VEON Reports Full Year 2017 Results With Robust Free Cash Flow Generation Of Over USD 1 Billion And Announces US 17 Cents Final Dividend

AMSTERDAM, Feb. 22, 2018 /PRNewswire/ -- VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON) a leading global provider of connectivity and internet services headquartered in Amsterdam and serving more than 240 million customers, today announces financial and operating results for the quarter and year ended 31 December 2017.

KEY DEVELOPMENTS

    --  Supervisory Board approved final dividend of US 17 cents, totalling 2017
        dividend to US 28 cents per share, representing approximately 22%
        year-on-year increase
    --  Delivered on FY2017 targets for organic(1) revenue growth and underlying
        free cash flow
    --  Underlying EBITDA margin(2) below target due to margin pressure in
        Russia, Algeria and Bangladesh
    --  Generated strong underlying equity free cash flow(3) of USD 1.1 billion,
        significantly ahead of guidance, up 31.4% year-on-year
    --  Successfully repatriated USD 200 million from Uzbekistan enhancing the
        Group's cash upstreaming capability
    --  Strengthened spectrum portfolio through acquisition of 4G/LTE licenses
        in Ukraine and Bangladesh

Q4 2017 KEY RESULTS

    --  Total reported revenue decreased 1.4% to USD 2,320 million, mainly due
        to the significant devaluation of the Uzbek som
    --  Organic(1) revenue grew 1.2%, driven by Russia, Pakistan, Ukraine and
        Uzbekistan, partially offset by continued pressure in Algeria and
        Bangladesh
    --  Reported EBITDA decreased 3.8% to USD 753 million, mainly due to the
        significant devaluation of the Uzbek som, partially offset by lower
        exceptional costs
    --  Underlying EBITDA(2), which excludes exceptional costs, decreased
        organically(1 )by 6.9% due to a decrease in EBITDA in Russia, Algeria
        and Bangladesh and increased corporate costs
    --  Underlying EBITDA margin of 35.1%, down 3.1 percentage points
        year-on-year
    --  Underlying equity free cash flow(3) excluding licenses totalled USD 101
        million in Q4 2017

JEAN-YVES CHARLIER, CHIEF EXECUTIVE OFFICER, COMMENTS:

"Looking back on 2017, I am pleased to report another good year. Our total revenue grew by over 6 percent and EBITDA by 11 percent, supported by organic growth and the strengthening of the currencies in our portfolio. On the back of this solid performance, our underlying equity free cashflow increased significantly to over USD 1 billion. This is a clear testament that the strategy we launched in August 2015 is transforming our business. In the last three months, we successfully repatriated - for the first time - USD 200 million from Uzbekistan and acquired new 4G/LTE spectrum in key markets: Ukraine and Bangladesh. We also delivered on our full year 2017 targets for organic growth in revenue and underlying equity free cash flow, which came far ahead of our original guidance, thus allowing the Board to announce a final dividend of US 17 cents, a total of US 28 cents per share for the full year.

During the fourth quarter of 2017, reported EBITDA declined by 4 percent, mainly due to the Uzbekistan currency liberalization and resetting of the official exchange rate in September 2017, which had a negative impact of more than 6 percent on the Group results. On an underlying basis, the largest contributors to the year-on-year organic decrease in EBITDA were Algeria, Bangladesh and Russia, which, along with an increase in corporate costs, more than offset the positive contribution from Pakistan and Ukraine.

We also delivered on a number of strategic objectives in 2017. This included an agreement to dispose of our tower business in Pakistan; the split of the Euroset joint venture to strengthen our mono-brand strategy in Russia, and the successful refinancing of our WIND Tre joint venture in Italy. The GTH Mandatory Tender Offer, which we submitted in November 2017, remains subject to approval by the Egyptian Authorities. VEON has taken all actions required for such approval and the matter is currently held up in connection with disputed GTH taxes. Our desire is to find a path forward with the Egyptian Authorities and we are considering all options.

Looking ahead to 2018, our financial performance will be impacted by Uzbekistan's currency liberalization and a number of strategic transactions including the Pakistan tower transaction closing and the integration of the Euroset business in Russia. As such, we expect flat-to-low single digit organic growth for both Group revenue and EBITDA. In addition, we forecast a strengthening of equity free cash flow, which we expect to be approximately USD 1 billion compared to USD 804 million in 2017 under the new definition for 2018 targets."


    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 E for reconciliations

    2) Underlying EBITDA excludes exceptional items in Q4 2016 consisting of performance transformation costs of USD 66 million and other exceptional items of USD 61 million, totalling
       USD 127 million. Exceptional items in Q4 2017 consists of performance transformation costs of USD 58 million and other exceptionals of USD 3 million, totalling USD 61 million. See
       Attachment E 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 M&A transactions,
       transformation costs, inflow/outflow of deposits, financial assets and other one-off items

KEY RESULTS: CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS




    USD million                                                    4Q17       4Q16         Reported     Organic
                                                                                                YoY     YoY (1)
    ---                                                                                         ---      ------

    Total revenue, of which                                             2,320       2,354      (1.4%)        1.2%

       mobile and fixed service revenue                                 2,214       2,244      (1.3%)        1.5%

       of which mobile data revenue                                       473         412       14.8%       19.0%

    EBITDA                                                                753         783      (3.8%)        0.4%

    Underlying EBITDA(2)                                                  814         910     (10.5%)      (6.9%)

    Underlying EBITDA margin(2)(Underlying EBITDA/total revenue)        35.1%      38.7%  (3.6p.p.)   (3.1p.p.)

    Profit from continued operations                                    (378)      (358)       n.m.

    Profit from discontinued operations                                     -      1,904        n.m.

    (Loss)/Profit for the period attributable to VEON shareholders      (325)      1,557        n.m.

    Underlying equity free cash flow excl. licenses (3)                   101        (50)       n.m.

    Capital expenditures excl. licenses                                   466         754     (38.3%)

    LTM capex excl. licenses/revenue                                    15.4%      17.9%  (2.5p.p.)

    Net debt                                                            8,741       7,162       22.0%

    Net debt/LTM underlying EBITDA4                                       2.4         2.0

    Total mobile customer (millions, excluding Italy)                     211         208        1.4%

    Total fixed-line broadband customers (millions)                       3.1         3.0        2.3%
    ----------------------------------------------                        ---         ---         ---



    USD million                                                                                                                                        FY17                                                 FY16                      FY16                    Reported      Organic
                                                                                                                                                                                                 pro-forma Warid4                  reported                         YoY      YoY (1)
    ---                                                                                                                                       ---                                                                                                                                      -------- --- --- -------

    Total revenue, of which                                                                                                                                   9,474                                         9,040                      8,885                         6.6%         1.9%

       mobile and fixed service revenue                                                                                                                       9,105                                         8,700                      8,553                         6.5%         1.9%

       of which mobile data revenue                                                                                                                           1,856                                         1,438                      1,426                        30.2%        25.7%

    EBITDA                                                                                                                                                    3,587                                         3,268                      3,232                        11.0%         7.5%

    EBITDA underlying (2)                                                                                                                                     3,675                                         3,617                      3,582                         2.6%       (0.4%)

    EBITDA margin underlying (2)(EBITDA underlying/total revenue)                                                                                             38.8%                                        40.0%                     40.3%                   (1.5p.p.)    (0.9p.p.)

    (Loss)/profit from continued operations                                                                                                                   (496)                                        (323)                     (288)                         n.m

    Profit from discontinued operations                                                                                                                           -                                        2,708                      2,708                          n.m

    (Loss)/Profit for the period attributable to VEON shareholders                                                                                            (483)                                        2,294                      2,328                          n.m

    Underlying equity free cash flow excl. licenses (3)                                                                                                       1,067                                           812                        812                        31.4%

    Capital expenditures excl. licenses                                                                                                                       1,460                                         1,623                      1,593                       (8.4%)

    LTM capex excl. licenses/revenue                                                                                                                          15.4%                                        18.0%                     17.9%
    --------------------------------                                                                                                                           ----                                          ----                       ----


    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 E for reconciliations

    2) Underlying EBITDA excludes exceptional items in FY 2016 consisting of transformation costs of USD 349 million and exceptional items in FY 2017 of USD 88 million. See Attachment E for reconciliations. Underlying EBITDA excludes exceptional items in Q4
     2016 consisting of performance transformation costs of USD 66 million and other exceptional items of USD
    61 million, totalling USD 127 million. Exceptional items in Q4 2017 consists of performance transformation costs of USD 58 million and other exceptionals of USD 3 million, totalling USD 61 million. See Attachment E 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, inflow/outflow of deposits, financial assets and other one-off items

    4) Pro-forma assuming that the results of Warid have been consolidated (including intercompany eliminations) within VEON's results with effect from 1 January 2016, this also applies for the calculation of LTM underlying EBITDA for the net leverage ratio
     at FY 2016

Contents

MAIN EVENTS......................................................................................................... 5

GROUP PERFORMANCE............................................................................................. 7

COUNTRY PERFORMANCE........................................................................................ 13

CONFERENCE CALL INFORMATION............................................................................. 21

ATTACHMENTS...................................................................................................... 24

PRESENTATION OF FINANCIAL RESULTS
VEON's results presented in this earnings release are based on IFRS and have not been audited.

Certain amounts and percentages that appear in this earnings release have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including those in 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 E.

As at 7 November 2016, VEON Ltd. owns a 50% share of the Wind Tre Joint Venture (with CK Hutchison owning the other 50%) and we account for this joint venture using the equity method as we do not have control. All information related to the Wind Tre Joint Venture is the sole responsibility of the Wind Tre Joint Venture's management, and no information contained herein, including, but not limited to, the Wind Tre Joint Venture's financial and industry data, has been prepared by or on behalf of, or approved by, our management. For further information on the Wind Tre Joint Venture and its accounting treatment, see 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.

IFRS 15 'Revenue from contracts with customers' -- The Group assessed the impact of IFRS 15. The scope of IFRS 15 includes the timing of revenue recognition and costs of obtaining contracts with customers. Under this standard, contract costs are required to be capitalized and amortized over the average customer life. VEON will apply IFRS 15 for the first time in the 2018 financial statements, using the modified retrospective approach. Based on the analysis performed, the Company expects no material impact on revenue recognition, due to currently existing product offering (i.e. prevailing pre-paid service offering). VEON estimates the additional asset stemming from capitalization of contract costs to amount to USD 95 million pre-tax as at 1 January 2018 (i.e. one-off gain to retained earnings in 2018).

IFRS 9 'Financial instruments' -- The Group assessed the impact of IFRS 9. The scope of IFRS 9 includes new guidance to classify financial instruments on the balance sheet. VEON will need to introduce the concept of Expected Credit Loss ("ECL"), where an allowance for doubtful debt is required for all debt-like instruments including unbilled receivables. VEON estimates the additional provision for bad debt to amount to USD 20 million pre-tax as at January 2018 (i.e. one-off charge to retained earnings in 2018)

The Group has yet to assess the impact of IFRS 16 "Leases", which may be material. The standard will be adopted in 2019.

MAIN EVENTS

SUCCESSFULLY REPATRIATED USD 200 MILLION FROM UZBEKISTAN
In December 2017, VEON's subsidiary PJSC VimpelCom, successfully repatriated a net amount of approximately USD 200 million from Unitel, its wholly-owned Uzbekistan subsidiary. The repatriation of cash from Uzbekistan for the first time is an important milestone for VEON, further enhancing the cash upstreaming capability of the Group and allowing Unitel to honor its global payment obligations necessary for ongoing operations.

KYIVSTAR SECURED 4G/LTE LICENSE
In January 2018, VEON's subsidiary in Ukraine, Kyivstar, secured one of three licenses to provide nationwide 4G/LTE services, subject to final regulatory approvals. Kyivstar will pay UAH 0.9 billion (approximately USD 32.2 million) for 2x15 MHz of contiguous frequency in the 2600 MHz band. The Company looks forward to the upcoming 4G/LTE license tender in 1800 MHz band in Ukraine.

BANGLALINK ACQUIRES ADDITIONAL SPECTRUM AND 4G/LTE LICENSE
On 13 February 2018, Banglalink was awarded technology neutral spectrum in the 1800 and 2100 MHz bands. As a result of the auction conducted by the Bangladesh Telecommunication Regulatory Commission, Banglalink has been awarded 5.6 MHz paired spectrum in the 1800 MHz band and 5 MHz paired spectrum in the 2100 MHz band. The spectrum is technology neutral and allows Banglalink to double its 3G network capacity. Moreover, Banglalink has also acquired a 4G/LTE license in parallel, allowing the company to launch a high-speed data network. The total investment amounts to USD 308.6 million for the spectrum, excluding VAT. An upfront payment of 60% for the spectrum is payable in approximately 30 days with the remaining 40% payable over four years. In addition, the company paid USD 35 million excluding VAT to convert its existing spectrum holding in 900 MHz and 1800 MHz into technology neutral spectrum and USD 1.2 million excluding VAT to acquire the 4G/LTE license. The investment is expected to be funded through locally available cash and local banking facilities.

GTH MANDATORY TENDER OFFER
The GTH Mandatory Tender Offer remains subject to approval by the Egyptian Authorities. VEON has taken all actions required for such approval and the matter is currently held up in connection with disputed GTH taxes. Our desire is to find a path forward with the Egyptian Authorities and we are considering all options.

