VEON Ltd. · NASDAQ:VEON

VEON — VimpelCom — Q1 2015 Earnings Presentation

36 slides from VEON's earnings presentation, May 14, 2015

  1. Slide 1: 1Q15 Earnings Presentation

    2015 Ltd 1Q15 Earnings Presentation VimpelCom © Amsterdam – May 13, 2015 Jean-Yves Charlier – CEO Andrew Davies – CFO 1

  2. Slide 2: Disclaimer

    Disclaimer This presentation contains “forward-looking statements”, as the phrase is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to, among other things, the Company’s anticipated perform

  3. Slide 3: New Group CEO – Jean-Yves Charlier

    New Group CEO – Jean-Yves Charlier 2015 Ltd VimpelCom © Strategic update planned for August 6, 2015 3

  4. Slide 4: Strategic highlights

    Strategic high lights • Successful closing of Algeria transaction • Repaid USD 3.4 billion of debt 2015 • Italian tower sale completed Ltd • Concluded 3rd and final stage of refinancing in Italy VimpelCom • Acquired 3G license in Ukraine © • 4G/LTE services launched in Georgia • On track to deliver

  5. Slide 5: 1Q15 Financial highlights

    1Q15 Financial highlights Service revenue Mobile customers • Organic results in line with management (USD billion) (million) expectations • Marginal organic decline in service revenue: 3.4 218—Delayed 3G launch in Algeria —Continued market weakness in Italy 2015—2% organic2 YoY • EBITDA margin decre

  6. Slide 6: Business Unit Performance 1Q15

    2015 Business Unit Performance Ltd VimpelCom 1Q15 © 6

  7. Slide 7: Russia: Continued operational improvements

    Russia: Continued operational improvements RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Continued improvements in NPS and -0.3% YoY +1% YoY churn led to sequential YoY growth in 70.6 mobile customers 64.6 64.3 55.0 55.7 • Stable revenue market share 2015 • Mobile

  8. Slide 8: Italy: Continued outperformance in mobile

    Italy: Continued outperformance in mobile EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Mobile service revenue declined by 3% -5% YoY -3% YoY YoY—a significant trend improvement versus previous quarters 1,035 1,038 983 22.0 21.4 YoY • Mobile data revenue increased

  9. Slide 9: Algeria: Transformation to take 12 to 18 months

    Algeria: Transformation to take 12 to 18 months DZD BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Market leader in very attractive growth -11 % YoY +6% YoY market, with a strong local partner 33.4 18.7 33.5 29.8 17.6 • Strengthening local management team • Clear leade

  10. Slide 10: Pakistan: Operational improvements

    Pakistan: Operational improvements PKR BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • 2G network modernization completed; –4 % YoY +0% YoY continued investment in mobile data 38.2 38.2 network 24.9 24.0 24.3 • Revenue pressure due to simplified 2015 VAS charging and SI

  11. Slide 11: Bangladesh: Continued double digit growth

    Bangladesh: Continued double digit growth BDT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Continued customer and revenue +10 % YoY +8% YoY market share gains 10.2 11.2 11.3 31.8 • Continued double digit revenue growth 29.4 YoY despite unstable macro 2015 environment

  12. Slide 12: Ukraine: Solid results in a challenging environment

    Ukraine: Solid results in a challenging environment UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • YoY customer and mobile service +5% YoY +2% YoY revenue growth, despite challenging & volatile environment 3.1 3.1 25.6 26.1 2.9 • Improvement in annualized churn of

  13. Slide 13: Kazakhstan: Strong position in competitive market

    Kazakhstan: Strong position in competitive market KZT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Strong position as a result of attractive -0.5% YoY +5% YoY customer propositions, network and 30.4 34.9 30.2 distribution 9.2 9.6 • Excluding MTR reductions mobile ser

  14. Slide 14: Eurasia: Increased competition

    Eurasia1: Increased competition USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Mobile service revenue increased Reported -8% YoY Organic +3% YoY +1% YoY organically 3% YoY mainly due to solid 263 290 242 16.5 16.6 results in Uzbekistan 21 21 18 • Mobile data revenu

