VEON Ltd. · NASDAQ:VEON
VEON — VimpelCom — Q1 2014 Earnings Presentation
33 slides from VEON's earnings presentation, May 14, 2014
Slide 1: VimpelCom Ltd. 1Q 2014
VimpelCom Ltd. 1Q 2014 | 4
Slide 2: 1Q 2014 Presentation
1Q 2014 Presentation Amsterdam, May 14, 2014 Jo Lunder - CEO Andrew Davies - CFO
Slide 3: 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 4: VimpelCom reports 1Q14 results
VimpelCom reports 1Q14 results EBITDA margin is EBITDA divided by total revenue; EBITDA and EBITDA margin are non-GAAP financial measures Service revenue (USD billion) 4.8 Mobile customers (million) 218 EBITDA (USD billion) 2.1 EBITDA margin1 (%) 41.6 Service revenue organic decline 4% YoY Mobile cu
Slide 5: 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 Obtained credit facili
Slide 6: Business Units Performance
Business Units Performance
Slide 7: Russia 1Q14: Pressure on results while investing in the network
(CHART) RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile Fixed-line -2% YoY EBITDA and EBITDA margin CAPEX and CAPEX/revenue -9% YoY Russia 1Q14: Pressure on results while investing in the network Mobile data revenue grew 22% YoY Service revenue decreased 2% YoY, mainly affected by measur
Slide 8: Transformation Phase 2 in Russia: Continued investments in high speed data network
+ 40% in 3G base stations YoY + 64% in 4G/LTE base stations QoQ 91% of 3G base stations connected via IP vs 86% in 4Q13 Transformation Phase 2 in Russia: Continued investments in high speed data network Beeline #1 in 40% of the cities for data speed1 Moscow: #1 in voice quality, #2 in data speed1 Av
Slide 9: Transformation Phase 2 in Russia: Enhanced customer experience with new content and spam policy
Free antivirus for Beeline customers: Free virus database updates Free traffic for database update Dedicated support line for Beeline customers Beeline branded interface Free anti virus protection for Android Filtering external SMS traffic, with spam detection methods Administrative sanctions to spa
Slide 10: Transformation Phase 2 in Russia: Improved customer value proposition
Most affordable smartphone in the market In combination with newly launched bundled tariff plans Transformation Phase 2 in Russia: Improved customer value proposition Beeline smartphone RUB 490 (< USD 15) Simplified tariff plans Unlimited on-net included Larger mobile data packages included Lowered
Slide 11: Transformation Phase 2 in Russia: Improving customer service
Self service upgrade (app) User friendly online cost overview: Costs details visualized in clear charts "My Beeline" account details in one click Transformation Phase 2 in Russia: Improving customer service Reduced waiting time in service centers
Slide 12: Italy 1Q14: Continued market outperformance
1. CAPEX in 1Q13 excludes €136 million of non-cash increase in intangible assets related to the contract with Terna for the Right of Way of WIND's backbone 2. Mobile broadband includes customers that have performed at least one mobile Internet event in the previous month Italy 1Q14: Continued market
Slide 13: Africa & Asia 1Q14: Good recovery in Bangladesh, solid performance in Pakistan
Africa & Asia1 1Q14: Good recovery in Bangladesh, solid performance in Pakistan, resolution in Algeria USD MILLION, UNLESS STATED OTHERWISE Revenue and EBITDA organically declined 1% YoY and 3% YoY Mobile customer growth supported by strong additions in Bangladesh Reported results negatively affecte
Slide 14: 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 coverage
Slide 15: Ukraine 1Q14: Transformation program on track
Ukraine 1Q14: Transformation program on track, delivering first signs of improvements UAH BILLION, UNLESS STATED OTHERWISE Kyivstar's operations in 1Q14 not materially impacted despite challenging macro- economic and political environment Fixed broadband customers increased 19% YoY Strong operating
