Good day and welcome to the VEON first quarter 2017 results conference call. Today’s conference is being recorded. 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 ladies and gentlemen, and again welcome to our first quarter 2017 results 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. The structure of the presentation mirrors the previous quarterly results with Jean-Yves starting with the key financial and strategic highlights of the Group, followed by Andrew running us through the operational results review for both the group and the key countries, ending with comments on the full year 2017 guidance. 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 necessary disclaimer. Forward-looking statements made during today's presentations 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, 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 risks 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-GAAP financial measures presented today, can be downloaded from our website. With that introduction, I would like now to hand over to Jean-Yves. Jean-Yves?

Thank you, Bart and good afternoon. Let me start by focusing on the highlights of the quarter. VEON reported double-digit revenue and EBITDA growth and close to $200 million of underlying equity free cash flow. After multiple years of currency depreciation, the Group is finally enjoying some currency tailwinds, resulting in a robust year-on-year growth rate of our financials. On an organic basis, revenues were flat for the quarter, accounting for the effect of the leap year while EBITDA margin strengthened. Our JV in Italy posted solid results with both top line and underlying EBITDA growth and with the merger integration and resulting synergies on track with our plans. This is a good start of the year and allows us to confirm the full year 2017 guidance which we presented at the end of February in Barcelona during the full year 2016 results presentation. The quarter was also marked by the achievement of a series of major milestones in the transformation of our Group. We announced during the quarter that the Group was resuming a meaningful dividend policy and in April we distributed a final dividend of $0.195. This amount was the compliment to a dividend paid in December 2016 of $0.035 bringing the dividend for 2016 to a total of $0.23. During the same event in Barcelona, we introduced VEON, a new personal Internet platform, the main initiative for our Group to accelerate our digital strategy and strengthen our core telecom business. It is on this digital ambition that we also decided to rebrand the company from VimpelCom to VEON. Only a few weeks after rebranding and presenting our strategic update, we initiated a dual-listing on Euronext Amsterdam. We now trade on both NASDAQ and Amsterdam Euronext under the new ticker VEON. The Amsterdam listing is in euros and…

Thank you, Jean-Yves and good afternoon or good morning from me as well. I would like to start today with the key driver for the double digit topline growth just discussed by Jean-Yves – this currency appreciation against the US dollar. The VEON Coin had shown an inflection from Q1 2016 onwards with a further positive year on year acceleration during the first quarter of 2017, thanks mainly the appreciation of the ruble. Again this phenomenon explains the bulk of the year-on-year revenue growth for this quarter, and as we noted when we presented our full year 2016 results in Barcelona, if the currencies remained stable from where they are today, this would enable us to outperform our full year equity free cash flow guidance by up to $100 million. Now move on to the next slide on revenue. In the waterfall chart, we provide a breakdown of the evolution of VEON’s total revenue both in reported and organic terms. On a reported basis, our first quarter 2017 revenue grew by 13% year on year, boosted by FOREX as have already noted and the Warid acquisition. Excluding Warid, the year-on-year growth would have still been very robust at over 8% year on year. Looking at the composition, you can see from the top chart, the continued strong growth in data and MFS revenue is upset by a decrease in voice revenue, which remains a secular trend across the industry. Mobile data revenue showed strong growth of 48% year on year, up 31% on an organic basis driven by the continued focus on monetizing the deployment of various high speed data networks. In the bottom chart, you can see that on an organic like-for-like basis, revenue decreased by 1% year on year and in this like-for-like calculation we have included Warid’s…

[Operator Instructions] We will now take our first question from Mattie Singh [ph] from Morgan Stanley.

Just a couple of questions, first on Algeria. Is there any help in understanding when the revenue recovery might be visible, understand that new management has just taken charge but any help in understanding the trends there would be very very appreciated? Secondly, in Bangladesh also, the growth being quite volatile, and do you consider Bangladesh as a growth market but we have hardly active in any revenue growth recently. So if you could explain -- is there any opportunities still left in Bangladesh or we should actually start looking at it as a mature market?

