32 slides from VEON Ltd. ORD's earnings presentation, May 14, 2014
Slide 1: 1Q 2014 Presentation
1Q 2014 © VimpelCom Ltd 2014 Presentation Amsterdam, May 14, 2014 Jo Lunder – CEO Andrew Davies – CFO 1
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, among other things, the Company's anticipated performance, its expectation to
Slide 3: VimpelCom reports 1Q14 results
VimpelCom reports 1Q14 results Service revenue Mobile customers (USD billion) (million) • Service revenue organic decline 4% YoY 4.8 218 • Mobile customers increased 3% YoY © VimpelCom Ltd 2014 EBITDA EBITDA margin1 (USD billion) (%) • EBITDA organic decline 6% YoY 2.1 41.6 • Strong EBITDA margin, d
Slide 4: Key recent developments
Key recent developments ► Favorable resolution in Algeria with proceeds of ~USD 4.0 billion intended for debt repayment with annual interest savings of ~USD 0.3 billion ► Successful refinancing of WIND Italy’s most expensive debt, saving ~USD 0.3 billion in annual interest expense © VimpelCom Ltd 20
Slide 5: Business Units Performance
Business Units Performance © VimpelCom Ltd 2014 5
Slide 6: Russia 1Q14: Pressure on results while investing in the network
Russia 1Q14: Pressure on results while investing in the network RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) -2% YoY -1% YoY • Mobile data revenue grew 22% YoY 65.8 68.7 64.6 55.7 55.0 • Service revenue decreased 2% YoY, 11.8 12.4 12.2 mainly affected by measures t
Slide 7: Transformation Phase in Russia: Continued investments in high speed data network
Transformation Phase 2 in Russia: Continued investments in high speed data network © VimpelCom Ltd 2014 4G/LTE launched in 8 cities Continued roll out of Improved network Including Moscow Oblast, 3G and 4G/LTE performance St. Petersburg and Leningradskaya Oblast • + 40% in 3G base stations YoY • 4G/
Slide 8: Transformation Phase in Russia: Enhanced customer experience with new content and spam policy
Transformation Phase 2 in Russia: Enhanced customer experience with new content and spam policy © VimpelCom Ltd 2014 Transparency of content Filter SMS spam subscription costs and Free anti virus protection no undesired subscription for Android • Filtering external SMS traffic, with spam • Clear SMS
Slide 9: Transformation Phase in Russia: Improved customer value proposition
Transformation Phase 2 in Russia: Improved customer value proposition 300 600 © VimpelCom Ltd 2014 1200 2700 Beeline smartphone New range of RUB 490 bundles and Brand proposition (< USD 15) new roaming tariffs • Most affordable smartphone in the • Simplified tariff plans • Launched TV campaign to co
Slide 10: Transformation Phase in Russia: Improving customer service
Transformation Phase 2 in Russia: Improving customer service © VimpelCom Ltd 2014 “My Beeline” account Self service Reduced waiting time details in one click upgrade (app) in service centers • User friendly online cost overview: • App for Android and iOS: • 16% reduction average waiting time ► Costs
Slide 11: Italy 1Q14: Continued market outperformance
Italy 1Q14: Continued market outperformance EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Continued market outperformance in (million) -10% YoY 0% YoY a competitive environment 1,147 1,120 1,035 22.0 22.0 • Mobile broadband customers2 up 40% 332 YoY to 9.3 million 320 306 •
Slide 12: Africa & Asia 1Q14: Good recovery in Bangladesh, solid performance in Pakistan, resolution in Algeria
Africa & Asia1 1Q14: Good recovery in Bangladesh, solid performance in Pakistan, resolution in Algeria USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) -2% YoY +8% YoY • Revenue and EBITDA organically 848 83.3 89.8 declined 1% YoY and 3% YoY 830 830 • Mobile customer g
Slide 13: Algeria plans post settlement
Algeria plans post settlement • Closing of the transaction is expected by the end of 2014 • Agreement will facilitate the procurement procedures, the deployment of the 3G network and the revamping of the existing network • Agreement enables modernization of the existing network and fulfilment of © V
Slide 14: Ukraine 1Q14: Transformation program on track, delivering first signs of improvements
Ukraine 1Q14: Transformation program on track, delivering first signs of improvements UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Kyivstar’s operations in 1Q14 not -5% YoY (million) materially impacted despite -3% YoY challenging macro- economic and 3.1 3.1 3.0 26.3 25.6
Slide 15: CIS 1Q14: Solid results
CIS1 1Q14: Solid results USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Mobile service revenue increased (million) -3% YoY +6% YoY organically 2% YoY 447 500 42 434 23.9 25.3 • Mobile data revenue growth of 29% 38 40 YoY 458 409 • Mobile customers increased 6% YoY, © VimpelC
Slide 16: Financial Highlights
Financial Highlights © VimpelCom Ltd 2014 16
Slide 17: Financial performance 1Q14
Financial performance 1Q14 USD million 1Q14 1Q13 YoY Revenue 5,024 5,591 (10%) • Revenue declined organically 5% YoY, mainly due to operational performance in Russia and continued market weakness in Italy of which service revenue 4,810 5,322 (10%) EBITDA 2,088 2,348 (11%) • EBITDA declined organical
Slide 18: Cash flow
Cash flow USD million 1Q14 1Q13 YoY EBITDA 2,088 2,348 (260) Changes in working capital and other (34) (267) 233 • Mainly due to improvements in trade working capital Net interest paid (652) (581) (71) • Due to bonds issued in 1Q13 with semi-annual interest payment © VimpelCom Ltd 2014 Income tax pa
Slide 19: Improved maturity profile
Improved maturity profile Pro Forma1 group debt maturity schedule as at 31 March 2014 Debt composition USD billion by currency2 WIND refinancing 9.4 WIND 2% GTH 17% USD 31% 6.2 VimpelCom/OJSC 6.1 USD EUR (7.7) 27.4 bln RUB © VimpelCom Ltd 2014 3.1 5.2 2.5 1.8 2.4 Other 1.7 2.2 1.5 1.2 50% 0.6 0.9 1.
