Good day, and welcome to the VimpelCom Third Quarter 2015 Investor and Analyst Conference Call. This conference is being recorded. At this time, I would like to turn the conference over to Bart Morselt. Please go ahead.

Yes, thank you. Good afternoon, ladies and gentlemen, also welcome from my side. For those of you that I've not met yet with, my name Bart Morselt, and I joined VimpelCom as Head of Investor relations at the start of September. Today I am pleased to be joined by this call – on this call by Jean-Yves Charlier, our Chief Executive Officer; and Andrew Davies, our Chief Financial Officer. Before getting started, I would like to draw you attention to the disclaimer. Forward-looking statements made during this presentation involve certain risks and uncertainties. These statements relate in part to the company's anticipated performance for 2015, future market developments and trends and anticipated investments in our networks. Certain factors may cause actual results to differ materially from those in the forward-looking statements, including the risks detailed in the company’s annual report on the Form 20-F and other recent public filings made by the company with the SEC, including today’s earnings release. The earnings release and the earnings presentation, each of which includes reconciliations of non-GAAP financial measures presented today can be downloaded from our website. Let's turn to page three for the agenda. For today's agenda our Group CEO, Jean-Yves Charlier will run you through the group highlights. Our Group CFO, Andrew Davies, will then talk you through the country and group results in more detail, to close his presentation with the key targets for the year. Following that both Jean-Yves and Andrew will be available to take any questions you may have. I will not hand over to Jean-Yves, to talk you through the third quarter highlights. Jean-Yves?

Thank you, Bart. And good afternoon, ladies and gentlemen. Before focusing on the third quarter results that demonstrate good operating momentum, I want to first comment on the Uzbekistan investigation. We announced on Tuesday a provision of $900 million in our third quarter financial statements in connection with investigations being conducted by the US and Dutch authorities relating primarily to VimpelCom's business in Uzbekistan and prior dealings with Takilant. We have been and our fully cooperating with the authorities to explore a resolution of our potential liabilities. As disclosed, the investigations and our discussions with the US and Dutch authorities are ongoing and therefore it would be inappropriate to comment further beyond the press release at this time during this presentation and I am sure you can understand this. Moving on to the next slide, and highlights of the third quarter. The good operating momentum that we have seen throughout the beginning of 2015 has continued into the third quarter with the company generating an organic year-on-year increase in service revenues and a double-digit growth in mobile data. On an underlying basis, net income was $191 million which reflects the good operational performance and continued improvements in most VimpelCom's OpCos. At the same time, however, reported revenue and EBITDA continued to be impacted by adverse currency movements. In addition, the group also recorded a net loss of approximately $1 billion this quarter, which reflects exceptional cost of approximately $1.2 billion, the principal component of which is a provision of $900 million in connection with the investigation by the SEC, DOJ and OM relating primarily to VimpelCom's business in Uzbekistan. In August, we also announced a transformational joint venture in Italy with Hutchison, under the agreement VimpelCom will merge WIND with 3 Italia to create a leading convergent operator in Europe’s…

Thank you, Jean-Yves. And welcome from me as well. Before I do get into the detail, let me note that these group results now reflect Italy, as an asset held for sale on the balance sheet and discontinued operations within both the income statement and cash flow statement and that all – on a group basis all prior [ph] numbers on growth rates have been restated accordingly. I start with Russia on slide eight. We see continued operational improvement with focuses on creating a more customer-centric organization. As a result, the company has now reported improvement in churn during the last several quarters, leading to customer growth of 3% year-on-year base. In local currency, mobile service revenue was up 1% year-on-year driven by strong 16% mobile data revenue growth. EBITDA decreased 5% year-on-year, due to the negative impact on cost from the weakening of the ruble against the US dollar, with an EBITDA margin of 39.3%, down 1.5 percentage point’s year-on-year. However, excluding these currency headwinds, EBITDA would have been stable and EBITDA margin would have improved by 160 basis points year-on-year. The CapEx revenue ratio is decreased to 18% from 24% in the same quarter last year, due to ongoing efficiency programs and saving from our network sharing agreement with MTS. Algeria on slide nine, is in the midst of a fundamental transformation program and organizational restructuring. It’s too early, but results have bee positive with the year-on-year trend improvements in revenue, EBITDA, on Net Promoter Score. In this quarter, we've also made progress on one of the regulatory issue that has affected the business, being the significant asymmetry on termination rates. With effect from July, the degree of asymmetry has been halved through both an increase in the rate at which generate income and revenue and a reduction…

Thank you. [Operator Instructions] We'll take our first question from Dalibor Vavruska from Citi. Please go ahead.

