VEON Announces Q2 2017 Results

AMSTERDAM, Aug. 3, 2017 /PRNewswire/ --

Q2 2017 KEY RESULTS

    --  Total revenue increased 12.3% year on year, and 3.7% organically(1) - a
        result of strong revenue performance in Russia, Pakistan, Ukraine and
        Uzbekistan despite continued, but reduced, pressure in Algeria
    --  Mobile service revenue growth was particularly positive, increasing 4.3%
        in organic terms (with mobile data growing organically by 30.5% year on
        year); fixed-line service revenue declined in organic terms by 11.5%
    --  Reported EBITDA increased 17.1% year on year and 10.6% organically(1)
        with a margin of 38.5%
    --  Net loss for the period attributable to VEON shareholders of USD 278
        million was mainly caused by exceptional items such as Euroset
        impairment of USD 110 million, the USD 85 million share of net loss
        recorded by the Group in respect of Italy JV, resulting from integration
        costs and accelerated depreciation and amortization, and early
        redemption premiums for bond repurchases of USD 124 million)
    --  Underlying equity free cash flow excluding licenses(3) of USD 293
        million up from USD 243 million in Q2 2016
    --  FY 2017 targets(4) confirmed with single digit revenue growth, EBITDA
        margin accretion and underlying equity free cash flow excluding
        licenses(3) of USD 900 million to USD 1 billion

MAIN EVENTS

    --  Supervisory Board of VEON approved an interim dividend 2017 of US 11
        cents per share to be paid on 6 September 2017
    --  VEON, the personal internet platform, launched in 5 countries
    --  VEON and MegaFon to end their Euroset joint venture in Russia
    --  Substantive refinancing activities completed in Q2 2017, simplifying the
        capital structure
    --  AGM elected two new independent directors with Ursula Burns appointed
        Chairman of the Supervisory Board
    --  Jazz acquired additional 4G/LTE spectrum in Pakistan

VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON) a leading global provider of connectivity and internet services headquartered in Amsterdam and serving over 235 million customers, today announces financial and operating results for the quarter ended 30 June 2017.

KEY RESULTS: CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS


    USD million                                                     2Q17             2Q16      2Q16    Reported      Organic
                                                                         pro-forma Warid5  reported         YoY      YoY (1)
    ---                                                                  ----------------  --------         ---       ------

    Total revenue, of which                                        2,417             2,228      2,153        12.3%         3.7%

       mobile and fixed service revenue                            2,331             2,158      2,086        11.8%         3.4%

       of which mobile data revenue                                  465               340        333        39.6%        30.5%

    EBITDA                                                           931               811        795        17.1%        10.6%

    EBITDA underlying (2)                                            977               928        913         7.0%         1.5%

    EBITDA margin underlying (2)(EBITDA underlying/total revenue)  40.4%            41.7%     42.4%   (2.0p.p.)    (0.9p.p.)

    Profit/(loss) from continued operations                        (258)             (55)      (40)         n.m

    Profit/(loss) from discontinued operations                         -              187        186          n.m

    Profit/(loss) for the period attributable to VEON shareholders (278)              122        137          n.m

    Underlying equity free cash flow (3)                             293               243        243        20.6%

    Capital expenditures excl. licenses                              332               307        284        17.2%

    LTM capex excl. licenses/revenue                               18.4%            17.2%     17.4%     1.0p.p.

    Net debt                                                       8,403               n.a     6,575        27.8%

    Net debt/LTM EBITDA underlying                                   2.2               n.a       1.8

    Total mobile customer (millions, excluding Italy)                208               204        194         6.9%

    Total fixed-line broadband customers (millions)                  3.5               3.4        3.4         4.6%
    ----------------------------------------------                   ---               ---        ---          ---


    1)             Organic change reflects changes in
                   revenue and EBITDA excluding foreign
                   currency movements and other
                   factors, such as businesses under
                   liquidation, disposals, mergers and
                   acquisitions (see Attachment C for
                   reconciliations)

    2)             Underlying EBITDA excludes
                   transformation costs and material
                   exceptional items, see Attachment C
                   for reconciliations

    3)             Underlying equity free cash flow
                   excluding licenses is defined as
                   free cash flow from operating
                   activities less free cash flow used
                   in investing activities (excluding
                   capex for licenses and withholding
                   tax related to Pakistan spectrum of
                   USD 29.5 million), excluding M&A
                   transactions, transformation costs
                   and other one-off items

    4)             FY 2017 targets based on pro-forma
                   results for 2016, including 12
                   months of Warid contribution;
                   organic targets for revenue and
                   underlying EBITDA margin are at
                   constant currency, excluding
                   exceptional items, e.g.
                   transformation costs and M&A.
                   Underlying equity free cash flow
                   excluding licenses is calculated at
                   the target rates for 2017 (see
                   Attachment C)

    5)             Pro-forma assuming that the results
                   of Warid have been consolidated
                   (including intercompany
                   eliminations) within VEON's results
                   with effect from 1 January 2016


    USD million                                                     1H17             1H16      1H16     Reported       Organic
                                                                         pro-forma Warid5  reported          YoY       YoY (1)
    ---                                                                  ----------------  --------          ---        ------

    Total revenue, of which                                        4,698             4,324      4,170         12.7%          1.5%

       mobile and fixed service revenue                            4,533             4,180      4,033         12.4%          1.5%

       of which mobile data revenue                                  901               647        635         42.0%         29.2%

    EBITDA                                                         1,792             1,589      1,553         15.3%          6.4%

    EBITDA underlying (2)                                          1,868             1,747      1,711          9.1%          1.2%

    EBITDA margin underlying (2)(EBITDA underlying/total revenue)  39.8%            40.4%     41.0%   (1.3 p.p.)    (0.2 p.p.)

    Profit/(loss) from continued operations                        (269)             (36)       (2)          n.m

    Profit/(loss) from discontinued operations                         -              383        383           n.m

    Profit/(loss) for the period attributable to VEON shareholders (283)              291        326           n.m

    Underlying equity free cash flow (3)                             491               328        328         49.7%

    Capital expenditures excl. licenses                              595               467        437         36.0%

    LTM capex excl. licenses/revenue                               18.4%            17.2%     17.4%      1.0p.p.
    --------------------------------                                ----              ----       ----       -------

JEAN-YVES CHARLIER, CHIEF EXECUTIVE OFFICER, COMMENTS:
"I am pleased to report a robust second quarter with continued double-digit growth in revenues and EBITDA. We observed further revenue growth in our core markets of Russia, Pakistan and Ukraine, which saw strong demand for our mobile data services. This momentum translated into further increases in underlying equity free cash flow, allowing us to confirm 2017 guidance. In addition, we are pleased to announce an interim dividend of 11 US cents on the back of our strong financial performance.

VEON's transformation journey to becoming a digital services provider also saw significant progress with the launch of the VEON personal internet platform across five of our major markets. We have withdrawn from the Euroset joint venture in Russia to focus on expanding our monobrand strategy. Furthermore, the simplification of our capital structure continues to make good progress and will bring significant savings.

The Board was also delighted to welcome our new independent Chairman, Ursula Burns, who with Guy Laurence, was appointed as an independent director, further strengthens VEON's corporate governance. Their experience in technology and leading global business transformations adds significant value to our development."

PRESENTATION OF FINANCIAL RESULTS
VEON's results presented in this earnings release are based on IFRS and have not been audited. "EBITDA" or "reported EBITDA" presented in this document is called "Adjusted EBITDA" in the Management's Discussion and Analysis of financial condition and results of operations (MD&A) section.

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 tables, may not be an exact arithmetic aggregation of the figures that precede or follow them.

All non-IFRS measures disclosed in the document, i.e. EBITDA, EBITDA margin, underlying EBITDA, underlying EBITDA margin, EBIT, net debt, equity free cash flow, organic growth, capital expenditures excluding licenses, last twelve months (LTM) Capex excluding licenses/Revenue, are reconciled to the comparable IFRS measures in Attachment C.

The financial results for Q2 2016 are also presented on a pro-forma basis assuming that the results of Warid have been consolidated (including intercompany eliminations) within VEON's results with effect from 1 January 2016, in order to assist with the year on year comparisons.

As at 7 November 2016, VEON Ltd. owns a 50% share of the Italy Joint Venture (with CK Hutchison owning the other 50%) and we account for this JV using the equity method as we do not have control. All information related to the Italy Joint Venture is the sole responsibility of the Italy Joint Venture's management, and no information contained herein, including, but not limited to, the Italy Joint Venture's financial and industry data, has been prepared by or on behalf of, or approved by, our management. VEON Ltd. is not making, and has not made, any written or oral representation or warranty, express or implied, of any nature whatsoever, with respect to any Italy Joint Venture information included in this report. For further information on the Italy Joint Venture and its accounting treatment, see "Item 5--Operating and Financial Review and Prospects--Key Developments and Trends--Italy Joint Venture" "Explanatory Note--Accounting Treatment of our Historical WIND Business and the new Italy Joint Venture" and Note 6 to our audited consolidated financial statements included in our Annual Report on Form 20-F for the year ended 31 December 2016.

All comparisons are on a year on year basis unless otherwise stated.

MAIN EVENTS

VEON's SUPERVISORY BOARD HAS APPROVED AN INTERIM DIVIDEND 2017 OF US 11 CENTS PER SHARE
Consistent with the Company's recently communicated commitment to pay a sustainable and progressive dividend based on the evolution of its equity free cash flow, the Supervisory Board approved the distribution of an interim gross dividend of 11 US cents per share for 2017. This payment is planned to take place on 6 September 2017, with a record date of 14 August 2017. For ordinary shareholders at Euronext Amsterdam, the interim dividend of US 11 cents will be paid in euro.

VEON, THE PERSONAL INTERNET PLATFORM LAUNCHED IN 5 COUNTRIES
In July, VEON launched its new global personal internet platform in Russia, Ukraine, Georgia, Pakistan and, with updated functionality, in Italy, covering 134 million potential customers. The VEON platform provides personalized internet services, with a range of messaging and communication capabilities (including chat, calls and sharing) which users can use for free, without worrying about running out of data. The platform gives access to some of the most popular consumer brands, thanks to more than 100 partnerships with both global and local players. The Company intends to roll out the VEON platform in all its markets by the end of 2017.

