Executives: Bart Morselt - Head, IR Jean-Yves Charlier - CEO Andrew Davies -

CFO
Analysts: Mitch Reznick - Hermes Ivan Kim - VTB Capital Gavin McKeown - Pioneer

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

Please go ahead sir.

Bart Morselt: Yes, thank you. Good afternoon or good morning, ladies and gentlemen. Welcome to VimpelCom's first quarter 2016 results conference. Today I am pleased to be joined on this call by Jean-Yves Charlier, our Chief Executive Officer; and Andrew Davies, our Chief Financial Officer.

Before getting started, on Page 2, I would like to invite you to pay close attention to the disclaimer which I will not read out loud, every word of it applies to the following presentation including the statements on Italy joint venture and the valid telecom transaction. Now the earnings release, the earnings presentation, as well as the exact disclaimer text can be downloaded from our website. Let's have a look at the agenda on Page 3. For today's agenda, our Group CEO, Jean-Yves will run you through the group highlights and the financial highlights of the first quarter. Our Group CFO, Andrew Davies, will then talk you through the group and country results in more detail, to close his presentation with the key targets for the year.

Following that Jean-Yves will close the presentation with final remarks. Before heading to the Q&A Session where both, Jean-Yves and Andrew will be available to take any questions you may have. With that I would now like to give the floor to Jean-Yves. Jean-Yves?
Jean-

Yves Charlier: Thank you, Bart and good afternoon gentlemen. Let me first focus on the highlights of VimpelCom's financial performance in the first quarter.

First and foremost, VimpelCom returned to organic growth both in terms of revenues and underlying EBITDA in the first quarter driven by strong results in Pakistan, Bangladesh, Ukraine and Uzbekistan and partially offset by Russia. Operationally these results are driven by the strong momentum in data services which are growing double-digit by 27% year-on-year and this across the whole footprint. On the Italian joint venture, the regulatory review is ongoing and the process has entered into Phase 2. We remain confident to complete the transition by year-end. We remain equally confident that the pros of merger of Mobilink and Warid in Pakistan, both complete around the end of the second quarter of this year as we have already received the first of four regulatory approvals required.

In terms of refinancing GTH financed successfully issued bonds a few weeks ago for an amount of $1.2 billion to refinance the shareholder loan with VimpelCom Amsterdam. Andrew Davies, our CFO, will later on this give you a brief overview on the transaction and will explain how it fits into our capital structure strategy. On the Uzbekistan investigation, we announced settlements with the SEC, DOJ, and OM in the first quarter. VimpelCom paid $795 million of fine and discouragements to the relevant authorities. This now is reflected in the net debt figure which therefore increased at the end of March compared with year-end 2015.

Finally, our strategic priority to streamline our group and reduce our cost base through the performance transformation program is on-track and accelerating. Overall, VimpelCom delivered improving operational momentum in the quarter in spite of the headwinds in Russia, a demonstration that our strategy to reposition VimpelCom is on-track. In terms of financial highlights, VimpelCom delivered a financial performance in line with our expectation and with the guidance during the quarter. However, our reported results have continued to be impacted by currency headwinds in many of the countries where the group operates. If we strip out this impact, service revenues increased by 2.6% organically year-on-year, primarily driven by the good operational performance in most group operating company, especially in Pakistan, Bangladesh, Ukraine and Uzbekistan.

Underlying EBITDA also grew organically in the first quarter by 1.7%. Our investments in promoting the usage of data services such as the focus on smartphone penetration slightly impacted our EBITDA margin compared to the same period of last year to 39.5%. Net income stood at $189 million for the quarter, the component of net income coming from continuing operations improved by $126 million year-on-year. If we look at the underlying net income which excludes the gain from tower sale in Italy and impairments in 2015 and minor impairments in 2016, the net income improved year-on-year by $270 million. On the CapEx side, the first quarter is usually characterized by low seasonality in terms of network deployments, at the same time we're also implementing the transformation program to be more focused in our investments without under investing in the business, hence optimize the utilization of our inventories.