Sure, I'll do that. So let me address Algeria first of all. So I'm not going to give a specific timeline of when we expect to get back to year-on-year revenue stability let alone growth. But here's how I would think about it. We knew that the first quarter of this year was probably going to be our toughest quarter from a year-on-year comparison perspective, simply because it’s the first quarter last year where we made some of the commercial missteps which actually gave us a short-term bulk in pricing effective BUs and therefore revenues and then we started to suffer the customer losses and in particular the high value customer losses from round about the end of first quarter 2016 onwards. We do see a little bit of a gradual sequential progress right now in Algeria, so I would expect that over the course of 2017 that rate of year-on-year decline should diminish. But I still think that we're probably two to four quarters away from actually seeing anything approaching year-on-year revenue stability. With regards to Bangladesh, as I’ve noted it’s a very competitive market right now. The market has gone through quite a bit of transition, if you will, in the last twelve months. There's been the imposition of these supplementary duties which clearly has increased government revenues but is taking money directly out of the operators’ revenue pool. And then in addition, you had SIM verification exercise and it's been a lot of aggressive competition for new customers following the completion of that SIM verification exercise and then also you’ve had a merger exercise between Robi and Airtel and that also obviously creates a little bit of more competitive tension in the early aftermath.

I think you're right and you described the market as being a little volatile right now. However we would not begin to call this a mature market, we still think that there is plenty of revenue growth to come from this market in the medium to long term. And if you look at all of the normal statistics, I mean, user penetration, smartphone penetration, and data usage, they all lag well behind what a mature market would exhibit. So there's a lot more upside to come from Bangladesh. And also we're going to broaden the coverage. With that, we’re still only at a 65% population coverage on the 3G network right now. So there's a lot of customers out there that don't even have the reach of a bundle linked 3G network right now. So I would not characterize this as a mature market.

And quickly on the Russian revenue trend, so if you could explain the decline in the fixed line business and is that a trend we can see continuing during 2017?

Well, as I said in my notes, it’s all driven by U.S. dollar denominated contracts, so roughly between 15% to 20% of the Russia's fixed line customer base has U.S. dollar denominated contract and therefore with the ruble appreciating, that just simply translates into a lower amount of ruble equivalent revenues. I mean that is almost exclusively the driver for the fixed line trend in Russia.

We take our next question from Herve Drouet from HSBC.

I’ve got a couple of question as well on my side. The first one is back on Algeria, I understand there's been some change in taxes, VAT, those type of things. I was wondering how and why could you not transfer part of it to the end user? Is it because competition did not signal any willingness to do it? And if it is the case, do you think that can change in the future looking forwards or do you think the current pricing that's to be passed partly to the end subscribers? The second question is on Pakistan, the subscriber acquisition costs increased; could you give a bit more light on the reason what is behind this SAC increase and also on the auctions on the spectrum, and the base price which has been put up $295 million they get; is it for the band you are targeting or is it for all the bands which are being put under auctions? So those are the main questions. Thanks.

Andrew, I can take Algeria, you want to do Pakistan?

Sure; why not?

All right .So on Algeria, in terms of the increased tax and VAT, I think that we found it difficult in the position that Djezzy is in to pass those on to the consumer. I think there's a few issues here to note. First, the third mobile operator, Mobily is extremely aggressive from a pricing point of view. So I think that at this stage very difficult to see ARPU increases there. And secondly, the macroeconomic environment is not good in Algeria and consumer spending is under considerable pressure, particularly with inflation on food and other items. So the contact both competitively and economically did not enable us to pass those increases onto the consumer demand. I don’t know, Andrew, before you address Pakistan if you want to say anything else on Algeria.

No, nothing else to say, you got it spot on, Jean-Yves. So on Pakistan, Herve, let me address the spectrum question first of all. So there is just one lot of 10 megahertz of paid spectrum in the 1800 megahertz band. Now it's technology neutral, so therefore it’s absolutely within a kind of our process -- is the absolute kind of spectrum that we want to obtain in the country. I didn't quite understand your first question, if I'm completely honest.

