Slide 1: Q3 2017 results and business update
Q3 2017 results and business update A m s t e r d a m, 9 N o v e m b e r 2 0 1 7 J e a n - Y v e s C h a r l ie r - C h i e f E x e c u t iv e O f f ic e r A n d r e w D a v i e s - C h i e f F i n a nc i a l O f f i c e r
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. These forward-looking statements may be identified by words such as “ma
Slide 3: Q3 2017 results agenda
Q3 2017 results agenda FINANCIAL AND BUSINESS HIGHLIGHTS Jean-Yves Charlier, CEO • Group results highlights • Strategy execution • Recent management changes FINANCIAL RESULTS AND CORPORATE FINANCE UPDATE Andrew Davies, CFO • Group results • Country results, including: ► Wind Tre refinancing ► Sale o
Slide 4: Q3 2017 financial highlights: substantial progress made
Q3 2017 financial highlights: substantial progress made 2.5 40.4% • Total revenue increased 4.0% YoY; TOTAL EBITDA 3.2% YoY organic growth REVENUE MARGIN, (USD BILLION) UNDERLYING2 • Mobile data revenue organic growth of 26.6% YoY (%) • EBITDA increased 16.4% YoY to USD 1,042m, +3.2% organic 1 YoY +
Slide 5: Strategy execution
Strategy execution REVITALIZING OUR BUSINESS • On 8 November, VEON submitted a mandatory cash tender offer in relation to Global Telecom Holding REVITALIZE • Telenor completed the third sell down of VEON shares – increasing free float • Wind Tre refinancing successfully completed – EUR 270m of annua
Slide 6: GTH: mandatory tender offer
GTH: mandatory tender offer • On 8 November 2017, VEON submitted an application to the Egyptian Financial Supervisory Authority (EFSA) to approve a mandatory tender offer (MTO) by VEON Holdings B.V. for any and all of the outstanding shares of GTH which are not owned by VEON (up to 1,997,639,608 sha
Slide 7: Telenor sale – free float to increase to 44% by 2019
Telenor sale – free float to increase to 44% by 2019 Before Telenor After third Assuming full conversion equity offering Telenor sale of bonds and 3 (September 2016) (25 September 2017) Telenor exit 8.3% 8.3% 8.3% 10.8% 29.2% 47.9% 47.9% 47.9% 43.8% 33.0% 14.6% Telenor expects to use the 14.6% Free
Slide 8: VEON – commercial launch in five markets
VEON – commercial launch in five markets • Commercial launch of VEON in Italy, Russia, Pakistan, Ukraine and Georgia • 5.3 million downloads to date • Passed 1 million download mark in each of Italy, Russia and Pakistan • After the first week: #1 top free app on Google Play Store and Apple AppStore
Slide 9: Recent management changes
Recent management changes • Trond Westlie (former Chief Financial Officer at AP Moller-Maersk) appointed Group Chief Financial Officer, succeeding Andrew Davies, effective from 9 November 2017 • Joshua Drew (former Associate General Counsel at VEON and former Vice President and Associate General Cou
Slide 10: Q3 2017 results agenda
Q3 2017 results agenda FINANCIAL AND BUSINESS HIGHLIGHTS Jean-Yves Charlier, CEO • Group results highlights • Strategy execution • Recent management changes FINANCIAL RESULTS AND CORPORATE FINANCE UPDATE Andrew Davies, CFO • Group results • Country results, including: ► Wind Tre refinancing ► Sale o
Slide 11: Revenue evolution
Revenue evolution Organic growth in data revenue is the key driver USD MILLION +4.0% 18 31 103 7 2,438 2,456 (53) 2,361 (12) Total Equipment & Voice Interconnect Data and MFS Other1 Organic total revenue FOREX Total revenue accessories and roaming 3Q17 revenue 3Q16 3Q17 +3.2% 41 18 16 26 (26) (7) (5
Slide 12: EBITDA evolution
EBITDA evolution Robust performance for the portfolio USD MILLION +16.4% 88 66 69 49 (123) (3) 962 993 1,042 896 EBITDA Exceptional Underlying Service Performance Re-investment in FOREX Underlying EBITDA Exceptional EBITDA 3Q16 items 1 EBITDA revenue transformation mono-brand, 3Q17 items 2 3Q17 3Q16
Slide 13: Russia: continued improvements in mobile business
Russia: continued improvements in mobile business TOTAL REVENUE MOBILE CUSTOMERS • Mobile service revenue increased by 4.2% (RUB BILLION) (MILLION) YoY, mainly driven by 13.8% mobile data +2.9% YoY +0.7% YoY 72.6 revenue growth 70.5 68.4 11.5 10.1 9.9 ► Mobile ARPU grew by 3.2% YoY 58.4 58.8 56.8 55
