Good day, and welcome to the VEON Third Quarterly Results Investor and Analyst Conference Call. Today's conference is being recorded. I will now hand the call over to Mr. Bart Morselt. Please go ahead, sir.

Good afternoon, ladies and gentlemen. Welcome to VEON's third quarter 2017 results conference call. Today, I'm pleased to be joined on this call by Jean-Yves Charlier, VEON's Chief Executive Officer; and Andrew Davies, VEON's Chief Financial Officer; Trond Westlie, who succeeds Andrew as CFO effective from today. The structure of the presentation mirrors that of previous quarterly results, with Jean-Yves starting with the group financials and business highlights, followed by Andrew running us through group and operational results, and finishing by reconfirming our 2017 outlook. At the end of Andrew's discussion, we will open the line for the Q&A session. Before getting started, I would like to draw your attention to the disclaimer. Forward-looking statements made during today's presentations include and involve certain risks and uncertainties. These statements relate in part to the company's anticipated performance and guidance for 2017, including its ability to generate sufficient cash flow, future market developments and trends, expected synergies of the Italy joint venture and the Warid transaction, operational and network development and network investment, the effect of the acquisition of additional spectrum on customer experience, and timing for the expected completion of the tower sale in Pakistan and the sale of the Laos operations, and the company's ability to realize its targets and strategic initiatives. Certain factors may cause actual results to differ materially from those in the forward-looking statements, including the risk detailed in the company's Annual Report on Form 20-F and other recent public filings made by the company with the SEC. The earnings release and the earnings presentation, each of which includes reconciliations of non-IFRS financial measures presented today can be downloaded from our website. I would like now to hand over to Jean-Yves, who, as you can see from the agenda here, will run through the Q3 financial highlights before updating on the group's strategy execution and our recent management changes. Jean-Yves?

Good afternoon ladies and gentlemen and thank you for joining our third quarter results call. VEON delivered another set of financial -- solid set of financial results in the third quarter with further growth in revenues, EBITDA, and cash flow. We remain satisfied with the rate of progress we are making as a company, both strategically and operationally. In terms of financial results, Q3 has seen a continuation in the positive trends of the first six months of 2017 with the group posting solid organic growth on a number of metrics. Total revenue grew by 4% to $2.5 billion and by 3.2% on an organic basis, driven by Russia, Pakistan, and Ukraine, and partially offset by continued pressure in Algeria and Bangladesh. Mobile data usage growth continues to be the key driver for revenue growth across our markets, recording 27% organic revenue growth year-on-year. EBITDA improved by 16.4% to reach just over $1 billion for Q3, benefiting from organic revenue growth and exceptional income from a one-off adjustment to a vendor agreement. On an underlying basis, EBITDA it grew 3.5% organically year-on-year. CapEx increased by 4% year-on-year due to higher CapEx in Russia and Bangladesh, primarily driven by a more linear phasing throughout 2017. The CapEx ratio in the quarter was just above 16%, trending towards our medium term objective of 15%. Growth in underlying equity free cash flow excluding licenses was especially strong during the first nine months of the year, totaling $965 million, of which $475 million was generated in the third quarter, further demonstrating the financial turnaround of the group and underpinning our sustainable and progressive dividend policy. Let me now focus on our strategic initiatives. On the 27th of February this year, we relaunched the company as VEON and accelerated our strategy to both revitalize and…

