VEON Ltd (VEON) 2016 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to beautiful Barcelona, with beautiful weather. Happy that all of you are around and have gone through the trouble of coming to Barcelona in the week that we also have the Mobile Work Congress here. We have exciting news to share with you today in this event and would like to welcome you here, but would also to like -- welcome everybody who's on the webcast or on the audio call.

Before we get into, I think, an exciting agenda, whereby I will present the presenters of today to you, I have to disappoint you because we need to go through the disclaimer. It is in a summary form, but I need to read this to you, but thereafter I promise it will become more positive.

This presentation contains forward-looking statements, as the phrase is defined in Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. The forward-looking statements included in this presentation are based on management's best assessment of the Company's strategic and financial position and of future market conditions, trends and other potential developments. These discussions involve risks and uncertainties.

The actual outcome may differ materially from these statements as a result of risks relating to our Company, which are described in our annual report on Form 20-F for the year ended December 31, 2015, filed with the SEC. Under no circumstances should the inclusion of such forward-looking statements in this presentation be regarded as a representation or warranty by us or any other person with respect to the achievement of results set out in such statements or that the underlying assumptions used will in fact be the case.

Therefore, you are cautioned not to place undue reliance on these forward-looking statements. Except to the extent required by law, we will not update or revise any of these forward-looking statements and they are made only as of today. Please refer to the full disclaimer behind me with respect to these estimates and forward-looking statements.

That's done, thank you. So, the agenda for today, and I would also like to quickly introduce the speakers to you. First of all, Jean-Yves Charlier, CEO -- would you mind briefly standing up, for the webcast -- will open up by talking about the Company, where it started and where it is going to. Andrew Davies, our Chief Financial Officer, will talk about the 2016 results, but also the corporate finance initiatives going forward.

Christopher Schlaeffer, our Chief Digital Officer, will then introduce VEON, the Internet platform -- the personalized Internet platform to you. Then after, Yogesh Malik, our Chief Technology Officer, will talk you though the technology initiatives that we have as a Company.

We will then break for about 20 minutes, and have coffee and tea back in the atrium, before moving on with Alex Matuschka, our Chief Performance Officer. Then move on with Kjell Morten-Johnsen, who is our Head of Russia and also Head of Major Markets. To finalize with Maximo Ibarra, the Chief Executive Officer of Vind Tre, the joint venture that we have, since recent times, in Italy.

Jean-Yves Charlier will then make a few final remarks before we move into the Q&A session at the end of today's session, by 5:30, roughly. Thereafter, we can have cocktails and have a working dinner for all of you to be together and to have some informal exchange thereafter.

With that, I would now like to hand over to Jean-Yves to start his presentation. Thank you.

Thank you, Bart, good afternoon and welcome to this important analyst and investor presentation for VimpelCom. Today we are presenting not only a strong set of financial results for 2016, but also a number of strategic announcements as the transformation of VimpelCom accelerates.

18 months ago we announced a strategy to profoundly transform VimpelCom. On one hand, our financial performance had been lackluster. Our balance sheet had a number of issues. We were confronted with a number of structural dimensions. All of these matters we needed to profoundly address.

On the other hand, we felt that the telecom industry, and particularly the mobile industry, was at crossroads. Ultimately, we were simply not monetizing the tremendous growth in our networks, the tremendous growth of data services. And we felt that beyond the transformation of VimpelCom, we needed to think about profoundly reinventing our business and firmly positioning it in the digital space.

Now, we set out broadly six strategic initiatives, and I'll make a few comments on the progress that we've made over the last 18 months in terms of these major dimensions of our transformation program.

First, we felt it was very important to address our structural issues. We formed a new partnership in Algeria to take our business Djezzy forward. We ultimately settled with the DOJ, relating to FCPA matters, dating back to our business in Uzbekistan. We've strengthened our position in GTH, through the GTH bond and most recent share buyback.

We've substantially improved the free flow of the business with the successful sell-down of the Telenor shares in September of last year. And ultimately, we've profoundly strengthened our balance sheet.

When we look at these past structural issues, in fact, today we feel that we've addressed most of the issues that plagued VimpelCom in the past.

The second strategic initiative has really been around making our business world-class and really focusing on transforming from within the Group. We've brought out a new set of values. We've defined a new vision for this business. We've ultimately strengthened our management teams. We've been massively recruiting in the areas of new digital initiatives.

We've strengthened our supervisory Board with recent appointments. We globalized the business model from what was then a very independent set of businesses across the world. And ultimately, we've strengthened our compliance and our controls environment, revamping our processes and obviously, launching a number of initiatives to revamp our systems across the business.

The third strategic initiative has really been around addressing our cost base. Taking cost out of our business to renew with a progressive dividend policy for VimpelCom. In the last 12 months, we've taken some $588 million of cost out of the business. And we've done that whilst investing in our networks. We've done that whilst accelerating our digital initiatives.

We've been able to bring down our CapEx to revenue ratio from over 20% in 2014 to just over 17% last year. And we've done that whilst modernizing fundamentally our networks across the board, as Yogesh Malik will take us through. And as the result of these strong results, we're upping our targets for 2017 to $700 million to $800 million of equity free cash flow and to over $1 billion for 2018.

The fourth strategic initiative that we've really been focusing on is strengthening the portfolio, ensuring that we were number one or strong number two positions in every one of the markets in which we operate. And we did major transactions in consolidating the markets in both Italy and Pakistan this year, emerging in both those markets as the number one player.

We've also announced that we would dispose of non-strategic assets, and we've done that with the sale of Zimbabwe last year. But we also announced that we would move our business much more to an asset-light model.

That we would focus on network-sharing opportunities. And we've done major transactions in Russia and Italy, but we also announced that we would dispose, over time, of our tower portfolio, to capitalize, in fact, on that asset that we felt was no longer as strategic as it might have been five years ago.

The fifth strategic initiative has been all about returning VimpelCom to organic revenue growth. We felt it was crucial to get back into growth mode as a business, by making our operations much more at a world-class level in terms of our traditional mobile business than it was in the past.

We focused on accelerating the growth of our data services across the world. And last year we've achieved some 26% growth in this space. And ultimately, this whole strategy has been underpinned by a greater focus on an FMC opportunity in those markets where we have fiber assets, but also focusing more and more on the enterprise space.

And finally, because we feel that this industry is at crossroads, we announced 18 months ago, that we would take VimpelCom from being solely a telecom company, to a tech company, and that we would become ultimately a platform serving the 235 million consumers that we serve across the 12 major markets around the world.

We've launched in Italy, at the beginning -- or at the back end, in fact, of last year, and we expect this year to launch many more countries. And ultimately, beyond positioning VimpelCom as a platform, we're overhauling completely our IT, our data architecture across world to be able to implement personalized and contextual services and new products for these consumers.

Now, what we've seen on the back of this strategy is that ultimately, we've delivered a strong set of results for 2016. We've returned to organic service revenue growth. We've expanded on an organic basis our EBITDA margins. We've also expanded our operating cash flow margins and ultimately, as I indicated, we were able to optimize much better our CapEx to revenue ratio.

We did this at a time when we were facing considerable currency headwinds, and what we've seen in the back end of 2016 is that these currency headwinds are fundamentally receding in the emerging markets where we operate. And potentially what we are seeing at the beginning of this year, is potentially a rebound of the currency portfolio in which we operate.

As a result of this, we broadly have met all the expectations, all the targets that we set out during the course of 2016, and we feel that that's a very strong accomplishment for a business that 18 months ago had a lackluster financial performance.

Of the back of these strong results, we're in fact making today three major announcements. The first is that VimpelCom is returning to a progressive dividend policy. And perhaps equally as important, we are announcing today a dividend of $0.23 per share for fiscal year 2016. We've already paid a $0.035 per share interim dividend, and will be making, in the next few weeks, a $0.195 share dividend for our investors.

The second major announcement is that in fact we want to broaden the appeal of VimpelCom to shareholders, and we've decided to undertake a second listing and list this Company beyond Nasdaq on the Amsterdam Stock Exchange. Amsterdam is a key hub for VimpelCom. That's where our headquarters is based.

Today we employ hundreds of employees in Amsterdam and it's a natural base, in fact, for us, to list this business in Europe and you expect that we will have -- can expect that we will have done this listing in the second quarter of 2017.

The third major announcement ultimately, today, is that we're projecting a stronger outlook for 2017. Andrew Davies, our Chief Financial Officer, will be taking us through this outlook in much more detail, but ultimately, for us, it's important to continue growing the equity free cash flow of the business from the $588 million that we achieved in 2016, to a target of $700 million to $800 million for 2017 and over $1 billion in 2018, to fundamentally support the progressive dividend policy that we're announcing today.

But we feel that whilst this transformation is well on track, we need to find new relays of growth in the future for VimpelCom. And as I indicated, we feel very much that the industry is at crossroads. In spite of the tremendous growth of the Internet, the mobile industry has failed to capture much of that growth. Growth has been eluding the industry throughout the world.

And on the other hand, our engagement with consumers is low. Even in emerging markets we've been reduced to offering connectivity with a few value-added services. A completely engagement model, a weak engagement model, compared to what the Internet digital OTT players are ultimately able to do in the marketplace.

That's why we feel it's crucial to reinvent VimpelCom today, taking the business from this telecommunication -- this traditional telecommunication position that we have, to becoming a global tech company. And our strategy is to fundamentally position VimpelCom as a platform for the 235 million consumers the we serve. So, what does that mean?

Well, first, and important for us, is that we want to offer an engagement that's no longer a brick-and-mortar engagement, but a digital engagement for consumers. The ability for them not to have queue up in our stores any longer, the ability to do everything online, rather than having to do things over the phone. And that will, as Christopher Schlaeffer, our Chief Digital Officer, will outline, have not only benefits in terms of finding new relays of growth for our business, but ultimately, help us (technical difficulty) our business (technical difficulty).

So, this is ultimately not a bolt-on strategy. This is a strategy to fundamentally reinvent the business from within.

The second pillar is ultimately that we need to be in the messaging space as a tech Company. We feel that we can't leave that space to the Silicon Valley OTTs. The communications of the 21st century is going to be all about messaging. And we feel that VimpelCom needs to be positioned in the messaging space. But offering messaging in a very different matter than what OTTs have been able to do.

Offering, obviously, on a zero-rated basis, the VEON platform, but going way beyond that. Offering, for example, messaging even if consumers don't have credit in whatever their data plan. Because we feel that we can bring to the market a unique value proposition that allows our customers to continue messaging even when they're out of credit.

And that is essential in emerging markets, when consumers, in fact, top up virtually every day or every other day. In many of our markets, consumers do not have the disposable income to be able to top up in data services on a daily basis.

And we want to make sure that we have the opportunity to continue providing messaging services for free, even if they are out of credit, so that they can continue communicating with their loved ones, their friends, or their business associates.

And the third leg of the pillar of the VEON platform is to well beyond a new digital model and messaging. It's to go into new services for consumers, whether it's entertainment, or all the way to financial services. And we want to do this on a partnership basis.

And here at Barcelona we're making a series of major announcements of strategic partnerships with Vivendi, with Deezer, with MasterCard. And this is just the beginning of a long list of partnerships that we'll be announcing to bring new services on a partnership basis to these 235 million consumers.

But to achieve this platform strategy we believe that we need to fundamentally overhaul our infrastructure, our data architecture. We need to basically change the model of legacy systems that we have, hundreds of legacy systems across the board, data architecture where data is siloed.

And if we want to be able to offer personalized contextual services, we have to have a unified data architecture and a standardized set of systems that are much more agile than what the typical telco has.

It's because this strategy is not a bolt-on, but is core to VimpelCom, that we are also making a major announcement today to in fact rebrand VimpelCom to VEON.

So fundamentally, I've been asked today two key questions. Why are you doing this today? Well, the reason that we're doing this today is because we've regained financial credibility. VimpelCom, the Group is now on solid foundations, on much better foundations than it was 18 months ago. And it's starting to operate on a world-class basis.

And the second major reason for the reason this rebrand right now is we're just at the beginning of rolling out VEON. We feel that we need to have a unified, global brand, to roll out this platform across the world.

So the second question that I get is ultimately, why making this change at this point in time? Or why making this change altogether? And the answer to that is that we feel it is crucial that the strategy is not a bolt-on. It's not 1% or 2% of what we want to be doing as a business. It's core to our business, and hence why we feel it's absolutely crucial to rebrand.

So why did we select VEON as a brand, ultimately? Well, if you think about it, most letters of the VEON brand are found within VimpelCom, and you'll find that within the brand we've kept exactly the same type of colors. And this is a brand that is a modern, 21st century brand. Not like where VimpelCom was, ultimately. How many Internet brands have com within the brand?

So, we feel that this is a very solid rebranding exercise that we're taking, and will take our business ultimately very much forward.

So, a few things that are ultimately very important about the brand DNA. Obviously, a dimension of diversity, because we operate in diverse markets across the world. A dimension of heritage of the past, as I explained. The same colors, having multiple letters of the current brand.

But ultimately, we want to make sure that the DNA of the brand encapsulates this concept of free. Ultimately coming with a very disruptive value proposition for emerging markets. So, we've prepared a short video to really show you how we've really encapsulated these values in the new VEON brand. Let's play the video.

(Video playing).

All right, just short video about the essence, the DNA of this new VEON brand.

So, let me just summarize what we've achieved as a Group. We're really taking VimpelCom, the telco, to VEON, the tech Company. That's the journey that we've defined for this business.

On one hand, we feel very much today that we've achieved a major milestone in transforming, in revitalizing this business. We've regained financial credibility, we've delivered a strong set of financial results. We've returned this business to organic growth. We've ultimately strengthened the balance sheet and addressed the structural issues of the past.

On the other hand, we feel we have a huge opportunity to reinvent this business in emerging markets. An opportunity that is second to none, an opportunity where we can position VEON as a unique platform for consumers, offering new services from entertainment to financial services, offering us the opportunity to ultimately transform, reinvent our business from a brick-and-mortar model to a digital model.

And with that I want to thank you. Andrew?

Thank you. Okay, so I obviously drew the short straw, coming directly after the Spike Lee video. So, I'm going to talk about 2016 results, the corporate finance initiatives and how that's progressed in 2016, and how we see them evolving for 2017. And then finally, I'll conclude by talking about targets for 2017 and the dividend policy.

Now within my presentation I would normally cover each of the major markets and go through those in some detail. Given the broader context of today's event, I'm not going to do that. But all of the usual information is readily available in both the earnings release and actually as appendices to the presentation here.

So, in 2016 we achieved all of our targets, as Jean-Yves has already mentioned. So, service revenue, back to consistent growth. Half a percentage point of growth year-on-year, for the entire year. EBITDA grew by 1.4% organically, with a little bit of accretion in EBITDA margin. The CapEx to revenue ratio, excluding CapEx related to the Warid integration, was right in the middle of our guidance range at 17.4%.