Hello, good afternoon. Just two questions if I may, one is regarding your provisions for the transformation, I am just wondering if you can give any guidance in terms of how much more you may intend to provision in the following quarter, so in the next year? And the second question is, I know that you mentioned and I understand it, that this is not possible to discuss the Uzbekistan situation. But my question is more that after the announcement of the provision that you're taking and I think that some shareholder said that they intend to have some legal claims against the company based on the presentation of the results before. So I am just wondering, I just want to double check, this provision obviously does not or cannot include any possibility of any claims like that, I just wanted to check, if that’s – that any potential losses from such claims maybe included in this provision and if not whether you think that the level of provisioning as of now is correctly reflecting your expectations of the losses from the case? Thank you.

Thank you, Dalibor. So let me deal view the second part first, so I think as alluded to the provision that we've taken just reflect the ongoing negotiations if the SEC, DOJ and OM – and reflects the expected outflow of cash associated with resolving those investigations. It does not reflect anything that might result from the class action lawsuits. I mean, clearly we will defend those very vigorously, but its – 24 hours of news, so it’s far too early to make any kind of judgment or evaluation on those lawsuits.

Sure.

Regards to your first question, we would expect to see a similar scale of transformation related charges in provisions and maybe the next two to three quarters as we get deeper into the transformation program and make – start making specific decisions on how we're going reshape the business. But clearly, any costs associated with the transformation program will be completely – more than offset by the $750 million worth of annualized free cash flow improvement that we expect the transformation program to deliver for us.

Okay. Thank you, Andrew.

Thank you.

We'll now take the next question from Herve Drouet from HSBC.

Thank you. Two question also on my side. Firstly, can you give us an update on the filing for the joint venture with the commission Italy, I mean, are you still in preparation of the paper work or document being submitted and if its not the case, do you have any timing in mind when those documents could be submitted? And the second question is on Pakistan, we're seeing some progression in Pakistan, how do you see potentially the consolidations playing out there and do you think the numbers you know, what we saw in Q3 are sustainable income of the trend looking forward? Thank you.

Okay. Let me perhaps take the two first parts of the questions and then Andrew will take on the trends going forward. Look in terms of the filings for the Italian joint venture, we have started the pre-notification with the DG Comp at the European Commission and have submitted draft [ph] documents at this stage. And we're still working towards the 12 months process that we indicated at the time of the announcement. So at this stage we are working towards the timeline that we indicated. As to Pakistan consolidation, obviously I will comment on any specifics, but as we articulated in the new strategic framework, we will focus on consolidation options in a number of countries, if these arise looking at mobile to mobile or mobile to fixed consolidation opportunities and obviously we'll report if we have progress to report on that side. Andrew, do you want to say anything on the trends?

Yes. Absolutely. So, I think that the team in Pakistan is done an excellent job over the last two, three quarters of stunt –tuning up business around and we've regained market leadership there, very, very successful. SIM re-verification program, really successful execution of the 3G network rollout and all of the related commercial activity. So without being overly specific on exactly what we expect to see, I mean, clearly we've got very, very good operating momentum within Pakistan and would expect to see this level of EBITDA margin and this level of service revenue continue for the next few quarters.

Okay. Thank you very much.

We'll now take the next question from Ivan Kim from VTB Capital.

Hi. Two questions from my side, please. Firstly, the tower sale on Russia, and can you please elaborate a little what you expect from the tower sale, probably what kind of pre-tower value price and how are you going to use the proceeds and what are maybe also the key issues selling the towers for you in Russia? Because I guess it’s quite different from the Uzbekistan [ph] And the second question is on the mobile tower [indiscernible] financing any update on that and I mean, I understand that you are in the process, but what kind of you should have appreciation there, so why its taking quite an extended period of time? Thank you.

All right. So I'll do the first one and I'll let Andrew take the second question. On tower sale, again, I am not going to comment on any specific country by country projects or initiatives, but again as we articulated just as much as on consolidation, we indicated as part of the strategic framework that we were going to move more towards an asset like network model going forward, as part of the transformation of VimpelCom. That includes two dimensions, the disposal of the tower portfolio and network sharing opportunities, potentially in a number of geographies. What I can say on the tower portfolio is that, it’s a significant tower portfolio, one of the largest in the world. It’s also a portfolio that potential will derive pricing per tower that were tremendously county by country reflecting obviously the specific market conditions of those countries. As to proceeds of any tower sale, I think there is two points of taken consideration. First, is that this is not an overnight process, it’s a medium to long-term plan for the business because we want extract maximum value the disposal of the tower portfolios. So I think that’s very, very important from that point of view. And we will have a date with the board at the appropriate point in time on usage of those proceeds. But we haven’t determined that specifically. Andrew?

