Good day, and welcome to the VimpelCom First Quarter 2016 Investor and Analyst Call. Today's conference is being recorded. At the end of the presentation, there will be a question-and-answer session. At this time, I would like to turn the conference over to Mr. Bart Morselt, Head of Investor Relations. Please go ahead sir.

Yes, thank you. Good afternoon or good morning, ladies and gentlemen. Welcome to VimpelCom's first quarter 2016 results conference. Today I am pleased to be joined on this call by Jean-Yves Charlier, our Chief Executive Officer; and Andrew Davies, our Chief Financial Officer. Before getting started, on Page 2, I would like to invite you to pay close attention to the disclaimer which I will not read out loud, every word of it applies to the following presentation including the statements on Italy joint venture and the valid telecom transaction. Now the earnings release, the earnings presentation, as well as the exact disclaimer text can be downloaded from our website. Let's have a look at the agenda on Page 3. For today's agenda, our Group CEO, Jean-Yves will run you through the group highlights and the financial highlights of the first quarter. Our Group CFO, Andrew Davies, will then talk you through the group and country results in more detail, to close his presentation with the key targets for the year. Following that Jean-Yves will close the presentation with final remarks. Before heading to the Q&A Session where both, Jean-Yves and Andrew will be available to take any questions you may have. With that I would now like to give the floor to Jean-Yves. Jean-Yves?

Thank you, Bart and good afternoon gentlemen. Let me first focus on the highlights of VimpelCom's financial performance in the first quarter. First and foremost, VimpelCom returned to organic growth both in terms of revenues and underlying EBITDA in the first quarter driven by strong results in Pakistan, Bangladesh, Ukraine and Uzbekistan and partially offset by Russia. Operationally these results are driven by the strong momentum in data services which are growing double-digit by 27% year-on-year and this across the whole footprint. On the Italian joint venture, the regulatory review is ongoing and the process has entered into Phase 2. We remain confident to complete the transition by year-end. We remain equally confident that the pros of merger of Mobilink and Warid in Pakistan, both complete around the end of the second quarter of this year as we have already received the first of four regulatory approvals required. In terms of refinancing GTH financed successfully issued bonds a few weeks ago for an amount of $1.2 billion to refinance the shareholder loan with VimpelCom Amsterdam. Andrew Davies, our CFO, will later on this give you a brief overview on the transaction and will explain how it fits into our capital structure strategy. On the Uzbekistan investigation, we announced settlements with the SEC, DOJ, and OM in the first quarter. VimpelCom paid $795 million of fine and discouragements to the relevant authorities. This now is reflected in the net debt figure which therefore increased at the end of March compared with year-end 2015. Finally, our strategic priority to streamline our group and reduce our cost base through the performance transformation program is on-track and accelerating. Overall, VimpelCom delivered improving operational momentum in the quarter in spite of the headwinds in Russia, a demonstration that our strategy to reposition VimpelCom is on-track.…

Thank you, Jean-Yves. On Slide 12 we provide a breakdown on the evolution about service revenue in both reported and organic terms. On reported basis, our first quarter 2016 service revenue was still impacted by foreign exchange movements resulting in the 13.6% year-on-year decrease with an unlashing [ph] effect of foreign exchange rates and service revenue in the negative $366 million. However, on an organic basis, service revenue grew by 2.6% year-on-year. If we look at the decomposition of this, you can see it from the top chart the legacy on road revenues voice and roaming continued to decline. But this was more than offset by significant growth in the more digital revenue streams such as data and MSS which grew year-on-year organically by $0.20 and 26% respectively. The chart at the bottom, we see that the marginal decline in Russia's service revenue was more than offset by strong mid-single digit growth and revenue from the emerging markets and Eurasian business units. And as I'll discuss in more detail later, the decline in Russia's service revenue is fully attributable to foreign exchange driven decline in fixed revenues and that mobile service revenue continues to grow. Now let's move on to the EBITDA analysis on Slide 13. On a reported basis, EBITDA also declined by 19% year-on-year due to both foreign exchange headwinds of $160 million roughly, and exceptional cost of $40 million which mainly related to performance transformation. The latter being a conscious successful investment we are making to sustainably improve our analyzed cash flow generation by at least $750 million. On a year-on-year basis and as Jean-Yves already discussed, this program has contributed $66 million to the underlying EBITDA improvement in the first quarter. However, in order to front form the business we also need to have some shorter…

Thank you Andrew. The first quarter has demonstrated continued momentum and we are well on track to meet our targets notwithstanding the macroeconomic environment which is still partially waiting on our group reported results. On the revenue and underlying EBITDA, we have posted organic growth on a year-on-year basis and Italy transaction now in phase II now expected to close by the year-end. Performance transformation initiative across the group are on track and accelerating and on the basis of this financial performance the 2016 guidance is confirmed. Thank you very much for your attention. We can now start the Q&A session.

