Good day, ladies and gentlemen, and welcome to the VimpelCom's First Quarter 2014 Investor and Analyst Conference Call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Gerbrand Nijman, Head of Investor Relations. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to VimpelCom's analyst and investor conference call to discuss our first quarter 2014 results. As usual, a formal presentation will be given by Jo Lunder, CEO of VimpelCom; and Andrew Davis, our CFO, after which we will have a Q&A session. Before getting started, I would like to remind everyone that forward-looking statements made on this conference call involve certain risks and uncertainties. These statements relate, in part, to the company's expectation to close and derive benefits from the Algeria transcription and subsequent developments planned in Algeria, its revised 2014 annual targets and its operational and network development plans in Russia. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including the risks detailed in the company's Annual Report on Form 20-F and other public filings made by the company with the SEC, including today's earnings release. The earnings release and earnings presentation, each of which includes reconciliations of non-GAAP financial measures referenced on this conference call can be downloaded from the VimpelCom website. At this time, I would like to turn the call over to our CEO, Jo Lunder.

Thank you, Gerbrand, and welcome to everybody. Our first quarter results were mainly impacted by the operational performance in Russia and the continued market weakness in Italy. Regulatory and governmental actions in Asia and Africa as well as unstable macroeconomic situations in Pakistan and Ukraine also impacted our results. As a result, the group reported an organic decline in service revenues of 4% year-on-year to $4.8 billion. We continue to enjoy double-digit mobile data revenue growth across our businesses. EBITDA decreased organically by 6% year-on-year mainly as a result of the decline in revenue and higher infrastructure and distribution costs in Russia. Despite this, our focus on operational excellence and cost control allowed us to deliver a solid EBITDA margin of 41.6%. It is also worth noting that half of the reported declines in revenue and EBITDA was a result of the devaluation of local currencies to the US dollar. We ended the quarter with solid overall customer growth across most countries. Our mobile base rose 3% year-on-year to 218 million. Moving to recent key development, in April, we achieved a major milestone in Algeria with the announced agreement to sell 51% interest in Djezzy to the Algerian National Investment Fund for $2.6 billion. This agreement allows us to solidify our leadership position in Algeria. Our partnership with FNI provides us with a strong and favorable shareholder structure in Algeria on which to build and strengthen our operations there. The total dividends and proceeds due to GTH at closing are expected to amount to $4 billion and all proceeds will be used to pay down the outstanding shareholder loans provided by VimpelCom to GTH. The proceeds will be used by VimpelCom to repay existing debt with estimated annual interest savings of approximately $300 million. Also in April, we announced the…

Thank you, Jo, and a warm welcome from me as well. So on Slide 17, as Joe has already mentioned, revenue declined in the first quarter, was mainly due to the weaker than expected operational performance in Russia and continued market weakness in Italy. EBITDA decreased organically by 6% year-on-year to $2.1 billion primarily reflecting the revenue decline. However, we maintained an industry-leading EBITDA margin of 41.6% due to our strong focus on cost controls and operational excellence program. EBIT in the first quarter decreased $925 million, with the revenue-led EBITDA decline being partially mitigated by reduced amortization of intangible assets associated with the WIND Telecom acquisition. The foreign exchange losses were mainly due to the continued devaluation of local currencies in Russia, Ukraine, Kazakhstan and Pakistan. Our high effective tax rate for the quarter is the result of non-deductible interest expense in Italy and the change in geographical profit mix was less profits coming from countries with a lower nominal tax rate. On the cash flows, the year-over-year decline in net cash from operating activities is a result of the EBITDA dilution with partial mitigation from an improved working capital movements on a year-on-year basis. The investments that we're making in our high-speed data networks to enable future revenue growth resulted in an increase in the net cash use in investing activities, while the reduction in net cash flow from investing activities reflects the fact that we issued $2 billion of bonds in the first quarter of 2013. Finally, consistent with the announcement of our January 2014 analyst and invest event, we paid no final dividend in respective 2013 financial year. Moving to Slide 19, our financial position remained solid. Our maturity profile has substantially improved due to the refinancing of WIND Italy's high-yield bonds and PIK notes through…