SUPERVISORY BOARD APPROVED A FINAL 2017 DIVIDEND OF US 17 CENTS PER SHARE
The VEON Supervisory Board approved a final dividend of US 17 cents per share, bringing total 2017 dividend to US 28 cents per share. The record date for the Company's shareholders entitled to receive the final dividend payment has been set for 5 March 2018. It is expected that the final dividend will be paid on 13 March 2018. The Company will make appropriate tax withholdings of up to 15% when the dividend is paid to the Company's share depositary, The Bank of New York Mellon. For ordinary shareholders at Euronext Amsterdam, the final dividend of US 17 cents will be paid in euro. VEON is committed to paying a sustainable and progressive dividend based on the evolution of the Company's equity free cash flow.

FY 2018 TARGETS
The Company has formulated targets for FY 2018. Guidance for total revenue and EBITDA is flat to low single digit organic growth. Organic growth reflects changes in revenue and EBITDA excluding foreign currency movements and other factors, such as businesses under liquidation, disposals, mergers and acquisitions and other exceptional items. Major exceptional items currently known are the impact from the Uzbekistan currency liberalization, the Pakistan tower transaction (Deodar), the Euroset transaction and the one-off adjustment to a vendor agreement.

The target for equity free cash flow is approximately USD 1 billion. Equity free cash flow is defined as free cash flow from operating activities less cash flow for net capex, excluding capex for licenses. FY 2018 equity free cash flow target is calculated at 2018 target currency rates. For the FY 2018 target currency rates, see attachment E.

GROUP PERFORMANCE

FY2017

    --  Total reported revenue increased 6.6% year-on-year with organic(1)
        growth of 1.9%
    --  Strong mobile data organic(1) revenue growth of 26%
    --  Reported EBITDA increased 11.0% year-on-year; underlying EBITDA(2),
        which is excluding exceptional costs of USD 88 million, decreased
        organically by 0.4%, resulting in an underlying EBITDA margin of 38.8%,
        an organic decrease of 0.9 percentage points
    --  Underlying equity free cash flow(3) excluding licenses totalled USD
        1,067 million, an increase of USD 255 million or 31% year-on-year

Q4 2017

    --  Total reported revenue decreased 1.4% to USD 2,320 million
    --  Organic(1) revenue growth of 1.2% driven by Russia, Pakistan, Ukraine
        and Uzbekistan, partially offset by continued pressure in Algeria and
        Bangladesh
    --  Reported EBITDA decreased 3.8% to USD 753 million
    --  Underlying EBITDA(2), excluding exceptional costs of USD 61 million,
        decreased by 10.5% and organically(1 )by 6.9% mainly due to a decrease
        in EBITDA in Russia, Algeria and Bangladesh
    --  Underlying EBITDA margin of 35.1%, down organically 3.1 percentage
        points year-on-year
    --  Underlying equity free cash flow(3) excluding licenses totalled USD 101
        million in Q4 2017

    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 E for reconciliations

    2 Underlying EBITDA excludes exceptional items in FY 2016 consisting of transformation costs of USD 349 million and exceptional items in FY 2017 of USD 88 million. See Attachment
      E for reconciliations. Underlying EBITDA excludes exceptional items in Q4 2016 consisting of performance transformation costs of USD 66 million and other exceptional items of USD
      61 million, totalling USD 127 million. Exceptional items in Q4 2017 consists of performance transformation costs of USD 58 million and other exceptionals of USD 3 million, totalling
      USD 61 million. See Attachment E 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 for FY 2017), excluding M&A transactions, transformation costs, inflow/outflow of deposits, financial assets and other
      one-off items

FINANCIALS BY COUNTRY



    USD million                                                      4Q17                    4Q16                                      Reported                   Organic(1)                 FY17                                          FY16                        FY16                 Reported                 Organic(1)
                                                                                                                                             YoY                          YoY                                                          pro-forma                    reported                      YoY                        YoY
                                                                                                                                                                                                                                           Warid

    Total revenue                                                                    2,320                    2,354                        (1.4%)                         1.2%                                 9,474                         9,040                        8,885                      6.6%                       1.9%


    Russia                                                                           1,206                    1,112                          8.4%                         0.4%                                 4,729                         4,097                        4,097                     15.4%                       1.1%

    Pakistan                                                                           379                      369                          2.6%                         4.2%                                 1,525                         1,450                        1,295                     17.8%                       5.9%

    Algeria                                                                            214                      246                       (13.1%)                       (9.9%)                                   915                         1,040                        1,040                   (12.0%)                    (10.8%)

    Bangladesh                                                                         131                      152                       (13.6%)                       (9.5%)                                   574                           621                          621                    (7.5%)                     (4.6%)

    Ukraine                                                                            159                      150                          6.3%                        10.7%                                   622                           586                          586                      6.2%                      10.6%

    Uzbekistan                                                                          78                      165                       (52.9%)                        21.3%                                   513                           663                          663                   (22.6%)                      19.1%

    HQ                                                                                   0                       10                                                                                                0                            10                           10

    Other and eliminations                                                             153                      150                          2.3%                                                                596                           573                          573                      3.7%
    ----------------------                                                             ---                      ---                           ---                                                                 ---                           ---                          ---                       ---


    Service revenue                                                                  2,214                    2,244                        (1.3%)                         1.5%                                 9,105                         8,700                        8,553                      6.6%                       1.9%


    Russia                                                                           1,140                    1,058                          7.8%                       (0.1%)                                 4,516                         3,941                        3,941                     14.6%                       0.3%

    Pakistan                                                                           350                      346                          1.3%                         2.9%                                 1,418                         1,364                        1,217                     16.5%                       4.6%

    Algeria                                                                            210                      244                       (13.9%)                      (10.7%)                                   898                         1,031                        1,031                   (12.8%)                    (11.6%)

    Bangladesh                                                                         127                      147                       (14.0%)                      (10.0%)                                   557                           606                          606                    (8.0%)                     (5.1%)

    Ukraine                                                                            158                      150                          6.0%                        10.3%                                   620                           584                          584                      6.2%                      10.5%

    Uzbekistan                                                                          77                      165                       (53.2%)                        20.9%                                   513                           663                          663                   (22.7%)                      18.9%

    HQ

    Other and eliminations                                                             151                      134                         11.7%                                                                583                           511                          511                     13.8%


    EBITDA                                                                             753                      783                        (3.8%)                         0.4%                                 3,587                         3,268                        3,232                     11.0%                       7.5%


    Russia                                                                             430                      419                          2.6%                       (4.9%)                                 1,789                         1,574                        1,574                     13.6%                     (0.4%)

    Pakistan                                                                           173                      129                         34.5%                        36.5%                                   703                           542                          507                     38.8%                      30.5%

    Algeria                                                                             92                      125                       (26.8%)                      (24.1%)                                   426                           547                          547                   (22.7%)                    (21.1%)

    Bangladesh                                                                          47                       55                       (14.5%)                      (10.5%)                                   233                           267                          267                   (12.8%)                    (10.1%)

    Ukraine                                                                             92                       69                         33.2%                        39.1%                                   347                           306                          306                     13.2%                      18.1%

    Uzbekistan                                                                          33                      105                       (68.4%)                      (18.8%)                                   261                           395                          395                   (33.9%)                     (1.1%)

    HQ                                                                               (125)                    (92)                      (35.0%)                                                              (325)                        (422)                       (422)                  (23.0%)

    Other and eliminations                                                              11                     (27)                       138.0%                                                                154                            57                           57                    165.0%


    EBITDA margin                                                                    32.4%                   33.3%    -0.8p.p.                                                                               37.9%                        36.1%                       36.4%    1.5p.p
    -------------                                                                     ----                     ----    --------                                                                                 ----                          ----                         ----    ------


    Underlying EBITDA(2)                                                               814                      910                       (10.5%)                       (6.9%)                                 3,675                         3,617                        3,582                      2.6%                     (0.4%)


    Russia                                                                             440                      420                          4.7%                       (3.0%)                                 1,801                         1,585                        1,585                     13.7%                     (0.4%)

    Pakistan                                                                           182                      149                         22.7%                        24.5%                                   730                           588                          552                     32.4%                      25.1%

    Algeria                                                                            100                      127                       (21.5%)                      (18.4%)                                   435                           562                          562                   (22.2%)                    (21.6%)

    Bangladesh                                                                          47                       65                       (27.9%)                      (24.4%)                                   234                           288                          288                   (18.6%)                    (16.1%)

    Ukraine                                                                             85                       78                          7.9%                        12.2%                                   340                           315                          315                      8.2%                      12.6%

    Uzbekistan                                                                          36                       92                       (61.5%)                       (0.5%)                                   266                           379                          379                   (30.0%)                       5.6%

    HQ                                                                                (93)                    (71)                      (31.0%)                                                              (314)                        (278)                       (278)                    13.1%

    Other and eliminations                                                              17                       50                       (64.5%)                                                                182                           179                          179                      2.4%


    Underlying EBITDA margin                                                         35.1%                   38.7%    (3.6p.p.)                    (3.1p.p.)                                                 38.8%                        40.0%                       40.3%    (1.5p.p.)                (0.9p.p.)
    ------------------------                                                          ----                     ----    --------                     --------                                                    ----                          ----                         ----    --------                 --------


    (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 E for reconciliations.

    (2) Underlying EBITDA excludes exceptional items in FY 2016 consisting of transformation costs of USD 349 million and exceptional items in FY 2017 of USD 88 million. See Attachment E for reconciliations. Underlying EBITDA excludes exceptional items in Q4 2016 consisting of
     performance transformation costs of USD 66 million and other exceptional items of USD 61 million, totalling USD 127 million. Exceptional items in Q4 2017 consists of performance transformation costs of USD 58 million and other exceptionals of USD 3 million, totalling USD 61
     million. See Attachment E for reconciliations.

Group revenue for Q4 2017 decreased 1.4% year-on-year to USD 2.3 billion but increased by 1.2% organically, driven by revenue growth in Russia, Pakistan, Ukraine and Uzbekistan, but with continued pressure on revenue in Algeria and Bangladesh. Mobile data revenue showed good organic growth increasing 19.0% for the quarter, with total mobile customers increasing 1.5% to 211 million at the end of Q4 2017, primarily driven by growth in Pakistan, Bangladesh and Ukraine. Reported mobile data revenue increased by 14.8%.

Group revenue for FY 2017 increased 6.6% to USD 9.5 billion, partially driven by the consolidation of Warid and the positive effect from the RUB appreciation against the USD. Group revenue increased 1.9% organically, delivering on the FY 2017 target of low single digit growth, as a result of strong performances in Russia, Pakistan, Ukraine and Uzbekistan, partially offset by decreased performance in Algeria and Bangladesh. Mobile data revenue for the year showed strong organic growth of 26%.

Group EBITDA decreased 3.8% to USD 753 million in Q4 2017, compared to USD 783 million in Q4 2016. Underlying EBITDA totalled USD 814 million, reflecting an organic decline of 6.9% year-on-year of USD 119 million, excluding the impact of currency depreciation. The largest contributors to the year-on-year decrease in organic terms were Algeria, Bangladesh, Russia. These negative impacts from country performance, along with an increase in "Other" and HQ costs, more than offset the positive operational contribution from Pakistan and Ukraine. A more detailed explanation for these trends is provided in the following paragraphs. The reported underlying EBITDA decreased by 10.5%.

The underlying EBITDA margin was 35.1%, an organic decrease of 3.1 percentage points year-on-year. Exceptional items amounted to USD 61 million in Q4 2017 and mainly included USD 58 million of costs for the Group wide performance transformation program. In Q4 2016, the Group recognized exceptional items totalling USD 127 million, mainly related to the costs for Group wide performance transformation program of USD 61 million and a provision for the Iraqna litigation of USD 66 million.

Reported EBITDA for FY 2017 increased 11% to USD 3,587 million, while underlying EBITDA decreased 0.4% organically to USD 3,675 million. The FY 2017 underlying EBITDA margin was 38.8%, a decrease of 0.9 percentage points year-on-year, missing the FY 2017 target of flat to low single digit accretion, due to margin pressure in Russia, Algeria and Bangladesh. In FY 2016, the Group recognized exceptional items totalling USD 349 million, while in FY 2017 exceptional items totalled USD 88 million.

The FY 2017 underlying equity free cash flow excluding licenses increased 31.4% year-on-year to USD 1,067 million, well above the FY 2017 target of USD 850-950 million.

The reconciliation table for reported EBITDA and underlying EBITDA is set forth in Attachment E.
For the discussion of each country's individual performances below, all trends are expressed in local currency.

In Russia, total revenue in Q4 2017 increased 0.4%, driven by an increase in mobile service revenue and sales of equipment and accessories. Mobile service revenue increased by 2.1%, driven by growth in mobile data, value added services and mobile financial services, offsetting the decrease in voice revenue. Mobile ARPU continued its growth trajectory in 2017, increasing by 2.0% during Q4 2017. Fixed-line service revenue decreased by 11.4%, mainly due to the competitive environment, a decrease in transit traffic, growing penetration of FMC in the customer base and the effect of the strengthened ruble on foreign currency contracts. EBITDA decreased 4.9% in Q4 2017. Underlying EBITDA, which is adjusted for exceptional costs related to the performance transformation program, costs related to rebranding and integration of approximately 200 Euroset stores and the impact of the change in definition for EBITDA, to align with the definition applied by the Group, decreased by 3.0%. The underlying EBITDA margin, which is excluding the exceptional costs mentioned above, was 36.5% in Q4 2017, representing a year-on-year decrease of 1.3 percentage points, mainly as a result of the associated costs related the commercial launch of VEON's personal internet platform (~0.5 p.p. impact) and increased G&A and HR costs.