And then that led to the one percentage point improvement in operating cash flow margins, and then we came in exactly in line with guidance on the leverage ratio, at exactly 2 times. Now, in addition to that, as Jean-Yves already mentioned as well, we generated an underlying equity free cash flow of nearly $600 million, in 2016, which already puts us more than three-quarters of the way to the long-term cash flow target that we had for 2018, of $750 million.

So, on service revenue, first of all -- so we continue to see, on a full-year basis, reported revenues declining, driven exclusively by foreign exchange head winds, which cost us roughly $1 billion of revenue for the year. However, on an organic basis, excluding this, we grew by half a percentage point.

Within the geography of the P&L account what you actually see is continued decline in the legacy voice services, and Christopher will address some of that when he talks about VEON. But that's been more than offset by, again, continued excellent growth on data and MFS, which grew again, at more than 20 percentage points, year on year, on a full-year basis.

Now, within the geography of our portfolio, what you see is a little bit of erosion in Russia. So, they lost $69 million of revenue year on year, more than offset by growth elsewhere across the portfolio. Within emerging markets, in totality, that was relatively flat, year-on-year, but you had stellar performance in Pakistan, which grew by roughly $125 million, year on- ear, being offset by the impact of continued weakness in Algeria.

And then within the Eurasian footprint, you had Ukraine and Uzbekistan both growing strongly and contributing to total of about $120 million of year-on-year improvements.

So, if we move on to EBITDA, you actually see a broadly similar picture. So again, just focusing on the geography of the P&L, you've got nearly a $50 million year-on-year improvement coming from the service revenue organic growth, and then within the cost base that marginally declined year on year, but what you've got, and Alex will talk about this in more detail later, is we've actually saved just in excess of $400 million, year on year, as a result of our performance transformation initiatives.

And that then is being more or less offset by reinvestments in other parts of the strategy, so devices, mono-brands and network, in particular, which cost us, again, roughly $400 million. So, you've got broadly flattish year-on-year movement in the cost base, but it would be much, much worse if we didn't have the performance transformation program.

If you look at, again, the footprint, you see a little bit of marginal decline year on year in Russia, significant growth though, elsewhere. So, continued stellar performance again in Pakistan, this time more than offsetting the impact of the weakness in Algeria. And again, coincidentally, roughly $120 million combined impact from Ukraine and Uzbekistan.

On the income statement, I'll focus on the items below EBITDA, specific, actually, on taxes and the impact of the closing of the Italian joint venture. So, our tax costs increased by broadly $400 million, year on year, but nearly all of this was non-cash in nature.

So, we've had a big change in the tax regime in Uzbekistan, with effect from January 1, 2016, which caused the effective tax rate in that country to rise to above 50%, and that, in isolation, cost us roughly $100 million on the tax line.

In addition, as part of the closing of the Italian joint venture, we wrote of $95 million worth of deferred tax assets within the Italian structure, but there -- and then, in addition, in 2015 we had a big benefit, because we released provisions totaling roughly $200 million related to deferred taxes on future withholding tax from intercompany dividends. So, of the tax increase, roughly only $100 million of that is actual cash taxes.

Right at the bottom of the P&L account we've got a large one-time gain of about $1.8 billion coming from the closing of the Italian joint venture. And that just simply reflects our 50% share of the equity value in that joint venture, compared to basically zero book value of the Wind asset that we used to own on 100% basis. And then that all leads to net income on a full year basis, of $2.4 billion.

If you look at the evolution of net debt. So, the net debt to EBITDA ratio has increased from 1.4 times to almost exactly 2 times at the end of 2016. Now, all of that increase was driven by inorganic things. So, you had the impact of the Warid acquisition, foreign exchange, again, and then most notably, over $1 billion of exceptional cash flows, the majority of which, obviously, is the settlement that Jean-Yves already referred to in respect of the Uzbekistan investigation.

And actually, if you remove those things, operationally, we would actually have been -- we would have delivered through the course of 2016.

So, corporate finance initiatives. So back in February of 2016 we listed six or seven initiatives, all of which were aimed at paving the way for us to return to a meaningful dividend policy. And as you can see from this chart, we've made good progress on every single one of them.

So, we closed the Italian joint venture, obviously, in November. We successfully completed the GTH refinancing in -- early in Q2 of 2016. We've rolled out a robust capital allocation framework, which is part of the reason why we've made the significant cash flow improvements that we have done, because we're more efficient on CapEx management.

And we've made some progress, but still work to do, when it comes to optimization of local debt structures, the ability to upstream cash and the asset light strategy. And I'll return to that theme -- to those themes later on in the presentation.

So, this just shows the timeline of the major corporate finance initiatives that we've executed on over the last two years. And actually, if you wind the clock back, one further year -- there just isn't room on the slide to do that, but you actually see that we've executed on over $35 billion worth of corporate finance transactions now, since early 2014 culminating, most recently, in early part of 2017, in putting in place a much stronger, much more solid revolving credit facility, and term loan, which is multi-currency, and the completion, just last week, of the GTH share buy-back process.

So, this all puts the capital structure in a much, much better place now, compared to where it was two years ago, and it's best illustrated on this slide, where we've gone from gross debt of $26.5 billion on a 2.5 times leverage ratio to $10.5 billion and a 2 times ratio, a leverage ratio, at the end of 2016.

And on a like-for-like basis we've saved about $150 million in annualized interest costs as well. But as I'll explain later, we're not declaring victory here yet either. We've still got a little bit more work to do.

So, let me talk about the equity free cash flow improvement in a little more detail. So, last year you needed a little bit of a microscope to see the equity free cash flow generation. We generated only $40 million. We've now grown that number to $588 million through the course of 2016 and as you can see here, it's essentially all driven by improvements in the cash that we've consumed in investing activities and essentially that's all driven by the robust capital efficiency improvement.

Now as Alex and Yogesh will both show later, it's all been accomplished by being much more intelligent and efficient at how we design networks and how we run the procurement processes. And actually in making these significant improvements, we've actually been able to enhance the customer experience and the quality and coverage of the network, rather than degrade them. Now that's a really important point to understand.

So, future priorities and ambitions in the corporate finance space. So first of all, debt structure. So, strengthened balance sheet, we're at a 2 times leverage ratio, which we're comfortable with, etc.

So, what else is there to do, I hear you ask. Quite a bit actually, because the structure is still far too fragmented, it's got structural limitations, it's too costly. The average cost to debt is over 7% and so on and so forth.

So, what we are going to do here is we're going to move towards a much more headquartered-centric debt structure. We're going to rebalance the currency mix, we're going to rebalance between capital markets and the bonds, bank financing and ETA financing.

And we're going to fund the opcos via the in-house bank and we're going to remove all of the upstream guarantees and other structural limitations that we currently have within the debt structure. And our goal is to get all of that completed within 2017.

And it'll improve the credit rating, it'll improve the gross cost to debt and more importantly, it'll really, really improve the net cost to debt, because we will be able to get to a much, much more efficient tax efficient debt structure as well. Both through the in-house itself, but also ensuring that we're gearing up appropriately at the opco level and actually getting real tax savings in the opcos.

Then on portfolio and asset light, so we accomplished two very large transactions in 2016; Italy and Pakistan. And within the M&A space, we still fully intend to remain within the existing footprint. So, we're not going to expand anywhere, but we will look to do selective what you might call niche based acquisitions that complement other parts of our strategy, for example, fixed mobile convergence.

On the asset light, so we're going to build on some of the work that we've already accomplished with the Italy towers transaction and some network sharing deals, are looking to do more of the same across the rest of the footprint. We have more than 80,000 towers that we can play around with.

However, I want to be clear again that we are not going to do towers transactions which are an esoteric form of financing, which will just end up as expensive debt on the balance sheet. We are looking to partner with strategic investors, who will give us sensible operational and commercial conditions and will lead to genuine strong NPV accretion. And then that'll all further improve the equity free cash flow.

And then, as Jean-Yves mentioned, we plan to open the second listing, or a dual listing in

Amsterdam in Q2, so let's talk about that in more detail. So, I think we'll all agree that Amsterdam is the natural home for VimpelCom, or for VEON, if we were to have a second listing.

The listing will be of the Company's ordinary or common shares, it would be fully fundable, with the ADSs that are currently listed on Nasdaq. And the listing will be in euros and we will list using the VEON ticker in Amsterdam and we will also change the ticker on the Nasdaq to be VEON as well.

And we expect as a result of this to get much stronger index inclusion, we want to attract a much broader base of investors into the shareholder register and we want to get much better and broader analyst coverage. And we think establishing the listing in Amsterdam will do all of that for us and obviously is on the back of doubling the free float in 2016, as Jean-Yves has already mentioned and maybe more progress on that front in 2017 as well.

So, coming back to equity free cash flow, so as I've already mentioned, we generated $588 million of underlying equity free cash flow in 2016. We are guiding towards a range of between $700 million and $800 million in 2017, which puts us in the midpoint of that range, exactly in line with our original 2018 target.

And the confidence that we now have within the business and the success of the performance transformation program and other aspects of the strategy, lead us to being able to increase our three-year target to at least $1 billion from the original $750 million.

And we are going to focus as well relentlessly on further improving the cash upstreaming. Let me just say a couple of words about that. So, within 2016 already our opcos actually declared dividends in excess of $500 million and it was across a range of operating companies. And our intention is that that number grows significantly in 2017 and that excludes anything from Italy.

Now on Italy specifically, let's just remind ourselves and Maximo is going to talk about the Italian joint venture and its prospects in more detail later, but we've gone from a Wind asset that used to be levered up at 6 times. When we announced the transaction in August 2015, we talked at that stage about the leverage ratio for the JV immediately on closing being roughly 5 times, it was actually 4.5 times.

As Maximo will show you in more detail later, they're already actually up only 4.2 times at the end of 2016 and that's very close to the very first threshold that we need to pass in order for the JV to actually be able to upstream dividends or distributions to its parents.

There's a very, very robust and rigorous distribution policy in place, which we've discussed many times. At below 4 times leverage it can pay out 40% of free cash flow in the form of distributions and all the way down to paying out up to 80% of free cash flow in the form of distributions, once it gets below a 3 times leverage ratio.

So, all of this improvement here excludes what we think can be delivered from Italy. So, don't underestimate the impact of Italy on equity free cash flow and that means for our dividend policy.

So, let me just get to the 2017 targets. So before discussing the targets in detail, I just want to be clear on the basis that we are using for these targets. So, it's important to us that we're able to give a meaningful like-for-like comparison of performance all the way through 2017.

And therefore, the basis for the targets is a pro forma set of members for 2016, which now incorporates Warid for the entire year, rather than just the second six months. So, it's a slightly bigger set of pro forma numbers for 2016 than we've reported.

And on that basis we are guiding to low-single-digit growth in total revenue, low-single-digit EBITDA margin accretion and again, those things and continued improvements on the capital efficiency will lead to the equity free cash flow range of $700 million to $800 million.

So, moving on to the final slide, so we have a new dividend policy on the back of these improved results and the robust outlook. 1,126 days exactly have elapsed since we announced the cut in the dividend policy, with a lot of sweat, quite a bit of blood and maybe even a few tears shed along the way.

And being able to resume this policy is the result of a lot of hard work by approximately 50,000 people, from the Board all the way down through the organization and even into customer service and sales representatives. This is the result of a collective effort over an extended period of time.

So, what is the policy? So first of all, for the financial year ended December 31, 2016, VimpelCom will pay a total dividend of $0.23 per share, being $0.035 per share already paid as an interim dividend in November last year and then $0.195 which we will pay out as a final dividend in April of this year, with a record date for the dividend being March 30.

And thereafter, we're committed to paying a sustainable and progressive dividend, based on the evolution of the Company's equity free cash flow. So, strong policy, meaningful dividend yield, but giving us a bit of room and a bit of flexibility for the future.

So, with that, I'll end my section and now I'm going to pass you on to something that's just as exciting and probably even more entertaining than the resumption of the meaningful dividend policy and Christopher Schlaeffer, who will talk about the VEON internet platform.

Thank you, Andrew. Good afternoon, ladies and gentlemen, I can never be more exciting than Andrew Davies and I think it's just beautiful to listen to Andrew and what he has to tell us, because it is really a representation of that transformation from within changing the whole of VimpelCom.

We're doing that with 50,000 people who are committing to that change and that transformation, which is not always easy, but at the same time they're committing to shaping the totally new.

The totally new in our regard is VEON, a personal internet platform. We're trying to achieve nothing less than the change to internet at large with the VEON platform and I have the privilege to guide you through today what this platform is all about, after now being 12 months with the Company. That was quite some work to get here and it's kind of a first-off show to you that you can really see what that new platform is about.

Let me, before I even go into the product, talk a bit about industry evolution with you, because I think it's important to always step back a little bit when you come to Barcelona and you're so overwhelmed by just another handset and a new next generation of networks and it's always the same actually. Since decades you always come to 1G, 2G, 3G, 4G, 5G and we'll be sitting here in 20 years and talking about 9G.

So that is the underlying trend and people will show new device portfolios for that industry, but what really happens is this internet now being 25 years old actually after Sir Tim Berners-Lee did the first connection in 1989, the year when the Berlin Wall came down.

And then we experienced it as a connection actually to be seen as consumers and corporate users, became very interesting in the late 1990s, as we know, with the emergence of eBay, Google, Amazon, the Netscape browsing substituting really Mosaic. And what did telcos do at that time? They were rolling out 2G networks, as we know.

Now there was a next phase really in the internet, where social networks came about; Facebook, or VKontakte in Russia, YouTube and video content came about and the end of that second phase really was with the iPhone in 2007 and Android in 2008 liberating the mobile internet, which until then has just been a walled garden approach of all the telco operators trying to, in essence, copy entity Docomo and their i-mode system for a [verge] of seven years and everybody had invested in 3G at that time. So the telcos were watching the phenomenon again, were building 3G networks.

Now in the last phase of this internet, really the messaging and communication team came in and with WhatsApp and WeChat and Instagram and Snapchat and all these phenomena really changed the way how people would relate to each other in the internet and communicate. Not only in the text spaces, but also with voice enablement. And what did telcos do again? They rolled out 4G networks.

So, this is really this dichotomy between telcos and OTT players, where we simply as telcos cannot differentiate. We're all deploying the same networks, from the same suppliers, most importantly from China today.

There's no way that telcos can really differentiate, if they continue just rolling out networks and doing that more efficiently and just looking at the cash flow line at the end of the day. Because what's happening underneath that is a radical disengagement in terms of our user relationships.

And Jean-Yves has mentioned it, we are serving 235 million customers today, which are not engaged users anymore. They are paying, that's true, they are customers, but we've been disengaged and we've been disengaged systematically in the last 10 years by events like that. 2007 you'll recall a revolutionary phone came out, with not only telephony but music and the internet.

And I recall very well, because I did the first big strategic partnership with Apple outside the US, when I negotiated seven months with Tim Cook, not on commercials but actually on what the business model would be for the iPhone.

And we were debating 10 years ago things like revenue sharing on the telco bill, not only on apps, but it turned out that suddenly Apple decided that in the internet, revenues would be shared only between an operating system called iOS and an app developer.