Slide 20: Revised annual targets for 2014
Revised annual targets for 2014 Previous targets1 Revised targets1 2014 2014 Low to mid single Revenue Stable YoY digit decline YoY © VimpelCom Ltd 2014 Low to mid single EBITDA Stable YoY digit decline YoY Leverage (Net Debt / EBITDA) ~2.3x ~2.4x CAPEX excl. licenses / Revenue ~21% ~21% 20 1. The a
Slide 21: Conclusion
Conclusion © VimpelCom Ltd 2014 Jo Lunder CEO 21
Slide 22: Challenging 2014
Challenging 2014 ► Favorable resolution in Algeria & successful refinancing of WIND ► Results impacted by operational performance in Russia and market weakness in Italy ► Transformation Phase 2 in Russia on track © VimpelCom Ltd 2014 ► Continued outperformance in the competitive Italian market ► Tra
Slide 23: Q&A
© VimpelCom Ltd 2014 23 Q&A
Slide 24: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 © VimpelCom Ltd 2014 E: ir@vimpelcom.com Visit our awards winning website Install VimpelCom’s App www.vimpelcom.com iPad App 24
Slide 25: Thank you!
© VimpelCom Ltd 2014 25 Thank you!
Slide 26: Appendices
© VimpelCom Ltd 2014 26 Appendices
Slide 27: Debt and cash
Debt and cash Consolidated cash and net debt development Actual 1Q14 (USD million) During 1Q14: • Draw downs under existing Vendor Financing facilities for USD 280 million Available headroom under committed (4,850) 4,959 1,174 62 revolving credit facilities as at the end of © VimpelCom Ltd 2014 27,4
Slide 28: FOREX rates used in annual targets for 2014
FOREX rates used in annual targets for 2014 Currency FX rates versus USD Algeria DZD 81 Armenia AMD 420 Bangladesh BDT 80 © VimpelCom Ltd 2014 Canada CAD 1.05 Egypt EGP 8.0 Georgia GEL 1.7 Italy EUR 0.80 Kazakhstan KZT 155 Kyrgyzstan KGS 47 Laos LAK 8,000 Pakistan PKR 110 Russia RUB 32 Ukraine UAH 9
Slide 29: Revenue and EBITDA development in 1Q14
Revenue and EBITDA development in 1Q14 1Q14 Revenue YoY EBITDA YoY Organic Reported Organic Reported Russia (6%) (18%) (9%) (21%) © VimpelCom Ltd 2014 Italy (7%) (3%) (7%) (3%) Africa & Asia (1%) (2%) (3%) (3%) Ukraine (7%) (15%) (8%) (16%) CIS 3% (3%) 4% (1%) Consolidated (5%) (10%) (6%) (11%) 29
Slide 30: FOREX development
FOREX development RATES OF FUNCTIONAL CURRENCY TO USD Average rates Closing rates 1Q14 1Q13 YoY 1Q14 4Q13 YoY © VimpelCom Ltd 2014 Russian Ruble 34.96 30.41 (13.0%) 35.69 32.73 (8.3%) Euro 0.73 0.76 3.8% 0.73 0.73 0.2% Algerian Dinar 78.01 78.65 0.8% 78.54 78.38 (0.2%) Pakistan Rupee 103.55 97.89 (5
Slide 31: Reconciliation of EBITDA
Reconciliation of EBITDA USD mln 1Q14 1Q13 Unaudited EBITDA 2,088 2,348 Depreciation (758) (766) Amortization (394) (454) Impairment loss - (18) © VimpelCom Ltd 2014 Loss on disposals of non-current assets (11) (3) EBIT 925 1,107 Financial Income and Expenses (513) (501) - including finance income 1
Slide 32: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt USD mln 1Q13 4Q13 1Q14 Net debt 22,861 22,603 22,434 C ash and cash equivalents 5,564 4,454 4,540 © VimpelCom Ltd 2014 Long-term and short-term deposits 190 396 419 Gross debt 28,615 27,453 27,393 Interest accrued related to financial liabilities 448 606 434 U