VEON Ltd. · NASDAQ:VEON
VEON — VimpelCom — Q2 2015 Earnings Presentation
52 slides from VEON's earnings presentation, Aug 7, 2015
Slide 1: Transformative transaction in Italy: 2Q15 earnings update
Exhibit 99.1 Exhibit Transformative Strategy 2Q15 London Jean-Yves 1© VimpelCom earnings 99.1 –update August Charlier Ltd transaction 6,2015 –2015 CEO Andrew in Italy Davies – CFO
Slide 2: Disclaimer
This Disclaimer statements Company’s regarding countries trends. from cause in filed law. Foreign proceeding. contained 2© VimpelCom ourThe document awith competition, actual prior civil These Corrupt Company of its the inrelate complaint filings strategy The operation. results this 4G/LTE discussio
Slide 3: Program of today
Program Transformative Strategy 2Q15 © 3Q&A VimpelCom earnings update of today Ltd transaction 2015 for Italy and VimpelCom
Slide 4: Creating a leading operator in the Italian telecoms market
Creating A 4© transformative VimpelCom a leading Ltd transaction operator 2015 inforItalian VimpelCom telecomsand the Italian market
Slide 5: WIND Tre: a new era in Italian telecoms
WIND New A base Investment Enlarged Provide Over Clear Substantive CKHH) “One “gridlock” Value EUR within and 5© leading VimpelCom above A era 1,000 700 company” corporate creation the superior and best Chairman for and million convergent first 40% 3and mono-brand shareholder Italian in Italia impro
Slide 6: Transaction rationale
Transaction 321A leading rationale converged operator Superior Significant 4Enhanced Clear 6© customer VimpelComcost 5Transformative corporateLtd experience synergies profitability transaction governance 2015 toin and cash for Italian telecoms JV generation ensure Italy &successful VimpelCom
Slide 7: Creating a leading converged operator in Italy
Creating 1Market Commercial 33% A (Fixed 16% 50% Mobile Strong (Mobile 35% 34% 2010 29% 32% Wide 36% (2017) 90% 88% WIND 7338% © 1. leading Notes: 2. 35% 15% 34% 90% 47% 2011 aVodafone 4G/LTE BB (2017) VimpelCom Company leading momentum +share service customer Italia 3alternative mobile 33% 13% 95%
Slide 8: Superior customer experience
82Superior Best Focus Reinforce Boost Expand Developing An Leverage Significant Enhanced Driving Stronger Customer © customer VimpelCom enlarged quality “digital onpresence growth market data best focused experience household-centric converged acceleration anetwork and leading in first” Ltd through
Slide 9: Significant cost synergies
Identified 3Market Operating SG&A Network Unified Location NPV1 0.6+ 3.1+ 1.3+ Synergies (EUR Capex 700 OPEX EUR 1© 2Notes: 9 VimpelCom Total: 700 cost billion) million) c.facing and Post 30% & Pre & taxsynergies—total consolidation optimization 70% million run model 5.0+ IT internalized taxes, rate
Slide 10: Enhanced profitability and cash generation
Enhanced 4An (EUR 1.73 4.63 8pp 32% 2.1 Revenue OpFCF2 …cash (% 43% 63% 0.9 Run-rate …and 5.6x WIND 13.0x 2Notes: cash operator 40% 6.36 4.9x 2.5 1.6 bn, profitability significant WIND 3conversion + conversion3) Including Italia synergies and 32014) Italia with EBITDA leverage Defined © VimpelCom 10
Slide 11: Transformative transaction for VimpelCom
Transformative 5Joint Significant Distribution Diversified Enhances 1Significantly 11 © ownership Target VimpelCom of transaction VimpelCom’s value emerging stronger dividend 2015 ofcreation Ltd a2015 leading Net marketfor balance Italy earnings from debt/EBITDA through and convergent focused JV she
Slide 12: Enhanced VimpelCom earnings profile
Enhanced 5VimpelCom Total pro (0.9%) 113.9% 2Note: forma earnings operating 27.2% (3.2%) Defined VimpelCom incl. Target © VimpelCom 12 1.6x 41.1% and revenue as Italy 2015 Ltd cash EBITDA Net 2015 excl. flow organic Italy metrics – Capex change debt/EBITDA (excl. YoY licenses) (1.6%) EBITDA organic
Slide 13: Improved VimpelCom net leverage
Improved 5Net Weighted Group Russia 1.6 3.1 1.0 2015 13 © 2.2 1.2 VimpelComleverage 1Deleveraging leverage 2016 debt GTH 1.2 Target average 2017 maturity HQ ratio profile completed 2015 2018 Ltd of cost schedule 1.6x1 Net 2019 2015ofpost-closing debt/EBITDA debt: >2020 pro 7.7% formaexcluding for It