Thank you for all those kind words Jean-Yves. Good afternoon or good morning depending on where you are from me to everyone else as well. So, I'll start as is usual on the revenues -- revenue side where we show the evolution for the quarter growth in reported and organic terms. On a reported basis, third quarter 2017 revenue grew by 4% year-on-year-year boosted by both organic growth and a little bit of ForEx tailwind. If you look at the composition in the upper chart, we see a continuation of trends from previous quarters, with strong growth in data and MFS revenues, partly offset by a decrease in voice revenue. The latter being a secular trend across the industry. Mobile data revenue in particular showed strong growth of nearly 27% year-on-year-year on an organic basis, driven by the continued monetization of our high-speed data networks. In the lower chart, you can see that on an organic basis, revenue increased by about 3.2% year-on-year, with the main growth markets being Russia, Pakistan, Ukraine and Uzbekistan with continued pressure in both Algeria and Bangladesh. Let's now move on to the next slide on EBITDA. On a reported basis, EBITDA improved 16% year-on-year for the quarter, trimmed by organic growth, performance transmission savings and exceptional items. Excluding exceptional items related to income from one-off adjustment to a vendor agreement, the year-on-year growth in underlying EBITDA with 3.5%. As you can see in the upper chart, on a year-on-year basis, performance transmission program has contributed approximately $88 million in the third quarter 2017 to the underlying improvement through outright cost savings while short-term counter effects and reinvestments and longer-term value accretive initiatives such as monobrand stores, devices and network development, all aimed at driving future growth aggregated to $123 million. In addition, reinvestments from…

Thank you. [Operator Instructions] We will now take our first question from Alastair Jones from New Street Research. Please go ahead.

Yes, hi. Thanks for the question. I just wanted to talk around your free cash flow generation. You previously mentioned, earlier in the year an increase in 2018 versus 2017 of at least $200 million to $300 million. I was just wondering if you got any update on that based on what you are seeing in the markets today, whether you're still comfortable with that. And sort of linked to that is just on your free cash flow and therefore for your dividend devolution, how did the one-off impacts of the Euroset acquisition Pakistan lease repayments, how does that affect your thinking about dividend growth, I guess, going forward? They are typically one-off and value-accretive longer term, but does that affect the dividend growth in the near-term? And then just finally, the second question on Russia. Obviously, strong performance there in Russia, particularly on the revenue side. What are we -- how are you sort of thinking about the market at the moment in terms of competitive pressures you've got obviously entry into the market. Can you sustain this level of growth in your service revenues on the mobile side? Or do you see any sort of potential for further increases are, in fact, may be downside? Thank you.

All right, thank you. Andrew you want to take two and three, I can take first one on guidance.

Sure. I think at this stage it's too early to talk about 2018 guidance obviously and on the objectives that we have given ourselves whether they relate to equity free cash flow or medium-term guidance on CapEx there is no change with these set of results.

Sure. So, let me deal with the second question. First of all, then Alastair, Euroset and Deodar, so -- I mean both of those transactions first of all had a relatively lengthy lead time or gestation period. So when we set the dividend policy and when we talked about cash flow guidance et cetera going forward we definitely factored those transactions into all of our thinking. Let me just make one point clear on the -- on these transactions before we move on. So the Euroset transaction, the EBITDA margin dilution is related to basically consolidating now 2000 stores and therefore it’s the growth in the equipment revenue affecting the denominator in the EBITDA margin calculation that we're referring to. Now, we're not actually expecting a dilution of absolute EBITDA once we get past the initial integration phase. So it's very important to understand that maybe slightly nuanced point. And on the Deodar transaction, while the EBITDA margin dilution is related to the absolute EBITDA impact that we'll have, so obviously we're going to increase tower rental costs in the country. We will also have some CapEx mitigation in the country against that, so the cash flow impact will be quite a bit less than the EBITDA impact. And then if I come to your final question on Russia. It’s still relatively early days in what some would have to I think the last quarter, the recovery in Russia right now and we are cautiously optimistic that market will continue to develop. But against that there are you can see some things on the horizon. The elections next year might prove a bit of a challenge etcetera, so right now, we are just generally pleased with the overall direction that market is going in.

That's very helpful. Thank you.

We will now take your next question from Irina Idrissova from RBC. Please go ahead.