The absolute figure of CapEx excluding licenses therefore decreased 27.9% year-on-year. Again, these results are on-track with full year 2016 guidance. Focusing on these financial results in more detail on Slide 6, we can also indicate that total revenue grew 4% year-on-year, even faster than service revenue. For the last 12 months, underlying EBITDA margin and CapEx contributed to the growth in operating cash flow margin to 22.3% or an increase of 1.6 percentage points compared to the same period of last year, in line with the full year 2016 guidance. Over the last four quarters, VimpelCom has seen an improvement in organic growth as indicated on Slide 7.

Both underlying revenue and EBITDA metrics grew organically. The line chart shows the trend of the reported figures fill hit on a year-on-year basis by our footprint weakening against the dollar, but at the same time with a softening of the negative trend which is even more visible in the next slide. On Slide 8, we have modelled the VimpelCom currency basket weighted by the respective revenue contribution of the various countries. We have indexed the VimpelCom coin with the first quarter of 2014 at 100 basis points. Over the last two years, the foreign currency headwinds have significantly hit our reported top line in U.S.

dollars. However, if we look at the curve of the currency basket starting from the first quarter of 2014, and indicates we have potentially reached an inflexion point. Let me now make comments on other highlights starting with Italy on Slide 9. We remain confident to complete the proposed merger between Wind and 3 in Italy by the end of the year. The joint venture will create a stronger competitor, able to compete with the two market leaders and drive competition, innovation, investment and consumer benefits.

We believe that the European Commission will review the transaction on its own merits. The Italian mobile market today is bifurcating in terms of competition with the first and second players pulling away from the third and fourth players in terms of investment, coverage and network quality. The emergence of a third viable operator with a state-of-the-art network will lead to more competition and greater as well as innovation for the benefit of all Italian consumers, as well as support Italy's digital agenda. Our objective is to build a well-structured third competitor in the Italian marketplace with a mobile network of over 20,000 sites offering 99% outdoor and 90% indoor 4G LTE coverage by 2019. I would like to focus my final comments on our performance transformation program which is on-track and accelerating.

Back in February Alex Matuschka, who heads up the Performance Transformation Program, presented the initiatives in detail. A cornerstone of the program is to simplify our group and make VimpelCom agile against while taking cost out. During the last three months we reduced headcount by 7% representing 3,700 staff who have left the company. We reduced almost a third of the micro-teams within the organization and simplifying our organizational structures. As such we are closing offices and we have reduced the real estate footprint by 44 office locations during the quarter representing approximately 27,000 square meters.

These measures imply the reduction of 5% of the global office footprint. At the same time we are focusing on reducing the CapEx intensity of the group and a cornerstone of business to globalize our purchasing. At the end of the first quarter, 40% of investments is globally managed now through global contracts. Furthermore, we have launched initiative team at mitigating the forged impact on our contractual framework and succeeded in reducing the forged exposure by 15% during the quarter. We are also focused on improving the supply chain.

We reduced in the first three months of the year, inventory levels by 15%. At the same time we reduced the warehouse base by 7% across the group. Bottom line, performance transformation has already delivered a 5% total OpEx savings coupled with a 15% year-on-year organic CapEx reduction excluding licenses. I will now pass on to Andrew who will run us through the group and country financials in more details.

Andrew Davies: Thank you, Jean-Yves.

On Slide 12 we provide a breakdown on the evolution about service revenue in both reported and organic terms. On reported basis, our first quarter 2016 service revenue was still impacted by foreign exchange movements resulting in the 13.6% year-on-year decrease with an unlashing [ph] effect of foreign exchange rates and service revenue in the negative $366 million. However, on an organic basis, service revenue grew by 2.6% year-on-year. If we look at the decomposition of this, you can see it from the top chart the legacy on road revenues voice and roaming continued to decline. But this was more than offset by significant growth in the more digital revenue streams such as data and MSS which grew year-on-year organically by $0.20 and 26% respectively.

