VEON Ltd. · NASDAQ:VEON
VEON — Debt Investor Presentation (December 2022)
38 slides from VEON's debt investor presentation, Dec 22, 2022
Slide 1: VEON Investor Presentation December 2022
1 1 VEON Investor Presentation 22 December 2022
Slide 2: Disclaimer (1/2)
2 2 This presentation has been prepared by VEON Ltd. (“VEON” and, together with its subsidiaries, the “Group”) solely for informational purposes. This presentation contains certain forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminolog
Slide 3: Important Notice
3 3 Important Notice This presentation is for informational purposes only and shall not constitute a prospectus or an offer to sell or the solicitation of an offer to buy securities in the United States or any other jurisdiction, nor shall there be any offer of securities in any jurisdiction in whic
Slide 4: Agenda
4 4 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW AGENDA 1. EXECUTIVE SUMMARY P.5 2. 3Q22 HIGHLIGHTS P.9 3. PORTFOLIO STRATEGY P.20 4. FUTURE PERFORMANCE AMBITION P.23 P.28 P.30 7. PROCESS & TIMELINE P.34 APPENDIX P.36
Slide 5: Executive summary: liquidity and debt service constraints
5 5 • Over the past nine months, VEON Ltd. (“VEON” or together with its subsidiaries, the “Group”) has successfully strengthened its liquidity position, and this will remain a key priority in the near term • However, despite the resilient performance of its underlying operating companies, which are
Slide 6: Russian Decree 430 and MinFin correspondence
6 6 • On 5 July 2022, the President of the Russian Federation issued Decree 430, which states that “Russian legal entities with obligations related to Eurobonds are required to ensure the fulfilment of obligations to holders of Eurobonds whose rights are recorded by Russian depositaries” • Although
Slide 7: Scheme of arrangement for the 2023 Notes
7 7 • The scheme of arrangement in England (the “Scheme”) launched by the Company today proposes an eight-month extension to the respective maturity dates of the 2023 Notes, together with certain other amendments to the terms of the 2023 Notes and related trust deeds • The Scheme represents the culm
Slide 8: Proposed amendments to the 2023 Notes
8 8 • The Scheme launched by the Company proposes the following changes with respect to the 2023 Notes (together, the “Amendments”): – An eight-month extension of the respective maturity dates of the February 2023 Notes and April 2023 Notes to October 2023 and December 2023 respectively; – An amendm
Slide 9: Agenda
9 9 AGENDA 1. EXECUTIVE SUMMARY 2. 3Q22 HIGHLIGHTS 3. PORTFOLIO STRATEGY 4. FUTURE PERFORMANCE AMBITION 7. PROCESS & TIMELINE APPENDIX 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW
Slide 10: Key Recent Developments
10 10 KEY RECENT DEVELOPMENTS Management continues to execute its strategic plan while navigating a complex sanctions environment 11 Mar 15 Mar 08 Jun 5 AugEARLY REPAYMENT OF VTB BANK LOAN • RUB20bn (USD 259m) bank loan with VTB Bank was repaid and cancelled COMPLETION OF SALE OF VEON GEORGIA • Valu
Slide 11: 4G Growth Driving Data & Digital Revenues
11 11 4G GROWTH DRIVING DATA & DIGITAL REVENUES Note: 3Q20, 3Q21 and 3Q22 data and digital revenues on this slide adjusted for Armenia, which was sold in October 2020, Georgia, which was sold in June 2022 and for corrections in Kazakhstan in 3Q22 1. Data and digital revenues include mobile data reve
Slide 12: 3Q22 Highlights
12 12 3Q22 HIGHLIGHTS Sale of the Algerian business for c.USD 682mn USD 3,293mn GROUP CASH POSITION $2,560mn at HQ Solid EBITDA performance across the Group EBITDA USD 889mn +0.7% YoY local currency At 21.6%, LTM capex intensity continues to decrease USD 404mn CAPEX +6.0% YoY Subscriber base +0.8% Y
Slide 13: Group Service Revenue Growth +7.1% YoY in Local Currency
