40 slides from VEON Ltd. ORD's earnings presentation, Nov 12, 2014
Slide 1: 3Q 2014 Results
3Q 2014 Results © VimpelCom Ltd 2014 Analyst & Investor Presentation Amsterdam - November 12, 2014 Jo Lunder – CEO Andrew Davies – CFO 1
Slide 2: 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 3: Continued sequential improvements in 3Q14
Continued sequential improvements in 3Q14 Service revenue Mobile customers1 (USD billion) (million) • Sequential improvements: Revenue and EBITDA growth 4.8 223 ► ► Higher EBITDA margin ► Strong customer growth © VimpelCom Ltd 2014 - 5% organic YoY + 5.0 million YoY • Service revenue organic3 declin
Slide 4: Key recent developments
Key recent developments • Macro-economic slow down and material currency devaluation in Russia and Ukraine, due to geopolitical unrest • Resolution in Algeria is on track for closing by end of 2014 © VimpelCom Ltd 2014 • Successful commercial 3G launch in Algeria and Pakistan • Streamlined portfolio
Slide 5: Business Units Performance
Business Units Performance © VimpelCom Ltd 2014 5
Slide 6: Russia: 3Q14 results in line with expectations
Russia: 3Q14 results in line with expectations RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Mobile data revenue grew 22% YoY -4% YoY -1% YoY • Mobile service revenue decreased 5% 73.6 58.1 12.8 71.0 57.3 YoY, driven by measures taken to 13.2 improve Customer Expe
Slide 7: Russia: Continued improvements in network quality and customer experience
Russia: Continued improvements in network quality and customer experience © VimpelCom Ltd 2014 Continued investments in high- Stimulating mobile data speed data networks • #1 or #2 in 75% of regions1 in mobile • Free data for 4G/LTE customers in data speed Moscow Oblast until January 15, 2015 • Mosc
Slide 8: Russia: Continued improvements QoQ in 3Q14
Russia: Continued improvements QoQ in 3Q14 RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile data revenue • Customer satisfaction increased, with +6% QoQ +10% QoQ higher Net Promoter Score, leading to 67.3 71.0 9.8 improvement in churn 9.0 13.2 12.4 • Strong customer growth of 1 million 54
Slide 9: Italy: Solid performance in a weak, but improving market
Italy: Solid performance in a weak, but improving market EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Mobile service revenue decreased 9% -8% YoY -3% YoY YoY: 1,151 1,039 1,054 22.4 21.8 ► Intense price competition 2013 312 303 291 ► SMS disintermediation • Mobil
Slide 10: Italy: Strong operational and financial progress
Italy: Strong operational and financial progress © VimpelCom Ltd 2014 WIND Digital: Mobile broadband double 8 billion euro refinancing oriented to the future digit growth continues concluded with success • “MyWind” App for smart-phones and • Mobile broadband revenue up 14% YoY • Average cost of debt
Slide 11: Africa & Asia: Successful 3G launches to drive future revenue growth
Africa & Asia: Successful 3G launches to drive future revenue growth USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Revenue and EBITDA organically -4% YoY (million) declined: +5% YoY 91.6 ► Competitive pressure in Algeria and 857 860 824 87.2 Pakistan ► Partly offset by cont
Slide 12: Algeria: Focus on commercial 3G launch
Algeria: Focus on commercial 3G launch Data revenue x4 times © VimpelCom Ltd 2014 2Q14 3Q14 Successful Data & handsets New special 3G 3G launch promotion value added services • 3G services currently in 14 main • Smartphone and dongle promotions • Facebook zero provinces, including Algiers and main w
Slide 13: Bangladesh: Successful turnaround and 3G roll out
Bangladesh: Successful turnaround and 3G roll out Mobile service revenue growth YoY (%) Customer base (millions) 30.2 29.8 10% 29.4 8% 8% 28.8 28.1 27.1 25.9 © VimpelCom Ltd 2014 -13% -14% -15% -15% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Smartphone MFS The fastest 3G p
Slide 14: Pakistan: Challenging political and macro-economic environment and strong competition
Pakistan: Challenging political and macro-economic environment and strong competition MOU development © VimpelCom Ltd 2014 3Q13 4Q13 1Q14 2Q14 3Q14 Improved network and Transparency in value MFS promotion is increased usage added services in focus, +30% QoQ • 2G coverage/capacity rollout on track •
Slide 15: Ukraine: Transformation showing operational improvements in a difficult environment
