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

CFO
Analysts: Alastair Jones - New Street Research Irina Idrissova - RBC Alexander Vengranovich - Otkritie Capital Madhvendra Singh - Morgan Stanley Ivan Kim - VTB Capital Dalibor Vavruska - Citigroup Stella Cridge - Barclays Igor Goncharov -

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

Bart Morselt: Good afternoon, ladies and gentlemen. Welcome to VEON's third quarter 2017 results conference call. Today, I'm pleased to be joined on this call by Jean-Yves Charlier, VEON's Chief Executive Officer; and Andrew Davies, VEON's Chief Financial Officer; Trond Westlie, who succeeds Andrew as CFO effective from today. The structure of the presentation mirrors that of previous quarterly results, with Jean-Yves starting with the group financials and business highlights, followed by Andrew running us through group and operational results, and finishing by reconfirming our 2017 outlook. At the end of Andrew's discussion, we will open the line for the Q&A session.

Before getting started, I would like to draw your attention to the disclaimer. Forward-looking statements made during today's presentations include and involve certain risks and uncertainties. These statements relate in part to the company's anticipated performance and guidance for 2017, including its ability to generate sufficient cash flow, future market developments and trends, expected synergies of the Italy joint venture and the Warid transaction, operational and network development and network investment, the effect of the acquisition of additional spectrum on customer experience, and timing for the expected completion of the tower sale in Pakistan and the sale of the Laos operations, and the company's ability to realize its targets and strategic initiatives. Certain factors may cause actual results to differ materially from those in the forward-looking statements, including the risk detailed in the company's Annual Report on Form 20-F and other recent public filings made by the company with the SEC. The earnings release and the earnings presentation, each of which includes reconciliations of non-IFRS financial measures presented today can be downloaded from our website.

I would like now to hand over to Jean-Yves, who, as you can see from the agenda here, will run through the Q3 financial highlights before updating on the group's strategy execution and our recent management changes. Jean-Yves?
Jean-

Yves Charlier: Good afternoon ladies and gentlemen and thank you for joining our third quarter results call. VEON delivered another set of financial -- solid set of financial results in the third quarter with further growth in revenues, EBITDA, and cash flow. We remain satisfied with the rate of progress we are making as a company, both strategically and operationally. In terms of financial results, Q3 has seen a continuation in the positive trends of the first six months of 2017 with the group posting solid organic growth on a number of metrics.

Total revenue grew by 4% to $2.5 billion and by 3.2% on an organic basis, driven by Russia, Pakistan, and Ukraine, and partially offset by continued pressure in Algeria and Bangladesh. Mobile data usage growth continues to be the key driver for revenue growth across our markets, recording 27% organic revenue growth year-on-year. EBITDA improved by 16.4% to reach just over $1 billion for Q3, benefiting from organic revenue growth and exceptional income from a one-off adjustment to a vendor agreement. On an underlying basis, EBITDA it grew 3.5% organically year-on-year. CapEx increased by 4% year-on-year due to higher CapEx in Russia and Bangladesh, primarily driven by a more linear phasing throughout 2017.

The CapEx ratio in the quarter was just above 16%, trending towards our medium term objective of 15%. Growth in underlying equity free cash flow excluding licenses was especially strong during the first nine months of the year, totaling $965 million, of which $475 million was generated in the third quarter, further demonstrating the financial turnaround of the group and underpinning our sustainable and progressive dividend policy. Let me now focus on our strategic initiatives. On the 27th of February this year, we relaunched the company as VEON and accelerated our strategy to both revitalize and reinvent the group. At the time, we presented our plans to grow equity free cash flow to more than $1 billion for 2018 in order to support a sustainable and progressive dividend policy.

Our strategy is to become a best-in-class provider of connectivity in all of the frontier markets where we operate, as well as reengage with the 240 million consumers we currently serve with a key component of this being the launch of the VEON personal internet platform. Since then, I'm pleased to say that we have made significant progress and I want to take this opportunity to share with you a few of the initiatives that have been completed or that are currently underway. Consistent with our goal to simplify and strengthen our structure, yesterday we submitted an application to the Egyptian Financial Supervisory Authority to approve a mandatory cash tender offer for any and all shares in GTH. Considering VEON's current shareholding in GTH, the offer will be for 42.31% of GTH's outstanding shares. In September, Telenor completed the third sell-down of shares in VEON, increasing our free float to just below 30%, an important development which I will turn to later in this presentation.

We also took advantage of a strong high yield market in Europe to successfully refinance our Wind Tre joint venture generating an expected annual saving of approximately €240 million, which further adds to the €700 million in synergies we announced at the time of the transaction. Andrew will discuss the transaction in more detail later in the presentation. Also in this quarter, we have made significant progress in further disposing of our tower assets as we move to a more asset-light model. In Pakistan, we announced the sale of our tower business for a near-price value for $400 million, a significant -- sorry $940 million, a significant premium versus the current VEON GTH trading multiple. In September, the government of Uzbekistan also liberalized the currency exchange rules and reset the official exchange rate at 8,100 Uzbek som per U.S.

dollar. While this did result in a strong devaluation, we expect that the longer term -- in the longer term, VEON will have more opportunities to effectively repatriate cash from Uzbekistan. Again, Andrew will talk about this later in the presentation in more detail. Finally during the quarter, we further strengthen the management team of the group. A further component of our strategy is about reinventing VEON's business model.