So basically in term of the pricing with the spectrum because you indicate in your guidance that your underlying equity free cash flow includes, if I well understood, the average annual purchase of spectrum license in the region of around $200 million. So I was wondering -- I mean do you believe what may happen in Pakistan will be included in what you consider to be the average annual purchase of the spectrum license and – or can it also include a potentially as well some spectrum inclusion on Bangladesh or you think it's out of the scope?

Look, clearly the guidance on equity free cash flow for the year assumed that we would spend what’s been our run rate -- average run rate over the last three to four years of $200 million. So clearly to the extent that we spend $295 million or thereabouts in Pakistan, that would -- all of the things being equal, would put a little bit of pressure on the guidance. And obviously we do have the benefit right now of currency tailwinds and there’s a number of other things, well so I don't see as being a grave danger to guidance right now. And as I said as well, I mean to the extent that it happens in a way to bring forward from next year, so really it doesn't affect how we think about the evolution of equity free cash flow over the medium to long term and we are very comfortable with being able to fund it, so with an absolutely zero impact on sustainable and progressive dividend policy that we've announced. But sorry, I also thought you asked some kind of question related to –

On the EBITDA margins, I mean so basically on the -- I was wondering I think there was a change on the subscriber acquisition costs. If I would remember, that has a plan –

That was in Bangladesh, no Pakistan.

Yes, in Bangladesh, sorry.

Okay, yes, Bangladesh, I mean that's driven simply by a higher level of gross additions following the completion of the SIM verification exercise. If you look at the earnings release, we reported roughly a 3.5% year-on-year decline in customer numbers but really the impact of the verification program would actually – did result in 3.8 million SIMs being blocked which in isolation would have caused roughly a 9% impact on their customer base. So the level of -- clearly in order to get to them the 3.5% year-on-year reduction, the level of gross additions that we’ve done in the quarter, year on year is much higher than it was in 2016. So it’s a volume thing rather than a [indiscernible] aspect.

We now take our next question from Irina Idrissova from RBC Capital Markets.

Hi thank you very much for taking my question. So from Bangladesh for me as well, the first on the price pressures that you've seen, how is that trending into Q2 and what do you expect for the rest of the year given the consolidation, do you expect some more rationale in pricing perhaps, and then also on the network, when do you expect to catch up to the market leader on 3G coverage and then also looking ahead to 4G, given the possible upcoming auction, do you dissipate another large scale network rollout, the spend associated with that; could you just give us more color in that? Thank you.

Andrew, you want to take both?

Yes sure. On the pricing side of things, we're here to report Q1 results, I am not going to start talking about Q2. I think it's too early to say what we think is going to happen for the rest of the year. I mean clearly there is room for a little more rationality in pricing in Bangladesh and in particular I think if you think what we've been able to successfully do in other markets such as Russia, Algeria, Kazakhstan, it's moving towards a much, much cleaner and simpler, they defend the pricing architecture and getting away from some of the clutter that telcos typically suffer from when they're still in the nascent period of rolling out data services. I think on spectrum, as I've indicated when I discussed cash flow guidance for the year, that has the potential for a 4G spectrum auction in the country later this year. And I think clearly we'd be interested in participating in that auction and clearly there would be some impact on -- in terms of having a 4G network rollout et cetera but that's probably a 2018 and 2019 thing. And overall long term that would still leave us with a more efficient network architecture. Because on average the cost of production of a 4G data network is roughly only 20% of that -- of a 3G. data network given the propagation characteristics and the other architectural parameters et cetera. In terms of catching up on the 3G network, I think we’re several quarters away from being able to catch up with the market leader when it comes to the 3G network coverage and quite frankly depending on how quickly the 4G spectrum auction comes along, we may never get there on 3G because it may get surpassed in relatively short order by the 4G network.