Thanks, Andrew. Let's turn to the last slide, which is the summary of our results. This quarter, we have accomplished two important strategic goals with the resolution in Algeria and the refinancing of WIND. However, the first quarter was challenging as the results were impacted by operational performance in Russia and the continued market weakness in Italy. For the remainder of 2014, we will stay very focused on our strategic initiatives undertaken in each of our business units. Our transformation Phase 2 in Russia remains, what I will say, on track, as we focus on improving customer experience. And we will continue to modernize and enhance the network through accelerated investments. In Italy, we will continue to outperform the market despite an expected weak environment. In Ukraine, we focus on executing our initiatives. We're progressing well and we saw early signs of improvement quarter-on-quarter. We continue to see solid performance in CIS and also in Africa and Asia business units. Financially, we maintained an industry-leading EBITDA margin, reflecting our focus on cost control and operational efficiencies. While CapEx has increased due to the accelerated investment, we continue to generate solid cash flows also during this quarter. With that, I suggest that we open the floor for questions and discuss whatever topics you want to talk about. Operator?

(Operator Instructions) And our first question comes from Cesar Tiron from Morgan Stanley.

I have two questions. My first question would be to understand a little better this revenue cleanup that you described in Russia and maybe you can give us an idea of the Russian revenue trajectory without this cleanup. The second question would be to really try to see if you can give us some details of what's really happening in Russia. It seems that some of the customers you're losing are high-end spenders, which explains your underperformance versus the data operators. Do you see some cannibalization of revenues when you move subscribers into bundles? I mean these type of comments would be extremely helpful.

I think what's going on is basically that we have had for years a network in Russia that has been probably of lower quality than the two main competitors. And for that reason, I think we have been able to kind of maintain the subscriber base and as you have seen we have had higher gross sales, we have had higher churn. I think what's been going on in the last part of 2013 was probably that some customers started to move away from VimpelCom to competitors. That could also be the core subscribers in core markets or core regions. And so in a way, they're just in time, the way I see it, in creating that parity in that. So you've seen in the first quarter that we're still losing subscribers. You see that on the subscriber base. Probably some of these subscribers are also high ARPU subscribers. But at the same time, you also see some underlying trends now given the fact that our main task now is really to change perception and make sure customers understand that the network is in many regions best with the higher speeds. We are now also doing a lot of initiatives to be more transparent in the way we work with them. So that's why I'm saying I'm confident that we're doing the right thing. I think you're a probably a little late in closing the gap on the network. You're little late in reacting to reality. I think we have reacted to reality. I think we have closed. I think we're doing the right thing. But I think unfortunately that we will see a bit of a bumpy road also in 2014 until we have kind of changed perception and ensure customers that this is the new Beeline and this is the network that in many regions are on par in all the radius probably even better. So I think that's the general dynamic ongoing right now. And frankly speaking, we see some early signs of improvement on net promoter score and on traffic patter and stuff like that. But that's not details that is being disclosed. So I'll just make the general comment instead of a specific one. And then on the first part, maybe Andrew can talk a bit about what does cleanup mean.

This is not a uniquely Russian phenomenon and you see it in most mobile markets. It basically involves third-party service providers who get access to the customer database, because customer numbers in general are made public. They would send some type of SMS messages to people with a one-click type of subscription in order to use whatever kind of services they're providing and the customer doesn't realize that actually this isn't just a one-time event, but they're actually subscribing on a regular whether it's a weekly or a monthly basis to this. And this is why they get a fairly decent annuity as a result. Clearly, the disclosure is around this, but this is not typically transparent and it ends up resulting in significant amount of churn for us, is a very quantifiable customer dissatisfier for us. So we've taken the decision that we're going to control within our databases and our systems, so that customers aren't prone to these sorts of offers going forward. We've pretty much done most of the cleanup that we need to in this regard. Clearly, we need to be vigilant going forward. But I don't think you see that impact from this getting worse from here on. What we'll see is a continuation of this as we kind of go through the rest of 2014 until you get to the overlapping impact. But offsetting that, given that we should be dissatisfying our customers less and less, it should also help to drive some customer growth as we get to the second half of the year.

And, Andrew, can you please say how much this cleanup impacted the Russian revenues roughly?

In rubles, it's roughly 1 billion rubles.

And our next question comes from Alexei Gogolev from JPMorgan.

I have two questions related to Italy. Can you please elaborate on why you had a record number of net subscribers in the first quarter, which came in despite relatively improved pricing position versus market leader? There was obviously (inaudible) one-off in this quarter. I think, Jo, you've mentioned some SMS, but it will be great to hear more details about it. And how will this subscriber losses impact your pricing strategy going forward? If I'm not mistaken, your current promotions expired this weekend, right? The second question is also about Italy and about CapEx. It's down quite significantly. Is there any expectation in your mind of some sort of consolidation in Italy and what's driving that year-on-year decline in CapEx? And also, what is your current level of 4G coverage in Italy and what are your year-end goals if you have any for Italy?