A key part of our digital strategy is launching the new VEON personal internet platform, which is now available to customers in five of our key markets. We are seeing a number of green shoots and we are focused on delivering a world-class experience to the millions of customers that have started downloading the platform. In addition, we are also focusing on personalizing our services and exploiting the significant data that we have on our networks by rolling out the DMP platforms as well as implementing a new digital BSS stack across all our businesses. I would like to spend a moment now on our announcements regarding GTH. Yesterday, VEON submitted an application to the Egyptian Financial Supervisory Authority to approve a mandatory tender offer for any and all of the GTH's outstanding shares which are not owned by VEON.

Accordingly, the offer will be for close to 2 billion shares and GTH representing 42.31% of the outstanding shares in GTH. The offer price is 7.9 Egyptian pounds per share. This is the same price as a GTH share buyback in February 2017, which was over 2.5 times oversubscribed. The six-month volume weighted average trading price of shares in GTH is 6.63 Egyptian pounds and the six-month simple average is 6.61 pounds. The transaction which will be funded by cash on hand and/or undrawn credit facilities is subject to the approval by the EFSA.

About the impact of the transaction, what I can say is that VEON's leverage will increase in line with the final cash outlay for the transaction as we already consolidate GTH. This cash outlay depends on the number of minority shareholders who accept the offer and the prevailing foreign exchange rate. We do not expect the transaction to have an impact on VEON's dividend policy. As the EFSA approval process is still pending, we cannot comment further on this matter at this time. Slide seven, Telenor completed the third sell-down of its VEON shares in September, decreasing its holding to 14.6% and increasing VEON's free float to 29.2%.

This marks another important milestone in improving the trading liquidity in our shares. Back in September 2016, our free float was just under 11%. Now, just over a year later, it has nearly tripled to just below 30%. Looking ahead, Telenor has indicated that it expects to use the remaining 14.6% holding exchange and/or redeem the exchangeable bonds. If full conversion does occur, then it will result in Telenor fully exiting VEON increasing our free float to 43.8%.

Slide eight. VEON, our personal internet platform is now commercially available in five of our markets including, Pakistan, Russia, and Italy. It is still very early days, but the initial signs are encouraging. To-date the platform has been downloaded by 5.3 million consumers and passed one million downloads in each of Italy, Russia, and Pakistan. In Pakistan, in particular, the VEON platform was the number one top three app in the Google Play Store and the Apple App Store after the first week.

We continue to focus on adding more functionality as well as content and offers to the platform before launching in new markets in 2018. Today, we have 140 partners and content offers and payments and we are partnering with both global and local brands. This is essential to the platform's growth and mass appeal. Our main objective is to build once again engagement with our customers. Finally, I wanted to update you on the senior management appointments that we have announced over the past two months as we further strengthen our management team.

Trond Westlie has been appointed Group Chief Financial Officer succeeding Andrew Davies. Trond joined on the 2nd of October and formally takes over today as CFO. He is a highly respected and experienced Finance Executive, having most recently been CFO of AP Moller-Maersk from 2010 to 2016 and will contribute significantly to the company's transformation, in particular, around our digital and cash flow growth initiatives. Andrew Davies will remain with the company until the end of the year to ensure a structured handover. In addition, he will continue as Board member of the Wind Tre joint venture.

I would like to take this opportunity to thank you Andrew for his leadership, integrity, and commitment over the past four years. He has made a major contribution to ensuring VEON is where it is today, a revitalized business that is generating strong free cash flow with a stable and appropriate capital structure and a set of strong results which enabled the Board to announce a new dividend policy earlier this year. We have also appointed Jacky Simmonds who will join us as Group Chief People Officer on the 1st of January 2018 and who brings strong experience from her time as Group People Director at easyJet. Finally, as we continue to strengthen our compliance and control functions, Josh Drew has been appointed Group Chief Compliance Officer since the beginning of October. Josh was previously an Associate General Counsel at VEDON and prior to that served as Vice President and Associate General Counsel at Hewlett-Packard.

With that, I now hand over to Andrew to run through the Group and Country financial and present our 2017 guidance.

Andrew Davies: Thank you for all those kind words Jean-Yves. Good afternoon or good morning depending on where you are from me to everyone else as well. So, I'll start as is usual on the revenues -- revenue side where we show the evolution for the quarter growth in reported and organic terms. On a reported basis, third quarter 2017 revenue grew by 4% year-on-year-year boosted by both organic growth and a little bit of ForEx tailwind.

If you look at the composition in the upper chart, we see a continuation of trends from previous quarters, with strong growth in data and MFS revenues, partly offset by a decrease in voice revenue. The latter being a secular trend across the industry. Mobile data revenue in particular showed strong growth of nearly 27% year-on-year-year on an organic basis, driven by the continued monetization of our high-speed data networks. In the lower chart, you can see that on an organic basis, revenue increased by about 3.2% year-on-year, with the main growth markets being Russia, Pakistan, Ukraine and Uzbekistan with continued pressure in both Algeria and Bangladesh. Let's now move on to the next slide on EBITDA.

