Slide 1: Q2 2017 Results And Business Update
Q2 2017 Results And Business Update A m s t e r d a m, 3 A u g u s t 2 0 1 7 J e a n - Y ve s C h a r l i e r - C h i e f E xe c u t i ve O f f i c er A n d r e w D a vi e s - C h i e f F i n a n c i a l O f f i c e r
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 “ma
Slide 3: Agenda
Agenda FINANCIAL AND OPERATIONAL PROGRESS – Q2 2017 Jean-Yves Charlier, CEO • Group results highlights • Interim dividend BUSINESS UPDATE – HIGHLIGHTS Jean-Yves Charlier, CEO • VEON platform launch in 5 countries • Expand monobrand distribution in Russia • Corporate Governance update FINANCIAL AND O
Slide 4: Q2 2017 Financial Highlights
Q2 2017 Financial Highlights ► Total revenue increased 12.3% YoY; 3.7% YoY organic growth TOTAL REVENUE (USD BILLION) 2.4 EBITDA MARGIN, UNDERLYING2 40.4% ► Mobile data organic growth of 30.5% YoY (%) ► EBITDA increased 17.1% YoY to USD 931 million, benefiting +3.7% organic1 YoY -0.9 p.p. organic1 Y
Slide 5: Interim Dividend of US 11 cents for 2017 Approved
Interim Dividend of US 11 cents for 2017 Approved 2015 2016 2017 2018 Aug./Sept.1 2015 2016 2016 2017 2017 total interim final interim expected dividend of dividend of dividend of dividend of final US 3.5 cents US 3.5 cents US 19.5 cents US 11 cents dividend US 23 cents for FY 2016 Consistent with t
Slide 6: Agenda
Agenda FINANCIAL AND OPERATIONAL PROGRESS – Q2 2017 Jean-Yves Charlier, CEO • Group results highlights • Interim dividend BUSINESS UPDATE – HIGHLIGHTS Jean-Yves Charlier, CEO • VEON platform launch in 5 countries • Expand monobrand distribution in Russia • Corporate Governance update FINANCIAL AND O
Slide 7: VEON: The Personal Internet Platform …
VEON: The Personal Internet Platform … Phase 1 - Engagement ► Focus for next 18 months: major Totally free messaging – consumer engagement and improving the with chat and voice calling. Even when you efficiency of our core business using are out of credit VEON ► Free communication and messaging ► In
Slide 8: … Is Now Out There!
… Is Now Out There! ► 19 July 2017: VEON launched in Russia, Italy, Ukraine, Pakistan, Georgia with deep self-care integration ► Also available in 10 more countries, and expanding (including Netherlands, UK & USA) ► Already available to 134 million potential customers ► From 3 to almost 100 partners
Slide 9: Expand Monobrand Distribution in Russia
Expand Monobrand Distribution in Russia VEON and MegaFon announced an agree- Integrate and rebrand acquired stores to Increasing the share of controlled ment 1 to end their Euroset joint venture Beeline monobrand stores distribution channels • Euroset owns ~4,000 stores • Store integration to be com
Slide 10: Corporate Governance Update
Corporate Governance Update ► Ursula Burns and Guy Laurence elected to the Supervisory Board ► Supervisory Board increased from 9 to 11 members ► Majority of board now unaffiliated with major shareholders ► Ursula Burns appointed as new Chairman URSULA BURNS GUY LAURENCE Former Xerox Chairman & CEO
Slide 11: Agenda
Agenda FINANCIAL AND OPERATIONAL PROGRESS – Q2 2017 Jean-Yves Charlier, CEO • Group results highlights • Interim dividend BUSINESS UPDATE – HIGHLIGHTS Jean-Yves Charlier, CEO • VEON platform launch in 5 countries • Expand monobrand distribution in Russia • Corporate Governance update FINANCIAL AND O
Slide 12: Significant Corporate Finance Transactions Successfully Executed
Significant Corporate Finance Transactions Successfully Executed Refinanced bank debt at improved terms and moved bank Repurchased and repaid subsidiary (guaranteed) bonds and debt from PJSC VimpelCom to VimpelCom Holdings B.V. issued unguaranteed bonds from HQ VimpelCom Holdings B.V.: ► Repaid USD
Slide 13: Significant Capital Structure Improvements