Thank you sir, [Operator Instructions] and we take our first question from Alec [ph] of Renaissance Capital, please go ahead.

Yes, good afternoon, thank you. My first question would be I was wondering you made preparations on the tower cells in Russia, where do you send on those ones and possibly you can extrapolate that on all the subsidiaries, where do you send the tower cells and deals which could happen there? My second question would be on Uzbekistan, is that kind of, of course with the - closed but there are some class actions justify the number correctly which would mean at least rumor [ph]. Is there anything there which is still outstanding or has this issue been closed and put behind? And the last one, I am not sure if you would like to comment on that, just wondering again what sort of remedies you could be considering to make sure the deal in Italy goes through. Is there any discussion at all about something which can soften so to say these consultation of the commission of the Russians for this to happen?

Okay let me perhaps start off with the tower. I will let Andrew talk about the Uzbekistan question and will come back to the Italy transaction. As part of our transformation strategies we want to move to more asset like network model as part of that we are focused very much on looking at sharing network opportunities across our geographic footprint as well at the same time we are focused on disposing of our tower portfolio. I think it's too early as to specific transactions to the tower portfolio disposal. We are looking at this on a country by country basis and you can expect nothing from us before a couple of more quarters i.e. that being the end of the next year. So, I think that's what I am going to say on the Tower transactions. Andrew?

Yes, Uzbekistan clearly we have settled all penalties and disgorgements within first quarter to the DOS and debt authorities and we have entered into the deferred prosecution agreement with the DPA. We are expecting no further cash outflows to any of the authorities. With regards to the cash back symbols it is still early days but right now, we see it generating no traction or momentum and we certainly don't have any provisions on the balance sheet in respect of any potential claims.

Is that a suit which is happening which doesn't get any traction or it doesn't even come aboard to actionable actions?

Well, we are seeing the same as you. We certainly not had a suit filed and we see this as not generating any traction whatsoever for the moment.

Okay.

Okay. Just on Italy and perhaps before talking about remedies, let me perhaps provide the framework under which we are working in terms of seeing through this transaction. I think the first is really that Italy is there is a bifurcation in the market place and so our perspective is all about a creating a third strong well-structured operator that can compete against number one and number two. So the question in Italy is not so much whether a market is going to go from four to three. The question is much more for the market to be going from two to three and pretty strong operators. They have said that they will review each market, each transaction on its own merits and we believe that this will be done in such matter. I think the other things to take into consideration obviously in Italy and to read across from the other transactions in Europe, as that the combined market structure of the combine entity is not going to exceed 35%. On a revenue basis it's even a less, there are no network sharing issues in Italy. So I think that we have a strong case for this proposed merger and we have just entered into phase II with the review of the European Commission and at this stage it is too early to speak of remedies but we will be evaluating this at the appropriate place and time.

Okay. Thank you very much.

Thank you. [Operator Instructions] And we will take the next question from Mitch Reznick of Hermes. Please go ahead.

Hi, thanks for taking the questions. One you just answered but staying on Italy can you in the improvement of the service revenue on the mobile side, can you talk about how sustained that trend is and whether we can see that growth on a stable basis this year and also can you talk to what you are doing to resolved some of the pressures you are seeing on the fixed line side of the business, thank you.

Okay. So let me take the policy. Recovery in the Italian market place have continued, our pools have let to eventually plateau out and then eventually start growing over the last several quarters and the service revenue the trend is following that albeit is lagging by a couple of quarters so as we collectively customers, multi-sim phenomenon take a bit of a backward step. But yes, what we are seeing on mobile service revenue in Italy, we think is sustainable over the medium term, to go a little more than deeper than that we certainly see a high degree of Russian competition when it comes to the headline pricing that's available in the retail distribution. The market does see the odd outbreak probably once a quarter end of the radar, out of the radar, under the table; proactive win back campaigns where operators maybe for couple of weeks a quarter are offering pricing at maybe 50% of standardized. We retail right but that's not really impacting the overall market trend. Okay and on fixed revenue Andrew?