The chart at the bottom, we see that the marginal decline in Russia's service revenue was more than offset by strong mid-single digit growth and revenue from the emerging markets and Eurasian business units. And as I'll discuss in more detail later, the decline in Russia's service revenue is fully attributable to foreign exchange driven decline in fixed revenues and that mobile service revenue continues to grow. Now let's move on to the EBITDA analysis on Slide 13. On a reported basis, EBITDA also declined by 19% year-on-year due to both foreign exchange headwinds of $160 million roughly, and exceptional cost of $40 million which mainly related to performance transformation. The latter being a conscious successful investment we are making to sustainably improve our analyzed cash flow generation by at least $750 million.

On a year-on-year basis and as Jean-Yves already discussed, this program has contributed $66 million to the underlying EBITDA improvement in the first quarter. However, in order to front form the business we also need to have some shorter reinvestment of these savings and as value initiatives. And in the first quarter of 2016 the amount of this reinvestment was $109 million, mainly related to modern devices and expanding the network footprint. Looking at the second chart we see that on an organic underlying basis, group EBITDA grew by approximately 2%. This improvement being driven by growth of 58% and 7% in the emerging markets and Eurasian region respectively as a consequence of both their revenue improvements and their performance transformation programs.

As I'll discuss later, the reduction in Russia's EBITDA mainly reflects some commercial issues which are primarily transient in nature rather than having a permanent effect. Looking at the group consulted P&L on Slide 14, I will highlight the most important elements below EBITDA. So depreciation and amortization including impairments was down significantly year-on-year due to lower depreciation and impairment charges in the first quarter of 2015 in Ukraine and Armenia. Net financial expenses decreased by $47 million year-on-year or 22% mainly as a result of debt repayments following the U.S. bond tender completed right at the end of the first quarter of 2015.

Foreign exchange and other was positive driven by foreign exchange gains recorded in the first quarter of 2016 while the company recorded foreign exchange losses in the same period of last year. Now this may seem counterintuitive at first given the year-on-year currency headwinds that we're facing but this is primarily caused by the retranslation effect of U.S. dollar debt that's on the Russian balance sheet. Then the first quarter of last year, the Rubble depreciated significantly by about 4% from 56.26 at the end of fourth quarter of 2014 to 58.46 at the end of the first quarter 2015, causing a loss. While within the first quarter of this year, the Rubble has actually appreciated within the quarter by approximately 7% from 72.88 at the end of the fourth quarter 2015 to 67.61 at the end of this quarter, thereby creating a gain.

Tax expense in the first quarter 2016 increased significantly, mainly due to changes in tax regime in Uzbekistan which caused the effective tax rate in that country to rise above 50% together with improved profits in emerging markets. On profits from discontinued operations totaled $197 million, which was a $64 million decrease year-on-year. However, the first quarter of last year wind recorded an excellent regain of $322 million from the tower sale. Excluding this extraordinary item, the profit from discontinued operations improved year-on-year mainly due to the fair value of the color options embedded in the bonds which contributed a net $60 million and significantly lower financial expenses as a result of the refinancing of wind. Finally, in the first quarter there was a negative impact year-on-year from non-controlling interest which is due to the increased net income generation within GTH coupled with the impact of the closing of the Algeria transition within first quarter of 2015.

So let's now focus on net income from continued operations for which we recorded a net profit in first quarter of $38 million compared to a net loss of $88 million in first quarter 2015. If we exclude impairments and exceptional items, underlying net income grew by $69 million from $70 million last year to $86 million this year. If you look at the bridge, in organic terms we had a positive year-on-year contribution from the underlying EBITDA growth rate of approximately $16 million and slightly reduced depreciation and amortization cost of $6 million. Net financial expenses, as already mentioned, showed year-on-year improvement of close to $50 million and we have increase in taxes of $37 million. On a year-on-year basis, we've actually had a net positive contribution in the income statement from foreign exchange of approximately $60 million which is made up of the negative impact of $160 million on EBITDA, the positive impact of $80 million on depreciation and amortization coupled with the approximately $140 million year-on-year impact in the FOREX and other line which as I already mentioned is primarily driven by the retranslation impact of the U.S.