Slide 14: Transaction terms summary and key management
Target Management Key 50-50 Transaction years Pro 40% Company Stefano Expected VIP 50% WIND HoldCo 1. Note: © 14 VimpelCom FCF: forma to CKHH terms dates of 50% post-completion JV leverage contribute 3FCF1 Invernizzi EBITDA Italia of closing to Net and summary conditional VimpelCom be team returned
Slide 15: Strategy update
Strategy © 15VimpelCom updateLtd 2015
Slide 16: The traditional telecom business model is at a crossroads
The Traditional Rapid Slowing Difficulty Exploding Complex © 16VimpelCom telecom migration penetration business to data mobile identify industry Ltd growth tomodel growth 2015 data growth new isrequiring atinducing in addressable amodel crossroads an even agile another is insignificant under emergin
Slide 17: VimpelCom's solid, diversified portfolio
VimpelCom’s Solid Diversified #1 213 Macro Adverse Opportunities Transformation Network Tower position © 17VimpelCom inmillion 5portfolio monetization & markets in macro-economic sharing business Algeria, emerging mobile with opportunities of Ltd of #2businesses the model in 2015 current customers U
Slide 18: We have defined six strategic priorities
654123Performance We have Structural World Portfolio Digital defined Reinventing New revenue class leadership six strategic priorities rationalization improvements operations VimpelCom transformation streams © 18VimpelCom Ltd 2015 and consolidation
Slide 19: Reinventing the business: data, B2B, new revenue streams
1. VimpelCom Data YoY 99 Fixed Significant B2B Opportunities Reinventing Accelerating MFS Evaluating © services 19 New million growth focus mobile revenue already mobile revenue data new broadband and complex at and new aof convergence &constant Ltd ~USD customers business streams ~USD initiatives f
Slide 20: Performance transformation and portfolio rationalization
3. VimpelCom Best-in-class Opportunities reduce Significant Initiatives Transition Dedicated Many Markets Selective Network © 20 Performance markets working moves management tosimplification shared operating still Ltd 4. capital toPortfolio fragmented 2015 more service costs team asset-light and rat
Slide 21: World class operations
5. World Accelerating Market OpCo’s NPS1 Developing 1Further Note: 21 © leader co-leader leading optimize 2014 class VimpelCom long-term in building operations 5customer incapital Ltd markets 22015 markets world #1and experience, 6. andStructural class tax #2structure positions operations building i
Slide 22: Structural improvements and clear strategic framework
Reinventing 6Structural World 14Portfolio class 5VimpelCom: rationalization improvements operations focus and inon cash 3 flow growth Expected USD New 2Digital © 22 750 sustainable million1 revenue Performance 3Clear leadership 1Additional Note: VimpelCom toper streams transformation strategic Exclu
Slide 23: 2Q15 financial and operational results
2Q15 © 23VimpelCom financial Ltd and 2015 operational results
Slide 24: 2Q15 material highlights
2Q15 Transformative Material Significantly Strategy management Chief Annual © 24VimpelCom Executive highlights 2015 update valueteam enhances targets creation Ltd transaction to Officer: deliver 2015 confirmed VimpelCom’s within Jean-Yves sustainable in Italy Italy withCharlier reduced earnings incr
Slide 25: 2Q15 financial highlights
2Q15 Service (USD 3.6 EBITDA (%) -40.2 Improving Delayed Continued 22% headwinds growth © 25 2% 26% 0.5 0.8 VimpelCom 2.6 (US 17 YoY p.p. organic2 financial billion) reported 1.3 are revenue 3G cents) organic2 reported margin1 mobile market organic 1non-GAAP launch EBITDA YoY Ltd YoY highlights Net
Slide 26: Russia
Russia: RUB Service -2% (million) 67.3 Mobile EBITDA -3% 28.5 13.7 41.4% 2Q14 17% Continued headwinds, © 26VimpelCom YoY 64.3 26.1 BILLION, 1Q15 39.4% Fixed-line continued revenue and +2% -17% 66.2 27.5 improvements EBITDA 2Q15 Capex 40.5% 56.3 11.4 YoY Ltd YoY Mobile UNLESS operational 2Q14 2015 57
