ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2018
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Title of each class
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Name of each exchange on which
registered
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American Depositary Shares, or ADSs,
each representing one common share
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NASDAQ Global Select Market
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Common shares, US$0.001 nominal value
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NASDAQ Global Select Market*
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*
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Listed, not for trading or quotation purposes, but only in connection with the registration of ADSs pursuant to the requirements of the Securities and Exchange Commission.
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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
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Emerging growth company
o
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U.S. GAAP
o
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International Financial Reporting Standards as issued by the
Interntional Accounting Standards Board
ý
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Other
o
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•
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our ability to implement and execute our strategic priorities successfully and to achieve the expected benefits from, our existing and future transactions;
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•
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our targets and strategic initiatives in the various countries in which we operate;
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•
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our ability to develop new revenue streams and achieve portfolio and asset optimizations, improve customer experience and optimize our capital structure;
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•
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our ability to generate sufficient cash flow to meet our debt service obligations, our expectations regarding working capital and the repayment of our debt and our projected capital requirements;
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•
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our plans regarding our dividend payments and policies, as well as our ability to receive dividends, distributions, loans, transfers or other payments or guarantees from our subsidiaries;
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•
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our expectations regarding our capital and operational expenditures in and after 2019;
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•
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our goals regarding value, experience and service for our customers, as well as our ability to retain and attract customers and to maintain and expand our market share positions;
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•
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our plans to develop, provide and expand our products and services, including operational and network development, optimization and investment, such as expectations regarding the expansion or roll-out and benefits of 3G, 4G/LTE and 5G networks or other networks, broadband services and integrated products and services, such as fixed-mobile convergence;
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•
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our expectations as to pricing for our products and services in the future, improving our ARPU and our future costs and operating results;
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•
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our ability to meet license requirements, to obtain, maintain, renew or extend licenses, frequency allocations and frequency channels and to obtain related regulatory approvals;
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•
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our plans regarding marketing and distribution of our products and services, including customer loyalty programs;
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•
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our expectations regarding our competitive strengths, customer demands, market trends and future developments in the industry and markets in which we operate;
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•
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our expectations regarding management changes;
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•
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possible adverse consequences resulting from our agreements announced on February 18, 2016 with the U.S. Securities and Exchange Commission (“SEC”), the U.S. Department of Justice (“DOJ”), and the Dutch Public Prosecution Service (Openbaar Ministerie) (“OM”), as well as any litigation or additional investigations related to or resulting from the agreements, any changes in company policy or procedure resulting from the review by the independent compliance
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•
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other statements regarding matters that are not historical facts.
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•
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risks relating to changes in political, economic and social conditions in each of the countries in which we operate and where laws are applicable to us (including as a result of armed conflict) such as any harm, reputational or otherwise, that may arise due to changing social norms, our business involvement in a particular jurisdiction or an otherwise unforeseen development in science or technology;
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•
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in each of the countries in which we operate and where laws are applicable to us, risks relating to legislation, regulation, taxation and currency, including costs of compliance, currency and exchange controls, currency fluctuations, and abrupt changes to laws, regulations, decrees and decisions governing the telecommunications industry and the taxation thereof, laws on foreign investment, anti-corruption and anti-terror laws, economic sanctions and their official interpretation by governmental and other regulatory bodies and courts;
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•
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risks related to the impact of export and re-export restrictions on our and our suppliers' ability to procure products, technology, or software necessary for the service, production and satisfactory delivery of supplies, support services, software, and equipment that we source from them — for example, in April 2018, the U.S. Department of Commerce issued, under the Export Administration Regulations, a Denial Order to ZTE Corporation (“ZTE”), an important third-party supplier, which prohibited, among other things, exports and re-exports of U.S. products, technology and software to and from ZTE and restricted our ability to receive certain services from ZTE, each of which could have led to service degradation and disruptions in certain markets, and in January 2019, the U.S. Department of Justice brought criminal charges against Huawei, another third-party supplier, alleging theft of trade secrets, violations of U.S. sanctions on Iran, and related bank and wire fraud;
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•
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risks relating to a failure to meet expectations regarding various strategic initiatives, including, but not limited to, changes to our portfolio;
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•
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risks related to solvency and other cash flow issues, including our ability to raise the necessary additional capital and incur additional indebtedness, the ability of our subsidiaries to make dividend payments, our ability to develop additional sources of revenue and unforeseen disruptions in our revenue streams;
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•
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risks that the adjudications by the various regulatory agencies or other parties with whom we are involved in legal challenges, tax disputes or appeals may not result in a final resolution in our favor or that we are unsuccessful in our defense of material litigation claims or are unable to settle such claims;
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•
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risks relating to our company and its operations in each of the countries in which we operate and where laws are applicable to us, including demand for and market acceptance of our products and services, regulatory uncertainty regarding our licenses, frequency allocations and numbering capacity, constraints on our spectrum capacity, availability of line capacity, intellectual property rights protection, labor issues, interconnection agreements, equipment failures and competitive product and pricing pressures;
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•
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risks related to developments from competition, unforeseen or otherwise, in each of the countries in which we operate and where laws are applicable to us, including our ability to keep pace with technological change and evolving industry standards;
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•
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risks associated with developments in the investigations by, and the agreements with, the DOJ, SEC and OM and any additional investigations or litigation that may be initiated relating to or arising out of any of the foregoing, and the costs associated therewith, including relating to remediation efforts and enhancements to our compliance programs, and the review by the independent compliance monitor;
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•
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risks related to the activities of our strategic shareholders, lenders, employees, joint venture partners, representatives, agents, suppliers, customers and other third parties;
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•
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risks associated with our existing and future transactions, including with respect to realizing the expected synergies of closed transactions, satisfying closing conditions for new transactions, obtaining regulatory approvals and implementing remedies;
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•
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risks associated with data protection, cyber-attacks or systems and network disruptions, or the perception of such attacks or failures in each of the countries in which we operate, including the costs associated with such events and the reputational harm that could arise therefrom;
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•
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risks related to the ownership of our American Depositary Receipts, including those associated with VEON Ltd.’s status as a Bermuda company and a foreign private issuer; and
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•
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other risks and uncertainties as set forth in
Item 3D. Risk Factors.
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Year ended December 31,
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|||||||||
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2018
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2017
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2016
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2015
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2014
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(in millions of U.S. dollars, except per share amounts and as indicated)
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|||||||||
Consolidated income statements data:
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|||||
Service revenue
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8,526
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|
9,105
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|
8,553
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|
9,313
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|
13,200
|
|
Sale of equipment and accessories
|
427
|
|
244
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|
184
|
|
190
|
|
218
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|
Other revenue
|
133
|
|
125
|
|
148
|
|
103
|
|
68
|
|
Total operating revenue
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9,086
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|
9,474
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|
8,885
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|
9,606
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13,486
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|
|
|
|
|
|
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|||||
Operating expenses
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|
|
|
|
|
|||||
Service costs
|
(1,701
|
)
|
(1,879
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)
|
(1,769
|
)
|
(1,937
|
)
|
(2,931
|
)
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Cost of equipment and accessories
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(415
|
)
|
(260
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)
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(216
|
)
|
(231
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)
|
(252
|
)
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Selling, general and administrative expenses
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(3,697
|
)
|
(3,748
|
)
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(3,668
|
)
|
(4,563
|
)
|
(4,743
|
)
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Depreciation
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(1,339
|
)
|
(1,491
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)
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(1,439
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)
|
(1,550
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)
|
(1,996
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)
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Amortization
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(495
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)
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(537
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)
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(497
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)
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(517
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)
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(647
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)
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Impairment loss
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(858
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)
|
(66
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)
|
(192
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)
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(245
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)
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(976
|
)
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Gain / (loss) on disposal of non-current assets
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(57
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)
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(26
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)
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(20
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)
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(39
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)
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(68
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)
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Gain / (loss) on sale of subsidiaries
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30
|
|
—
|
|
—
|
|
—
|
|
—
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Total operating expenses
|
(8,532
|
)
|
(8,007
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)
|
(7,801
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)
|
(9,082
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)
|
(11,613
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)
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
Operating profit
|
554
|
|
1,467
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|
1,084
|
|
524
|
|
1,873
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Finance costs
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(816
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)
|
(935
|
)
|
(830
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)
|
(829
|
)
|
(1,077
|
)
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Finance income
|
67
|
|
95
|
|
69
|
|
52
|
|
52
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|
Other non-operating gain / (loss), net
|
(68
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)
|
(97
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)
|
(82
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)
|
(42
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)
|
121
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|
Share of profit / (loss) of joint ventures and associates
|
—
|
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(22
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)
|
(11
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)
|
14
|
|
(38
|
)
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Impairment of joint ventures and associates
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—
|
|
(110
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)
|
(99
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)
|
—
|
|
—
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Net foreign exchange gain / (loss)
|
15
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|
(70
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)
|
157
|
|
(314
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)
|
(556
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)
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Profit / (loss) before tax from continuing operations
|
(248
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)
|
328
|
|
288
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|
(595
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)
|
375
|
|
|
|
|
|
|
|
|||||
Income tax expense
|
(369
|
)
|
(472
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)
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(635
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)
|
(220
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)
|
(598
|
)
|
|
|
|
|
|
|
|||||
Profit / (loss) from continuing operations
|
(617
|
)
|
(144
|
)
|
(347
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)
|
(815
|
)
|
(223
|
)
|
|
|
|
|
|
|
|||||
Profit/(loss) after tax for the period from discontinued operations
|
(300
|
)
|
(390
|
)
|
979
|
|
262
|
|
(680
|
)
|
Gain / (loss) on disposal of discontinued operations
|
1,279
|
|
—
|
|
1,788
|
|
—
|
|
—
|
|
Profit for the period from discontinued operations
|
979
|
|
(390
|
)
|
2,767
|
|
262
|
|
(680
|
)
|
Profit/(loss) for the year
|
362
|
|
(534
|
)
|
2,420
|
|
(553
|
)
|
(903
|
)
|
Attributable to:
|
|
|
|
|
|
|||||
The owners of the parent (continuing operations)
|
(397
|
)
|
(115
|
)
|
(439
|
)
|
(917
|
)
|
33
|
|
The owners of the parent (discontinued operations)
|
979
|
|
(390
|
)
|
2,767
|
|
262
|
|
(680
|
)
|
Non-controlling interest
|
(220
|
)
|
(29
|
)
|
92
|
|
102
|
|
(256
|
)
|
|
362
|
|
(534
|
)
|
2,420
|
|
(553
|
)
|
(903
|
)
|
|
|
|
|
|
|
|||||
Basic and diluted gain / (loss) per share attributable to ordinary equity holders of the parent:
|
|
|
|
|
|
|||||
From continued operations
|
($0.23)
|
|
($0.07)
|
|
($0.25)
|
|
($0.52)
|
|
$0.02
|
|
From discontinued operations
|
$0.56
|
|
($0.22)
|
|
$1.58
|
|
($0.52)
|
|
$0.02
|
|
|
|
|
|
|
|
|||||
Dividends declared per share
|
0.29
|
|
0.28
|
|
0.23
|
|
0.035
|
|
0.035
|
|
|
As of December 31,
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|||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|
(in millions of U.S. dollars)
|
|||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
1,808
|
|
1,314
|
|
2,942
|
|
3,614
|
|
6,342
|
|
Working capital (deficit)
(1)
|
(1,316
|
)
|
(716
|
)
|
(2,007
|
)
|
(156)
|
|
(938
|
)
|
Property and equipment, net
|
4,932
|
|
6,237
|
|
6,719
|
|
6,239
|
|
11,849
|
|
Intangible assets and goodwill
|
5,670
|
|
6,786
|
|
6,953
|
|
6,447
|
|
18,002
|
|
Total assets
|
14,102
|
|
19,484
|
|
21,193
|
|
33,854
|
|
41,042
|
|
Total liabilities
|
11,323
|
|
15,594
|
|
15,150
|
|
29,960
|
|
37,066
|
|
Total equity
|
2,779
|
|
3,890
|
|
6,043
|
|
3,894
|
|
3,976
|
|
(1)
|
Working capital (deficit) is calculated as current assets less current liabilities and is equivalent to net current assets.