dollar debt on the Russian balance sheet. In addition, joint ventures, associates, and others negatively contributed $23 million on a year-on-year basis. So now let's move on to the analysis of net cash flow from operating activities. Last year we had a negative outflow of $764 million which was significantly affected by payments related to the closing of the Algeria transaction totaling nearly $1.3 billion. If we exclude these payments and Italy, which is now accounted for as a discontinued operation as a result of the JV enhancement, the underlying net cash flow from continuing operating activities in first quarter 2015 is equal to $443 million.

That has grown by 10% year-on-year to $488 million in first quarter of 2016. Within that the underlying EBITDA in dollar terms negatively contributed $146 million. However, that was offset or more than offset by improvement in cash flows written to tax interest and working capital which then contributed to the overall 10% year-on-year growth. The next slide shows the net debt evolution quarter-on-quarter. From the end of 2015 and as we projected in February when we provided our guidance for this year the net debt has actually increased within the quarter, $911 million.

The main contributors to this increase and the settlements with the SEC, DOJ and OM and aggregate amount of $795 million, $10 million of legal costs together with performance transformation cash flows of $44 million for a total outflow of $849 million in the first quarter 2016 which is represented with a bar on the right hand side labeled exceptional. These are the creeks of the net debt underlying EBITDA ratio to 1.7 times from 1.4 times at the end of this December and is perfectly in line for the target for the year-end is approximately 2 times. Net debt would have actually decreased by $62 million and the underlying net debt EBITDA ratio would have remained stable at 1.4 times. Since we are commenting on debt we have prepared two specific slides on the recent bond issued by GTH finance which Jean-Yves briefly listed as the main events that took place during the quarter. The bond of the GTH must be seen as part of the natural journey when the group started in 2013.

It started with us issuing bonds with full guarantees from our Russian company [indiscernible]. The structure that we offered in April in fact goes in completely in the direction of centralizing all of our required US dollar borrowing and they had become holding levels without any guarantees from any of our companies. At a local level as I have discussed many times in the past and the strategies to refine financing in the operational needs in the local currencies where we leverage opportunistically on market liquidity and availability on a country by country basis. Obviously this journey fits into the key strategic qualities for the group which is now structural improvement. The second slide is a brief description in terms of the bond issued along with a simplified group structure and would understand these proceeds.

So in brief GTH finance was able to place bonds guaranteed by VimpelCom holdings with the blended coupons of about 6.8% which is approximately 80 basis points lower than the group's average cost of debt for the first quarter. The offer was made up of two trenches with 4 year and 7 year and coupons six and a quarter and seven and a quarter respectively. And was very successful with the book feed oversubscribed by 6 times by 650 international investors. GTH issued these nodes and fully repaid $1.2 billion into company loan to become Amsterdam under bonds guaranteed by VimpelCom holdings which we will receive in exchange for the guarantee, a yearly fee of 3%. Now I will take you through the individual country performance and the explanation of the trends in the key market.

In Russia, as Jean-Yves already mentioned we see signs increasing competition in the market with the pricing pressure on devices and increased data allowances while the macro environment remains challenging. Service revenue decreased year-on-year by 1.3% and this performance is attributable to fixed line where service revenue decreased by 11% year-on-year as a result of the many customers moving from US dollar denominated to Ruble denominated conference. However, we grew our mobile customer base year-on-year by 3.5% to $57.7 million, as a result of the increase in the mono brand stores and the urban pricing. In local currency this translated into mobile service revenue growth of 1% year-over-year which was driven by 19% growth in mobile data revenues. EBITDA decreased 7% year-over-year and EBITDA margin showed a 3% on year-over-year decrease to 36.4% and there is more detail on the next slide.