I think we continue to see some pressure in the market place. I think that has to do more with certain types of customers particularly in the B2B segment. This is what we have witnessed also in Russia.

And on Italy, what's, in the unlikely event that the JV isn't approved, what's the Plan B?

We are working on plan A right now and it's plan A.

Right.

So I am not confident of a plan B, we have got a plan A, we have articulated. I think it's a solid merger proposal that we have put on the table. It's going to be reviewed on its own merits by Europe and this transaction is very different than the other transactions that the market has seen across Europe in the past couple of quarters.

Okay and do you think we require additional support from the VimpelCom if for some reason the JV doesn't go through?

Yes, let me take that question Mitch, over a 12 month time period we did three very successful round of refinancing of Italy and Italy did the towers sale as part of that and we took hundreds of millions of euros of the unwilling cost in doing so and also extended the debt maturity profile by quite several years so as a result of that the win in Italy is right now just about cash flow positive. And we have got a very covenant light structure so in the unlikely event of plan A didn't succeed there would be no need for us to provide additional sources of cash to WIND Italy.

Okay. Alright good, thanks for taking my questions.

We will take the next question from Ivan Kim of VTB Capital. Please go ahead.

Two questions from my side. Firstly you have a lot of cash at hand more than to do more even if you exclude the cash in Uzbekistan, do you have any particular plans to deploy this cash over the course of this year? And then secondly, do you see any signs of it or it remains pretty tough? Thank you.

Yes, on the cash we have no immediate plans to deploy it. As I said quite constantly over the last several quarters given the foreign exchange head winds and volatility that we see we much more of a liquidity buffer right now than maybe in a more normal environment. And we do have some debt and the headquarters maturing over the next 12 to 15 months that we would utilize that cash for if would able to refinance the debt. And on Kazakhstan, we do see small signs of recovery and the revenue trends are gradually showing a low year-on-year decline, so we do see some stabilization coming into the market and maybe by the end of this year it will be much more stabilized but having said that it still remains a very competitive market for us. And I would point that we have gained market share consistently over the last several quarters in Kazakhstan as we be much more price national as our competitors and in particular we have been very focused on our big day yields in the country and we basically manage to double our DP. I would affect the DP compares to our deal done last year.

Okay. Great thank you.

We will take the next question from Gavin McKeown of Pioneer Investments. Please go ahead.

Hi, guys thanks for taking the question. I have couple of question on Italy. Is it correct that you would normally get feedback at around 40 to 45 day mark and if so will that be disclosed by the commission or by the JV partners and if we say that you are closer to detail to the UK on the Italian deal I am afraid so, do you expect structural remedies will be required rather than handing out just remedies? Third, Jean-Yves made a good point on the bifurcation on Italy and how the Italian market is different to the UK but it would appear on the site of the U decision that it is regulated and nothing to compare about finance or the financial position or the financial sustainability of the M&Os. And 40 if the deal does fail, would you from to consolidate when north of six times of leverage or other ways to avoid that? And just finally, as you pointed out the refinancing get wins own way, but it's only as you say barely cash breakeven leverage is north of six times, would it be correct to assume the if support is required in the latter years before the maturity starts to kick in at a decision on further support, further injection of capital will be reliant on visibility of funding? Thanks.

All right, that's a lot of questions on that. Italy, and particularly the latter part, the next few years whether support is required, as I said, I'm working on closing the deal, I'm not sure I have a lot of time to focus on results on the Italian transaction right now. But let me say a few things, on perhaps the remedy dimension that you articulated. Look, I think that we will review to get this transaction completed, the implementation of various remedies. As I said, we're not at that stage yet in the process, as we've just entered our Phase 2, as I said, there are very particular dimensions of why this transaction is very different than all the other transaction in Europe that we've seen in the last couple of quarters. We will evaluate both MVNO and MNO type of remedies, if required. And as I said, there is no network sharing dimension that is a consideration for the implementation of any type of remedy. And if you've looked at also spectrum in Italy, spectrum has been relatively well balanced amongst the operators up to now and there is sufficient spectrum to see the appropriate remedy structure if required. So - look I think that the Italian transaction once again is very specific, and we believe it can be seen in a very favorable like even if everybody wants at this stage to give a relatively negative read across with the decision this week in the UK. As to the first part of the question on disclosure, I can't respond to that - I don't know. So maybe Andrew, you want to talk about reconsolidation and support required in the outer years although I don't think we've spent a lot of time on that.

