23 slides from VEON Ltd. ORD's merger presentation, Sep 2, 2016
Slide 1: WIND and 3 Italia merger: transformative transaction approved by EC
WIND and 3 Italia merger: transformative © VimpelCom Ltd 2016 transaction approved by EC Amsterdam – 2 September 2016 Jean-Yves Charlier – Chief Executive Officer Kjell Morten Johnsen – Head of Major Markets Andrew Davies – Chief Financial Officer 1
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. Forward-looking statements are not historical facts, and include statem
Slide 3: Wind and 3 Italia merger – agenda
Wind and 3 Italia merger – agenda Jean-Yves Charlier – Chief Executive Officer • A transformative transaction • Beneficial transaction for all stakeholders • Strategic fit and benefits for VimpelCom shareholders • Joint venture corporate governance © VimpelCom Ltd 2016 Kjell Morten Johnsen – Head of
Slide 4: Wind and 3 Italia merger – agenda
Wind and 3 Italia merger – agenda Jean-Yves Charlier – Chief Executive Officer • A transformative transaction • Beneficial transaction for all stakeholders • Strategic fit and benefits for VimpelCom shareholders • Joint venture corporate governance © VimpelCom Ltd 2016 Kjell Morten Johnsen – Head of
Slide 5: Transformative transaction for VimpelCom and the Italian market
Transformative transaction for VimpelCom and the Italian market • European • Creates a leading • Material proceeds • Substantial value • Significantly Commission convergent and cost savings accretion for stronger balance © VimpelCom Ltd 2016 clearance obtained operator in from long-term shareholders
Slide 6: Beneficial transaction for all stakeholders…
Beneficial transaction for all stakeholders… Consumers Italian economy and Shareholders and and businesses government goals debt-holders © VimpelCom Ltd 2016 • Provides a compelling • Supporting Digital Italy Plan • Unlocking value through the alternative vis-à-vis other combination of #3 (WIND) and
Slide 7: Strategic fit and benefits for VimpelCom shareholders
Strategic fit and benefits for VimpelCom shareholders • A leading world-class player able to compete in the same league with other operators • Major portfolio and in-market consolidation milestone for Performance Transformation New Revenu Streams VimpelCom, following the July 2016 closing of the War
Slide 8: Solid joint venture corporate governance
Solid joint venture corporate governance © VimpelCom Ltd 2016 • Detailed • Strong • Board consisting • Chairman rotating • “One company” • After three years shareholder empowered and of 6 directors (3 every 18 months, approach with post-completion, agreement to independent by VIP, 3 by with casting
Slide 9: Wind and 3 Italia merger – agenda
Wind and 3 Italia merger – agenda Jean-Yves Charlier – Chief Executive Officer • A transformative transaction • Beneficial transaction for all stakeholders • Strategic fit and benefits for VimpelCom shareholders • Joint venture corporate governance © VimpelCom Ltd 2016 Kjell Morten Johnsen – Head of
Slide 10: New leading operator in Europe’s fourth largest telecom market
New leading operator in Europe’s fourth largest telecom market Historical evolution After merger 36.2% 36.5% 36.9% 34.9% 36.9% 35.0% Customer 34.1% 35.0% 35.0% 28.1% 34.7% Mobile © VimpelCom Ltd 2016 31.0% 29.1% market 28.5% 28.1% 2013 2014 2015 1H 2016 JV Telecom Vodafone share1 Italy Italia Italy
Slide 11: Enhanced customer experience
Enhanced customer experience Fully convergent Best quality Distribution Upscaling business operator network segment © VimpelCom Ltd 2016 • JV will serve more than 31 • Improved and enlarged network for • Increased efficiency in • Improved market position and million mobile and more than best in clas
Slide 12: Merger integration plan update
Merger integration plan update © VimpelCom Ltd 2016 • Completion • Network • Roaming available • JV to be led by • Management team expected by Q4 integration to 3 Italia Maximo Ibarra to be communicated 2016, with expected to start customers on (current CEO of upon completion integration to start be