And those who would subsidized the smartphone big time and who would roll out the networks, would simply be excluded from the economic equation of the internet. That was the model which emerged in 2007.

And of course, 2008 Android was launched and you see me here at the launch event with Sergey and Larry and Andy Rubin in New York, in a subway station with a very early system of the Android operating system, as we launched the first-ever Android handset together in September 2008.

And that opened the internet, it was an open mobile operating system, as contrasted to Apple, which was not that open at the time. But both systems excluded the telcos and more than that, a customer relationship suddenly started, not with an AT&T account or VimpelCom account or a Vodafone account. No, a customer relationship suddenly started with an iTunes account, where you had to leave your credit cards, or with a Gmail account in the case of Google and Android.

So there was a complete disengagement in terms of logic user relationship. Now what happened then, with the emergence of the messaging systems, coming out starting from 2009 and here we are with the Snapchat IPO ahead of us and things like that.

Messaging platforms came in and attacked telcos in their core, because people kind of were completely fed up with hidden pricing, with roaming charges, etc. And they started to use a tool for communication which is pretty complicated for most of the users, that you actually text to each other, or you initiate a voice OIB call out of a messaging platform and relate to people quite naturally with something which is an OTT service. And telcos were sidelined because they did not get the message how big the frustration of users was with all these pricing and hidden regimes, etc.

Now what's interesting, of course, and we know all of that, is that these messaging platforms don't stay there and don't remain communication platforms, but they're now in essence becoming the new ecosystems of our time.

They're becoming the new ecosystems of our time in the age of artificial intelligence, where we have a complete switchover since last year of the whole Silicon Valley and everybody's moving away from mobile first to AI first and context first.

And these platforms -- and we see with the example of WeChat now integrate internet services of any kind. And they're using a personal context of users to actually do magic to users and produce a service as they speak, as they dialog, as they communicate. Because when you communicate, the communication context is quite clear on what you would actually now need as a consumer.

Would you need to book a table in a restaurant because you're talking to a friend about going out, would you need to have a piece of information because you're talking about the last Arsenal match and don't have the score. Things like that are coming in and I'd like to call that the contextual internet.

Now VEON is exactly built for that. It's built for coming from a universe where people are overwhelmed with apps, to a contextual personal internet platform. What is the reality of a user today? A user can actually theoretically access 2.2 million apps in the Apple Store, or 2.5 million apps in Google Play Store. But in everyday life users are using three apps for 80% of their time, three apps for 80% of their time.

And what does that tell us? It tells us that the model of forcing users to understand and go somewhere like an app store and download something and understand the service and learn it, is overwhelming for the majority of the population on the planet.

For us tech geeks in such a room, of course, we're used to our 50, 60, 70 apps on the phone, but people just used three apps for 80% of their time in 2016, which means you have to have something which is a personal internet platform which enables you to really use the internet differently. That services come to out of a context and they're entirely different.

So VEON, as a personal internet platform is built around five foundations. First, it's truly personal, it knows you. Secondly, it is radically free. It's not free like the internet, where you use a service and think that's free. It's free of data charges, so you use the internet platform and you don't pay and it's not deducting from your data charges and it could even work when you're out of credit.

Thirdly, it's completely disruptive and radical. Now we're talking about that in terms of security, privacy protection, because us not being an advertising funded model, we can afford not to compromise on privacy and we'll definitely do that as a Company.

Fourth, it's absolutely open, there's no way that you can be impartial or exclusive or something. And then it's contextual with a massive investment of VEON as a Company into artificial intelligence, in enabling our key platforms and everything required around that.

Now here's the first screen now. I'll go into the product just in a second. If you look at that screen, of course, it starts with messaging. That is the VEON platform, it is a messaging platform, it's a communication platform because messaging covers text, video, photo, emojis, animated gifs, but of course, also voice telephony. So, it is a messaging platform, but it goes far beyond because it has all you need in one place, far beyond messaging.

It has, first of all, a single account up here, where you are still a telco customer, where you can access your telco account and do all kinds of things with it. But let's think that through for a moment. The telco account is maybe the only real source in the internet where you have an authenticated identity, so it is actually me, Christopher Schlaeffer, with my mobile phone number, with my email address and with my payment credentials.

I am not Maxi7 on Facebook or somebody, I'm fully identified and fully authenticated. And we can use that single account to actually enable all the services in the internet in a very novel way in terms of technology architecture and you fully stay in control as a customer, because we are protecting privacy.

Secondly, this is totally free messaging, with chat and voice calling, I'll get back to that. Thirdly, this is everything the internet has to offer out of the messaging stream, so we're producing an ecosystem where you actually can access things like taxi hailing, financial services, maybe travel services, etc., directly out of your messaging stream, without the necessity to go to any app.

So, we make it completely simple and these services are produced out of the context, they emerge, they come to you without you even knowing that the service exists in cases.

Fourthly, this is of course, content. This is news, music and video entrainment completely personalized for you. And then this is all beautifully delivered in terms of the user experience in a single elegantly done VEON stream.

So, we don't overwhelm the user and force him to swipe left, right, north, south, etc., to discover something on a third level. No, you're exposed to your personal internet platform out of a consistent single stream.

Now changing the ticker against the phone just here, using an iPhone for the presentation, ladies and gentlemen, and I'm going to launch the platform. Here we are, this is the messaging platform where I have my account on top, which you see. I have a series of messages where I can scroll down and up.

I have a navigation bar on the bottom, which is messaging on the left-hand side, which is active at the moment, where I could do voice calls out of my context. We of course, can access context and do something with that context, where I do have a setting.

But let me go back to messaging and start with the most basic element of that platform first, which is, of course, messaging. We have in a virtual actually four and a half months, built a fully fledged messaging system which has all the features all major messaging platforms out there have today.

And we have launched that part of the platform already, quite silently in Italy. So, that is what is out there at the moment, the messaging platform.

So, let's go into that and that might even bore you a little bit, but I need to, of course, prove that this is the messaging platform. So, I got, Jean-Yves, a message from you; good luck, Christopher, break a leg. I'm skiing in Austria, I don't know whether that is really what I want to have here and I can, of course, message with Jean-Yves and say, simply polite as we are, Jean-Yves, thank you.

And I might send him back something like an animated gif, or I do an emoji, which in this case is a Vmoji, presenting to the world today in Barcelona maybe a little gimmick, but it's much more than that on visual language with Vmojis. And I'm sending Jean-Yves this one, so I send it out.

I could actually also take, of course, a photo of this cool crowd here, or this is even cooler over there, and do that photo and send the photo to Jean-Yves and say what a cool crowd at our analyst and investor meeting. So that's what I do, it's a messaging system, you get it, right?

So, I'm going to go back to the chat stream and see that Helen has sent me a video. Helen is a friend of mine and what did Helen do? You won't believe it, I saw Katie Perry at the Brit Awards last Wednesday, so Katie Perry I already know because I've got two daughters, 20 and 17 years old, so I can of course, look at the video and -- I hope we have the sound on. Do we have sound, guys? They can look at the video. I think you get the point here. So, this is a message by Helen.

I go out of that message by Helen and find another friend, so you saw it's completely video, photo, animated gifs, Vmojis, everything is there. I go to Aimee, a friend of mine from London and she says hi, catch up in London next week and I'd say of course, why not?

But also we're always going together with three or four people, should we invite the others, because there's always two people with us in London. So Chris and Mark, I sent that back to Aimee and what I'd like to show you is how simple it is, of course, to make a single chat a group chat.

She says sure, good idea, so I go back to Aimee and I can simply say why don't we create a group with Aimee and in our group with Aimee we usually have Cherie, she's here and we have Tony. Where's Tony?

Now Tony seems to not yet be on the VEON platform, so we need to invite him, right? So let's create that group, which is the new group chat created with Aimee and Cherie so far.

So I'd like to actually go back and invite Tony. So I go to my contacts, I scroll down to Tony. I hope you can follow me. Tony Winters is not yet invited, so I invite him and an invite is being sent. By the way, VEON works for every user, not only our own network customers.

So you can invite, of course, customers from other networks to VEON. It's not a silo for just our Beeline customers or (inaudible) customers or somebody; everybody can be on VEON because this is an open ecosystem.

So he's invited and there's one more feature, just to be complete, and here is Gabriel Giordani and he has apparently given me a call on the platform. This is a free app-to=app call I got from Gabriel, so let's go in there. Missed called from Gabriel from yesterday and I actually need to call Gabriel back here, very simply. Gabriel is my global head of product management.

Hello.

Yes, it's here. So I'm doing that on the mike, otherwise it doesn't work.

I'm coming on in right now, I'll be in the door in a second.

He will come in, it will show us. Here he is. So you see, Gabriel is here, just to show it, that this actually does work in terms of a voice OIB call. We're actually quite proud that our voice OIB quality mostly likely is the best voice OIB quality of any messaging platform out there at the moment, because we're using very advanced codex. It's a very strong feature of our platform and it makes voice communication for real for our customers.

So what did I show you so far? Let's briefly summarize in a chart. I showed you a messaging app, of course, so far. Maybe, not that disruptive yet, but what's disruptive about that messaging platform is the network integration. This platform is completely for free as I've said it.

When you use the platform, you don't consume data. It always works. It is always on, even when you run out of a credit, which is for prepaid customers, in the emerging markets, exactly what they experience every day. They're running out of credit on the 22nd of a month and they don't top-up for days but they can continue using VEON because it's free even when you're out of credits.

Now you see integration through a bit, and immediately discover that the boundaries will be very much blurring between a text message and an SMS and chat. So, there is no reason actually to stick to SMS in the future to use because it's just messaging to each other.

So, I'm actually proud to announce that we are able beginning this today, to integrate message out with SMS, you can send a message, which will actually be delivered as an SMS with a non-VEON customer, and that is bringing the iMessaging experience to every phone and every operating system as a first.

Now needless to say that in our labs we are working also on integrating voice calls with all kinds of networks. So, in the future if we on once the lab is successful and the lab is fast, we can terminate voice calls out of VEON in a mobile GSM network, but we can also terminate a voice call out of VEON in a PSTN network, fluently both directions.

So, that is network integration. So, in summary, we have created a state-of-the-art messaging system which is entirely for free, even if we're out of strategy. So, let's go back.

I'm going to go back to the home screen and I'd like to demo you my account and my internet identity in that regards. If I click on here, I see that this is my account, this is Christopher Schlaeffer, I see where my account at the moment is, I have no data, but I can use this platform as we know without data. I have no minutes, but I can do VoIP calls without credit on the platform. I've got some SMS there, I've not got a photo but an avatar here.

So, first of all lets change this, go into settings, tap on that photo, choose a photo from your library, you know the procedure, you've all done that already, you can go in there and it's just being done, and that's how you change your settings.

You see with your account here, that you can easily top up, so we're completely automating our processes with VEON. We're moving away from offline processes, having to call a call center or going to a kiosk in emerging markets or going to some retailer with something like a barcode which we have to scan in a very complicated way in Algeria or Pakistan or Bangladesh to simply electronically topping up, so you could top-up.

You see that I already have a payment means in there, which is my MasterCard in that regard, because at the moment I'm a Wind customer, it's only launched in Italy so far and I simply type in an amount and seven is my holy number, as a Catholic, and I top-up, right. So, I'd say, this is the summary and it's done and its top-up.

Now in the very vicinity of that authenticated identity, of course offers have a role to play. So, I'm a Wind customer. If I went there, Wind knows from my data context because we have location in real-time as a telco that I'm at the moment in Barcelona, I'm actually roaming unfortunately, and why don't I go for roaming or (inaudible) upsell. So, you get the story. I don't have to expand on it.

So, this is really what my account is, but the important part with my account is that we have the identity authenticated of a consumer. So, let me go there and talk a bit about security in a context. We're going for an entirely new privacy and security, prior time at VimpelCom, now VEON, where we first of all have the real personnel data.

Secondly, we are not sharing that data with services anymore on a personalized way. We're ascending tokens which are anonymized. So, for instance we would have a credit card on file, and for payment with a taxi hailing service which would use our messaging platform, we would not send over credit details, but a technical token, which is a 16-digit code, just enabling that taxi hailing service to charge the credit card which we have on file. The same with personal data.

Which means in that new ecosystem, you can continue to use hundreds of services in the internet, but you can absolutely stop of giving your identity credit card location to every app on your phone. you just remain in VEON, and the technical architecture of a token which is travelling through the service connected to VEON, anonymizes that and that is a 100% secure system where you're not sharing your privacy details.

Of course, the platform is end-to-end encrypted and has all the features you would expect from a secured regime but that is really important, which in other words puts the user in control. You can decide as a user what you share, with whom you share, when you shared and how you disclose your privacy or don't do it.

Now let's go back to the app after these fundamentals which are, sorry, forgot that, major announcement, you saw that I was using MasterCard in my theme.

We are today announcing in Barcelona (inaudible) a global partnership with MasterCard on their Masterpass project, which meaning MasterCard is enabling the VEON platform in all our markets and even beyond, which is one-click payment for any digital payment, which is connecting us with all the merchants MasterCard has actually in the network today, and that is across our markets and that is a global partnership of which we are proud of.

Of course, we will support any kind of payment means and the platform we are not exclusive on anything, this is an open platform, but this is a pretty strong start with MasterCard into the ecosystem.

Now let's go back to the product, because as I said, we were so far only talking about messaging and my account. Let's now talk about services coming into the messaging stream.

And I'd like to go back to chat and I see I have a new message here from Mariana, she lives here in Barcelona, she's a friend of mine and she is not in tech really, she is a bit more in the arts and we have debated already a couple of days ago, whether I should join actually a discussion on Thursday on the impacts of augmented reality on the visual arts here in an arts community in Barcelona.

So, that is the case, but she warns me, it's going to be busy in Barcelona as we also now with traffic, make sure you plan for travel.

Now what I did forget is where was that, I simply forgot the address, so I am clicking here and sending that, where was that Mariana, I don't have really the address and that is giving her the opportunity to sending me back this address, which is now here. It's Thursday 7 pm in Enoteca Paco Perez, Carrer de la Marina 19 in Barcelona.

Now what you see here in terms of contextually enablement is that a little sign pops up of actually the local taxi hailing services, because an address was sent, it's indicating that. Now think how strong a telco is.

We have a clearly identified user who is authenticated, we always know the location, we know a lot of user data and if the user permits to use that, we can produce services out of context to somebody even not knowing that the taxi hailing service exists.

So, I could click on that symbol, did I do it? And Hailo, the local taxi hailing app, actually has prepopulated your screen because they know -- saw us at the moment, this is location data. They have fetched the address out of the messaging -- out of the message of Mariana, it's going to in Enoteca Paco Perez and it says, pickup time as soon as possible.

Now I know, not as soon as possible, I need to go on Thursday, of course, so let's go to Thursday and it was 7 p.m., so let's start here maybe half an hour earlier, because I see that, I've set the pick-up time, my payment details again there, bear in mind, this is our credit card with that token being sent to the service, they would never get the credit card data and I request the service, and out of that, I get the confirmation that my ride will arrive at 7:30 here in Barcelona and take me there securely.