VEON AND MEGAFON AGREED TO END THEIR EUROSET JOINT VENTURE IN RUSSIA
In July 2017, PJSC VimpelCom, a subsidiary of the Company, entered into a Framework Agreement with Megafon to unwind their retail joint venture, Euroset Holding B.V. ("Euroset"). Under the agreement, Megafon will acquire PJSC VimpelCom's 50% interest in Euroset and PJSC VimpelCom will pay RUB 1.25 billion (~USD 20 million, subject to possible completion adjustments) and will acquire rights to 50% of Euroset's approximately 4,000 retail stores in Russia. The transaction is subject to relevant regulatory approvals and other conditions precedent, and is expected to be completed in Q4 2017. Following completion of this transaction, VEON intends to double the number of Beeline monobrand stores, which VEON believes will result in churn and ARPU improvements, more upselling opportunities and a higher level of customer service.

SUBSTANTIVE REFINANCING ACTIVITIES COMPLETED IN Q2 2017, SIMPLIFYING THE CAPITAL STRUCTURE
VEON intends to continuously improve its capital structure and rebalance the debt currency mix, with the aim of lowering its net cost of debt. The Company's subsidiary VimpelCom Holdings B.V. has successfully entered into a new RUB 110 billion, five-year term loan agreement with Sberbank. The term loan were utilized to refinance the existing loans between Sberbank and PJSC VimpelCom, as well as provide additional funds for general corporate purposes.

VimpelCom Holdings B.V. also completed an any-and-all cash tender offer for the following notes: (i) USD 1 billion 9.125% Loan Participation Notes due 2018 (USD 499 million o/s), (ii) USD 1 billion 7.748% Loan Participation Notes due 2021 (USD 651 million o/s) and (iii) USD 1.5 billion 7.5043% Guaranteed Notes due 2022 (USD 1,280 million o/s). The aggregate principal amount accepted for purchase pursuant to the offer was equal to approximately USD 1.3 billion, leaving the aggregrate principal amount outstanding, following settlement of the offer, at around USD 1.2 billion.

In connection with the cash tender offer, VimpelCom Holdings B.V. also issued new senior unsecured notes; on 16 June 2017, VimpelCom Holdings B.V. issued USD 600 million 3.95% Senior Notes due 2021 and USD 900 million 4.95% Senior Notes due 2024. The net proceeds of the issue have been utilized to finance the cash tender offer.

Since the beginning of 2017, the Group has been able to restructure or refinance approximately 60% of its debt, leading to enhanced flexibility, an improved currency mix, a lower average cost of debt and a lengthened maturity profile. This will lead to an average interest cost reduction of approximately USD 100 million per annum assuming stable gross debt.

AGM ELECTED TWO NEW INDEPENDENT DIRECTORS, WITH URSULA BURNS APPOINTED CHAIRMAN
Following the election of the directors of the Supervisory Board at the AGM of 24 July 2017, the Supervisory Board appointed Ursula Burns, the former Chairman and CEO of Xerox, to become its Chairman effective immediately. With the election of Ursula Burns and Guy Laurence, the former CEO of Rogers, the Supervisory Board increased from nine to eleven members.

JAZZ ACQUIRED ADDITIONAL 4G/LTE SPECTRUM IN PAKISTAN
VEON and its subsidiary Global Telecom Holding announced the acquisition of additional 4G/LTE spectrum in Pakistan, through their local 85% owned subsidiary, Jazz. This marks another major milestone in VEON's ambition to become a global digital leader and is expected to improve the customer experience in terms of voice quality, data speeds and connectivity. Jazz won the auction, being awarded 10 MHz of paired spectrum in the 1800 MHz band for a total consideration of USD 295 million and withholding tax of 10%.

GROUP PERFORMANCE - Q2 2017

    --  Total revenue increased 12.3% year on year, organic growth of 3.7% year
        on year
    --  EBITDA increased 17.1% and includes exceptional costs of USD 46 million
        related to performance transformation (which in Q2 2016 amounted to USD
        118 million)
    --  Underlying EBITDA increased organically by 1.5% year on year; underlying
        EBITDA margin decreased organically by 0.9 percentage points to 40.4%
    --  Underlying equity free cash flow (excluding licenses) of USD 293 million
        in Q2 2017, which represents an increase of USD 50 million compared to
        Q2 2016

FINANCIALS BY COUNTRY



    USD million               2Q17      2Q16      2Q16   Reported    Organic     1H17          1H16      1H16 reported       Reported        Organic
                                   pro-forma  reported        YoY        YoY              pro-forma                               YoY            YoY
                                       Warid                                                  Warid

    Total revenue            2,417      2,228      2,152       12.3%       3.7%    4,698          4,324               4,169           12.7%           1.5%


    Russia                   1,197      1,008      1,008       18.7%       3.0%    2,294          1,893               1,893           21.2%           0.4%

    Pakistan                   385        361        285       35.4%       6.9%      755            712                 558           35.5%           6.1%

    Algeria                    231        251        251      (7.6%)     (8.0%)      463            529                 529         (12.5%)        (11.7%)

    Bangladesh                 148        157        157      (6.0%)     (3.0%)      299            312                 312          (4.3%)         (2.1%)

    Ukraine                    154        146        146        5.0%      10.0%      297            281                 281            5.4%          10.8%

    Uzbekistan                 153        164        164      (7.3%)      20.3%      306            329                 329          (7.2%)          15.0%

    HQ                           -         -                                        -             -                  -

    Other and eliminations     149        141        141       12.4%                 284            268                 267           12.0%
    ----------------------     ---        ---        ---        ----                  ---            ---                 ---            ----


    Service revenue          2,331      2,158      2,085       11.8%       3.4%    4,533          4,180               4,033           12.4%           1.5%


    Russia                   1,147        980        980       17.0%       1.5%    2,201          1,827               1,827           20.5%         (0.1%)

    Pakistan                   359        341        269       33.7%       5.4%      705            673                 526           34.0%           4.8%

    Algeria                    228        248        248      (8.0%)     (8.3%)      456            524                 524         (13.0%)        (12.2%)

    Bangladesh                 144        152        152      (5.6%)     (2.6%)      291            305                 305          (4.7%)         (2.5%)

    Ukraine                    153        145        145        5.5%      10.5%      295            280                 280            5.5%          11.0%

    Uzbekistan                 152        164        164      (7.3%)      20.3%      305            329                 329          (7.2%)          15.0%

    HQ                           -         -         -                              -             -                  -

    Other and eliminations     147        135        128       16.0%                 280            242                 242           15.5%
    ----------------------     ---        ---        ---        ----                  ---            ---                 ---            ----


    EBITDA                     931        811        795       17.1%      10.6%    1,792          1,589               1,553           15.3%           6.4%


    Russia                     471        414        414       13.8%     (1.3%)      880            742                 742           18.7%         (1.3%)

    Pakistan                   167        130        115       45.6%      28.3%      321            266                 231           39.3%          20.8%

    Algeria                    105        128        128     (18.4%)    (18.7%)      219            286                 286         (24.0%)        (23.0%)

    Bangladesh                  61         69         69     (11.7%)     (8.9%)      130            139                 139          (6.3%)         (4.2%)

    Ukraine                     87         80         80        8.5%      13.7%      164            151                 151            8.2%          13.8%

    Uzbekistan                  83         94         94     (11.9%)      14.4%      162            194                 194         (16.8%)           3.4%

    HQ                        (94)     (112)     (112)    (16.3%)               (170)         (237)              (237)        (28.7%)

    Other and eliminations      51          8          8      561.3%                  86             48                  48           80.0%


    EBITDA margin            38.5%     36.4%     36.9%                          38.1%         36.7%              37.3%
    -------------             ----       ----       ----                            ----           ----                ----


    EBITDA underlying          977        928        913        7.0%       1.5%    1,868          1,747               1,711            9.1%           1.2%


    Russia                     472        417        417       13.3%     (1.7%)      884            745                 745           18.6%         (1.4%)

    Pakistan                   172        146        129       33.3%      19.1%      333            285                 249           33.8%          17.2%

    Algeria                    105        128        128     (18.4%)    (18.8%)      219            287                 287         (23.6%)        (23.0%)

    Bangladesh                  61         75         75     (18.7%)    (16.1%)      130            149                 149         (12.8%)        (10.9%)

    Ukraine                     88         80         80       10.0%      15.1%      165            151                 151            9.5%          15.1%

    Uzbekistan                  83         94         94     (11.9%)      14.4%      162            191                 191         (15.4%)           5.1%

    HQ                        (66)      (58)      (58)      13.5%               (169)         (148)              (148)          14.3%

    Other and eliminations      62         46         46       31.2%                 143             89                  90           61.0%


    EBITDA margin underlying 40.4%     41.7%     42.4%                          39.8%         40.4%              40.4%
    ------------------------  ----       ----       ----                            ----           ----                ----

Group revenue for Q2 2017 increased 12.3% year on year to USD 2.4 billion driven by year on year organic growth of 3.7%, currency appreciation and the impact of the Warid transaction with effect from 1 July 2016. The Group showed strong revenue growth in Russia, Pakistan, Ukraine and Uzbekistan, with continued, although alleviating, weakness in Algeria.

Mobile data revenue continued to show strong organic growth of 30.5% and total mobile customers increased 6.9% to 208 million at the end of Q2 2017, primarily driven by the inclusion of Warid's customer base in Pakistan and by further organic customer growth in Pakistan, Ukraine and Uzbekistan.

Group reported EBITDA in Q2 2017 increased 17.1% to USD 931 million while underlying EBITDA was USD 977 million, reflecting an organic increase of 1.5%. The exceptional items of USD 46 million in this period largely relate to the cost of the Group-wide performance transformation program. The reconciliation table for EBITDA and underlying EBITDA is set forth in Attachment C.

For the discussion of each country's individual performances below, all trends are expressed in local currency.

In Russia, total revenue in Q2 2017 increased 3.0%, driven by an increase in mobile service revenue, partially offset by a decrease in voice revenue. Mobile data revenue continued its strong growth, increasing 17.8%. Reported EBITDA decreased by 1.3%, while underlying EBITDA decreased by 1.7%, adjusted for exceptional costs in Q2 2016 and Q2 2017 related to the performance transformation program.

