57 slides from VEON Ltd. ORD's earnings presentation, May 2015
Slide 1: Creating Value, Investing in the Future
Creating Value © VimpelCom Ltd 2015 Investing in the Future www.vimpelcom.com iPad App 1
Slide 2: A well diversified leading international mobile operator
A well diversified leading international mobile operator Headquartered in Amsterdam No 7erator Mobile Population p USD 18.1 billion ile o 1 customers covered Mob e world Total revenue in th 218 740 split2 (%) 30 9 4 7 5 5 4 34 million2 million3 66% from Emerging markets © VimpelCom Ltd 2015 USD 7.3
Slide 3: Strong EBITDA margin versus our global peers
Strong EBITDA margin versus our global peers EBITDA Margin (FY14) 50% 44% 44% 41% 37% 37% © VimpelCom Ltd 2015 33% 33% 31% 29% 23% VIP WE Telcos with CIS / Emerging Market1 Others2 CEE Exposure 1 3Q14 LTM EBITDA Margin for MTS 3 2 Others include a sample of more than 80 listed telecom operators in D
Slide 4: Growth drivers
Growth drivers External growth drivers VimpelCom’s positioning ► Customer growth from increase in mobile ► Leading player in growth markets with high penetration quality networks ► Mobile data usage growth ► Significant upsides in penetration and usage in key markets Continued emerging markets growt
Slide 5: Significant upside in terms of mobile penetration & data usage
Significant upside in terms of mobile penetration & data usage Mobile Penetration1 (%) Mobile Data Penetration2 (%) Data Usage2 (MB / User) Western Europe Avg: 66% 171% 160% 1,313 147% 1,213 Western Europe 138% Avg: 133% 57% © VimpelCom Ltd 2015 55% 113% 52% 47% 72% 73% 43% 66% 39% 37% 369 169 169 1
Slide 6: VimpelCom has an attractive emerging markets portfolio
VimpelCom has an attractive emerging markets portfolio 66% of revenue in emerging markets Emerging market portfolio ► Solid market positions in our seven LTM 1Q15 major emerging markets: © VimpelCom Ltd 2015 Revenues – #1 in 4 (UKR, ALG, PAK, UZB) USD 12.3 bn – #2 in 2 (BAN, KAZ) EBITDA1 USD 5.0 bn
Slide 7: Recent strategic highlights
Recent strategic highlights • Successful closing of Algeria transaction • Repaid USD 3.4 billion of debt • Italian tower sale completed © VimpelCom Ltd 2015 • Concluded 3rd and final stage of refinancing in Italy • Acquired 3G license in Ukraine • 4G/LTE services launched in Georgia • On track to de
Slide 8: Leading in customer experience in 2014
Leading in customer experience in 2014 #1 Co-leader Improving Bangladesh Kazakhstan © VimpelCom Ltd 2015 Algeria Pakistan Kyrgyzstan Italy Russia Ukraine Uzbekistan 8 NOTE: Independent agency research
Slide 9: 1Q15 Financial highlights
1Q15 Financial highlights Service revenue Mobile customers • Organic results in line with management (USD billion) (million) expectations 3.4 218 • Marginal organic decline in service revenue: - Delayed 3G launch in Algeria - Continued market weakness in Italy © VimpelCom Ltd 2015 - 2% organic2 YoY
Slide 10: 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 weakness in Italy, partly offset by growth in Bangladesh, Ukraine and Eurasia of which service revenue 3,358 4,810 (30%) EBITDA 1,396 2,088 (33%
Slide 11: 1Q15 Cash flow statement
1Q15 Cash flow statement USD million 1Q15 1Q14 YoY EBITDA 1,396 2,088 (33%) Changes in working capital and other (1,387) (34) n.m. • Payment of Bank of Algeria fine (USD 1.1 billion), as part of closing transaction in Algeria Net interest paid (429) (652) (34%) • Significant YoY reduction from refin
Slide 12: 1Q15 continued capital structure optimization