Hi, thanks for taking my questions. My first one is on Spectrum reallocation in Uzbekistan, are you able to give us any color on the potential magnitude of the additional CapEx impact there? And my second question is on Bangladesh, looks like both you and your competitors are reporting a reduction in minutes of use and this seems to have accelerated in Q3, could you just talk about the main drivers here is it mostly the diluted share of wallet in the multi-SIM market, is it mix or are you also seeing voice for data substitution stepping up?

Okay. Just on spectrum reallocation in Uzbekistan I think Andrew what we can say is that the reallocation will have an impact on CapEx in Uzbekistan, but it's relatively immaterial in the grand scheme of things for the group. We will continue to have sufficient spectrum given the number one position that we have in that marketplace. We'll need to add density to the network, enhance the number of sites. But again there we feel that that's immaterial. You want to say a few words about Bangladesh?

Yes, sure. I mean just little more color on Uzbekistan, I mean just let's remember we spend roughly $1.5 billion here on CapEx as a group, so any incremental CapEx that we need to spend in Uzbekistan will be very low single-digit percentage points of that overall group number. On Bangladesh, I think in a way with your question you kind of provided your own answer. I think it is a little bit of the impact from multi-SIM penetration. Some of it clearly is OTP substitution by data and also you should as I mentioned in what I said is the weather I know it sounds overly convenient, but the weather conditions in Bangladesh this particular year have been truly atrocious and the worst that many people can remember for several years, so that has definitely dampen down traffic and in particular as I said because it’s actually directly impacted the functioning of the network and has contributed to a relatively decent amount of network outages.

All right. Thank you.

We will now take our next question from Alexander Vengranovich from Otkritie Capital. Please go ahead.

Yes, good afternoon. Follow-up question on Euroset transaction. So you said about negative impact on the EBITDA margin, but can you also please provide the outlook for the sales both following the transaction? And also the second question here. What do you think we can expect some cost optimization following the acquisition and when should we expect the margin in Russia to start recovering after that transaction? So I'm basically trying to understand whether you keep the stores or you will try to cut some part of them in order to optimize the margin. And the second part of the question, on VEON platform launch, can you please share the data for monthly average user, deleverage users in any of the markets especially I am interested in Russia and how can we also estimate the impact of the platform launch on financial results? Please, thank you.

I'll take the VEON launch.

Yes.

You'll take the Euroset dimension. On VEON, Alexander, we are not providing at this stage any [Indiscernible] indicators because it's simply too early. At this stage, we’re very much focused on first and foremost in the commercial launches in the number of downloads. We're then very focused on basically migrating the millions of consumers that we have on a variety of customer service apps that are legacy apps in Russia and in other parts of the world. And all of this is about creating engagement and once we've gone through sort of those milestones that will be a point in time, when we will consider providing the [indiscernible] indicators. We're seeing, as I said a significant number of downloads and interest from consumers. We're also very pleased with the partnerships and the number of partnerships both with local and global brands that we are signing. Again that's all about creating the engagements around the platform. In terms of the financial impact, I think that we see the financial impact in three stages. Obviously, short-term, there are costs with launching commercially the platform in the various markets as well as development costs in the medium-term. We expect to see benefits on our own cost structure. Obviously, if we have a very significant portion of our customer base on the platform we can expect to see the traditional customer service cost coming down with people doing self-care on a digital platform. If Top-ups are high through the platform, we can expect distribution costs come down and so on and so on. So, in many ways, the platform is about reengineering in a more digital way our own business. And finally the more longer term perspective as we create a marketplace is potential new revenue stream. So that's the way that we look at sort of the financial impact. Euroset?