|
|
As of and for the year ended December 31,
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|
2018
|
2017
|
2016
|
2015
|
2014
|
Mobile customers in millions
|
|
|
|
|
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Russia
|
55.3
|
58.2
|
58.3
|
59.8
|
57.2
|
Pakistan
|
56.2
|
53.6
|
51.6
|
36.2
|
38.5
|
Algeria
|
15.8
|
15.0
|
16.3
|
17.0
|
17.7
|
Bangladesh
|
32.3
|
31.3
|
30.4
|
32.3
|
30.8
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Ukraine
|
26.4
|
26.5
|
26.1
|
25.4
|
26.2
|
Uzbekistan
|
9.1
|
9.7
|
9.5
|
9.9
|
10.6
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|
|
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Mobile data customers in millions
|
|
|
|
|
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Russia
|
36.8
|
38.4
|
36.6
|
34.3
|
31.9
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Pakistan
|
33.0
|
28.5
|
25.1
|
16.8
|
14.4
|
Algeria
|
9.2
|
7.2
|
7.0
|
4.1
|
1.3
|
Bangladesh
|
19.6
|
16.9
|
14.9
|
14.0
|
12.2
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Ukraine
|
14.8
|
12.5
|
11.2
|
12.0
|
11.1
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Uzbekistan
|
5.5
|
5.0
|
4.6
|
4.7
|
5.4
|
|
|
|
|
|
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Mobile ARPU (in U.S. dollars)
|
|
|
|
|
|
Russia
|
5.4
|
5.5
|
4.6
|
5.1
|
8.6
|
Pakistan
|
2.1
|
2.2
|
2.3
|
2.1
|
2.1
|
Algeria
|
4.3
|
4.8
|
5.1
|
6.0
|
7.9
|
Bangladesh
|
1.3
|
1.5
|
1.6
|
1.6
|
1.6
|
Ukraine
|
2.0
|
1.8
|
1.7
|
1.8
|
3.1
|
Uzbekistan
|
2.8
|
4.4
|
5.6
|
5.7
|
5.6
|
|
|
|
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•
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we cannot assure you that our revenue will grow in the future, as competition puts pressure on our prices;
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•
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with the increasing pace of technological developments, including new digital technologies and regulatory changes impacting our industry, we cannot predict with certainty future business drivers and we cannot assure you that we will adapt to these changes at a competitive pace;
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•
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we may be forced to utilize more aggressive marketing schemes to retain existing customers and attract new ones that may include lower tariffs, handset subsidies or increased dealer commissions;
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•
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in more mature or saturated markets, such as Russia, there are limits on the extent to which we can continue to grow our customer base, and the continued growth in our business and results of operations will depend, in part, on our ability to extract greater revenue from our existing customers, including through the expansion of data services and the introduction of next generation technologies, which may prove difficult to accomplish;
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•
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we may be unable to deliver superior customer experience relative to our competitors or our competitors may reach customers more effectively through a better use of digital and physical distribution channels, which may negatively impact our revenue and market share;
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•
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as we expand the scope of our services, such as new networks, fixed-line residential and commercial broadband, digital financial and other services, we may encounter a greater number of competitors that provide similar services;
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•
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the liberalization of the regulations in certain markets in which we operate could greatly increase competition;
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•
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competitors may operate more cost effectively or have other competitive advantages such as greater financial resources, market presence and network coverage, stronger brand name recognition, higher customer loyalty and goodwill, and more control over domestic transmission lines;
|
•
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competitors, particularly current and former state-controlled telecommunications service providers, may receive preferential treatment from the regulatory authorities and benefit from the resources of their shareholders;
|
•
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current or future relationships among our competitors and third parties may restrict our access to critical systems and resources;
|
•
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new competitors or alliances among competitors could rapidly acquire significant market share, and we cannot assure you that we will be able to forge similar relationships;
|
•
|
reduced demand for our core services of voice, messaging and data and the development of services by application developers (commonly referred to as OTT players) could significantly impact our future profitability;
|
•
|
competitors may partner with OTT players to provide integrated customer experiences, and we may be unable to implement offers, products and technology to support our commercial partnerships; and
|
•
|
in markets where we do not have bundled offerings, our existing service offerings could become disadvantaged as compared to those offered by competitors who can offer bundled combinations of fixed-line, broadband, public Wi-Fi, TV and mobile.
|
•
|
difficulties in realizing expected synergies or integrating acquired companies, joint ventures, investments or other forms of strategic partnerships, personnel, products, property and technologies into our existing business;
|
•
|
higher or unforeseen costs of integration or capital expenditure;
|
•
|
difficulties relating to the acquired or formed companies’ or our partnerships’ compliance with telecommunications licenses and permissions, compliance with laws, regulations and contractual obligations, ability to obtain and maintain favorable interconnect terms, frequencies and numbering capacity and ability to protect our intellectual property;
|
•
|
adverse market reactions stemming from competitive and other pressures;
|
•
|
difficulties in retaining key employees of the merged or acquired business or strategic partnerships who are necessary to manage the relevant businesses;
|
•
|
difficulties in maintaining uniform standards, controls, procedures and policies throughout our businesses;
|
•
|
other risks related to loss of full control of a merged business, or not having the ability to fully control an acquired business, strategic partnership or investment;
|
•
|
risks that different geographic regions present, such as currency exchange risks, competition, regulatory, political, economic and social developments, which may, among other things, restrict our ability to maintain such strategic partnerships;
|
•
|
adverse customer reaction to the business combination or divestiture; and
|
•
|
increased liability and exposure to contingencies that we did not contemplate at the time of the merger, acquisition, strategic partnership or investment, including tax liabilities.
|
•
|
unauthorized usage of customer and business information performed by authorized users;
|
•
|
unauthorized access to customer and business information;
|
•
|
accidental alteration or destruction of information during processing due to human errors;
|
•
|
the spread of malicious software that compromises the confidentiality, integrity or availability of technology assets;
|
•
|
alteration of technology assets caused, accidentally or voluntarily, by employees or third parties;
|
•
|
accidental misuse of assets by users with possible degradation of both network services and available computing resources, such as denial-of-service;
|
•
|
malfunction of technology assets or services caused by obsolescence, wear or defects in design or manufacturing;
|
•
|
faults during standard or extraordinary maintenance procedures; and
|
•
|
unforeseen absence of key personnel.
|
•
|
restrictions or delays in obtaining additional numbering capacity, receiving new licenses and frequencies, receiving regulatory approvals for rolling out our networks in the regions for which we have licenses, receiving regulatory approvals for the use of /change to our frequency, receiving regulatory approvals of our tariffs plans and importing and certifying our equipment;
|
•
|
difficulty in complying with new or existing legislation and the terms of any notices or warnings received from the regulatory authorities in a timely manner;
|
•
|
adverse rulings by courts or government authorities resulting from a change in interpretation or inconsistent application of existing law;
|
•
|
significant additional costs and operational burdens that we are ordered to comply with on short notice;
|
•
|
delays in implementing our global strategies and business plans; and
|
•
|
a more challenging operating environment.
|
•
|
failure to act in good faith and in accordance with the group’s values, Code of Conduct, other policies and internal standards;
|
•
|
failure, real or perceived, to comply with applicable laws or regulations, or association, real or perceived, with illegal activity;
|
•
|
failures in corporate governance, management or systems;
|
•
|
association with controversial practices, customers, transactions, projects, countries or governments;
|
•
|
association with controversial business decisions, including but not limited to, those relating to existing or new products, delivery channels, promotions/advertising, acquisitions, representation, sourcing/supply chain relationships, locations, or treatment of financial transactions; and
|
•
|
association with poor employment or human rights practices.
|
•
|
the success of competitive products or technologies;
|
•
|
the issuance of new shares or the perception that such issuances could occur;
|
•
|
regulatory developments in the foreign countries where we operate;
|
•
|
developments or disputes concerning licenses or other proprietary rights;
|
•
|
the recruitment or departure of key personnel;
|
•
|
quarterly or annual variations in our financial results or those of companies that are perceived to be similar to us;
|
•
|
market conditions in the industries in which we compete and issuance of new or changed securities analysts’ reports or recommendations;
|
•
|
the failure of securities analysts to cover our shares or changes in financial estimates by analysts;
|
•
|
investor perception of our company and of the industry in which we compete; and
|
•
|
general economic, political and market conditions.
|
Name of significant subsidiary
|
Country of incorporation
|
Nature of subsidiary
|
Percentage of ownership interest
|
|
|
|
|
|
|
VEON Amsterdam B.V.
|
Netherlands
|
Holding
|
100
|
%
|
VEON Holdings B.V.
|
Netherlands
|
Holding
|
100
|
%
|
PJSC VimpelCom
|
Russia
|
Operating
|
100
|
%
|
JSC “Kyivstar”
|
Ukraine
|
Operating
|
100
|
%
|
LLP “KaR-Tel”
|
Kazakhstan
|
Operating
|
75
|
%
|
LLC “Unitel”
|
Uzbekistan
|
Operating
|
100
|
%
|
LLC “VEON Georgia”
|
Georgia
|
Operating
|
80
|
%
|
CJSC “VEON Armenia”
|
Armenia
|
Operating
|
100
|
%
|
LLC “Sky Mobile”
|
Kyrgyzstan
|
Operating
|
50
|
%
|
VEON Luxembourg Holdings S.à r.l.
|
Luxembourg
|
Holding
|
100
|
%
|
VEON Luxembourg Finance Holdings S.à r.l.
|
Luxembourg
|
Holding
|
100
|
%
|
VEON Luxembourg Finance S.A.