1Q15 continued capital structure optimization Bought back USD1.8 bln bonds using Algeria proceeds1 © VimpelCom Ltd 2015 Repaid RUB 35 bln Sale of 90% shares in Italian bonds using Algeria towers Company for EUR 693 mln proceeds Closed transaction 3rd refinancing of Italy in Algeria, USD 3.8 bln net
Slide 13: 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 © VimpelCom Ltd 2015 5.8 6.0 6.3 5.4 3.2 2.7 2.2 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 13 1 Matu
Slide 14: 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 © VimpelCom Ltd 2015 2.5 2.4 1.2 1.2 Excluding Group Excluding Group Italy Italy 14
Slide 15: 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 debt 1Q151 © VimpelCom Ltd 2015 8.3% 8.3% 6.3% 6.2% 15 1 Average cost of debt at 1Q15 is pro-forma for the outcome of the tender. Settlement of the tender and cancellation of the bond
Slide 16: 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 © VimpelCom Ltd 2015 Debt optimization USD 150 million USD 400 million Gross debt reduction USD 150 million USD 280 millio
Slide 17: Annual targets 2015
Annual targets 2015 Targets 20151 Flat to low single Service Revenue digit decline YoY Flat to minus one © VimpelCom Ltd 2015 EBITDA Margin p.p. YoY 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 currency
Slide 18: Conclusion
Conclusion • Continued operational improvements • Strong increase in EPS • Successful closing of Algeria transaction © VimpelCom Ltd 2015 • Repaid USD 3.4 billion of debt • Completed Italian tower sale & 3rd and final stage of refinancing in Italy • On track to deliver 2015 targets 18
Slide 19: Business Units Performance 1Q15
Business Units Performance 1Q15 © VimpelCom Ltd 2015 19
Slide 20: 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 55.7 mobile customers 64.6 64.3 55.0 • Stable revenue market share • Mobile data
Slide 21: 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 • Mobile data revenue increased 1
Slide 22: Algeria: Transformation to take to 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 18.7 33.4 33.5 29.8 17.6 • Strengthening local management team • Clear leade
Slide 23: 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 VAS charging and SIM re-
Slide 24: 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 11.3 10.2 11.2 29.4 31.8 • Continued double digit revenue growth YoY despite unstable macro environment © Vi
Slide 25: 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
Slide 26: Kazakhstan: Strong position in competitive market
Kazakhstan: Strong position in competitive market KZT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -0.5% YoY (million) • Strong position as a result of attractive 34.9 +5% YoY customer propositions, network and 30.4 30.2 distribution 9.2 9.6 • Excluding MTR reductions mobile ser
Slide 27: 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
Slide 28: Appendices
© VimpelCom Ltd 2015 28 Appendices
Slide 29: Financial calendar 2015
Financial calendar 2015 – accelerating reporting 20151 © VimpelCom Ltd 2015 A&I site visit Russia July 9 2Q15 results & strategy update (analyst meeting in London) August 6 A&I Conference (London) October 8 - 9 3Q15 results November 6 29 1. The final confirmation of the date and invitation will be i
Slide 30: VimpelCom Ltd. ownership structure
VimpelCom Ltd. ownership structure* Total Economic % Economic Preferred Total voting % of voting Shareholder Common DRs rights shares DRs and shares rights and shares © VimpelCom Ltd 2015 Free Float 189 579 732 10.8% - 189 579 732 9.1% Telenor(1) 580 578 840 33.0% 305 000 000 885 578 840 43.0% Lette
Slide 31: Dividend policy to support deleverage and investments