The last 12 months CapEx revenue ratio decreased to 18% from 19% last year due to ongoing efficiency programs under phasing of CapEx plans. On Slide 21, we demonstrate evolution about EBITDA performance in Russia. The left hand side of the chart displays what I would consider as the most structural year-over-year changes and the right hand side of the chart contains more transient or temporary impacts. We focus first of all on the left hand side of the chart you notice that the positive impact from performance transformation in savings year-on-year of almost 1 billion Rubles. Regional re-structural program launched in the technical functions in the last 2015 as a result of which the total life is decreased by 1700 or 8.1%.

Secondly, our efforts in centralization of procurement and tempering processes allow us to achieve much better pricing and third saving many different initiatives to transport network cost optimization. The contribution from the performance transformation program almost entirely offset the lower margin contribution from the fixed line decrease as already mentioned and the impact on the mono brand stores. On the right hand side we have negative contributions on increased subsidies on data devices which ended early in the same quarter and one of our debt cost due to sub-optimal designer execute certain pre-paid bundles all of which cost in excess of 500 million Rubles in the quarter on a year-over-year basis. In addition we had 750 million Ruble in the year-over-year impact, the majority of impact was the negative impact of the currency depreciation which in fact our roaming and inter connect cost. Year-on-year impact which broadly started this phase as we moved through the remainder of 2016.

Excluding the more transient impacts the EBITDA margin for the quarter would be broadly stable year-on-year at roughly 39%. Moving on to the next slide, in Nigeria the management is focusing on the transformation program on the commercial recovery with particular emphasis on stabilizing the customer base since we are still experiencing overly high churn. As part of this we are re-evaluating our distribution model and rethinking our pricing architecture. These measures should take few quarters to bring benefits from that fixed age we expect these actions to be largely completed by the end of 2016. On a year-on-year basis revenues were almost stable in the first quarter but this was aided by the significant benefit year-on-year from the change in termination rates without which revenue would have been declined by approximately 3% year-on-year.

The market remains challenging and as we noted the customer base continued to decline because of the high churn. And after we have said all this we do have some bright spots most noticeably in data revenue which continued in strong growth more than doubling year-over-year. EBITDA increased 9% year-on-year with a robust EBITDA margin as 56.8% broadly half of the year-on-year EBITDA improvement came from the favorable change in the interconnect ways while the remaining 50% improvement is the impact of the performance transformation program. We launched 3G in five new regions in the beginning of this year and our 3G network now covers 60% of the country's population with 75% population on coverage within all areas planned for the end of this year. Furthermore we expect the 4G/LTE license to be awarded for the end of the same quarter with the commercial launch in the third quarter of this year.

In Pakistan Mobilink recorded several digit growth in both revenue and EBITDA and continued to gain market share in the first quarter. The positive momentum and data revenue continues with a strong 80% year-on-year growth due to successful data monetization, data device promotions and 3G network expansions. The customer base decreased by 0.2% year-on-year due to the 2015 SIM re-verification process while quarter-on-quarter the customer base increased by 5% driven by distribution channel effectiveness and continued focus on price simplicity and transparency. Mobilink reported its strong EBITDA margin and this now represent the fourth consecutive quarter where EBITDA margin has exceeded 40%. CapEx decreased year-on-year due to the rapid roll out of 3G network in 2015 and Mobilink is committed to further expand its high speed data network with 3G currently covering approximately covering 33% of the population.

In Bangladesh, our operations continued to demonstrate strong growth despite intense market competition within the quarter. The main focus in this quarter was the ongoing string of re-verification in the market, trying to make us one of the leaders in this initiative and managed to verify 72% of its customers by the end of April. Mobile service revenue increased 6.4% year-on-year with the main driver of the revenue growth being data. Which showed a 60% increase year-on-year. Underlying EBITDA grew by 26% on year-on-year basis resulting in outstanding margin growth of 48.1% versus 40.6% in the same period of last year.