On a reported basis, EBITDA improved 16% year-on-year for the quarter, trimmed by organic growth, performance transmission savings and exceptional items. Excluding exceptional items related to income from one-off adjustment to a vendor agreement, the year-on-year growth in underlying EBITDA with 3.5%. As you can see in the upper chart, on a year-on-year basis, performance transmission program has contributed approximately $88 million in the third quarter 2017 to the underlying improvement through outright cost savings while short-term counter effects and reinvestments and longer-term value accretive initiatives such as monobrand stores, devices and network development, all aimed at driving future growth aggregated to $123 million. In addition, reinvestments from prior periods is one of the main drivers underpinning the 60 -- $69 million growth in year-on-year terms of service revenue for the quarter. Look at the second chart; we can see that on an organic underlying basis EBITDA shows sustained momentum, growing by 3.5% excluding both ForEx and the exceptional items that I just noted.

We look at the geographies in the lower chart, we again see positive trends in Russia, Pakistan, Ukraine and Uzbekistan which more than offset the pressures in the other countries. While the year-on-year increase in corporate cost is primarily driven by changes in accrual assumptions relative to long-term variable compensation plans which are non-cash in nature. I'll now move on to the company review, starting as usual with Russia. The performance continued to improve during the third quarter while market conditions and competition remains somewhat challenging. Total revenue in the quarter increased 3% to just under RUB73 billion, driven by an increase in mobile service revenue and sales of equipment and accessories.

Mobile service revenue increased by 4.2% to just over RUB59 billion from growth in mobile data, value-added services and mobile financial services, partially offset by a decrease in voice revenue. Mobile ARPU grew 3% year-on-year, as a result of successful upselling activities and continued efforts to simplify tariff plans, while also being supported by increased penetration of bundled propositions in the customer base. Beeline's mobile customer base increased by 0.7% year-on-year to 58.8 million at the end of the third quarter. Fixed-line service revenue decreased by 12% year-on-year due to negative ForEx impact on the effective increased FMC penetration. The take-up for our fixed mobile convergence proposition remains strong with a total customer base of more than 800,000 at the end of the quarter.

B2B is also a focal point for Beeline with both small and large enterprises and this segment recorded a 6.7% year-on-year growth driven by expansion of the customer base. Underlying EBITDA margin was 38.9%, representing a year-on-year improvement of half a percentage point. And in September 2017, Beeline started the national promotional campaign for the VEON personal internet platform after the soft launch in July 2017. The increased costs related to the internet platform rollout are expected to negatively impact EBITDA margins for the rest of the year. Furthermore, Beeline expects additional EBITDA margin pressures related to the resale transaction.

And from -- roughly at the end of this year onwards with the annualized margin dilution from this transaction expected to be approximately one and a half percentage points. I now move on to the joint venture in Italy on the next slide. In Italy, the competitive environment remains tough ahead of Iliad's market entry. Revenue for Q3 decreased by 6.4%, driven by a 4.7% decline in mobile service revenue due to continued aggressive competition which drove a customer base decline of 5.1%, together with the impact of the new EU rules and regulations. This mobile revenue decline was possibly offset by growth of 1.4% in fixed-line service revenue, being driven by growing broadband customers, coupled with broadband ARPU growth of more than 3% year-on-year.

Underlying EBITDA, excluding non-recurring items, declined by 4.9% year-on-year to €579 billion mainly due to the revenue erosion with somewhat mitigation from OpEx synergies of $44 million in the quarter, which led to an increase in underlying EBITDA margin of roughly half a percentage point to 37.5%. CapEx for the quarter totaled €236 million and was primarily focused on expanding capacity and coverage of the 4G/LTE network, together with modernizing and merging the form of Wind and Tre networks. The net leverage ratio reached 4.3 times at the end of the third quarter, mainly as a result of a €435 million payment at the end of the quarter related to spectrum renewal and refarming. Wind Tre expects to offset this impact by the end of the year with a sale of the Iliad's spectrum receivable. Finally, the JD contributed a share of loss of $60 million to VEON's P&L, primarily driven by integration costs together with accelerated depreciation and amortization.

We move -- before moving on to Pakistan, and I want to speak in a bit more detail about the refinancing and synergy progress after Wind Tre joint venture. So as Jean-Yves noted earlier, in recent days Wind Tre has concluded the very definition of a landmark transaction with the refinancing of its debt, following the issuance of €7.3 billion euros of new bonds and the use of nearly €3.5 billion of newly signed senior facility agreement. The bond issuance was vastly oversubscribed and was the largest Eurobond issuance ever for this class of debt. Following the refinancing, the average cost of debt for Wind Tre has decreased significantly to just under 2.7 % compared to the 5.5% average at the end of the third quarter. And this will generate annual interest savings of around €270 million.