Dividend policy to support deleverage and investments ► More long-term value in deleveraging and investing in high quality, 3G and 4G networks to capture high mobile data growth © VimpelCom Ltd 2015 ► Dividends of 3.5 US cents per share per annum until targeted leverage of less than 2.0 net debt / E
Slide 32: Financing structure
Financing structure As at 31 March 2015 VimpelCom Ltd. VimpelCom Amsterdam B.V. VimpelCom Holdings VimpelCom Amsterdam WIND Telecom B.V. Finance B.V. S.p.A. © VimpelCom Ltd 2015 USD 2.7 bln Total Wind Group Weather Capital Wind Acquisition USD 12.1 bln S.a.r.l. Holdings Finance S.p.A. OJSC VimpelCom
Slide 33: Debt by entity
Debt by entity As at 31 December 2014, in USD billion Outstanding debt Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing VimpelCom Holdings B.V. 3,813 3,813 © VimpelCom Ltd 2015 VimpelCom Amsterdam B.V. 1,000 500 752 2,252 OJSC VimpelCom 4,078 1,583 207 45 5,913 WIND Telecomuni
Slide 34: Credit facilities
Credit facilities USD 6.2 bn credit facilities arranged in FY14: Available RCF headroom at the end 2014: Financing VimpelCom USD 1.3 billion USD 1.8 billion RCF VIP Holdings USD 1.0 billion CF AlfaBank OJSC VimpelCom USD 0.3 billion (RUB 15 billion) USD 1.0 billion VF CDB/BoC WIND USD 0.6 billion (E
Slide 35: Debt maturity profile
Debt maturity profile As at 31 December 2014, in USD billion Group debt maturity schedule by Business Units Italy Russia 5.8 6.0 A&A HQ 3.2 © VimpelCom Ltd 2015 2.7 2.2 2.0 1.9 1.5 1.1 2015 2016 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2015 2016 2017 2018 2019 20
Slide 36: Market Overviews
© VimpelCom Ltd 2015 36 Market Overviews
Slide 37: A truly international telecoms operator
A truly international telecoms operator Georgia Armenia Kazakhstan Uzbekistan Kyrgyzstan Pop: 4.9 M Pop: 3.1 M Pop: 17.9 M Pop: 28.9 M Pop: 5.6 M Pen: 126% Pen: 121% Pen: 160% Pen: 70% Pen: 112% GDP: 5,900 GDP: 5,600 GDP: 13,900 GDP: 3,500 GDP: 2,400 Ukraine Pop: 44.3 M Tajikistan Pen: 138% Pop: 8.1
Slide 38: Competitive situation and market trends - Russia
Competitive situation and market trends - Russia Mobile1 Mobile Market Share1 • ~ 90% pre-paid market (on service revenue), % • ~ 171% penetration • 3 major players (Megafon, MTS and VimpelCom) with 25 24 22 VimpelCom comparable market shares • 2014: 4G/LTE launched in 46 regions 26 27 27 Megafon ©
Slide 39: Competitive situation and market trends - Italy
Competitive situation and market trends - Italy Mobile Mobile Market Share1 • ~ 79 % pre-paid market (on revenue), % • ~ 147% penetration • 4 major players: TIM, Vodafone, WIND and H3G 21 22 22 WIND • 31% smartphone penetration on SIM cards 8 9 10 3 36 Vodafone 35 33 Fixed © VimpelCom Ltd 2015 • Tel
Slide 40: Competitive situation and market trends - Ukraine
Competitive situation and market trends - Ukraine Mobile Mobile Market Share • Major players are Kyivstar, MTS and Astelit (“Life” brand) (on revenue), % • Kyivstar is the leading integrated operator with #1 in mobile and #2 in fixed residential broadband • Penetration ~138%, ~87% pre-paid market 49
Slide 41: Competitive situation and market trends - Algeria
Competitive situation and market trends - Algeria Macro Environment: Mobile Market Share1 • Government, trade and agricultural sectors account for over (on revenue), % 60% of GDP • 28% of the population is under 15 years old 55 53 49 Djezzy Mobile: 27 23 25 Mobilis • © VimpelCom Ltd 2015 113% penetr
Slide 42: Competitive situation and market trends - Pakistan
Competitive situation and market trends - Pakistan Macro Environment: Mobile Market Share1 • Power shortfalls persist (on revenue), % • 34% of the population under 15 years old • New government working on achieving political stability and 30 29 28 Mobilink economic reform 25 25 26 Telenor Mobile: 14