Slide 27: Italy
Italy: EUR Service -4% (million) 1,040 EBITDA -9% 435 186 38.0% 2Q14 2Q15 Mobile 16% © 27 VimpelCom 173 YoY YoY MILLION, sequential 1Q15 mobile 983 37.7% ARPU Fixed-line revenue 406 and -2% 7% mobile 998 2Q15 397 YoY service Capex 36.7% YoY 21.9 increased Ltd Mobile improvement UNLESS data 2Q14 2015
Slide 28: Algeria
Algeria: DZD Service -7% (million) 34.3 29.8 –8% 18.8 54.3% 2Q14 4.5 14% Transformation EBITDA 1Results © 28 As VimpelCom YoY 32.0 17.1 17.2 YoY part BILLION, 1Q15 52.7% expected revenue transformation and margin of 0% 17.1 37% -65% transformation 2Q15 YoY Capex 53.4% 15.7 Ltd program YoY Mobile UNL
Slide 29: Pakistan
Pakistan: PKR Service –1% (million) 25.2 38.8 ?33.4 EBITDA +6% 10.2 38% 8.1 9.9 38.9% 41.3% 2Q14 Successfully 87% 99% Mobilink 1Underlying 2Q15 3229 © In 24.0 9.7 YoY 31% customers of BILLION, 1Q15 38.5% revenue Customer Excluding 10.8 and strong gained 24.9 Underlying VimpelCom 1Q15 -14% -19% EBITD
Slide 30: Bangladesh
Bangladesh: BDT Service +7% (million) 11.3 10.8 EBITDA +18% 4.6 3.3 4.2 40.6% 38.2% 2Q14 Continued growth, © 30VimpelCom 4.9 2.5 11.6 29.8 YoY BILLION, 1Q15 YoY 41.9% 21% revenue driven and 32.0 +8% revenue -25% 2Q15 continued Capex 30% Ltd by YoY Mobile UNLESS YoY significant 2Q14 2015 market andro
Slide 31: Ukraine
Ukraine: UAH Service +9% (million) 3.0 Mobile EBITDA +12% 1.5 1.3 45.6% 2Q14 12% 0.3 41.3% 44.5% Successful Strong 1network 31 © 3.1 1.2 1.3 YoY BILLION, 1Q15 YoY 35% mobile 3.3 Fixed-line revenue Capex roll-out successful and VimpelCom+3% 25.4 3G 232% 2Q15 Capex1 service launch YoY excluding 26.1 M
Slide 32: Kazakhstan
Kazakhstan: KZT Service (million) +1% 30.2 33.9 ?9.6 EBITDA -8% 16.5 48.7% 4.1 2Q14 9% 13% Mobile competitive © 32Mobile VimpelCom 9.7 YoY 31.3 15.3 YoY BILLION, 1Q15 49.5% service revenue -7% ?and 28% 15.0 Fixed-line 2Q15 environment heightened Capex 48.6% YoY YoY Ltd revenue Mobile UNLESS 2Q14 201
Slide 33: Eurasia
Eurasia1: USD Service (million) 277 18 ?21 EBITDA Reported Organic 140 50.4% 17.0 2Q14 7% 9% Mobile 21increasing 33 © Mobile 19 248 128 MILLION, 1Q15 256 51.6% service revenue +1% +4% Eurasia 16.2 25.0 ?and -11% -9% strong 224 in Fixed-line 2Q15 Uzbekistan 16.3 120 Capex YoY 49.5% YoY 228 revenue Op
Slide 34: 2Q15 income statement
2Q15 USD Revenue of EBITDA D&A EBIT Financial FOREX Tax Profit Non-controlling Net Organic Decrease Significant gains In 1Sale 34 © which 2Q15, income1 (42) of million from and 646 income before for 51% decline Net VimpelComand (421) 3,759 service positive 1,511 Margin due the expenses other 939 Ita
Slide 35: 2Q15 cash flow statement
2Q15 USD EBITDA Changes Income Net Significant equivalents Decreased Decrease In © 35 VimpelCom 2Q15 interest cash (decrease)/increase million cash tax buy in from used flow 1,511 YoY due flow YoY paid working paid back 2Q15 from in operating due to Ltd 2,076 statement reduction (109) investing (356
Slide 36: Annual targets for 2015
Annual Original 20151 Service digit EBITDA p.p. EPS2 Capex/revenue Leverage 18-20% 21Excl. 3charges 36 © The EPS YoY decline Italy USD annual at 1H15 targets revenue and Targets targets VimpelComconstant margin (net ~1.7x 0.35 constant YoY 20151 targets debt/EBITDA) 2015 ~20% Actual adjusted Flat –F
Slide 37: Conclusion
Transformative Conclusion Improves In New On © 37 VimpelCom excess track strategic to of VimpelCom’s deliver EUR framework Ltd transaction 52015 billion earnings, targets toNPV inimprove Italy incash cost cash flow synergies, flow andby leverage net USD of 750 integration profile million Annualized
Slide 38: VimpelCom's October presentations
VimpelCom’s October Presentations © 38VimpelCom 8 & 9,by analyst Ltd 2015 Group 2015 London, &Management investor United conference Kingdom
Slide 39: Q&A
© VimpelCom Ltd 2015 Q&A 39
Slide 40: Further information and Investor Relations