Slide 14: Italy: aggressive competition weighs on margins, synergies on track
Italy: aggressive competition weighs on margins, synergies on track TOTAL REVENUE MOBILE CUSTOMERS • Highly competitive environment (EUR MILLION) (MILLION) -6.4% YoY -5.1% YoY • Service revenue decline of 4.7% YoY with: 1,648 1,535 1,543 ► Mobile service revenue decline of 6.1% YoY 228 270 225 189 m
Slide 15: Wind Tre refinancing successfully completed
Wind Tre refinancing successfully completed Wind Tre completed the refinancing of its external debt: ~2.7% Average new cost of debt post refinancing (from ~5.5% at the end of Q3 2017) • On 3 November 2017, Wind Tre issued ~EUR 7.3bn equivalent of new bonds with very ~270 (EUR MILLION) Expected annua
Slide 16: Progress on Wind Tre synergies
Progress on Wind Tre synergies SOURCES OF SYNERGIES SINCE TRANSACTION COMPLETION Opex synergies realized year to date at Q3 (NOVEMBER 2016) 2017: EUR 98m Network & IT • Termination of national roaming contract • Insourcing activities and contract renegotiation mainly in network and IT area Opex and
Slide 17: Pakistan: strong growth and margin expansion
Pakistan: strong growth and margin expansion TOTAL REVENUE MOBILE CUSTOMERS • Continued revenue growth, fuelled by strong (PKR BILLION) (MILLION) data revenue growth (+38.9% YoY) +6.9% YoY +4.1% YoY • Network integration activities in progress and 41.2 38.5 40.4 on track to be completed by year end
Slide 18: Sale of Pakistan tower business
Sale of Pakistan tower business • On 30 August 2017, Jazz announced the sale of Deodar, its wholly-owned tower company with a portfolio of ~13,000 towers, for a total consideration of PKR 98,700m (~USD 940m equivalent 1) EV = USD 940M 1 VALUATION KEY FINANCIAL IMPACTS USE OF PROCEEDS • Deodar to be
Slide 19: Algeria: regulatory environment improved, aggressive competition
Algeria: regulatory environment improved, aggressive competition TOTAL REVENUE MOBILE CUSTOMERS • Mobile termination rate symmetry introduced (DZD BILLION) (MILLION) from 31 October 2017 -9.8% YoY -4.5% YoY 29.0 • Top line remains under pressure due to 0.2 26.2 acceleration of data pricing competiti
Slide 20: Bangladesh: market pressure impacting revenue and EBITDA
Bangladesh: market pressure impacting revenue and EBITDA TOTAL REVENUE MOBILE CUSTOMERS • Revenue YoY trend deteriorated vs Q2 2017 (BDT BILLION) (MILLION) -4.6% YoY +8.4% YoY ► Continued competition on customer acquisition driving multi-SIM and diluted share 12.3 11.9 11.7 0.3 0.3 of wallet 0.4 29.
Slide 21: Ukraine: sustained robust performance
Ukraine: sustained robust performance TOTAL REVENUE MOBILE CUSTOMERS • Leader in NPS and clear market leader with (UAH BILLION) (MILLION) customer market share above 47% +10.0% YoY +0.8% YoY 4.3 • Strong gross adds driving customer growth 4.1 0.3 3.9 0.3 26.3 26.4 • Mobile service revenue growth of
Slide 22: Uzbekistan: continued organic growth and currency liberalization
Uzbekistan: continued organic growth and currency liberalization TOTAL REVENUE MOBILE CUSTOMERS • Revenue grew 24.4% YoY driven by increased tariffs, (UZS BILLION) (MILLION) which were pegged to USD until the Uzbek som +24.4% YoY -0.1% YoY liberalisation on 4 September 2017 576 625 502 4 5 • Mobile
Slide 23: Uzbek som liberalization
Uzbek som liberalization Before 4 September 2017 After 4 September 2017 • Currency restrictions and therefore no meaningful extraction of cash • The Central Bank changed the official exchange rate from 4,210 UZS/USD to 8,100 USD/UZS, bringing the official rate in line with the market rate; since • S
Slide 24: Q3 2017 income statement
Q3 2017 income statement USD MILLION 3Q17 3Q16 Reported Organic1 YoY YoY Revenue 2,456 2,361 4.0% 3.2% Service revenue 2,359 2,276 3.6% 3.0% EBITDA 1,042 896 16.4% 16.7% Depreciation & amortization (481) (490) (1.7%) EBIT 561 406 38.1% ► EBIT increased year on year, due to EBITDA growth and stable d
Slide 25: Q3 2017 net debt evolution
Q3 2017 net debt evolution USD MILLION 469 273 (993) 363 77 131 8,672 8,403 (50) 8,204 3 Net debt EBITDA Change in working Net interest Taxes Cash capex incl. Dividend Net debt before FOREX and other Net debt 30 June underlying capital 4 licenses FOREX and other 1 30 September 2017 2017 NET DEBT EBI
