VEON Ltd., - Execution Gains Momentum: Another Quarter of Double-Digit Growth; Raising Full Year EBITDA Guidance

Earnings Release

3Q21 results

28 OCTOBER 2021

EXECUTION GAINS MOMENTUM:

ANOTHER QUARTER OF DOUBLE-DIGIT GROWTH

RAISING FULL YEAR EBITDA GUIDANCE

2	Earnings Release
	3Q21 results

Amsterdam (28 October 2021) - VEON Ltd. (VEON) announces results for the third quarter ended 30 September 2021:

3Q21 HIGHLIGHTS:

• Strong year-over-year revenue performance in both reported currency (+10.2%) and local currency (+11.2%)
• Strong acceleration in Beeline Russia's total revenue and service revenue performance, which were up 8.2% and 4.7% YoY in local currency respectively (+8.3% and +4.8% YoY reported respectively)
• EBITDA increased strongly year-over-year in both reported currency (+8.6%) and local currency (+9.1%)
• Equity free cash flow for the quarter of USD 308 million showing a significant improvement over prior quarters
• 4G subscribers increased to 93.8 million, reaching penetration of 46.2%, up 10.3 p.p. YoY and 3.0 p.p. QoQ
• JazzCash in Pakistan reached 13.9 million monthly active users, and Toffee TV in Bangladesh reached 6.3 million monthly active users.
• FY2021 Group EBITDA guidance raised to minimum local currency growth of 8%. On Group revenues guidance, we maintain high single-digit local currency growth for the full financial year
• Algeria has become a discontinued operation, is accounted for as an "Asset held for sale" and does not contribute to both the comparison base and the actual reported numbers
• With reported revenues up 10.2% YoY and local currency revenues growing 11.2% YoY, VEON recorded double digit growth for the second consecutive quarter in 3Q21.
• Beeline Russia continued to execute on its turnaround, as revenue growth accelerated with 3Q21 local currency revenue growth of 8.2% YoY and local currency mobile service revenue growth of 4.5%. Beeline added 0.5 million mobile customers in last quarter reaching 50.6m (+1.7% YoY).
• All of our countries posted local currency revenue growth, with double digit performance from Kazakhstan (+25.5% YoY), Georgia (+21.4% YoY), Pakistan (+13.0% YoY), Ukraine (+11.9% YoY) and Uzbekistan (+10.4% YoY).
• Group EBITDA increased by 8.6% YoY in reported terms, and 9.1% YoY in local currency. This solid result was driven primarily by robust local- currency EBITDA performance in Ukraine (+11.4% YoY) and Kazakhstan (+36.7% YoY). Russian posted a second consecutive quarter of positive EBITDA with local currency growth of 1.9%.
• Group capex stood at USD 381 million, supporting the continued expansion of our 4G customer base, which increased by 24.7 million YoY and 7.0 million QoQ. Total Group 4G users reached 93.8 million, corresponding to 4G subscriber penetration of 46.2% at quarter-end. The Group also recorded a QoQ increase in its total subscribers, which grew by 3.2 million in 3Q21 to reach 202.9 million.
• Mobile data revenue increased by 18.8% YoY in local currency (18.1% YoY reported), driven by our ongoing 4G focus. A noteworthy contribution to our data revenue growth came from Pakistan (+25.5% YoY), Kazakhstan (+40.3% YoY) and Bangladesh (+32.0% YoY).
• JazzCash closed the quarter with 13.9 million monthly active users (+43.6% YoY), Toffee TV in Bangladesh reached 6.3 million monthly active users from 1.8 million a year ago; and Beeline TV in Russia hit 3.1 million monthly active users (+16.7% YoY) in 3Q21.
• We remain focused on active portfolio management and the pursuit of opportunities to realize the value of our infrastructure portfolio. On 6 September 2021, VEON announced that it had reached an agreement to sell its mobile network towers in Russia to Service-Telecom Group of Companies LLC for a total consideration of RUB 70.65 billion (USD 970 million equivalent), subject to customary regulatory approvals.
• Group net debt of USD 8.2bn (of which lease liabilities were USD 1.8bn) at the end of 3Q resulted in a net debt/EBITDA ratio of around 2.5x. These figures reflect cash capex of approximately USD 347mn in the quarter. The Group's cost of debt (excluding leases) in 3Q21 increased to 6.3% from 6.1% in 3Q20, while debt maturity (excluding leases) increased to 3.2 years, from 2.8 years in 3Q20.