Yes, let me get my crystal ball out. I understand the question Gavin, look, I think whether we would have to reconsolidate the full asset, depending very much on the decision to approve or not and then our own decision with good on what we would then do with that asset? So it's too early to say when we'll run but clearly to your point there is a potential that we would have to reconsolidate wind Italy relates six times leverage. In terms of support, as I said, we are - wind right now is cash flow positive, a very, very covenant like structure with maturities in the 21-22 time horizon from a material perspective. So that's really a question that we don't have to address for at least another three years I think. So I think it's a bit too premature to be speculating in public on that right now.

Okay. If I could just ask two follow-up questions, if that okay?

Absolutely. On Italy?

So I'm going to make it seven questions. On the point about spectrum, I guess it's an important point if your retention is looking at structural remedies are separate and then take [ph]. No spectrum is available until 2021.

All right, without going into too much detail but as a result of the transaction, the combined entity is going to have substantial more spectrum than the number one and number two player. And the businesses would be sufficiently competitive in the marketplace and would have the appropriate synergies to reinvest and better serve our customers.

Okay, thanks. That's very helpful.

[Operator Instructions] And we'll take the next question from Vivek Kana [ph] of Deutsche Bank. Please go ahead.

Hi, as you'd imagine most of my questions have been asked already. I just had a quick follow-up with regards to discussions with the commission. I mean which of the two entities is leading the discussions or are you both going together into the meeting? Just to understand how the process is being managed between the two merging entities?

Well, this is a joint venture. We've established a very strong partnerships with Hutchison. And in terms of this joint venture structure we are obviously doing this together. So that's as much as I want to comment on that question.

Thank you very much.

Thank you. And we'll take the next question from Kasina [ph] of UBS. Please go ahead.

Hi, thank you for the presentation. I have few questions. First one is what is the value of your tower portfolio? What portion of your short-term do you plan to refinance? And how much that in nominal terms is currently located at wind level? I only have financial as of full year '15 wins and the final question is how quickly you will have to reconsolidate WIND Italy if the merger doesn't go ahead. Is there a requirement? Thank you.

Okay let me talk about the towers and then I will let Andrew talk about three other points. And again I think your questions are very interesting on reconsolidating WIND but I just want to remind you that is not the strategy that the company is pursuing. I am sure we all like the read across with the decision on the UK but that is not our plan and the plan we are pursuing. On the value of the tower portfolio I will just say that VimpelCom has over the years created a substantial tower portfolio across its operations, we today have more than 50,000 towers across our footprint. We believe that these towers have substantial value and as I said our strategy is to unlock that value. I think it's absolutely premature for me to give any indication of bids that we could be receiving for parts of this tower portfolio and as I said that it is a substantial asset that the business has on the market place and you have seen the valuations of tower portfolios in different parts of the world. We think that it marks a substantial value of the balance sheet by pursuing this strategy. Andrew?

Yes, so the short-term debt question is subject to liquidity, pricing and tangents that's available in the market. Our intentions would be ultimately refinance all of the short term debt that we have got. On the WIND I think, at the end of Q1 its roughly $11 billion. And is the net debt that's on the WIND balance sheets and the reconsolidation question, I am not sure whether I kind of understand the value what's behind it but the timing of when we have to reconsolidate again depends on decisions that we make with regards to the asset that we make in regards to the asset in the unlikely event that we would not get approval from the European authorities for the JV. The one thing I would also like to point out here for absolute clarity is that reconsolidation, if it were to happen and that's a big if would be retrospective in nature and so it would not just be prospective.

And will the WIND debt remain?

Oh absolutely, yes it would remain completely rim fence and on known course.

So just for the clarity, if the merger was not to go ahead would you still be able to keep this asset potential merger and not consolidate it into VimpelCom financials?

Yes, depended upon what we exactly wanted to do with the asset. But I am going to draw a line in the sand and not address more questions on reconsolidating WINDs, all very interesting but not the plan that the company has.

Thank you.

Thanks.

Alright I would like to end. Thank everybody for your time and for your interest. Any other questions, particularly if they do not relate to please feel free to contact us at investor relations. I wish all of you a very nice day. And let's talk soon. Thank you, everyone.

Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may disconnect.