Let's talk about your first question, which is really about dynamic on the subscriber base in the first quarter. First of all, let me take one step back, because what you see and what we probably also underestimated at the beginning of the year in the Italian market was actually the melt-over effect on the price war that took place during the summer of 2013. There was a lot of subscribers moving from normal bundles to the more bundles offered during those summer months. And most of them were still sitting with the operators entry into 2014. So the estimate that was made in the beginning of the year didn't fully take into account the melt-over effect, as I said, from that price competition. So that's partly why at least our estimates on Italy is likely weaker now for 2014 than it was four, five months ago. If you look at the first quarter, it's actually on our side, we have a stable subscriber base. We entered the quarter more or less on the same level as we illustrated previously, so dynamic in the quarter with less aggressive price competition that gross additions in the market declined a lot and also the churns were reduced. So in a way, the overall dynamics in the first quarter was quite good actually in terms of the quarter isolated. But as I said, total revenues are down as a result of things that happened in 2013.

I think the first quarter number, I think there's just a little bit of natural isolation there. It's not reduced year-on-year because we've got an eye on anything in the structural nature. On the full year basis, we expect CapEx to be stable year-on-year. And within that, we expect that from 4G/LTE perspective, we will cover at least 17 largest cities by the end of the year and we'll be around about at 20% population coverage.

And our next question comes from Dalibor Vavruska from Citigroup.

I apologize I may have missed the part of this previous question, but just on CapEx, you're reducing your guidance in terms of revenue and EBITDA. But you're maintaining this 22% for Russia. Does it mean that you're going to spend less than you did before? And also, when you were giving this guidance in January, as it was, the ruble rate was slightly stronger than it is now. So does it mean that actually you're going to spend less, you're going to invest less on this basis? And if so, how do you see this income tax for competitors after you're invested, they came out with relatively aggressive CapEx guidance and some of them are saying that they are not going to reflect the weaker revenue in the CapEx in a way that they are saying that their CapEx as a percentage of revenue may go up actually compared to these expectations from a couple of weeks ago. This is one question. The second question is I'm just wondering in terms of how the management incentive works and the regional levels, so for example, when you get a new regional head for a specific country, how long would you give them to actually show some performance turnaround? At which point, are you going to get [ph] awarded if that doesn't come?

Well, we have ordinary, I would say, normal incentive systems for senior management. I think you'll find them in most companies. It's a base salary. It's an annual bonus based on budget and things we want to achieve in the year. And then you an LTI, long-term incentive that normally is based on the next three years in terms of strategic plan and long-term objective. So it's 100% aligned with the shareholder interest, whether strategic shareholders or public shareholders. So there is no disconnect between our strategy, our target to create value and management incentives. And specifically on Asia/Africa that we announced today, I think Ahmed has been with us for three years now. He's done a good job. He's built on the headquarter in Cairo from 250 people to 300 people. He's built a very close cooperating model with Amsterdam. I think for him it was important that we finally were able to sign the Algerian deal. I think he feels that we are now entering into the next stage of development. We're focused on 3G in all three markets. We've also sort of made decisions on the smaller assets. Canada is not as large as a market for us. So I think he feels that in a way the job was done and that the next stage now will include other types of challenges. And for that reason, he is moving on, so that he's being appointed, knows the company very well. He's been instrumental in getting the job in Algeria done. Long experience from the telecom industry and taking on the rollout of CO and GTH with more of a financial holding with close cooperation with VimpelCom Amsterdam on the operational side. So I think his appointment was very logical and easy to explain them. Any incentives, they are quite standard actually and fully aligned with shareholders.

I think without making this overly complicated, the first thing to remember is the guidance that we gave at the start of the year and then with these revised targets on an organic basis, so constant currency, so with regard to the CapEx to revenue ratio, yes, clearly revenue is we are now saying going to be a slight year-on-year decline. Clearly, that is going to be the absolute amount. The spend on CapEx is going to slightly decline by roughly about same ratio as well. However, we are confident that we can do so and still deliver the same volume of scale of network rollout and investment in high-speed networks as the expected delivery due to the start of the year. And the reduction in CapEx will come from non-network related investments. And then just going back to this organic thing, just to remind you that on the reported basis, if you continue to see currency deterioration throughout the year, the reported CapEx to revenue ratio being slightly higher than the 21%, because CapEx across the group is still denominated in dollars regardless of where it gets spent.