In Pakistan, the Group acquired Warid, strengthening its leading position and, as a result, Warid's financial results have been consolidated into VEON´s financial statements with effect from 1 July 2016. Total revenue grew organically (i.e. including Warid pro-forma for 2016) by 6.9%, mainly due to growth in data and financial services revenues. Data revenue grew organically by 46.2%, driven by an increase in data customers through higher bundle engagement and continued 3G network expansion. Underlying EBITDA, excluding both restructuring costs related to the performance transformation program and integration costs related to the Warid transaction increased organically by 19.1%, while the underlying EBITDA margin was 44.7%, improving by 4.6 percentage points year on year.

In Algeria, total revenue decreased 8.0% as Djezzy continues to operate in a challenging environment with high inflation, an increase of VAT and of taxes on recharges following the new Finance law implemented on 1 January 2017, and also characterized by intense competition on data pricing in particular. The company expects the competitive pressure to continue and is taking corrective measures to turn the business around. Djezzy's service revenue also decreased by 8.3%, while data revenue growth accelerated to 88.9%, due to higher usage and a substantial increase in data customers as a result of the 3G and 4G/LTE network roll-out. Underlying EBITDA, adjusted for exceptional costs related to the performance transformation program in Q2 2017, decreased by 18.8%, mainly due to the revenue decline.

In Bangladesh, total revenue decreased by 3.0%, driven by the 2.6% decline in service revenue. This decline in service revenue was partially caused by the spectrum disadvantage and the resulting gap in 3G network coverage versus the market leader although 3G network population coverage has been increased to 68% during Q2 2017 which reduces this gap. In addition, the market is still characterized by intense price competition which more than offset the continued increase in data revenue of 32.2%. The company's underlying EBITDA decreased by 16.1%, mainly due to the declining revenue trend and customer acquisition activity during the quarter.

In Ukraine, total revenue increased by 10.0% and mobile service revenue grew by 10.9%, driven by successful commercial activities and continued strong growth of mobile data revenue, which grew by 71.6%, driven by growing data customers, successful marketing activities stimulated by the continued 3G roll-out and increased penetration of data-centric tariffs. Underlying EBITDA, adjusted for performance transformation costs in Q2 2016 and Q2 2017, grew by 15.1%.

In Uzbekistan, total revenue increased by 20.3% and mobile service revenue increased by 20.4%, primarily as a result of the impact of Beeline´s price plans being pegged to U.S. dollars. Mobile data revenue increased 28.2%, driven by the continued high-speed data network roll-out, increased smartphone penetration and the launch of new bundled offerings. Underlying EBITDA increased 14.4% driven by the increased revenue, partially offset by higher interconnect costs as a result of both higher off-net usage and a negative currency effect together with increases in content costs, customer costs and structural opex. As a result, the underlying EBITDA margin was a strong 54.3% in Q2 2017.

The "HQ" segment includes the costs of VEON's and GTH's headquarters in Amsterdam, the London digital office and the Eurasia Hub. In Q2 2017, HQ costs decreased year on year due to lower performance transformation costs.

"Other" includes the results of Kazakhstan, Kyrgyzstan, Armenia, Georgia, Tajikistan and intercompany eliminations.

INCOME STATEMENT & CAPITAL EXPENDITURES



    USD million                                              2Q17            2Q16      2Q16   Reported    1H17                       1H16         1H16      Reported
                                                                  pro-forma Warid  reported        YoY                    pro-forma Warid     reported           YoY

    Total revenue                                           2,417            2,228      2,153       12.3%           4,698               4,324         4,170          12.7%

    Service revenue                                         2,331            2,158      2,086       11.8%           4,533               4,180         4,033          12.4%

    EBITDA                                                    931              811        795       17.1%           1,792               1,589         1,553          15.3%

    EBITDA margin                                           38.5%           36.4%     37.0%    1.6p.p.           38.1%              36.7%        37.3%       0.9p.p.

    Depreciation, amortization, impairments and other       (542)           (542)     (512)       5.7%         (1,057)            (1,023)        (966)          9.4%

    EBIT                                                      389              269        283       37.6%             734                 566           587          25.1%

    Financial income and expenses                           (208)           (194)     (186)      11.3%           (401)              (370)        (354)         13.2%

    Net foreign exchange (loss)/gain and others             (169)              19          9         n.m            (90)                 40            33            n.m

    Share of profit/(loss) of joint ventures and associates  (95)            (12)      (11)        n.m           (196)               (16)         (16)

    Impairment of JV and associates                         (110)               -         -        n.m           (110)                  -            -

    Profit/(loss) before tax                                (193)              82         95    (302.4%)            (63)                220           250       (125.4%)

    Income tax expense                                       (65)           (137)     (135)    (52.5%)           (206)              (256)        (252)       (18.4%)

    Profit/(loss) from continued operations                 (258)            (55)      (40)        n.m           (269)               (36)          (2)           n.m

    Profit/(loss)  from discontinued operations                 -             187        187         n.m               -                383           383            n.m

    Profit for the period attributable to VEON shareholders (278)             122        137         n.m           (283)                291           326            n.m
    -------------------------------------------------------  ----              ---        ---         ---            ----                 ---           ---            ---


                                                             2Q17            2Q16      2Q16   Reported    1H17                       1H16         1H16      Reported
                                                                  pro-forma Warid  reported        YoY                    pro-forma Warid     reported           YoY

    Capex                                                     644              371        350       84.5%             912                 574           545          68.0%

    Capex excl. licenses                                      332              307        284       17.2%             595                 467           437          36.0%

    Capex excl.licenses/revenue                             13.7%           13.8%     13.2%    0.5p.p.

    LTM capex excl. licenses/revenue                        18.4%           17.2%     17.4%    1.0p.p.
    --------------------------------                         ----             ----       ----     -------

Q2 2017 ANALYSIS
EBIT increased year on year to USD 389 million, due to the EBITDA growth, partially offset by higher amortization driven by the revision of useful life of the Mobilink and Warid brands, following the introduction of the Jazz brand in Pakistan.

The loss before tax of USD 193 million was mainly driven by an increase in financial income and expenses due to the Warid debt consolidation and currency appreciation against the US dollar; net FX losses of USD 53 million (non-cash) as well as early redemption premiums on bond repurchases of USD 124 million; our 50% share of loss of the Wind Tre joint venture which amounted to USD 85 million (non-cash) and the Euroset impairment of USD 110 million (non-cash). The net loss of the Wind Tre joint venture loss was mainly driven by integration costs as well as accelerated depreciation and amortization recorded in Q2 2017.

Income tax expense decreased in Q2 2017 to USD 65 million as higher taxes in Pakistan and Ukraine resulting from higher profits were more than offset by positive year on year impact from lower taxes in Russia, mainly due to the tax deductibility of fees paid in connection with the bond repurchase.

Prior to the Wind Tre joint venture closing in November 2016, WIND has been accounted for as a discontinued operation and classified as held for sale under IFRS rules since Q3 2015. As a result, the Q2 2016 results were positively affected by the elimination of depreciation and amortization charges from the results of WIND. Following the closing of the Italy JV transaction, this "discontinued operations" accounting treatment is no longer applicable.

In Q2 2017, the company recorded a loss for the period attributable to VEON shareholders of USD 278 million, mainly attributable to the USD 372 million of non-cash charges explained above.

Capex including licenses increased 84.5% to USD 644 million in Q2 2017 primarily due to the purchase of spectrum in Pakistan, following the positive outcome of the auction in May this year. Without licenses, capex increased by 17.2% year on year.

The LTM (Last Twelve Months) ratio of capex (excluding licenses) to revenue was 18.4% in Q2 2017, with the Q2 2017 stand-alone ratio at 13.7%.

FINANCIAL POSITION & CASH FLOW



    USD million                                    2Q17  1Q17    QoQ

    Total assets                                 21,034 20,567    2.3%

    Shareholders' equity                          5,355  5,720  (6.4%)

    Gross debt                                   11,624 10,240   13.5%

    Net debt                                      8,403  7,661    9.7%

    Net debt/underlying LTM EBITDA                  2.2    2.1
    ------------------------------                  ---    ---


    USD million                                    2Q17  2Q16    YoY      1H17       1H16       YoY

    Net cash from/(used in) operating activities    578    680   (102)     1,162         442        720

    from continued operations                       578    428     150      1,162          67      1,095

    from discontinued operations                      -   252   (252)         -        375      (375)

    Net cash from/(used in) investing activities  (725) (626)   (99)   (1,314)    (1,177)     (137)

    from continued operations                     (725) (405)  (320)   (1,314)      (765)     (549)

    from discontinued operations                      - (221)    221          -      (412)       412

    Net cash from/(used in) financing activities    909    693     216        163         719      (556)

    from continued operations                       909    693     216        163         729      (566)

    from discontinued operations                      -     -      -         -       (10)        10
    ----------------------------                    ---   ---    ---       ---        ---        ---

Assets increased compared to Q2 2017 mainly driven by the 4G/LTE spectrum investment in Pakistan of USD 295 million.

Gross debt increased 13.5% quarter on quarter mainly due to the new term-loan at HQ of USD 0.6 billion, new bonds issued by VimpelCom Holdings of USD 1.5 billion and the new Sberbank facility at HQ of USD 1.7 billion, partially offset by bond repayments of USD 1.3 billion and the repayment of Sberbank facilities in Russia of USD 1.1 billion.

Net cash from operating activities decreased year on year in Q2 2017 by USD 102 million, driven by the USD 150 million higher cash flow from continued operations being more than offset by the year on year decrease in the net cash from discontinued operations as a result of the closing of the Italy JV transaction in November 2016.

Net cash flow used in investing activities increased year on year by USD 99 million, due to the net effect of 4G/LTE spectrum investment in Pakistan, offset by the above-mentioned impact related to discontinued operations in Italy.

Net cash from financing activities increased in Q2 2017, mainly due to USD 562 million of additional net borrowings and USD 345 million of dividend payments.

COUNTRY PERFORMANCE - Q2 2017

    --  Russia
    --  Pakistan
    --  Algeria
    --  Bangladesh
    --  Ukraine
    --  Uzbekistan
    --  Italy

RUSSIA



    RUB million                                                                                2Q17           2Q16              YoY   1H17          1H16                YoY

    Total revenue                                                                                     68,407       66,423        3.0%      132,913        132,344          0.4%

    Mobile service revenue                                                                            55,674       53,730        3.6%      108,022        105,564          2.3%

    Fixed-line service revenue                                                                         9,889       10,848      (8.8%)       19,549         22,119       (11.6%)

    EBITDA                                                                                            26,925       27,269      (1.3%)       50,995         51,679        (1.3%)

    EBITDA underlying                                                                                 26,975       27,446      (1.7%)       51,199         51,909        (1.4%)

    EBITDA margin                                                                                      39.4%       41.1%  (1.7p.p.)        38.4%         39.0%    (0.6p.p.)