Slide 13: Material proceeds and cost savings from agreement with Iliad
Material proceeds and cost savings from agreement with Iliad © VimpelCom Ltd 2016 • Hutchison and VimpelCom • The package includes: • JV to maintain its strong entered into binding strategic position to offer ► Transfer of 2x35MHz 3G & 4G/LTE agreement with Iliad as a frequencies1 for EUR 450 millio
Slide 14: Wind and 3 Italia merger – agenda
Wind and 3 Italia merger – agenda Jean-Yves Charlier – Chief Executive Officer • A transformative transaction • Beneficial transaction for all stakeholders • Strategic fit and benefits for VimpelCom shareholders • Joint venture corporate governance © VimpelCom Ltd 2016 Kjell Morten Johnsen – Head of
Slide 15: The JV improves VimpelCom’s financial profile significantly
The JV improves VimpelCom’s financial profile significantly As at 30 June 2016, USD billion Significantly reducing net debt by Substantially improving leverage EUR 9.8 billion (USD 11.9 billion): (Net debt/EBITDA1): © VimpelCom Ltd 2016 18.5 3.2x 1.8x 6.6 Pro-forma, including Reported Pro-forma, inc
Slide 16: The JV is a financially stronger asset
The JV is a financially stronger asset Financially solid player Healthier debt profile Prospective in the Italian market & deleverage dividend payer © VimpelCom Ltd 2016 • Cash flow improvements • No significant debt maturities • The joint venture is expected through synergies until 2020 to distribu
Slide 17: Transaction structure
Transaction structure • 50/50 JV of VimpelCom and CK Hutchison Holdings • VimpelCom to contribute WIND with existing net debt (EUR 9.8 billion as of June 2016) Key terms • CK Hutchinson Holdings to contribute 3 Italia virtually debt free plus EUR and 200 million cash VimpelCom CK Hutchinson Holdings
Slide 18: A value accretive transaction…
A value accretive transaction… Originally anticipated cost & capex synergies confirmed1 New proceeds and impact from remedy package EUR 700 million annual run-rate cash synergies2 • Future proceeds and cost savings from Iliad Main areas for synergies NPV3 agreement (net effect will depend on how the
Slide 19: Enhanced profitability and cash flow generation
Enhanced profitability and cash flow generation An operator with EUR 6.3 billion revenues and… …EBITDA margin of 39%… (EUR billion, FY 2015) (EUR billion, FY 2015 and % margin) 8pp 39% 1.8 6.3 31% Revenue 4.4 2.5 2.0 and EBITDA © VimpelCom Ltd 2016 WIND 3 Italia pro forma WIND + 3 Italia pro forma 1
Slide 20: P&L accounting treatment for VimpelCom
P&L accounting treatment for VimpelCom Current accounting of Italy Intermediate accounting Long term accounting FY2015 FY2016E1 FY 2017E - onward USD million FY15 USD million USD million Revenue 9,625 Revenue Revenue Service Revenue 9,332 Service Revenue Service Revenue EBITDA underlying 3,908 EBITD
Slide 21: JV debt maturity profile from H2 2016 onwards
JV debt maturity profile from H2 2016 onwards EUR million 575 420 © VimpelCom Ltd 2016 3,513 3,779 150 22 700 775 2016 2017 2018 2019 2020 2021 Tap to SSN 2020 + FRN 2020 New Senior Credit Facility 3 Italia LTE liability Italian State New Senior Secured Notes 2020 Senior Secured FRN Senior Secured N
Slide 22: Final remarks
Final remarks © VimpelCom Ltd 2016 • A transformative • Beneficial to all stakeholders • Building a new leading • Strengthening the transaction operator in Italy with financial profile and significant synergies portfolio of VimpelCom 22
Slide 23: Wind and 3 Italia merger – agenda
Wind and 3 Italia merger – agenda Jean-Yves Charlier – Chief Executive Officer • A transformative transaction • Beneficial transaction for all stakeholders • Strategic fit and benefits for VimpelCom shareholders • Joint venture corporate governance © VimpelCom Ltd 2016 Kjell Morten Johnsen – Head of