In addition as you can see from the chart on the bottom right hand side of the slide, the Wind Tre joint venture now has a significant enhanced maturity profile. The total one-off cost of this refinancing amounted to just in excess of $300 million, given the joint venture cash payback on this transaction of just over a year. Moving on to synergies on slide 16 as at the end of the third quarter, Wind Tre has now realized OpEx synergies of approximately €98 million. The three boxes and I now provide you with an overview of where the synergies have been generated. In network and IT, Wind Tre terminated its national roaming contract, looking to insource activities and renegotiate contracts wherever possible and has embarked on a network consolidation and modernization program with ZTE.

In G&A cost, the business continues on its rightsizing project with the reduction of approximately 1,800 FTEs on 19T of total employee population year-to-date. Overall, Wind Tre continues to project €700 million of annualized run rate synergies, almost €500 million of which is really to OpEx with the remainder being CapEx-related and the JV continues to expect that 90% of this annualized run rate will be achieved by the end of 2019. It's also important to note that the €270 million of annualized interest savings that I discussed on the previous slide are completely incremental to the previously announced synergy target of €700 million and thereby it will further accelerate both the cash flow generation and the deleveraging profile of the joint venture. Now onto Pakistan on the next slide, Jazz continues to show strong growth with the wired integration also ahead of schedule. This is the first quarter in which the 2017 results in Pakistan are fully compatible on a year-on-year following the consolidation of Warid in July of 2016.

Jazz reported revenue growth of nearly 7% year-on-year, driven by continued growth in mobile data revenues, which grew by nearly 39% year-on-year for the quarter, that itself driven by an increase in data customers and the continued 3G network expansion. The customer base increased by more than 4% year-on-year, driven by continued customer satisfaction through focus on price, simplicity, and efficient distribution channel management. Underlying margin excluding 700 million rupees of restructuring costs related to both performance transmission and integration with Warid was 55.1% in the third quarter, improving by 13 percentage points year-on-year and just over 10 percentage points quarter-on-quarter. However, this steep increase in margins is partially attributable to approximately 7.8 points of margin benefit coming from the release of historic SIM tax accruals. But even excluding this impact, the margin would have been very healthy at 47.3%.

CapEx increased year-on-year, with the last 12-month CapEx to revenue ratio of approximately 18% and this is entirely driven by the network integration and 3G and 4G/LTE rollouts. Finally, while Jazz is already fully achieved, the synergy target announced at the time of the Warid transaction, it remains fully focused and on track to complete its network integration by the end of this year. Now moving onto slide 18 to discuss the Pakistan tower sale. So, at the end of August, we announced that Jazz had signed an agreement for the sale of its tower business Deodar to Tanzanite for $940 million equivalent on a debt and cash free basis. This is clearly a highly attractive transaction for VEON shareholders and fully in line as Jean-Yves already mentioned with our asset-light strategy.

The $940 million valuation implies a high single-digit EV multiple on a contributed EBITDA basis and a significant premium versus both current VEON and GTH trading multiples. In terms of accounting, VEON will book a gain of approximately $420 million at closing and our leverage ratio will decrease by about 0.1 of a turn on a pro forma basis going forward. In addition, the group EBITDA margin will be diluted by around 1.3 percentage points on an annualized basis following the closing of this transaction. Completion of the transaction is subject to the satisfaction of a waiver of certain conditions including receipt of customary regulatory approval. The approval process is in progress and on track and we are still aiming for completion to occur by the end of 2017.

Now moving into to Algeria where Jazz's operational turnaround continued in third quarter 2017, despite a challenging regulatory and macroeconomic environment which remains characterized by strong competition and inflationary pressures. Telecom's share of wallet remains under significant pressure in Algeria from full basket inflation and taxes resulting from the new finance law introduced in January of this year. The final piece of the regulatory puzzle has been completed since the end of the quarter with the introduction of mobile termination rate symmetry with effect from the end of October 2017. Against this evolving regulatory background, revenue decreased by 9.8% year-on-year, slowing the year-on-year decline from second quarter with service revenue decreasing by 11.3%. Data revenue growth was 55% due to higher usage and a substantial increase in data customers as a result of the 3G and 4G LTE network rollouts.

However, competition on smartphone data pricing and particular remains aggressive in certain propositions being several times cheaper than Jazz's standard tariff architecture. Underlying EBITDA margin remains strong at nearly 49% and, excluding the impact of changes to indirect taxes with effect from January 1st of this year, the underlying EBITDA margin would have been robust at approximately 51%. I now move on to Bangladesh on slide 20. In Bangladesh, the market is still characterized by intense price competition, which has accelerated following the same reverification process with additional pressure in Q3 coming from the impact of very adverse weather conditions. Revenue decreased by 4.6%, with continued competition and customer acquisition driving multi-SIM penetration and a diluted share of wallet.

The operational focus continues to be on improving network coverage, which has driven data revenue growth of 28% from both data usage growth of 106%, along with approximately a 17% growth in active data users. Underlying EBITDA decreased by 19% year-on-year mainly caused by the revenue erosion together with higher acquisition -- customer acquisition cost and increase technology costs to improve network availability, which have been put under significant stress by the extreme weather conditions characterize the country in the recent months. At the end of the quarter, 3G population coverage reached approximately 70%, representing a gradual closing of the gap with competition. Finally, on the regulatory front, the government of Bangladesh approved the regulatory and licensing guidelines for 4G LTE cellular mobile services and spectrum auction guidelines. However, an auction is unlikely to occur until 2018.