Slide 43: Competitive situation and market trends - Bangladesh
Competitive situation and market trends - Bangladesh Macro Environment: Mobile Market Share1 • The world’s highest population density (on revenue), % • 33% of the population under 15 years old 27 25 26 banglalink • Elections and political instability 7 7 7 Airtel Mobile: 42 42 42 GrameenPhone • 73%
Slide 44: Competitive situation and market trends - Kazakhstan
Competitive situation and market trends - Kazakhstan Mobile1 Mobile Market Share1 • 160% penetration (on revenue), % • 2 major players (VimpelCom, KCell) with cumulative MS 90%, 3d player is discounter (Tele2) • 3G launched by all players, 4G network introduced only by Altel 37 35 36 VimpelCom (gove
Slide 45: Competitive situation and market trends - Uzbekistan
Competitive situation and market trends - Uzbekistan Mobile Mobile Market Share2 • 70% penetration (on revenue), % • 2 major players: VimpelCom, UCell, MTS entrance in Dec’14 • 3G launched by two operators 42 VimpelCom • First commercial launch of 4G/LTE in Uzbekistan in 58 58 September 2014 MTS 25
Slide 46: Competitive situation in rest of CIS
Competitive situation in rest of CIS Tajikistan Armenia • 4 competitors: Beeline 4th, Babilon Mobile1st, • 3 international competitors: Beeline 2nd, Tcell (TeliaSonera) 2nd, MegaFon 3rd Vivacell (MTS) 1st, Orange 3rd • First 3G operations in CIS, low data usage, • 3G license collaboration with BU Ru
Slide 47: Reconciliation Tables and Forex
Reconciliation Tables and Forex © VimpelCom Ltd 2015 47
Slide 48: Forex sensitivities
Forex sensitivities FOREX translation sensitivities on Group level FOREX sensitivities1 FY14 RUB vs. USD EUR vs. USD UAH vs. USD © VimpelCom Ltd 2015 USD billion +/-10% +/-10% +/-10% Revenue 19.6 4% 3% 0.5% Average EBITDA FOREX 8.0 4% 3% 0.6% Gross Debt 26.4 1% 5% n.a. Year-end Net Debt FOREX 20.0 1
Slide 49: 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 © VimpelCom Ltd 2015 Bangladesh BDT 79.0 Egypt EGP 7.5 Georgia GEL 1.8 Italy EUR 0.91 Kazakhstan KZT 190.0 Kyrgyzstan KGS 55.0 Pakistan PKR 105.0 Russia RUB 70.0 Ukraine UAH 25.0 49
Slide 50: 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) WIND USD 0.4 billion (EU
Slide 51: 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 © VimpelCom Ltd 2015 2.1 2.1 1.6 1.2 1.3 1.1 2015 1 2016 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency2 20151 2016 2017 2018 2019
Slide 52: 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 VimpelCom Holdings B.V. 3,785 - - - - 3,785 © VimpelCom Ltd 2015 VimpelCom Amsterdam B.V. - 1,000 - 736 - 1,736 OJSC VimpelCom 3,479 1,523 - 186 45 5,233 WIND Tele
Slide 53: 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 © VimpelCom Ltd 2015 Bangladesh BDT 79.0 Egypt EGP 7.5 Georgia GEL 1.8 Italy EUR 0.91 Kazakhstan KZT 190.0 Kyrgyzstan KGS 55.0 Pakistan PKR 105.0 Russia RUB 70.0 Ukraine UAH 25.0 53
Slide 54: 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 Russia 0% (44%) (44%) (2%) (43%) (45%) © VimpelCom Ltd 2015 Italy (5%) (17%) (22%) (5%) (18%) (23%) Algeria (11%) (14%) (25%) (18%) (1
Slide 55: 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) © VimpelCom Ltd 2015 Gain from sale of towers in Italy 466 - EBIT 879 924 Financial Income and Expenses (
Slide 56: 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 C ash and cash equivalents 6,499 6,342 5,852 © VimpelCom Ltd 2015 Long-term and short-term deposits 118 109 126 Gross debt 24,225 26,443 27,714 Interest accrued relate
Slide 57: 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