  15. Slide 15: 1Q15 Income statement

    1Q15 Income statement USD million 1Q15 1Q14 YoY Revenue 3,515 5,024 (30%) • Organic decline of 2% due to the delayed 3G launch in Algeria, continued market of which service revenue 3,358 4,810 (30%) weakness in Italy, partly offset by growth in Bangladesh, Ukraine and Eurasia EBITDA 1,396 2,088 (33%

  16. Slide 16: 1Q15 Cash flow statement

    1Q15 Cash flow statement USD million 1Q15 1Q14 YoY EBITDA 1,396 2,088 (33%) • Payment of Bank of Algeria fine (USD 1.1 billion), as part of Changes in working capital and other (1,387) (34) n.m. closing transaction in Algeria • Significant YoY reduction from refinancing of Wind Italy in 2014 Net int

  17. Slide 17: 1Q15 continued capital structure optimization

    1Q15 continued capital structure optimization Bought back USD1.8 bln bonds using Algeria proceeds1 2015 Repaid RUB 35 bln Sale of 90% shares in Italian Ltd bonds using Algeria towers Company for EUR 693 mln VimpelCom proceeds © Closed transaction 3rd refinancing of Italy in Algeria, USD 3.8 bln € ne

  18. Slide 18: Substantially reduced the cost of debt

    Substantially reduced the cost of debt Pro forma average cost of Average cost of debt 1Q14 Average cost of debt 4Q14 1 debt 1Q15 2015 Ltd VimpelCom 8.3% 6.3% 6.2% © 18 1 Average cost of debt at 1Q15 is pro-forma for the outcome of the tender. Settlement of the tender and cancellation of the bonds wa

  19. Slide 19: Reduced net debt offset by FOREX impact on EBITDA

    Reduced net debt offset by FOREX impact on EBITDA Net debt / EBITDA December 31, 2014 March 31, 2015 2015 Ltd VimpelCom 2.5 2.4 © 1.2 1.2 Excluding Group Excluding Group Italy Italy 19

  20. Slide 20: Significantly improved debt maturity schedule

    Significantly improved debt maturity schedule Group debt maturity schedule (in USD billion) ? As at December 31, 2014 ? As at March 31, 2015 Pro Forma1 2015 5.8 Ltd 6.0 6.3 5.4 VimpelCom 3.2 © 2.2 2.7 2.0 1.9 1.5 1.1 2.1 2.1 1.3 1.6 1.2 1.3 1.1 2015 2016 2017 2018 2019 2020 2021 2022 >2022 20 1 Matu

  21. Slide 21: Cash flow enhancing from financing improvements

    Cash flow enhancing from financing improvements during 2014—1Q 2015 Targeted potential Expected A&I day Jan 2014 savings In-house finance company USD 50 million USD 20 million 2015 Ltd Debt optimization USD 150 million USD 400 million VimpelCom Gross debt reduction USD 150 million USD 280 million ©

  22. Slide 22: Confirmed annual targets

    Confirmed annual targets 2015 Targets 20151 Flat to low single Service Revenue digit decline YoY Flat to minus one 2015 EBITDA Margin Ltd p.p. YoY VimpelCom EPS2 USD 0.35 – 0.40 © CAPEX / Revenue ~20% Leverage (Net Debt / EBITDA) ~3.2x Excl. Italy ~1.7x 1 The annual targets for 2015 assume constant

  23. Slide 23: Conclusion

    Conclusion • Continued operational improvements • Strong increase in EPS • Successful closing of Algeria transaction 2015 Ltd • Repaid USD 3.4 billion of debt VimpelCom • Completed Italian tower sale & 3rd and final stage of refinancing in Italy © • On track to deliver 2015 targets 23

  24. Slide 24: VimpelCom's 4th Analyst & Investor site visit

    VimpelCom’s 4th Analyst & Investor site visit Moscow, Russia July 9, 2015 Moscow, Russia 2015 Presentations by Group CFO, Ltd Head of BU Russia and VimpelCom local management © 24