In addition, the Ministry of Post Telecommunications and Information Technology issued a public consultation on drop regulatory and licensing guidelines for tower sharing and the industry it has not provided comments on these guidelines to the government in Bangladesh. On slide 21, in Ukraine, [Indiscernible] continue to deliver robust results during the quarter and remains the clear leader in both market share and NPS. Total revenue grew 10%, with mobile service revenue also increasing 10% year-on-year driven by continued strong growth of mobile data revenue, which grew in excess of 70% as a result of improving data customers, successful marketing activity stimulated by the continued 3G network rollout and more data-centric carriers. As a result, data consumption per user more than doubled in third quarter 2017 compared with the same quarter in the previous year. The customer base grew 1% year-on-year due to higher gross additions, while mobile ARPU continued to increase by just over 8% year-on-year.

Underlying EBITDA adjusted for performance transformation costs grew 8.7% year-on-year driven by higher revenues with some partial mitigation by increased structural OpEx and commercial costs. Kyivstar continued to roll out its 3G network in the third quarter, reaching a population coverage of approximately 73%, compared to 52% in the same quarter last year. In Uzbekistan, we reported another quarter of strong revenue performance despite the liberalization of the Uzbekistan on the 4th of September 2017. Total revenue grew by just over 24% year-on-year and mobile service revenue also increased by just over 24%, supported by successful marketing activities and increased revenues from interconnect services, value-added services, and mobile data. The company's tariffs, which were previously pegged to the U.S.

dollar, our fixed at the pre-liberalization foreign exchange rate of approximately 4,200 to the U.S. dollar, which is a higher level compared to the prior year. Underlying EBITDA increased 10%, driven by the revenue growth, but partially offset by an 83% year-on-year increase in customer taxes. Adjusting for this negative effect, underlying EBITDA growth would have been 22.8% and underlying EBITDA margin would have been nearly six percentage points higher than reported at 56.5%. The last 12 months CapEx to revenue ratio increased to 21%, mainly due to prepayments of equipment at the end of 2016 for deployment in the first half of 2017.

Finally, the Republican Radiofrequency Council in Uzbekistan has delayed the implementation of the decision to redistribute radio frequencies in the country to April of 2018. We believe that this may result in the reallocation of [Indiscernible] radio frequencies to other cellular communication providers in the market, and we're still in evaluating the effect of this measure, which may lead to an increased investment in network capacity in the future. At the end of September 2017, the company held cash and deposits balances equivalent to approximately $370 million, denominated in the Uzbek som. I also just want to spend a little bit more time discussing the impact on the group from the Uzbek som liberalization. On 15th of September, we highlighted the announcements from the government of Uzbekistan, which liberalized the currency exchange rules and reset the official exchange rate at 8,100 Uzbek som to the U.S.

dollar, which represented nearly halving of the value of the Uzbek som to the U.S. dollar. Under these liberalized exchange rules we believe that VEON may, in the longer term, be able to more effectively repatriate cash from Uzbekistan, while the cash balances at the end of the third quarter was approximately $370 million as I just noted. However, the new official exchange rate will also directly impact VEON's reported growth results for two reasons. Firstly, and most obviously, the Uzbek som results of Unitel will now be translated into U.S.

dollars at a higher exchange rate. Secondly, Unitel and all other telecommunications operators will experience an erosion of EBITDA in local currency terms, resulting from the fixing of tariffs from U.S. dollars into Uzbek som at the prior official exchange rate. As a result, we expect annualized decreases in revenues of somewhere between $300 million to $350 million and an underlying EBITDA of somewhere between $175 million and $225 million. Based on last year's total annualized revenues and underlying EBITDA, these ranges represent approximately 3.5% of revenues and approximately 5.5% of underlying EBITDA.

In addition, in Q3, the group's leverage ratio immediately decreased -- sorry, increased by 0.1 of a turn and the group's net assets decreased by approximately $430 million. We now look at the Q3 group income statement, and as normal, I'll focus my attention of the areas below EBITDA. EBIT increased year-on-year due to both the EBITDA growth, along with stable depreciation and amortization. Net ForEx and other gains increased year-on-year, driven by a one-off arbitration award of approximately $44 million related to a prior win indemnification. VEON's share of results from JVs and associates was a loss of $60 million, and as I've already noted, it's primarily related to the accelerated depreciation and amortization in connection with the network modernization program in the Wind Tre joint venture.

Last but not least, taxes, which increased by $59 million year-on-year is due to primarily higher taxable profit in Russia, along with higher withholding tax expenses due to dividends from both Pakistan and Algeria. I'll now move on to the net debt analysis on slide 25. We closed the quarter with approximately $8.7 billion of net debt and a leverage ratio of just under 2.3 times. However, excluding the impact of ForEx, which is mainly related to the Uzbek som liberalization, net debt would have totaled $8.2 million at the end of the third quarter, a leverage ratio of 2.2 times, and in line with the ratio at the end of the prior quarter. On the next slide, we provide an update on the underlying equity free cash flow.