Ukraine: Transformation showing operational improvements in a difficult environment UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Transformation program on track: -4% YoY +2% YoY ► #1 in NPS 3.3 0.3 3.0 3.2 0.3 25.9 26.3 ► Substantial improvement in 0.3 annualized
Slide 16: CIS: Continued organic growth
CIS: Continued organic growth USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Increased market shares in most -4% YoY +6% YoY countries 510 494 41 461 41 42 24.9 26.3 • Mobile service revenue increased organically 5% YoY 469 452 420 • Mobile data revenue growth of 2
Slide 17: Kazakhstan: Completion of successful turnaround
Kazakhstan: Completion of successful turnaround Mobile service revenue growth YoY (%) Customer base (millions) 9.8 9.6 6% 9.2 9.2 4% 09 8.8 3% 2% 8.5 1% © VimpelCom Ltd 2014 -1% -1% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 3G Coverage New data tariff #1 in NPS offerings
Slide 18: Financial Highlights
Financial Highlights © VimpelCom Ltd 2014 18
Slide 19: Financial performance negatively impacted by one-off costs related to WIND refinancing and FOREX
Financial performance negatively impacted by one-off costs related to WIND refinancing and FOREX USD million 3Q14 3Q13 YoY Revenue 5,145 5,685 (9%) • Revenue declined organically 3% YoY, due to YoY performance, macro slowdown in some markets and continued market weakness in Italy of which service re
Slide 20: Resilient cash flow
Resilient cash flow USD million 3Q14 3Q13 Delta EBITDA 2,205 2,474 (269) • Due to FOREX, lower revenue and higher network costs Changes in working capital and other 40 123 (83) Net interest paid (477) (634) 157 • As a result of the April and July 2014 WIND refinancing © VimpelCom Ltd 2014 Income tax
Slide 21: Financing activities and available headroom
Financing activities and available headroom USD 18.6 billion financing activities YTD: USD 2.3 billion available RCF headroom: Refinancing WIND USD 10.6 billion new SNs and SSNs VimpelCom USD 1.3 billion © VimpelCom Ltd 2014 banglalink USD 0.3 billion Senior Notes (SNs) OJSC VimpelCom USD 0.4 billio
Slide 22: Interest savings from WIND's refinancing & Algeria resolution
Interest savings from WIND’s refinancing & Algeria resolution • Refinanced WIND’s debt, annual interest savings of ~USD 0.4 billion and improved debt maturity profile © VimpelCom Ltd 2014 • Net proceeds from Algeria resolution targeted for repayment of gross debt, annual interest savings of ~USD 0.3
Slide 23: Improved debt maturity profile
Improved debt maturity profile As at 30 September 2014, in USD billion Group debt maturity schedule by unit Debt composition by unit Italy Russia 5.9 6.0 3% A&A 22% Italy HQ © VimpelCom Ltd 2014 2.9 3.3 USD Russia 2.2 51% 2.0 1.9 27.7bn HQ 1.5 1.2 0.8 A&A 24% 2014 2015 2016 2017 2018 2019 2020 2021
Slide 24: Lower leverage and average cost of debt
Lower leverage and average cost of debt EBITDA1 / Financial Average Cost Net Debt/ EBITDA1 Gross Debt/ EBITDA1 income and expenses of Debt 3Q14 2.5 3.2 4.2 6.3% © VimpelCom Ltd 2014 -0.1 QoQ -0.1 QoQ -0.1 QoQ -0.8 p.p. QoQ With a cash position of USD 6 billion, additional financial facilities, no ma
Slide 25: Sensitivity to FOREX movements
Sensitivity to FOREX movements FOREX sensitivities1 9M14 RUB vs. USD EUR vs. USD UAH vs. USD © VimpelCom Ltd 2014 +/-10% +/-10% +/-10% USD billion Revenue 15.2 4% 3% 1% Average FOREX EBITDA 6.4 4% 2% 1% Gross Debt 27.7 2% 5% n.a. Year-end FOREX Net Debt 21.7 2% 6% n.a. 25 1. RUB vs USD +10% = 10% ap
Slide 26: 2014 targets confirmed
2014 targets confirmed Targets1 2014 Low to mid single Revenue digit decline YoY © VimpelCom Ltd 2014 Low to mid single EBITDA digit decline YoY Leverage (Net Debt / EBITDA) ~2.4x CAPEX excl. licenses / Revenue ~21% 26 1. The annual targets for 2014 assume constant currency, no major regulatory chan
Slide 27: Conclusion
© VimpelCom Ltd 2014 27 Conclusion
Slide 28: Conclusion
Conclusion • Results impacted by unfavorable currency movements, macro-economic headwinds and operational performance in some markets • Continued sequential improvements driven by investments in high quality networks © VimpelCom Ltd 2014 and improved customer experience • Streamlined portfolio with
Slide 29: Q&A
© VimpelCom Ltd 2014 29 Q&A
Slide 30: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: ir@vimpelcom.com © VimpelCom Ltd 2014 Visit our awards winning website Install VimpelCom’s App www.vimpelcom.com iPad App 30
Slide 31: Thank you!