In July 2016, VEON acquired Warid, strengthening its leading market 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. Consequently, this is the second consecutive quarter in which the 2017 results of Pakistan are fully comparable year-on-year. Total revenue grew 4.2%, supported by continued growth in mobile data revenue which grew 27.8% year-on-year, driven by an increase in data customers through higher bundle engagement and the continued data network expansion. The reported EBITDA margin increased to 45.7% (+10.8 percentage points year-on-year), due to strong revenue growth, opex synergies and benefitting for the positive impact of PKR 1.1 billion from the release of historic SIM tax accruals. The margin reduction quarter-on-quarter is the result of a lower positive impact from the release of historic SIM tax accruals when compared to Q3 2017. Underlying EBITDA margin, which is excluding the negative impact of PKR 1.0 billion for performance transformation and integration costs, was 48.1% in Q4 2017, improving by 7.8 percentage points year-on-year while the margin, excluding the above-mentioned release of historic SIM tax accruals, would have been 45.4%.

In Algeria, total revenue decreased by 9.9% year-on-year with a trend in line with Q3 2017. Price competition, in both voice and data, caused a continued reduction of ARPU and a year-on-year increase in churn. Data revenue growth was 36.0%, due to higher usage and a substantial increase in data customers as a result of the 3G and 4G/LTE network roll-out. This positive data revenue trend is also supported by the simplified data-centric pricing architecture. In Q4 2017, EBITDA decreased by 24.1% while underlying EBITDA, which in Q4 2016 was adjusted for exceptional costs of DZD 0.9 billion related to performance transformation, decreased 18.4% to DZD 11.5 billion primarily due to the decline in revenue. Underlying EBITDA margin was 46.7% and excluding the impact of the changes to indirect taxes with effect from 1 January 2017, the underlying EBITDA margin would have been 49.1%.

In Bangladesh, total revenue in Q4 2017 decreased by 9.5%, mainly attributable to the gap in 3G network coverage compared to the market leader and to network availability issues caused by the extreme weather conditions in the country. In addition, the market remains characterized by intense price competition especially on data, which accelerated following the SIM re-verification process and which more than offset the increase in data revenue of 14.6%. Underlying EBITDA in Q4 2017 decreased by 24.4%, which was mainly caused by the revenue decline together with additional technical expenses to improve network availability. As a result, the underlying EBITDA margin was 35.8%, which represents a year-on-year reduction of 7.1 percentage points.

In Ukraine, total revenue increased by 10.7%, mainly driven by continued strong growth of mobile data revenue, which increased by 64.5% as a result of growing number of data customers, and successful marketing activities driven by the continued 3G network roll-out and data-centric tariffs. Fixed-line service revenue increased by 5.4%, supported by broadband revenue which increased by 9.3% and which was driven primarily by the FMC launch. EBITDA increased by 39.1%, representing an EBITDA margin of 58.0%. Underlying EBITDA grew by 12.2% year-on-year, driven by higher revenue and cost efficiencies. Underlying EBITDA margin increased by 0.7 percentage points year on year to 53.1%.

Uzbekistan continued to report strong revenue growth, as the company´s tariffs were fixed at the foreign exchange rate of UZS 4,210 to the USD after the liberalization of the Uzbek som on 4 September 2017, which is a higher level compared to the prior year. Total revenue increased 21.3%, supported by successful marketing activities, increased revenues from interconnect services, value added services and mobile data revenue growth of 28.6%. Underlying EBITDA, adjusted for a reversal of a provision related to a court case of UZS 39.9 billion in Q4 2016, slightly decreased in local currency compared to the prior year and the underlying EBITDA margin was 45.7% in Q4 2017. The revenue growth was mainly offset by an increase in non-controllable costs, such as customer tax, interconnect costs, content costs, frequency fees and the negative impact from the currency liberalization.

The HQ segment includes the costs of VEON's headquarters in Amsterdam and London, costs for digital, external costs for services and projects (e.g. M&A, legal costs, Enterprise Support System, global procurement). In Q4 2017, the amount increased by USD 22 million year-on-year largely due to increased HR costs related to variable remuneration plans, a significant increase in costs (mainly headcount) related to the digital strategy and external costs for services, more than offsetting a positive impact from a tax reversal for prior periods.

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

INCOME STATEMENT & CAPITAL EXPENDITURES



    USD million                                                     4Q17  4Q16   Reported      FY17               FY16         FY16      Reported
                                                                                      YoY              pro-forma Warid     reported           YoY

    Total revenue                                                  2,320  2,354      (1.4%)     9,474               9,040         8,885           6.6%

    Service revenue                                                2,214  2,244      (1.3%)     9,105               8,700         8,553           6.5%

    EBITDA                                                           753    783      (3.8%)     3,587               3,268         3,232          11.0%

    EBITDA margin                                                  32.4% 33.3%  (0.8p.p.)     37.9%              36.1%        36.4%       1.5p.p.

    Depreciation, amortization, impairments and other              (542) (692)    (21.7%)   (2,081)            (2,204)      (2,148)        (3.1%)

    EBIT (Operating Profit)                                          211     91      130.9%     1,506               1,063         1,084          38.9%

    Financial income and expenses                                  (237) (196)      20.7%     (840)              (776)        (761)         10.4%

    Net foreign exchange (loss)/gain and others                    (103)    38         n.m     (168)                 80            75            n.m

    Share of (loss)/profit of joint ventures and associates        (156)    77        n.m.     (412)               (51)           48            n.m

    Impairment of JV and associates                                    -  (99)       n.m.     (110)                  -         (99)           n.m

    Profit before tax                                              (285)  (89)     220.7%      (24)                316           347       (107.0%)

    Income tax expense                                              (93) (269)    (65.7%)     (472)              (639)        (635)       (25.7%)

    (Loss)/Profit from continued operations                        (378) (358)        n.m     (496)              (323)        (288)           n.m

    Profit  from discontinued operations                               - 1,904         n.m         -              2,708         2,708            n.m

    (Loss)/Profit for the period attributable to VEON shareholders (325) 1,557      (121%)     (483)              2,294         2,328            n.m
    --------------------------------------------------------------  ----  -----       -----       ----               -----         -----            ---


                                                                    4Q17  4Q16   Reported      FY17               FY16         FY16      Reported
                                                                                      YoY              pro-forma Warid     reported           YoY

    Capex                                                            473    770     (38.5%)     1,791               1,741         1,741           2.8%

    Capex excl. licenses                                             466    754     (38.3%)     1,459               1,623         1,593         (8.4%)

    LTM capex excl. licenses/revenue                               15.4% 17.9%  (2.5p.p.)
    --------------------------------                                ----   ----    --------

Q4 2017 ANALYSIS
EBIT increased by 131% to USD 211 million in Q4 2017, as Q4 2017 was impacted by a lower level of impairments at USD 64 million, mainly related to Armenia and Kyrgyzstan due to revised business plans, compared to USD 177 million recorded in Q4 2016, mainly related to impairments for Georgia, Tajikistan and Kyrgyzstan.

The increase in losses before tax to USD 285 million was driven by an increase in net financial expenses of USD 41 million, higher year-on-year foreign exchange losses and other of USD 141 million and an increase in the loss in joint venture and associates of USD 134 million. The increase in financial expenses in Q4 2017 is the result of the revaluation of the put option liability for Warid in Pakistan of USD 38 million. Net foreign exchange losses and other gains of USD 103 million are driven by foreign exchange losses in HQ related to new non-USD debt, foreign exchange losses in Russia and a loss of USD 49 million related to the currency conversion of USD 200 million repatriated from Uzbekistan, which was recorded as a finance cost. The decrease in the share of loss of joint ventures and associates was driven by VEON's 50% share of loss of the Wind Tre joint venture impacted by accelerated depreciation in respect of network modernization, amounting to USD 68 million, and loss of USD 70 million arising on early redemption of the Wind Tre group's senior and junior secured third-party debt as part of the Italy joint venture´s refinancing of its debt.

Prior to the Wind Tre joint venture closing in November 2016, WIND had been accounted for as a discontinued operation and classified as held for sale under IFRS rules since Q3 2015. As a result, the Q4 2016 results were positively affected by the elimination of depreciation and amortization charges from the results of WIND. The "discontinued operations" accounting treatment was not applied in 2017 following the closing of the Wind Tre joint venture transaction.

Income tax expense decreased to USD 93 million in Q4 2017 mainly due to the utilization of tax assets and the loss caused by the foreign exchange devaluation in Uzbekistan, as well as lower taxable profit in Russia, Algeria and Bangladesh.

In Q4 2017, the company recorded a net loss for the period attributable to VEON´s shareholders of USD 325 million, while the net profit reported in Q4 2016 was attributable to a non-cash gain driven by the completion of the Wind Tre joint venture transaction.

Capex excluding licenses decreased to USD 466 million in Q4 2017 primarily due to improved capex planning with capex more evenly spread over the quarters, compared to end of year loaded capex in FY 2016.

The ratio of capex excluding licenses to revenue was 15.4% in FY 2017, reflecting improved capex efficiencies during 2017.

FINANCIAL POSITION & CASH FLOW


    USD million                                     4Q17    3Q17    QoQ

    Total assets                                  19,521   20,280  (3.7%)

    Shareholders' equity                           4,352    4,809  (9.5%)

    Gross debt                                    11,102   11,437  (2.9%)

    Net debt                                       8,741    8,672    0.8%

    Net debt/underlying LTM EBITDA                   2.4      2.3


    USD million                                     4Q17    4Q16    YoY      FY17       FY16       YoY

    Net cash from/(used in) operating activities     479      445      34      2,475       1,875        600

    from continued operations                        479      384      95      2,475       1,192      1,283

    from discontinued operations                       -      61    (61)         -        683      (683)

    Net cash from/(used in) investing activities (1,326) (1,001)  (325)   (3,016)    (2,671)     (345)

    from continued operations                    (1,326)   (931)  (395)   (3,016)    (2,022)     (994)

    from discontinued operations                       -    (70)     70          -      (649)       649

    Net cash from/(used in) financing activities   (377)   (475)     98      (733)      (126)     (607)

    from continued operations                      (377)   (475)     98      (733)      (106)     (627)

    from discontinued operations                       -       -      -         -       (20)        20
    ----------------------------                     ---     ---    ---       ---        ---        ---

Total assets decreased compared to Q3 2017 mainly driven by a decrease in the cash position, used for debt repayments in Russia, Algeria and GTH, partially offset by debt drawdowns at HQ, including a drawdown under the revolving credit facility in relation to the application for the GTH MTO.

Net cash from operating activities increased by USD 34 million year-on-year in Q4 2017, driven by USD 96 million higher cash flow from continued operations as a result of significant improvements in working capital, partially offset by the year-on-year decrease in net cash from discontinued operations as a result of the closing of the Wind Tre joint venture transaction in November 2016, which resulted in Italy no longer being accounted for as a discontinued operation.

Net cash flow used in investing activities increased year-on-year by USD 325 million, mainly due to outflow in deposits of USD 898 million in HQ Amsterdam driven by the GTH Mandatory Tender Offer collateral, partially offset by the decrease in net cash used in investing activities in discontinued operations.

Net cash used in financing activities decreased by USD 98 million year-on-year in Q4 2017, mainly due to debt repayments and capital restructuring activities that led to interest cost savings.

Net debt includes cash balances of USD 987 million pledged as collateral for the Mandatory Tender Offer. Excluding this net debt would have been USD 9,728 million and the net debt/underlying LTM EBITDA ratio would have been 2.6x.

COUNTRY PERFORMANCE

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

RUSSIA


    RUB million                       4Q17        4Q16                        YoY   FY17         FY16                    YoY

    Total revenue                          70,415      70,130                  0.4%      275,887       273,003              1.1%

    Mobile service revenue                 57,001      55,844                  2.1%      224,186       218,192              2.7%

    Fixed-line service revenue              9,608      10,840               (11.4%)       39,271        44,418           (11.6%)

    EBITDA                                 25,108      26,401                (4.9%)      104,342       104,790            (0.4%)

    Underlying EBITDA                      25,698      26,487                (3.0%)      105,098       105,486            (0.4%)

    EBITDA margin                           35.7%      37.6%            (2.0p.p.)        37.8%        38.4%    (0.6p.p.)

    Underlying EBITDA margin                36.5%      37.8%            (1.3p.p.)        38.1%        38.6%    (0.5p.p.)

    Capex excl. licenses                   13,435      21,615               (37.8%)       38,918        41,432            (6.1%)

    LTM Capex excl. licenses /revenue       14.1%      15.2%  (1.1p.p.)                  14.1%        15.2%    (1.1p.p.)


    Mobile

    Total revenue                          60,771      59,276                  2.5%      236,501       228,443              3.5%

    - of which mobile data                 15,344      14,088                  8.9%       59,041        51,773             14.0%

    Customers (mln)                          58.2        58.3                (0.3%)            -            -                -

    - of which data users (mln)              38.4        36.6                  5.0%            -            -                -

    ARPU (RUB)                                324         317                  2.0%            -            -                -

    MOU (min)                                 323         335                (3.6%)            -            -                -

    Data usage (MB/user)                    3,047       2,308                 32.0%            -            -                -

    Fixed-line(1)

    Total revenue                           9,644      10,854               (11.1%)       39,386        44,560           (11.6%)

    Broadband revenue                       2,508       2,807               (10.7%)       10,269        11,615           (11.6%)

    Broadband customers (mln)                 2.2         2.2                  2.8%

    Broadband ARPU (RUB)                      376         433               (13.0%)
    -------------------                       ---         ---                ------

The market conditions remained challenging in Russia, but Beeline continued to grow its mobile revenue during the fourth quarter.