As already presented, the cash flow generation for both the third quarter and the year-to-date was very healthy and in line with our expectations. If we look at the year today trend in the first nine months of 2017, we have delivered, as Jean-Yves has already mentioned, $965 million of underlying equity free cash flow, a robust growth compared to the same period last year. The significant increase in net cash from operating activities of just over $310 million was mainly driven by an increase in the underlying EBITDA generation, more than offset $246 million increase in cash used for investment activities. This increased cash used in investing activities results from better CapEx planning and an improved phasing of capex spend across the four quarters of the year. Let's now move on to the final slide on full year 2017 guidance.

The results for the nine months demonstrate that we remain on track to deliver our full year guidance, which we refined in September as a result of the Uzbek som liberalization. From a revenue perspective, results were fully in line with the guidance of low single-digit growth, showing 2.1% year-on-year growth for the year-to-date. Underlying EBITDA margin was broadly flat year-on-year at 0.1 of a percentage point increase and we expect to be at the lower end of the flat to low single-digit range for the full year. Finally, and as noted on the previous slide, we have generated $965 million in underlying equity free cash flow, excluding licenses, and we now expect to be at the upper end of the $850 million to $950 million range for the full year. With that, operator, can we now please start the Q&A session?

Operator: Thank you.

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

Alastair Jones: Yes, hi. Thanks for the question. I just wanted to talk around your free cash flow generation.

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

Can you sustain this level of growth in your service revenues on the mobile side? Or do you see any sort of potential for further increases are, in fact, may be downside? Thank you. Jean-

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

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

Jean-

Yves Charlier: Sure. So, let me deal with the second question. First of all, then Alastair, Euroset and Deodar, so -- I mean both of those transactions first of all had a relatively lengthy lead time or gestation period. So when we set the dividend policy and when we talked about cash flow guidance et cetera going forward we definitely factored those transactions into all of our thinking. Let me just make one point clear on the -- on these transactions before we move on.

So the Euroset transaction, the EBITDA margin dilution is related to basically consolidating now 2000 stores and therefore it’s the growth in the equipment revenue affecting the denominator in the EBITDA margin calculation that we're referring to. Now, we're not actually expecting a dilution of absolute EBITDA once we get past the initial integration phase. So it's very important to understand that maybe slightly nuanced point. And on the Deodar transaction, while the EBITDA margin dilution is related to the absolute EBITDA impact that we'll have, so obviously we're going to increase tower rental costs in the country. We will also have some CapEx mitigation in the country against that, so the cash flow impact will be quite a bit less than the EBITDA impact.

And then if I come to your final question on Russia. It’s still relatively early days in what some would have to I think the last quarter, the recovery in Russia right now and we are cautiously optimistic that market will continue to develop. But against that there are you can see some things on the horizon. The elections next year might prove a bit of a challenge etcetera, so right now, we are just generally pleased with the overall direction that market is going in.

Alastair Jones: That's very helpful.

Thank you.

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

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

Yves Charlier: Okay.

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

Andrew Davies: Yes, sure.

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

Irina Idrissova: All right.

Thank you.

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

Alexander Vengranovich: Yes, good afternoon. Follow-up question on Euroset transaction.

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

Yves Charlier: I'll take the VEON launch.

Andrew Davies: Yes.

Jean-

Yves Charlier: You'll take the Euroset dimension. On VEON, Alexander, we are not providing at this stage any [Indiscernible] indicators because it's simply too early. At this stage, we’re very much focused on first and foremost in the commercial launches in the number of downloads. We're then very focused on basically migrating the millions of consumers that we have on a variety of customer service apps that are legacy apps in Russia and in other parts of the world. And all of this is about creating engagement and once we've gone through sort of those milestones that will be a point in time, when we will consider providing the [indiscernible] indicators.

We're seeing, as I said a significant number of downloads and interest from consumers. We're also very pleased with the partnerships and the number of partnerships both with local and global brands that we are signing. Again that's all about creating the engagements around the platform. In terms of the financial impact, I think that we see the financial impact in three stages. Obviously, short-term, there are costs with launching commercially the platform in the various markets as well as development costs in the medium-term.

We expect to see benefits on our own cost structure. Obviously, if we have a very significant portion of our customer base on the platform we can expect to see the traditional customer service cost coming down with people doing self-care on a digital platform. If Top-ups are high through the platform, we can expect distribution costs come down and so on and so on. So, in many ways, the platform is about reengineering in a more digital way our own business. And finally the more longer term perspective as we create a marketplace is potential new revenue stream.

So that's the way that we look at sort of the financial impact. Euroset?

Andrew Davies: Yes. On Euroset, I'm not going to give any specific guidance on increased revenues et cetera. You know clearly, we have indicated when we announced the transaction over the long-term we saw margin uplift as a result of this transaction. Some of that margin uplift will be related to a more operationally efficient distribution network and therefore rationalizing stows etcetera.

However the bigger margin uplift should come from a greater focus on our own monobrand distribution and therefore lower reliance on the third party indirect distribution particularly the smaller mono pop type stores which would benefit the P&L in two ways. So first of all, having more control over distribution should enable us to drive data device penetration and therefore the data revenues. Possibly more importantly but we should be able to reduce the churn washing machine effect within the market and reduce churn from you know the 50%-60% range to a range is more normal for a prepaid market. And therefore you'd save money on customer acquisition costs etcetera. But you know those longer-term impacts are once we've completed the entire integration and rationalization of the store footprint which I think we said we probably achieved by the end of 2018.