© VimpelCom Ltd 2014 31 Thank you!
Slide 32: Bangladesh analyst and investor site visit
Bangladesh analyst and investor site visit © VimpelCom Ltd 2014 Register now for: banglalink site visit December 2, 2014 – Dhaka, Bangladesh Presentations by Vincenzo Nesci, CEO GTH Ahmad Haleem, CFO banglalink Gerbrand Nijman, Group Head of IR VimpelCom Shihab Ahmad, CMO banglalink Ziad Shatara, CE
Slide 33: Financial calendar 2015 – accelerating reporting
Financial calendar 2015 – accelerating reporting 20151 4Q14 results (analyst meeting in London) February 25 © VimpelCom Ltd 2014 1Q15 results May 13 2Q15 results (analyst meeting in London) August 6 Analyst and Investor Day (London) October 8 - 9 3Q15 results November 5 33 1. The final confirmation
Slide 34: Appendices
© VimpelCom Ltd 2014 34 Appendices
Slide 35: Financing structure
Financing structure VimpelCom Ltd. VimpelCom Amsterdam B.V. VimpelCom Holdings VimpelCom Amsterdam WIND Telecom B.V. Finance B.V. S.p.A. © VimpelCom Ltd 2014 USD 2.7 bln Total Wind Group Weather Capital Wind Acquisition USD 14.0 bln S.a.r.l. Holdings Finance S.p.A. OJSC VimpelCom PJSC Kyivstar Senio
Slide 36: FOREX rates used in annual targets for 2014
FOREX rates used in annual targets for 2014 Currency FX rates versus USD Algeria DZD 81 Armenia AMD 420 Bangladesh BDT 80 © VimpelCom Ltd 2014 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
Slide 37: Revenue and EBITDA development in 3Q14
Revenue and EBITDA development in 3Q14 3Q14 Revenue YoY EBITDA YoY Organic Reported Organic Reported Russia (3%) (12%) (7%) (16%) © VimpelCom Ltd 2014 Italy (2%) (3%) 3% 3% Africa & Asia (4%) (3%) (12%) (11%) Ukraine (6%) (40%) (14%) (45%) CIS 5% (3%) 12% 3% Consolidated (3%) (9%) (4%) (11%) 37
Slide 38: FOREX development
FOREX development RATES OF FUNCTIONAL CURRENCY TO USD Ave r a ge r a t e s Closing r a t e s 3 Q1 4 3 Q1 3 YoY 3 Q1 4 2 Q1 4 QoQ Russian Ruble 36,19 32,80 (9,4%) 39,39 33,63 (14,6%) © VimpelCom Ltd 2014 Euro 0,76 0,75 (0,1%) 0,79 0,73 (7,7%) Algerian Dinar 80,27 80,66 0,5% 83,22 79,25 (4,8%) Pakista
Slide 39: Reconciliation of EBITDA
Reconciliation of EBITDA USD mln 3Q14 3Q13 9M14 9M13 Unaudited EBITDA 2,205 2,474 6,370 7,247 Depreciation (717) (726) (2,217) (2,240) Amortization (381) (441) (1,155) (1,333) Impairment loss 61 (45) 59 (67) Loss on disposals of non-current assets (24) (29) (50) (43) © VimpelCom Ltd 2014 EBIT 1,143
Slide 40: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt USD mln 3Q13 2Q14 3Q14 Net debt 22,485 23,242 21,736 C ash and cash equivalents 4,890 5,505 5,852 © VimpelCom Ltd 2014 Long-term and short-term deposits 191 275 126 Gross debt 27,566 29,022 27,714 Interest accrued related to financial liabilities 430 432 402 U