VEON resultaten 2q 2109

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Algemeen advies 01/08/2019 08:49
S O L I D Q 2 2 0 1 9 R E S U L T S S U P P O R T E D B Y G O O D O P E R A T I O N A L P E R F O R M A N C E W I T H O N G O I N G F O C U S O N C O S T E F F I C I E N C I E S
F Y 2 0 1 9 G U I D A N C E C O N F I R M E D.
Amsterdam (1 August 2019) – VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a leading global provider
of connectivity and internet services, today announces financial and operating results for the quarter ended 30 June
Q2 2019 RESULTS1
• Revenue tracking in line: total revenue increased by 7.5% organically2 year on year with service revenue increasing
5.0% organically2 to USD 2,080 million, driven by particularly strong performances in Ukraine and Pakistan
• Organic data revenue growth remains robust: the momentum in mobile data revenue continued in the period
growing by 22.7% year on year organically2, with Ukraine (+77%), Pakistan (+59%) and Bangladesh (+28%)
delivering strong performances on the back of ongoing 4G/LTE investments
• Reported revenue flat as currency headwind slows: the currency headwind in the period was limited to USD 179
million resulting in a decline in reported revenue of only 0.4% year on year. This compares to the 5.6% decline in the
first quarter.
• EBITDA (pre-IFRS 16) delivers good organic growth: EBITDA (pre-IFRS 16) increased organically2 by 11.1%
year on year to USD 866 million, resulting in an EBITDA margin of 38.3%. Ukraine and Pakistan delivered particularly
strong performances in organic EBITDA. Reported EBITDA grew by 16.1% year on year
• Cost intensity ratio3 continues to improve organically2: We recorded a 2.7 percentage point year on year organic2
improvement in our cost intensity ratio, helped in particular by Ukraine and Pakistan which both saw benefits from
above-inflation revenue growth while we continued to progress on lower corporate costs
• Corporate costs trending lower: Corporate costs were USD 60 million, which resulted in a 15% year on year
decline in the first half 2019. This is in line with VEON´s ambition to reduce corporate costs by 25% year on year in
FY 2019 and to halve the corporate cost run-rate from FY 2017 level by end-FY 2019
• Equity free cash flow4 excluding licenses USD 338 million: In the quarter, adjusting for the positive effect of IFRS
16, the company generated USD 249 million equity free cash flow (excluding licenses), including USD 175 million
from Ericsson. Equity Free Cash Flow excluding licenses for the half year adjusted for IFRS 16 impact was USD 630
• Reported cash flow impacted by tax payment: cash flow was negatively impacted by the first payment of USD 54
million related to GTH tax settlement
• Board of Directors approved interim FY 2019 dividend per share of USD 0.13
• VEON’s Group Chief Financial Officer to step down at the end of September 2019
• GTH reached an agreement with the Egyptian Tax Authority (“ETA”) to settle all outstanding tax liabilities of GTH
and its Egyptian subsidiaries for a total amount of USD 136 million
• The mandatory tender offer (“MTO”) in relation to Global Telecom Holding (“GTH”) commenced on 2 July and will
expire on 6 August 2019. While we remain optimistic on the outcome of this process, we will need to wait until the
closing of offer period to have certainty on the outcome
• During the second quarter, VEON received the balance of the Ericsson payment of USD 175 million, supporting
equity free cash flow. Cash flow was negatively impacted by the payment of USD 54 million in taxes to the ETA
ahead of the MTO
• Strengthening our management team: Sergi Herrero appointed as the COO for VEON Ventures
• VEON shareholders elected Muhterem Kaan Terzio?lu as a new member of VEON’s Board of Directors

• FY 2019 guidance confirmed: Low single-digit organic2 growth for revenue, low to mid single-digit organic2 growth
for EBITDA and Equity Free Cash Flow excluding licences of approximately USD 1 billion. While we are tracking ahead of our guidance at the interim period, we note the second half metrics are more challenging. Directionally there is upside to revenue and EBITDA.

“VEON reported a strong first half 2019 with continuing good operational performance. Despite the challenging market
conditions, we continue to make steady progress on network performance and distribution optimization. Our strong
results in Ukraine and Pakistan ensured a balanced performance for the Group. Our service revenue growth was largely
driven by strong growth in data revenue on the back of the continued investment in our data networks in the period. This
will remain a key focus for VEON over the medium-term while we explore new ventures in the longer-term.
We remain acutely focused on costs not only at the Group level but across all our operations. The improving cost
efficiencies we are delivering have allowed a number of our smaller markets to record encouraging incremental
profitability for the Group.
As we continue to focus on simplifying our structure, we are encouraged by the progress we are making with our
restructuring plans for GTH, including the commencement of the mandatory tender offer on 2 July 2019, and we are
optimistic on concluding this process successfully. We believe that a simplified and streamlined Group will allow us to
further unlock value for shareholders over the medium to long term.
Despite some macro and regulatory challenges, we remain optimistic on the medium to long term opportunity that our
portfolio presents, and we will continue to focus on driving strong operational performance, while simplifying our portfolio
and maximizing data opportunities. We have confirmed our guidance for FY 2019.”
1 Key results compare to prior year results unless stated otherwise
2 Organic change is a non-IFRS measure and reflects changes in revenue, EBITDA and cost intensity ratio, that excludes the effect of foreign currency
movements, the impact of the introduction of IFRS 16, exceptional income of USD 350 million in respect of revised partnership with Ericsson and other
factors, such as businesses under liquidation, disposals, mergers and acquisitions. See Attachment C for reconciliations
3 Cost intensity ratio is defined as service costs plus selling, general and administrative costs, less other revenue, divided by total service revenue. Based on
FY 2018, in USD million (3,697+1,701-133)/8,526
4 Equity free cash flow excluding licenses is a non-IFRS measure and is defined as free cash flow from operating activities less cash flow used in investing
activities, excluding M&A transactions, capex for licenses, inflow/outflow of deposits, financial assets and other one-off items. EFCF target for FY 2019 is
based on currency rates of 20 February 2019, excludes USD 136 million payment of Global Telecom Holding tax settlement, includes the one-time cash
received in connection with a revised arrangement from Ericsson of USD 350 million. See attachment C for reconciliations
5 FY 2019 targets exclude the impact of the introduction of IFRS 16
In Q2 2019, both revenue and EBITDA were positively impacted by special compensation of USD 38 million related to the termination of a network sharing
agreement in Kazakhstan between our subsidiary KaR-Tel LLP and Kcell Joint Stock Company ("Kcell”) due to Kazakh telecom JSC’s acquisition of 75%
of Kcell's shares.
In addition, in Q2 2019, as a result of the USD 136 million GTH Tax Settlement (see below “GTH Tax Settlement’’), VEON has recorded an additional
provision of USD 56 million with USD 27 million in the EBITDA and USD 29 million in the income tax.

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