13 13 GROUP SERVICE REVENUE GROWTH +7.1% YOY IN LOCAL CURRENCY Note: In some countries EBITDA was impacted by extraordinary non-recurring items in 3Q22 and in 3Q21 as noted on subsequent country performance slides +11.3% -6.8% EBITDA +23.2% +9.2% EBITDA +11.8% -2.1% EBITDA +22.5% +7.9% EBITDA +15.8%
Slide 14: Ukraine
14 14 UKRAINE Keeping Ukraine connected and rebuilding the country’s infrastructure • 121 settlements reconnected to Kyivstar network in 3Q22 • Since February, around 400 new 4G base stations built and some 6,000 4G base stations upgraded • Around 90% of Kyivstar network was operational at the end o
Slide 15: Russia
15 15 RUSSIA Higher customer value drives service revenue and EBITDA growth 1. 4G penetration in Russia: % of active 4G data users in total 3 months active customer base excluding machine-to-machine (M2M) connections SERVICE REVENUE 66.4bn +2.2% 12.9bn -24.2% RUB RUB 3Q22 RESULTS YOY TRENDS CAPEX •
Slide 16: Pakistan
16 16 • High inflation and elimination of energy subsides impacted utility prices: diesel +139% YoY, electricity +69% YoY, negatively impacting EBITDA margin c.6% • Amidst the country-wide floods in August, Jazz ensured availability of telecom services • Balanced revenue growth with YoY increase in
Slide 17: Kazakhstan
17 17 KAZAKHSTAN Sixth consecutive quarter of revenue YoY growth above 20% • Beeline Kazakhstan gaining market share and maintaining leadership position in NPS • Top line supported by growing data users (+11.9%) with higher consumption (+18.8%) • Adjusting for one-off in 3Q21, Beeline Kazakhstan’s E
Slide 18: Bangladesh
18 18 BANGLADESH Gaining market share as double-digit topline growth continues • Double-digit top line growth with data revenue up 21.4% YoY, gaining market share • 4G users +31.7% YoY with 4G penetration up 7.8 p.p. YoY, supporting higher ARPU (+5.4% YoY) • Banglalink executes on its strategy to be
Slide 19: Uzbekistan
19 19 UZBEKISTAN Third consecutive quarter of 20%+ topline YoY growth • Third consecutive quarter of revenue YoY growth above 20% • Adjusted for one-offs, revenue increased by 27.7% YoY, service revenue +27.9% YoY, and EBITDA was 17.1% higher YoY • 4G users +34.7% YoY with 4G penetration reaching 64
Slide 20: Agenda
20 20 AGENDA 1. EXECUTIVE SUMMARY 3. PORTFOLIO STRATEGY 4. FUTURE PERFORMANCE AMBITION 7. PROCESS & TIMELINE APPENDIX 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW 2. 3Q22 HIGHLIGHTS
Slide 21: Group Capital Allocation Priorities and Country Action Plans
21 21 • Monetise assets to enhance HQ liquidity and deleveraging • Unlock infrastructure value through tower transactions • Continue to invest into connectivity, digital opportunities, and support portfolio investments to drive growth in core countries • Establish VEON as a digital operator focusing
Slide 22: Infrastructure value crystallisation: towers and sites
22 22 • More than 40k sites and “Build-to-Suit” (BTS) commitments selected for short to medium term value crystallisation • Proven in-house expertise in infrastructure separation & monetisation following recent sale of tower portfolio in Russia and historic sale of towers in Italy • Model and proces
Slide 23: Agenda
23 23 AGENDA 1. EXECUTIVE SUMMARY 3. PORTFOLIO STRATEGY 4. FUTURE PERFORMANCE AMBITION 7. PROCESS & TIMELINE APPENDIX 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW 2. 3Q22 HIGHLIGHTS
Slide 24: Group Consolidated Ambition 2022-2024
24 24 GROUP CONSOLIDATED AMBITION1 3-year forward 2022 – 2024 ambition • Revenue, EBITDA growth, EBITDA margin revised downward from previously communicated guidance2 • Digital operator customer offers roll-out • Continue to execute on infra value crystallisation • Unlock value of high-potential dig
Slide 25: Portfolio Future Performance Ambition and Dividend Potential