Now, let's recap for a second, what we have seen here to understand the breadth of that. We are approaching the contextual internet, where I as the user don't have to know what services exist out there but the service would come to me in my given context and support me with what I need, when I need it, that is what is happening, so it's an immersive kind of internet out of context.

It secondly, uses contextual data in a magnificent way. I say it again, we have the authenticated identity, we have location data and we have usage data. So, think entire industry is full like taxi hailing I stayed here for a second.

We would know that tonight a match between Barcelona and Madrid would end at 10 p.m. Of course it's not happening, but let's make the example, and in that stadium with 80,000 spectators, we would have 11,232 users of football spectators who have taxi hailing app on their phone, because we know that this is on the phone, we would know that the match is ending at 10 p.m.

We would create a heatmap for that taxi hailing services and say, well, you better send 11,232 cars to the Nou Camp stadium, and 10 minutes before the match is ending, a notification would pop up, if you allow it as a consumer and say, what's your choice tonight.

You want to go underground or bus again, with thousands of people, or would you like a personal ride and maybe for free because it's a first-time promotion. Think about that. You're creating heat maps in context.

You could go to logistics delivery, where today the most fundamental flaw is, when somebody is delivering a parcel to your home at 11 a.m. on a Wednesday, ringing the bell and nobody's at home. It's a cost of an average EUR25 for a logistics company like DHL or UPS, but what is easier than sharing data like Christopher on a Wednesday 11 a.m. is never at home, he is always in that office in (inaudible) where he has to [go fast], right.

So, when I'm loading the van in the morning, we're just giving a choice and say, should we deliver to the office here and then that delivery is gone. I'm just making to you the example of logistics and we've gone through all the industries, financial services, e-commerce, retail, etc. and thought through how our current and existing internet services actually can be disrupted in the future with a personal internet platform called VEON.

Now let's go back for the product and we did that example. In the meantime, I've got a new notification from a brand called STUDIO+. So STUDIO+ is here and that seems like a video. I click on that, and it tells me that this is kind of a movie-quality type of video series with episodes actually, it has 10 episodes.

That is the new product of Vivendi from France, which has produced super high quality 10 minute episodes in a series, it's paid content in that regard, which I can consume directly, out of [pin]. I go in he full screen mode. You see that, it's perfect quality, dubbed in every language around the globe, it's paid-for content, short form, bite-sized, snackable sharable on a mobile platform.

And if you consume it out of my personal internet platform. Now I'll stop that. I think the thing is clear, you could go to STUDIO+ here, and see other series which taken or produce.

And I'm actually proud to announce to you today, that we have a global partnership with Vivendi on STUDIO+, across all our markets, with that high-quality content taking the video experience on a mobile handset to the next level, that is Vivendi.

Now let's go back to the product. I was there, I think that's clear. We need to go, I think we are stuck somewhere guys. I unpause it, and I pause it again, right, back, thank you. This is my Global Head of Product and he is also my Development Head, Gabriel Giordani.

So, you've seen already in the beginning that we kind of slipped over that picture here, which is in a frame called the Daily. That is the daily content stream, which we can produce in a personalized and contextual way, where you could actually access content which is pre-curated for customer, so I'd like to go in that daily, and what I present to you here in the daily is a system of cards, where I can consume content again out of that messaging stream, like for instance a music content around Deezer or simply something around my favorite Cafe Del Mondo here or some m-commerce application.

And I can go into that like Deezer, and this is about see as greatest hits, it's a story, it's actually something editorial and my younger daughter, [Amalie] has told me about (inaudible) so I'm curious listen to the music, and I can do that out right of the app, I could share that piece of music, its snackable, its bite size again, and a good music, I'm rather classical type, but this is what my daughter seems to listen to. That's Deezer and I can follow it, because I like it, right. So, I'm getting more of daily doses so to say from Deezer.

Now we're also proud to announce of course a global partnership with Deezer today. Deezer is one of the leading music streaming services in the world with more than 40 million tracks on file, but the particular thing which Deezer is, that they are so outstanding in terms of their algorithms and their approach to contextual intelligence.

They have a flow product, which is really preempting your tastes and what you use in music and they have local content for all our markets, so they have Pakistani content, Italian content, they have Kazakhstan content, and they're not going there just with the charts from the US or from France or from somewhere, they have local content and we have a freemium service, which includes local pricing, because in our markets, with an ARPU of $2 or $3, you cannot afford $9.99, that's Spotify or somewhere else. You have to have sachet pricing, transaction pricing, etc., and this is what our partnership with Deezer is all about to really cover the music space, is the first example.

Now let's go back one last time in that content section that you really get it and we're going back to this which is the daily stream. So, in the daily stream, I could have new things like YEAY which is a very novel e-commerce site, actually from Berlin, it's dubbed being the Snapchat of shopping by Forbes magazine.

What I can do here is I can buy things which people are simply posting, so it's kind of a baby between eBay and Snapchat and you go there, you see somebody is selling an underwater camera for EUR5 or here is a loudspeaker or here is a full screen (background noise) and if you swipe, I can buy it for EUR39 or I can share that to Aimee who is very much into (background noise).

Now, I'm going back up. You get the idea, e-commerce services, fully integrated in the platform.

So, I think it's becoming clear if I summarize here, is that this is not only about contextual internet services. It's about an open internet, where everything the internet has to offer can be accessed via single personal internet platform, which goes along with a principal of no exclusivity, because who are we to decide on behalf of a consumer what a consumer would actually chose in terms of content, services etc. It's completely open. It's a completely industrialized system.

If an SDK and APIs for the developer community out there, if the code begins to have new paradigm, where you don't code an app anymore, but you immerse your user experience into the messaging product of that platform, so that's what it is and it goes along with a new economic regime of value sharing, because of course we are providing the context for these services that a taxi hailing app can work like that out of context, which means in return, we're asking for a revenue share for the platform.

And that is the new source of monetization, breaking history, where 2017 and 2008, two Silicon Valley companies called Apple and Google have decided that telcos would never participate in the internet revenue streams and we're breaking it back and say, this is a web sharing agreement.

And all the operators supporting that with their data, our own operators called Beeline in Russia and Wind Tre in Italy, of course share back with the VM platform, because they have provided us with that.

It doesn't actually matter whether we are 100% on that company, like Beeline Russia or we are on a partnership 50-50 joint venture with Wind Tre Italy, or even if you through we will be out of [footprint], and doing that in cooperation with another telco somewhere. So, there is no boundary of the thinking really.

Now, I guess for you ,economics is an important topic, so let me do a little section on that, a single chat, and leave the product. Economics for our Company are fundamentally changing. We so far count subscribers or users and we have 235 million customers in the most exciting geographies in the markets of tomorrow, which are 750 people, a tenth of the global population living in these markets.

What we will introduce maybe as the first telco in our communication to the outside world and to analysts, investors new metrics, like monthly active users or daily active users or (inaudible) ratios, so we're having a different dialogue next year when we come together.

We'll still do, of course, the metrics we need to do as a telco, but we will engage in a dialogue with you on how many of our 235 million consumers to start with have been converted into VEON users who are monthly active or daily active in a year from here.

So, this is very important. This is the key metric of reengaging with a consumer. So, that's where it starts. Now in the short term, that reengagement and hopefully we are converting the vast majority of our user base at least, data users into VEON very soon and we are most aggressive on that.

This conversion will lead to a dramatic impact of profitability and effectiveness of the core business. Because what are we in essence doing? We are shifting from offline gross [adds] and we had really 80 million gross adds last year, to a huge and substantial share of digital gross adds, which of course comes with a different cost.

We are changing subscriber acquisition costs, because we've become a digital subscriber, from threshold somewhere at the moment in Italy as an example of EUR25 maximum, to maybe down to the single digits in the digital paradigm from EUR25 to maybe down to the single digits, very much dependent on whether we can deliver the SIM card in a maybe delivery way via post.

We're going to digital top-ups, getting rid of all these complicated distribution procedures in emerging markets, again with bar codes, with automated machine, somewhere which you can handle to a single click topping up like I've showed you and with that we're getting rid of the whole load on customer care.

Nearly 14,000 people still work in customer care in our footprint and our target is to in essence get rid of customer care, maybe with a couple of examples over the years, because we can chat with the service in VEON and we can digitally top-up into that.

We expect a very substantial churn effect on VEON users who are also our telco customers, most likely also in the double-digit percentages that churn is going down with that model and we do expect an increase in subscriber market share, because already today in Italy, we don't only have users on VEON from Wind Tre today, but also from two other networks, which we see at the moment.

So, there is a reason for VEON users to actually switch network, because what happens if I switch from a competitive network to VEON, I'm switching from paying for data to free. That's what's going on there. So, this is the economic equation and we'll be reporting to you how that turns out.

And then in the long term, of course there is a new revenue model for us. This is the value sharing with partners, which we are entering now, all of the partners we have communicated to you today are already part of that value sharing regime, of course, we're not drinking vodka and praying wine. My English is too limited to maybe quote it even, that's what it is.

Now, let's go back to the platform one last time, to finish out. Now, what I have demonstrated to you today is a personal internet platform which is actually aiming at changing the internet as we know it. Nothing less. This is VEON and about being truly free.

It is something that starts with few identity, which is authenticated in my account. It has every feature of a modern edge messaging platform. It is including in a contextual way based on advanced analytics and artificial intelligence on textual internet services of that new era which Silicon Valley has just started and it's providing a user with access to content of every dimension also in a new way, bite size, snackable, shareable, etc. That's what we do with VEON.

And I've got a last word from Mark MacGann, who is the new kid on the block in our executive committee and he is sending me a video and it is about vmjois, so let's look at that.

(Video playing)

And with that, I'd like to hand over to Yogesh Malik, our CTO.

Extremely inspirational, extremely. Okay, so now we go two levels deeper, on what is really going on below.

So, let's talk about differentiation there, because we always kind of talk about OTTs, us, contextuals, so I'll about concrete points on differentiation.

The first one is, how do we differentiate ourselves? By integration to the network, which means today when you're over a WhatsApp and you get a PSTN call, you do not really see anything and the call gets blocked and the PSTN overrides it. We would be able to differentiate that, by deep integration.

Second, today if you have a SMS or iMessage, you are unable to send it to WhatsApp. We would be able to do that and that is possible because of the deep integration of the message environment and of the network. That's the first thing.

And this is not easy because actually a lot of people have forgotten what SMS is like and what the network flows are, so we are going back and trying to make sure that we have full integration.

Then the second thing is data and we have a lot of data. As telcos I think we have so much data that we cannot even imagine. Now the question is, most of this data is withheld within applications in our IT stack. And I'll just give you an example of the data we have. This is all the data we carry today. You may say that these are all prepaid markets.

How come that you have such an accurate data? In most of our markets, Pakistan, Ukraine, Bangladesh, Russia, we have gone through reverification processes. In Pakistan, actually we have a biometric ID as well on top of the data we have from the customer. So, all this data is there with us today.

How do we use that data? How do we make it completely contextual to Christopher's point? I think that is the knowledge which we have and we are deploying that.

The third one, as Johnny has mentioned, IT backends are owned by us. A lot of people just run away from the backend, say, no, no that's an IT thing, let's not touch it. Actually, we are going to overhaul the whole thing, because as in the future number of transactions increase exponentially, we will need systems which are able to interact real time all the way from the beta to the product.

And that is what we have undertaken, a complete overhaul of all the IT systems. So, you understand that this application platform below what is happening.

Now let me just start with the vision, why do we want to become a tech company? Because if you want to be a platform, you need to be a tech company. You cannot be a telco. Because if you would be a telco, we would have a siloed infrastructure. You can never make a product out of that.

Second, in a telco, generally there are not a lot of software skills. They are more vendor managers, if you may and heavy dependence on system integrators. That's what telcos are like, but our vision is to come out of that and to be having a architecture which is for a purpose, microservices-based architecture, whether it is ID, whether it is payment, like Christopher was showing, you want to pay a restaurant, you need a microservice ID, go straight in, flexing the data, you pay, you move on.

Second one is we are building our software team in Amsterdam, in London. So, these teams, they are capable of coding in one of the most interesting languages I call that, which is Erlang. And that has extremely good efficiency when it comes to exponential transaction per second.

And the third one is the front end, which you were seeing. Now whether it is a web or whether it is a retail or the application, the whole platform, the frontend we want it under our control. Its full on open source, but we want to customize it so that we can differentiate our customer journey from others.

So, I will just run through a simple way of demonstrating what we are building and this what we are building is not in one country, not in one geography, because we are doing this across, across all the 11 geographies and (inaudible) as well. We are applying the same architecture.

Network, we are modernizing networks, I'll come to that. IT stack, as I explained, that we are changing the whole IT.

Data management platform. This is actually one of the key pillars for us, where we can ingest the data, we can parse it, and we can run algorithms in a way that we can make a difference. So, if we want to know, how the segment of one will work like, the knowledge will sit here in the data management platform.

We expose that in microservices, for example, payment ID, customer care, and you can define further based on profile. And then, we expose further into APIs that we can connect ecosystems and enable new businesses, taxi hailing service, we can talk about music, we can talk about content and that all then becomes possible.

So, I'll focus on network for a bit so that everyone understands why we say that we are at a very, very solid network pace of modernization. Because we are thanking in the future networks. We want to decouple hardware and software.

Today what's happening? Telco is the only industry I would say left where hardware and software are coupled together and of course there is a reason which is given of performance, I don't believe in that. Actually, the moment you decouple, you can scale much, much faster. You don't need to invest in every geography the same amount. You can use commodity hardware in a much, much more efficient way.

And then on top of that, we want to also pool, so hence the licenses will not be stuck between a zone in a country. It can scale all across geographies. So hence you don't need to buy license in every place. And that is the way to think.

Modernizations and sharing, I think network sharing has been there for quite some time, but not really in a very intense manner. We are taking that to the next level.

So, what have we modernized? What have we done? There are six countries we have launched LTE, new countries, last year. So, you can see we have done that in Algeria, Pakistan, Kazakhstan, Armenia, Uzbekistan, and Kyrgyzstan. All that in one year. We have signed network sharing deals in Kazakhstan and its already in motion and it's not only on a 4G layer, it's on 2G and 3G layer as well, so that we can remove cost out, we can consolidate.

Pakistan, it's a huge consolidation exercise going on, where we will be install a lot of redundant sites and take out cost and reap out the synergies much, much faster.

Russia, we have expanded our network sharing and Kjell will talk more and this gives us a reach to the customer in a much, much more smarter and a cost-efficient manner.

Meanwhile, you can see that LTE population, which we are serving has increased by 70% and more, so which means we are doing all this at a pace which is record pace, within one year.

And then for us, modernization and swap, there are two purposes, we want to be future ready, LTE and beyond. but not only that, I think for us what is important is to remove structural cost, because the moment you modernize and swap, you take away a lot of dormant real estate cost, electricity cost, maintenance cost, simplification cost, everything, you just take them out, headcount, training, everything.

