VEON Ltd. · NASDAQ:VEON
VEON — Q1 2020 Earnings Presentation
30 slides from VEON's earnings presentation, May 7, 2020
Slide 1: 1Q20 Results
1Q20 RESULTS 7 MAY 2020 ©VEON Ltd 2020
Slide 2: Agenda
AGENDA 1. OPENING Nik Kershaw: HEAD IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioglu: CO-CEO Sergi Herrero: CO-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 2
Slide 3: Disclaimer
DISCLAIMER This press release contains “forward-looking statements”, as the phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by words such as “m
Slide 4: Agenda
AGENDA 1. OPENING Nik Kershaw: HEAD IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioglu: CO-CEO Sergi Herrero: CO-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 4
Slide 5: Financial Results: 1Q20 Results
FINANCIAL RESULTS 1Q20 Results1 REPORTED REVENUE EBITDA OPERATIONAL CAPEX4 $2.1bn $0.9bn $0.4bn +0.3% local currency2 YoY -1.8% local currency2 YoY -5.4% reported YoY -1.3% reported YoY -29.1% reported3 YoY 19.5% LTM Capital intensity ratio4 DATA REVENUE EBITDA MARGIN LTM NET DEBT/EBITDA5 $0.7bn 43.
Slide 6: 1Q20 Key Financial highlights
FINANCIAL RESULTS 1Q20 Key Financial highlights Local Reported USD MILLION 1Q20 1Q19 currency YoY YoY ► 2.7% YoY increase in local currency revenue excluding the impact of tax change in Revenue 2,097 2,124 (1.3%) 0.3% Pakistan Other operating income - 350 n.m. n.m. ► Other operating income is relate
Slide 7: Revenue and EBITDA by country
FINANCIAL RESULTS Revenue and EBITDA by country USD MILLION (-1.3%) YoY reported 18 5 (2) (4) (9) (27) 30 (5) (34) 2,124 2,131 2,097 1 Reported total Ukraine Kazakhstan Bangladesh Uzbekistan Algeria Pakistan Russia Other Local currency FOREX Reported total revenue 1Q19 total revenue revenue 1Q20 1Q2
Slide 8: Prudent capital structure
FINANCIAL RESULTS Prudent capital structure ► Funding mix (post hedging) that appropriately 1Q20 GROUP DEBT CURRENCY MIX 5% 1% (including effect of FX derivatives) reflects the currency mix of our operations USD ► The decline in proportion of ruble funding follows Average maturity: 2.3 years USD 52%
Slide 9: Stable net debt and leverage trends
FINANCIAL RESULTS Stable net debt and leverage trends USD MILLION 113 72 61 246 (393) 449 (796) 6,302 6,054 1 3 1 1 Net debt Cash capex (incl. Financial Taxes Change in working Dividend FOREX EBITDA Net debt 31 December 2019 licenses) charges capital and other 31 March and provisions 2020 LTM NET DE
Slide 10: Agenda
AGENDA 1. OPENING Nik Kershaw: HEAD IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioglu: CO-CEO Sergi Herrero: CO-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 10
Slide 11: COVID-19 Impact on Operational Performance
COVID-19 IMPACT ON OPERATIONAL PERFORMANCE ► In the quarter we were impacted by material forex movements, COVID-19 as well as lockdown ► COVID-19 is redefining the role of our industry and accelerating digital transformation ► Divergent impact on our operational performance so far: ► Increase in voi
Slide 12: COVID-19 Impact on Operational Performance
COVID-19 IMPACT ON OPERATIONAL PERFORMANCE ► As we look to mitigate the impact on COVID-19 on our business: ► We are extending payment terms with our key vendors ► Optimizing costs and capex as appropriate across our operations ► Continue to focus on optimizing our balance sheet structure in the com
Slide 13: Russia: Organizational alignment in place, continued focus on quality of service
RUSSIA Organizational alignment in place, continued focus on quality of service ► Appointment of Alexander Torbakhov as Chief Executive Officer of Beeline Russia ► Significant progress on network rollout, 33% YoY increase in base stations ► Retail optimization on track ► Growing customer engagement
Slide 14: Russia: Organizational alignment in place, continued focus on quality of service
RUSSIA Organizational alignment in place, continued focus on quality of service REVENUE DATA REVENUE KEY OPERATIONAL METRICS (RUB Billion) (RUB Billion) -2.6% +8.5% 74.7 73.4 54 million -1.4% 72.6 Total mobile subscribers 69.2 67.5 16.2 16.2 16.3 YoY 15.4 15.0 31% +4 p.p. Data rev % of mobile YoY se
Slide 15: Kazakhstan: Strong operational performance driven by 4G
KAZAKHSTAN Strong operational performance driven by 4G customer penetration ► Infrastructure modernization and 4G network coverage expansion ► Strong value proposition, good progress with Izi ‘digital operator’ ► 4G customer penetration reached 44% and 4G customer base increased YoY by 41% in 1Q20 ►
Slide 16: Kazakhstan: Strong operational performance driven by 4G