3G is now covering 34% of the population. In Ukraine the business performance continues to be extremely strong in the quarter with mobile service revenue growth of 13% year-on-year driven by a 76% growth in mobile data revenue as a result of the successful launch of 3G network and related commercial propositions. The strong revenue growth together with cost efficiencies from the transformation program grew a 28% year-on-year increasing EBITDA with a very healthy 53% EBITDA margin. Lastly, from a country perspective, let's talk about Italy which is now as we said many times accounted for sale, pending or closing of the JV that we announced in August. As Jean-Yves mentioned earlier phase II was started by the EC competition authority in the end of Q1.

First quarter 2016 revenue in Italy showed a year-on-year decline of 1.7% but there has been a further improvement in the trend of mobile service revenue particular almost flat year-on-year at just over 700 million euros. Mobile output grew by 1.5% confirming the slight continued market recovery while mobile data continued to exhibit strong performance of 13% year-on-year. Wins on mobile customer base was 24.9 million with 4G/LTE population coverage now at 58% versus 56% in the fourth quarter. And in fixed line the performance in fixed broadband continues with customers 3.3% year-on-year. Underlying EBITDA was found by 2% year-on-year if we exclude the impact of the towers transaction which was concluded right at the very end in the first quarter of 2015.

And now on my final slide, number 27, we confirmed the 2016 guidance and the target we announced in market in the middle of February when we announced our full year 2015 results. In summary, the service revenue, we continue to target flat to low single digit organic growth year-on-year. We also expect to see the EBITDA margins on an underlying basis to showing 1% of growth year-on-year. CapEx to revenue ratio remains a key focus and we expect it to be at a lower level in 2016 at somewhere between 17% to 18%. Operating cash flow margin defined as EBITDA less CapEx divided by revenue is expected to be flat to 2% of growth compared to 22.6% margin we reported for 2015.

And finally on average when our target 2016 net debt to EBITDA ratio is based on our assumed FX of 2016 un-assumed closing of the JVs in Italy and Pakistan. Here we expect the net debt to EBITDA rate to finish the year at around 2 times. As we have already mentioned this is high ratio into 2015 mainly due to the impacts of the settlements with DOJ, SEC and OM and the completion of the transaction in Pakistan. With that I will now hand back to Jean-Yves for his final remarks. Jean-

Yves Charlier: Thank you Andrew.

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

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

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

Yves Charlier: Okay let me perhaps start off with the tower.

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

So, I think that's what I am going to say on the Tower transactions. Andrew?

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

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

Andrew Davies: Well, we are seeing the same as you.

We certainly not had a suit filed and we see this as not generating any traction whatsoever for the moment.

Unidentified Analyst: Okay. Jean-

Yves Charlier: Okay. Just on Italy and perhaps before talking about remedies, let me perhaps provide the framework under which we are working in terms of seeing through this transaction. I think the first is really that Italy is there is a bifurcation in the market place and so our perspective is all about a creating a third strong well-structured operator that can compete against number one and number two.

So the question in Italy is not so much whether a market is going to go from four to three. The question is much more for the market to be going from two to three and pretty strong operators. They have said that they will review each market, each transaction on its own merits and we believe that this will be done in such matter. I think the other things to take into consideration obviously in Italy and to read across from the other transactions in Europe, as that the combined market structure of the combine entity is not going to exceed 35%. On a revenue basis it's even a less, there are no network sharing issues in Italy.

So I think that we have a strong case for this proposed merger and we have just entered into phase II with the review of the European Commission and at this stage it is too early to speak of remedies but we will be evaluating this at the appropriate place and time.

Unidentified Analyst: Okay. Thank you very much.

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

Please go ahead.

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

Yves Charlier: Okay. So let me take the policy.

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

Andrew Davies: I think we continue to see some pressure in the market place.

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

Mitch Reznick: And on Italy, what's, in the unlikely event that the JV isn't approved, what's the Plan B?
Jean-

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

Mitch Reznick: Right. Jean-

Yves Charlier: So I am not confident of a plan B, we have got a plan A, we have articulated.

I think it's a solid merger proposal that we have put on the table. It's going to be reviewed on its own merits by Europe and this transaction is very different than the other transactions that the market has seen across Europe in the past couple of quarters.