|
Luxembourg
|
Holding
|
100
|
%
|
Global Telecom Holding S.A.E
|
Egypt
|
Holding
|
58
|
%
|
Omnium Telecom Algérie S.p.A.*
|
Algeria
|
Holding
|
26
|
%
|
Optimum Telecom Algeria S.p.A.*
|
Algeria
|
Operating
|
26
|
%
|
Pakistan Mobile Communications Limited
|
Pakistan
|
Operating
|
49
|
%
|
Banglalink Digital Communications Limited
|
Bangladesh
|
Operating
|
58
|
%
|
Russia
|
We have interconnection agreements with mobile and fixed-line operators in Russia. During 2018, we had the following MTRs in Russia: average cost per minute of national traffic 0.9258 RUB (US$ 0.0148) and average price per minute of national traffic 0.9750 RUB (US$ 0.0155), which were broadly stable as compared to the 2017 and 2016 historical periods.
|
Pakistan
|
In the territories of Pakistan and Azad Jammu and Kashmir (“AJK”) and Gilgit-Baltistan, we have several interconnection agreements with mobile and fixed-line operators. Our MTRs in 2018, at PKR 0.9 (US$0.0074), were the same as in 2017 and 2016 historical periods.
|
Algeria
|
We have interconnection agreements with mobile, VoIP and fixed-line operators. For the 2016-2017 period, the evolution of MTRs was favorable to our business despite an asymmetry with our competitors. For the 2017-2018 period, our MTR remained stable and the asymmetry was reduced both in scope (with one competitor instead of two benefitting from the asymmetry) and in value (the gap between MTRs was reduced). Furthermore, in the reference interconnection offer approved for the 2018-2019 period and introduced on November 1, 2018, the ARPCE imposed symmetrical MTRs for all three operators both for voice and SMS (respectively 0.95 DA for voice and 1.5 for SMS). These new rates are aligned with the ones Djezzy had in previous years.
|
Bangladesh
|
We have interconnection agreements with ICX, IGW, mobile operators, IPTSP and fixed-line operators. For international incoming calls, MTR in 2018 was reduced to BDT 0.14 (US$0.0017) as compared to the 2017 and 2016 historical periods. The international termination rate was changed, effective February 22, 2018, after which the maximum and minimum termination rates became US$ 0.025/min and US$ 0.0175/min, respectively. Revenue share is done on the minimum termination rate while respective MNO gets 22.5% of that amount. The domestic termination rate has been changed to BDT 0.14/min or US$0.0017/min (terminating MNO gets BDT 0.10 (US$0.0012) and ICX gets BDT 0.04 (US$0.0005)), effective August 14, 2018.
|
Ukraine
|
We have interconnection agreements with mobile and fixed-line operators. The rates in 2018 for termination of national traffic to a mobile network and a fixed network on an intercity level remained at level of the 2017 at 0.15 UAH/min (US$0.0055/min) and decreased compared to 2016 0.23 UAH/min (US$0.0090/min) historical periods.
|
Uzbekistan
|
We have interconnection agreements with mobile and fixed-line operators. Historically, MTR with state operator Uzmobile and small CDMA operator Perfectum was UZS 0.05, while MTR between other operators (UMS, Beeline, Ucell) was US$0.01. On September 5, 2017, the State Committee of Uzbekistan on Privatization, Demonopolization and Development of Competition (“State Committee of Uzbekistan”) issued an injunction requiring Unitel LLC to implement equal mobile termination rates for all national operators. Unitel LLC appealed this injunction and on January 15, 2018, the appellate division of the Tashkent administrative court ruled in favor of the State Committee of Uzbekistan. During 2018, Unitel LLC was engaged in discussions with the State Committee of Uzbekistan, other relevant regulators and national operators regarding the implementation of the injunction. Unitel LLC was also involved in litigation with UMS and Ucell in relation to unpaid mobile termination rates The courts supported Ucell and UMS, and through the course of 2018, MTR in the amount of UZS 0.05 was established by court decisions, applicable to UMS from September 1, 2017 (retroactively) and applicable to Ucell from September 11, 2018.
|
Mobile Service Description
|
Russia
|
Pakistan
|
Algeria
|
Bangladesh
|
Ukraine
|
Uzbekistan
|
Others
(3)
|
Value added and call completion services
(1)
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
National and international roaming services
(2)
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Wireless Internet access
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
(4)
|
Yes
|
Yes
|
Mobile financial services
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
(5)
|
Yes
|
No/Yes
(7)
|
Mobile bundles
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
(6)
|
(1)
|
Value added services include messaging services, content/infotainment services, data access services, location based services, media, and content delivery channels.
|
(2)
|
Access to both national and international roaming services allows our customers and customers of other mobile operators to receive and make international, local and long-distance calls while outside of their home network.
|
(3)
|
For a description of the mobile services we offer in Kazakhstan, Kyrgyzstan, Armenia, and Georgia, see “
—Mobile Business in Others
.”
|
(4)
|
Includes 4G
|
(5)
|
Includes Smart Money (payment method for services via mobile phone)
|
(6)
|
Reflects mobile bundles provided in Armenia.
|
(7)
|
Reflects services offered in Armenia.
|
Voice
|
•
airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad
|
Internet and Data Access
|
•
GPRS/EDGE; 3G/HSPA; 4G/LTE; special wireless “Plug&Play” USB modems
|
Roaming
|
•
active roaming agreements with 704 GSM networks in 215 countries
•
GPRS roaming with 515 networks in 187 countries
•
4G/LTE roaming with 245 networks in 117 countries
•
roaming agreements generally state that the host operator bills PJSC VimpelCom for roaming services; PJSC VimpelCom pays these charges and then bills the customer for these services on a monthly basis
|
VAS
|
•
caller-ID; voicemail; call forwarding; conference calling; call blocking and call waiting
|
Messaging
|
•
SMS (consumer and corporate); MMS and voice messaging (allows customers to send pictures, audio and video to mobile phones and to e-mails); mobile instant messaging
|
Content/infotainment
|
•
voice services (including referral services); content downloadable to telephone (including music, pictures, games and video); RBT; mobile cloud solutions; geo-positioning and compass service for fleet and assets management; and M2M control center solution for all M2M/IoT verticals
|
Mobile financial services
|
•
Mobile payment; banking card; trusted payment; banks notification; and mobile insurance
|
Services
|
License
|
Expiration
|
Super-regional GSM (GSM900, GSM1800, GSM900/1800, UMTS 900 and 4G/LTE 1800 standards)
|
Moscow, Central and Central Black Earth, North Caucasus, North-West, Siberia, Ural and Volga
|
September 2022- April 2023 (various dates)
|
GSM
(1)
(GSM900, GSM1800, GSM900/1800 and 4G/LTE 1800 standards)
|
Regions in the Far East super-region of Russia
|
2019 - 2025 (various dates)
|
Orenburg region
|
June 2020
|
|
3G
(2)
(UMTS/LTE)
|
Nationwide
|
May 2022
|
4G
(3)
(LTE)
|
Nationwide
(4)
|
July 2022
|
4G/LTE 2600
|
32 districts of Russia
|
April 2026
|
(1)
|
In total, our GSM licenses cover approximately 97% of Russia’s population.
|
(2)
|
PJSC VimpelCom holds one of three 3G licenses in Russia.
|
(3)
|
In July 2012, PJSC VimpelCom was awarded a mobile license, a data transmission license, a voice transmission license and a telematic license for the provision of 4G/LTE services in Russia. These licenses allow PJSC VimpelCom to provide services using radio-electronic devices in Russia via networks that use 4G/LTE standard equipment within any of the following frequency bands: 735-742.5/776-783.5 MHz; 813.5-821/854.5-862 MHz; and 2550-2560/2670-2680 MHz. Certain channels allocated to us in accordance with the licenses have restrictions on their use. To remove restrictions, we have to perform organizational technical measure field tests. The rollout of the 4G/LTE network is using a phased approach based on a pre-defined schedule pursuant to the requirements of the license.
|
(4)
|
This includes 83 regions of Russia, except for Republic of Crimea and Sevastopol.
|
LICENSE FEES
|
PJSC VimpelCom must pay an annual fee for the use of radio frequency spectrum. These fees were RUB 5,508 million and RUB 4,288 million for the years ended December 31, 2018 and 2017, respectively. Under Federal Law No. 126 FZ “On Communication” and license terms, PJSC VimpelCom is required to make universal service fund contributions in the amount equal to 1.2% of corporate revenues from provided communications services. Universal service fund contributions were RUB 2,404 million and RUB 2,369 million for the years ended December 31, 2018 and 2017, respectively. PJSC VimpelCom is also subject to certain other license fees on a case-by-case basis.
|
Operator
|
Customers in Russia
(in millions) |
MTS
|
71.2
|
MegaFon
|
68.6
|
PJSC VimpelCom
|
52.7
|
Tele2
|
42.0
|
Voice
|
•
airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad
|
Internet and data access
|
•
GPRS, EDGE, 3G and 4G/LTE
|
Roaming
|
•
active roaming agreements with 315 GSM networks in 155 countries
•
GPRS roaming with 235 networks in 116 countries
•
CAMEL roaming through 109 networks in 67 countries
•
roaming agreements generally state that the host operator bills PMCL for the roaming services; PMCL pays these charges and then bills the customer for these services on a monthly basis
|
VAS
|
•
caller-ID; voicemail; call forwarding; conference calling; call blocking and call waiting
|
Messaging
|
•
SMS, MMS (which allows customers to send pictures, audio and video to mobile phones and to e-mail), and mobile instant messaging
|
Content/infotainment
|
•
music; live audio streaming; infotainment services for religious, sports, comedy, quotes, news, weather and other content; RBT and IVR Chat
|
Mobile financial services
|
•
mobile payment; banking card; trusted payment; banks notification; and mobile insurance
|
(1)
|
Warid (now merged with Jazz) acquired a 15-year technology neutral license in 2004 for US$291 million. US$145.5 million was paid upfront with the remainder paid in ten equal annual installments starting with a four-year grace period, with the last payment made May 2018. The same 2G license was amended in December 2014 by PTA to allow Warid to provide 4G/LTE services in Pakistan. Additionally, the National Accountability Bureau is currently conducting an investigation into certain former PTA and other officials, and have requested information from Jazz concerning Warid’s 2014 license amendment. This license is up for renewal in May 2019 and subject to the successful completion of the renewal process under a forthcoming policy directive and license renewal framework to be provided by the PTA.
|
(2)
|
In addition, PMCL and its subsidiaries have other licenses, including LDI, WLL, local loop licenses, licenses to provide non-voice communication services, and licenses to provide class VAS in Pakistan, AJK and Gilgit-Baltistan. The licensees must also pay annual fees (0.5%) to the PTA and make universal service fund contributions (1.5%) and/or research and development fund contributions (0.5%), as applicable, in a total amount equal to a percentage of the licensees’ annual gross revenues (less certain allowed deductions) for such services.
|
(3)
|
In 2007, PMCL renewed its 2G license for a further term of 15 years. As of December 31, 2018, PMCL had a balance of US$14.5 million to be paid to the PTA for the renewal of its 2G license. Such amount is payable in yearly installments of US$14.5 million, payable in December of each year, until December 2019. PMCL has two 15-year licenses for provision of cellular mobile 2G services in AJK and Gilgit-Baltistan.
|
LICENSE FEES
|
Under the terms of its 2G, 3G and 4G/LTE licenses, as well as its license for services in AJK and Gilgit-Baltistan, PMCL must pay annual fees to the PTA and make universal service fund contributions and/or research and development fund contributions, as applicable (not all of the foregoing are applicable to all licenses), in a total amount equal to 2.5% of PMCL’s annual gross revenues (less certain allowed deductions) for such services, supplemental to spectrum administrative fees.