And our next question comes from Alex Balakhnin from Goldman Sachs.

I have two questions, if I may. First is on Russia. And I just wanted to get your thoughts on what do you think is the time lag between the improvements in the net promoter score, which you're trying to achieve, and the positive uptick in the revenues, if there is any time lag between two events from your industry experience and from what you see, what do you think this time lag may be? And my second question is on Italy. The market was shrinking quite substantially during the first quarter, while at the same time, it also seems like industry participants are able to (inaudible) with the cost cutting, so margins for you and your competitors are largely being stable year-on-year. My question is do you see sort of scope for the cost cutting in Italy and don't you think it may suggest the potential for further market interaction.

On Russia, this is not exact science. And many things might work in our favor and against us. So please see this as more high-level guidance than precise guidance. But I think personally that you've seen from net promoter score starting to show a better result in Russia, because we signs of that as a result of everything we've done with customers and with the network over the last three to four months. I think first you'll see some changes in the subscriber base as a result of that with less churn and maybe more subscribers coming on to our networks. And then of course that should result into revenues. But of course, then again it's quality of subscribers that we are able to keep the high ARPU and not just add low ARPU. If we also assume that our action is stimulating high ARPU subscribers to stay with us, given the fact that we have now a good network in Moscow and the big cities, I would think a couple of quarters. So when you see signs of improvement in the first quarter, you should see revenue being sort of affected in a positive way a couple of quarters later. So I think that's what I'm saying that 2014 might be another difficult year for us in Russia, but still I expect to see improvement in the underlying trends that should start translating into better performance eventually at the end of the year.

With respect to the second part of your questions on Italy, first of all, I'm not sure I agree with one of the statements you made. I think we've shown a better ability to take cost out than certain of our competitors have. And we've increased our EBITDA market share over the last few quarters. And one of our competitors is yet to report for this quarter, but certainly based on their reporting, we have a better margin performance than they did despite of the fact that they had significantly more scale. So I think we're doing better than average on cost control there. Clearly, with any cost control program, you go after the low-hanging fruit first. And we've done that pretty much. But the degree of science and process we engineer, it's probably some more business transformation and therefore cost reduction to achieve yet. But I would also devote that from pricing. I think you've seen evidence in the last six months that pricing in the marketplace has been more rational and more disciplined. And I would expect that to continue. With regards to the overall market, yes, because it's what happened during the pricing last year, you will see an overall market contraction continuing throughout 2014. But we expect to see a lower rate of contraction in the second half of the year than we will do in the first half of the year.

So you don't see the potential to cut further costs, maybe sort of reinvested in the pricing. You'd probably still do a great job with building market share and EBITDA, but by some of your competitors, they think that may be the case in the year?

I'm not going to hypothesize in public here of what my competitors' reaction going to be. All I'm saying is the market (inaudible) pricing rationality and discipline in the last expense and we expect that to continue.

And our next question comes from Alex Wright from UBS.

So my first question relates to the tariff plans and the smartphone, also the highlights, that's been launched in Russia. I wondered if you could talk about what you think the impact of the tariff plans may be on effective pricing both of voice and data, whether you're expecting to have a significant impact and whether you think the overall impact should be, improved customer trends in the longer run, as you've explained, but perhaps weaker ARPU and weaker revenue per minute trends? And regarding the smartphones, you're priced at around $15. Can you talk about how the uptake of that is going, what sort of subsidy, if any, is in place there, what sort of impact we may see on the margin from that? And then my other question is on an unrelated topic concerning the shareholder loan to Global Telecom. Once the Djezzy transaction is closed and the $4 billion of shareholder loan is paid down, can you comment on the interest rate that may be applied to the remaining portion of the shareholder loan and whether you expect to take that cash interest now to Global Telecom or (inaudible) has been the case in the past?

So the situation we're in right now with the pay to extend the shareholder loan once it matures in a few days' time, we need that to be approved at the GTH AGM, which is yet to be organized, and we're going to put the maturity into the standstill kind of period until we get that approved. When we get to closing the Algeria transaction, the $4 billion of cash proceeds will be used to repay a substantial portion of that loan, but we're assuming that the extension of loans gets approval at the AGM. The balance on the loan by, say, if we assume end of September closing, we'd still be about $1.25 billion and it will continue to accrue interest at the new rate, which would be somewhere around 13% and again that will continue to be rolled up into the loan.