Yes. On Euroset, I'm not going to give any specific guidance on increased revenues et cetera. You know clearly, we have indicated when we announced the transaction over the long-term we saw margin uplift as a result of this transaction. Some of that margin uplift will be related to a more operationally efficient distribution network and therefore rationalizing stows etcetera. However the bigger margin uplift should come from a greater focus on our own monobrand distribution and therefore lower reliance on the third party indirect distribution particularly the smaller mono pop type stores which would benefit the P&L in two ways. So first of all, having more control over distribution should enable us to drive data device penetration and therefore the data revenues. Possibly more importantly but we should be able to reduce the churn washing machine effect within the market and reduce churn from you know the 50%-60% range to a range is more normal for a prepaid market. And therefore you'd save money on customer acquisition costs etcetera. But you know those longer-term impacts are once we've completed the entire integration and rationalization of the store footprint which I think we said we probably achieved by the end of 2018.

Okay. Thank you.

We will now take our next question from Madi Singh from Morgan Stanley. Please go ahead.

Yes, hi. This is Madi Singh from Morgan Stanley. Can you hear me?

Yes. We can hear you.

Thank you. So, I have few questions. So first just following up from the last question. Is it possible to isolate the one-off integration cost which you will incur on the Euroset integration? And secondly on the -- in terms of the Group leverage targets, can you share you know after the GTH MTO is completed whether that changes your leverage targets in any way? And what would be the target if you could share that as well? Thirdly, after the exiting Laos, is there any other market you might be considering to exit? Thank you.

Okay, so let me -- I'll start off with addressing I think the first couple of questions you asked there Madi and Jean-Yves will discuss the portfolio side of things. So on Euroset integration costs, we've not given any specific number yet and I think it's appropriate to do so. But just right now we're still going through the planning process for that integration. On your question on leverage targets, so let me start off by unequivocally stating that we still very firmly committed to a medium to long-term leverage target around about two times. First more -- first the important thing to note. So with GTH MTO assuming that we get approval and assuming that we get a 100% take-up rate at the same 90 offer price and foreign exchange stays where it is right now. You can expect the MTO to cost us almost exactly $900 million. So that's in the short-term going to increase the reported leverage ratio by about 0.25. We think that is very, very manageable. We have more than enough liquidity and access to funding to be able to afford that transaction. And then we see a future deleveraging impact down towards the two times targets that I just mentioned. So Jean-Yves for Laos.

Laos marks for us I think you know the completion of the reshaping of the portfolio in many ways. It marks the last of the very small assets that didn't fit in the portfolio. This has been a three, four year process in exiting the -- you know smaller and strategic assets. The portfolio that remains it is very solid as you know as we predominately have number one, number two positions in significant marketplaces. So I think that's about as much as we can say now.

Sorry to interrupt but you know in Bangladesh now you are number three. Would that be a market that you might consider?

As I said we've pretty much completed you know our program. Bangladesh market at this stage but we can't roll up as it's a three player market. But we see structural opportunities in the long-term. Let's not forget that this market we believe that has very significant upside given the size of the market the fact that is a three player market etcetera, etcetera. So lost -- you know we have number of short-term challenges in that marketplace. We believe that the structural long-term opportunity remains sound which wasn't the case in Laos. Laos is a very small market. Remember the number of players in Laos were five or six players. So you know it wasn't structurally sound and didn't represent a significant opportunity for us.

Thank you very much.

We will now take our next question from Ivan Kim from VTB Capital. Please go ahead.

Yes. Good afternoon. My main question is on Italy, as your third quarter results to be frankly quite forcing to me and it looks like it'll only get worse. Remembering how long it takes in some markets to stabilize. What can you think you can do to protect the market share there? And what's your strategic view of how the market is going to shape up because obviously you know it will be very hard for Iliad to do anything but they will try and sort of comment that is super aggressive and doesn't feel like they wants to lose any ground to Iliad which is impacting the whole market and you of course saying if some of these all of you -- very much appreciate that. And secondly, Andrew what is the cash tax number you expect this year and maybe next year? Thank you.