PMCL’s total license fees (annual license fees plus revenue sharing) in Pakistan (excluding the yearly installments noted above) were US$26.9 million, US$26.7 million, and US$27.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. PMCL’s total spectrum administrative fee payments, including for Warid’s spectrum, were US$1.9 million, US$1.5 million, and US$1.0 million for the years ended December 31, 2018, 2017, and 2016, respectively.
|
Operator
|
Customers in
Pakistan (in millions) |
PMCL (“Jazz”)
|
56.2
|
Telenor Pakistan
|
43.8
|
Zong
|
32.4
|
Ufone
|
21.6
|
Voice
|
•
airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad
|
Internet and data access
|
•
GPRS, EDGE, 3G and 4G/LTE technology
•
data services available via pay-per-use and via a bundle
|
Roaming
|
•
active roaming agreements with 457 GSM networks in 158 countries
•
GPRS roaming with 314 networks in 119 countries
•
3G roaming with 247 networks in 111 countries
•
4G/LTE roaming with 48 networks in 27 countries.
•
roaming agreements generally state that the host operator bills OTA for roaming services; OTA pays these charges and then bills the customer for these services on a monthly basis
|
VAS
|
•
caller-ID; call forwarding; conference calling; call blocking; and call waiting
|
Messaging
|
•
SMS, MMS (which allows customers to send pictures, audio and video to mobile phones and to e-mail), and mobile instant messaging
|
Content/infotainment
|
•
mobile message notification service offering packages with various types of content (sports, news, food, culture) (SMS SCOOP); ring back tunes (RBT); e-learning for customers (iMadrassa); co-branding with VTC service app (Yassir)
|
Mobile financial services
|
•
peer-to-peer credit transfer and credit loan
|
(1)
|
In 2001, OTA was awarded a 15-year license to operate a 2G telecommunications network for an aggregate fee of approximately US$737 million. The license expired in 2016 and was renewed for a five-year period at no additional cost (Decree 17-195 of June 11, 2017).
|
(2)
|
In 2003, OTA acquired a VSAT data-voice license for an aggregate fee of US$2.05 million and renewed the license in 2014 for an additional period of five years, at no additional cost. This license expires in April 2019 and the renewal process is currently in progress.
|
(3)
|
In 2013, OTA was awarded a 15-year license to operate a 3G telecommunications network for an aggregate fee of approximately US$38 million, which was paid in full in 2013. Under the terms of its 3G license, OTA is required to pay an additional annual revenue sharing fee of 1% based on 3G revenues less interconnection costs.
|
(4)
|
Under the terms of its 4G/LTE license, Optimum is required to pay an additional annual revenue sharing fee of 1% based on 4G/LTE revenues less interconnection costs.
|
LICENSE FEES
|
Under the terms of its 2G, 3G, 4G/LTE and VSAT licenses, OTA is required to pay contributions for the universal service and environmental protection fund (3% of revenues less interconnection costs); management of the numbering plan (0.2% of revenues less interconnection costs); research, training and standardization (0.3% of revenues less interconnection costs) and license fees for 3G and 4G licenses (1% of revenue less interconnection costs).
OTA’s total license fees in Algeria were US$58.7 million, US$61.8 million, and US$62.1 million for the years ended December 31, 2018, 2017 and 2016, respectively, of which US$28.1 million, US$28.1 million, and US$25.9 million, respectively, was related to spectrum charges, and US$30.6 million, US$33.7 million, and US$36.2 million, respectively, was related mainly to contributions made to the Universal Services of Telecommunications fund and to the number plan management over the same periods.
|
Operator
|
Customers in
Algeria (in millions) |
Mobilis
|
21.1
|
Optimum (“Djezzy”)
|
15.8
|
Ooredoo
|
13.9
|
Voice
|
•
airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad
|
Internet and data access
|
•
GPRS, EDGE, 3G and 4G/LTE technology
•
data services provided via pay-per-use and via a bundle
|
Roaming
|
•
active roaming agreements with 455 GSM networks in 165 countries
•
GPRS roaming with 350 networks in 121 countries
•
maritime roaming and in-flight roaming with Emirates Airlines and Malaysian Airlines
•
roaming agreements generally state that the host operator bills BDCL for roaming services; BDCL pays these charges and then bills the customer for these services on a monthly basis
|
VAS
|
•
call forwarding; conference calling; call blocking; call waiting; caller line identification presentation; call me back; and voicemail missed call alert
|
Messaging
|
•
SMS, MMS (which allows customers to send pictures, audio and video to mobile phones and to e-mail) and mobile instant messaging
|
Content/infotainment
|
•
news alert service; sports related content; job alerts; music streaming; mobile TV; content download; religious content; RBT; and agricultural helpline
|
Mobile financial services
|
•
mobile-based utility bill payments; train ticketing; international remittance disbursements
•
Unstructured Supplementary Service Data, SMS and distribution network to Bangladesh Post Office for their mobile money order service
|
Services
|
License
|
Expiration
|
2G
(1)
|
Nationwide
|
2026
|
3G
(2)
|
Nationwide
|
2028
|
4G/LTE
(3)
|
Nationwide
|
2033
|
(1)
|
In November 1996, BDCL was awarded a 15-year GSM license to establish, operate and maintain a digital mobile telephone network to provide 2G services throughout Bangladesh. The license was renewed in November 2011 for a further 15-year term.
|
(2)
|
In September 19, 2013, following a competitive auction process, BDCL was awarded a 15-year license to use 5 MHz of technology neutral spectrum in 2100MHz band and was also awarded a 3G license, for which it paid a total cost of BDT 8,677.4 million (inclusive of 5% VAT), including both a license acquisition fee and a spectrum assignment fee.
|
(3)
|
On February 13, 2018, BDCL acquired a 4G/LTE license for US$1.2 million. BDCL also acquired the right to use 10.6MHz technology neutral of spectrum in 1800MHz (5.6) and 2100MHz (5) for US$324 million including VAT (33.34% of the fee has been considered as tariff value for 15% VAT). Banglalink also converted 15MHz of existing 2G spectrum for the remaining tenure of it for US$ 36.75 million.
|
LICENSE FEES
|
Under the terms of its 2G, 3G and 4G/LTE mobile licenses, BDCL is required to pay to the Bangladesh Telecommunication Regulatory Commission (i) an annual license fee of BDT 50.0 million (US$0.6 million as of December 31, 2018) for each mobile license; (ii) 5.5% of BDCL’s annual audited gross revenue, as adjusted pursuant to the applicable guidelines; and (iii) 1% of its annual audited gross revenue (payable to Bangladesh’s social obligation fund), as adjusted pursuant to the applicable guidelines. The annual license fees are payable in advance of each year, and the annual revenue sharing fees are each payable on a quarterly basis and reconciled at the end of each year.
BDCL’s total license fees (annual license fees plus revenue sharing) in Bangladesh were equivalent to US$46.4, US$34.7 million, and US$41.7 million for the years ended December 31, 2018, 2017 and 2016, respectively.
In addition to license fees, BDCL pays annual spectrum charges to the BTRC, calculated according to the size of BDCL’s network, its frequencies, the number of its customers and its bandwidth. The annual spectrum charges are payable on a quarterly basis and reconciled at the end of each year. BDCL’s annual spectrum charges were equivalent to US$11.0 million, US$9.0 million, and US$9.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.
|
Operator
|
Customers in
Bangladesh (in millions) |
Grameenphone
|
72.7
|
Robi Axiata
|
46.9
|
BDCL (“banglalink”)
|
32.3
|
Teletalk
|
3.9
|
Voice
|
•
airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad
|
Internet and data access
|
•
GPRS/EDGE, 3G and 4G/LTE
|
Roaming
|
•
active roaming agreements for 472 networks in 189 countries
•
GPRS roaming on 411 networks in 167 countries
•
3G roaming on 313 networks in 133 countries
•
4G/LTE roaming on 24 networks in 24 countries
|
Messaging
|
• SMS; MMS; voice messaging and SMS services (including information services such as news, weather, entertainment chats and friend finder)
|
Content/infotainment
|
•
voice services (including referral services); content downloadable to telephone (including music, pictures, games and video); and RBT
|
Mobile financial services
|
•
mobile payment; banking card; trusted payment; banks notification; mobile insurance; and Smart Money (payment method for services via mobile phone)
|
(1)
|
Licenses were received on October 5, 2011 for a term of 15 years each.
|
(2)
|
The license was issued on April 1, 2015 for a term of 15 years. Services provided in the 2100 MHz band. We have also obtained a range of national and regional radio frequency licenses for the use of radio frequency resources in the referred standards and in specified standards— radio-relay and WiMax. Our network coverage is (except the Anti-Terrorist Operation zone where Kyivstar is not able to use and control its network): 91.46% of the 2G network; 18.7% of the 3G network; 9,864 localities covered by 2G network; and 25,484 localities covered by 3G network.
|
(3)
|
Kyivstar secured 4G/LTE licenses and spectrum in two separate transactions in 2018. Following the auction held on January 31, 2018, Kyivstar acquired 15 MHz (paired) of contiguous frequency in the 2600 MHz band for UAH 0.9 billion (US$32 million as of December 31, 2017). In addition, on March 6, 2018, Kyivstar secured the following spectrum through auction in the 1800MHz band: 25MHz (paired) for UAH 1.325 billion (US$47 million as of December 31, 2017) and two lots of 5MHz (paired) for UAH 1.512 billion (US$54 million as of December 31, 2017).
|
LICENSE FEES
|
In 2018, Kyivstar PJSC made spectrum and license payments as follows: 4G licenses - UAH 3.75 billion (paid to State Budget; annual fee for the use of radio frequency spectrum - UAH 1.02 billion (paid to State Budget); final stage of 3G spectrum conversion - UAH 231.7 million (paid to special users: Ministry of Defense of Ukraine, State Service for Special Communication and Information); EMC monitoring - UAH 154 million (paid to Ukrainian State Center of Radio Frequencies); and prolongation of existing 15 licenses on use of radio frequency spectrum - UAH 49.1 million (paid to State Budget).