Yes, sure. So on the GTH refinancing, I think as GTH mentioned today in their earnings release, they are – they are exploring refinancing opportunities right now. They’ve started a ratings process and I think there will be – therefore we'll give you more of an update on their earnings call later. But we expect that process to be completed within the next quarter.

Okay. Thank you.

We'll now take the next question from San Dhillon from Royal Bank Canada. Please go ahead.

Hi, guys. Yes, I had a couple of questions. Firstly, a follow up on towers, Jean given your point, so I am wanting maximize the proceeds from towers, I guess my question is, would that rule out of possible IPO, other tower ventures that you've seen in and the Italian market which can ascribe a pretty good value and do it in relatively quick time to market. And second question is on the Telenor stake sale, has there been temptation to engage with the company on helping them get to an exit route, whether that be to siding them to SPRO, whether you have enough capacity to buyback some of the stake yourself for instance, I'd love to get your reason there? Thank you.

All right, again, I'll take the first part of the question and let Andrew take the second part of the question. I think on towers, just to I think frame the opportunity, we will look at all options of maximizing value, including potential IPO, whether that is independently or with potentially a partner. I think that as we want to maximize value we wouldn’t certainly not rule that out. But again, I would say that needs to have a clear timeline for us in terms of proceeds. I don’t think we'd want to contemplate any long-term sort of position in tower promos probably. So I think that’s probably what we can frame in terms of towers looking at all options basically of extracting maximum value. Andrew?

Yes. So, on the Telenor stake San, so to be clear the company itself, such as not yet being formerly contacted by Telenor with regards to that. All we know is the same as you, which is the public announcement that they made, so therefore there is no timeframe, in particular that’s being set yet for their intended divestment. You recall that the day after, announcement was made public, we issued a release where we welcomed the opportunity that this would give to increase our free float, we will work with Telenor to ensure that the divesture of the stake is as successful as possible.

Jean, thank you very much.

Thanks.

[Operator Instructions] We'll now take our next question from [indiscernible] Please go ahead.

Thank you very much. I just had actually one clarification and two questions please. First, Andrew, you mentioned that the refinancing options that you'd expect to be continued with the next quarter, are you talking about the current kind of fourth quarter, on a current basis, or you're talking about next year in 2016? And my two questions were more on Italy and the Russian business. So in Italy, I was just wondering if the development in Denmark have changed you view as to what kind of requirements you have to kind of get the deals through, do you think that Italy is a very different example from Denmark because of the lower market shares? And on Russia, I was just wondering how you're seeing new entrant in Moscow and how that’s slightly to impact your earnings going forward?

Okay. Andrew, you want to start on refinancing?

Yes. For clarity, I said within quarter I was talking about within the end of this particular quarter for Q4.

Thank you.

Look on Italy, our perspective is that there are material differences between the Danish and the Italian market places. Obviously here we are looking at a potential combination of two entities that are number three and number four in the market place. The market place we fundamentally believe is bifurcating in Italy between two strong incumbent MNOs and two weaker MNOs represented by WIND and three, weaker for different dimensions, but certainly on the WIND side as you know, we can buy the debt levels of the business. And this market is at a turning point. There is an acceleration investment in LTE and acceleration investment in fiber and we believe that our case will be centered around the creation of a third fully functional competitive MNO in the Italian market place. So I think the dimensions are very different than Denmark. As to Russia, I think that we have not seen a substantial impact in the first two to three weeks of launch of Tele2 in Moscow, that predominantly in spite of price reductions that are at least 25% compared to the three other major operators in Moscow. Obviously there are network quality issues that Tele2 faces, obviously lack of 2G availability, but also in the rollout of their LTE network. So I think attributable at this stage we remain relatively confident of our position and the strategies that we put in place. And as we've seen from the third quarter results, and we have not seen to date any material impact resulting from the Tele2 launch. Andrew, I don’t know if you want add anything to that.