Total revenue in Q4 2017 increased by 0.4% to RUB 70.4 billion, driven by an increase in mobile service revenue and sales of equipment and accessories. Mobile service revenue increased by 2.1% to RUB 57.0 billion, driven by growth in mobile data, value added services and mobile financial services, offsetting the decrease in voice revenue. Mobile ARPU continued its growth trajectory in 2017, increasing by 2.0% during the quarter.

Beeline has increased its focus on the B2B segment, improving its proposition with more customized offers and solutions to both small and large enterprises. As a result, mobile service revenue in the B2B segment showed growth in a stagnating market, growing by 5.8% year-on-year, driven by a growth of 9.5% in Beeline's B2B customer base. Overall, B2B revenue contributed RUB 16.2 billion to revenue.

Mobile data revenue continued to grow, increasing by 8.9% to RUB 15.3 billion, as a result of an increased penetration of integrated bundles and smartphones, together with data traffic growth. Mobile ARPU showed continued improvement, growing by 2.0%, driven by successful upselling activities and continued efforts to simplify tariff plans, while being supported by increased penetration of bundled propositions in the customer base. Beeline's mobile customer base was broadly stable year-on-year with 58.2 million customers.

Fixed-line service revenue decreased by 11.4% to RUB 9.6 billion, mainly due to increased competition, a decrease in transit traffic, growing penetration of FMC in the customer base to more than 877 thousand customers, and the effect of a strengthening ruble on foreign currency contracts.

Reported EBITDA decreased by 4.9% to RUB 25.1 billion, with a reported EBITDA margin of 35.7%. Underlying EBITDA, which is adjusted for exceptional costs related to the performance transformation program in both Q4 2016 (RUB 86 million) and Q4 2017 (RUB 158 million), costs related to rebranding and integration of approximately 200 Euroset stores (RUB 266 million), and the impact of change in definition for EBITDA (RUB 165 million), to align with the definition applied by the Group, decreased by 3.0%. The underlying EBITDA margin was 36.5% in Q4 2017, representing a year-on-year decrease of 1.3 percentage points, mainly as a result of the associated costs of the commercial launch of VEON's personal internet platform (impact of 0.5 p.p.) and increased G&A and HR costs.

Beeline expects continued negative impact on EBITDA of approximately RUB 3.0 billion in FY 2018 due to the integration and rebranding costs for the Euroset stores into Beeline monobrand stores. Additionally, Beeline expects EBITDA margin pressure driven by the changing revenue mix, following the integration and rebranding of the Euroset stores. After the rebranding and integration of the Euroset stores, Beeline expects a positive effect on revenue going forward and, from 2019, on EBITDA driven by device sales acceleration and channel-mix improvement.

Capex excluding licenses decreased by 37.8% year-on-year during the quarter as a result of improved capex planning with capex more evenly spread over the quarters, in comparison to capex in FY 2016, which was weighted towards the the end of the year. The LTM capex excluding licenses to revenue ratio for FY 2017 was 14.1%.

From January 2018, the international interconnect and transit services revenues will be fully centralized in VEON Wholesale Services, a Group division centrally managing arrangements of VEON Group companies with international carriers, currently reported at the HQ level. The FY 2018 expected maximum impact on revenue for Russia is USD 53 million, while the expected maximum impact on EBITDA is USD 7 million.

PAKISTAN


    PKR billion                                                                    4Q17                  4Q16                    YoY   FY17             FY16              YoY
                                                                                                                                                    pro-forma
                                                                                                                                                        Warid

    Total revenue                                                                                 40.3          38.7              4.2%        160.7       151.8              5.9%

    Mobile service revenue                                                                        37.3          36.2              2.9%        149.4       142.8              4.6%

    of which mobile data                                                                           6.4           5.0             27.8%         23.7        17.6             35.1%

    EBITDA                                                                                        18.4          13.5             36.5%         74.1        56.8             30.5%

    Underlying EBITDA                                                                             19.4          15.6             24.5%         76.9        61.5             25.1%

    EBITDA margin                                                                                45.7%        34.9%  10.8p.p.               46.1%      37.4%      8.7p.p.

    Underlying EBITDA margin                                                                     48.1%        40.3%    7.8p.p.              47.9%      40.5%      7.4p.p.

    Capex excl. licenses                                                                           6.6          10.1           (34.2%)         25.3        25.7            (1.9%)

    LTM capex excl. licenses/revenue                                                             15.7%        17.0%  (1.2p.p.)              15.7%      17.0%    (1.2p.p.)


    Mobile

    Customers (mln)                                                                               53.6          51.6              4.0%

    - of which data users (mln)                                                                   28.5          25.1             13.3%

    ARPU (PKR)                                                                                     232           244            (4.6%)

    MOU (min)(1)                                                                                   515           540            (4.6%)

    Data usage (MB/user)                                                                           672           464             45.0%
    --------------------                                                                           ---           ---              ----

    (1) MoU and ARPU have been adjusted in 2016 due to a change of components in the definition of traffic

In July 2016, VEON acquired Warid, strengthening its leading market 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. Consequently, this is the second consecutive quarter in which the 2017 results of Pakistan are fully comparable year-on-year.

Jazz continued to show growth of both revenue and customers despite competitive market conditions. Revenue growth of 4.2% year-on-year was supported by continued growth in mobile data revenue which grew 27.8% year-on-year, driven by an increase in data customers through higher bundle penetration and continued data network expansion.

The customer base increased by 4.0% year-on-year driven by continued customer satisfaction as a result of a 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.

Reported EBITDA margin increased to 45.7% (+10.8 percentage points year-on-year), due to strong revenue growth, opex synergies and benefitting for the positive impact of PKR 1.1 billion from the release of historic SIM tax accruals. The margin reduction quarter-on-quarter is the result of a lower impact from the release of historic SIM tax accruals when compared to Q3 2017. Underlying EBITDA margin, which is excluding the negative impact of PKR 1.0 billion for performance transformation and integration costs, was 48.1% in Q4 2017, improving by 7.8 percentage points year-on-year while the margin, excluding the release of historic SIM tax accruals, would have been 45.4%.

Capex excluding licenses decreased to PKR 6.6 billion in Q4 2017 while the LTM capex excluding licenses to revenue ratio was 15.7% in Q4 2017 (12.3% excluding integration capex). At the end of the Q4 2017, 3G was offered in more than 350 cities while 4G/LTE was offered in over 50 cities (defined as cities with at least three base stations).

In Q3 2017, Jazz achieved the target annual run-rate of synergies announced alongside the transaction to merge Mobilink with Warid, and it completed the network integration by the end of 2017.

Finally, on 30 August 2017 VEON announced that Jazz had signed an agreement for the sale of its tower business ("Deodar") to Tanzanite, a tower operating company owned by edotco and Dawood, for PKR 98.7 billion subject to adjustments. Following the classification of Deodar as a disposal group held-for-sale on 30 June 2017, VEON is no longer accounting for depreciation and amortization charges on these assets. Completion of the transaction is subject to the satisfaction or waiver of certain conditions including receipt of customary regulatory approvals. The approval process remains ongoing.

ALGERIA



    DZD billion                                                                                             4Q17  4Q16        YoY    FY17    FY16          YoY

    Total revenue                                                                                           24.5   27.2      (9.9%)   101.5    113.7       (10.8%)

    Mobile service revenue                                                                                  24.1   26.9     (10.7%)    99.6    112.7       (11.6%)

    of which mobile data                                                                                     3.3    2.4       36.0%    12.6      8.0         57.2%

    EBITDA                                                                                                  10.5   13.9     (24.1%)    47.2     59.8       (21.1%)

    Underlying EBITDA                                                                                       11.5   14.0     (18.4%)    48.1     61.4       (21.6%)

    EBITDA margin                                                                                          42.9% 50.9%  (8.0p.p.)   46.5%   52.6%    (6.1p.p.)

    Underlying EBITDA margin                                                                               46.7% 51.6%  (4.9p.p.)   47.5%   54.0%    (6.6p.p.)

    Capex excl. licenses                                                                                     4.0    6.2     (35.7%)    14.6     18.1       (19.4%)

    LTM capex excl. licenses/revenue                                                                       14.4% 16.0%  (1.5p.p.)   14.4%   16.0%    (1.5p.p.)


    Mobile

    Customers (mln)                                                                                         15.0   16.3      (8.0%)

    - of which mobile data customers (mln)                                                                   7.2    7.0        3.1%

    ARPU (DZD)                                                                                               528    555      (4.8%)

    MOU (min)(1)                                                                                             430    323       33.1%

    Data usage (MB/user)                                                                                     561    447       25.4%
    --------------------                                                                                     ---    ---        ----

    (1) MoU and ARPU have been adjusted in 2016 due to a change of components in the definition of traffic

Djezzy's operational turnaround continued in Q4 2017, despite a challenging regulatory and macro-economic environment which remains characterized by strong competition and inflationary pressures. As previously stated, the new Finance Law (effective from January 2017), resulted in an increase in VAT from 7% to 19% on data services and an increase from 17% to 19% on voice services. Taxes on recharges also increased from 5% to 7% as a result. The higher indirect taxes affected Djezzy's performance in relation to both revenue and EBITDA as taxes could not be passed on to customers.

Revenue decreased by 9.9% year-on-year, in line with Q3 2017 trends. Price competition, in both voice and data, caused a continued reduction in ARPU and a year-on-year increase in churn. Djezzy's Q4 2017 service revenue was DZD 24.1 billion, a 10.7% reduction, while data revenue growth was 36.0%, due to higher usage and a substantial increase in data customers as a result of the 3G and 4G/LTE network roll-out. This positive data revenue trend is also supported by the simplified data-centric pricing architecture.

The customer base in Algeria decreased by 8.0% to 15.0 million, due to competitive pressures in the market. ARPU declined by 4.8%, a lower decrease compared to Q3 2017, primarily caused by the intense price competition.

In Q4 2017, EBITDA decreased by 24.1% year-on-year while underlying EBITDA, which is adjusted for exceptional costs of DZD 0.9 billion related to performance transformation in Q4 2016, decreased by 18.4% to DZD 11.5 billion primarily due to the decline in revenues. Underlying EBITDA margin was 46.7% and excluding the impact of the changes to indirect taxes with effect from 1 January 2017, the underlying EBITDA margin would have been 49.1%.

At the end of Q4 2017, the company's 4G/LTE services covered 28 wilayas and more than 24.6% of the country's population, while the 3G network covers all 48 wilayas. In Q4 2017 capex excluding licenses was DZD 4.0 billion, a 35.7% year-on-year reduction, with a LTM capex excluding licenses to revenue ratio of 14.4%.

The mobile termination rate ("MTR") symmetry in place from 31 October 2017, which has marked a further improvement of the regulatory environment in the country. Djezzy currently has symmetric MTRs with only one of the two major competitors in the market.

BANGLADESH


    BDT billion                             4Q17  4Q16        YoY    FY17    FY16          YoY

    Total revenue                           10.8   12.0      (9.5%)    46.5     48.7        (4.6%)

    Mobile service revenue                  10.4   11.6     (10.0%)    45.1     47.5        (5.1%)

    of which mobile data                     1.6    1.4       14.6%     6.3      4.9         28.5%

    EBITDA                                   3.9    4.4     (10.5%)    18.8     21.0       (10.1%)

    Underlying EBITDA                        3.9    5.1     (24.4%)    18.9     22.5       (16.1%)

    EBITDA margin                          36.1% 36.4%  (0.4p.p.)   40.5%   43.1%    (2.5p.p.)

    Underlying EBITDA margin               35.8% 42.9%  (7.1p.p.)   40.7%   46.3%    (5.6p.p.)

    Capex excl. licenses                     3.7    5.1     (26.6%)     8.2     10.7       (23.6%)

    LTM capex excl. licenses/revenue       17.7% 22.1%  (4.4p.p.)   17.7%   22.1%    (4.4p.p.)


    Mobile

    Customers (mln)                         31.3   30.4        3.2%

    - of which mobile data customers (mln)  16.9   14.9       13.4%

    ARPU (BDT)                               111    130     (14.7%)

    MOU (min)                                274    322     (14.7%)

    Data usage (MB/user)                     580    391       48.2%
    --------------------                     ---    ---        ----

In Bangladesh, Q4 2017 results continue to be affected by technical costs, required to restore network availability following flooding caused by severe monsoons earlier in the year, and the market continues to see intense competition, particularly focused around customer acquisition. During the quarter, Banglalink continued to focus on acquiring customers in a competitive market and restoring network availability.

The customer base grew by 3.2% year-on-year, and this increase was fuelled by competitive customer acquisition campaigns in the market by all operators.