|
Operator
|
Customers
(in millions) |
Kyivstar
|
26.3
|
“VF Ukraine” JSC
|
19.5
|
“lifecell” LLC
|
7.3
|
Voice
|
•
airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad
•
GSM service is provided in 2G and 3G networks; call duration for one session is limited for 40 minutes
|
Internet and data access
|
•
GPRS/EDGE/3G/4G/LTE networks
|
Roaming
|
•
active roaming agreements with 485 GSM networks in 186 countries
•
GPRS roaming with 386 networks in 164 countries
•
CAMEL roaming through 272 networks in 120 countries
•
roaming agreements generally state that the host operator bills us for roaming services; we pay these charges and then bill the customer for these services on a monthly basis
|
VAS
|
•
caller-ID; voicemail; call forwarding; conference calling; call blocking; and call waiting
|
Messaging
|
•
SMS, MMS, voice messaging and SMS services (including information services such as news, weather, entertainment chats and friend finder)
|
Content/infotainment
|
•
voice services (including referral services), content downloadable to telephone (including music, pictures, games and video), and RBT
|
Mobile financial services
|
•
card-to-card transfer; bank card payments; trusted payment; our own payment system “Beepul”; mobile transfer; loyalty program
|
Services
|
License
|
Expiration
|
GSM900/1800
(1)
|
Nationwide
|
August 7, 2031
|
3G
(1)
|
Nationwide
|
August 7, 2031
|
4G/LTE
(1)
|
Nationwide
|
August 7, 2031
|
International Communication Services License
|
Nationwide
|
2026
|
Data Transfer
|
Nationwide
|
2019/2020
(2)
|
Inter-city communication services license
|
Nationwide
|
2026
|
TV broadcasting
|
Nationwide
|
2023
|
(1)
|
Requires annual license fee payments.
|
(2)
|
License for exploitation of data transfer network expires in August 2019, and license for design, construction and service provision of data transfer network expires in 2020.
|
Operator
|
Customers
(in millions) |
LLC "Unitel"
|
9.1
|
Ucell
|
7.3
|
UMS
|
2.6
|
UzMobile (Uzbektelecom)
|
2.9
|
Perfectum
|
0.4
|
Payment Plan
|
Kazakhstan
|
Kyrgyzstan
|
Armenia
|
Georgia
|
Prepaid
|
95.2%
|
95.7%
|
88.8%
|
100%
|
Postpaid
|
4.8%
|
4.3%
|
11.2%
|
0%
|
(1)
|
The license is valid for both fixed/mobile operations countrywide
|
|
2018
(millions of customers)
|
Mobile Penetration
|
2017
(millions of customers)
|
Mobile Penetration
|
|||
Kazakhstan
|
24.4
|
132.6%
|
|
25.5
|
|
140.2
|
%
|
Kyrgyzstan
|
7.6
|
123.2%
|
|
7.4
|
|
121.5
|
%
|
Armenia
|
3.7
|
126.8
%
|
|
3.6
|
|
123.6
|
%
|
Georgia
|
5.2
|
133.7
|
%
|
5.6
|
|
143
|
%
|
Services
|
•
network access and hardware and software solutions, including configuration and maintenance, SaaS and an integrated managed service
•
local access services by connecting the customers’ premises to our own fiber network, international and domestic long-distance services and VSAT services to customers located in remote areas
•
internet access to both corporate and consumer customers through backbone networks and private line channels
•
IP address services, the ability to rent leased channels with different high-speed capacities and remote access to corporate information, databases and applications.
•
managed Wi-Fi networks based on IEEE 802.11b/g/n/ac wireless technology
•
virtual PSTN number, xDSL services, session initiation protocol (SIP) connection, financial information services, data center services, such as co-location, web hosting, audio conference and domain registration services
•
IPTV services (1.24 million customers), virtual PBX, certain Microsoft Office packages (including SaaS), web-videoconferencing services and sale, rental and technical support for telecommunications equipment
•
Pay TV (cable TV) (29,975 customers)
•
FMC product services (1,103,329 customers)
•
carrier and operator services, including voice, internet and data transmission over our own networks and roaming services
•
MPLS-based IP VPN, local, domestic and international private lines, equipment and equipment maintenance (under interconnection agreements with international global data network operators
•
high-speed domestic and international channels to international and Russian operators to sell excess backbone network capacity
|
Coverage
|
•
all major population centers
|
Operations
|
•
operate a number of competitive local exchange carriers that operate fully digital overlay networks in a number of major Russian cities
|
Customers
|
•
large multinational corporate groups
•
government clients
•
SMEs
•
high-end residential buildings in major cities
|
Services
|
License
|
Expiration
|
Local Communications Services
|
Krasnodar
|
December 31, 2019
|
Data Transmission Services
|
Moscow
|
April 17, 2019
|
St.Petersburg
|
April 17, 2019
|
|
International and National Communications Services license
|
Russian Federation
|
December 13, 2019
|
Services
|
•
data, voice and VAS services over a wide range of access media, covering the major cities
•
data services being provided to the enterprise customers include: dedicated internet access, VPN (virtual private networking), leased lines & fixed telephony
•
domestic and international leased lines, domestic and international MPLS, and IP transit services through our access network
1
•
high-speed internet access (including fiber optic lines)
•
telephony
•
telephone communication services, based on modern digital fiber optic network
•
dedicated lines of data transmission
•
dedicated line access and fixed-line mobile convergence
|
Coverage
|
•
wired and wireless access services include FTTx, PMP (point to multipoint), point-to-point radios, VSAT, and WiMax connecting more than 150 locations across Pakistan
|
Operations
|
•
long-haul fiber optic network covers more than 9,000 kilometers and, supplemented by wired and wireless networks
|
Customers
|
•
enterprise customers
•
domestic and international carriers
•
corporate and individual business customers
|
Internet Services
|
||
•
PTCL
•
Wateen
|
•
Wi-Tribe
•
Qubee
|
•
World Call
|
Carrier and Operator Services
|
||
•
PTCL
•
Wateen
|
•
Wi-Tribe
•
Telenor Pakistan
|
•
World Call
|
Fixed-line Broadband
|
||
•
Pakistan Telecommunication Company Limited, or “PTCL”
•
Multinet
•
Wateen
|
•
Cybernet
•
Nexlinx
•
Nayatel
|
•
Supernet
|
Services
|
License
|
Expiration
|
Long Distance & International (“LDI”)
|
Nationwide and International
|
2024
|
Local Loop (“LL”) (fixed line and/or wireless local loop with limited mobility)
|
Regional
|
2024
|
Services
|
•
data
•
broadband services
•
corporate internet access
•
Fixed-line: VPN services, data center, contact center, voice, fixed-line telephony and a number of VAS
•
Internet access services: ADSL, symmetrical and Ethernet interfaces at speeds ranging from 256 kilobytes per second to 10 gigabytes per second
•
FMC
•
FTTB services tariffs for fixed-line broadband internet access targeted at different customer segments
|
Coverage
|
•
provided services in 118 cities in Ukraine (excluding cities in Crimea and the ATO zone)
•
engaged in a project to install FTTB for fixed-line broadband services in approximately 41,400 residential buildings in 118 cities, providing over 56,500 access points
|
Voice Services
(
1)
,
Data Services
(
2)
and Voice Services
|
||
•
Ukrtelecom
|
•
Datagroup
|
•
Farlep-Invest (Vega)
|
Retail Internet Services
|
||
•
Ukrtelecom
|
•
Volia
|
|
(1)
|
Voice services market for business customers only.
|
(2)
|
Data services for corporate market only.
|
Services
|
License
|
Expiration
|
International Communication
|
Nationwide
|
August 18, 2019
|
Long-distance Communication
|
Nationwide
|
August 18, 2019
|
Local Communication
|
Nationwide
|
August 29, 2020
|
Services
(1)
|
•
fixed-line services, such as network access
•
internet and hardware and software solutions, including configuration and maintenance
•
high-speed internet access (including fiber optic lines and xDSL)
•
telephony
•
long distance and international long-distance telephony on prepaid cards
•
telephone communication services, through our copper cable network and our modern digital fiber optic network
•
dedicated lines of data transmission
•
dedicated line access and fixed-line mobile convergence
|
Fixed-line Services
|
|
•
Uztelecom
•
East Telecom
•
Sarkor Telecom
|
•
Sharq Telecom
•
TPS
•
EVO
|
Services
|
License
|
Expiration
|
Fixed-line
|
Nationwide
|
2021
|
Data
|
Nationwide
|
2021
|
Long-distance
|
Nationwide
|
2029
|
International
|
Nationwide
|
2029
|
Services
|
•
PSTN-fixed telephony
•
internet, data transmission and network access
•
domestic and international voice termination
•
TCP/IP international transit traffic services
•
local telephony services
•
international and domestic long distance services
•
broadband access services (including ADSL, VDSL, LTE 450 and fiber optic lines)
•
VoIP services
•
SIP telephony
•
wholesale services, such as leased line service and wholesale broadband services
•
wholesale international voice termination and origination services for other local and international operators and service providers
•
fixed-line broadband internet access based on ADSL and FTTB technologies
•
dial-up services and wireless internet access based on CDMA technology
•
FMC bundles, offering fixed internet, fixed TV and mobile services, and fixed voice services
|
Fixed Internet and Cable TV Services
|
•
U!Com
•
Rostelcom
|
Services
(
1)
|
•
high-speed internet access
•
local, long distance and international voice services over IP
•
local, intercity and international leased channels and IP VPN services
•
cloud services
•
integrated corporate networks (including integrated network voice, data and other services)
•
FMC product, including mobile bundles and video content from Amediateka
•
ADSL, FTTB, Wi-Fi, WiMax, VSAT
|
Internet, Data Transmission and Traffic Termination Services
|
|
• Kazakhtelecom
• KazTransCom
|
• TransTelecom (owned by Kazakhstan Temir Zholy, the national railway company)
• Astel (a leader in the provision of satellite services)
|
Services
|
License
|
Expiration
|
Long-distance
|
Nationwide
|
Unlimited
|
•
|
Stakeholders: By engaging with our stakeholders, we understand their concerns and expectations, and we follow a number of stakeholder defined standards and guidelines. Our reporting meets Global Reporting Initiative standards at the “core” level, follows the guidance in the AA1000 Accountability Principles Standard and is influenced by International Integrated Reporting Council guidance. Several of our markets have adopted International Organization for Standardization standards, and the social accountability standard;
|
•
|
Materiality: Using pre-defined criteria, we prioritize globally as well as logically by assessing the materiality of individual opportunities against our strategy and their importance to our stakeholders; and
|
•
|
Accountability: We are accountable to our stakeholders and customers through the publication of our annual Sustainability Report. We also share periodic updates with internal stakeholders, including members of management, to inform them about key corporate responsibility-related developments and our corporate responsibility performance. As part of our reporting cycle, we assess the effectiveness of our corporate responsibility strategy and revise it when needed.