  25. Slide 25: 2Q15 results & strategy update

    2Q15 results & strategy update August 6, 2015 London 2015 Ltd VimpelCom © 25

  26. Slide 26: Q&A

    © VimpelCom Ltd 2015 26 Q&A

  27. Slide 27: Further information

    Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 2015 E: ir@vimpelcom.com Ltd Visit our awards winning website Install VimpelCom’s App VimpelCom www.vimpelcom.com iPadApp © No.1 CORPORATE WEBSITE 2014 -2015 in the Netherlands 27

  28. Slide 28: Thank you!

    © VimpelCom Ltd 2015 28 Thank you!

  29. Slide 29: Appendix

    © VimpelCom Ltd 2015 29 Appendix

  30. Slide 30: Credit facilities: USD 3.8 billion in available headroom

    Credit facilities: USD 3.8 billion in available headroom USD 0.4 bn credit facilities arranged in 1Q15: Available RCF headroom at the end 1Q15: Financing VimpelCom USD 1.8 billion WIND USD 0.4 billion RCF (EUR 0.4 billion RCF1) OJSC VimpelCom USD 0.3 billion (RUB 15 billion) 2015 WIND USD 0.4 billio

  31. Slide 31: Debt maturity profile

    Debt maturity profile As at 31 March 2015, in USD billion Group debt maturity schedule by Business Units 6.3 Italy Russia 5.4 Other HQ 3.2 2015 2.1 2.1 1.6 Ltd 1.2 1.3 1.1 VimpelCom 20151 2016 2017 2018 2019 2020 2021 2022 >2022 © Group debt maturity schedule by currency2 20151 2016 2017 2018 2019 2

  32. Slide 32: Debt by entity

    Debt by entity As at 31 March 2015, USD million Outstanding debt Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing 2015 VimpelCom Holdings B.V. 3,785 — — 3,785 Ltd VimpelCom Amsterdam B.V. —1,000 —736 —1,736 OJSC VimpelCom 3,479 1,523—186 45 5,233 VimpelCom WIND Telecomunicazio

  33. Slide 33: FOREX rates used in annual targets for 2015

    FOREX rates used in annual targets for 2015 Currency FX rates versus USD Algeria DZD 92.0 Armenia AMD 415.0 2015 Bangladesh BDT 79.0 Ltd Egypt EGP 7.5 Georgia GEL 1.8 VimpelCom Italy EUR 0.91 © Kazakhstan KZT 190.0 Kyrgyzstan KGS 55.0 Pakistan PKR 105.0 Russia RUB 70.0 Ukraine UAH 25.0 33

  34. Slide 34: Service revenue and EBITDA development in 1Q15

    Service revenue and EBITDA development in 1Q15 1Q 2015 vs 1Q 2014 Service Revenue EBITDA FX and Business Units Organic Reported Organic FX and others Reported others 2015 Russia 0% (44%) (44%) (2%) (43%) (45%) Italy (5%) (17%) (22%) (5%) (18%) (23%) Ltd Algeria (11%) (14%) (25%) (18%) (14%) (32%) Pa

  35. Slide 35: Reconciliation of EBITDA

    Reconciliation of EBITDA USD mln 1Q15 1Q14 Unaudited EBITDA 1,396 2,088 Depreciation (584) (758) Amortization (286) (394) Impairment loss (98) — Loss on disposals of non-current assets (15) (12) Gain from sale of towers in Italy 466 —2015 EBIT 879 924 Ltd Financial Income and Expenses (382) (513) —i

  36. Slide 36: Reconciliation of consolidated net debt

    Reconciliation of consolidated net debt Reconciliation of consolidated net debt USD mln 1Q15 4Q14 3Q14 Net debt 17,608 19,992 21,736 2015 Cash and cash equivalents 6,499 6,342 5,852 Long-term and short-term deposits 118 109 126 Ltd Gross debt 24,225 26,443 27,714 Interest accrued related to financia

VimpelCom — Q1 2015 Earnings Presentation on 6ix