Revenue in Q4 2017 decreased by 9.5% year-on-year, while Banglalink's service revenue decreased by 10.0% year-on-year to BDT 10.4 billion. The decline in service revenue was mainly attributable to the gap in 3G network coverage compared to the market leader, in addition to network availability issues caused by the extreme weather conditions in the country. The market remains characterized by intense price competition especially in relation to data, which accelerated following the SIM re-verification process. Notwithstanding the competitive environment, data revenue increased by 14.6%, driven by increased smartphone penetration. Data revenue growth was driven by data usage growth of 48.2% along with 13.4% growth in active data users. ARPU decreased year-on-year by 14.7%, as a result of in market pricing pressure.

Banglalink's underlying EBITDA in Q4 2017 decreased by 24.4% to BDT 3.9 billion, which was mainly caused by a decline in revenue and technical expenses to improve network availability. As a result, the underlying EBITDA margin was 35.8% in Q4 2017, which represents a year-on-year reduction of 7.1 percentage points.

In Q4 2017, capex excluding licenses decreased by 26.6% year-on-year to BDT 3.7 billion, with a LTM capex excluding licenses to revenue ratio of 17.7%. Banglalink continues to invest in efficient, high-speed data networks aiming to substantially improve its 3G network coverage and availability. The 3G network covered approximately 70% of the population at the end of Q4 2017.

The Ministry of Post, Telecommunications and Information Technology issued a public consultation on draft Regulatory and Licensing Guidelines for Tower Sharing. The industry has provided comments on these guidelines to the Government of Bangladesh and Guidelines have not been issued following the consultation.

On 24 December 2017, Banglalink entered into a new floating rate term facilities agreement of BDT 29.3 billion (approx. USD 353 million), divided into two tranches. The first tranche amounting to BDT 10.7 billion (approx. USD 129 million) has a three-year tenor and the second tranche amounting to BDT 18.6 billion (approx. USD 224 million) has a five-year tenor. The facilities agreement includes an option to increase the amount of the facilities up to a total amount of BDT 40 billion.

On 13 February 2018, Banglalink was awarded technology neutral spectrum in the 1800 and 2100 MHz bands. As a result of the auction conducted by the Bangladesh Telecommunication Regulatory Commission, Banglalink has been awarded 5.6 MHz paired spectrum in the 1800 MHz band and 5 MHz paired spectrum in the 2100 MHz band. The spectrum is technology neutral and allows Banglalink to double its 3G network capacity. Moreover, Banglalink has also acquired a 4G/LTE license in parallel allowing the company to launch a high-speed data network. The total investment amounts to USD 308.6 million for the spectrum, excluding VAT. An upfront payment of 60% for the spectrum is payable in approximately 30 days with the remaining 40% payable over four years. In addition, the company paid USD 35 million excluding VAT to convert its existing spectrum holding in 900 MHz and 1800 MHz into technology neutral spectrum and USD 1.2 million excluding VAT to acquire the 4G/LTE license. The investment is expected to be funded through locally available cash and local banking facilities.

UKRAINE




    UAH million                      4Q17       4Q16                     YoY   FY17         FY16                    YoY

    Total revenue                         4,297       3,881              10.7%       16,542        14,960             10.6%

    Mobile service revenue                3,986       3,601              10.7%       15,338        13,851             10.7%

    Fixed-line service revenue              285         270               5.4%        1,132         1,052              7.6%

    EBITDA                                2,494       1,793              39.1%        9,221         7,811             18.1%

    Underlying EBITDA                     2,281       2,033              12.2%        9,043         8,031             12.6%

    EBITDA margin                         58.0%      46.2%  11.8p.p.                55.7%        52.2%      3.5p.p.

    Underlying EBITDA margin              53.1%      52.4%     0.7p.p.              54.7%        53.7%      1.0p.p.

    Capex excl. licenses                    534         836            (36.2%)        2,618         2,672            (2.0%)

    LTM capex excl. licenses/revenue      15.8%      17.9%   (2.0p.p.)              15.8%        17.9%    (2.0p.p.)


    Mobile

    Total operating revenue               4,012       3,611              11.1%       15,411        13,908             10.8%

    - of which mobile data                1,202         731              64.5%        4,103         2,429             68.9%

    Customers (mln)                        26.5        26.1               1.7%            -            -                -

    - of which data customers (mln)        12.5        11.2              11.5%                                          -

    ARPU (UAH)                               49          45               9.1%            -            -                -

    MOU (min)                               589         565               4.3%            -            -                -

    Data usage (MB/user)                  1,091         553              97.2%            -            -                -

    Fixed-line

    Total operating revenue                 285         270               5.4%        1,132         1,052              7.6%

    Broadband revenue                       170         156               9.3%          678           604             12.2%

    Broadband customers (mln)               0.8         0.8               0.8%

    Broadband ARPU (UAH)                     70          64               8.6%
    -------------------                     ---         ---                ---

Kyivstar continued to deliver robust results in Q4 2017 and, in an increasingly competitive environment, the company remains the clear leader in both customer market share and NPS.

Total revenue increased by 10.7% year-on-year to UAH 4.3 billion in Q4 2017 while mobile service revenue grew by 10.7% to UAH 4.0 billion. This was driven by continued strong growth of mobile data revenue, which increased by 64.5% as a result of growing data usage, and successful marketing activities driven by the continued 3G network roll-out and data-centric tariffs. As a result, data consumption per user more than doubled in Q4 2017 compared to the same quarter in the previous year.

Kyivstar´s mobile customer base increased by 1.7% to 26.5 million in Q4 2017, while mobile ARPU continued to increase by 9.1% year-on-year to UAH 49.

Fixed-line service revenue increased by 5.4% to UAH 285 million, supported by broadband revenue which increased by 9.3% and which was driven primarily by the FMC launch. The fixed broadband customer base is stable year-on-year at 0.8 million and fixed broadband ARPU increased by 8.6% year-on-year to UAH 70.

EBITDA increased by 39.1% to UAH 2.5 billion in Q4 2017, representing an EBITDA margin of 58.0%. Underlying EBITDA, adjusted for regulatory provisions grew by 12.2% year-on-year, driven by higher revenue and cost efficiencies. Underlying EBITDA margin increased by 0.7 percentage points year on year to 53.1%.

Q4 2017 capex excluding licenses was UAH 534 million with an LTM capex excluding licenses to revenue ratio of 15.8% as Kyivstar continued to roll out its 3G network, reaching a population coverage of 74% up from 61% in the same quarter last year.

On 31 January 2018 Kyivstar secured one of three licenses to provide nationwide 4G/LTE services, subject to final regulatory approvals. Kyivstar will pay UAH 0.9 billion (approximately USD 32.2 million) for 2x15MHz in the 2600 MHz band.

UZBEKISTAN


    UZS bln                    4Q17        4Q16               YoY   FY17         FY16                 YoY

    Total revenue                      628         518        21.3%        2,342         1,967          19.1%

    Mobile service revenue             621         514        20.8%        2,323         1,953          18.9%

    - of which mobile data             162         126        28.6%          585           452          29.4%

    Fixed-line service revenue           4           3        26.3%           15            13          13.6%

    EBITDA                             267         328      (18.8%)        1,160         1,173         (1.1%)

    Underlying EBITDA                  287         289       (0.5%)        1,187         1,124           5.6%

    EBITDA margin                    42.5%      63.5%  (21.0p.p.)        49.5%        59.6%    (10.1p.p.)

    Underlying EBITDA margin         45.7%      55.8%  (10.0p.p.)        50.7%        57.2%     (6.5p.p.)

    Capex excl. licenses               120         289      (58.5%)          304           533        (42.9%)

    LTM Capex excl. licenses/
     revenue                         13.0%      27.1%  (14.1p.p.)        13.0%        27.1%    (14.1p.p.)


    Mobile

    Customers (mln)                    9.7         9.5         1.9%

    -of which mobile data
     customers (mln)                   5.0         4.6        10.1%

    ARPU (UZS)                      21,672      17,925        20.9%

    MOU (min)                          574         568         1.1%

    Data usage (MB/user)               649         330        96.3%
    --------------------               ---         ---         ----

Unitel continued to report strong revenue growth, as the company´s tariffs were fixed at the foreign exchange rate of UZS 4,210 to the USD after the liberalization of the Uzbek som on 4 September 2017, which is a higher level compared to the prior year. Total revenue increased by 21.3% and mobile service revenue increased by 20.8% to UZS 621 billion, supported by successful marketing activities, increased revenues from interconnect services, value added services and mobile data. Mobile data traffic more than doubled and mobile data revenue increased by 28.6% year on year during the fourth quarter, 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 by 1.9% to 9.7 million during the fourth quarter.

Underlying EBITDA, which is adjusted for a reversal of a provision related to a court case of UZS 39.9 billion in Q4 2016, slightly decreased compared to the prior year and the underlying EBITDA margin was 45.7% in Q4 2017. The revenue growth was mainly offset by an increase in non-controllable costs, such as customer tax, interconnect costs, content costs, frequency fees and the negative impact from the currency liberalization. Customer costs increased as a result of an 83.3% growth in customer tax to UZS 2,750 per customer per month during Q4 2017. The customer tax increased further to UZS 4,000 per customer starting from January 2018. Adjusting for this negative effect, underlying EBITDA growth would have been 12.9% and underlying EBITDA margin for Q4 2017 would have been 5.9 percentage points higher at 51.6%.

Capex excluding licenses totalled UZS 120.1 billion and the capex excluding licenses to revenue ratio was 13.0% in 2017. The company continued to invest in its high-speed data networks, improving the 4G/LTE coverage in Tashkent and increasing the number of nationwide 3G sites by 60% year-on-year. Further improvements to the high-speed data networks will continue to be a priority for Unitel in 2018.

The Republican Radiofrequencies Council in Uzbekistan delayed the implementation of the decision to redistribute radio frequencies in Uzbekistan to April 2018. This will result in a reallocation of Unitel's radio frequencies to other cellular communications providers in the market. The Company prepared the network for this conversion and is analyzing the effect of this measure, which might lead to increased investments in network capacity.

In December 2017, PJSC VimpelCom successfully repatriated a net amount of approximately USD 200 million from Unitel, its wholly owned subsidiary. The remaining cash and deposits balances as per year end 2017 in Uzbekistan are USD 147 million in Uzbek som.

ITALY JOINT VENTURE(1)


    EUR million                                                      4Q17                    4Q16                     YoY                          FY17                    FY16                   YoY

    Total revenue                                                   1,556                    1,749                  (11.1%)                                 6,182                    6,475         (4.5%)

    Mobile service revenue                                          1,014                    1,103                   (8.1%)                                 4,179                    4,367         (4.3%)

    Fixed-line service revenue                                        272                      279                   (2.5%)                                 1,085                    1,082           0.2%

    EBITDA                                                            526                      551                   (4.5%)                                 1,945                    2,124         (8.4%)

    EBITDA underlying(2)                                              592                      611                   (3.1%)                                 2,211                    2,184           1.2%

    EBITDA margin                                                   33.8%                   31.5%    2.3pp                                                31.5%                   32.8%     (1.3p.p.)

    EBITDA underlying(2)margin                                      38.1%                   34.9%    3.2pp                                                35.8%                   33.7%     2.1p.p.

    Capex excl. licenses                                              515                      404                    27.6%                                 1,257                    1,172           7.3%

    LTM capex excl. licenses/
     revenue                                                        20.3%                   18.1%    2.2pp                                                20.3%                   18.1%     2.2p.p.

    Mobile

    Total revenue                                                   1,248                    1,440                  (13.3%)                                 4,996                    5,338         (6.4%)

    - of which mobile data                                            398                      341                    16.8%                                 1,508                    1,329          13.4%

    Customers (mln)                                                  29.5                     31.3                   (5.8%)                                  29.5                     31.3         (5.8%)

    -of which data customers
     (mln)                                                           19.3                     19.5                   (0.8%)                                  19.3                     19.5         (0.8%)

    ARPU (EUR)                                                       11.2                     11.4                   (1.8%)                                  11.3                     11.4         (0.9%)

    MOU (min)                                                         284                      288                   (1.4%)                                   272                      280         (3.1%)

    Fixed-line

    Total revenue                                                     307                      309                   (0.6%)                                 1,185                    1,137           4.2%

    Total voice customers (mln)                                      2.68                     2.69                   (0.4%)                                  2.68                     2.69         (0.4%)

    ARPU (EUR)                                                       27.6                     28.8                   (4.3%)                                  27.9                     27.6           1.3%

    Broadband customers (mln)                                        2.36                     2.31                     2.3%                                  2.36                     2.31           2.3%

    Broadband ARPU (EUR)                                              2.4                      2.3                     2.3%                                  21.7                     21.2           1.9%
    -------------------                                               ---                      ---                      ---                                   ----                     ----            ---


    (1)The ''combined data'' for Q4 2016 as well as 2016 FY, consists of the sum of the WIND Telecomunicazioni s.p.a. and H3G s.p.a. businesses results, respectively, for the
     three months ended 31 December 2016, prior to the merger of the two businesses. The Q4 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 Q4 2017 underlying EBITDA before integration costs of ~EUR 66 million

    (3) 2017 EBITDA before approx. EUR 266 million of integration costs

( )

Wind Tre's total revenue in Q4 2017 decreased by 11.1% to EUR 1.6 billion, driven by a 8.1% decline in mobile service revenue and lower mobile CPE (consumer premises equipment) revenue. The mobile service revenue decline was primarily due to continuing aggressive competition in the market, which resulted in a customer base decline of 5.8% to 29.5 million, together with impact from the new EU roaming regulation. The mobile CPE revenue decline was primarily due to lower volume of gross additions and a more selective mobile customer scoring, aimed at reducing bad debt, in line with the company' shift of focus from volume to value.