|
•
|
Telenor Global Services AS, a Norwegian subsidiary, has an interconnection agreement with Telecommunication Company of Iran, the parent company of Mobile Telecommunication Company of Iran (“MCI”). During 2018, Telenor Global Services recorded net expenses of US$81,813.30 related to this interconnection agreement.
|
•
|
Telenor Norge AS, a Norwegian subsidiary, has roaming agreements with MCI, MTN Irancell and Rightel. During 2018, Telenor Norge AS recorded net revenue related to these roaming agreements of €3,749.00 to MCI, net expenses of €2,704.00 to MTN Irancell and net expenses of €2,366.00 to Rightel.
|
•
|
Telenor Sverige AB, a Swedish subsidiary, has roaming agreements with MCI and MTN Irancell and Rightel. During 2018, Telenor Sverige AB recorded net expense related to its roaming agreement with MCI of €768.84, net expenses related to its roaming agreement with MTN Irancell of €23,890.05 and net expenses related to its roaming agreement with Rightel €11,770.68.
|
•
|
Telenor Pakistan (Private) Ltd., a Pakistani subsidiary, has roaming agreements with MCI and MTN Irancell. During 2018, Telenor Pakistan (Private) Ltd. recorded net expenses of €428.91 related to the roaming agreement with MCI and net revenue of US$72,455.31 related to the roaming agreement with MTN Irancell.
|
•
|
Telenor A/S, a Danish subsidiary, has roaming agreements with MCI, MTN Irancell and Rightel. During 2018, Telenor A/S recorded net revenue related to its roaming agreement with MCI of €38,768.00, net expenses related to its roaming agreement with MTN Irancell of €44,598.00 and net expenses related to Rightel of €8,133.00.
|
•
|
Telenor d.o.o. Beograd Omladinskih brigada 90, a Serbian subsidiary, has a roaming agreement with MCI. During 2018, Telenor d.o.o. Beograd Omladinskih brigada 90 recorded net revenues of €11,040.15 related to this roaming agreement.
|
•
|
Telenor Hungary Plc, a Hungarian subsidiary, has a roaming agreement with MCI. During 2018, Telenor Hungary Plc, recorded net revenues of €3,265.63 related to this roaming agreement.
|
•
|
Telenor Bulgaria EAD, a Bulgarian subsidiary, has a roaming agreement with MCI. During 2018, Telenor Bulgaria EAD recorded net revenues of €89.60 related to this roaming agreement.
|
•
|
DiGi.Com Bhd, a Malaysian subsidiary, has a roaming agreement with MCI, MTN Irancell and Rightel. During 2018, DiGi.Com Bhd recorded net revenues of €8,290.00 related to MCI, net expenses of US$8,874.76 related to MTN Irancell and net revenues of US$1.64 related to Rightel.
|
•
|
Total Access Communications Plc, a Thai subsidiary, had no traffic with Iran operators during 2018.
|
|
Year ended
December 31,
|
||
In millions of U.S. dollars
|
2018
|
2017*
|
2016*
|
|
|
|
|
Consolidated income statement data:
|
|
|
|
Service revenue
|
8,526
|
9,105
|
8,553
|
Sale of equipment and accessories
|
427
|
244
|
184
|
Other revenue
|
133
|
125
|
148
|
Total operating revenue
|
9,086
|
9,474
|
8,885
|
|
|
|
|
Service costs
|
(1,701)
|
(1,879)
|
(1,769)
|
Cost of equipment and accessories
|
(415)
|
(260)
|
(216)
|
Selling, general and administrative expenses
|
(3,697)
|
(3,748)
|
(3,668)
|
Depreciation
|
(1,339)
|
(1,491)
|
(1,439)
|
Amortization
|
(495)
|
(537)
|
(497)
|
Impairment (loss) / reversal
|
(858)
|
(66)
|
(192)
|
Gain / (loss) on disposals of non-current assets
|
(57)
|
(26)
|
(20)
|
Gain / (loss) on disposals of subsidiaries
|
30
|
-
|
-
|
Total operating expenses
|
(8,532)
|
(8,007)
|
(7,801)
|
Operating profit
|
554
|
1,467
|
1,084
|
|
|
|
|
Finance costs
|
(816)
|
(935)
|
(830)
|
Finance income
|
67
|
95
|
69
|
Other non-operating losses
|
(68)
|
(97)
|
(82)
|
Shares of loss of joint ventures and associates
|
-
|
(22)
|
(11)
|
Impairment of joint ventures and associates
|
-
|
(110)
|
(99)
|
Net foreign exchange gain
|
15
|
(70)
|
157
|
Profit / (loss) before tax
|
(248)
|
328
|
288
|
Income tax expense
|
(369)
|
(472)
|
(635)
|
Profit / (loss) from continuing operations
|
(617)
|
(144)
|
(347)
|
Profit/(loss) after tax for the period from discontinued operations
|
(300)
|
(390)
|
979
|
Gain / (loss) on disposal of discontinued operations
|
1,279
|
—
|
1,788
|
Profit / (loss) after tax from discontinued operations
|
979
|
(390)
|
2,767
|
Profit / (loss) for the period
|
362
|
(534)
|
2,420
|
|
|
|
|
Attributable to:
|
|
|
|
The owners of the parent (continuing operations)
|
(397)
|
(115)
|
(439)
|
The owners of the parent (discontinued operations)
|
979
|
(390)
|
2,767
|
Non-controlling interest
|
(220)
|
(29)
|
92
|
|
362
|
(534)
|
2,420
|
|
Year ended December 31,
|
||
In millions of U.S. dollars, includes intersegment revenue
|
2018
|
2017
|
2016
|
|
|
|
|
Russia
|
4,654
|
4,729
|
4,097
|
Pakistan
|
1,494
|
1,525
|
1,295
|
Algeria
|
813
|
915
|
1,040
|
Bangladesh
|
521
|
574
|
621
|
Ukraine
|
688
|
622
|
586
|
Uzbekistan
|
315
|
513
|
663
|
Others
|
601
|
596
|
583
|
|
|
|
|
Total operating revenue
|
9,086
|
9,474
|
8,885
|
|
Year ended
December 31,
|
||
In millions of U.S. dollars
|
2018
|
2017
|
2016
|
|
|
|
|
Russia
|
1,677
|
1,788
|
1,574
|
Pakistan
|
714
|
703
|
507
|
Algeria
|
363
|
426
|
547
|
Bangladesh
|
183
|
233
|
267
|
Ukraine
|
387
|
347
|
306
|
Uzbekistan
|
136
|
261
|
395
|
HQ
|
(357)
|
(325)
|
(421)
|
Others
|
170
|
154
|
57
|
Total Adjusted EBITDA
|
3,273
|
3,587
|
3,232
|
|
Year ended December 31,
|
|||||||||
In millions of U.S. dollars (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
4,654
|
|
4,729
|
|
4,097
|
|
-2
|
%
|
15
|
%
|
Mobile service revenue
|
3,679
|
|
3,843
|
|
3,276
|
|
-4
|
%
|
17
|
%
|
- of which fixed-mobile convergence (“FMC”)
|
126
|
|
87
|
|
23
|
|
46
|
%
|
271
|
%
|
- of which mobile data
|
996
|
|
1,012
|
|
778
|
|
-2
|
%
|
30
|
%
|
Fixed-line service revenue
|
566
|
|
673
|
|
665
|
|
-16
|
%
|
1
|
%
|
Sales of equipment, accessories and other
|
410
|
|
213
|
|
156
|
|
92
|
%
|
37
|
%
|
Operating expenses
|
2,977
|
|
2,941
|
|
2,523
|
|
1
|
%
|
17
|
%
|
Adjusted EBITDA
|
1,677
|
|
1,788
|
|
1,574
|
|
-6
|
%
|
14
|
%
|
Adjusted EBITDA margin
|
36.0
|
%
|
37.8
|
%
|
38.4
|
%
|
-1.8pp
|
|
-0.6pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of RUB (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
291,539
|
|
275,887
|
|
273,003
|
|
6
|
%
|
1
|
%
|
Mobile service revenue
|
230,123
|
|
224,186
|
|
218,192
|
|
3
|
%
|
3
|
%
|
- of which FMC
|
7,942
|
|
5,064
|
|
1,496
|
|
57
|
%
|
238
|
%
|
- of which mobile data
|
62,259
|
|
59,041
|
|
51,773
|
|
5
|
%
|
14
|
%
|
Fixed-line service revenue
|
35,295
|
|
39,271
|
|
44,418
|
|
-10
|
%
|
-12
|
%
|
Sales of equipment, accessories and other
|
26,121
|
|
12,430
|
|
10,393
|
|
110
|
%
|
20
|
%
|
Operating expenses
|
186,822
|
|
171,545
|
|
168,212
|
|
9
|
%
|
2
|
%
|
Adjusted EBITDA
|
104,717
|
|
104,342
|
|
104,790
|
|
0
|
%
|
0
|
%
|
Adjusted EBITDA margin
|
35.9
|
%
|
37.8
|
%
|
38.4
|
%
|
-1.9pp
|
|
-0.6pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||
|
2018
|
2017
|
2016
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
||
Mobile
|
|
|
|
|
|
||
Customers in millions
|
55.3
|
58.2
|
58.3
|
-5
|
%
|
0
|
%
|
Mobile data customers in millions
|
36.8
|
38.4
|
36.6
|
-4
|
%
|
5
|
%
|
ARPU in US$
|
5.4
|
5.5
|
4.6
|
-2
|
%
|
19
|
%
|
ARPU in RUB
|
336
|
319
|
306
|
5
|
%
|
4
|
%
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of U.S. dollars (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
1,494
|
|
1,525
|
|
1,295
|
|
-2
|
%
|
18
|
%
|
Mobile service revenue
|
1,391
|
|
1,418
|
|
1,217
|
|
-2
|
%
|
17
|
%
|
- of which mobile data
|
311
|
|
225
|
|
155
|
|
38
|
%
|
45
|
%
|
Sales of equipment, accessories and other
|
103
|
|
107
|
|
78
|
|
-4
|
%
|
37
|
%
|
Operating expenses
|
780
|
|
822
|
|
788
|
|
-5
|
%
|
4
|
%
|
Adjusted EBITDA
|
714
|
|
703
|
|
507
|
|
1
|
%
|
39
|
%
|
Adjusted EBITDA margin
|
47.8
|
%
|
46.1
|
%
|
39.1
|
%
|
1.7pp
|
|
7.0pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of PKR (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