We will now move to our question Sergey Libin from Raiffeisen Bank.

So first one, I wanted just to have a follow up on Pakistan frequency auction, so how important has this worked for you and probably how far can you go with the price increases to the competition is significant and could you also describe the competitive situation in the country? So what do you think whether the U.S. will be aggressive in talks from ops [ph]? And secondly if you could clarify your spectrum reallocation in Uzbekistan; so does it mean that whole amount of the spend will be withdrawn as proposed by the authorities or is it just some parts of your spectrum that's going to be withdrawn and redistributes it so that all the operators have more or less far amounts of frequencies.

Okay, maybe I can say a few words on them, and Andrew, you can complement I think in Pakistan neither Andrew or I would really want to discuss any form of auction strategy and why our thinking is that. There was a previous auction last year for a block of spectrum. We did not participate in that auction because we were in the midst of the Warid Transaction. If I recall correctly, only Telenor participated in that auction. So I think the competitive landscape is at different levels in the sense that I'm not sure we should expect that all four parties will participate in this process. So I don't think there is more to say really on Pakistan at this stage. On Uzbek spectrum realignment, we've been through this process recently in Ukraine on an issue of fragmentation or defragmentation of the spectrum. I think we're still in very early days with discussions with the Uzbek government on this .Obviously alignment for us just makes no sense because the market positions between the three operators are different. And so I think we have a very strong case to maintain that our spectrum portfolio should be more enhanced and the other two players in the marketplace.

[Operator Instructions] We will now take a question from the Beatrice Bushati from East Capital.

Hello, thank you for taking my question. I wanted to hear what your thoughts are on outlook for HQ costs including the interest that you're paying currently, is there any plans to restructure the payments and et cetera and bring down HQ costs?

As it pertains to interest, and debt structure, Andrew, you want to take that?

Yeah, sure. Let me take that one. So as I mentioned in Barcelona we are looking to do quite a bit further optimization of the debt structure in 2017. We've already made a good start in the first quarter by some of the actions that we've done. We see an opportunity based on where the markets are right now to potentially refinance -- I wouldn't use the word restructure like you did, but refinance quite a bit of our debt portfolio. The intent as I mentioned in Barcelona is to do a number of things. So we want to move towards a more balanced currency mix. The deck structure is still 2 US dollar centric, so we want to move to more of a broader mix across particularly ruble, euros as a natural hedge against our investment in the Italian J.V., dollars and also increasing our exposure to some of the currencies that we have in our emerging markets portfolio. We want to move to a broader mix -- in terms of the type of debt, but which I mean today we are too dependent on bonds and we want move on to a better mix between bond bank debt and ECA tech facilities and in that regard clearly the tune that quarter, billion R.C.F. into term loan that we put in place in the first quarter was an important step. We want to do to remove all of the upstream garment tees and other structural limitations that we have within the debt structure -- and then also start using in a Moe, more assertive manner the in-house bank through which we would have bring in the debt on a more centralized basis initially, but then flow that through the subsidiary legal entity structure via the in-house bank. That will be a significant tax benefits both within the inhouse bank itself and in so doing so clearly, I helped with the upstreaming of cash to headquarters. So yes we're going to continue to do it to look at next close all of that in the rest of 2021, quite a material going forward in both Headquarters interest costs and in the past both our headquarters, employees costs, and the tax costs more generally across the Group. And then I have notified I think in Barcelona. The full year impact of a full yea benefit of those initiatives which will obviously only come into 2018 onwards, is probably the main reason why we see an increase in equity free cash flow for 2018 to at least $1 billion US compared to the seven to eighteen million US dollars that we've got used to for this year.