    EBITDA underlying margin                                                                           39.4%       41.3%  (1.9p.p.)        38.5%         39.2%    (0.7p.p.)

    Capex excl. licenses                                                                               7,882        7,191        9.6%       14,577         10,372         40.5%

    LTM Capex excl. licenses /revenue                                                                  16.7%       16.7%  (0.0p.p.)            -             -


    Mobile

    Total revenue                                                                                     58,491       55,537        5.3%      113,313        110,123          2.9%

    - of which mobile data                                                                            14,510       12,316       17.8%       28,413         24,259         17.1%

    Customers (mln)                                                                                     58.3         57.5        1.4%            -             -            -

    - of which data users (mln)                                                                         38.1         33.7       12.9%            -             -            -

    ARPU (RUB)                                                                                           320          309        3.6%            -             -            -

    MOU (min)                                                                                            338          337        0.3%            -             -            -

    Data usage (MB/user)                                                                               2,716        1,906       42.5%            -             -            -

    Fixed-line(1)

    Total revenue                                                                                      9,916       10,886      (8.9%)       19,600         22,221       (11.8%)

    Broadband revenue                                                                                  2,579        2,941     (12.3%)        5,229          6,002       (12.9%)

    Broadband customers (mln)                                                                            2.2          2.2        2.0%            -             -            -

    Broadband ARPU (RUB)                                                                                 391          452     (13.5%)            -             -            -
    -------------------                                                                                  ---          ---      ------           ---           ---          ---


    Note: Fixed-line revenue and it's component have been restated to align it with Group accounting policies

Performance in Russia improved during Q2 2017, but the conditions and competition in the market remain challenging.

Total revenue in Q2 2017 increased 3.0% to RUB 68.4 billion, driven by an increase in mobile service revenue. Mobile service revenue increased by 3.6% to RUB 55.7 billion, driven by growth in mobile data, value added services and mobile financial services revenue, partially offset by a decrease in voice revenue. Mobile data revenue continued its strong growth, increasing 17.8% to RUB 14.5 billion, resulting from increased penetration of integrated bundles and smartphones together with data traffic growth. Mobile ARPU grew 3.6% year on year to RUB 320, driven by the continued efforts to simplify tariff plans and successful upselling activities, while also being supported by increased penetration of bundled propositions in the customer base. Beeline's mobile customer base increased by 1.4% year on year to 58.3 million in Q2 2017, driven by both increased sales and improved annual churn and the Net Promoter Score position remains at par with Beeline's main competitors. Take up for the fixed mobile convergence ("FMC") offer continues to be strong with more than 730,000 customers. Fixed-line service revenue decreased by 8.8% to RUB 9.9 billion mainly driven by the effect of the strengthening ruble on foreign currency contracts and growing penetration of FMC in the customer base.

Reported EBITDA decreased by 1.3% to RUB 26.9 billion while underlying EBITDA decreased by 1.7%, adjusted for exceptional costs related to the performance transformation program of RUB 49 million in Q2 2017 and RUB 177 million in Q2 2016. The underlying EBITDA margin was 39.4%, representing a sequential quarter on quarter improvement of 1.8 percentage points.

Capex excluding licenses increased 9.6% year on year during the quarter as a result of the accelerated roll-out of the high-speed data network, which led to 60% 4G/LTE population coverage. The LTM capex to revenue ratio for Q2 2017 was 16.7%.

PAKISTAN
Q2 2016 pro-forma results assume that the results of Warid have been consolidated (including intercompany eliminations) with effect from 1 January 2016



    PKR billion                                                                                   2Q17                    2Q16      YoY    1H17        1H16        YoY
                                                                                                                      pro-forma                    pro-forma
                                                                                                                          Warid                        Warid

    Total revenue                                                                                 40.4                     37.8      6.9%    79.2         74.6        6.1%

    Mobile service revenue                                                                        37.7                     35.7      5.4%    73.9         70.5        4.8%

    of which mobile data                                                                           5.8                      3.9     46.2%    11.0          8.0       37.4%

    EBITDA                                                                                        17.5                     13.6     28.3%    33.7         27.9       20.8%

    EBITDA underlying                                                                             18.1                     15.2     19.1%    34.9         29.7       17.2%

    EBITDA margin                                                                                43.3%                   36.0%  7.2p.p.   42.5%       37.4%    5.2p.p.

    EBITDA underlying margin                                                                     44.7%                   40.1%  4.6p.p.   44.0%       39.9%    4.2p.p.

    Capex excl. licenses                                                                           6.8                      5.9     14.0%    10.4          8.0       29.5%

    LTM capex excl. licenses/revenue                                                             18.0%                   17.7%  0.3p.p.       -           -          -


    Mobile

    Customers (mln)                                                                               52.5                     49.3      6.4%       -           -          -

    - of which data users (mln)                                                                   26.7                     22.7     17.4%       -           -          -

    ARPU (PKR)                                                                                     238                      245    (2.7%)       -           -          -

    MOU (min)(1)                                                                                   520                      566    (8.0%)       -           -          -

    Data usage (MB/user)                                                                           509                      292     74.3%       -           -          -
    --------------------                                                                           ---                      ---      ----      ---         ---        ---

    (1) MoU has been adjusted in 2016 and revised for 2015 due to a change of components in the definition of traffic

In July 2016, VEON acquired Warid, strengthening its leading position in Pakistan, and as a result, Warid's financial results have been consolidated into VEON´s financial statements with effect from 1 July 2016. The companies received merger approval on 15 December 2016, with retrospective effect from 1 July 2016. The company started re-branding to the "Jazz" brand in January 2017, unifying distribution channels and processes, with the aim of simplifying the customer experience.

Despite the continuing aggressive price competition in the market, Jazz continued to show mid-to-high single-digit growth of both revenue and customer base. Revenue growth of 6.9% year on year was supported by growth in data and financial services revenues; in particular, data revenue accelerated to a 46.2% year on year growth, driven by an increase in data customers through higher bundle engagement and the continued 3G network expansion. The customer base increased by 6.4% year on year, driven by continued customer satisfaction through focus on price simplicity and efficient distribution channel management. Jazz sees data and voice monetization among its key priorities, underpinned by the ambition to offer the best network in terms of both quality of service and coverage.

Underlying EBITDA margin, excluding PKR 0.6 billion in performance transformation costs (including the Warid integration costs), was 44.7% in Q2 2017, improving by over 4.6 percentage points year on year.

Capex increased to PKR 6.8 billion in Q2 2017 while the LTM capex to revenue ratio was 18.0% in Q2 2017 (13.1% excluding integration capex). At the end of the Q2 2017, 3G was offered in 358 cities while 4G/LTE was offered in over 60 cities.

The Warid integration is ahead of schedule and the merged entity has been providing unified on-net offers to its customers since October 2016. In November 2015, with the announcement of the transaction to merge Mobilink with Warid, the Company provided target run-rate net cost synergies in the region of USD 115 million, 90% of which was expected by third year post-closing. This synergy target has already been fully achieved by the end of Q2 2017 although Jazz remains fully focused on network integration activities.

During Q2 2017, Jazz won the auction for 4G/LTE spectrum and was awarded 10 MHz of paired spectrum in the 1800 MHz band for a total consideration of USD 295 million (PKR 31 billion) and withholding tax of 10%, all of which was paid in Q2 2017. This additional spectrum will allow Jazz's customers to experience higher data speeds, with better quality and coverage, making VEON the ideal platform to fulfil Pakistan's digital ambitions.

VEON is in advanced discussions for the sale of its indirect subsidiary, Deodar Limited ("Deodar"), which holds a portfolio of approximately 13,000 towers and provides network tower services in Pakistan. As a result, on June 30, 2017, VEON classified Deodar as a disposal group held for sale and there can be no assurance that a definitive agreement for the sale of Deodar will be reached. Following the classification as a disposal group held-for sale, VEON will no longer account for depreciation and amortization charges of Deodar's assets.

ALGERIA



    DZD billion                                                                                              2Q17      2Q16        YoY    1H17     1H16          YoY

    Total revenue                                                                                            25.3       27.4      (8.0%)    50.7      57.5       (11.7%)

    Mobile service revenue                                                                                   24.9       27.2      (8.3%)    49.9      56.9       (12.2%)

    of which mobile data                                                                                      3.2        1.7       88.9%     6.0       3.5         73.3%

    EBITDA                                                                                                   11.4       14.0     (18.7%)    23.9      31.1       (23.0%)

    EBITDA underlying                                                                                        11.4       14.0     (18.8%)    24.0      31.1       (22.9%)

    EBITDA margin                                                                                           45.1%     51.1%  (6.0p.p.)   47.2%    54.1%    (6.9p.p.)

    EBITDA underlying margin                                                                                45.1%     51.2%    6.0p.p.   47.2%    54.1%    (6.9p.p.)

    Capex excl. licenses                                                                                      3.1        4.7     (33.7%)     6.0       7.6       (20.8%)

    LTM capex excl. licenses/revenue                                                                        15.5%     14.9%    0.6p.p.       -        -            -


    Mobile

    Customers (mln)                                                                                          15.5       16.3      (4.9%)       -        -            -

    - of which mobile data customers (mln)                                                                    7.0        5.4       29.9%       -        -            -

    ARPU (DZD)                                                                                                522        546      (4.4%)       -        -            -

    MOU (min)(1)                                                                                              379        339       11.8%       -        -            -

    Data usage (MB/user)                                                                                      478        304       57.5%       -        -            -
    --------------------                                                                                      ---        ---        ----      ---      ---          ---

    (1) MoU has been adjusted in 2016 and revised for 2015 due to a change of components in the definition of traffic

Djezzy's turnaround continued in Q2 2017, despite a challenging regulatory and macro-economic environment which remains characterized by strong competitive and inflationary pressures. As disclosed in Q4 2016, the regulatory environment has recently improved in Algeria, although the mobile termination rate ("MTR") asymmetry for Djezzy is a topic still under discussion with the regulator. From a taxation perspective, with effect from January 2017, the new Finance law increased VAT from 7% to 19% on data services and from 17% to 19% on voice services and also increased taxes on recharges from 5% to 7%. These higher indirect taxes influenced Djezzy's performance in relation to both revenue and EBITDA as these taxes could not be passed on to customers.