181,722
|
|
160,679
|
|
135,602
|
|
13
|
%
|
18
|
%
|
Mobile service revenue
|
169,277
|
|
149,393
|
|
127,414
|
|
13
|
%
|
17
|
%
|
- of which mobile data
|
38,230
|
|
23,743
|
|
16,248
|
|
61
|
%
|
46
|
%
|
Sales of equipment, accessories and other
|
12,445
|
|
11,286
|
|
8,188
|
|
10
|
%
|
38
|
%
|
Operating expenses
|
94,911
|
|
86,583
|
|
82,539
|
|
10
|
%
|
5
|
%
|
Adjusted EBITDA
|
86,811
|
|
74,096
|
|
53,063
|
|
17
|
%
|
40
|
%
|
Adjusted EBITDA margin
|
47.8
|
%
|
46.1
|
%
|
39.1
|
%
|
1.7pp
|
|
7.0pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||
|
2018
|
2017
|
2016
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
||
Mobile
|
|
|
|
|
|
||
Customers in millions
|
56.2
|
53.6
|
51.6
|
5
|
%
|
4
|
%
|
Mobile data customers in millions
|
33.0
|
28.5
|
25.1
|
16
|
%
|
13
|
%
|
ARPU in US$
|
2.1
|
2.2
|
2.3
|
-7
|
%
|
-4
|
%
|
ARPU in PKR
|
254
|
236
|
245
|
8
|
%
|
-4
|
%
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of U.S. dollars (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
813
|
|
915
|
|
1,040
|
|
-11
|
%
|
-12
|
%
|
Mobile service revenue
|
801
|
|
898
|
|
1,031
|
|
-11
|
%
|
-13
|
%
|
- of which mobile data
|
188
|
|
113
|
|
73
|
|
66
|
%
|
55
|
%
|
Sales of equipment, accessories and other
|
12
|
|
17
|
|
9
|
|
-31
|
%
|
80
|
%
|
Operating expenses
|
449
|
|
490
|
|
493
|
|
-8
|
%
|
-1
|
%
|
Adjusted EBITDA
|
363
|
|
426
|
|
547
|
|
-15
|
%
|
-22
|
%
|
Adjusted EBITDA margin
|
44.7
|
%
|
46.5
|
%
|
52.6
|
%
|
-1.8pp
|
|
-6.1pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of DZD (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
94,773
|
|
101,457
|
|
113,727
|
|
-7
|
%
|
-11
|
%
|
Mobile service revenue
|
93,409
|
|
99,588
|
|
112,706
|
|
-6
|
%
|
-12
|
%
|
- of which mobile data
|
21,978
|
|
12,586
|
|
8,006
|
|
75
|
%
|
57
|
%
|
Sales of equipment, accessories and other
|
1,364
|
|
1,869
|
|
1,021
|
|
-27
|
%
|
83
|
%
|
Operating expenses
|
52,376
|
|
54,301
|
|
53,929
|
|
-4
|
%
|
1
|
%
|
Adjusted EBITDA
|
42,398
|
|
47,156
|
|
59,798
|
|
-10
|
%
|
-21
|
%
|
Adjusted EBITDA margin
|
44.7
|
%
|
46.5
|
%
|
52.6
|
%
|
-1.7pp
|
|
-6.1pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||
|
2018
|
2017
|
2016
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
||
Mobile
|
|
|
|
|
|
||
Customers in millions
|
15.8
|
15.0
|
16.3
|
6
|
%
|
-8
|
%
|
Mobile data customers in millions
|
9.2
|
7.2
|
7.0
|
28
|
%
|
3
|
%
|
ARPU in US$
|
4.3
|
4.8
|
5.1
|
-9
|
%
|
-7
|
%
|
ARPU in DZD
|
504
|
529
|
562
|
-5
|
%
|
-6
|
%
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of U.S. dollars (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
521
|
|
574
|
|
621
|
|
-9
|
%
|
-7
|
%
|
Mobile service revenue
|
504
|
|
557
|
|
606
|
|
-9
|
%
|
-8
|
%
|
- of which mobile data
|
87
|
|
78
|
|
63
|
|
11
|
%
|
25
|
%
|
Sales of equipment, accessories and other
|
17
|
|
17
|
|
15
|
|
0
|
%
|
15
|
%
|
Operating expenses
|
338
|
|
341
|
|
353
|
|
-1
|
%
|
-3
|
%
|
Adjusted EBITDA
|
183
|
|
233
|
|
267
|
|
-21
|
%
|
-13
|
%
|
Adjusted EBITDA margin
|
35.2
|
%
|
40.6
|
%
|
43.1
|
%
|
-5.4pp
|
|
-2.5pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of BDT (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
43,653
|
|
46,471
|
|
48,687
|
|
-6
|
%
|
-5
|
%
|
Mobile service revenue
|
42,211
|
|
45,072
|
|
47,506
|
|
-6
|
%
|
-5
|
%
|
- of which mobile data
|
7,250
|
|
6,308
|
|
4,909
|
|
15
|
%
|
29
|
%
|
Sales of equipment, accessories and other
|
1,442
|
|
1,399
|
|
1,181
|
|
3
|
%
|
18
|
%
|
Operating expenses
|
28,306
|
|
27,630
|
|
27,723
|
|
2
|
%
|
0
|
%
|
Adjusted EBITDA
|
15,347
|
|
18,841
|
|
20,964
|
|
-19
|
%
|
-10
|
%
|
Adjusted EBITDA margin
|
35.2
|
%
|
40.5
|
%
|
43.1
|
%
|
-5.4pp
|
|
-2.5pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||
|
2018
|
2017
|
2016
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
||
Mobile
|
|
|
|
|
|
||
Customers in millions
|
32.3
|
31.3
|
30.4
|
3
|
%
|
3
|
%
|
Mobile data customers in millions
|
19.6
|
16.9
|
14.9
|
16
|
%
|
13
|
%
|
ARPU in US$
|
1.3
|
1.5
|
1.6
|
-12
|
%
|
-7
|
%
|
ARPU in BDT
|
110
|
121
|
126
|
-9
|
%
|
-4
|
%
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of U.S. dollars (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
688
|
|
622
|
|
586
|
|
11
|
%
|
6
|
%
|
Mobile service revenue
|
641
|
|
577
|
|
542
|
|
11
|
%
|
6
|
%
|
- of which mobile data
|
263
|
|
154
|
|
95
|
|
71
|
%
|
62
|
%
|
Fixed-line service revenue
|
44
|
|
43
|
|
41
|
|
4
|
%
|
3
|
%
|
Sales of equipment, accessories and other
|
3
|
|
3
|
|
2
|
|
25
|
%
|
20
|
%
|
Operating expenses
|
301
|
|
276
|
|
280
|
|
9
|
%
|
-1
|
%
|
Adjusted EBITDA
|
387
|
|
347
|
|
306
|
|
12
|
%
|
13
|
%
|
Adjusted EBITDA margin
|
56.3
|
%
|
55.7
|
%
|
52.3
|
%
|
0.5pp
|
|
3.4pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of UAH (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
18,719
|
|
16,542
|
|
14,960
|
|
13
|
%
|
11
|
%
|
Mobile service revenue
|
17,421
|
|
15,338
|
|
13,851
|
|
14
|
%
|
11
|
%
|
- of which mobile data
|
7,177
|
|
4,103
|
|
2,429
|
|
75
|
%
|
69
|
%
|
Fixed-line service revenue
|
1,206
|
|
1,132
|
|
1,052
|
|
7
|
%
|
8
|
%
|
Sales of equipment, accessories and other
|
93
|
|
72
|
|
57
|
|
28
|
%
|
26
|
%
|
Operating expenses
|
8,190
|
|
7,321
|
|
7,149
|
|
12
|
%
|
2
|
%
|
Adjusted EBITDA
|
10,529
|
|
9,221
|
|
7,811
|
|
14
|
%
|
18
|
%
|
Adjusted EBITDA margin
|
56.2
|
%
|
55.7
|
%
|
52.2
|
%
|
0.5pp
|
|
3.5pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||
|
2018
|
2017
|
2016
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
||
Mobile
|
|
|
|
|
|
||
Customers in millions
|
26.4
|
26.5
|
26.1
|
-1
|
%
|
2
|
%
|
Mobile data customers in millions
|
14.8
|
12.5
|
11.2
|
18
|
%
|
11
|
%
|
ARPU in US$
|
2.0
|
1.8
|
1.7
|
11
|
%
|
4
|
%
|
ARPU in UAH
|
54
|
48
|
44
|
13
|
%
|
8
|
%
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of U.S. dollars (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
315
|
|
513
|
|
663
|
|
-39
|
%
|
-23
|
%
|
Mobile service revenue
|
312
|
|
509
|
|
659
|
|
-39
|
%
|
-23
|
%
|
- of which mobile data
|
108
|
|
128
|
|
152
|
|
-16
|
%
|
-16
|
%
|
Fixed-line service revenue
|
2
|
|
3
|
|
4
|
|
-35
|
%
|
-26
|
%
|
Sales of equipment, accessories and other
|
0
|
|
1
|
|
0
|
|
-22
|
%
|
174
|
%
|
Operating expenses
|
178
|
|
252
|
|
268
|
|
-29
|
%
|
-6
|
%
|
Adjusted EBITDA
|
136
|
|
261
|
|
395
|
|
-48
|
%
|
-34
|
%
|
Adjusted EBITDA margin
|
43.3
|
%
|
50.9
|
%
|
59.6
|
%
|
-7.6pp
|
|
-8.7pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|||||||||
In millions of UZS (except as indicated)
|
2018
|
|
2017
|
|
2016
|
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
|||||
Total operating revenue
|
2,537,768
|
|
2,341,828
|
|
1,967,042
|
|
8
|
%
|
19
|
%
|
Mobile service revenue
|
2,516,756
|
|
2,323,177
|
|
1,953,182
|
|
8
|
%
|
19
|
%
|
- of which mobile data
|
871,670
|
|
585,059
|
|
452,160
|
|
49
|
%
|
29
|
%
|
Fixed-line service revenue
|
17,390
|
|
15,036
|
|
13,241
|
|
16
|
%
|
14
|
%
|
Sales of equipment, accessories and other
|
3,622
|
|
3,615
|
|
619
|
|
0
|
%
|
484
|
%
|
Operating expenses
|
1,439,916
|
|
1,181,702
|
|
793,775
|
|
22
|
%
|
49
|
%
|
Adjusted EBITDA
|
1,097,852
|
|
1,160,126
|
|
1,173,267
|
|
-5
|
%
|
-1
|
%
|
Adjusted EBITDA margin
|
43.3
|
%
|
49.5
|
%
|
59.6
|
%
|
-6.3pp
|
|
-10.1pp
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||
|
2018
|
2017
|
2016
|
‘17-18
% change |
|
‘16-17
% change |
|
|
|
|
|
|
|
||
Mobile
|
|
|
|
|
|
||
Customers in millions
|
9.1
|
9.7
|
9.5
|
-6
|
%
|
2
|
%
|
Mobile data customers in millions
|
5.5
|
5.0
|
4.6
|
10
|
%
|
10
|
%
|
ARPU in US$
|
2.8
|
4.4
|
5.6
|
-38
|
%
|
-22
|
%
|
ARPU in UZS
|
22,177
|
20,126
|
16,664
|
10
|
%
|
21
|
%
|
|
|
|
|
|
|
Entity
|
Type of debt/ original lenders
|
Interest rate
|
Debt currency
|
Outstanding debt (mln)
|
|
Outstanding debt
(US$ mln)
|
|
Maturity
date
|
VEON Holdings B.V.