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

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

Mitch Reznick: Okay.

Alright good, thanks for taking my questions.

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

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

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

I would affect the DP compares to our deal done last year.

Ivan Kim: Okay. Great thank you.

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

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

Yves Charlier: All right, that's a lot of questions on that.

Italy, and particularly the latter part, the next few years whether support is required, as I said, I'm working on closing the deal, I'm not sure I have a lot of time to focus on results on the Italian transaction right now. But let me say a few things, on perhaps the remedy dimension that you articulated. Look, I think that we will review to get this transaction completed, the implementation of various remedies. As I said, we're not at that stage yet in the process, as we've just entered our Phase 2, as I said, there are very particular dimensions of why this transaction is very different than all the other transaction in Europe that we've seen in the last couple of quarters. We will evaluate both MVNO and MNO type of remedies, if required.

And as I said, there is no network sharing dimension that is a consideration for the implementation of any type of remedy. And if you've looked at also spectrum in Italy, spectrum has been relatively well balanced amongst the operators up to now and there is sufficient spectrum to see the appropriate remedy structure if required. So - look I think that the Italian transaction once again is very specific, and we believe it can be seen in a very favorable like even if everybody wants at this stage to give a relatively negative read across with the decision this week in the UK. As to the first part of the question on disclosure, I can't respond to that - I don't know. So maybe Andrew, you want to talk about reconsolidation and support required in the outer years although I don't think we've spent a lot of time on that.

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

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

Yves Charlier: Absolutely. On Italy?

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

Jean-

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

Gavin McKeown: Okay, thanks. That's very helpful.

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

Please go ahead.

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

Yves Charlier: Well, this is a joint venture. We've established a very strong partnerships with Hutchison.

And in terms of this joint venture structure we are obviously doing this together. So that's as much as I want to comment on that question.

Unidentified Analyst: Thank you very much.

Operator: Thank you. And we'll take the next question from Kasina [ph] of UBS.

Please go ahead.

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

Jean-

Yves Charlier: Okay let me talk about the towers and then I will let Andrew talk about three other points. And again I think your questions are very interesting on reconsolidating WIND but I just want to remind you that is not the strategy that the company is pursuing. I am sure we all like the read across with the decision on the UK but that is not our plan and the plan we are pursuing. On the value of the tower portfolio I will just say that VimpelCom has over the years created a substantial tower portfolio across its operations, we today have more than 50,000 towers across our footprint. We believe that these towers have substantial value and as I said our strategy is to unlock that value.

I think it's absolutely premature for me to give any indication of bids that we could be receiving for parts of this tower portfolio and as I said that it is a substantial asset that the business has on the market place and you have seen the valuations of tower portfolios in different parts of the world. We think that it marks a substantial value of the balance sheet by pursuing this strategy. Andrew?

Andrew Davies: Yes, so the short-term debt question is subject to liquidity, pricing and tangents that's available in the market. Our intentions would be ultimately refinance all of the short term debt that we have got. On the WIND I think, at the end of Q1 its roughly $11 billion.

And is the net debt that's on the WIND balance sheets and the reconsolidation question, I am not sure whether I kind of understand the value what's behind it but the timing of when we have to reconsolidate again depends on decisions that we make with regards to the asset that we make in regards to the asset in the unlikely event that we would not get approval from the European authorities for the JV. The one thing I would also like to point out here for absolute clarity is that reconsolidation, if it were to happen and that's a big if would be retrospective in nature and so it would not just be prospective.

Unidentified Analyst: And will the WIND debt remain?

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

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

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

Unidentified Analyst: Thank you. Jean-

Yves Charlier: Thanks. Jean-

Yves Charlier: Alright I would like to end. Thank everybody for your time and for your interest. Any other questions, particularly if they do not relate to please feel free to contact us at investor relations.

I wish all of you a very nice day. And let's talk soon. Thank you, everyone.

Operator: Thank you. That will conclude today's conference call.

Thank you for your participation, ladies and gentlemen. You may disconnect.