Our next question comes from Alexander Venganotvitch [indiscernible]

Two questions from my side; so first on the bundling – on the frequencies of bundle [ph] Pakistan, how do you plan to finance this acquisition? Do you think you're going to manage this type of acquisition via like a own plant at these business units, or I think you'll need to wireless general accounting from there. And just can you also confirm that this like additional spending on the frequency will have no impact on your dividend guidance. So I understand that you saw negative effect on equity cash flow but if you just like sort of how –

Yes, I was maybe just going to take maybe the second part just to reaffirm what you said in that, we see this hum of Spectrum of investments in 2017, potentially having some bearing on our equity free cash flow guidance but no bearing on our dividend and progressive dividend policy. And as Andre said we would expect, if we have these auctions in Pakistan and Bangladesh in subsequent years, particularly in 2018, that are sort of $200 to assumed $1 million per annum for spectrum would be greatly reduced. So I think we can only reaffirm those statements. In terms of financing under Andrew – Pakistan, Bangladesh?

I mean Ukraine, yeah, so in terms of funding without being overly specific, we are very comfortable that we're going to be – we would be able to fund any of those auctions in local currencies using either the cash that's already being generated by those operations, or by putting in place additional financing instruments in the countries.

We will now take a question from Alastair Jones from New Street Research.

Yeah thanks for the question. Just wanted to talk briefly about Russia. I mean, we stored an improvement in your overall revenue. Mobile service revenue growth was flattened last quarter, it's up about 2% if you adjusted the leap year effect .What's driven that improvement in revenue growth, is it to do mostly with consumer spend? Or is it to do with competitive pressures maybe easing a little bit and in relation to that can you talk a little bit about your tariff strategies, we’ve heard price increase from the other guys, removal of unlimited data plan. So just wondering what your thinking is going forward. And then the second question just also on Russia in terms of the margins with a slight increase in 40 bps. I know you’re guiding some for the revenue that’s revenue 60% improvement in margins. Is it right to assume then archive field [ph] that would be further increases in the margin going forward in the rest of the rest of the year or is there anything specific, let’s just talk about maybe margins might be ticked up as we go through the of course of the year.

All right. I can take part of that question, Andrew will complement that. I think what we've seen is a more stable market following a degree of stability that was reached in Q4 in the Russian marketplace, certainly much better than what we saw in the first half of 2016. We've been advocating I think of the top three operators that the market really needs to move from voice centric pricing to a data centric pricing. We took early decisions in 2016 to exit the unlimited medium large screen bundled data bundles and as we continue to change our tariff structure we hope that the market is going to follow and hence create I think even further stability and potential, further stability in the revenue growth trends that we've recently seen. So I think that's the context overall. Andrew, you do want to add some details and particularly on the margins?

I think Russia is a good support of margins, for the first quarter --- probably on balance in line with our expectations, and I think you would be fair to say, for the first quarter it's probably going to be slightly easier easier comparisons for us than other quarters because we did have a couple of commercial issues around bad debt costs and overly subsidizing devices in the first quarter of 2016. So I would not get overly carried away with 40 bps to 60 bps improvement in underlying EBITDA in Russia for just one quarter right. There's a lot of hard work to do to stabilize the margins and really radically transform that business, obviously that is across the rest of the group. So I would say that overall we're pleased with where the margins are in the first quarter and I guess we've got roughly across the group 60 bps, organic year on year increase, now that is not adjusted for the leap year, right? When you actually adjust margins for the leap year effect, which obviously is a real thing, you can't lose a day in the quarter and pretend as if nothing happened. The underlying margin growth on a day for day -- life like for likesome databases is actually well over a percentage point year on year. So that's still within the confines of a low single digit accretion guidance for the year. So I think we're pleased with where we are but we're not -- I wouldn't get overly bullish and start thinking that we're going to talk about materially different guidance on margins as we go through the rest of 2017. End of Q&A

All right. Thank you, and Andrew, as we’re now slightly over on the time for the call, which is okay, if there are any for any queries or questions, please feel free to contact us at IR here in Amsterdam. Before handing over back to the operator, we would like to thank you for your attention, participating on the call, and would like to wish you a very pleasant remainder of the day. Thank you.

Thank you sir. Ladies and gentlemen that will now conclude today's conference call. Thank you for your participation. You may now disconnect.