And we have swapped out 25,000 sites last year across our geography. This year, we are planning to swap another 35,000 sites roughly. So, we would be two thirds of sites across our geography swapped out within two years.

An example here is of Ukraine. We started the swap, if I remember, in January last year. By June this year, we would be done 10,000 sites. Not only that, we would be 4G ready, so whenever we get the 4G license, we can switch it on. CapEx to revenue in Ukraine had come down to 15% and sub.

And now we are talking about urban sites with 60% of fiber connectivity. So, we have a network of the future. This is not network of the past, where we just talk about single ramp, but we talk about single ramp straight with the fiber connectivity backend.

I've heard a lot about (technical difficulty) virtualization the way we are doing it. We have implemented virtualization in five countries on the EPC, enhanced packet port, it's extremely important because that is where most of the data traffic goes.

We are now adopting a strategy, which is compressive across, which means the infrastructure layer will be commoditized with proper secure metrics and then we will virtually have applications running over that, whether it is EPC, enhanced packet core, whether it is content server or whether it is HLR, which is called the subscriber data manager. Our first HLR going virtual is in Bangladesh.

And the way we do that, is we start in a very prudent manner. We install, we go with our own employees' testing phase for at least two months. Beyond that we move to a cluster of subscribers, friendly subscribers and then we scale up and we want to do this within the next year.

This year and next year we would like to virtualize across all countries, and what this would do to the financial will be to take out cost and we will be able to stop investment in legacy core, which was huge, which was 20% of our CapEx at a given time.

So, then you can see why we are reaching a CapEx of 17.4% last year, and where we are going to be hitting 15%, 15.5% this year. And the reason is, because we believe in modernization. And we want to do it at a very fast pace so that we can take out dormant technologies. For example, there is no reason to invest in 3G capacity anymore right now, doesn't make sense.

Second, very, very important thing of CapEx discipline for us is, there is no CapEx which is allocated. It is prioritized on a quarterly basis. It's a very, very stringent process, but fully transparent. Every company knows what's the allocation and that can be changed on a quarter basis depending upon our growth, or our initiative prioritization.

Third on, which is very important for us, is quality of service, because we are not just going to say that okay, we dumped some CapEx or we implement a lot of CapEx, but for me, what's important is, customer perceives quality of service and p.s. throughput, latency and the voice quality.

And in all the metrics, we are doing very, very well. I'll demonstrate that to you now. Our 4G traffic increased by around 57% and it's been going on, the overall 3G, 4G traffic. 4G traffic within that has also increased, which means the handsets are coming in the market, which means our investments in 4G are going to start getting utilized much faster. And our performance, we are number one in six countries in the throughput.

On top of throughput, I observe latency, because that is where the customer and the user experience would be. So, whenever we'll run the VEON video, that's going to be extremely important for us.

Now I'll touch something which is absolutely unknown. I call that the IP, the traditional IP, which is this part. And trust me, a lot of people do not want to go there. Lot of groups try to touch one country or one system, either a CRN system or a BSS system.

What we are taking is a clean sheet, state-of-art approach and that is the reason we can develop a platform like VEON. I'm not going to bore you, but this is how everything connects together. In 20 seconds, let me just try to explain.

We have seen VEON. All the behavioral analysis is done in the DMP called the data management platform. This is not bought, this VR building ourselves on open source. The red piece is how you make decisions.

This is not what we are going to build by ourselves, this is what we are going to buy, so it's a mix of buy and build. Microservices is what we enable new economies in the future and when it comes to the new digital stack, it allows us to connect all this together in a seamless manner.

So, what have we done? VEON, here you have seen and I'm very, very proud of it and my team is very proud of it. Mobile financial services, we had Pakistan, we had Russia, we have launched Kazakhstan, we are almost ready because we need some regulatory clearances for Ukraine and we are doing that in all the countries. And that would be an extremely big enabler for us to pay to the platform.

Second one, data management platform. We were showing to our digital advisory board, the first result for the data management platform in Russia and very, very encouraging results, the way we can dig in the data and we can really take out the most relevant bits.

Towards the customer, software development center and here I think we have taken a very, very hard look and I think it's been encouraged by Johnny, that in the future, more than 60% of the staff, which I would have, needs to be software expert.

And my target is that by end of next year, that figure would go up to 80%. So, 80% of Amsterdam London technology team would be software focused technology teams, because that is the foundation which we need to serve the platform.

And the last, but not the least, is a huge exercise on taking the IT systems and making them even much more ready for the future with all the transactions per second which we are going to have.

So, three takeaways from this. Number one, it's a state-of-art architecture, it is not one country based; it is ubiquitous across all countries; and number third for me, is modernization that's extremely fast paced, so that we can deliver CapEx efficiency, at the same time take out dormant structural cost.

That's it. Thank you. Now to Bart.

Thank you, Yogesh, and thank you to speakers before that. I thought it was very exciting, both on the results but also on the outlook for the business going forward. We will have more to share with you after the break.

For the people on the webcast call, we will be back in the room in 20 minutes, which is 10 past 4 CET. We will have refreshments at the [end of the room], so you can enter here. Thank you for the attention in the first half. It will be an exciting second half in 20 minutes. Thank you for now.

(Break)

For the second half. Thank you. Please take your seats. We'll start again and we will continue now with the next presentation, which is held by Alexander Matuschka, our Chief Performance and Information Officer.

Alex, the floor is yours.

Thank you. So, we had a break, we had coffee and we're two exciting people presenting the new VEON and what we do technology-wise. But however, we need to finance it and just adding costs on top makes no sense destroys shareholder value. Let's talk about or let's double-click on cost.

So first of all, the entire program is about restructuring. I will show you many examples what we did during the last 12 to 14 months to improve our cost base. But at the other end, as you have seen already, it is a reinvestment which is taking place at the same time. And everything together should lead to meaningful dividend policy.

Now I start -- there's a lot of people started to tell you what the program is all about. As everybody in the big companies in the world announce big programs to cut cost, they always concentrate on three pieces -- the OpEx for obvious reason, the CapEx and the working capital.

But what did we achieve? As you know, last year we announced that, by the end of 2018, our cost structure or our equity free cash flow will improve by three-quarter of a billion. As we accelerated the program, we already achieved $588 million by the end of 2016, which brought us to the next level that we want to achieve now -- more than $1 billion by the end of 2018.

How do we get there? First of all, cutting costs alone doesn't work. We are coming from a civil servant's environment and we really need to reinvent ourselves. We need to implement a new operating model.

Let me take you back to the past. VimpelCom -- now I can say really VimpelCom the past -- was consisting of 14 different operators which have been completely independent. We didn't scale what we have. Actually we replicated or duplicated each and every function in each and every country.

Now we are implementing a new operating model. Number one, it consists of consolidation. What do we consolidate? Functions such as procurement. Instead of having seven times procurement in seven countries like Eurasia, we consolidated these seven into one. The other piece is we consolidate transactional activities in global shared service centers. Again we lean the local office, we standardize and we improve the quality.

Standardization, Yogesh already spoke about it. We have 14 countries, 14 different networks with 14 different set of tools and different vendors -- high complexity, huge legacy. As we started to swap the networks across our footprint, we are at the same time standardizing across the footprint, which brings also a lot of advantage as we can scale the volume.

The last -- and I don't go here in a double-click, I think. My friend, Christopher, already told you or shared with you the journey of digitalization of the Company.

What are the designing principles? Here I would like to do a bit of more deep dive. Every program has designing principles, but we have a very stringent governance. Every activity we implemented during the last 14 years has a P&L link, so with other words, we are living a four-eye principle.

You may have heard that many times in your life before. Everybody comes up with great initiatives. If you add up all these initiatives, you come up with an amount you never achieve and you don't identify in your balance sheet.

Not in this case. Andrew and myself, we have a four-eye principle, so every initiative that gets designed gets a P&L link and only if finance signs it up, it's part of the program.

In totality, over the last 14 months, we generated 80 initiatives and we have more than 400 action owners. The great news is that, if you start such a big program, you usually start to work with consultants.

The big mistake a lot of transformation programs do or companies do is they continue to work with the consultants over three years. The drama of it is the management never take over the responsibility or, with other words, in worst case, after the program comes to an end and the consultant left the building, everybody goes back to mama. They behave the same way as they did before. If we really want to try for change, if we really want to move from an operator to a tech company, we also need to redesign the organization as such.

What did we achieve so far? $402 million in-year saving which gives us a run rate of more than $500 million already for this year. So, as you can see, a lot of initiatives which we created being executed more or less in the second half of the year.

Let me walk you now a bit more through the cost structure. In totality, we are just almost $4 billion. Let's start with the biggest piece. About $3 billion we spent for OpEx and CapEx. We do that with third parties.

So, what did we do here? Number one, we introduced a vendor day. A lot of companies do a vendor day. What do you do on a vendor day? Some people get on stage, a lot of handshaking. At the end of the day, most of the people who participate end up at the bar. In our case, we did it a bit different. We, first of all, started to communicate with our vendors.

A lot of people don't do that. A lot of companies don't do it. We presented our values and our strategy, because only when your business partners really understand what you're doing, they can contribute with innovation and with entrepreneurial behavior.

Number two, we insisted that only decision makers in the room, because at the same time, we had real-time auctions, completely transparent. You can imagine what a momentum you create if the competitors see each other. They are in conference rooms next to each other. You see all the executives are there on the ground, working actively. What a dynamic you can reach.

At the end of the day, clear target was in 48 hours we signed the contract and we award the vendors. In a very traditional way -- which this industry, the operators, are -- it takes months and months and months and then maybe you don't even have a signature. In our case, after 48 hours, we are coming to an end.

So, what did we achieve? Let's go back in time. Let's talk about VimpelCom again. Under VimpelCom, only 4% of our total spend was in global contracts and 96% in local contracts. Vendors, I have to give a compliment. They did a great job.

The consequence of that was that, for the same box, we paid up to 40% more, so we didn't scale at all the benefit of being a Group. As a result of the global vendor day, 70% of our global spend is now in global contracts. So, with other words, for the same box from Tajikistan, Russia, through Bangladesh, they pay exactly the same price.

Obviously, this is the reason why we are able to drive down the CapEx ratio to the top line and deploy the same volume as we did before, so from procurement global contracts are heavily contributing.

Let's talk about the remaining 30%. It's mainly local vendors -- creation of sites, construction and a lot of field management services. Answer here, we duplicated the vendor days and we went local. The global and the local team became one team from perspective of procurement. Again, we presented the values, the strategies, online auctions, real-time results. We have really reached impressive cost cuts for the same volume and the same quality as the procurements before.

Why? A lot of local vendors had no idea who VimpelCom was. They lived in their environment and they didn't recognize, heck, I'm also in this country. I can scale with them. Let's talk about it. All of a sudden, more and more vendors became attracted by us. Even vendors who'd never been in the telco industry, all of a sudden, applied to become part of our business partner family.

The other dimension which we covered was not only cost. The truth is, in a footprint like ours, we are facing high inflation. We are facing high depreciation of currencies. In many years, a lot of cost cut was done, but it was eaten up by the ForEx.

So, what did we do at the same time? We touched, in the last year, more than 1,600 contracts -- which is representing 80% of our spend -- and we tried to optimize our FX presence in the countries. As you can see from left to right, from the addressable spend a bit more than $2 billion, $1.2 billion was fully mitigated, only $200 million was shared by the vendor and us in a mix and $900 million be not mitigated.

By the end of last year, we truly can say that we're on top of taking cost out de-risked, or with other words, the transformational piece what we are doing is not only taking cost out and investing into the future. No, we are de-risking what we are doing. It's complementary to our hedging activities.

So, let's go to the next piece -- HR, human capital. Quite a change we did here. Let me walk you through and let me prove to you that we are moving from a telco to a tech. We need a different set-up of people. We need to lean. We need to automate. And as I mentioned in the beginning, we need to secure that, when the program comes to an end, the people don't go back to mama and do exactly the same thing what they did before we started.

One piece is always reflected in headcount. When I show you here the headcount development, it is not outsourcing. It is optimization of processes.

We've achieved 5,000 people already in 2015. In 2016, we reduced another 15,000 people. In totality, in the last 14 months, we took out a third of the population of VimpelCom by leaning, by optimizing processes and by installing a new operating system.

But heck, that doesn't work. If you only cut -- and I'll show you this. The people, the managers who meet for a coffee, the only thing what they do is they talk about the good old days. So, at the same time, we reinvested in 3,000 people with a different set of capabilities. It's digital, it's coding, but it's also capabilities such as Lean, Six Sigma, Black Belts who continuously help us to optimize the processes.

But let's go even -- let's do a double-click, which shows you that VimpelCom became VEON. We took out 36% of the line managers. We delayered the organization. Delayering as a consequence, if you do it in a proper way, drives agility.

The next piece, when we started the exercise, 55% of our population did administrational work. Can you imagine? We want to sell. We want to grow the top line. What do we do? 55% of the population is working on administrational activities. That can't be lean. This is civil servants as a class. This is a traditional operator.

What did we achieve? As you see, we cut deeper and we reinvested. As of today, 74% of the population are not administrational people -- mainly sales orientated, product development. By the end of 2018, we will reach a level of more than 80%.

I give you another example -- global shared service center, hubs, the new operating model. By 2015, only 2% of the population being in these centers of creativity. By the end of 2016, it was already 10%. When we are done, about 20% of the entire population of VEON will work out of one of these centers of creativity.

Another example in here, Christopher already mentioned. We are transforming the Company. VimpelCom becomes VEON. 2% in 2015 worked on so-called digital activities. Ten times more work now on digital in the headquarter. By the year 2018, 50% of the population will focus their work on digital activities.

So, you see, we are reinvesting heavily into quality, into capability. We drive talent management. We really believe that we become VEON now.

Let's go to the remaining rest, real estate. Only 4% of the cost, but it's a very important 4%.

What makes me say that? The real estate strategy has two things. It is a virtualization of the new culture, of the values. Or with other words, if you go to very traditional German companies -- I can say that, I am German -- they live in rabbit boxes. And as more important you become, as bigger is your rabbit box. It's not open space. It's not open communication. It's a traditional you meet in a conference room and not like you go to the next desk and just ask the question, which is a signal of being agile.

So, what did we do? 20% of our sites been reduced and not because of the headcount reduction -- because we are moving to open office space, to desk/chair ratio. At the same time, we reduced more than 140,000 square meters. This is an artificial number. What does 140,000 square meters mean? Everybody who likes football like me knows that a football field is 7,000 square meters or, with other words, can you imagine 20 football fields of office space have been reduced? What a waste of money. What a waste of communication.

Desk/chair ratio, incredible number. In 2014 and 2015, we had more desks than people, so everybody had enough space. Now we are becoming agile. We share desks, because a lot of people are on the road. They are with our subscribers. They are with our vendors. Why not sharing the desk? But that only works if you go in an open office environment. 40% being in an open office environment by 2015. By 2018, it will be more than 80%.

So, in a nutshell, we are restructuring heavily as you've seen. 20,000 people have gone. You may recognize no noise in the industry, because we did it in an elegant, in a polite way, in a respectful way.