Slide 26: Robust underlying equity free cash flow evolution
Robust underlying equity free cash flow 1 evolution USD MILLION 311 (246) 900 965 9M 2016 Increase in net cash Increase in net cash used 9M 2017 from operating in investing activities2 activities2 1 Underlying equity free cash flow is defined as free cash flow from operating activities less free cas
Slide 27: 2017 guidance confirmed
2017 guidance confirmed 9M 2017 actuals FY 2017 targets1 Total revenue +2.1% Low single digit growth Underlying EBITDA margin +0.1 p.p. Flat to low single digit accretion Underlying equity free cash flow 965 850 - 950 excluding licenses2 1 FY 2017 targets after Uzbekistan currency regime adjustment
Slide 28: Q3 2017 results agenda
Q3 2017 results agenda FINANCIAL AND BUSINESS HIGHLIGHTS Jean-Yves Charlier, CEO • Group results highlights • Strategy execution • Recent management changes FINANCIAL RESULTS AND CORPORATE FINANCE UPDATE Andrew Davies, CFO • Group results • Country results, including: ► Wind Tre refinancing ► Sale o
Slide 29: Appendix
VEON APPENDIX
Slide 30: Pakistan towers sale - structure and key terms
Pakistan towers sale - structure and key terms Transaction details: SIMPLIFIED TRANSACTION STRUCTURE • Agreement signed on 30 August 2017 with Tanzanite 1 for the disposal of substantially all of the tower business of Jazz (through the sale of Current structure Future structure3 Deodar, the tower co
Slide 31: Uzbekistan currency
Uzbekistan currency • In 9M 2017 total organic revenue growth in Uzbekistan was 18.3%, as Beeline ´s price plans were pegged to U.S. dollars until 4 September 2017 • In September 2017 prices were fixed at rate of 4,210 Uzbek som per U.S. dollar, with no changes allowed for the time being • In Q4 201
Slide 32: Group debt maturity schedule
Group debt maturity schedule AS AT 30 SEPTEMBER 2017, USD BILLION HQ GTH Russia 2.7 2.6 1.6 1.5 1.3 0.8 0.8 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2017 2018 2019 2020 2021 2022 >2022 USD 0.3 0.3 1.1 0.7 0.4 0.7 2.6 53% EUR 0.0 0.0 0.0 0.3 1.0 0.0 0.0 11% R UB 0
Slide 33: Liquidity analysis
Liquidity analysis Group cash breakdown by currency 30 SEPTEMBER, 2017 Unused RCF headroom at the end of Q3 2017: VEON – syndicate USD 1.68 billion 42% Unused VF/CF headroom at the end of Q3 2017: 58% VEON – CDB RMB 0.27 billion (USD 0.04 billion) Algeria – syndicate DZD 32 billion (USD 0.3 billion)
Slide 34: Debt by entity
Debt by entity AS AT 30 SEPTEMBER 2017, USD MILLION Outstanding debt (millions) Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing VEON Holdings B.V. 3,889 3,079 - 64 - 7,032 VEON Amsterdam B.V. - - - 522 - 522 PJSC VimpelCom 984 - - - 61 1,045 GTH Finance B.V. 1,200 - - - - 1,2
Slide 35: Underlying equity free cash flow (excluding licenses) reconciliation table
Underlying equity free cash flow (excluding licenses) reconciliation table 3Q17 3Q16 9M17 9M16 Net cash from operating activities 833 741 1,997 807 from continued operations Exceptional items: One-off adjustment to a vendor (66) - (66) - agreement1 PT costs 55 71 121 191 Other 9 45 22 69 Settlement
Slide 36: Underlying EBITDA reconciliation table
Underlying EBITDA reconciliation table 9M16 3Q17 3Q16 9M17 Pro-forma Warid EBITDA 1,042 896 2,834 2,485 One-off vendor adjustment (106) - (106) - Performance Transformation costs of which: HQ and Other 49 40 104 165 Russia - 6 2 9 Emerging Markets 8 20 20 49 Other exceptional - - 6 EBITDA underlying
Slide 37: Forex
Forex Forex assumptions Average rates Closing rates FY 2017 3Q17 3Q16 YoY 3Q17 3Q16 YoY Russian ruble 67.00 59.02 64.62 (8.7%) 58.02 63.16 (8.1%) Algerian dinar 118.00 109.9 109.77 0.1% 113.04 109.62 3.1% Pakistan rupee 107.00 105.37 104.67 0.7% 105.39 104.46 0.9% Bangladeshi taka 79.00 81.11 78.32
Slide 38: IFRS 9 & 15: expected impact for VEON
IFRS 9 & 15: expected impact for VEON IFRS 9 IFRS 15 • The scope of IFRS 9 includes new guidance to classify • The scope of IFRS 15 includes the timing of revenue financial instruments on the balance sheet recognition and costs of obtaining contracts with • VEON will need to introduce the concept of