Revenue decreased by 8.0% year on year, a slightly improved year on year trend compared to Q1 2017. Price competition, on both voice and data, caused a reduction of ARPU and a year on year increase in churn. Djezzy's Q2 2017 service revenue was DZD 24.9 billion, an 8.3% reduction, while data revenue growth accelerating to 88.9%, due to higher usage and a substantial increase in data customers as a result of the 3G and 4G/LTE network roll-out. Djezzy's path to transform into a digital leader is being executed, as the company leads on 4G/LTE population coverage.

The customer base in Algeria decreased 4.9% to 15.5 million as a result of competitive pressure in the market and ARPU declined by 4.4%, a relative improvement compared to the year on year erosion experienced in Q1 2017, and this ARPU pressure was primarily caused by sub-optimal changes in billing and commission structures for indirect distribution that were introduced in early 2016.

Structural measures, taken by the new management team to improve performance and stabilize the customer base, including distribution transformation and monobrand roll-out, acceleration of 4G/LTE network deployment, promotion of micro campaigns with tailored services to increase satisfaction, data monetization activities and smartphone promotions coupled with bundle offers, are showing the first positive signs. The simplified data centric pricing architecture, in place since Q3 2016, is also contributing to the positive data revenue trend.

In Q2 2017, EBITDA decreased by 18.7% year on year. Underlying EBITDA (which in Q2 2016 was adjusted for exceptional costs of DZD 21 million related to the performance transformation program) decreased 18.8% to DZD 11.4 billion primarily due to revenue decline, with an underlying EBITDA margin of 45.1% and excluding the impact of the changes to indirect taxes with effect from 1 January 2017 underlying EBITDA margin would have been 48%.

At the end of Q2 2017, the company's 4G/LTE services covered 20 wilayas and more than 20.5% of the country's population, while the 3G network covers all 48 willayas Q2 2017 capex was DZD 3.1 billion, a 33.7% year on year reduction, with LTM capex to revenue at 15.5%.

Finally, in June Djezzy's Board approved the distribution of DZD 16.4 billion (approximately USD 150 million) of gross dividends representing approximately 60% of 2016's net income.

BANGLADESH



    BDT billion                             2Q17  2Q16        YoY    1H17    1H16          YoY

    Total revenue                           12.0   12.3      (3.0%)    24.0     24.5        (2.1%)

    Mobile service revenue                  11.6   11.9      (2.6%)    23.3     23.9        (2.5%)

    of which mobile data                     1.5    1.2       32.2%     3.1      2.2         37.4%

    EBITDA                                   4.9    5.4      (8.9%)    10.4     10.9        (4.2%)

    EBITDA underlying                        4.9    5.8     (16.1%)    10.4     11.7       (10.9%)

    EBITDA margin                          41.1% 43.7%  (2.7p.p.)   43.5%   44.5%    (1.0p.p.)

    EBITDA underlying margin               41.1% 47.5%  (6.4p.p.)   43.5%   47.8%    (4.3p.p.)

    Capex excl. licenses                     1.4    2.6     (44.6%)     2.2      3.9       (44.1%)

    LTM capex excl. licenses/revenue       18.7% 22.6%  (3.9p.p.)


    Mobile

    Customers (mln)                         30.7   31.1      (1.5%)

    - of which mobile data customers (mln)  15.9   14.5        9.3%

    ARPU (BDT)                               127    126        0.1%

    MOU (min)                                285    316      (9.6%)

    Data usage (MB/user)                     364    167      117.2%
    --------------------                     ---    ---       -----

In Bangladesh, the operational focus during Q2 2017 continued to be on increasing network coverage in order to address the 3G coverage gap vis-à-vis the competition and on customer acquisition following the completion of the Government-mandated SIM re-verification program.

The year on year decline of the customer base slightly softened in Q2 2017 compared to Q1.
Excluding the results of the re-verification process, which resulted in 3.8 million SIM cards being blocked by Banglalink, the customer base increased year on year and the customer base grew on a quarter on quarter basis.

Total revenue in Q2 2017 decreased by 3.0% year on year while Banglalink's service revenue decreased year on year 2.6% to BDT 11.6 billion and was stable quarter on quarter. The low single-digit decline in service revenue is mostly attributable to the gap in 3G network coverage versus the market leader. In addition, the market is still characterized by intense price competition, which accelerated following the SIM re-verification process and which more than offset the continued increase in data revenue of 32.2%, which was driven by increased smart-phone penetration. Data revenue growth was driven by data usage growth of 117.2% along with 9.3% growth in active data users and ARPU was broadly flat year on year.

Banglalink's underlying EBITDA in Q2 2017 decreased by 16.1% to BDT 4.9 billion, as a result of the revenue trend and higher customer acquisition activity, more than offsetting savings from the performance transformation program. As a result, in Q2 2017, the underlying EBITDA margin was 41.1%, which represents a year on year reduction of 6.4 percentage points.

In Q2 2017, capex excluding licenses decreased 44.6% year on year to BDT 1.4 billion, with a LTM capex to revenue ratio of 18.7%. Banglalink continues to invest in efficient, high-speed data networks aiming to substantially improve its 3G network coverage, which covered 68% of the population at the end of Q2 2017.

The Government has published draft guidelines with regards to a spectrum auction and 4G/LTE service licenses for public consultation.

UKRAINE




    UAH million                       2Q17  2Q16      YoY    1H17    1H16        YoY

    Total revenue                    4,058  3,689     10.0%   7,929    7,157       10.8%

    Mobile service revenue           3,768  3,399     10.9%   7,328    6,598       11.1%

    Fixed-line service revenue         277    262      5.9%     572      520        9.9%

    EBITDA                           2,305  2,027     13.7%   4,378    3,848       13.8%

    EBITDA underlying                2,333  2,027     15.1%   4,407    3,828       15.1%

    EBITDA margin                    56.8% 54.9%  1.9p.p.   55.2%   53.8%    1.4p.p.

    EBITDA underlying margin         57.5% 55.0%  2.5p.p.   55.6%   53.5%    2.1p.p.

    Capex excl. licenses               705    727    (3.0%)   1,442      975       47.8%

    LTM capex excl. licenses/revenue 19.9% 18.4%  1.5p.p.       -       -          -


    Mobile

    Total operating revenue          3,781  3,427     10.3%   7,357    6,636       10.9%

    - of which mobile data             933    544     71.6%   1,778    1,040       71.0%

    Customers (mln)                   26.1   25.4      2.8%       -       -          -

    - of which data customers (mln)   11.2   10.3      8.7%                          -

    ARPU (UAH)                          48     44      8.5%       -       -          -

    MOU (min)                          573    559      2.5%       -       -          -

    Data usage (MB/user)               758    283    167.8%       -       -          -

    Fixed-line

    Total operating revenue            277    262      5.9%     572      520        9.9%

    Broadband revenue                  169    151     12.5%     340      298       14.1%

    Broadband customers (mln)          0.8    0.8      0.0%

    Broadband ARPU (UAH)                69     62     11.5%
    -------------------                ---    ---      ----

Kyivstar continued to deliver strong results in Q2 2017, as the company remains the clear leader in both customer market share and NPS.

Total revenue increased 10.0% year on year to UAH 4.1 billion in Q2 2017 while mobile service revenue grew 10.9% to UAH 3.8 billion. This was driven by continued strong growth of mobile data revenue, which grew 71.6% as a result of growing data customers, successful marketing activities stimulated by the continued 3G network roll-out and data-centric tariffs. As a result, data consumption per user more than doubled in Q2 2017 compared with the same quarter in the previous year.

Kyivstar´s mobile customer base increased 2.8% to 26.1 million in Q2 2017, due to higher gross adds and improved churn and ARPU increased by 8.5% to UAH 48.

Fixed-line service revenue increased 5.9% to UAH 277 million, supported by fixed residential broadband (''FTTB'') revenue, which continued to outgrow the market, increasing 13.1%, driven primarily by FTTB re-pricing and the improved quality of the customer base. The fixed broadband customer base is stable year on year at 0.8 million and fixed broadband ARPU increased 11.5% year on year to UAH 69.

EBITDA increased 13.7% to UAH 2.3 billion in Q2 2017 with an EBITDA margin of 56.8% while underlying EBITDA, adjusted for performance transformation and other costs totalling UAH 28 million in Q2 2017, grew 15.1% year on year, driven by higher revenue and lower interconnect costs, partially offset by the increase in commercial costs and structural opex, such as license and frequency fees. Underlying EBITDA margin increased 2.5 percentage points to 57.5%.

Q2 2017 capex was UAH 705 million with an LTM capex to revenue ratio of 19.9%. Kyivstar continued to roll out its 3G network in Q2 2017 reaching a population coverage of 69% from 48% in the same quarter last year.

UZBEKISTAN




    UZS bln                                                                                                     2Q17  2Q16        YoY    1H17    1H16          YoY

    Total revenue                                                                                                576    479       20.3%   1,089      947         15.0%

    Mobile service revenue                                                                                       572    475       20.4%   1,082      940         15.1%

    - of which mobile data                                                                                       139    109       28.2%     274      212         29.0%

    Fixed-line service revenue                                                                                     4      3       13.3%       7        7          4.9%

    EBITDA                                                                                                       313    273       14.4%     577      558          3.4%

    EBITDA underlying                                                                                            313    273       14.4%     577      549          5.1%

    EBITDA margin                                                                                              54.3% 57.1%  (2.8p.p.)   53.0%   58.9%    (5.9p.p.)

    EBITDA underlying margin                                                                                   54.3% 57.1%  (2.8p.p.)   53.0%   58.0%    (5.0p.p.)

    Capex excl. licenses                                                                                          60     47       26.0%     135      132          2.0%

    Capex excl. licenses LTM/revenue                                                                           25.4% 14.2%   11.3p.p.