But we took out a third of the population. We reinvested in new capabilities, human capital, more than 3,000 people, talented people, people who define our future.

At the end of the day, besides the cost cut, besides the reinvestment, we are now able to give a meaningful dividend to our shareholders, so with other words, we created value. I know it's not that exciting like Christopher, but having said this, everything must be financed. Everything what we do for our future, we are financing by ourselves by taking legacy cost out.

Now I'm very happy to pass over to Kjell, our acting CEO in Russia and Chairman.

Thank you very much, Alex. Thank you.

I'm going to take you through a few things around Russia. I'm going to talk about why it's quite fun, why I'm pretty positive and excited about what we can do there, and of course a little bit about what needs to change. Not only in the Company but also in the industry, to give you some perspective on that.

Let me start by a couple of the things that we definitely have. And sitting here today, you have heard Alex talking about optimizing, cutting costs. We're doing it across the Group. We have heard Yogesh talking about network IT, in many areas at the forefront of the industry. And, of course, we have heard Christopher. We'll return to Christopher a little bit later.

What this tell us is that as a Group, we are working across the countries in a more mature way than previously. This is extremely important. Because we cannot succeed as individual OpCos whatever the size. We need the Group to function as a group to succeed.

There are other things to be excited about and to be interested in. We have, in the Russian markets, Beeline, 57 million customers out there. They have chosen us not only because we have the strongest brand in Russia -- there's no doubt that Beeline is the strongest mobile brand in Russia. It is also the clearest in terms of its colors; has been and will continue to be.

We have a good fixed position, stemming back also to the times of the Golden Telecom acquisition. These are building blocks for the future. Now of course, working with our colleagues to optimize, super important, to drive that kind of performance.

The core business needs to change. The industry in Russia needs to change in a couple of very important aspects. I will guide you through a few of those things but I'm very happy that Christopher took us through VEON today, because that's what we're going to build on top of the business we have today. We're going to get everything right in the core and we're going to build a super-exciting VEON on top of that in Russia. We're going to do it soon.

Priorities, the industry in Russia has seen ARPUs going down for a long time. And it almost has become a mindset. Some of you may know that I took this job on extremely short notice; 24 hours. That was no issue, I was fine with that. But what I saw very quickly was a mindset in the industry, and to some extent in the Company, that ARPUs are set to be flat or down, year by year by year.

We have to change that. There's no reason why ARPUs should go down. People are using their phones more, more and more. There are some fundamental flaws in how the market is structured that we need to change to get that right. So, we are setting clear targets for the Company of growing the ARPU. Not only stopping the fall but also growing up.

We need to focus much more on how we work with customers. This goes down to networks. But people, when they talk about NPS, start talking about networks. It's not only about networks, it's about getting it right, it's about simplifying. We have taken away probably 90% of the pricing complexity inside Beeline in the last 12 months. More work to do; should be done, will be done.

I have set in front of my management team and all employees a target of being number one on NPS with a meaningful difference to number two. This is a crystal-clear target on all employees and we're going to deliver on that. People are engaged around these ideas, people want to make it happen.

Then of course we need to maintain our customer base. You look at our numbers, we have had big exposure to migrants, but that's not an excuse going forward for not saying that we need to maintain and improve our overall customer base. That is also a crystal-clear target that we set in front of ourselves.

The transformation to digital is underway. I can tell you a lot of work has been done. This is not something three years into the future. Those of you who speak Russian in the audience; this is not (spoken in Russian), this is reality. And it's going to happen soon.

Looking at the performance, you have seen the numbers, you are smart, you can count the numbers very quickly. What I can say to you is that this is stabilized. We see it on the top line. We have healthy growth of data revenues.

We are seeing stabilization and growth in B2C. We still have some work to do in FTTB but we are succeeding with our FMC strategy. Lots of good building blocks to take this forward.

And if you look at that EBITDA that is on this screen behind me, it looks like it's going down. But if you correct for a one off in 2015, the actual number is going up. So, the EBITDA is stable to slightly increasing from 2015 to 2016.

And I'm going to do something now that usually is not very career promoting. But I'm going to tell you guys that one of the tasks that I put in front of myself is to prove my chairman wrong.

[Alexey] talked about three lives of the telecom industry, well, I want to monetize data. And you know what? If I prove him wrong, I think he's going to be happy because it's going to mean more dividend and better cash flows from the Company. So, this is my way of either applying for moving on or whatever. But we want to deliver on it.

CapEx, there is a lot of talk about CapEx. You heard Yogesh, you heard also Alex talking about what we're doing to become more professional. So, CapEx is about several things. It's about the structures we have, it's about the processes we have and it's the way we work with our partners.

The 15% number that we're talking about is definitely manageable for Russia. I have no problem committing to that number for Russia. Now comes a key issue for the industry in Russia. Something that the industry has done completely wrong. The industry in Russia is now making offerings based on valuations of voice. We need to move that over to data.

Unlimited data is a thing of the past. We see now more than 50% bundles, we see more than 50% smartphone penetration, it's time to move on also for the industry. We, as an industry, have a tradition of talking about voice and data, as if we are delivering voice and data. We are not delivering voice and data. Those are very simple, basic things.

If you go to Starbucks, if you go to an airport, if you go on a train, you often find Wi-Fi zones. Yes, you can do voice and data over these Wi-Fi zones. What do you lose? You lose the mobility and you also lose the security and the privacy that a carrier-grade mobile operator gives to you.

Do you want your identity to be stolen? Do you want to take the risk of someone interfering or intercepting what you are just sending; either to your bank or to your family or to someone else? No, you don't.

We are dealing with a natural resource call spectrum. It is a limited natural resource. There are a few players, three to four usually in every market. People having a bundle are paying for the privilege of having mobility at any time, wherever you are. That is the basis of this industry's pricing.

Then of course, when you want to spend much more data, you have to pay for it. There's nothing dramatic about that. If you drive your car 200 kilometers, you spend more on fuel than if you drive 100 kilometers. No one thinks that's strange at all. So, we just need to get it through.

And I'm happy to say that people are responding to this. We see this happening as we speak. Early days, but definitely the right direction.

I touched upon FMC. We have spent a lot of energy on developing our FMC proposition. We have to revitalize the fiber capacities we have, FTTB, it's the legacy of Gold Telecom. We have to drive that going forward. And we also see that we are able to upsell when we come with these propositions.

Popular in the market, we're going to continue driving these campaigns and we're going to see an uptick in the number of customers and ARPU from these efforts. And as we also see in most other markets, putting people together in an FMC offering -- also with TV coming up in these bundles -- takes down churn.

Churn is an issue in Russia, churn needs to be addressed by FMC and also a revamp of the distribution thinking in the Russian market. Overpopulated by shops, probably could have shut down several thousand shops and reduced the multi-brand activity and had a much more benign market structure. These things are underway, will take time. There is an upside in fixing these things.

We have also been able to revamp the B2B segment. The exit speed in 2016 was significantly better than what we saw one year earlier. So, people have been working throughout the year, doing a good job. We are quite positive about our ability to drive performance within the B2B segment in Russia going forward.

CapEx, very popular to drive down. You can do it in many ways. You can take down the cost of equipment, but also working with partners. I think it's completely natural to work with others in rolling out network.

We are not going to compete -- be able to build a network that is so much better than everyone else that people are going to choose us just for that. People choose us because we are easy to deal with, because we have good service, we have exciting offerings. Not only because of network.

There's a lot of money to be saved, and we have a good cooperation with Megafon, we have a good cooperation with MTS and we're very happy to expand that wherever possible in the Russian market.

There are some specifics of the Russian market with different spectrum zones and this and that, complications which means that it is a bit complicated to drive these initiatives forward. But there is some momentum and we are very, very open to continue that together with our partners.

So, that's why I'm saying that we are happy to confirm this 15% CapEx to saved. We'll definitely deliver within that in Russia. We will also -- I can tell you, we are not saving on the cents here so that we can drive this down.

We will build more base stations in the first half of 2017 than we did in the first half of 2016. We are not going to jeopardize network quality to save money. That's not going to happen, but we're going to deliver.

And then comes VEON, Christopher, the inspirational thing for us today. I think you were happy when you were through the presentation because it went really, really well. And we were proud to watch it.

Now you showed us international brands. And we're going to work with those international brands, we're happy to have them on board. A lot of this is boiling on the stove in the back office on Beeline in Russia as we speak.

We will be launching an exciting proposition in Q2 this year, I assure you of that. We will also be bringing on board local partnerships and local marketplace for this personal internet platform that we are offering -- or private internet platform that we are offering for our customers. And for the customers of MTS, Megafon and whoever wants to jump onto VEON, to be excited about the offerings we have there. So, I really look forward to that.

But this was, in a nutshell, what I wanted to say about Russia. How we are bringing together the efforts of my colleagues and the team and, of course, the 17,000 employees who are actually engaged about coming to work every day to deliver a good performance for our 57 million customers who rely on us not only to get a signal, but to handle their privacy and their security in a good way, not over a Wi-Fi spot.

And now, the one and only Maximo Ibarra, CEO of Italy.

Welcome, you have done the most exciting telecom merger in Europe for a long, long time. Quite a job.

Thank you very much.

Good luck.

I have to say that three out of six of my supervisory board members are sitting here, so I have to be extremely -- no pressure. But one of those is Kjell, Jean-Yves and Andrew.

So, okay, I'm not going to read the disclaimer, so this is it there. So, you can -- we can take one minute in full silence and you can read it, or we can go directly into the presentation. I think that we go directly into presentation.

Okay, let me start with the who we are. And this is the Wind Tre identity. Wind Tre, this is the name of the Company. The joint venture between VimpelCom, now VEON, and Hutchison.

What is really interesting is that this Company has had a quite long journey. I remember the first time that I discussed, or I was informed by shareholders at the time VimpelCom about this potential merger between 3 Italia and Wind in Italy, and it was December 2014.

So, it has been quite along journey but quite successful journey because then we got finally the authorization from the European Union, European Commission in September 2016 that the Company was born in November 2016. There was a merger of the legal Italian entities in December 31, 2016 and now we are operating as -- we are one Company.

So, the Company name Wind Tre. Then I'll talk about the commercial brands later on. The mission, this is really important because it has been proven that most of the 50-50 joint ventures have not been very successful but we have understood that there are a lot of lessons that we learned.

We had time to understand that properly. The key success factor is to be really one, and to do that in a super-fast way. Integrating and merging cultures, and start operating as we are really one Company from the very beginning. Which is exactly what we're doing.

And the whole mission is not only being one but keep being number one in the market. As you can see, the joint venture, Wind Tre in Italy is currently the number one, followed by Telecom Italia and Vodafone Mobile in terms of number of customers.

It's 2.7-plus million customers in fixed, which is the second operator in Italy. This is another important information, but our ambitions are not stopping here. Of course, you will see later that we have in our strategic pillars much more to come.

I don't think this is a nice picture or not but this is the management team. That day when we took the picture, it was particularly cold. So, you see that we were wearing coats.

The message here is that we have been working with the two shareholders, trying to create a successful team. Companies are made by people and people are the real trigger of success.

So, we spent and invested a lot of time in understanding how can we create the right combination and the right team in order to drive this Company to more successes. And we have picked the best of these.

The best people from Wind, the best people from 3 Italy, the best people from Hutchison and VimpelCom. So, we were able to create this very nice mix of experience and expertise and seniority and I have the privilege to run this management team into the future of this Company.

Of course, the other important information is that we have been working quite closely with our two shareholders. We have been very pragmatic, working together as they were one team at the same time. Again, it's a 50-50, but at the same time, it's a 50-50 where both are supporting the joint ventures in order to be very efficient and effective.

And at the moment, we have been taking a lot of decisions, strategic decisions together. There is a chairman meeting on board in place, there are different boards. We meet every month and we have very transparent and straightforward discussions.

So, at the moment, the governance has been absolutely super-lean and effective. When we move into the numbers, let me show you the starting point of this joint venture. We have been working for a short time together but I think that the starting point is quite promising.

In terms of revenue, the total operating revenues have been growing in 2016 by 1.3%. These are pro-forma results of 2016. Consider we have been working 10 months on a standalone basis and the last two months together. So, this is a pro-forma financial results of Wind Tre in 2016.

On the TLC revenues, the performance has been plus 1.7% year-on-year. And the performance of the fourth quarter has been exactly the same. So quite material in terms of TLC revenues.

And if we look at the way the fixed has been doing in the market, it is true that the performance has been negative in 2016. But it's also true that the quarterly trend has been particularly positive. And that's why the performance in the last quarter has been particularly positive, plus 3.9% in terms of TLC revenues -- fixed TLC revenues fourth quarter 2016.

EBITDA, this is very important, EBITDA, the combined entity, the joint venture Wind Tre, reached EUR2.2 billion of EBITDA. With the EBITDA margin of -- we are talking about 33.6% full year and 34.8% in the fourth quarter.

In terms of operating cash flow, which is the outcome, the result of the industrial performance of the Company, so the EBITDA minus CapEx, the joint venture Wind Tre has reached approximately EUR1 billion. With a growth of 9.5% year-on-year. While the EBITDA has grown 6.8% in 2016 and in the fourth quarter, 7.5%.

If we move into the net debt leverage ratio, it's important and worth mentioning what was so anticipated before, Andrew Davies, is that the leverage ratio is now 4.2 times the EBITDA, when it used to be 4.8 times. So, this is again another important step of the -- in terms of financial performance.

Moving into the competitive landscape, this is always very interesting. Italy's a very competitive market but I think that Wind Tre is now playing quite an important role. If we look at the market share in terms of customers in 2016, it has been 37.2%.

And another information is that if we take the gross adds in the Italian market, approximately 50% of Italians have been attracted by both Wind and Tre brands. Why? Because their gross additions market share is approximately 47%, 48%.

So, this is good news, because in terms of dynamics, in terms of looking forward, this can of course trigger an additional increase in terms of market share, customer base market share.

When we move into the fixed, the fired direct OLOs, here we are talking about the unbundling direct fixed operation which is the most important one. Wind Tre has the first position if you exclude Telecom Italia. So, excluding Telecom Italia, the market share of Wind Tre is 38.8% in 2016.

What are the most important dynamics? I think that you have been reading on the press and some rumors that are particularly out there. So, the number one is that Telecom has recently announced the birth, or let me say the entrance of a second brand in the market. The other important information is that Iliad is expected.

Of course, we cannot speculate too much on Iliad. We know that they are preparing their market launch but we expect them to be in Italy, operating live by the end of 2017. Maybe after the back-to-school season.

Another important thing that is already happening in Italy in terms of positioning is that the two big players, Telecom and Vodafone that now are the number two and the number three in the market are trying to leverage as much as possible this positioning in terms of very strong 4G players.

On the fixed, I think that convergence, fixed mobile convergence is a reality. Customers are now looking at convergent solutions because their experience has to be seamless experience. It's not only mobile but it's fixed.