Mobile data revenue continued to show solid growth year-on-year with a 16.8% increase, driven by stable data customer base, data ARPU growth of 7.9% and data usage which grew by 50% to approximately 4.1 GB per customer per month. In Q4 2017, mobile ARPU slightly declined to EUR 11.2, a 1.8% year-on-year erosion, all attributable to voice component.Fixed-line service revenue slightly declined by 2.5% year on year, as the increases in direct and broadband customers of 2.0% and 2.3% respectively driven by the increased demand for ultra-broadband connections, were more than offset by the unfavourable comparison with Q4 2016, when some commercial initiatives were undertaken. In Q4 2017, the fixed-line direct customer base and the broadband customer base reached 2.5 million and 2.4 million respectively. Fixed and broadband ARPU slightly declined as a consequence of the abovementioned unfavourable YoY comparison.

Underlying EBITDA declined by 3.1% year-on-year in Q4 2017 to EUR 592 million, mainly due to service revenue erosion, partially offset by opex synergies of EUR 69 million, which led to an increase in the underlying EBITDA margin of 3.2 percentage points to 38.1%.

Capex in the quarter totalled EUR 515 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. To be noted that in the cities, Trieste and Agrigento, where the network modernization has been performed, network performances recorded are at the top.

The net leverage ratio (net debt/underlying EBITDA) was 4.4x at the end Q4 2017, primarily due to the payment of call premia and one-off costs related to the refinancing of the entire capital structure of Wind Tre. This refinancing not only improved the maturity profile of the company but is expected to substantially reduce future interest costs by an annual amount of approximately EUR 270 million.

During the year 2017, Wind Tre generated opex synergies of approximately EUR 167 million, on track with the targets disclosed at the time of the announcement of the Wind Tre joint venture.

CONFERENCE CALL INFORMATION

On 22 February 2018, VEON will also host a live presentation by senior management in London at 14.00 CET (13.00 GMT), which will simultaneously be made available through video webcast on its website and through the following dial-in numbers. The call and slide presentation may be accessed at http://www.veon.com

2.00pm CET investor and analyst conference call
US call-in number: +1 (646) 828 8143
Confirmation Code: 8795299

International call-in number: +44 (0) 330 336 9411
Confirmation Code: 8795299

The conference call replay and the slide presentation webcast will be available until 1 March 2018.
The slide presentation will also be available for download on VEON's website.

Investor and analyst call replay
US Replay Number: +1 719 457 0820
Confirmation Code: 8795299

UK Replay Number: 0800 101 1153
Confirmation Code: 8795299

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 transformation plan, among others; anticipated performance and guidance for 2018, including VEON's ability to generate sufficient cash flow; future market developments and trends; 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 VEON'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 VEON'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 priorities, 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 VEON'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 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. Non-IFRS measures are reconciled to comparable IFRS measures in VEON Ltd.'s earnings release published on its website on the date hereof. Furthermore, elements of this release contain or may contain, "inside information" as defined under the Market Abuse Regulation (EU) No. 596/2014.
As of 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. As a result of this, we do not provide any reconciliations for non-IFRS measures for the Wind Tre Joint Venture. 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 non-IFRS measures disclosed further in this release (including, without limitation, EBITDA, EBITDA margin, underlying EBITDA, underlying EBITDA margin, EBIT, EBT, net debt, equity free cash flow, organic growth, capital expenditures excluding licenses and LTM (last twelve months) capex excluding licenses/revenue) are reconciled to comparable IFRS measures in VEON Ltd.'s earnings release published on its website on the date hereof. In addition, we present certain information on a forward-looking basis (including, without limitation, the expected impact on revenue, EBITDA and equity free cash flow from the currency liberalization in Uzbekistan, the sale of the tower business in Pakistan (the "Deodar" transaction), the consolidation of the Euroset stores after completing the transaction ending the Euroset joint venture). We are not able to, without unreasonable efforts, provide a full reconciliation to IFRS due to potentially high variability, complexity and low visibility as to the items that would be excluded from the comparable IFRS measure in the relevant future period, including, but not limited to, depreciation and amortization, impairment loss, loss on disposal of non-current assets, financial income and expenses, foreign currency exchange losses and gains, income tax expense and performance transformation costs, cash and cash equivalents, long - term and short-term deposits, interest accrued related to financial liabilities, other unamortized adjustments to financial liabilities, derivatives, and other financial liabilities.

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 over 240 million customers it currently serves, and many others in the years to come.

Follow us:

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visit our blog @ blog.veon.com

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

CONTENT OF THE ATTACHMENTS


    Attachment A VEON financial schedules           26

    Attachment B Debt overview                      29

    Attachment C Customers                          30

    Attachment D Definitions                        30

    Attachment E Reconciliation tables              32

                  Average rates and budget rates of
                  functional currencies to USD

For more information on financial and operating data for specific countries, please refer to the supplementary file Factbook4Q2017.xls on VEON's website at http://veon.com/Investor-relations/Reports--results/Results/.

ATTACHMENT A: VEON LTD FINANCIAL SCHEDULES

VEON LTD UNAUDITED CONSOLIDATED STATEMENT OF INCOME




    USD million                                                 4Q17    4Q16     FY17      FY16

    Total operating revenues                                   2,320    2,354     9,474      8,885

    of which other revenues                                       35       48       125        148


    Operating expenses

    Service costs, equipment and accessories                   (543)   (527)  (2,139)   (1,985)

    Selling, general and administrative expenses             (1,024) (1,044)  (3,748)   (3,668)

    Depreciation                                               (337)   (367)  (1,454)   (1,439)

    Amortization                                               (133)   (142)    (537)     (497)

    Impairment loss                                             (64)   (177)     (66)     (192)

    Loss on disposals of non-current assets                      (8)     (6)     (24)      (20)

    Total operating expenses                                 (2,109) (2,263)  (7,968)   (7,801)


    Operating profit/(loss)                                      211       91     1,506      1,084

    Finance costs                                              (262)   (219)    (935)     (830)

    Finance income                                                25       23        95         69

    Other non-operating (losses)/gains                            15     (15)     (97)      (82)

    Shares of (loss)/profit of associates and joint ventures   (156)    (22)    (522)      (51)

    Net foreign exchange gain/ (loss)                          (118)      53        71      (157)


    (Loss)/profit before tax                                   (285)    (89)     (24)       347


    Income tax expense                                          (93)   (269)    (472)     (635)


    (Loss)/ profit from continued operations                   (378)   (358)    (496)     (288)

    Profit from discontinued operations                            -   1,905         -     2,708

    Profit/(loss) for the period                               (378)   1,546     (496)     2,420

    Non-controlling interest                                    (53)    (11)     (13)        92

    The owners of the parent                                   (325)   1,557     (483)     2,328
    ------------------------                                    ----    -----      ----      -----

VEON LTD UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION




    USD million                                        31 December 2017        30 September 2017        31 December 2016


    Assets

    Non-current assets

    Property and equipment                                               6,097                    6,115                   6,719

    Intangible assets                                                    2,168                    2,289                   2,257

    Goodwill                                                             4,394                    4,457                   4,696

    Investments in associates and joint ventures                         1,921                    2,059                   2,179

    Deferred tax asset                                                     272                      273                     343

    Income Tax advances, non-current                                        28                       25                      25

    Financial assets                                                        34                      126                     306

    Other assets                                                           199                      192                     118

    Total non-current assets                                            15,113                   15,536                  16,643


    Current assets

    Inventories                                                             72                       93                     125

    Trade and other receivables                                            745                      745                     685

    Other assets                                                           394                      390                     439

    Current income tax asset                                               230                      161                     169

    Other financial assets                                               1,130                      245                     190

    Cash and cash equivalents                                            1,304                    2,565                   2,942

    Total current assets                                                 3,875                    4,199                   4,550


    Assets classified as held for sale                                     533                      545                       -


    Total assets                                                        19,521                   20,280                  21,193
    ------------                                                        ------                   ------                  ------


    Equity and liabilities

    Equity

    Equity attributable to equity owners of the parent                   4,352                    4,809                   5,960

    Non-controlling interests                               -              425   -                 329                     83

    Total equity                                                         3,927                    4,480                   6,043


    Non-current liabilities

    Debt                                                                 9,951                    9,911                   7,632

    Other financial liabilities                                            411                      356                     438

    Provisions                                                             116                      134                     148

    Other liabilities                                                       83                       94                      44

    Deferred tax liability                                                 376                      259                     331

    Total non-current liabilities                                       10,937                   10,754                   8,593


    Current liabilities

    Trade and other payables                                             1,497                    1,522                   1,737

    Dividends payable                                                       26                       22                       7

    Debt                                                                 1,151                    1,525                   2,856

    Other financial liabilities                                            117                      179                     190

    Other  liabilities                                                   1,346                    1,276                   1,236

    Current income tax payable                                              48                       54                      57

    Provisions                                                             422                      410                     474

    Total current liabilities                                            4,607                    4,988                   6,557


    Liabilities associated with assets held for sale                        50                       58                       -


    Total equity and liabilities                                        19,521                   20,280                  21,193
    ----------------------------                                        ------                   ------                  ------

VEON LTD UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW




    USD million                                                                           4Q17         4Q16          FY17           FY16

    Operating activities

    Profit after tax                                                                             (378)        (359)         (496)          (288)

    Income tax expenses                                                                             93           270            472             635

    Profit/(loss) before tax                                                                     (285)         (89)          (24)            347

    Non-cash adjustment to reconcile profit before tax to net operating cash flows:

    Depreciation                                                                                   337           367          1,454           1,439

    Amortization                                                                                   133           142            537             497

    Impairment loss                                                                                 64           177             66             192

    Loss from disposal of non current assets                                                         8             6             24              20

    Finance income                                                                                (25)         (23)          (95)           (69)

    Finance cost                                                                                   262           219            935             830

    Other non operating losses/(gains)                                                            (15)           15             97              82

    Net foreign exchange loss/(gain)                                                               118          (53)            71           (157)

    Share of loss of associates and joint ventures                                                 156          (77)           412            (48)

    Impairment of associates and joint ventures                                                      -           99            110              99

    Movements in provisions and pensions                                                          (39)          122          (119)          (645)

    Changes in working capital                                                                     122         (208)           197           (249)

    Net interest paid                                                                            (264)        (222)         (834)          (789)

    Net interest received                                                                           32            19             89              63

    Income tax paid                                                                              (125)        (110)         (445)          (420)

    Changes due to discontinued operations from operating activity                                   -           61              -            683

    Net cash from/(used in) operating activities                                                   479           445          2,475           1,875


    Proceeds from sale of property and equipment                                                   (6)            2              8              16

    Proceeds from sale of intangible assets                                                          -          (1)             -            (1)

    Purchase of property, plant and equipment                                                    (406)        (467)       (1,481)        (1,310)

    Purchase of licenses                                                                          (19)         (47)         (359)          (165)

    Purchase of other intangible assets                                                           (53)         (35)         (197)          (176)

    Outflow for loan granted                                                                         -            -           (2)              -

    Inflow from loan granted                                                                         -            1              -              1

    Inflows/(outflows) from financial assets                                                         8          (19)          (99)           (87)

    Inflows/(outflows) from deposits                                                             (861)         (40)         (898)             19

    Acquisition of a subsidiary, net of cash acquired                                                -            -             -              7

    Proceeds from sales of share in subsidiaries, net of cash                                       12         (325)            12           (325)

    Receipt of dividends                                                                             -            -             -              -

    Discontinued operations in investing activity                                                    -         (70)             -          (649)

    Net cash from/(used in) investing activities                                               (1,326)      (1,001)       (3,016)        (2,671)


    Net proceeds from exercise of share options                                                      -            -             -              -

    Acquisition of non-controlling interest                                                          -          (7)         (259)            (5)

    Gross proceeds from borrowings                                                                 949            16          6,249           1,913

    Fees paid for the borrowings                                                                   (4)            -          (56)           (31)

    Repayment of borrowings                                                                    (1,289)        (423)       (5,948)        (1,816)

    Dividends paid to equity holders                                                                 -         (60)         (518)           (61)

    Proceeds from sale of treasury stock                                                             -            -             -              -

    Dividends paid to non-controlling interests                                                   (33)            -         (202)          (106)

    Proceeds from sale of non-controlling interests                                                  -            -             1               -

    Discontinued operations in financing activity                                                    -            -             -           (20)

    Net cash from/(used in) financing activities                                                 (377)        (474)         (733)          (126)

    Net increase/(decrease) in cash and cash equivalents                                       (1,225)      (1,030)       (1,274)          (922)
    ----------------------------------------------------                                        ------        ------         ------            ----


    Cash and cash equivalent at beginning of period                                              2,565         3,684          2,942           3,614

    Net foreign exchange difference related to continued operations                               (28)         (45)         (353)           (61)

    Net foreign exchange difference related to discontinued operations                               -          (6)             -            (3)

    Cash and cash equivalent reclassified as Held for Sale at the beginning of the period            -            -             -            314

    Cash and cash equivalent reclassified as Held for Sale at the end of the period                (9)          340           (11)              -

ATTACHMENT B: DEBT OVERVIEW



                   Type of debt/original lenders                                        Interest rate                        Debt currency      Outstanding debt (million)                                                                     Type of debt/original lenders                                                                              Interest rate                                        Debt currency       Outstanding debt (million)

    VEON Amsterdam B.V.                                                                                                                                                              VEON Amsterdam B.V.