    Mobile

    Customers (mln)                                                                                              9.6    9.3        2.9%

    - of which mobile data customers (mln)                                                                       4.5    4.3        5.5%

    ARPU (UZS)                                                                                                19,847 16,720       18.7%

    MOU (min)                                                                                                    578    535        8.1%

    Data usage (MB/user)                                                                                         392    226       73.4%
    --------------------                                                                                         ---    ---        ----

    Note: Mobile data revenue have been restated for the prior periods to align it with Group accounting policies

Beeline reported strong results and continues to hold the leading position in both revenue market share and NPS in a highly competitive market.

Total revenue increased 20.3% as mobile service revenue increased 20.4% to UZS 572 billion, primarily as a result of the impact of Beeline´s price plans being pegged to U.S. dollars and successful marketing activities, together with increased revenues from interconnect services, value added services and mobile data. Mobile data revenue increased 28.2%, driven by the continued high-speed data network roll-out, increased smartphone penetration and the launch of new bundled offerings. The overall customer base increased 2.9% to 9.6 million, the second consecutive quarter of year on year growth, driven by strong gross additions.

Underlying EBITDA increased 14.4% compared to the prior year driven by increased revenue, partly offset by higher interconnect costs as a result of both higher off-net usage and a negative currency effect together with increases in content costs, customer costs and structural opex. As a result, the underlying EBITDA margin was a robust 54.3% in Q2 2017.

Capex was UZS 59.8 billion and the LTM capex to revenue ratio was 25.4%, mainly due to prepayments of equipment in Q4 2016 for deployment in 2017. The company continued to invest in its high-speed data networks as it improved the 4G/LTE coverage in Tashkent and increased the number of 3G sites by 41% and further improvements to the high-speed data networks will continue to be a priority for Beeline in 2017.

The cash and deposits balances of USD 696 million in Uzbek som are considered to be largely restricted from repatriation due to local government and central bank regulations.

The Republican Radiofrequencies Council in Uzbekistan published a Decision on ordering the redistribution of radio frequencies in Uzbekistan which, if it comes into force as planned in September 2017, could result in a reallocation of the Company's subsidiary Unitel LLC's radio frequencies to other cellular communications providers in the market.

ITALY JOINT VENTURE(1)




    EUR million                                                                                     2Q17                    2Q16                       YoY                                 1H17                 1H16          YoY

    Total revenue                                                                                  1,535                    1,563                     (1.7%)                                3,083                 3,078          0.2%

    Mobile service revenue                                                                         1,042                    1,065                     (2.2%)                                2,085                 2,114        (1.4%)

    Fixed-line service revenue                                                                       268                      267                       0.5%                                  539                   533          1.1%

    EBITDA                                                                                           442                      493                    (10.3%)                                  900                   964        (6.6%)

    EBITDA underlying(2)                                                                             523                      493                       6.1%                                1,040                   964          7.9%

    EBITDA margin                                                                                  28.8%                   31.5%                 (2.7p.p.)                                29.2%                31.3%     (213.4%)

    EBITDA underlying(2)margin                                                                     34.0%                   31.5%                   2.5p.p.                                33.7%                  31%       240.3%

    Capex excl. licenses                                                                             266                      264                       0.9%                                  506                   540        (6.2%)

    LTM capex excl. licenses/revenue                                                               17.6%                   17.7%                 (0.6p.p.)                                17.6%                17.7%      (60.0%)

    Mobile

    Total revenue                                                                                  1,239                    1,292                     (4.1%)                                2,492                 2,535        (1.7%)

    - of which mobile data                                                                           367                      319                      15.0%                                  719                   633         13.5%

    Customers (mln)                                                                                 30.3                     31.3                     (3.4%)                                 30.3                  31.3        (3.4%)

    - of which data customers (mln)                                                                 19.3                     18.9                       1.9%                                 19.3                  18.9          1.9%

    ARPU (EUR)                                                                                      11.2                     11.2                     (0.2%)                                 11.1                  11.1        (0.2%)

    MOU (min)                                                                                        274                      286                     (4.3%)                                  269                   281        (4.2%)

    Fixed-line

    Total revenue                                                                                    296                      271                       9.6%                                591.1                 542.2          9.0%

    Total voice customers (mln)                                                                     2.73                     2.78                     (1.8%)                                 2.73                  2.78        (1.8%)

    ARPU (EUR)                                                                                      27.6                     26.9                       2.7%                                   28                    27          2.8%

    Broadband customers (mln)                                                                        2.4                      2.3                       2.4%                                  2.4                   2.3          2.4%

    Broadband ARPU (EUR)                                                                            21.8                     20.9                       4.2%                                 21.8                  20.7          5.1%
    -------------------                                                                             ----                     ----                        ---                                  ----                  ----           ---


    1 The ''combined data'' for Q2 2016 consists of the sum of the WIND Telecomunicazioni s.p.a. and H3G s.p.a. businesses results, respectively, for the three months ended 30 June 2016, prior to the merger
     of the two businesses. The Q2 2016 data related to H3G s.p.a. was obtained through due diligence performed as part of the merger process. The Company has included this "combined data" because it
     believes that financial information on the Wind Tre joint venture is relevant to its business and results for the financial quarter. Going forward, the Company expects to include financial information
     related to the Wind Tre joint venture in the publication of its financial results. It should be noted that the Company owns 50% of the Wind Tre joint venture, while the results above reflect the entire
     business

    2 Q2 2017 underlying EBITDA before integration costs of ~EUR 81 million

    (3) Q2 2017 LTM EBITDA before approx. EUR 200 million of integration costs

    Note: starting from Q2 2017 results, minor changes in accounting policies were adopted and for a proper comparison previous period results were adjusted accordingly

( )

Wind Tre's total revenue in Q2 2017 decreased 1.7% to EUR 1.5 billion, driven by a 2.2% decline in mobile service revenue and lower sales of mobile handsets. The revenue decline was partially offset by growth of 0.5% in fixed-line service revenue.

The mobile service revenue decline was primarily due to increased competition in the market impacting the customer base, a more difficult comparison with Q2 of 2016 when certain re-pricing activities were implemented and by new EU roaming regulations.

Mobile data revenue continued to show strong growth with a 15.0% year on year increase to EUR 367 million, driven by an increase in both data customers, which grew by 1.9% to 19.3 million, and in data ARPU, which grew by 8.3%. At the end of Q2 2017, Wind Tre's mobile customer base was 30.3 million subscribers, declining compared to the previous year due to increased competition ahead of the Iliad launch. In Q2 2017, mobile ARPU remained stable at EUR 11.2 with the increase in data ARPU fully offsetting the decline in voice ARPU.

Fixed-line service revenue performance was driven by a 7.0% growth in broadband revenue to EUR 155 million, with direct and broadband customers growing 1.8% and 2.4% respectively. In Q2 2017, the fixed-line direct customer base reached 2.5 million and the broadband customer base reached 2.4 million as a result of increased demand for ultra-broadband connections. Fixed and broadband ARPU grew by 2.7% and 4.2% respectively.

In Q2 2017, underlying EBITDA(2) grew by 6.1% to EUR 523 million, driven by increased other revenues coupled with the benefits of post-merger synergies. As a result, the underlying EBITDA margin for Q2 2017 increased by 2.5 percentage points to 34.0%.

Capex in the quarter totaled EUR 266 million and was primarily focused on expanding capacity and coverage of the 4G/LTE network, as well as modernizing and merging the former Wind and Tre networks. The net leverage ratio (net debt/LTM underlying3 EBITDA) was at 4.1x at the end Q2 2017.

In June 2017, Jeffrey Hedberg was appointed as new CEO of Wind Tre.

CONFERENCE CALL INFORMATION

On 3 August 2017, VEON will also host a conference call at 14:00 CEST (13:00 BST) through video webcast on its website and through following dial-in numbers. The call and slide presentation may be accessed at http://www.veon.com

14:00 CEST investor and analyst conference call
US call-in number: +1 (646) 254 3366
Confirmation Code: 4916180

International call-in number: +44 (0) 20 3427 1913
Confirmation Code: 4916180

The conference call replay and the slide presentation webcast will be available until 16 August 2017.
The slide presentation will also be available for download on VEON's website.

Investor and analyst call replay
US Replay Number: +1 866 932 5017
Confirmation Code: 4916180

UK Replay Number: 0800 358 7735
Confirmation Code: 4916180

DISCLAIMER

This press release contains "forward-looking statements", as the phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by words such as "may," "might," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "seek," "believe," "estimate," "predict," "potential," "continue," "contemplate," "possible" and other similar words. Forward-looking statements include statements relating to, among other things, VEON's plans to implement its strategic priorities, including with respect to its performance transformation, among others; anticipated performance and guidance for 2017, including VEON's ability to generate sufficient cash flow; future market developments and trends; expected synergies of the Italy Joint Venture, including expectations regarding capex and opex benefits; realization of the synergies of the Warid transaction; operational and network development and network investment, including expectations regarding the roll out and benefits of 3G/4G/LTE networks, as applicable, the effect of the acquisition of additional spectrum on customer experience and the Company's ability to realize its targets and strategic initiatives in its various countries of operation. The forward-looking statements included in this release are based on management's best assessment of the Company's strategic and financial position and of future market conditions, trends and other potential developments. These discussions involve risks and uncertainties. The actual outcome may differ materially from these statements as a result of demand for and market acceptance of VEON's products and services; continued volatility in the economies in VEON's markets; unforeseen developments from competition; governmental regulation of the telecommunications industries; general political uncertainties in VEON's markets; government investigations or other regulatory actions and/or litigation with third parties; failure to realize the expected benefits of the Italy Joint Venture or the Warid transaction as expected or at all due to, among other things, the parties' inability to successfully implement integration strategies or otherwise realize the anticipated synergies; risks associated with data protection or cyber security, other risks beyond the parties' control or a failure to meet expectations regarding various strategic initiatives, including, but not limited to, the performance transformation program, the effect of foreign currency fluctuations, increased competition in the markets in which VEON operates and the effect of consumer taxes on the purchasing activities of consumers of VEON´s services. Certain other factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risk factors described in the Company's Annual Report on Form 20-F for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission (the "SEC") and other public filings made by VEON with the SEC. Other unknown or unpredictable factors also could harm our future results. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Under no circumstances should the inclusion of such forward-looking statements in this press release be regarded as a representation or warranty by us or any other person with respect to the achievement of results set out in such statements or that the underlying assumptions used will in fact be the case. Therefore, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date hereof. We cannot assure you that any projected results or events will be achieved. Except to the extent required by law, we disclaim any obligation to update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made, or to reflect the occurrence of unanticipated events. Furthermore, elements of this release contain, or may contain, "inside information" as defined under the Market Abuse Regulation (EU) No. 596/2014.