All right. Let me take Italy and talk a little bit about the market conditions. Obviously the market conditions are tougher in the third quarter and particularly that has to do with below line offers an initiative undertaken by team in the marketplace. You know when we look at it from a medium to long-term point of view, you know whilst you know there are obviously question marks and concerns about the top line and the impact of the new entrants on the topline. You know our focus is very much on the value drivers of that marketplace on preserving ARPUs in that marketplace and on delivering very significant synergies. That -- well beyond as you've seen the 700 million of synergies that we have guided towards that time of the transaction. Don't forget also that we will have substantial revenues and profit coming in with Iliad's entry as we have the wholesale contract, which should dampen the impact that Iliad has on the Wind Tre joint venture versus the other operators in Italy. So, net-net, I think current market conditions are challenging, but we're very focused on delivering the synergies. And we believe that we'll have an opportunity to see a cushion created with the arrival of Iliad compared to our competitors with the wholesale contract.

Yes, cash taxes. Wow. Its long time since I've had a question on cash taxes. So, I assume you mean in absolute terms, Ivan and not as a percent of profits or anything of that nature.

Yes, yes, in absolute terms.

Yes. So, roughly somewhere in the region of $350 million to $375 million for this year probably, which would itself represent a $50 million to $75 million year-on-year improvement in that number, which is almost exclusively driven by the success of the tax planning initiatives, which we put in place since first quarter of this year. In terms of next year, I'd be careful to phrase my answer so that nobody can actually back into any form of profit guidance for next year. So, look, I think for next year, and absolute terms, we will see a broadly similar number, which will be, in essence, driven by 2 opposite effects. The first one of which is that next year, we will get a full year's benefit of the tax planning initiatives that we put in place this year. But that will be somewhat offset by, hopefully, a greater level of underlying profit generation, and therefore, taxability within the business. So broadly in the same numbers next year.

Thank you very much for the detailed answer. Thank you.

We will now take our next question from [Indiscernible] from Citi. Please go ahead. Hello, that's Dalibor, sorry.

This is actually Dalibor. If I can ask a question on the platform. So, basically from my understanding, the key selling point is the free communications, but also in some markets at least they are giving some free allocation of data in addition to the zero rated connectivity within VEON. I'm wondering if you have any early signs of the economics of which type of ARPU customers this is attracting and how is it impacting the -- I know it's early days, but how is it impacting the economics of this particular customer for you.

Dalibor, thanks for the questions. It's really too early days, in fact, for us to share a conclusive matter any of those points. What I would say is that we're seeing today two parts of the platform that are resonating with our consumers in the various markets. The first point is the one that you raised of the value proposition around free messaging even when you're out of credit. We see that particularly resonating in Pakistan, given that, that market, being a prepaid market with most users not necessarily having a monthly data plan, but the daily data plan is particularly attractive. What we've also seen in the first few weeks is that the promotion part of the platform is also particularly attractive, for example, in Russia where we've had significant interest in the promotional dimension. And as I said, we now have 140 partnerships with both local and global brands. And this goes from in Russia, specific promotions with [Indiscernible], for example, in terms of fashion to Burger King in terms of free meals or free specific items on the meals. So, we're working on all dimensions of the platform. In the first stage what is important for us to create engagement is have a very differentiated value proposition on messaging because through messaging, we can, in fact, personalize offers. We can conceptualize offers and content. The second element is really around promotions and content. And the third element, which I haven't talked about and will be launched in the next -- in the near-term in a number of our markets is really the customer care self-serve proposition to enable consumers to really manage the A to Z part of the -- of their subscription with a VEON brand. So, those are the elements that we're very much focused on in the initial stages and beyond that in the medium to long-term it's creating the marketplace. So, I think when we have sufficient scale on the platform. We will start the appropriate point in time sharing more of the various dimensions and indicators.

And Jean-Yves, can I very quickly ask another question on the platform? Out of the over 5 million customers that you have or downloads, how many of them are actually VEON customers? Is there any meaningful number in any of the markets of customers of other operators who are downloading?