25 25 Focus Dividend Potential Russia • Complete VimpelCom Disposal in compliance with applicable sanctions laws and regulations • Expected proceeds of RUB 130bn Ukraine • Ensuring service continuity • No dividends anticipated Pakistan • Growing 4G penetration and digital services • Medium-high expe
Slide 26: HQ Cash Flows
26 26 HQ CASH FLOWS Decreasing corporate costs but uncertain cash upstreaming from OpCos, in particular in the current macro environment 308 208 c.185 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 PROJECTED CORPORATE COSTS CASH FLOW ( U SD m ) • FY2021 corporate costs were USD 208m, a decrease of ~32% YoY
Slide 27: HQ Liquidity Profile
27 27 HQ LIQUIDITY PROFILE Potential USD 1.2bn 2023 Notes repayment would imply PF HQ cash balance of USD 1.4bn (USD 0.4bn excl. RCF) prior to HQ cash flows and any asset monetisation proceeds 1.6bn 2.6bn 0.4bn 1.4bn 1.1bn 1.1bn (1.2bn) Sep-22 HQ Cash 2023 Notes Repayment 2023E HQ Cash before Operat
Slide 28: Agenda
28 28 AGENDA 1. EXECUTIVE SUMMARY 3. PORTFOLIO STRATEGY 4. FUTURE PERFORMANCE AMBITION 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW 7. PROCESS & TIMELINE APPENDIX 2. 3Q22 HIGHLIGHTS
Slide 29: Amendments Objectives
29 29 AMENDMENTS OBJECTIVES Amendments aim to provide additional time for the situation in Russia to become clearer following recent developments and to maximize value for all stakeholders whilst ensuring fair and equal treatment Creating short-term maturity runway, allowing more time for the Vimpel
Slide 30: Agenda
30 30 AGENDA 1. EXECUTIVE SUMMARY 3. PORTFOLIO STRATEGY 4. FUTURE PERFORMANCE AMBITION 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW 7. PROCESS & TIMELINE APPENDIX 2. 3Q22 HIGHLIGHTS
Slide 31: Current Terms vs Amended Terms of the 2023 Notes
31 31 Principal Outstanding • USD 700m • No change Maturity • 26 April 2023 • 27 December 2023 Interest • 7.25% • No change Amendment Consent Levels1 • Reserved Matters − Consent threshold: >50% of votes cast on a poll − Quorum requirement: ≥75% (or if at adjourned meeting, ≥50%) • No change to voti
Slide 32: Put Right
32 32 Put Right Put Right Start Date • The later of (i) 2 May 2023 and (ii) the Amendment Effective Date1 under the Scheme Put Right Period • 10 calendar days Put Right Close Date • The later of (i) 12 May 2023 and (ii) 10 calendar days following the Amendment Effective Date1 under the Scheme Put Pr
Slide 33: RCF and Note Maturity Profile Pre & Post Extension
33 33 250 805 500 333529 1,000 1,250 700 533 H1 2023F H2 2023F 2024F 2025F 2026F 2027F RCF RUB Notes USD Notes21 250 805 529 500 333 700 533 1,000 1,250 H1 2023F H2 2023F 2024F 2025F 2026F 2027F RCF RUB Notes USD Notes21 CURRENT MATURITY PROFILE PRO FORMA MATURITY PROFILE Weighted Average Life: 2.5
Slide 34: Agenda
34 34 AGENDA 1. EXECUTIVE SUMMARY 3. PORTFOLIO STRATEGY 4. FUTURE PERFORMANCE AMBITION 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW 7. PROCESS & TIMELINE APPENDIX 2. 3Q22 HIGHLIGHTS
Slide 35: Anticipated Process & Timeline
35 35 ANTICIPATED PROCESS & TIMELINE Scheme expected to complete by early 2023 Note: final dates subject to Court availability and confirmation KEY DATE STEPS 24 November 2022 Transaction announcement and launch of the Scheme via issuance of the practice statement letter 9 December 2022 Issuance of
Slide 36: Agenda: Appendix
36 36 AGENDA 1. EXECUTIVE SUMMARY 3. PORTFOLIO STRATEGY 4. FUTURE PERFORMANCE AMBITION 7. PROCESS & TIMELINE APPENDIX 5. AMENDMENTS OBJECTIVES 6. AMENDMENTS OVERVIEW 2. 3Q22 HIGHLIGHTS
Slide 37: Simplified group structure and gross debt
37 37 50.1% VEON Ltd. (Bermuda) Listed entity USD 1,055m RCF USD 4,012m notes RUB 50bn (USD 871m) notes USD 1,576m gross debt TNS-Plus Limited Liability Partnership (Kazakhstan) Pakistan Mobile Communications (Pakistan) Mobile network operator Sky Mobile LLC (Kyrgyzstan) Unitel LLC (Uzbekistan
Slide 38: Thank You
38 38 THANK YOU! VEON