Significant Capital Structure Improvements As at 31 December 2016 As at 30 June 2017 13% 15% 9% 9% 28% ► Create more flexibility in the 37% debt structure 22% 67% HQ - guaranteed HQ - Unguaranteed PJSC GTH subs & other 8% 9% 19% 10% ► Improve currency mix 20% 61% 73% USD RUB EUR Other ► Lower averag
Slide 14: Currency Trend Continues to Improve
Currency Trend Continues to Improve VEON coin against USD, Index (1Q14=100) 110 100 100 98 94 90 82 80 76 73 70 70 69 69 66 66 67 64 67 60 50 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 VEON currency weightings calculated from the sum of the individual countries’ relative c
Slide 15: Revenue Evolution
Revenue Evolution Organic growth, currency tailwinds and Warid acquisition driving revenue growth USD MILLION +12.3% +8.5% 107 27 9 112 2,417 75 (73) 7 2,310 2,228 2,153 Reported Warid Pro-forma Equipments & Voice Interconnect Data and MFS Other 1 Organic total FOREX Total total 2Q16 total Accessori
Slide 16: EBITDA Evolution
EBITDA Evolution Organic growth, currency tailwinds and Warid acquisition driving EBITDA growth USD MILLION +17.1% +5.3% 84 (141) 72 34 (46) 118 16 928 977 931 795 811 Reported Warid Pro-forma Exceptional Underlying Service Performance Re-investment in FOREX Underlying EBITDA Exceptional EBITDA EBIT
Slide 17: Russia: Improving Results
Russia: Improving Results TOTAL REVENUE MOBILE CUSTOMERS ► Total revenue increased, mainly as a result of (RUB BILLION) (MILLION) mobile service revenue growth +3.0% YoY +1.4% YoY ► Mobile service revenue increased by 4% YoY, 66.4 64.5 68.4 10.8 9.9 mainly driven by 18% mobile data revenue 9.7 growt
Slide 18: Pakistan: Synergies Target Delivered, Spectrum Investment for Future Growth
Pakistan: Synergies Target Delivered, Spectrum Investment for Future Growth TOTAL REVENUE MOBILE CUSTOMERS ► Merger integration progress: (PKR BILLION) (MILLION) • Annual run rate target of synergies > USD +6.9% YoY +6.4% YoY 115 million achieved well ahead of schedule 37.8 38.7 40.4 2.5 2.7 52.5 2.
Slide 19: Algeria: Turnaround in Progress
Algeria: Turnaround in Progress TOTAL REVENUE MOBILE CUSTOMERS ► Revenue trend gradually improving: (DZD BILLION) (MILLION) -8.0% YoY -4.9% YoY • Accelerating data revenue in Q2 (+89% YoY) 27.4 0.2 25.5 25.3 • Strong focus on customer base retention 0.5 0.4 16.3 27.2 15.5 with launch of new tariff p
Slide 20: Bangladesh: Sustained Data Growth, Spectrum Disadvantage
Bangladesh: Sustained Data Growth, Spectrum Disadvantage TOTAL REVENUE MOBILE CUSTOMERS ► Continued aggressive competition on customer (BDT BILLION) (MILLION) acquisition -3.0% YoY -1.5% YoY • 0.2 million QoQ customer growth 12.3 12.0 12.0 0.4 0.3 0.4 ► Strong growth in data revenue of 32% YoY, 31.1
Slide 21: Ukraine: Market Leader, Continued Strong Performance
Ukraine: Market Leader, Continued Strong Performance TOTAL REVENUE MOBILE CUSTOMERS ► Strengthening #1 NPS position and clear market (UAH BILLION) (MILLION) leader with customer market share above 45% +10.0% YoY +2.8% YoY ► Mobile service revenue growth of 11% YoY, 4.1 0.3 supported by a strong data
Slide 22: Uzbekistan: Solid Results
Uzbekistan: Solid Results TOTAL REVENUE MOBILE CUSTOMERS ► Revenue grew by 20% YoY driven by USD- (UZS BILLION) (MILLION) denominated tariffs +20.3% YoY +2.9% YoY ► Customer base grew 3% YoY, second 513.3 576.0 consecutive quarter of YoY growth 478.6 4.1 3.4 3.5 571.9 ► Mobile data revenue increased
Slide 23: Italy: Wind Tre Synergy Realization Drives Underlying EBITDA Margin Expansion
Italy: Wind Tre Synergy Realization Drives Underlying EBITDA Margin Expansion TOTAL REVENUE MOBILE CUSTOMERS ► Tougher competitive environment, ahead of Iliad (EUR MILLION) (MILLION) entry -1.7% YoY -3.4% YoY ► Service revenue declined by 1.6% YoY with: 1,563 1,548 1,535 231 234 225 • Mobile service
