base with "All Inclusive" (million) Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence (CHART) State-of-the-art commercial proposition: "All Inclusive" extended across the board Innovative and
Slide 74: Win in mobile data
1 Mobile internet includes consumer customers that have performed at least one mobile Internet event in the previous month Profitable Growth Win in mobile data Mobile internet customer base1 (thousands) Doubled WIND mobile internet revenues (EUR million) 2.5 times Continued to outperform the market
Slide 75: Innovative end-to-end digital services
Launch of innovative end-to-end digital services with focus on Mobile Financial Services Identify partnerships to build stronger value proposition and identify new revenue streams Leverage all digital touch-points to improve customer experience and streamline operational costs: eCare and My WIND App
Slide 76: Recurring waves to optimize OPEX cost lines
Recurring waves in order to optimize all P&L's OPEX cost lines Description (CHART) -10% Advertising optimization: Same format and same testimonial for the entire product portfolio and across all segments, without impacting on communication efficiency Established dedicated organization to optimize re
Slide 77: Capital Efficiency: Network
Capital Efficiency Network Launch in 2014 of the MVNO service with Poste Mobile Tower sale Exploit joint network build-out with OLOs Balanced mix of investments between HSPA+ and LTE aiming to provide a seamless "surfing" experience HSPA+ at 42 Mbps deployed in largest Italian cities, to be extended
Slide 78: WIND's focus in 2014
WIND's focus in 2014 WIND to continue outperforming its competitors and strengthening its position in the Italian market Solid free cash flow generating machine enhanced by lean cost structure Continue to focus on market segments where current share is lower than fair share Continue to monetize mobi
Slide 79: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go
Slide 80: Creating Value in Africa & Asia
Creating Value in Africa & Asia Ahmed Abou Doma Group Executive Vice President and Head of Africa & Asia London, January 28-29, 2014
Slide 81: Leading market positions in A&A
Growth potential throughout Africa & Asia due to relatively low penetration rates Maintained leading market positions in main markets Expanding mobile data and VAS revenues Network CAPEX and OPEX efficiency by modernizing networks Cost optimization Leading market positions in A&A
Slide 82: Market leadership in large underpenetrated markets
Market leadership in large underpenetrated markets Competitive landscape and market trends Geographic footprint1 VimpelCom operates in 7 countries with low levels of mobile penetration and high potential for mobile data services Algeria: Despite limitations, Djezzy remains a profitable market leader
Slide 83: Delivering profitable growth in BU Africa & Asia
Delivering profitable growth in BU Africa & Asia Revenues (USD billion) 1 Cash flow is EBITDA less CAPEX (CHART) (CHART) EBITDA and EBITDA margin (USD billion) Cash flow, cash flow margin1 (USD billion) (CHART)
Slide 84: Djezzy - Overview
Djezzy - Overview 1 CIA Factbook 2 Penetration figures are provided based on OTA closing base and our data warehouse (DWH) figures for competition 3 DWH market share Population1: 38 million GDP/capita1: USD 7,600 GDP growth for FY 2012/2013 of ~2.5% Government, trade and agricultural sectors account
Slide 85: Djezzy - Resilient market leadership despite limitations
Djezzy - Resilient market leadership despite limitations Revenues (DZD billion) EBITDA and EBITDA margin (DZD billion) Cash flow, cash flow margin1 (DZD billion) (CHART) (CHART) 1 Cash flow is EBITDA less CAPEX (CHART)
Slide 86: Mobilink - Overview
(CHART) Population1: 193 million GDP/capita1: USD 2,900 Mobilink - Overview 1 CIA Factbook 2 Market share as provided by the regulator as of September 30, 2013 GDP growth for FY 2012/2013 of ~3.7% Continued devaluation of the Rupee against the USD Power shortfalls persist 34% of the population under
Slide 87: Mobilink - Steady growth and successful cost savings
Mobilink - Steady growth and successful cost savings initiatives 1 Cash flow is EBITDA less CAPEX Revenues (PKR billion) EBITDA and EBITDA margin (PKR billion) Cash flow, cash flow margin1 (PKR billion) (CHART) (CHART) (CHART)
Slide 88: banglalink - Overview
banglalink - Overview 1 CIA Factbook 2 Penetration figures are provided based on BTRC published figures 3 BTRC market share Population1: 164 million GDP/capita1: USD 2,100 GDP growth for FY 2012/2013 of ~6% The world's highest population density 33% of the population under 15 years old BDT continued
Slide 89: banglalink - Negatively impacted by regulatory actions
banglalink - Negatively impacted by regulatory and governmental actions 1 Cash flow is EBITDA less CAPEX Revenues (BDT billion) EBITDA and EBITDA margin (BDT billion) Cash flow, cash flow margin1 (BDT billion) (CHART) (CHART) Excluding 3G license fees (CHART)
Slide 90: What did A&A deliver since last A&I Conference?
Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Strategic initiatives pursued to achieve group objectives: what did A&A deliver since last A&I Conference? Win in mobile data Grow beyond the core (MFS, OTTs) Network modernization Create superior custo
Slide 91: Customer Excellence: superior customer experience
Customer Excellence: enhanced leadership positions and created superior customer experience Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Achievements in 2013 Created customer experience function directly reporting to OpCo CEOs Top-down NPS in plac
Slide 92: Customer Excellence: superior pricing capabilities
Customer Excellence: enhanced leadership positions and created superior customer experience Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Achievements in 2013 In Bangladesh, pursed attractive tariff moves Above The Line ("ATL"), to maintain price l
Slide 93: Profitable Growth: win in mobile data
Profitable Growth: started to realize data potential and grow beyond the core Achievements in 2013 In Algeria, Pakistan and Bangladesh, mobile data revenue1 showed high double digit growth rates In Algeria, the number of data subscribers1 showed triple digit growth YoY, while achieving a double digi
Slide 94: Profitable Growth: grow beyond the core
Profitable Growth: started to realize data potential and grow beyond the core Achievements in 2013 In Pakistan, expanded MFS through more than 23,000 POS with active promotional campaigns banglalink achieved double digit growth of MFS revenues by cooperating with several local banks and expanding th
Slide 95: Operational Excellence: structural cost improvements
Operational Excellence: continued focus on structural costs improvements Achievements in 2013 In Bangladesh, achieved 41% site sharing, outsourced 31% first line maintenance, 53% new sites installed, free cooling units installed on 69% of macro sites In Pakistan, marketing expenses decreased to 2.5%
Slide 96: Capital Efficiency: capex efficiencies
Capital Efficiency: leveraged group size to achieve capex efficiencies Achievements in 2013 In Algeria, maintained network quality leadership despite regulatory restrictions Following receipt of necessary approvals from the Algerian authorities in 4Q13, Djezzy partnered with leading international ve
Slide 97: Focus in 2014: Customer Excellence
Focus in 2014: Customer Excellence Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Develop superior pricing capabilities Drive adoption of commitment based/bundle packages Target high value and youth segments with segmented offers. Revamp corporate a
Slide 98: Focus in 2014: Customer Excellence distribution
Focus in 2014: Customer Excellence Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Optimize distribution network Develop sales structure to better align segment needs, launch a commission scheme for 3G Develop new regional warehouses to improve distr
Slide 99: Focus in 2014: Profitable Growth
Focus in 2014: Profitable Growth Win in mobile data In Algeria, launch 3G services in 14 Wilayas (provinces) and offer attractive mobile data promotions starting from 1H14 Djezzy as application start-ups incubator, to create a mobile data ecosystem Leverage OTT and other partnership deals and focus
Slide 100: Focus in 2014: Operational Excellence
Focus in 2014: Operational Excellence Drive operational excellence Drive Network and IT efficiency through free cooling and power saving, data center consolidation Increase outsourcing efficiency Focus on network modernization and IT excellence Technical warehouse optimization Commission structure o
Slide 101: Focus in 2014: Capital Efficiency
Focus in 2014: Capital Efficiency Increase network sharing In Pakistan and Bangladesh, enhance infrastructure sharing and outsourcing to improve CAPEX/OPEX Set targets for local technical teams for site sharing percentages on the new rollout sites Rollout of 3G sites in Algeria, Pakistan and Banglad
Slide 102: Conclusion
Conclusion Significant mobile data opportunities through the deployment of 3G services Growth potential due to relatively low penetration rates Defend market leadership in Algeria and Pakistan Continued focus on profitable growth and cost saving initiatives Network modernization continues to be one
Slide 103: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go
Slide 104: Creating Value in Ukraine
Creating Value in Ukraine London, January 28-29, 2014 Igor Lytovchenko Group Executive Vice President and Head of Ukraine
Slide 105: Leadership position in mobile
Leadership position in mobile Attractive growth in the fastest growing segment, mobile data High margins and cash flows Transformation towards Operational Excellence by reloading commercial strategy and operational governance Market leader with strong cash flow
Slide 106: Telecom market expected to grow 0.3% CAGR 2013-2016
Telecom market expected to grow 0.3% CAGR 2013 - 2016, with mobile data being key growth driver Market dynamics2 (Revenues in UAH billion) 1 Assumes no 3G in Ukraine 2 Source: UBU analysis Fixed data Mobile voice -0.9% +4.2% Mobile data +7.4% Fixed voice -2.3% (CHART) 24.1 2016 6.6 23.4 2015 2013 6.