Fixed is becoming more and more important in terms of the purchasing decisions of customers, and mobile is becoming the second option in order to increase the package and the value position.

And this is really now the outstanding trend in the Italian market. Everybody now is trying to enhance the fixed mobile convergence proposition and one important thing that Wind Tre has in terms of partnership is this agreement and partnership with Enel Open Fiber, now Open Fiber. That is a real alternative to Telecom Italia in terms of fiber rollout.

With the difference that Open Fiber is working on fiber to the home technology while Telecom Italia is merely working on fiber to the cabinet. And this, in terms of performance, is absolutely a big, big difference.

The pillars of the strategy of Wind Tre. There are four and they are very simple. Normally when things are simple, work much better.

The number one is the market leadership. It's not only being the number one in terms of customers, but it's also working in order to enhance and strengthen the customer satisfaction. The relationship has to be extremely well managed. This is the most important piece of loyalty and engagement.

And this is what we want to be; the most reliable, the most transparent, the strongest operator in terms of customer relationship. And there, you will see later, VEON will play an important role.

Then, we are looking for boosting this fiber proposition. Enel Open Fiber in this moment is covering approximately four of the most important, largest Italian cities. By end of the year, there will be 13 cities.

And now we are agreeing on the next 80 most important Italian cities by 2018 and 2019. And again, this is fiber to the home, it's not fiber to the cabinet. So, we're talking about one gigabit onwards.

The third important aspect is the access mobile network. And not only the access but also the mobile call network. Here is where we want to play the most important card we have in our integration plan, which is building a future-proof network, the best 4G LTE network with a single-run technology that can allow us to become the number one in terms of customer satisfaction. Not only because of the relationship but also because of the quality delivered.

In terms of digital all-in, I think that Christopher has been absolutely super-clear in all the new things that are coming up with VEON. VEON in Italy is real, is already in place. Very recently, we have reached more than 1 million downloads.

We have started, of course, quietly, but now we are taking off and these numbers are growing week by week. And the other important information is that most of the things that you have seen, that Christopher explained extremely well in terms of content, in terms of content strategy in general, will be available in Italy, in Wind Tre, in the second quarter of 2017 -- so this year.

So, we are talking about something that is coming up right now. Like coming soon, but this soon is very soon, it's right now, it's in the second quarter of 2017. And this will have an important role in terms of differentiation. Again, we are trying to enhance and strengthen relationships not only on our physical touchpoints but on all our digital touchpoints.

To become the best digital player, not only because we are digital but because we are able to engage customers in the perfect way, differentiating our value proposition in the most effective way compared to our peers in the market.

Beyond mobile B2C, we have the mobile B2B, the business segment. Wind Tre is particularly strong when it comes to the consumer segment. Our ambition is to become super-strong in the business-to-business segment, which means small-medium enterprise, large enterprise. And we will be successful in that segment for the simple reason that the network will be supporting this strategy.

The more we improve in terms of customer and natural perception, the more we'll be able to increase our penetration in the segment. As well as on the fixed. Fixed is not only the ADSL, unbundling local loop but it's fiber. And the more we grow in terms of fiber to the home, the more we will be able to be extremely effective in churn management.

It's a market standard, the churn, when it comes to fiber it's approximately [10%]. When it comes to mobile, average market is approximately 30%.

Lean company is the fourth pillar. Again, I think that Alexander has been absolutely super-effective in explaining what exactly being a lean company means. We have a [merged] integration plan, something that we have worked out in 2016. We have understood exactly where are the most important areas that we need to address in order to have a lean company where the integration can properly work.

And again, we are not talking only about linear cost savings, we are talking about real, integrated, efficiencies in this Company. Putting everything together; buildings, people, processes.

Creating a new IT stack, having a new network from scratch. Not only processes but technology as well. So, this is really important in order to deliver all the results that we have in front of us.

Sorry, just forgot to say that in a nutshell, if we had to summarize all these four strategic pillars, it's important to say that the goal of Wind Tre is to become the most innovative digital telco with the largest and best 4G LTE network. This is our ambition.

Dual brand strategy. Every time I speak to whoever, the most, let me say, voted question is, what are you going to do, guys, with your commercial brands? The decision here has been already taken with our shareholders, is to keep our two super-strong brands in the Italian market in the B2C segment, Wind and Tre. The equity that has been raised has been created with these two brands is very strong.

We would like to leverage it. We would like to be very effective in the market by competing from two different angles thanks to a clear positioning of these two brands. One is going to be super-relying on the concept of being closer to you -- this is Wind. And the new one, the new positioning of Tre is the future you want.

The idea of these two brands is to have a clear positioning, very differentiated, complementary and working in a harmonized way, we will be able to compete effectively with the new entrants in the market.

As I said at the beginning, there will be Iliad, there will be other second brands. Much better having two established brands than, let me say, creating a new one. So, the starting point is quite positive.

When it comes to the main financial goals, here is very important to mention that in terms of synergies -- and you know this very well because we have already announced that -- the goal is to get approximately EUR5 billion plus of net present value. So, the value creation of the joint venture of Wind Tre is more than EUR5 billion from the synergies.

And this will come from synergies in all areas. We are talking about commercial, we are talking about technology, we are talking about human resources, G&A, all the different areas. So, we are exploring all the synergies in different areas in order to create more than EUR5 billion in terms of value creation.

So, it means that we will get EUR700 million of synergies of run rate that will be reaching 90% by 2019.

If we move into the second financial goal, we are talking about deleverage. Deleverage is important because thanks to deleveraging, we will be able to, of course, optimize our debt structure, our capital structure and, as has been already anticipated by Andrew, our aim is to get to a leverage target which is below 3 times in the long term.

Of course, we are exploring all the other opportunities in terms of capital optimization. And this is something that we are looking carefully, because it's an important opportunity for Wind Tre. In a nutshell, the return on investments in terms of dividends can be done following a precise policy that has been agreed by the two shareholders.

At the moment will be 4 times -- below 4 times net debt, indebtedness. Then we will be able to pay or to return in terms of dividends approximately 40% of the equity free cash flow which goes down to if we are below the 3.5 times then the free cash flow that can be utilized is 60% in order to give the right return to shareholders. When it goes below 3 times then the policy says that 80% of the free cash flow can be realized for this cap.

So, our focus is really crystalizing, is really working on the right return to shareholders in a very full, comprehensive way, methodical way, working effectively on our merged integration plan and delivering those synergies.

We have accomplished quite a lot of things. As I said, we have been working for a very short time. But in terms of perception is like I've been working for approximately three years. So, one month is equal to one year in my personal perception because of the lot of things that we have already done.

With the cooperation of VimpelCom -- now VEON again, I now have to be use -- utilize VEON instead of VimpelCom -- and Hutchison, we have already approved the business plan, we have already approved the budget, we have new management appointed.

By end of February, which is now, all the management is going to be in place and fully appointed, not only the CEO minus four. All the management of the Company.

And this is extremely important because it means that everywhere you go, you will find processes and people in place in order to deliver all the numbers that we have seen. The incentive policy is already in place. But at the same time, we have a single -- a supervisory board from day one that is supporting all the most important strategic decisions. So, the governance has been already set and is alive and kicking.

In terms of setting up a single commercial strategy, as we said, the brand strategy is already in place. We have already launched the new advertising campaigns and positioning campaigns of the new -- of the brand 3 Italia. So, that brand is now playing with the new positioning advertising brand campaign.

We have already hormones the different products and offer portfolio. We have already put in place all the different cross selling. Now we are cross selling the fixed product in the 3 Italia stores.

We have already eliminated cross-incentive compensation scheme between 3 and Wind in terms of mobile number portability, which is part of the integration plan. So many things have already happened. It's like the Company is already in place and operating.

Fast track to an integrated technology infrastructure. Again, this is really important. We have already chosen the most important technology partners on the network and on IT. So, we are not starting, it's not just simply theory, but we are already working with the selected partners.

By the way, on the network (inaudible) we will have just the single-run, completely new, super-modernized, that we will now consolidate moving forward in a quite short time in order to deliver -- to start delivering the right quality perceived in the most important cities by the end of this year.

We are targeting approximately 21,000 radiating sites in terms of the footprint of the new network. Last but not least, the contract with the remedy taker. This is, again, up and running. All the different milestones are absolutely well managed.

We expect Iliad to be in the market, as I said before, by the end of 2017, but we have already selected -- we have already freed part of the spectrum and approximately 1000 sites that can be given to Illiad for the construction of the network.

They have also the commitment to build the network in Italy by 2020/2021, and the roaming agreement has been already set up, not only in terms of contract, but in terms of the technology there is necessary in order to get there.

Again, just as a conclusion, I think that many things have happened. This Wind Tre is the number one mobile, is the number two on the fixed. We are competing in a very tough market, but the starting point is the right one and, as I said, approximately 50% of the customers are interested in these two plans, that through the right [monetization] we'd be able to keep competing very effectively in market, moving forward.

We will do quite many initiatives and activities. Most of them are already in -- under construction. Things have already happened. We have the ambition to be the most innovative digital telco in Italy and, as I said, more than 1 million downloads taking up with a clear road map in terms of new services being implemented and delivered in the market in the second quarter is absolutely key for our development.

What we accomplished is really important because, again, this is not just an exercise that we are doing on paper, but this is something existing. We have already put in place a lot of activities. Things are moving very fast and they think that this is going to be a very successful 50/50 joint venture. Thank you very much.

Please, Jean-Yves, come on to the stage. I was forgetting about you.

Thank you very much. I think that concludes at least the day in terms of the presentation. I think that we've given you really a full breadth of how, on one side, we're really transforming VimpelCom, or the old VimpelCom, the telecom business side of the house and, on the other side, how we're really betting on reinventing this telecom business to become a global tech company, one that we've rebranded today as VEON as we insure, or we position this transformation as core ultimately to the strategy going forward.

So, I'll invite Andrew on stage with me. We'll open up to Q&A. The whole management team is here. We've got a few other individuals of the management team. We've got Scott Dresser, our legal counsel. There in the back we've Jon Eddy, who heads up emerging markets, and they'll be ready to answer some of your questions if there are specific.

So why don't we start with Q&A in the room? Are you going to give us an introduction to Q&A?

Very good. Thank you. Just a little introduction in terms of we have sufficient time for the Q&A, so let's agree that you ask one or two questions, not five, in a single go, first of all. Secondly, once we have done a few questions here, then there may be questions on the webcast, that we can also take from the webcast. With that, I would like to open up the floor and to get the first question. Ivan, would you like to?

Hi. May I ask you two things. Firstly, on VEON, which was the centerpiece of today's presentation pretty much, so I was just wondering how are you planning to displace the existing incumbents in this space, like WhatsApp or any other messengers which is out there? Aren't you afraid of cannibalization? And, generally speaking, what kind of investment do you foresee for these? Is it $100 million, or it can be much, much more? So, I think that's something that worries both investors and myself and analysts here.

And the second question is on the dividends. How exactly is it moved to free cash flow? For example, this year it's $0.23 off about $600 million. Do we need to think about this as proportionate increase of free cash flow? So, portion to increase to $1 billion dollars of free cash flow will yield the same increase in dividends or something else? Thank you.

You want to start with dividends?

Good. Why not? All right, (Technical difficulty) so we wanted (technical difficulty) cash flow evolves, then so will the dividend payment, but you shouldn't bank on -- if we guide to a 10% improvement or whatever in equity free cash flow, that you can therefore just simplistically assume a 10% increase in the dividend payout either, so it will be progressive. It will be based on, but not directly linked to.

On the first part of the question, do we risk cannibalization, yes is the answer. And our strategy is, in fact, to cannibalize part of our business rather than have others cannibalize, ultimately, our business.

But as Christopher took us through, we see this equation as not a risk management equation. We think that this is potentially a growth equation for the business as well as an opportunity to fundamentally re-engineer further our cost structure and the way that we operate, ultimately, as a business.

So, we're looking for new revenue streams on one hand, but on the other hand we're looking for changes in our cost model, changes in distribution costs as we go online for everything, changes in customer support costs as we deal with things online versus in the brick and mortar matter. That's how we think of this ultimate equation.

In terms of how we intend to compete, Christopher, do you want to say a couple of words there against the OTTs?

(Technical difficulty) differentiation against these messaging platforms, so let's recall where they stand at the moment. These are messaging platforms like we know them. What they don't have is two things. First of all, interestingly, they don't have the access to the contextual data which we have. That is the irony of the telecoms industry. And the (inaudible) has shown that [chart holder] context and richness of that we do have. In order to work together with these services, that is simply something others cannot do in the mainstream space.

But, of course, that cannibalization element around being truly free and our free message around data connectivity is the key differentiating element in the beginning to break into that phalanx of messaging services.

What's important when we get taken up and initiating in the marketplace that we create that element of virality. What we're doing here and didn't talk about that, we are putting in place some members' programs.

So, if you joined the Italian app in the verge of the first six clicks you can add your six, seven, eight friends or dearest colleagues or family members to your person network no matter where they are, and you incentivize. You're getting at the moment a free gigabyte in Italy for adding a friend, up to 10 friends, that's possible. It is very simple to create these micro networks which are there.

You've asked also the question of investment. This clearly is not an investment, not for $100 million. If you look at 2016 is where very low double digit US million numbers what we invested. We roughly operate our internal competencies at the moment with 120 people in product management and software. We're very concentrated and have been able to pull this out, but we'll be increasing that team, basically, to two and a half times that size during the course of 2017.

Very good. Next question please. Dalibor?

Thank you. My question is a follow-up on the earlier one on the cannibalization item, the revenue elements of this. So essentially, I don't know if you can tell us how much of your total service revenue is cemented in, potentially, the under (inaudible). That's the first part.

Secondly, what exactly are you going to be offering for free? Is it going to be the videos as well? What type of content will actually be potentially free, would be free and therefore for cannibalizing the others?

The third one -- and sorry, I probably asking two more, which is all part of one, if you don't mind, Bart.

I know the trick

The third one is what sort of competitive responses are you expecting to these? I was just reading, literally a couple of minutes ago, that [MPS] is going to be launching in Russia free mobile data sponsored by advertising. I don't know if it's a response to this or whether it is a separate initiative, but it looks like that competitors will also try to [re-work] their models.

So how much -- and the fourth one is what -- I mean I understand that the platform is quite unique and difficult to replicate. Nonetheless, you've managed to do it in a very short time. I assume that if some of your competitors throw some money at it they could possibly achieve some of these things as well. Perhaps not, but I just wanted to see -- is it really now gains for time for you where you want to get this momentum very quickly.

If you don't get it in six months, nine months, and then there's a threat that someone else may be entering this space, shall we see it like that? Or you think that you have something more unique, more sustainable, even if it takes a year, a year and a half, that you're still okay and it's unlikely to be replicated?

Christopher, you want to take some of those questions, and maybe I can point to Kjell on the [FTS] --

Yes, I'm happy to, and then --

--and how the Russian operators might replicate this.

I'm happy to comment on these questions because they are key questions, of course. First of all, what is for free? There is a clear delineation in the user experience or when you're in the VEON system and you, as a user, do recognize that, you are in there for free. That includes playing a music track or playing a certain trail in a video when you're still in that.