KEY RECENT DEVELOPMENTS

• 17 August 2021, Michael Schulz joined VEON as Group Chief People Officer
• 6 September 2021, VEON announced the sale of its Russian tower assets for USD 970 million
• 9 September 2021, VEON announced the pricing of its 5-year RUB 20 billion 8.125% notes issued under its GMTN programme
• 21 October 2021, VEON announced that its Group General Counsel Scott Dresser will be leaving the Company effective 31 December 2021
• 26 October 2021, VEON published its integrated report for 2020

The non - IFRS financial information used in this document, including among others, EBITDA, EBITDA margin, net debt, equity free cash flow, operational capex, capex Intensity, local currency trends, and ARPU, are defined in Attachment A "Definitions" on page 18 . In the above text, YoY local currency was calculated excluding Armenia from 3Q20 and 9M20 results . For further discussion of adjustments made for one - off and non - recurring items, see "Non - recurring items that affect year - on - year comparisons" on page 4 .

3	Earnings Release
	3Q21 results

Kaan Terzioğlu commented on 3Q21 results:

"Our successful execution along VEON's 3 strategic pillars - infrastructure, digital operator transformation and Ventures - is moving full steam ahead and bearing fruit. With this we have now delivered five consecutive quarters of improvement in both operational and financial performance.

All of our operating companies have recorded year-over-year total revenue growth, with 5 of them reporting double-digit growth. I am particularly pleased that Beeline Russia's strong performance has continued to accelerate further in the month of September with total revenues up 8.2% and mobile service revenue growth of 4.5% making Beeline Russia a significant contributor to our Group's revenue growth.

These financial results are built on strong operational foundations as we strengthen our 4G subscriber base - now 46% of our customers. With significantly higher ARPU and lower churn, they form the fundamental building block of our present and future growth as we execute on our digital operator transformation.

Our operating companies are widening and deepening their relationship with the users of our digital services. In Q3, Toffee TV reached 6.3 million subscribers up 3.6 times YoY, JazzCash reached 13.9 million subscribers with 44.0% YoY growth and Beeline TV reached 3.1 million subscribers with 17% YoY growth.

We are making progress in crystallising the value of our infrastructure assets. The agreement that we have reached for the sale of our Russia towers is a first and an important step in our transition towards an asset-light model while maintaining our competitiveness.

As we deliver on our targets and strategy, we remain focused on the long-term financial health and sustainability of the Group. Improving cash flow trends is proof of our disciplined approach in this area. With the achievements of this quarter, we are well positioned for sustained growth and confident in the longer-term value creation for all our stakeholders."

3Q21 KEY FIGURES

• Revenue: USD 2,005 million, +10.2% YoY on a reported basis and +11.2% YoY in local currency, with +8.2% YoY revenue growth in Russia, +13.0% in Pakistan, +11.9% in Ukraine, +25.5% in Kazakhstan and +7.2% in Bangladesh
• EBITDA: USD 889 million, +8.6% YoY on a reported basis and +9.1% YoY in local currency, driven by EBITDA growth in Russia (+1.9% YoY) and double-digit EBITDA growth in Ukraine (+11.4% YoY) and Kazakhstan (+36.7% YoY)
• Operational capex: USD 381 million in 3Q21, with a rolling 12-month capex intensity of 25.2% reflecting our continued focus on our 4G roll-out, and healthy linearity driven by good investment planning
• Capital structure: Group leverage of 2.5x (net debt/EBITDA), including lease liabilities; total cash and undrawn committed credit lines of USD 3.0 billion; average cost of debt (excluding leases) of 6.3% and average debt (excluding leases) maturity at 3.2 years
• Net income for the period: USD 195 million, material YoY improvement compared to USD 645 million loss in 3Q20 (Net income includes the contribution from discontinued operations)

USD million	3Q21	3Q20	YoY	YoY	9M21	9M20	YoY	YoY
reported	local currency	reported	local currency
Total Revenue, of which	2,005	1,820	10.2%	11.2%	5,736	5,463	5.0%	9.7%
mobile and fixed service revenue	1,825	1,683	8.4%	9.4%	5,283	5,113	3.3%	8.0%
of which mobile data revenue	685	580	18.1%	18.8%	1,964	1,732	13.4%	18.2%
EBITDA	889	819	8.6%	9.1%	2,505	2,403	4.2%	8.7%
EBITDA margin (EBITDA /total revenue)	44.4%	45.0%	(0.6p.p.)	(0.8p.p.)	43.7%	44.0%	(0.3p.p.)	(0.4p.p.)
Net income/(loss) for the period	195	(645)	n.m.		460	(350)	n.m.
Net income/(loss) for the period	145	(620)	n.m.		375	(357)	n.m.
attr. to VEON shareholders
Operational Capex	381	328	16.0%		1,260	1,150	9.5%
LTM Operational Capex / LTM Revenue	25.2%	24.5%	0.6p.p.
Equity Free Cash Flow	308	239	29.2%		320	300	6.5%
Net Debt, excluding banking operations in Pakistan	8,154	7,607	7.2%
Net Debt / LTM EBITDA	2.5	2.5
Total mobile customers (millions)	202.9	192.3	5.5%
4G smartphone users (millions)	104.0	84.5	23.1%
4G smartphone penetration, %	51.3%	44.0%	7.3p.p.
4G users (millions)	93.8	69.1	35.8%
4G customer base penetration, %	46.2%	35.9%	10.3p.p.
4G coverage, %	78.3%	69.2%	9.1p.p.
Fixed-line broadband customers (millions)	4.6	4.4	4.4%

Note: in the above table YoY local currency was calculated excluding Armenia from 3Q20 and 9M20 results . The Algerian operations do not contribute to both the comparison base and the actual reported numbers , other than in net income (for further discussion of adjustments made for one - off and non - recurring items, see "Non - recurring items that affect year - on - year comparisons . " on page 4) .