Yes. I think you said quite a bit here. Moscow, quality of the network is critical there and we have a very strong network in Moscow. So we expect the impact to be limited, and going forward our focus from mid way through this year has been on bundled price plans and we will continue to execute on that strategy going forward and we will not structurally lower prices in order to compete where we don’t need to compete, we will be – we will be having a rational pricing strategy and we'll compete on coverage, quality, customer service and innovative products and tariff plans.

Thank you very much.

Okay.

[Operator Instructions] We'll now take a follow up question from Dalibor Vavruska from Citi. Please go ahead.

Hello. Just a very quick question on Russia, I mean, when I look at the trends in your numbers they are improving and I think its got interesting, they are not quite comparable for example with MegaFon that reported in the third quarter. But one thing that I wanted to ask, you see this decline the fixed line revenue and I think you mentioned that you have focused through perhaps on scaling down some of the low margin activities, but in terms of your EBITDA margin year-on-year its about roughly the same. So can I just double check if – whether this scaling down of the low margin activities, so or businesses has been offset by anything else or whether you feel confident that your performance of your Russian business, especially on the mobile side is now essentially on par with competitors and may continue to be so?

Yes. I'll take that question. So thank you again Dalibor. So I think, the main thing affecting margin in Russia is the foreign exchange headwinds. We have a pretty reasonable exposure to dollar denominated costs in Russia, particularly from an P&L perspective, well from an EBITDA perspective when it comes to service cost. So interconnect traffic which is denominated in dollars. As I said earlier, I mean, if you actually look at the business, excluding the impact, the adverse impact year-on-year of the foreign currency impact, we would have absolutely EBITDA stable, actually marginally yet, but still in a rounding or two and EBITDA margins would have actually increased by about 160 basis points year-on-year. So really the impact, the positive impact that we would otherwise have seen on margins from eliminating very low margin revenue business has been completely masked by the impact of the foreign exchange headwinds year-on-year.

Thank you, Andrew. Can I ask just one last follow up, in terms of the FX impact that would be similar to your competitors in Russia as well, right? Or is there any reason why the FX impact on EBITDA should be different for VimpelCom?

No, we actually that we have much exposed to dollar denominated international traffic then…

Okay…

Our footprint…

Okay. Thank you.

Okay. Thank you.

We'll take the next question from Roman Arbuzov from UBS.

Thank you for taking the question. Just a follow up on one of the earlier questions related to the $900 million provision. I just wanted to check, is it relate only to the actual settlement with the Department of Justice, the SEC and if that’s just or it is all – there are other cost in that numbers like for example legal, or maybe some sort of an accounting fees you have? Thank you very much.

Yes, I'll take that one. Yes, and Roman, thanks for the question Yes, within that provision there is a relatively modest amount in the four future legal cost associated with the investigation.

Okay. Thank you very much.

We'll now take the next question from Sergey Libin from Raiffeisen Bank.

Yes. Hello, gentlemen. Thanks. My question is about the cash flow, so you said that it is stabilizing in Pakistan and Bangladesh, does it mean that - and our thinking will be thoroughly on restoring a more meaningful dividends as you said, I think a couple of quarters ago that, this now becomes the main factor for - to consider why not restoring dividends? Thanks.

I think we said, in fact there are two factors, really in restoring a dividend policy, and for the board to obviously consider that. But obviously first, as you outlined, it’s an increase in free cash flow. But the point I'd like to make is certainly a sustained increase in free cash flow, I think that’s absolutely important for certainly management to make a recommendation on the dividend policy to the board. The second dimension for us still remains, you know, some stability from the macroeconomic and currency headwinds that we've been confronted to, I think it would be premature to say anything about a dividend policy, whilst we still have a high degree of volatility in the markets in which we operate.

Absolutely. And then one final thing from me, I mean, we maybe getting a little bit ahead of our sales as well. We clearly said that the redemption of a meaningful dividend going forward was going to be tied to the net debt to EBITDA ratio being lower than two, and why we've reclassified Italy as an asset held for sale with the fact from this quarter onwards, and therefore we've got a reported net debt to EBITDA ratio of 1.3 times. We still haven’t completed the transaction. And so we absolutely need to complete the joint venture transaction and get through the regulatory approval process as well. That’s still – that’s very key from a dividend policy perspective.

Okay. That’s clear. Thank you.

All right, okay

Good. Ladies and gentlemen, thank you very much for interest. I would like to close the call. If there was any follow up questions, after this call, feel free to contact the Investor Relations people at VimpelCom. We look forward to speaking to you very soon again. And thanks and for your interest. Have a very nice weekend. Good bye.