KAZAKHSTAN Strong operational performance driven by 4G customer penetration REVENUE DATA REVENUE KEY OPERATIONAL METRICS (KZT Billion) 40.0 (KZT Billion) +17.7% +46.5% 35.0 57.0 10 million -1.1% 60.0 30.0 44.5 45.5 46.0 50.0 39.0 Total mobile subscribers 25.0 40.0 17.4 18.6 YoY 15.5 20.0 12.7 14.3 4
Slide 17: Pakistan: Continued focus on development of new services
PAKISTAN Continued focus on development of new services ► Continued focus in Jazz Cash with appointment of Erwan Gelebart as Jazz Cash CEO1 ► Partnership commenced with Mastercard ► 4G penetration reached 29% in the quarter, with the 4G customer base doubling YoY ► Self-care app Jazz World has grown
Slide 18: Pakistan: Continued focus on development of new services
PAKISTAN Continued focus on development of new services REVENUE DATA REVENUE KEY OPERATIONAL METRICS (PKR Billion) (PKR Billion) -2.6% 60.0 +17.1% 50.6 51.1 50.5 49.3 55.0 14.3 15.1 15.9 62 million +6.3% 13.6 Total mobile subscribers 45.4 12.5 YoY 50.0 45.0 35% +6 p.p. 40.0 35.0 Data rev % of mobile
Slide 19: Pakistan: Continued focus on development of new services
PAKISTAN Continued focus on development of new services REVENUE DATA REVENUE JAZZ CASH KEY OPERATIONAL METRICS (PKR Billion) (PKR Billion) -2.6% +17.1% +42% 60.0 50.6 51.1 50.5 49.3 55.0 15.1 15.9 13.6 12.5 14.3 YoY Mobile wallets 45.4 50.0 45.0 40.0 35.0 PKR 450 billion 230 million 30.0 Value proce
Slide 20: Ukraine: Strong performance, growing 4G contribution
UKRAINE Strong performance, growing 4G contribution ► Enhancing 4G potential through new digital offers ► Expanding revenue streams and deploying new services ► 4G penetration reached 30% as our 4G customer base continued to grow in 1Q20 up 89% YoY ► Kyivstar well positioned for continued strong gro
Slide 21: Ukraine: Strong performance, growing 4G contribution
UKRAINE Strong performance, growing 4G contribution REVENUE DATA REVENUE KEY OPERATIONAL METRICS (UAH Billion) (UAH Billion) +16.1% +22.4% 6.0 26 million -1.2% 3.0 6.2 5.8 2.8 2.8 2.8 Total mobile subscribers 5.8 YoY 6.0 5.6 5.8 2.5 5.6 5.1 5.4 5.2 54% +3 p.p. 5.0 Data rev % of mobile YoY 4.8 servic
Slide 22: Data revenues a key performance driver
DATA REVENUES A KEY PERFORMANCE DRIVER ARMENIA, GEORGIA & UZBEKISTAN ALGERIA BANGLADESH KYRGYSTAN • 26.6% YoY increase in • 31.5% YoY increase in • 18.5% YoY increase in • 26.4% YoY1 increase in data revenue data revenue data revenue data revenue • IMEI intro impacting • 6.5% YoY decrease in • 7.8%
Slide 23: Agenda
AGENDA 1. OPENING Nik Kershaw: HEAD IR 2. FINANCIAL RESULTS Serkan Okandan: CFO 3. OPERATIONAL REVIEW Kaan Terzioglu: CO-CEO Sergi Herrero: CO-CEO 4. OUTLOOK AND GUIDANCE Serkan Okandan: CFO 23
Slide 24: Outlook for 2Q20 impacted by COVID-19
OUTLOOK FOR 2Q20 IMPACTED BY COVID-19 COVID-19 VEON OUTLOOK • COVID-19 increasing uncertainty, particularly in • The impact of the COVID-19 disruption does not relation to both the duration of the lock-down allow VEON to give full year guidance for 2020 and its economic impact at this stage • There
Slide 25: Appendix
APPENDIX 7 MAY 2020 ©VEON Ltd 2020
Slide 26: Group debt maturity schedule
GROUP DEBT MATURITY SCHEDULE1 GROUP DEBT MATURITY SCHEDULE BY CURRENCY – EXCLUDING LEASE LIABILITIES1 Currency breakdown 2020 2021 2022 2023 2024 2025 Currency breakdown incl. fx derivatives2 US D 1.13 0.8 0.4 1.2 0.6 1.0 68% 52% R UB 0.3 0.8 0.4 0.1 0.2 0.1 25% 42% P KR 0.1 0.1 0.1 0.1 0.0 0.0 5% 5
Slide 27: Liquidity overview
LIQUIDITY OVERVIEW GROUP CASH BREAKDOWN BY CURRENCY1 UNUSED RCF HEADROOM 31 March 2020 31 March 2020 12% Syndicated RCF facility USD 0.99 billion 7% USD 53% PKR UNUSED CF HEADROOM 31 March 2020 RUB 13% EUR Pakistan – credit facilities PKR 40.5 billion (USD 0.24 billion) Other 15% Total cash and unus
Slide 28: Debt by entity
DEBT BY ENTITY1 31 MARCH 2020 USD MILLION Outstanding debt Type of debt Cash-pool Entity Bonds Loans overdrafts2 and Total other VEON Holdings B.V. 3,079 2,498 30 5,607 GTH Finance B.V. 700 - - 700 PJSC VimpelCom 271 - - 271 Pakistan Mobile Communications Limited - 465 - 465 Banglalink Digital Commu
Slide 29: COVID-19: Our response, 360-degree approach
COVID-19: OUR RESPONSE 360-degree approach OUR OPERATIONS OUR CUSTOMERS • Network responding well to increased demand • Customer awareness via apps, SMS, • Supply chain delays social media etc. • Store closing partially mitigated by digital • Zero-rating of emergency hotlines channels, self care app
Slide 30: COVID-19: Initial response, lives, livelihoods, lifestyles
COVID-19: INITIAL RESPONSE LIVES, LIVELIHOODS, LIFESTYLES Protecting Lives Connecting our customers with vital resources around health education, advice and access to essential services Safeguarding Livelihoods Enhancing Lifestyles Through our connectivity services, Providing digital services that c