The non - IFRS financial information used in this document, including among others, EBITDA, EBITDA margin, net debt, equity free cash flow,

operational capex, capex Intensity, local currency trends, and ARPU, are defined in Attachment A "Definitions" on page 18 . In the above text, YoY local currency was calculated excluding Armenia from 3Q20 and 9M20 results . For further discussion of adjustments made for one - off and no n - recurring items, see "Non - recurring items that affect year - on - year comparisons" on page 4 .

	Earnings Release
	3Q21 results
CONTENTS
KEY RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
GROUP PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
COUNTRY PERFORMANCES . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CONFERENCE CALL INFORMATION . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5
ATTACHMENTS .........................................................................................................................................	17

PRESENTATION OF FINANCIAL RESULTS

VEON's results presented in this earnings release are, unless otherwise stated, based on IFRS and have not been audited.

Certain amounts and percentages that appear in this earnings release have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including those in the tables, may not be an exact arithmetic aggregation of the figures that precede or follow them.

All comparisons are on a year-on-year (YoY) basis unless otherwise stated.

The non-IFRS information- disclosed in the document, including among others, EBITDA, EBITDA margin, net debt, equity free cash flow, operational capex, capex intensity, local currency trends, and ARPU is defined in Attachment A.

The non-IFRS information disclosed in the document, such as EBITDA, net debt, equity free cash flow, operational capex, local currency YoY change, is reconciled to the comparable IFRS information in Attachment C.

NON-RECURRING ITEMS THAT AFFECT YEAR-ON-YEAR COMPARISONS FOR REVENUE AND EBITDA

On 29 October 2020, VEON announced the sale of CJSC "VEON Armenia", VEON's operating subsidiary in Armenia. Armenia results were deconsolidated from VEON Group numbers starting from 4Q20.

Local currency year-on-yeartrends for 3Q21 and 9M21 disclosed in this earnings release exclude both the impact of foreign currency movements (see full definition in Attachment A) and the non-recurring item - the sale of operations in Armenia.

Following the exercise of the put option for our stake in Algeria on 1 July 2021, the Algerian business has, in line with the IFRS 5 requirements, become a discontinued operation, and accounted for as "Asset held for sale". The result is that the Algerian operations do not contribute to both the comparison base and the actual reported numbers of VEON, without any change in the net economic value of this business.

5	Earnings Release
	3Q21 results

KEY RECENT DEVELOPMENTS

VEON announced the appointment of Group Chief People Officer

On 17 August 2021, VEON announced the appointment of Michael Schulz as VEON Group Chief People Officer. Michael joins VEON's Group Executive Committee and has been appointed to the Board of Directors of a number of the Group's operating companies.

VEON announced the sale of its Russia tower assets for USD 970 million

On 6 September 2021, VEON announced that it has reached an agreement to sell its mobile network towers in Russia to Service- Telecom for a total consideration of RUB 70.65 billion (USD 970 million equivalent). The sale reflects VEON's continued focus on active portfolio management and the pursuit of opportunities to realize the value of its infrastructure portfolio.

New executive compensation scheme

As mentioned in our integrated report, our new executive compensation scheme ensures total alignment between management and shareholders. It introduces an annual rolling stock-basedlong-term incentive based on total shareholder return, as well as a deferred equity component in annual performance bonus. This combines global standards for vesting with share ownership requirements, and aims to attract and retain the best talent in a competitive market.

In 3Q21, Yaroslav Glazunov, a member of our Board, Kaan Terzioglu, our Group Chief Executive Officer and Erik Aas, the Chief Executive Officer of Banglalink, each purchased 68,500, 100,000 and 100,000 of our ADSs, respectively. As of 31 September 2021, Mr. Glazunov, Mr. Terzioglu and Mr. Aas, each owned 68,500, 700,000 and 200,000 of our ADSs, respectively.

VEON announced the pricing of its ruble- denominated notes offering

On 9 September 2021, VEON announced the pricing of its 5-year RUB 20 billion (approximately USD 273 million) 8.125% notes issued under its Global Medium Term Note programme. This represents the third Russian ruble denominated bond offering under the programme.

VEON announced that Scott Dresser will depart VEON

On 21 October 2021, VEON announced that long serving General Counsel, Scott Dresser, will be leaving the company effective 31 December 2021. Mr. Dresser will continue as a strategic advisor to the Chairman of the Board.