Further Investor Claude Visit Install CORPORATE 2014 © 40VimpelCom our -2015 VimpelCom’s Debussylaan information Relations award in the WEBSITE Ltd winning Netherlands 2015 88 App 1082 website iPadApp MDwww.vimpelcom.com Amsterdam No.1 The Netherlands T: +31 20 79 77 234 E: ir@vimpelcom.com
Slide 41: Appendix
© VimpelCom Ltd 2015 Appendix 41
Slide 42: Accounting implications of the Italian JV
Accounting including Upon 1The Note: 42 © Italian results investment 50% difference signing closing Including shareholding debt, VimpelCom operations from implications between will will Italy Ltd attributable be bewill 2015reported in accounted the of JV be ‘fair JVwill presented classified goodwill
Slide 43: Pro forma income statement
VimpelCom Presentation USD Proforma held Service Total Operating Finance Other Shares ventures Income Profit Profit/(loss) operations discontinued Non-controlling Net 43 shareholders foreign income fo mln operating non-operating before for of rtax revenue costs income sale accounted the loss/(gains)
Slide 44: Pro forma statement of financial position
VimpelCom Presentation USD for Assets Equity Non-current Current Liabilities Total 44 sale mln assets equity classified and 6,305 Proforma assets liabilities 30 associated liabilities 36,687 and Ltd assets liabilities of June (0) 7,283 liabilities interim 6,305 as8,720 2015 29,401 243 held (1,397) w
Slide 45: Pro forma cash flows
VimpelCom Presentation USD Proforma held Net 45 cash increase for mlnsale used from Proforma 1H15 Ltd held 1H15 inin operating financing cash ointerim investing for f Presentation Italy and saleconsolidated activities as cash activities 1H14 equivalents 1H14 oon fon Italy continued discontinued stat
Slide 46: VimpelCom's performance pro forma for Italy
VimpelCom’s VimpelCom USD Total EBITDA Capex OpFCF1 % 1xNet Note: 46 © of organic ofdebt LTM revenue m, operating (excl. Defined 1H15 17,904 1,825 VimpelCom2,907 EBITDA YoYincl. licenses) 40.0% 14.9% 25.1% 1H15 1,326 revenue (1.6%) (4.3%) 2,006 5,830 as Italy Ltd 2.6x EBITDA performance 41.1% 13.9%
Slide 47: Credit facilities
Credit USD Algeria Financing PJSC Available VimpelCom CDB/BoC Algeria—syndicate © 47VimpelCom 0.05 VimpelCom facilities USD VF/CF RCF bn USD –USD 0.05 credit Ltd headroom 1.0 headroom 1.8 billion USD 2015 USD facilities billion billion 0.3 0.3 (DZD at billion at the arranged billion the end 5 billio
Slide 48: Debt outstanding by entity
Debt As Outstanding Entity Vendor Financing VimpelCom PJSC Pakistan Banglalink Omnium KaR-Tel Others Total © 48VimpelCom at by 5,788 June VimpelCom Bonds —entity Mobile LLP Telecom 19 30, Digital 3,460 Amsterdam Holdings debt — Loans — 2015 Ltd 9Communications 45 (USD — Algeria 11 2,044 Communicatio
Slide 49: FOREX rates
FOREX Currency Algeria Armenia Bangladesh Egypt Georgia Italy Kazakhstan Kyrgyzstan Pakistan Russia Ukraine © 49 VimpelCom EUR EGP RUB DZD GEL UAH rates PKR AMD FX 0.91 7.5 KGS KZT BDT 70.0 rates 92.0 1.8 used 105.0 25.0 Ltd 415.0 190.0 55.0 79.0 versus in 2015 annual USDtargets for 2015
Slide 50: Reported and organic results by country
Reported USD YoY Service Russia Italy Algeria Pakistan Bangladesh Ukraine Kazakhstan Eurasia other EBITDA © 50 VimpelCom YoY 1,104 444 mln (39) (81) 1,257 524 revenue revenues 326 247 175 128 153 70 244 106 600 1,511 margin Organic YoY 2Q15 (38) (78) 1,425 813 115 169 82 149 63 434 277 238 140 259 2
Slide 51: EBITDA reconciliation
Reconciliation Depreciation Amortization Impairment Loss EBIT Financial -Net EBT Income Profit/(loss) Profit USD EBITDA Unaudited Add LTM © 51including VimpelCom foreign back 188 on mln EBITDA 646 fortax disposals 1,511 6,712 479 the Income 2Q15 provisions 938 finance Other Shares Net expense exchan
Slide 52: Net debt reconciliation
Reconciliation USD Net Cash Long-term Gross Interest Fair Other Derivatives Total © 52 VimpelCom debt Value and mln debt unamortised liabilities debt accrued 17,904 cash 2Q15 and adjustment and 22,348 designated other equivalents of Ltd short-term at 1Q15 related 17,608 consolidated amortized 24,225