Again, I think this is something I don't want to share at this point in time. All I can say is that it's obviously not just VEON customers that are downloading the platform. The value proposition, obviously, of the platform is much stronger for VEON customers. That's the free dimension that can't be offered on competitive networks. But I think too early again to share those type of data points.

Sure. Thank you very much.

Thank you.

We will now take our next question from Stella Cridge from Barclays.

Good afternoon and many thanks for the presentation and also wishing all the best Andrew after today. And I have three questions. Maybe I can ask them more upfront. The first one is that you mentioned, you're talking about a progressive dividend going forward relative to 2017. Could just give us a sense in absolute terms of how you think about that given that there may be some cash outflows or negative impact from the cash flow from Uzbekistan and perhaps spectrum on Bangladesh. Just to see how you may balance dividends with the balance sheet strength. That's the first one. And the second is on the proceeds in Pakistan. So, I know you said you plan to use some of the proceeds for spectrum to paying down debt, but also ex-distribute to shareholders. Could you give us a sense of how -- what proportion you might see going to each part? And are there any obstacles in you getting that cash to Pakistan? The final question is on Bangladesh. I see you're talking about -- and perhaps trying to raise debt in the local market there. Could just give us a sense of how deep you think that market is and perhaps what proportion of spectrum cost might be able to be funded local currency? That would be great. Many thanks.

Andrew -- those are all Andrew question, so there you go.

I knew before Stella started asking questions that all of these will be coming my way. Thank you, first of all, for the kind words Stella. So, let me kind of try and take them in reverse order, if that's okay with you. So, Bangladesh, we actually think that the market is probably sufficiently deep enough for us to be able to fund all of our requirements locally in local currency and might be an extent to be able to refinance the existing dollar bond in that same manner. With regards to Pakistan, this is probably the longest answer of the day. So, it is a question that we get frequently, so let me take the time here to step through this in a clear way for everybody. So, we're going to get roughly -- let's make it easier to work with the numbers. We're going to get ballpark figure $750 million equivalent either at or shortly after closing. We're going to use roughly $200 million to $250 million equivalent to pay down our gross debt locally. So, that's going to leave somewhere between $500 million to $550 million to -- for Jazz try to distribute out. So, obviously, when it distributes that many, 17% of that amount first of all, you can do the math from what that means is going to go to [Indiscernible] Group, our minority partner in that entity. Of the amount that will get paid to GTH, being 83%, 15% of that number is going to get paid in the form of withholding taxes to the Pakistani authorities. And then GTH will get what's left over. GTH will need to use those proceeds of the residual funds to repay, first of all, the $200 million bridge facility that was put in place in order to…

That should be helpful and maybe a small follow-up. Do you have any sense at this stage of what kind of cost spectrum allocation in Bangladesh might be? And I think also, you mentioned that there may be one coming up in Ukraine in the past result, is any update on that side?

I think the guidelines in Bangladesh have been published. I think it's a little too early at this stage to speculate as to what that might cost. So, -- in part because we're not sure how much spectrum we're actually going to need, et cetera and when we're going to need it. And Ukraine, I think, there are some draft guidelines, but again, it's difficult to put a number on that at this stage, albeit I would -- we would imagine that we will probably be running a spectrum auction process in Ukraine by the very end of next year.

That's fantastic. Many thanks.

Thank you.

Operator, in the conscious of time, we will take two more questions from two more people questions and then finish the call.

We will now take our next question from Igor Goncharov from BCS. Please go ahead.

Well, thank you very much. [Indiscernible] my question was already answered. Thank you.

Thanks Igor.

Thank you.

There are no further questions in the queue. I will now hand the call back for any additional or closing remarks.

Thank you very much for your time and for your interest today. And Andrew, special thanks to you also on behalf of the IR team for good years of good interaction on the capital markets and all these people on the call. Very much appreciated. We wish you all the best for the future. With that, ladies and gentlemen, I would like to close the call, and we hope to speak to you very soon again. Thank you and good bye.

Thank you.

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