Slide 24: Q2 2017 Income Statement
Q2 2017 Income Statement USD MILLION 2Q16 2Q17 pro 2Q16 Reported Organic2 reported forma reported YoY YoY Warid1 Revenue 2,417 2,228 2,153 12.3% 3.7% Service revenue 2,331 2,158 2,086 11.8% 3.4% EBITDA 931 811 795 17.1% 10.6% Depreciation & amortization and other (542) (542) (512) 5.7% ► Increased a
Slide 25: Q2 2017 Net Debt Evolution
Q2 2017 Net Debt Evolution USD MILLION 270 344 46 709 189 117 (977) 44 8,403 8,087 7,661 Net debt EBITDA Change in working Net interest Taxes Cash capex incl. Dividend Net debt before Exceptionals in FOREX and other Net debt 31 March underlying capital licenses exceptionals and 2Q17 1 30 June 2017 F
Slide 26: Robust Underlying Equity Free Cash Flow Excluding Licenses
Robust Underlying Equity Free Cash Flow Excluding Licenses 1 USD MILLION (172) 336 491 328 H1 2016 Increase in net cash Increase in net cash used H1 2017 from operating in investing activities2 activities2 1 Underlying equity free cash flow excluding licenses is defined as free cash flow from operat
Slide 27: 2017 Guidance Confirmed
2017 Guidance Confirmed H1 2017 actuals FY 2017 targets1 Total revenue +1.5% Low single digit growth Underlying EBITDA margin -0.2 p.p. Low single digit accretion Underlying equity free cash flow 491 900 - 1,000 ► The previous guidance assumed USD 200 million excluding licenses2 of annual investment
Slide 28: Agenda
Agenda FINANCIAL AND OPERATIONAL PROGRESS – Q2 2017 Jean-Yves Charlier, CEO • Group results highlights • Interim dividend BUSINESS UPDATE – HIGHLIGHTS Jean-Yves Charlier, CEO • VEON platform launch in 5 countries • Expand monobrand distribution in Russia • Corporate Governance update FINANCIAL AND O
Slide 29: Appendix
VEON APPENDIX
Slide 30: Debt Maturity Schedule
Debt Maturity Schedule AS AT 30 JUNE 2017, USD BILLION Russia GTH HQ Group debt maturity schedule 2.6 2.2 1.9 1.4 1.5 1.2 0.8 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2017 2018 2019 2020 2021 2022 >2022 USD 1.3 0.3 1.1 0.7 0.4 0.7 2.6 61% EUR 0.0 0.0 0.0 0.3 0.9
Slide 31: Liquidity Analysis
Liquidity Analysis Group cash breakdown by currency 30 JUNE, 2017 Unused RCF headroom at the end of Q2 2017: VimpelCom – syndicate USD 1.68 billion 30% Unused VF/CF headroom at the end of Q2 2017: VimpelCom - CDB RMB 0.27 billion (USD 0.04 billion) 70% Algeria - syndicate DZD 32 billion (USD 0.3 bil
Slide 32: Debt by Entity
Debt by Entity AS AT 30 JUNE 2017, USD MILLION Outstanding debt (millions) Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing VimpelCom Holdings B.V. 3,885 3,210 - 63 - 7,158 VimpelCom Amsterdam B.V. - - - 538 - 538 PJSC VimpelCom 976 - - - 61 1,037 GTH Finance B.V. 1,200 - - -
Slide 33: Underlying Equity Free Cash Flow (Excluding Licenses) Reconciliation Table
Underlying Equity Free Cash Flow (Excluding Licenses) Reconciliation Table 2Q17 2Q16 1H17 1H16 Net cash from operating activities 578 428 1,162 67 Exceptional items: PT costs 46 74 67 119 WHT on license in Pakistan 30 - 30 IRAQNA Provision - - 69 - Settlement with DOJ/SEC/OM - - - 795 investigation
Slide 34: EBITDA Underlying Reconciliation Table
EBITDA Underlying Reconciliation Table 2Q16 1H16 2Q17 1H17 Pro-forma Warid Pro-forma Warid EBITDA 931 811 1,792 1,589 Performance Transformation costs of which: HQ and Other 37 56 58 89 Russia 1 3 4 4 Emerging Markets 6 16 12 24 Other exceptional 2 43 2 42 EBITDA Underlying 977 928 1,868 1,747 Q2 20
Slide 35: Forex
Forex Forex assumptions Average rates Closing rates FY 2017 2Q17 2Q16 YoY 2Q17 2Q16 YoY Russian Ruble 67.00 57.15 65.89 (13.3%) 59.09 64.26 (8.0%) Algerian Dinar 118.00 109.04 109.54 (0.5%) 107.8 110.31 (2.3%) Pakistan Rupee 107.00 104.81 104.67 0.1% 104.83 104.71 0.1% Bangladeshi Taka 79.00 80.86 7