Slide 16: CIS 1Q14: Solid results
CIS1 1Q14: Solid results USD MILLION, UNLESS STATED OTHERWISE Mobile service revenue increased organically 2% YoY Mobile data revenue growth of 29% YoY Mobile customers increased 6% YoY, primarily due to 8% growth in Kazakhstan EBITDA increased 4% organically YoY EBITDA margin increased 0.8 pp to a
Slide 17: Financial Highlights
Financial Highlights
Slide 18: Financial performance 1Q14
Financial performance 1Q14 USD million 1Q14 1Q13 YoY Revenue 5,024 5,591 (10%) of which service revenue 4,810 5,322 (10%) EBITDA 2,088 2,348 (11%) EBITDA Margin 41.6% 42.0% (0.4 p.p.) D&A/Other (1,163) (1,241) (6%) EBIT 925 1,107 (16%) Financial expenses (513) (501) 2% FOREX and Other (166) (63) n.m
Slide 19: Cash flow
Cash flow USD million 1Q14 1Q13 YoY EBITDA 2,088 2,348 (260) Changes in working capital and other (34) (267) 233 Net interest paid (652) (581) (71) Income tax paid (234) (226) (8) Net cash from operating acitivities 1,168 1,274 (106) Net cash used in investing activities (1,211) (1,054) (157) Net pr
Slide 20: Improved maturity profile
(CHART) Improved maturity profile Pro Forma1 group debt maturity schedule as at 31 March 2014 Net Debt/ EBITDA3 Gross Debt/ EBITDA3 EBITDA / Financial income and expenses 4.1 Average Cost of Debt 8.2% 2.9 2.4 Debt composition by currency2 USD 27.4 bln 1. Pro Forma for group debt maturity schedule as
Slide 21: Revised annual targets for 2014
Revised targets1 2014 Previous targets1 2014 Revised annual targets for 2014 Revenue Stable YoY Low to mid single digit decline YoY CAPEX excl. licenses / Revenue ~21% ~21% Leverage (Net Debt / EBITDA) ~2.3x ~2.4x 1. The annual targets for 2014 assume constant currency, no major regulatory changes,
Slide 22: Conclusion
Conclusion Jo Lunder CEO
Slide 23: 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 Continued outperformance in the competitive Italian market Transformation process in Ukraine
Slide 24: Svimpelcom
Svimpelcom
Slide 25: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: ir@vimpelcom.com Install VimpelCom's App iPad App Visit our awards winning website www.vimpelcom.com
Slide 26: Svimpelcom
Svimpelcom
Slide 27: Appendices
Appendices
Slide 28: Debt and cash
Net cash flow from operating activities (USD billion) Debt and cash (CHART) During 1Q14: Draw downs under existing Vendor Financing facilities for USD 280 million Available headroom under committed revolving credit facilities as at the end of March 2014: VimpelCom1: USD 507 million OJSC: RUB 15 bill
Slide 29: FX rates versus USD
Currency FX rates versus USD Algeria DZD 81 Armenia AMD 420 Bangladesh BDT 80 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 9.5 Zimbabwe ZWD 325 FOREX rates used in annual targets for 2014
Slide 30: Revenue and EBITDA development in 1Q14
Russia Italy Africa & Asia Ukraine CIS Consolidated Revenue YoY Revenue YoY EBITDA YoY EBITDA YoY Organic Reported Organic Reported (6%) (18%) (9%) (21%) (7%) (3%) (7%) (3%) (1%) (2%) (3%) (3%) (7%) (15%) (8%) (16%) 3% (3%) 4% (1%) (5%) (10%) (6%) (11%) Revenue and EBITDA development in 1Q14 1Q14
Slide 31: FOREX development
Source: National Banks of the respective countries, Company calculations FOREX development RATES OF FUNCTIONAL CURRENCY TO USD
Slide 32: Reconciliation of EBITDA
Reconciliation of EBITDA 3 as 107 i om om H oy a a! SVimpetcom
Slide 33: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt VimpelCom Ltd. Index sheet Consolidated VIP Ltd. Consolidated BU Russia Russia BU Europe and North America Italy BU Africa and Asia Algeria Pakistan Bangladesh Sub Saharan Africa SEA BU Ukraine Ukraine BU CIS Kazakhstan Uzbekistan Armenia Tajikistan Georgia Ky