All non-IFRS measures disclosed in the document, i.e. EBITDA, EBITDA margin, underlying EBITDA, underlying EBITDA margin, EBIT, net debt, equity free cash flow, organic growth, capital expenditures excluding licenses, last twelve months (LTM) Capex excluding licenses/Revenue, are reconciled to comparable IFRS measures in Attachment C.

ABOUT VEON

VEON is a NASDAQ and Euronext Amsterdam-listed global provider of connectivity and internet services, with the ambition to lead the personal internet revolution for the 235 million+ customers it currently serves, and many others in the years to come.

Follow us:

on Twitter @veondigital

visit our blog @ blog.veon.com

go to our website @ http:// www.veon.com

For more information on interim financial schedules please refer to the MD&A section and financial statements section.

For more information on financial and operating data for specific countries, please refer to the supplementary file Factbook2Q2017.xls on VEON's website at http://veon.com/Investor-relations/Reports--results/Results/.

ATTACHMENT A: CUSTOMERS


                       Mobile             Fixed-line broadband
                       ------             --------------------

    million                    2Q17 2Q16                   YoY   2Q17    2Q16     YoY

    Russia                     58.3  57.5                   1.4%    2.2      2.2     2.0%

    Pakistan                   52.5  49.3                   6.4%

    Algeria                    15.5  16.3                 (4.9%)

    Bangladesh                 30.7  31.1                 (1.5%)

    Ukraine                    26.1  25.4                   2.8%    0.8      0.8     1.7%

    Uzbekistan                  9.6   9.3                   2.9%

    Other                      15.4  15.1                   1.7%    0.5      0.4    23.5%

    Total consolidated        208.1 204.2                   1.9%    3.5      3.4     4.6%

    Italy                      30.3  31.1                 (3.4%)    2.4      2.3     4.3%

    Total                     238.4 235.3                   1.3%    5.9      5.7     3.6%
    -----                     ----- -----                    ---     ---      ---      ---

ATTACHMENT B: DEFINITIONS

ARPU (Average Revenue per User) measures the monthly average revenue per mobile user. We generally calculate mobile ARPU by dividing our mobile serfvice revenue during the relevant period, including data revenue, roaming revenue and interconnect revenue, but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of our mobile customers during the period and dividing by the number of months in that period. Wind Tre defines mobile ARPU as the measure of the sum of the mobile revenue in the period divided by the average number of mobile customers in the period (the average of each month's average number of mobile customers (calculated as the average of the total number of mobile customers at the beginning of the month and the total number of mobile customers at the end of the month) divided by the number of months in that period.

Data customers are mobile customers who have engaged in revenue generating activity during the three months prior to the measurement date as a result of activities including USB modem Internet access using 2.5G/3G/4G/HSPA+ technologies. Wind Tre measures mobile data customers based on the number of active contracts signed and includes customers who have performed at least one mobile Internet event during the previous month. For Algeria, mobile data customers are 3G customers who have performed at least one mobile data event on the 3G network during the previous four months.

Capital expenditures (capex) are purchases of new equipment, new construction, upgrades, software, other long lived assets and related reasonable costs incurred prior to intended use of the non-current asset, accounted at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures.

EBIT is a non-IFRS measure and is calculated as EBITDA plus depreciation, amortization and impairment loss. Our management uses EBIT as a supplemental performance measure and believes that it provides useful information of earnings of the Company before making accruals for financial income and expenses and net foreign exchange (loss)/gain and others. Reconciliation of EBIT to net income attributable to VEON Ltd., the most directly comparable IFRS financial measure, is presented in the reconciliation tables section in Attachment C below.

Adjusted EBITDA (called "EBITDA" in this document) is a non-IFRS financial measure. EBITDA is defined as earnings before interest, tax, depreciation and amortization. VEON calculates EBITDA as operating income before depreciation, amortization, loss from disposal of non-current assets and impairment loss and includes certain non-operating losses and gains mainly represented by litigation provisions for all of its Business Units except for its Russia Business Unit. For 2016 Russia Business Unit's EBITDA is calculated as operating income before depreciation, amortization, loss from disposal of non-current assets and impairment loss.

In addition, the components of EBITDA include the key revenue and expense items for which the Company's operating managers are responsible and upon which their performance is evaluated. EBITDA also assists management and investors by increasing the comparability of the Company's performance against the performance of other telecommunications companies that provide EBITDA information. This increased comparability is achieved by excluding the potentially inconsistent effects between periods or companies of depreciation, amortization and impairment losses, which items may significantly affect operating income between periods. However, our EBITDA results may not be directly comparable to other companies' reported EBITDA results due to variances and adjustments in the components of EBITDA (including our calculation of EBITDA) or calculation measures.

Additionally, a limitation of EBITDA's use as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue or the need to replace capital equipment over time. Reconciliation of EBITDA to net income attributable to VEON Ltd., the most directly comparable IFRS financial measure, is presented in the reconciliation tables section in Attachment C below.

EBITDA margin is calculated as EBITDA divided by total revenue, expressed as a percentage.

Gross Debt is calculated as the sum of long term debt and short term debt.

Equity Free Cash Flow is derived from consolidated statements of cash flows and is cash flow before financing activities; net cash from operating activities less net cash used in investing activities. Reconciliation to the most directly comparable IFRS financial measure, is presented in the reconciliation tables section in Attachment C below.

Households passed are households located within buildings, in which indoor installation of all the FTTB equipment necessary to install terminal residential equipment has been completed.

MBOU (Megabyte of use) is calculated by dividing the total data traffic by the average mobile data customers during the period.

MFS (Mobile financial services) is a variety of innovative services, such as mobile commerce or m-commerce, that use a mobile phone as the primary payment user interface and allow mobile customers to conduct money transfers to pay for items such as goods at an online store, utility payments, fines and state fees, loan repayments, domestic and international remittances, mobile insurance and tickets for air and rail travel, all via their mobile phone.

MNP (Mobile number portability) is a facility provided by telecommunications operators, which enables customers to keep their telephone numbers when they change operators.

Mobile customers are generally customers in the registered customer base as of a given measurement date who engaged in a revenue generating activity at any time during the three months prior to such measurement date. Such activity includes any outgoing calls, customer fee accruals, debits related to service, outgoing SMS and MMS, data transmission and receipt sessions, but does not include incoming calls, SMS and MMS or abandoned calls. Our total number of mobile customers also includes customers using mobile internet service via USB modems. For our business in Italy, prepaid mobile customers are counted in our customer base if they have activated our SIM card in the last 13 months (with respect to new customers) or if they have recharged their mobile telephone credit in the last 13 months and have not requested that their SIM card be deactivated and have not switched to another telecommunications operator via mobile number portability during this period (with respect to our existing customers), unless a fraud event has occurred. Postpaid customers in Italy are counted in our customer base if they have an active contract unless a fraud event has occurred or the subscription is deactivated due to payment default or because they have requested and obtained through mobile number portability a switch to another telecommunications operator.

MOU (Monthly Average Minutes of Use per User) measures the monthly average minutes of voice service use per mobile customer. We generally calculate mobile MOU by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile customers during the period and dividing by the number of months in that period. For our business in Italy, we calculate mobile MOU as the sum of the total traffic (in minutes) in a certain period divided by the average number of customers for the period (the average of each month's average number of customers (calculated as the average of the total number of customers at the beginning of the month and the total number of customers at the end of the month)) divided by the number of months in that period.

Net debt is a non-IFRS financial measure and is calculated as the sum of interest bearing long-term debt and short-term debt minus cash and cash equivalents, long-term and short-term deposits and fair value hedges. The Company believes that net debt provides useful information to investors because it shows the amount of debt outstanding to be paid after using available cash and cash equivalents and long-term and short-term deposits. Net debt should not be considered in isolation as an alternative to long-term debt and short-term debt, or any other measure of the Company financial position.

Net foreign exchange (loss)/gain and others represents the sum of Net foreign exchange (loss)/gain, Equity in net (loss)/gain of associates and Other (expense)/income (primarily (losses)/gains from derivative instruments), and is adjusted for certain non-operating losses and gains mainly represented by litigation provisions. Our management uses Net foreign exchange (loss)/gain and others as a supplemental performance measure and believes that it provides useful information about the impact of our debt denominated in foreign currencies on our results of operations due to fluctuations in exchange rates, the performance of our equity investees and other losses and gains the Company needs to manage the business.

NPS (Net Promoter Score) is the methodology VEON uses to measure customer satisfaction.

Operational expenses (opex) represents service costs and selling, general and administrative expenses.

Organic growth in revenue and EBITDA are non-IFRS financial measures that reflect changes in Revenue and EBITDA, excluding foreign currency movements and other factors, such as businesses under liquidation, disposals, mergers and acquisitions.

Reportable segments: the Company identified Russia, Algeria, Pakistan, Bangladesh, Ukraine and Uzbekistan based on the business activities in different geographical areas. Intersegment revenue is eliminated in consolidation.