But you will clearly see that you leave the ecosystem and, for instance, will go to a YouTube stream outside of the VEON platform and end up in YouTube in that moment you will be charged for data, so that is very clearly indicated for users.

We are very diligent on how far we go because we are actually designing that user experience together with the partners. Our actually content is displayed in a messaging experience, how you could order taxi or book a table in such a messaging experience, so that is the limit of that.

Are we afraid of a competitive move? I think we are at a speed with that company and a clarity of also at the intention of the shareholders that transform that business, that it would take telcos as we know them one and a half years of a debate, whether that it is at all feasible, so I think we're going to run now.

And it's true. This is not about a linear growth. We need to really achieve viral growth in the very short term, in the first 18 to 24 months, with that platform. It's not something which you can postpone into five, six years out from here. So, those are key answers.

Kjell, any perspective on Russia and how you see VEON positioned against the others?

Well, I think what I could add to what Christopher was saying is that of course everything can be copied in this world. There's nothing that can't be copied over time. This is more about setting up a new platform that will be evolving over time, so what we will launch in Q2 2017 will be exciting but, of course, when we work on that for the next 6, 9 months, 12 months, working with more partners, getting more offerings on this platform, we are creating a position and a culture and a company that is on the move all the time.

If you want to catch up by copying, I don't think it's a very easy concept. Yogesh knows how long it has taken to build up the first-class DMP platform that we have. The data management platform of Beeline is good. It's not something that's going to be ready in nine months. It is ready. We can use it today.

So, setting all these things in motion, tying it together and having the culture of constant improve that we're going to build there is going to give us a head start. And, of course, sometimes you will see people try to come up with something to create a bit of noise, so maybe -- so it doesn't look so exciting, what the innovator is coming up with, but that's normal.

Advertised sponsor data, I don't want to speak negatively about our competition, but I do remember there was a time when you can have voice calls so you could be interrupted in all kinds of ways so you get it free. It's giving away value in that sense. I don't find that super exciting, to be honest. We want to get people on board because they see a value every day of being on the platform.

Can I make one more comment please, because I think that might be interesting for you as our analysts and investors. I came back from the software industry after seven years being a (inaudible) entrepreneur and was quite hesitant to re-enter telco scheme knowing that. I was in there for 12 years with another big telco decades ago. Already I'm an old man.

But it's very important to know for you that we only doing this in terms of innovation. This is not like a big telco operator who has 2,500 R&D projects and developing projects and then does advertise something on a fair like Barcelona.

When we took this decision together for VEON we stopped any other project in the Company. This is like a start of a mass Silicon Valley start-up which is crowding around a single mission creating VEON. We are announcing today to you that we are rebranding a company VEON and the name of that platform is also VEON.

So, to give you just a sense of how radical this endeavor is for the Company, this is not an afterthought. That is not nothing at the side lens of something or where somebody goes into an advertising messaging app somewhere, number 17 of my R&D projects. This is it for us. We want to break the paradigm. We want to play on par with the heavyweights in that industry and create something entirely new for users out there.

Here, Nick, third row.

Thanks very much. Nick Delfas from Redburn. Two questions. A fairly simple one first of all on the Italian dividends. Is the test every six months, every 12 months? Is it payable on a rolling 12-month basis, quarterly?

Then, just to go back on VEON, the other question, if I am a Wind subscriber and I haven't recharged for a month, is it still free. If I'm a Vodafone subscriber what aspect of it is free? If you could just explain a little bit more the charging model. Thanks.

Dividends.

Definitely dividends. I'll address your question and, Nick, a couple of other observations as well in part, as part of that. First of all, it's not actually correct to just talk about them as dividends to start off with, right. I think you'll recall, when we announced the transaction, that we basically -- we kept over EUR5 billion of the shareholder loan that previously was in place in the old hat structure in place.

For the first several years' distributions from that Italian joint venture will actually be in the form of repayment of the shareholder loan, which is -- first of all really tax efficient.

And, secondly, we don't have to go through the bureaucratic process of having audited financial statements, formally declaring a dividend et cetera, et cetera. Therefore, as part of that, all we need to do is put two successive quarters past the relevant leverage threshold test, and then we can just make the dividend -- the distributions as and when we want to.

To be clear, the leverage test is the only thing that's important. There's no other structural limitations which exist within the financing documentation within that JV either. When we did the three rounds of refinancing of Wind from early 2014 through to Q1 of 2015 we cleaned up all the documentation and made the debt structure completely fit for purpose within the new joint venture.

For free.

It's free, yes. It's also free if you don't top up, but you're alluding to the question of fair usage and abuse. We'll be careful about that as we go along but, at the moment, we really open the gates to get this going, but we will be managing that process also in terms of how we create the user experience and how far we go in including actually certain consumer experiences and where you hand over to an application outside.

This is a very important topic. As a Vodafone customer, you're out of that paradigm at the moment in Italy, so you can use the VEON application, of course, but not free of data, so you're incurring data charges at Vodafone and here's an incentive which we also use, of course, in converting customers because we have the knowledge of the VEON user on another network, to connect him and pull him in. That is why a market share gain most likely out of VEON.

Very good. [Georgios], at the end.

Just to follow up on your answer around acquisition passed from VEON, if I'm a Vodafone customer in Italy, presumably--

I hope you're not a Vodafone customer.

Well, not in Italy. I'm not a Vodafone customer but, presumably, their experience will not be the same as when I'm a Wind customer because you don't have all the network information. How would the user experience look versus what you just demonstrated earlier?

Then you mentioned during your presentation a significant reduction in the cost of gross adds from, let's say, EUR25 or EUR9 or EUR8. In Italy, in particular there are some verification processes you need to follow. I'd be very interested if you can talk us through the path to verification if I go through VEON versus going to a shop in order to migrate.

And we will do that to get a maximum on the verification process. The user experience for a Wind customer is as I've shown it, starting in the second quarters. To date it's only the messaging experience which has already produced, after only three weeks of advertising, more than one million of downloads, so that's there.

For a competitor's network customer you can still access the content of course. I've shown Vivendi and STUDIO+ or music tracks, etc., but you're reaching certain limitations on the contextual internet services.

Of course, our identity and the data on file will develop in VEON even without the network connection because you would get a customer consent of using maybe location. With each transaction you are starting to, you know, create a profile and we can segment et cetera, but it is limited in comparison when you have the fully fledged access to network data which Yogesh has shown on his chart. That is the differentiation.

I would say you, in the beginning, may be lacking 20% or 30% on that element, but we will also be able to do a lot. And that brings me to the on-boarding process you're asking in Italy.

First of all, it's a very simple process in Italy. You're automatically detecting your phone number, the [MSI] is (inaudible). You just have to confirm that this is you and that your name is right. We asking for your email. We asking for your payment details, and we're giving an incentive to leave us the payment details. In the case of Italy, you get a 10% discount on your telco bundle.

In the first cohort of users, after a couple of weeks we have a conversion rate of significant double digit of users giving us payment details, which is a revolution. It's not easy and then to the consents you need in Italy. So, we were heavily studying the legal environment in Italy, what you need there in terms of -- do you need a password, yes or not, to access a service like that? What are the consents on data?

Please, Maximo, help me out a bit. You might even better understand where that question is targeted. (Multiple speakers) --

-- your question. Who made the question? Okay, yes. Your question is more on what we call the e-commerce site; so, the fact that you can buy the SIM card, and then you can manage your digital on-boarding without passing by the retail distribution footprint.

This is one of the developments that VEON will have, so the full digital boarding without passing by the retail footprint. When you look at it, then you will notice that, as a market standard average, the acquisition cost is approximately between EUR20 and EUR25. This will drop significantly because then you will have the logistic costs, and maybe you will have just something more in terms of digital customer recognition.

But Christopher is perfectly right saying that this is going to become a low digit -- just a one single digit acquisition cost, but that process is something that will be managed by VEON. At the moment, it's important to create the right engagement to capture the credit card, to manage the contents in terms of revenue sharing, because it's also important. There is another question that has been made in terms of revenue cannibalization on one hand. There can be some revenues cannibalization but, on the other hand, there is a significant potential value creation thanks to these content partnerships.

Again, the real key success factor is customer experience. The way it is managed right now -- and this is something that customers are now really stating and commenting -- is that you can do everything with only just one, two steps. This is extremely important. It has to be easy and, at the same time, has to have all the most important differentiating contents moving forward, not only my account and the automatic top-up just normal top-up.

Very good. No worries. Everybody will get a chance. We have time. I had already pre-selected Herve.

Thank you. A question again on VEON and the -- in terms of the tariff policy. I mean do you see VEON as an opportunity as the same times you launch a platform, let's say, for example in Russia, as changing your tariff policies, especially on the prepaid and on the low hand of the prepaid? Do you think it could be a tool that can be used potentially as well to change and make all the players change their tariff policy? I'm particularly thinking of Russia as one.

The second question is in some of the roll outs and the speed of the roll outs in the different countries. I guess you had some talk already with some of the regulators but those are free rating pricing. I was wondering, are there some countries where the regulator is more difficult for you to put that model out? Finally, just why did you go for soft launch in Italy? What was the reason behind it?

Okay. Let me try and maybe take the questions in reverse. So, soft launch in Italy was really about testing and gaining knowledge about an alpha version of the product rather than waiting basically to have a full fledge release that Christopher demonstrated. I think we're breaking really the paradigm of not doing these two or three year developments and then rolling out something.

Since we've launched in Italy, I don't know how many releases we've rolled out -- seven releases. We're getting really into the Silicon Valley OTT model, leaving behind really the telco model of quarters, if not years, to do development work, all right? So going into alpha beta versions for us is absolutely critical to gain that expertise and gain the knowledge in the marketplace. So I think that's -- to answer how crucial it was to start in fact in one of the markets and our expectation and our objective is obviously to roll this out as -- in many markets as we can across the globe.

Regulation, do you want to take that?

Absolutely. So of course, the internet neutrality or net neutrality debate is something which is very close to that discussion of zero rating, zero crediting. But the most relevant debate for us on that is in Europe and I think it's important to have that debate because this is about an open platform. So what is going on in Europe is something -- we are watching, we are participating but we also want to shape that development and that is something we are clearly aware of. Outside Europe as you know, the discussion is not that advanced in our markets.

On pricing and portfolio share, would you like to say something on Russia?

Yes --

Before we go to that, let me just make one or two comments to introduce the topic. But what's really important for us as we go all out digital is to fundamentally simplify our tariff structure, and that has huge implications in terms of positioning of VEON in the marketplace and our telecom brand, but also huge implications in terms of the transformation of our legacy IT systems. Because part of the reason that the industry has such high IT cost to revenue is because of the inherent complexity that we've built into these systems.

The system stack that we're rolling out is predicated on the basis that we're going to profoundly transform and simplify the tariffing structure that we have out there, as Kjell said and we'll repeat around data pricing which we feel is absolutely appropriate. So, can you perhaps take the Russian angle, where you've had tens of thousands of tariffs, right, and maybe Maximo can pick it up in what we've done already in Italy around the two tariffs that are absolutely center now to the business.

Yes, this is --

Russia first.

I'm sorry, yes.

Stretch our legs a little bit. Let me -- first of all, what Jean-Yves said. Simplification, cleanup, absolutely important. We have taken out 90% already. There is more to be done. This is just something that has to be done by every telco. We've come quite a long way, but back to the pricing structures in the Russian market, there is a secular trend in the Russian market from pay-as-you-go to bundles. More and more people want to go and have a bundle relationship with their provider.

Beeline started that one, that push quite some time ago and is the leader also in bundleization. We have paid a little bit of cost for that in terms of our interconnect, but we're clearly leading that secular trend and that is something that we're going to continue with. We think the market is going that way.

When it comes to the VEON launch, for me, that is much more about creating a personal or private internet platform where we can drive new value to the customer base. I think the initial stages which Christopher describes, the key attributes for -- basically can be always on, it's super important, but going down the road, I am a believer that the whole marketplace dynamic partnerships is going to be the real driver for people's excitement about being on the platform to put this together. That is what I want to do with VEON. I don't see it as a way to transform the pricing structures.

We do put a lot of emphasis on driving data centric pricing. Those of you who read Russian newspapers will see that that is in the media all the time now. It's being spoken about and we have pushed that because we think it's the right thing to do. Not only for ourselves, for the industry and for society because it's absolutely unfair that heavy users drive so much network loads that you have to build more and more capacity instead of spending your money on building coverage, which is much better for society and also much better for us in terms of being able to offer good services.

So back to your question -- I don't see VEON as this primary driver for reshaping the prepaid market in Russia.

Yes, VEON and pricing simplification are really tied to each other. We decided to launch two prepaid tariffs, just only two prepaid tariffs, or all new gross additions for new acquisitions in Italy. So, the combination of a new customer downloading VEON is simplifying at a very big extent, the offer portfolio in the market.

Of course, this does not mean that if you are a customer of Wind that has been a customer for a long time, that has another tariff plan and once you realize VEON, then of course that customer can download the application and use all the functionalities and features that are included.

It's important because the process of simplification is always based on the concept that customers really love, the best customer experience where they cannot and they don't have to think. So, big allowances, very clear, very transparent, the possibility to check those on the account that is embedded in the VEON application, but at the same time having the possibility to get more services thanks to the contextual market and that Christopher was explaining before. This is integrated network, it's integrated with the theorem of the Company so you can really get all this information and that information is ready for whatever, let me say, upselling initiative we want to play.

Very good. Before I -- this next question -- feel free to ask other topics as well. So, it's clearly catching the attention which is good, but feel free on others as well Roman, I promised you one.

Roman Arbuzov from UBS. So, for the sake of asking something else, I will start with a cash flow question for Andrew. You mentioned you want to significantly increase the cash [fluidity stream] from the OpCos to go beyond the $0.5 billion]. So, can you just give us maybe a little bit more granularity where you say the additional cash to come from and then maybe just this part of that answer, you could touch upon Ukraine and Uzbekistan that you mentioned last quarter? That'll be helpful. Then I've got unfortunately, I do have one more in VEON, but afterwards.

Why don't you ask the VEON question first as well and maybe we can just (inaudible) the answers.

Sorry to labor the point, but it still feels like there is a dislocation between VEON and the emerging markets portfolio of VimpelCom. You do have the Italian business which is very different and you're also operating in deep frontier markets, right? I mean Kjell was talking about good old data monetization in Russia and it just -- it's hard to reconcile it with VEON, so can you just maybe provide a little bit more granularity, whether you expect VEON to operate in profoundly new ways in emerging markets versus what we have in Italy.

Okay. So, let's do the cash at streaming first. So yes, as I said here, we've had in excess of $500 million of dividends declared by the OpCos in 2016 and that's across a range of OpCos, so much as -- Russia's broadly only half of that total. So, there's Kazakhstan, Kyrgyzstan, Ukraine has completed the repayment of the shareholder loan that we put in place back in February of 2015 to fund both the license acquisition and the --