                   Loan from ING Bank N.V.                                                             6 month LIBOR + 1.08%               USD                                 67                                                              Loan from ING Bank N.V.                                                                                                                  7 month LIBOR + 1.08%                USD                                  67

                   Loan from China Development Bank Corporation                                         6 month LIBOR + 3.3%               USD                                249                                                              Loan from China Development Bank Corporation                                                                                              7 month LIBOR + 3.3%                USD                                 249

                   Loan from HSBC Bank plc                                                                           1.7200%                USD                                159                                                              Loan from HSBC Bank plc                                                                                                                                1.7200%                 USD                                 159

    VEON Holdings B.V.                                                                                                                                                            VEON Holdings B.V.

                   Loan from CDB                                                                                     5.7100%                CNY                                424                                                              Loan from CDB                                                                                                                                          5.7100%                 CNY                                 424

                   Loan from SberBank                                                                               10.0000%                RUB                             95,000                                                              Loan from SberBank                                                                                                                                    10.0000%                 RUB                              95,000

                   Loan from Alfa Bank                                                                               8.8000%                RUB                             17,500                                                              Loan from Alfa Bank                                                                                                                                    8.8000%                 RUB                              17,500

                   Loan from VTB                                                                                     8.7500%                RUB                             30,000                                                              Loan from VTB                                                                                                                                          8.7500%                 RUB                              30,000

                   Loan from CCB                                                                           3 m EURIBOR +1.9%               EUR                                100                                                              Loan from CCB                                                                                                                                4 m EURIBOR +1.9%                EUR                                 100

                   Syndicated Loan Facility (Term Loan)*                                                  3m EURIBOR + 2.75%               EUR                                527                                                              Syndicated Loan Facility (Term Loan)*                                                                                                       3m EURIBOR + 2.75%                EUR                                 527

                   Syndicated Loan Facility (RCF)**                                                          1m LIBOR +2.25%               USD                                250                                                              Syndicated Loan Facility (RCF)**                                                                                                               1m LIBOR +2.25%                USD                                 250

                   Notes                                                                                             9.0000%                RUB                             12,000                                                              Notes                                                                                                                                                  9.0000%                 RUB                              12,000

                   Notes                                                                                             5.2000%                USD                                571                                                              Notes                                                                                                                                                  5.2000%                 USD                                 571

                   Notes                                                                                             3.9500%                USD                                600                                                              Notes                                                                                                                                                  3.9500%                 USD                                 600

                   Notes                                                                                             7.5043%                USD                                628                                                              Notes                                                                                                                                                  7.5043%                 USD                                 628

                   Notes                                                                                             5.9500%                USD                                983                                                              Notes                                                                                                                                                  5.9500%                 USD                                 983

                   Notes                                                                                             4.9500%                USD                                900                                                              Notes                                                                                                                                                  4.9500%                 USD                                 900

    PJSC VimpelCom                                                                                                                                                                PJSC VimpelCom

                   Loan from VIP Finance Ireland (funded                                                             9.1250%                USD                                166                                                              Loan from VIP Finance Ireland (funded by the issuance of loan participation notes by VIP Finance Ireland)                                              9.1250%                 USD                                 166
                   by the issuance of loan participation
                   notes by VIP Finance Ireland)

                   Loan from VIP Finance Ireland (funded                                                             7.7480%                USD                                377                                                              Loan from VIP Finance Ireland (funded by the issuance of loan participation notes by VIP Finance Ireland)                                              7.7480%                 USD                                 377
                   by the issuance of loan participation
                   notes by VIP Finance Ireland)

                   Other PJSC VimpelCom                                                                                                                                         81                                                              Other PJSC VimpelCom                                                                                                                                                                                                81

    GTH Finance B.V.                                                                                                                                                              GTH Finance B.V.

                   Notes                                                                                             6.2500%                USD                                500                                                              Notes                                                                                                                                                  6.2500%                 USD                                 500

                   Notes                                                                                             7.2500%                USD                                700                                                              Notes                                                                                                                                                  7.2500%                 USD                                 700


    GTH SAE                                                                                                                                                                       GTH SAE

                   Term Loan                                                                                1m LIBOR + 4.00%               USD                                 98                                                              Term Loan                                                                                                                                     1m LIBOR + 4.00%                USD                                  98

    Pakistan Mobile Communications Limited ("PMCL")                                                                                                                              Pakistan Mobile Communications Limited ("PMCL")

                   Sukuk Certificates                                                                 3 months KIBOR + 0.88%               PKR                              4,600                                                              Sukuk Certificates                                                                                                                      4 months KIBOR + 0.88%                PKR                               4,600

                   Loan from Habib Bank Limited                                                       6 months KIBOR + 0.90%               PKR                              4,000                                                              Loan from Habib Bank Limited                                                                                                            7 months KIBOR + 0.90%                PKR                               4,000

                   Loan from ING Bank N.V.                                                           6 month LIBOR plus 1.9%               USD                                212                                                              Loan from ING Bank N.V.                                                                                                                7 month LIBOR plus 1.9%                USD                                 212

                   Loan from MCB Bank Limited                                                          6 months KIBOR + 0.8%               PKR                             16,000                                                              Loan from MCB Bank Limited                                                                                                               7 months KIBOR + 0.8%                PKR                              16,000

                   Loan from Habib Bank Limited                                                       6 months KIBOR + 0.35%               PKR                              5,000                                                              Loan from Habib Bank Limited                                                                                                            7 months KIBOR + 0.35%                PKR                               5,000

                   Loan from Habib Bank Limited                                                                      6.0000%                PKR                              5,818                                                              Loan from Habib Bank Limited                                                                                                                           6.0000%                 PKR                               5,818

                   Loan from Habib Bank Limited                                                                      6.0000%                PKR                              3,856                                                              Loan from Habib Bank Limited                                                                                                                           6.0000%                 PKR                               3,856

                   Syndicated loan via MCB Bank Limited                                               6 months KIBOR + 0.35%               PKR                             17,000                                                              Syndicated loan via MCB Bank Limited                                                                                                    7 months KIBOR + 0.35%                PKR                              17,000

                   Other Pakistan Mobile Communications Limited ("PMCL")                                                                                                                                                                       Other Pakistan Mobile Communications Limited ("PMCL")

    Banglalink Digital Communications Ltd. ("BDC")                                                                                                                               Banglalink Digital Communications Ltd. ("BDC")

                   Senior Notes                                                                                        8.63%                USD                                300                                                              Senior Notes                                                                                                                                           108.63%                 USD                                 300

    Optimum Telecom Algeria SpA                                                                                                                                                   Optimum Telecom Algeria SpA

                   Syndicated Loan Facility                                          Bank of Algeria Re-                                    DZD                             15,000                                                              Syndicated Loan Facility                                                                                               Bank of Algeria Re-Discount Rate + 2.0%                DZD                              15,000
                                                                                                      Discount Rate + 2.0%

    Other loans, equipment financing and capital lease obligations                                                                                                              Other loans, equipment financing and capital lease obligations
    --------------------------------------------------------------                                                                                                              --------------------------------------------------------------



                   ***This facility was extended to 15 June 2018 on 8 December 2017.

ATTACHMENT C: CUSTOMERS


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

    million                                                                           4Q17                       4Q16             YoY   4Q17                         4Q16     YoY

    Russia                                                                                      58.2                        58.3 (0.3%)    2.2                           2.2     2.8%

    Pakistan                                                                                    53.6                        51.6   4.0%

    Algeria                                                                                     15.0                        16.3 (8.0%)

    Bangladesh                                                                                  31.3                        30.4   3.2%

    Ukraine                                                                                     26.5                        26.1   1.7%    0.8                           0.8     0.8%

    Uzbekistan                                                                                   9.7                         9.5   1.9%

    Other                                                                                       16.2                        15.3   5.9%

    Total consolidated                                                                         210.5                       207.5   1.4%    3.4                           3.3     3.7%

    Italy                                                                                       29.5                        31.3 (5.8%)    2.4                           2.3     2.2%

    Total                                                                                      240.0                       238.8   0.5%    5.8                           5.6     2.7%
    -----                                                                                      -----                       -----    ---     ---                           ---      ---

    Note: In Russia Fixed line and mobile customers have been restated in 2016 to align them with Group accounting policies

ATTACHMENT D: DEFINITIONS

ARPU (Average Revenue per User) measures the monthly average revenue per mobile user. We generally calculate mobile ARPU by dividing our mobile service revenue during the relevant period, including data revenue, roaming revenue, MFS 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.

Mobile 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, licenses, 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.

Capital expenditures (capex) excluding licenses is calculated as capex, excluding purchases of new spectrum licenses.

EBIT or Operating Profit 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 E below.

Adjusted EBITDA (called EBITDA in this document) is a non-IFRS financial measure. VEON calculates Adjusted EBITDA as (loss)/profit before tax 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 segments except for Russia. Our Adjusted EBITDA may be used to evaluate our performance against other telecommunications companies that provide EBITDA.

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 E below.

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

Underlying EBITDA is calculated as EBITDA excluding exceptional items consisting of transformation costs and other one-off items.

Gross Debt is calculated as the sum of long term notional debt and short-term notional 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 E 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 at 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 and fixed-mobile convergence ("FMC")

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 notional debt and short-term notional debt minus cash and cash equivalents, long-term and short-term deposits. The Company believes that net debt provides useful information to investors because it shows the amount of notional 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, VEON's share 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.

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

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, Pakistan, Algeria, Bangladesh, Ukraine, Uzbekistan and HQ based on the business activities in different geographical areas

ATTACHMENT E: RECONCILIATION TABLES

RECONCILIATION OF CONSOLIDATED EBITDA



    USD mln                                                                                                         4Q17  4Q16     FY17       FY16
                                                                                                                                          reported

    Unaudited


    EBITDA                                                                                                           753    783     3,587       3,232


    Depreciation                                                                                                   (337) (367)  (1,454)    (1,439)

    Amortization                                                                                                   (133) (142)    (537)      (497)

    Impairment loss                                                                                                 (64) (177)     (66)      (192)

    Loss on disposals of non-current assets                                                                          (8)   (6)     (24)       (20)


    Operating profit                                                                                                 211     91     1,506       1,084


    Financial Income and Expenses                                                                                  (237) (196)    (840)      (761)

     -  including  finance income                                                                                     25     23        95          69

     -  including finance costs                                                                                    (262) (219)    (935)      (830)

    Net foreign exchange (loss)/gain and others                                                                    (259)    16     (690)         24

     -  including Other non-operating (losses)/gains                                                                  15   (15)     (97)       (82)

     -  including Shares of loss of associates and joint ventures accounted for using the equity method, including (156)  (22)    (522)       (51)
    impairments of JV and associates

     -  including Net foreign exchange gain                                                                        (118)    53      (71)        157



    Profit before tax                                                                                              (285)  (89)     (24)        347


     Income tax expense                                                                                             (93) (270)    (472)      (635)


    Profit from discontinued operations                                                                                - 1,905         -      2,708


    Profit/(loss) for the period                                                                                   (378) 1,546     (496)      2,420


    Profit/(Loss) for the period attributable to non-controlling interest                                             52     11        13        (92)


    Profit/(loss) for the year attributable to the owners of the parent                                            (325) 1,557     (483)      2,328
    -------------------------------------------------------------------                                             ----  -----      ----       -----

RECONCILIATION OF CONSOLIDATED REPORTED AND UNDERLYING EBITDA



    USD mln, unaudited                     4Q17 4Q16   FY17        FY16
                                                              pro-forma
                                                                  Warid


    EBITDA                                  753   783   3,587        3,268


    One off vendor adjustment                 -    -  (106)           -


    Performance transformation and other
     costs, of which                         58    66     184          245

    HQ and Other                             38    29     142          156

    Russia                                    3     1       5           11

    Emerging Markets                         17    36      37           78

    Other exceptionals                        3    61       9          104


    Underlying EBITDA                       814   910   3,675        3,617
    -----------------                       ---   ---   -----        -----

    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                                                                                           4Q17 4Q16   FY17    FY16

    Cash paid for purchase of property, plant and equipment and intangible assets                                478   548   2,037    1,651

    Net difference between timing of recognition and payments for purchase of property, plant and equipment and  (5)  221   (246)      90
    intangible assets

    Capital expenditures                                                                                         473   770   1,791    1,741

    Less capital expenditures in licenses                                                                        (8) (16)  (332)   (148)

    Capital expenditures excl. licenses                                                                          466   754   1,459    1,593
    -----------------------------------                                                                          ---   ---   -----    -----

RECONCILIATION OF ORGANIC AND REPORTED GROWTH RATES


                            4Q17 vs 4Q16
                            ------------

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

                          Organic       Forex & other             Reported   Organic    Forex & other         Reported

    Russia                   0.4%                    8.0%             8.4%    (4.9%)                 7.5%         2.6%

    Pakistan                 4.2%                  (1.6%)             2.6%     36.5%               (2.0%)        34.5%

    Algeria                (9.9%)                  (3.3%)            13.1%   (24.1%)               (2.8%)      (26.8%)

    Bangladesh             (9.5%)                  (4.1%)          (13.6%)   (10.5%)               (4.1%)      (14.5%)

    Ukraine                 10.7%                  (4.4%)             6.3%     39.1%               (5.9%)        33.2%