On the first part, the pricing, first of all, let me just confirm that there is no handset subsidies offered in Russia. So there is no message or hidden message in what we talked about earlier today. When you buy a smartphone, you buy it together with a bundle. And what we've done is basically to make the bundle more attractive with on-net traffic and data package, et cetera, that has been welcomed in the market. And we also have some interesting things coming up over the next couple of months. So this is all related to more user-friendly bundles and more attractive bundles. And I think we have been extremely disciplined in the way we've been working in the market, not aggressively using the price tool to compensate for a weaker network and other areas we had to catch up. And we don't have the plans for doing that going forward. I think we can compete very effectively now with a strong effort and good distribution network with innovative products, bundles, low-priced smartphones, et cetera. So I think we've having the right plans and philosophy related to that.

Our next question comes from Vivek Khanna from Deutsche Bank.

So just a quick question on Italy. Now I remember the Investor Day, you did tell us to be patient and that over time that you'll be able to create value out of that asset. So congratulations on the refinancing. I guess my question is more on how you see that asset sitting within the portfolio going forward. I see that with regards to Canada, which I appreciate clearly is a much smaller operation and different cash flow profile, you are potentially thinking about taking a smaller stake in a larger entity. And with regards to Italy, now that the balance sheet is largely taken care of and you have no stress from that perspective, I'm just wondering how you're thinking potentially about creating value. I mean is there a route to potentially own a minority stake again in a larger entity in Italy or when you think about creating value, are you thinking about still either owning 100% of the asset or not owning the asset at all, or is there in between in order to create value?

I think our thinking on Italy hasn't changed all that much actually, because we have a very good company in Italy. We have a very strong management team there. We have outperformed the market and competitors for years, as you all know by now, with the refinancing we did. We also strengthened our position financially, not only operationally. So what we've done in Italy now is just to make sure that we have a position that is strong enough to stand on our own feet and compete on a standalone basis if necessary. So that's the starting point. And I think it's really important to grow into types of discussions out of strength. So everything you've seen that we've been doing in Italy over the last six to 12 months I think has been to create strength. So that's the starting point. And then we've said many times that our general industry view and our general philosophy is that we are in the favor of market consolidations. We are in favor of sharing arrangements whether it's powers, networks, anything. And I think it's going to be very hard for the industry to have four, five, six players in any market to allow high-speed, high-quality data networks. And for that reason, this is something we're actively working on and actively exploring. But I think also at the same time, there is a long-term investment horizon and investors in telecom understand that. And we don't need to rush into anything. We can take a long-term view and make sure that we protect market position with values long term. And for that reason, we have right now a strong company in Italy, we have a strong financial position after the refinancing. We are generally in favor of discussing consolidations and sharing. But we're going to do it out of strength, not out of weakness. And that's basically where we're right now. And we can't comment really on specific conversations or negotiations for obvious reasons. But we think there is value to be created in Italy. We are quite certain about that.

We've strengthened the balance sheet in the last quarter. The capital structure is much more stable than it was, but there is an opportunity to potentially strengthen it even further. We still have secured notes outside, which have the coupons associated with them, which are probably higher than current market rates. And so we might look at doing something with that in the near future. However there is a judgment call to be made, because I think as most people would recognize, those secured notes have a pretty material call premium. Again, consistent with our long-term view, we have an opportunity to strengthen the balance sheet even further, but we need to make a judgment call on how long we think these good market conditions will last.

And our next question comes from Ivan Kim from VTB Capital.

So despite the significant efforts that you're doing, (inaudible) has actually increased over the last two questions 17% and 18% per quarter and they were like more than 3 million in their subscriber disconnections. So what are the potential kind of ways to reduce that in fairly efficient way with no powerful effect on the (inaudible), because it looks like the measures that you've taken so far didn't really kind of bear fruit. And then secondly on Italy, from what I understand, means to keep the (inaudible) pricing than the industry, do you have a view on why it doesn't lead to the market share gain and whether they might do something that would change that?