Alexander Vengranovich: Okay. Thank you.

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

Madhvendra Singh: Yes, hi.

This is Madi Singh from Morgan Stanley. Can you hear me?
Jean-

Yves Charlier: Yes. We can hear you.

Madhvendra Singh: Thank you. So, I have few questions.

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

Andrew Davies: Okay, so let me -- I'll start off with addressing I think the first couple of questions you asked there Madi and Jean-Yves will discuss the portfolio side of things. So on Euroset integration costs, we've not given any specific number yet and I think it's appropriate to do so. But just right now we're still going through the planning process for that integration.

On your question on leverage targets, so let me start off by unequivocally stating that we still very firmly committed to a medium to long-term leverage target around about two times. First more -- first the important thing to note. So with GTH MTO assuming that we get approval and assuming that we get a 100% take-up rate at the same 90 offer price and foreign exchange stays where it is right now. You can expect the MTO to cost us almost exactly $900 million. So that's in the short-term going to increase the reported leverage ratio by about 0.25.

We think that is very, very manageable. We have more than enough liquidity and access to funding to be able to afford that transaction. And then we see a future deleveraging impact down towards the two times targets that I just mentioned. So Jean-Yves for Laos. Jean-

Yves Charlier: Laos marks for us I think you know the completion of the reshaping of the portfolio in many ways.

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

Madhvendra Singh: Sorry to interrupt but you know in Bangladesh now you are number three.

Would that be a market that you might consider?
Jean-

Yves Charlier: As I said we've pretty much completed you know our program. Bangladesh market at this stage but we can't roll up as it's a three player market. But we see structural opportunities in the long-term. Let's not forget that this market we believe that has very significant upside given the size of the market the fact that is a three player market etcetera, etcetera. So lost -- you know we have number of short-term challenges in that marketplace.

We believe that the structural long-term opportunity remains sound which wasn't the case in Laos. Laos is a very small market. Remember the number of players in Laos were five or six players. So you know it wasn't structurally sound and didn't represent a significant opportunity for us.

Madhvendra Singh: Thank you very much.

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

Ivan Kim: Yes. Good afternoon. My main question is on Italy, as your third quarter results to be frankly quite forcing to me and it looks like it'll only get worse.

Remembering how long it takes in some markets to stabilize. What can you think you can do to protect the market share there? And what's your strategic view of how the market is going to shape up because obviously you know it will be very hard for Iliad to do anything but they will try and sort of comment that is super aggressive and doesn't feel like they wants to lose any ground to Iliad which is impacting the whole market and you of course saying if some of these all of you -- very much appreciate that. And secondly, Andrew what is the cash tax number you expect this year and maybe next year? Thank you. Jean-

Yves Charlier: All right. Let me take Italy and talk a little bit about the market conditions.

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

So, net-net, I think current market conditions are challenging, but we're very focused on delivering the synergies. And we believe that we'll have an opportunity to see a cushion created with the arrival of Iliad compared to our competitors with the wholesale contract.

Andrew Davies: Yes, cash taxes. Wow. Its long time since I've had a question on cash taxes.

So, I assume you mean in absolute terms, Ivan and not as a percent of profits or anything of that nature.

Ivan Kim: Yes, yes, in absolute terms.

Andrew Davies: Yes. So, roughly somewhere in the region of $350 million to $375 million for this year probably, which would itself represent a $50 million to $75 million year-on-year improvement in that number, which is almost exclusively driven by the success of the tax planning initiatives, which we put in place since first quarter of this year. In terms of next year, I'd be careful to phrase my answer so that nobody can actually back into any form of profit guidance for next year.

So, look, I think for next year, and absolute terms, we will see a broadly similar number, which will be, in essence, driven by 2 opposite effects. The first one of which is that next year, we will get a full year's benefit of the tax planning initiatives that we put in place this year. But that will be somewhat offset by, hopefully, a greater level of underlying profit generation, and therefore, taxability within the business. So broadly in the same numbers next year.

Ivan Kim: Thank you very much for the detailed answer.

Thank you.

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

Dalibor Vavruska: This is actually Dalibor.

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

Yves Charlier: Dalibor, thanks for the questions. It's really too early days, in fact, for us to share a conclusive matter any of those points.

What I would say is that we're seeing today two parts of the platform that are resonating with our consumers in the various markets. The first point is the one that you raised of the value proposition around free messaging even when you're out of credit. We see that particularly resonating in Pakistan, given that, that market, being a prepaid market with most users not necessarily having a monthly data plan, but the daily data plan is particularly attractive. What we've also seen in the first few weeks is that the promotion part of the platform is also particularly attractive, for example, in Russia where we've had significant interest in the promotional dimension. And as I said, we now have 140 partnerships with both local and global brands.