Slide 107: Kyivstar is the market leader in mobile
Kyivstar is the market leader in mobile Mobile Major players are Kyivstar, MTS and Astelit ("Life" brand) Kyivstar is the leading integrated operator with #1 in mobile and #2 in fixed residential broadband Penetration ~120%, ~87% pre-paid market Mostly bucket pricing with high MOU of ~500 In absence
Slide 108: Continued strong cash flow generation despite pressures
Continued strong cash flow generation despite pressures Taking measures to improve performance Total revenues (UAH billion) EBITDA & EBITDA margin (UAH billion) (CHART) (CHART) EBITDA EBITDA margin Pressure on results primarily as customers switched to lower priced bundled tariff plans and lack of u
Slide 109: Challenges for 2014 and progress on actions
Challenges for 2014 Progress on actions and main achievements Kyivstar is the mobile market leader with ~47% revenue market share Mobile data revenues growing more than 10% YoY in 9M13 Commercial investments to secure mobile market potential in a highly competitive market Ongoing network modernizati
Slide 110: Kyivstar Reload as part of the value agenda
Enablers: Enhanced culture & values Sharper performance management & robust operational governance Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Commercial strategy: New products & services Lean operations Commercial strategy: Offers and pricing Ch
Slide 111: Customer Excellence: granular commercial strategy
Customer Excellence Granular commercial strategy with clearly shaped priorities Optimized sales & service channels New products & services Churn Offers and pricing Image & positioning Enabled by reloaded business model, governance and first class organization Commercial strategy: value based managem
Slide 112: Customer Excellence: offers and pricing, churn
Customer Excellence Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Offers and pricing - Superior pricing frameworks Re-balanced tariff portfolio including data and introduce differentiation in ATL tariffs Differentiate the tariffs by regions, new st
Slide 113: Customer Excellence: sales and service channels
Customer Excellence Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Optimized sales & service channels Competitively incentivized POS and salesforce Rationalized distribution portfolio with close steering on POS level; increased monobrand attractiven
Slide 114: Profitable Growth: new products & services
Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Profitable Growth New products & services Win in mobile data (incl. devices) Growth of mobile data penetration through customer-oriented pricing Growth beyond the core Continue investing in MFS & direct
Slide 115: Operational Excellence: enablers
Operational Excellence Enablers Enhanced corporate culture and renewed customer centricity as key cultural values Performance management High employee engagement New operational governance and decision-making framework Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operat
Slide 116: Operational Excellence: lean operations
Operational Excellence Lean operations Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence "One step resolution" of customers' requests Process & policy re-engineering with new operating model Maintained continuous and sustainable cost efficiency improve
Slide 117: Operational Excellence: moving to a new organization
Operational Excellence Moving to a new organization Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Implementation of a new operating model with functional centralization Previously employed regional matrix structure turned to be inefficient in such
Slide 118: Capital Efficiency
Capital Efficiency Elevate Kyivstar's capacity to be ready for the future Profitable Growth Increase Net Cash Capital Efficiency Customer Excellence Operational Excellence Smart investment philosophy enabling Kyivstar to maintain effective CAPEX to Revenue ratio, without sacrificing its network mode
Slide 119: Creating value in Ukraine
Ensure leading position and cash flow optimization Creating value in Ukraine Grow our leadership position in mobile Capitalize on mobile data revenue growth Maintain high margins and cash flows Transform operations and organization
Slide 120: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go
Slide 121: Concluding Remarks
Concluding Remarks London, January 28-29, 2014 Jo Lunder CEO
Slide 122: Strategic Value Agenda remains at the heart of our business
Strategic Value Agenda remains at the heart of our business One of the most profitable global groups Further growth potential, but challenging 2014 environment expected Focus on solid cash flow generation Investments in high quality mobile networks for the future New dividend policy to support inves
Slide 123: Disclaimer
Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's 2014 targets, its new dividend policy, its plans in Italy, its go