ATTACHMENT C: RECONCILIATION TABLES

RECONCILIATION OF CONSOLIDATED EBITDA





    USD mln                                                                2Q17     2Q16   1H17       1H16
                                                                                reported          reported

    Unaudited


    EBITDA                                                                  931       795   1,792       1,553


    Depreciation                                                          (386)    (391)  (776)      (723)

    Amortization                                                          (146)    (113)  (268)      (225)

    Impairment loss                                                         (8)      (4)    (5)       (12)

    Loss on disposals of non-current assets                                 (2)      (4)    (9)        (6)


    EBIT                                                                    389       283     734         587


    Financial Income and Expenses                                         (208)    (186)  (401)      (354)

     -  including  finance income                                            24        19      46          31

     -  including finance costs                                           (232)    (205)  (447)      (385)

    Net foreign exchange (loss)/gain and others                           (374)      (2)  (396)         17

     -  including Other non-operating (losses)/gains                      (116)     (24)  (152)       (62)

      -  including Shares of loss of associates and joint ventures         (95)     (11)  (196)       (16)
         accounted for using the equity method

      - impairment of JV and associates                                   (110)        -  (110)          -

     -  including Net foreign exchange gain                                (53)       33      62          95


    EBT                                                                   (193)       95    (63)        250


     Income tax expense                                                    (65)    (135)  (206)      (252)


    Profit/ (loss) from discontinued operations                               -      186       -        383


    Profit/(loss) for the period                                          (258)      146   (269)        381


    Profit/(loss) for the period attributable to non-controlling interest    20         9      14          55


    Profit/(loss) for the year attributable to the owners of the parent   (278)      137   (283)        326
    -------------------------------------------------------------------    ----       ---    ----         ---

RECONCILIATION OF CONSOLIDATED REPORTED AND UNDERLYING EBITDA





    USD mln, unaudited                                                                                                          2Q17            2Q16  1H17              1H16

                                                                                                                                     Pro-forma Warid         Pro-forma Warid

    EBITDA                                                                                                                       931              811  1,792              1,589


    Performance transformation costs, of which                                                                                    44               75     74                117

    HQ and Other                                                                                                                  37               56     58                 89

    Russia                                                                                                                         1                3      4                  4

    Emerging Markets                                                                                                               6               16     12                 24

    Other exceptionals                                                                                                             2               43      2                 42


    EBITDA underlying                                                                                                            977              928  1,868              1,747
    -----------------                                                                                                            ---              ---  -----              -----

    Note: Q2 2016 one-offs have changed to USD 118 million from USD 116 million after reclassification of Opex expenses in 2016

RECONCILIATION OF CAPEX



    USD mln unaudited                                                                                                              2Q17 2Q16   1H17    1H16

    Cash paid for purchase of property, plant and equipment and intangible assets                                                   709   275   1,196      714

    Net difference between timing of recognition and payments for purchase of property, plant and equipment and intangible assets  (65)   75   (284)   (169)

    Capital expenditures                                                                                                            644   350     912      545

    Less capital expenditures in licenses                                                                                         (312) (66)  (317)   (108)

    Capital expenditures excl. licenses                                                                                             332   284     595      437
    -----------------------------------                                                                                             ---   ---     ---      ---

RECONCILIATION OF ORGANIC AND REPORTED GROWTH RATES


                                    2Q17 vs 2Q16
                                    ------------

               Total Revenue                                            EBITDA
               -------------                                            ------

                  Organic                       Forex & other          Reported           Organic            Forex & other             Reported

    Russia                   3.0%                               15.7%             18.7%            (1.3%)                    15.0%                13.8%

    Pakistan                 6.9%                               28.5%             35.4%             28.3%                    17.3%                45.6%

    Algeria                (8.0%)                                0.3%            (7.6%)           (18.7%)                     0.2%              (18.4%)

    Bangladesh             (3.0%)                              (3.0%)            (6.0%)            (8.9%)                   (2.8%)              (11.7%)

    Ukraine                 10.0%                              (5.0%)              5.0%             13.7%                   (5.2%)                 8.5%

    Uzbekistan              20.3%                             (27.6%)            (7.3%)             14.4%                  (26.3%)              (11.9%)


    Total                    3.7%                                8.6%             12.3%             10.6%                     6.5%                17.1%
    -----                     ---                                  ---               ----               ----                       ---                  ----


                                  1H17 vs 1H16
                                  ------------

               Total Revenue                                            EBITDA
               -------------                                            ------

                  Organic                       Forex & other          Reported           Organic            Forex & other             Reported

    Russia                   0.4%                               20.7%             21.2%            (1.3%)                    20.0%                18.7%

    Pakistan                 6.1%                               29.3%             35.5%             20.8%                    18.4%                39.3%

    Algeria               (11.7%)                              (0.7%)           (12.5%)           (23.0%)                   (0.7%)              (24.0%)

    Bangladesh             (2.1%)                              (2.2%)            (4.3%)            (4.2%)                   (2.1%)               (6.3%)

    Ukraine                 10.8%                              (5.4%)              5.4%             13.8%                   (5.6%)                 8.2%

    Uzbekistan              15.0%                             (22.2%)            (7.2%)              3.4%                  (20.2%)              (16.8%)


    Total                    1.5%                               11.1%             12.7%              6.4%                     8.9%                15.3%
    -----                     ---                                 ----               ----                ---                       ---                  ----

RECONCILIATION OF VEON CONSOLIDATED NET DEBT



    USD mln                                                                       30 June 2017 31 March 2017  31 December 2016

    Net debt                                                                             8,403          7,661              7,162

    Cash and cash equivalents                                                            2,873          2,172              2,942

    Long - term and short-term deposits                                                    348            407                385

    Gross debt                                                                          11,624         10,240             10,489

    Interest accrued related to financial liabilities                                      146            160                173

    Other unamortised adjustments to financial liabilities (fees, discounts etc.)         (36)            20                 40

    Derivatives not designated as hedges                                                   309            302                319

    Derivatives designated as hedges                                                        33             53                  7

    Other financial liabilities                                                             76             87                 89

    Total other financial liabilities                                                   12,153         10,862             11,116
    ---------------------------------                                                   ------         ------             ------

RECONCILIATION OF REPORTED CASH FLOW FROM CONTINUED OPERATIONS AND UNDERLYING EQUITY FREE CASH FLOW EXCLUDING LICENSES



    USD million                                            2Q17  2Q16     1H17    1H16

    Net cash from operating activities                      578    428     1,162       67

    Exceptional items:                                       58     97       148      941

    PT costs                                                 46     74        67      119

    Uzbekistan legal costs                                    -     -        -     795

    IRAQNA provision                                          -     -       69        -

    WHT on licence in Pakistan                               30      -       30        -

    Other                                                    12     23        12       27

    Underlying net cash flow from operating activities      664    525     1,341    1,006

    Net cash used in investing activities                 (725) (405)  (1,314)   (765)

    Adjustments:

    Deposits & Financial assets                            (27)  (56)    (131)      23

    Purchase of license and other                         (326)  (67)    (333)   (111)

    Underlying net cash flow used in investing activities (371) (282)    (850)   (678)

    Underlying Equity Free Cash Flow excluding licenses     293    243       491      328
    ---------------------------------------------------     ---    ---       ---      ---

RECONCILIATION OF REPORTED AND PRO-FORMA WARID INCOME STATEMENT FOR Q2 AND 1H 2016



    USD million                                                 2Q16  Warid incl.       2Q16
                                                            reported intercompany  pro-forma
                                                                     eliminations

    Total revenue                                              2,153            75       2,228

    Service revenue                                            2,086            72       2,158

    EBITDA                                                       795            16         811

    EBITDA margin                                              37.0%                   36.4%

    Depreciation, amortization, impairments and other          (512)         (30)      (542)

    EBIT                                                         283          (14)        269

    Financial income and expenses                              (186)          (8)      (194)

    Net foreign exchange (loss)/gain and others                    9            10          19

    Share of profit/(loss) of joint ventures and associates     (11)          (1)       (12)

    Impairment of JV and associates                                -            -          -

    Profit/(loss) before tax                                      95          (13)         82

    Income tax expense                                         (135)          (2)      (137)

    Profit/(loss) from continued operations                     (40)         (15)       (55)

    Profit/(loss)  from discontinued operations                  186             1         187

    Profit for the period attributable to VEON shareholders      137          (15)        122



    USD million                                                1HQ16  Warid incl.       1H16
                                                            reported intercompany  pro-forma
                                                                     eliminations

    Total revenue                                              4,169           155       4,324

    Service revenue                                            4,033           147       4,180

    EBITDA                                                     1,553            36       1,589

    EBITDA margin                                              37.3%                   37.0%

    Depreciation, amortization, impairments and other          (966)         (57)    (1,023)

    EBIT                                                         587          (21)        566

    Financial income and expenses                              (355)         (15)      (370)

    Net foreign exchange (loss)/gain and others                   34             6          40

    Share of profit/(loss) of joint ventures and associates     (16)            0        (16)

    Impairment of JV and associates                                -            -          -

    Profit/(loss) before tax                                     250          (30)        220

    Income tax expense                                         (252)          (4)      (256)

    Profit/(loss) from continued operations                      (2)         (34)       (36)

    Profit/(loss)  from discontinued operations                  383             0         383

    Profit for the period attributable to VEON shareholders      326          (35)        291
    -------------------------------------------------------      ---           ---         ---

RECONCILIATION OF ITALY JV REPORTED NET RESULT TO VEON'S SHARE OF PROFIT/(LOSS) FROM JV AND ASSOCIATES



    USD mln                                             2Q17

    Italy JV reported net result                       (626)


    50% of Italy JV reported net result                (313)


    D&A - PPA adjustment                                 213


    Other PPA adjustmnet                                  15


    Total PPA adjustment                                 228


    VEON share of profit/(loss) from JV and associates  (85)
    --------------------------------------------------   ---

RATES OF FUNCTIONAL CURRENCIES TO USD(1)


                                                 Average rates                Closing rates

                                                                 2Q17   2Q16                YoY     2Q17    2Q16     QoQ

    Russian Ruble                                               57.15   65.89             (13.3%)    59.09    64.26   (8.0%)

    Euro                                                         0.91    0.89                2.6%     0.88     0.90   (2.8%)

    Algerian Dinar                                             109.04  109.54              (0.5%)   107.80   110.31   (2.3%)

    Pakistan Rupee                                             104.81  104.67                0.1%   104.83   104.75     0.1%

    Bangladeshi Taka                                            80.86   78.35                3.2%    80.64    78.33     3.0%

    Ukrainian Hryvnia                                           26.46   25.26                4.8%    26.10    24.85     5.0%

    Kazakh Tenge                                               315.01  335.58              (6.1%)   321.46   338.87   (5.1%)

    Uzbekistan Som                                           3,778.07 2,911.0               29.8% 3,958.56  2,943.5    34.5%

    Armenian Dram                                              483.37  479.06                0.9%   480.47   476.68     0.8%

    Kyrgyz Som                                                  68.12   68.38              (0.4%)    69.14    67.49     2.4%

    Georgian Lari                                                2.42    2.21                9.3%     2.41     2.34     2.8%
    -------------                                                ----    ----                 ---      ----     ----      ---


    (1) Functional currency in Tajikistan is USD

View original content:http://www.prnewswire.com/news-releases/veon-announces-q2-2017-results-300498911.html

SOURCE VEON Ltd.