And this goes from in Russia, specific promotions with [Indiscernible], for example, in terms of fashion to Burger King in terms of free meals or free specific items on the meals. So, we're working on all dimensions of the platform. In the first stage what is important for us to create engagement is have a very differentiated value proposition on messaging because through messaging, we can, in fact, personalize offers. We can conceptualize offers and content. The second element is really around promotions and content.

And the third element, which I haven't talked about and will be launched in the next -- in the near-term in a number of our markets is really the customer care self-serve proposition to enable consumers to really manage the A to Z part of the -- of their subscription with a VEON brand. So, those are the elements that we're very much focused on in the initial stages and beyond that in the medium to long-term it's creating the marketplace. So, I think when we have sufficient scale on the platform. We will start the appropriate point in time sharing more of the various dimensions and indicators.

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

Yves Charlier: Again, I think this is something I don't want to share at this point in time.

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

Dalibor Vavruska: Sure.

Thank you very much. Jean-

Yves Charlier: Thank you.

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

Stella Cridge: Good afternoon and many thanks for the presentation and also wishing all the best Andrew after today. And I have three questions.

Maybe I can ask them more upfront. The first one is that you mentioned, you're talking about a progressive dividend going forward relative to 2017. Could just give us a sense in absolute terms of how you think about that given that there may be some cash outflows or negative impact from the cash flow from Uzbekistan and perhaps spectrum on Bangladesh. Just to see how you may balance dividends with the balance sheet strength. That's the first one.

And the second is on the proceeds in Pakistan. So, I know you said you plan to use some of the proceeds for spectrum to paying down debt, but also ex-distribute to shareholders. Could you give us a sense of how -- what proportion you might see going to each part? And are there any obstacles in you getting that cash to Pakistan? The final question is on Bangladesh. I see you're talking about -- and perhaps trying to raise debt in the local market there. Could just give us a sense of how deep you think that market is and perhaps what proportion of spectrum cost might be able to be funded local currency? That would be great.

Many thanks. Jean-

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

Andrew Davies: I knew before Stella started asking questions that all of these will be coming my way. Thank you, first of all, for the kind words Stella. So, let me kind of try and take them in reverse order, if that's okay with you.

So, Bangladesh, we actually think that the market is probably sufficiently deep enough for us to be able to fund all of our requirements locally in local currency and might be an extent to be able to refinance the existing dollar bond in that same manner. With regards to Pakistan, this is probably the longest answer of the day. So, it is a question that we get frequently, so let me take the time here to step through this in a clear way for everybody. So, we're going to get roughly -- let's make it easier to work with the numbers. We're going to get ballpark figure $750 million equivalent either at or shortly after closing.

We're going to use roughly $200 million to $250 million equivalent to pay down our gross debt locally. So, that's going to leave somewhere between $500 million to $550 million to -- for Jazz try to distribute out. So, obviously, when it distributes that many, 17% of that amount first of all, you can do the math from what that means is going to go to [Indiscernible] Group, our minority partner in that entity. Of the amount that will get paid to GTH, being 83%, 15% of that number is going to get paid in the form of withholding taxes to the Pakistani authorities. And then GTH will get what's left over.

GTH will need to use those proceeds of the residual funds to repay, first of all, the $200 million bridge facility that was put in place in order to fund the share buyback program of earlier this year, coupled with also paying down over $100 million worth of revolving credit facility, which currently exists between Amsterdam and GTH and we'll also need to fund the interest payments on all of its debt, including, don't forget, the $1.2 billion bond that was put in place in roughly, what, April, May timeframe of last year, okay? So, after all of that amount of money, I mean, basically that will use up all the proceeds. So zero of the proceeds is going to end up being paid by GTH in the form of dividends. In terms of time and capacity in Pakistan, there is sufficient currency reserves in the country to be able to pay all this money up in the form of dividend, but it will take quite some time. And we -- our expectation is that it may take until the end of 2018 before Jazz pays out all of these dividends to GTH in dollars. And -- but to your first question, I think we're not going to put a number to this yet.

I mean, clearly, we will talk about this alongside fourth quarter results in February time frame next year. But again, as I noted earlier, when we looked at the dividend policy before we announced it in February of this year, we took account of a number of things, including Euroset and Deodar transactions I mentioned earlier on. But also, we looked at stress testing dividend capacity in connection with Uzbek som devaluation and various other potential impact. And we -- having gone through all of that stress testing, we were comfortable that we could announce a sustainable and progressive dividend policy. And the fact that many of these things have now come to fruition doesn't change the dividend policy just frankly demonstrates internally that we did a really good job in actually doing all of the stress testing that we did.

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

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

Stella Cridge: That's fantastic. Many thanks.

Andrew Davies: Thank you. Jean-

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

Operator: We will now take our next question from Igor Goncharov from BCS.

Please go ahead.

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

Andrew Davies: Thanks Igor.

Jean-

Yves Charlier: Thank you.

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

Bart Morselt: Thank you very much for your time and for your interest today. And Andrew, special thanks to you also on behalf of the IR team for good years of good interaction on the capital markets and all these people on the call.

Very much appreciated. We wish you all the best for the future. With that, ladies and gentlemen, I would like to close the call, and we hope to speak to you very soon again. Thank you and good bye.

Andrew Davies: Thank you.

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