    Uzbekistan              21.3%                 (74.3%)          (52.9%)   (18.8%)              (49.7%)      (68.4%)


    Total                    1.2%                  (2.6%)           (1.4%)      0.4%               (4.2%)       (3.8%)
    -----                     ---                    -----             -----        ---                 -----         -----


                            FY17 vs FY16
                            ------------

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

                          Organic       Forex & other             Reported   Organic    Forex & other         Reported

    Russia                   1.1%                   14.4%            15.4%    (0.4%)                14.1%        13.6%

    Pakistan                 5.9%                   11.9%            17.8%     30.5%                 8.3%        38.8%

    Algeria               (10.8%)                  (1.2%)          (12.0%)   (21.1%)               (1.0%)      (22.7%)

    Bangladesh             (4.6%)                  (2.9%)           (7.5%)   (10.1%)               (2.7%)      (12.8%)

    Ukraine                 10.6%                  (4.3%)             6.2%     18.1%               (4.8%)        13.2%

    Uzbekistan              19.1%                 (41.7%)          (22.6%)    (1.1%)              (32.8%)      (33.9%)


    Total                    1.9%                    4.7%             6.6%      7.5%                 3.5%        11.0%
    -----                     ---                      ---               ---        ---                   ---          ----

RECONCILIATION OF VEON CONSOLIDATED NET DEBT



    USD mln           31 December 2017 30 September 2017  30 June 2017

    Net debt                     8,741              8,672          8,403

    Cash and cash
     equivalents                 1,304              2,565          2,873

    Long - term and
     short-term
     deposits                       70                199            348

    Cash pledged as
     collateral for
     the Mandatory
     Tender Offer                  987                  -             -

    Gross debt                  11,102             11,437         11,624

    Interest accrued
     related to
     financial
     liabilities                   130                179            146

    Other unamortised
     adjustments to
     financial
     liabilities
     (fees, discounts
     etc.)                        (34)              (34)          (36)

    Derivatives not
     designated as
     hedges                        310                311            309

    Derivatives
     designated as
     hedges                         60                 40             33

    Other financial
     liabilities                    62                 38             76

    Total other
     financial
     liabilities                11,630             11,971         12,153
    ------------                ------             ------         ------

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


    USD million                         4Q17  4Q16     FY17      FY16

    Net cash from operating
     activities from continued
     operations                          479    384     2,475      1,192

    Exceptional items:

    One off vendor adjustment              -     -     (66)         -

    PT costs                              58     66       179        255

    Settlement with DOJ/SEC/OM
     Investigation                         -     -        -       795

    IRAQNA provision                       -     -       69          -

    WHT on licence in Pakistan             -     -       30

    Proceeds from sale of shares in
     subsdiaries                               325                 325

    Other                                 19      -       41         33

    Underlying net cash flow from
     operating activities                555    775     2,728      2,601

    Net cash used in investing
     activities from continued
     operations                      (1,325) (931)  (3,016)   (2,021)

    Adjustments:

    Deposits & Financial assets        (853)  (59)    (997)      (68)

    Purchase of license and other       (19)  (47)    (359)     (165)

    Underlying net cash flow used in
     investing activities              (453) (825)  (1,660)   (1,788)

    Underlying Equity Free Cash Flow
     excluding licenses                  101   (50)    1,067        812
    --------------------------------     ---    ---     -----        ---

RECONCILIATION OF EQUITY FREE CASH FLOW (NEW DEFINITION FOR GUIDANCE 2018) TO UNDERLYING EQUITY FREE CASH FLOW EXCLUDING LICENSES


    USD million                                       FY17    FY16      YoY

    EBITDA                                           3,587    3,232     11.0%

    Changes in working capital                         197    (249) (179.1%)

    Movements in provision                           (119)   (645)  (81.6%)

    Net interest paid received                       (745)   (726)     2.6%

    Income tax paid                                  (445)   (420)     6.0%

    Cash flow from operating activities
     (excl.discontinued operations)                  2,475    1,192    107.6%

    Capex excl.licenses                            (1,460) (1,593)   (8.4%)

    Working capital related to Capex excl. license   (218)     107  (304.1%)

    Proceeds from sale of PPE                            8       15   (46.7%)

    Equity Free Cash Flow                              804    (278)     n.m.

    Purchase of licenses                             (359)   (165)     n.m.

    Other investing activities                       (987)   (386)   155.7%

    Cash Flow before financing                       (542)   (830)  (34.7%)

    Exceptional cash flow items                        263    1,091   (75.9%)

    Underlying Equity Free Cash Flow                 1,067      813     31.2%
    --------------------------------                 -----      ---      ----

RECONCILIATION OF REPORTED AND PRO-FORMA WARID INCOME STATEMENT FOR FY 2016


    USD
     million           FY16 Warid incl. intercompany eliminations       FY16
                   reported                                        pro-forma

    Total
     revenue          8,885                                    155       9,040

    Service
     revenue          8,553                                    147       8,700

    EBITDA            3,232                                     36       3,268

    EBITDA
     margin           36.4%                                 -0.2%      36.1%

     Depreciation,
     amortization,
     impairments
     and other      (2,148)                                  (56)    (2,204)

    Operating
     profit           1,084                                   (21)      1,063

    Financial
     income
     and
     expenses         (761)                                  (15)      (776)

    Net
     foreign
     exchange
     (loss)/gain
     and
     others              75                                      5          80

    Share of
     profit/
     (loss) of
     joint
     ventures
     and
     associates          48                                   (99)       (51)

    Impairment
     of JV and
     associates        (99)                                    99           -

    Profit/
     (loss)
     before
     tax                347                                   (31)        316

    Income tax
     expense          (635)                                   (4)      (639)

    Profit/
     (loss)
     from
     continued
     operations       (288)                                  (35)      (323)

    Profit/
     (loss)
     from
     discontinued
     operations       2,708                                      -      2,708

    Profit for
     the
     period
     attributable
     to VEON
     shareholders     2,328                                   (34)      2,294
    -------------     -----                                    ---       -----

RECONCILIATION OF WIND TRE JOINT VENTURE REPORTED NET RESULT TO VEON'S SHARE OF PROFIT/(LOSS) FROM JV AND ASSOCIATES


    USD mln                       4Q17    FY17

    Italy JV reported net result 1,278  (3,054)


    50% of Italy JV reported net
     result                      (639) (1,527)


    D&A - PPA adjustment           213      850


    Financing - PPA adjustment     287      287


    Other PPA adjustmnet          (17)       -


    Total PPA adjustment           483    1,137


    VEON share of profit/(loss)
     from JV and associates      (156)   (390)
    ---------------------------   ----     ----

EBITDA RECONCILIATION FOR COUNTRY

Q4 2017


                      Russia       Pakistan       Algeria        Bangladesh         Ukraine          Uzbekistan          HQ           Other                 VEON
                                                                                                                                                        Consolidated
                                                                                                                                                        ------------

    USD mln

    Underlying EBITDA          440            182            100                 47               85                  36         (93)               17                        814

    Execptional costs           10              9              8                (0)             (8)                  2           32                 6                         61


    EBITDA                     430            173             92                 47               92                  33        (125)               11                        753

    Less

    Depreciation             (206)          (33)          (22)              (27)            (13)                (7)         (1)             (28)                     (337)

    Amortization              (39)          (35)          (27)              (10)            (10)                (0)         (3)              (9)                     (133)

    Impairment loss           (14)          (23)             3                (1)               1                   -           -             (30)                      (64)

    Loss on disposals
     of non-current
     assets                    (5)           (1)             0                (1)               1                 (0)           -              (1)                       (7)


    Operating profit           165             82             46                  8               70                  26        (128)             (58)                       211
    ----------------           ---            ---            ---                ---              ---                 ---         ----               ---                        ---

Q4 2016


                                            Russia       Pakistan       Algeria        Bangladesh         Ukraine          Uzbekistan           HQ           Other                 VEON
                                                                                                                                                                               Consolidated
                                                                                                                                                                               ------------

    USD mln

    Underlying EBITDA                                420            149            127                 65               78                   92         (71)               48                        910

    Execptional costs                                  1             20              2                 10                9                 (12)          21                77                        127


    EBITDA                                           419            129            125                 55               69                  105         (92)             (27)                       783

    Less

    Depreciation                                   (183)          (37)          (33)              (46)            (20)                (15)         (1)             (31)                     (367)

    Amortization                                    (39)          (22)          (32)              (10)            (27)                 (2)         (1)              (9)                     (142)

    Impairment loss                                 (17)           (4)           (2)               (3)               4                    -           -            (155)                     (177)

    Loss on disposals of non-current assets          (7)             1              0                (0)             (0)                   1            -              (1)                       (6)


    Operating profit                                 173             67             58                (4)              25                   89         (94)            (224)                        91
    ----------------                                 ---            ---            ---                ---              ---                  ---          ---              ----                        ---

FY 2017


                                            Russia       Pakistan        Algeria         Bangladesh          Ukraine          Uzbekistan           HQ           Other                  VEON
                                                                                                                                                                                   Consolidated
                                                                                                                                                                                   ------------

    USD mln

    Underlying EBITDA                              1,801             730             435                 234              340                  266        (314)               182                        3,675

    Execptional costs                                 13              27               9                   1              (6)                   4           10                 30                           88


    EBITDA                                         1,788             703             426                 233              347                  261        (325)               154                        3,587

    Less

    Depreciation                                   (813)          (186)          (104)              (128)            (55)                (49)         (2)             (118)                     (1,454)

    Amortization                                   (157)          (134)          (113)               (40)            (45)                 (4)         (8)              (35)                       (537)

    Impairment loss                                 (18)           (23)              3                 (1)               1                    -           -              (28)                        (66)

    Loss on disposals of non-current assets         (23)              2               0                 (9)               4                    5            -               (4)                        (24)


    Operating profit                                 778             362             212                  56              252                  214        (335)              (32)                       1,506
    ----------------                                 ---             ---             ---                 ---              ---                  ---         ----                ---                        -----

FY 2016


                                            Russia       Pakistan        Algeria         Bangladesh          Ukraine           Uzbekistan           HQ           Other                   VEON
                                                                                                                                                                                     Consolidated
                                                                                                                                                                                    pro-forma Warid
                                                                                                                                                                                    ---------------

    USD mln

    Underlying EBITDA                              1,585             588             562                 288               315                  379        (278)               179                           3,617

    Execptional costs                                 11              45              15                  20                 8                 (16)         144                122                             349


    EBITDA                                         1,574             542             547                 267               306                  395        (422)                58                           3,268

    Less

    Depreciation                                   (688)          (253)          (107)              (139)            (106)                (59)         (3)             (134)                        (1,491)

    Amortization                                   (129)           (79)          (151)               (40)             (60)                (11)         (4)              (27)                          (502)

    Impairment loss                                 (20)            (4)            (2)                (6)                2                    0            -             (163)                          (192)

    Loss on disposals of non-current assets         (18)              4             (0)                (0)              (1)                 (1)           -               (4)                           (20)


    Operating profit                                 719             210             287                  81               142                  324        (428)             (271)                          1,064
    ----------------                                 ---             ---             ---                 ---               ---                  ---         ----               ----                           -----

RATES OF FUNCTIONAL CURRENCIES TO USD(1)


                                                 Target rates           Average rates               Average rates           Closing rates
                                                                                                    -------------

                                                          2018     4Q17                4Q16   YoY                   FY17                   FY16     YoY      4Q17       4Q16        YoY

    Russian Ruble                                           60    58.41                63.07 (7.4%)                  58.35                   67.03  (13.0%)     57.60       60.66      (5.0%)

    Euro                                                   0.8     0.85                 0.93 (8.5%)                   0.89                    0.90   (1.9%)      0.83        0.95     (12.4%)

    Algerian Dinar                                         110   114.77               110.58   3.8%                 110.92                  109.43     1.4%    114.76      110.40        4.0%

    Pakistan Rupee                                         105   106.42               104.78   1.6%                 105.35                  104.72     0.6%    110.70      104.37        6.1%

    Bangladeshi Taka                                        79    82.32                78.62   4.7%                  80.88                   78.44     3.1%     82.69       78.92        4.8%

    Ukrainian Hryvnia                                       27    26.96                25.89   4.1%                  26.59                   25.55     4.1%     28.07       27.19        3.2%

    Kazakh Tenge                                           340   334.40               335.07 (0.2%)                 326.08                  341.76   (4.6%)    332.33      333.29      (0.3%)

    Uzbekistan Som                                       8,748 8,079.91              3,129.4 158.2%               5,121.14                2,965.66    72.7%  8,120.07     3,231.5      151.3%

    Armenian Dram                                          480   483.10               478.84   0.9%                 482.68                  480.45     0.5%    484.10      483.94        0.0%

    Kyrgyz Som                                              70    69.22                68.83   0.6%                  68.87                   69.90   (1.5%)     68.84       69.23      (0.6%)

    Georgian Lari                                          2.4     2.59                 2.50   3.9%                   2.51                    2.37     6.0%      2.59        2.65      (2.1%)
    -------------                                          ---     ----                 ----    ---                    ----                    ----      ---       ----        ----       -----



    (1) Functional currency in Tajikistan is USD

View original content:http://www.prnewswire.com/news-releases/veon-reports-full-year-2017-results-with-robust-free-cash-flow-generation-of-over-usd-1-billion-and-announces-us-17-cents-final-dividend-300602533.html

SOURCE VEON Ltd.