So with regard to Russia, you're right. We have seen last couple of quarters in elevated share and rates compared to prior periods. And there is a number of customer dissatisfiers that we have with the spam SMSes that customers get. The actions that we have outlined in the presentation about improving the customer experience and more transparent in practices and things of that nature will improve churn, but there will be a lag between (inaudible) goals and that reduction in churn actually happening. We are looking at other things as well, putting our distribution channel in more of a revenue share type base to incentivize the right churn behaviors. We have (inaudible) customer base management activities, all of which is designed to reduced churn quite significantly.

I think on Italy, we see actually that Hutch is gaining market share. That's clearly a trend dynamic that is taking place. It's difficult for me to really say on their behalf. But we think that they're gaining cost conscious subscribers or low ARPU subscribers. We also might think that due to their network quality, churn is again high. So it's gaining market share by churn due to network quality. So maybe it's not price dynamic. But for the time being, they're clearly gaining market share in the Italian market.

And our final question comes from Olga Bystrova from Credit Suisse.

I wanted to ask quickly on this Canada issue you're seeing today that you might consider swapping stake into larger operator. Can you maybe elaborate a little bit on first of all how far forward this idea is, sort of which is limited to Canadian market only or (inaudible) developed or maybe even larger markets here? And sort of what level of control will (inaudible) will be willing to accept? And maybe (inaudible) follow-up on your guidance, given the performance in the first quarter and what you are expecting for the full year suggest to me that you're basically expecting improvement in operations in Russia, Ukraine and Italy, yet saying that Russia and Italy will be challenging for the year and Ukraine we still don't know how things will develop there. How confident you are you will be able to actually improve trends in the second half in these key markets?

Let's not read too much into the statement on Canada when it comes to general terms. I don't think this should be interpreted as if we're ready to take minority positions in a variety of markets. What's going on in Canada, I think, is very simple. We decided not to participate in the 700 Mhz auction early in the year, because there was no clear path to control. At the same time, we have written off $1.5 billion of investments in Canada over the last couple of years. We have no intention really to put any more funding into Canada at this point in time, which means that we have an asset there right now with no 700 Mhz spectrum, but with the customer base, with employees, with an effort. For that reason, we are now having different discussions with different players in that market to either sell it or to combine it with others and take a smaller position in a larger entity. So that's basically the background on the thinking in Canada. If we could have had a path to control, we might have used things different. But that's not the case. And for that reason, we have shaped our position with respect to what we believe is the right thing to do there. And I don't think this is necessarily to be used as a general view on other markets when it comes to consolidation.

With respect to the guidance question, I just want to correct one of the statements that you made, first of all. So implied within the guidance is the notion that we will have a lower rate of contraction from here on and particularly half of the year than we still aim in the first quarter. So it is a relative improvement when you look at year-on-year dilutions. I wouldn't describe it as a year-on-year improvement in revenue and margins in the second half of the year and which I think you may have implied. I think if you look at the three large markets, Ukraine, we're not crystal ball gazing here and implied in the guidance is that the macro situation there pretty much remains static, either gets materially worse or materially better. We already have a good evidence that the reload transformation program in Ukraine is working and we expect that to continue develop through the remainder of 2014. With regard to Italy, in the first quarter, we suffered from the MTR reductions, which clearly won't have as much of an impact on the balance of the year. And also, the impact of the intense price competition, which is particularly acute in the summer and early autumn of 2013 will by its nature have an overlapping impact. By the time you get to the back half of 2014, in particular Q4, the year-on-year impact of that will be nowhere near as severe as it's been in first quarter. And then with regard to Russia, as we've said, we're taking a lot of customer-centric actions to turn around that business in the second phase of the transformation to build upon the investment in the infrastructure and the distribution that we did in the first phase of the transformation. And we expect that to start paying dividends in the second half of the year and again, for that to result in that being a lower year-on-year revenue reduction in particular than we've seen in first quarter.

Thank you. That ends the Q&A session for today. I would now like to turn the call back to Jo Lunder for any further remarks.

Thank you. First of all, thank you for all the good questions and the interest in VimpelCom and for participating on the call. We've expressed that we're not pleased with some of the performance and we've also expressed today that we have some markets that is difficult right now. But I think still this is a long-term industry in its investment cycles and we need now to be very disciplined and focused on what we believe in and not to be jumpy. So we've tried to expressed our views today. We will continue to focus on the principles we have outlined today. And if you have any questions, please contact Investor Relations. I'm sure I'll see some of you over the next months as well. And the next earnings call we're going to have is on August 6. And I hope to talk to all of you either before that or on that call. So with that, I suggest to close the call and I wish everybody a good day. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.