|
Loan from Sberbank
|
10.0000%
|
RUB
|
95,000
|
|
1,367
|
|
19.05.2022
|
VEON Holdings B.V.
|
Loan from Alfa Bank
|
8.8%
|
RUB
|
17,500
|
|
252
|
|
30.08.2022
|
VEON Holdings B.V.
|
Loan from VTB
|
8.75%
|
RUB
|
30,000
|
|
432
|
|
30.08.2022
|
VEON Holdings B.V.
|
Notes
|
5.2000%
|
US$
|
571
|
|
571
|
|
13.02.2019
|
VEON Holdings B.V.
|
Notes
|
3.9500%
|
US$
|
600
|
|
600
|
|
16.06.2021
|
VEON Holdings B.V.
|
Notes
|
7.5043%
|
US$
|
417
|
|
417
|
|
01.03.2022
|
VEON Holdings B.V.
|
Notes
|
5.9500%
|
US$
|
529
|
|
529
|
|
13.02.2023
|
VEON Holdings B.V.
|
Notes
|
4.9500%
|
US$
|
533
|
|
533
|
|
17.06.2024
|
TOTAL VEON Holdings B.V.
|
|
|
|
|
4,701
|
|
|
|
|
|
|
|
|
|
|
||
GTH Finance B.V.
|
Notes
|
6.2500%
|
US$
|
500
|
|
500
|
|
26.04.2020
|
GTH Finance B.V.
|
Notes
|
7.2500%
|
US$
|
700
|
|
700
|
|
26.04.2023
|
TOTAL GTH Finance B.V.
|
|
|
|
|
1,200
|
|
|
|
|
|
|
|
|
|
|
||
PJSC VimpelCom
|
Loan from VIP Finance Ireland (funded by the issuance of loan participation notes by VIP Finance Ireland)
|
7.7480%
|
US$
|
262
|
|
262
|
|
02.02.2021
|
PJSC VimpelCom
|
Other PJSC VimpelCom
|
|
|
|
64
|
|
|
|
TOTAL PJSC VimpelCom
|
|
|
|
|
326
|
|
|
|
|
|
|
|
|
|
|
||
Pakistan Mobile Communications Limited
|
Sukuk Certificates
|
3 months KIBOR + 0.88%
|
PKR
|
2,300
|
|
16
|
|
20.12.2019
|
Pakistan Mobile Communications Limited
|
Loan from Habib Bank Limited
|
6 months KIBOR + 0.90%
|
PKR
|
2,667
|
|
19
|
|
23.12.2020
|
Pakistan Mobile Communications Limited
|
Loan from ING Bank N.V.
|
6 month LIBOR plus 1.9%
|
US$
|
137
|
|
137
|
|
31.12.2020
|
Pakistan Mobile Communications Limited
|
Loan from MCB Bank Limited
|
6 months KIBOR + 0.8%
|
PKR
|
10,667
|
|
76
|
|
23.12.2020
|
Pakistan Mobile Communications Limited
|
Loan from Habib Bank Limited
|
6 months KIBOR + 0.35%
|
PKR
|
5,463
|
|
39
|
|
29.06.2022
|
Pakistan Mobile Communications Limited
|
Loan from Habib Bank Limited
|
6.2100%
|
PKR
|
4,848
|
|
35
|
|
31.12.2023
|
Pakistan Mobile Communications Limited
|
Loan from Habib Bank Limited
|
7.0300%
|
PKR
|
3,213
|
|
23
|
|
31.12.2023
|
Pakistan Mobile Communications Limited
|
Syndicated loan via MCB Bank Limited
|
6 months KIBOR + 0.35%
|
PKR
|
17,000
|
|
122
|
|
29.06.2022
|
Pakistan Mobile Communications Limited
|
Other Pakistan Mobile Communications Limited
|
|
|
|
74
|
|
|
|
TOTAL Pakistan Mobile Communications Limited
|
|
|
|
541
|
|
|
||
|
|
|
|
|
|
|
||
Banglalink Digital Communications Ltd.
|
Senior Notes
|
8.6250%
|
US$
|
300
|
|
300
|
|
06.05.2019
|
Banglalink Digital Communications Ltd.
|
Syndicated Loan Facility
|
Average bank deposit rate + 4.25%
|
BDT
|
9,092
|
|
109
|
|
24.12.2022
|
Banglalink Digital Communications Ltd.
|
Syndicated Loan Facility
|
Average bank deposit rate + 3.0%
|
BDT
|
3,140
|
|
37
|
|
24.12.2020
|
TOTAL Banglalink Digital Communications Ltd.
|
|
|
|
446
|
|
|
||
|
|
|
|
|
|
|
||
Optimum Telecom Algérie S.p.A.
|
Syndicated Loan Facility
|
Bank of Algeria Re-Discount Rate + 2.0% (floor 5.5%)
|
DZD
|
7,500
|
|
64
|
|
30.12.2019
|
TOTAL Optimum Telecom Algérie S.p.A.
|
|
|
|
64
|
|
|
||
|
|
|
|
|
|
|
||
Other entities
|
Cash-pool overdrawn accounts*
|
|
|
|
17
|
|
|
|
Other loans, equipment financing and lease obligations
|
|
|
|
3
|
|
|
||
Total VEON consolidated
|
|
|
|
|
7,298
|
|
|
•
|
Cash we currently hold;
|
•
|
Operating cash flows;
|
•
|
Export credit agency guaranteed financing;
|
•
|
Borrowings under bank financings, including credit lines currently available to us;
|
•
|
Syndicated loan facilities; and
|
•
|
Issuances of debt securities on local and international capital markets.
|
|
Less than 1 year
|
|
1-3
years
|
|
3-5 years
|
|
More than 5 years
|
|
Total
|
|
|
|
|
|
|
|
|||||
Bank loans and bonds
|
1,697
|
|
3,866
|
|
2,642
|
|
579
|
|
8,784
|
|
Non-cancellable lease obligations
|
102
|
|
211
|
|
139
|
|
180
|
|
632
|
|
Purchase obligations
|
456
|
|
4
|
|
—
|
|
—
|
|
460
|
|
|
|
|
|
|
|
|||||
Total financial liabilities, net of derivative assets
|
2,255
|
|
4,081
|
|
2,781
|
|
759
|
|
9,876
|
|
Name
|
Age
|
Position
|
Ursula Burns
|
60
|
Chairman of Board of Directors
|
Guillaume Bacuvier
|
46
|
Director
|
Osama Bedier
|
43
|
Director
|
Mikhail M. Fridman
|
54
|
Director
|
Gennady Gazin
|
54
|
Director
|
Andrei Gusev
|
46
|
Director
|
Gunnar Holt
|
64
|
Director
|
Sir Julian Horn-Smith
|
70
|
Director
|
Robert Jan van de Kraats
|
58
|
Director
|
Guy Laurence
|
57
|
Director
|
Alexander Pertsovsky
|
50
|
Director
|
|
As of December 31, 2018
|
|||||
Category of activity
(1)
|
Russia
|
Pakistan
|
Algeria
|
Bangladesh
|
Ukraine
|
Uzbekistan
|
Executive and senior management
|
25
|
19
|
13
|
9
|
16
|
22
|
Engineering, construction and information technology
|
2,026
|
707
|
730
|
352
|
1,240
|
381
|
Sales, marketing and other commercial operations
|
17,428
|
1,549
|
1,241
|
531
|
826
|
354
|
Finance, administration and legal
|
1,876
|
555
|
383
|
129
|
395
|
98
|
Customer service
|
5,562
|
446
|
349
|
37
|
111
|
391
|
Procurement and logistics
|
637
|
74
|
75
|
26
|
84
|
23
|
Other support functions
|
1,016
|
1,074
|
75
|
36
|
82
|
294
|
Total
|
28,570
|
4,424
|
2,866
|
1,120
|
2,754
|
1,563
|
(1)
|
A breakdown of employees by category of activity is not available for our HQ segment and our “Others” category.
|
Name
|
Number of VEON Ltd. Common Shares
|
Percent of VEON Ltd. Issued and Outstanding Shares
|
L1T VIP Holdings S.à r.l.
(1)
|
840,625,001
|
47.85
|
Telenor East Holding II AS
(2)
|
256,703,840
|
14.61
|
Stichting Administratiekantoor Mobile Telecommunications Investor
(3)
|
145,947,562
|
8.31
|
(3)
|
As reported on Schedule 13G, filed on April 1, 2016, by Stichting with the SEC, Stichting is the direct beneficial owner of 145,947,562 of VEON Ltd.’s common shares. LetterOne is the holder of the depositary receipts issued by Stichting and is therefore entitled to the economic benefits (dividend payments, other distributions and sale proceeds) of such depositary receipts and, indirectly, of the 145,947,562 common shares represented by the depositary receipts. According to the conditions of administration entered into between Stichting and LetterOne (“Conditions of Administration”) in connection with the transfer of 145,947,562 ADSs from LetterOne to Stichting on March 29, 2016, Stichting has the power to vote and direct the voting of, and the power to dispose and direct the disposition of, the ADSs, in its sole discretion, in accordance with the Conditions of Administration and Stichting’s articles of association. Stichting is a foundation incorporated under the laws of the Netherlands. The common shares held by Stichting represent approximately 8.31% of VEON Ltd.’s issued and outstanding shares.
|
•
|
participate in shareholder meetings;
|
•
|
have one vote on all issues voted upon at a shareholder meeting, except for the purposes of cumulative voting for the election of the board of directors, in which case each common share shall have the same number of votes as the total number of members to be elected to the board of directors and all such votes may be cast for a single candidate or may be distributed between or among two or more candidates;
|
•
|
receive dividends approved by the board of directors (any dividend or other moneys payable in respect of a share which has remained unclaimed for six years from the date when it became due for payment shall, if the board of directors so resolves, be forfeited and cease to remain owing by VEON Ltd.);
|
•
|
in the event of our liquidation, receive a pro rata share of our surplus assets; and
|
•
|
exercise any other rights of a common shareholder set forth in our bye-laws and Bermuda law.
|
•
|
delivering such notice to the shareholder in person;
|
•
|
sending such notice by letter or courier to the shareholder’s address as stated in the register of shareholders;
|
•
|
transmitting such notice by electronic means in accordance with directions given by the shareholder; or
|
•
|
accessing such notice on our website.
|
•
|
it is proposed by or at the direction of the board of directors;
|
•
|
it is proposed at the direction of a court;
|
•
|
it is proposed on the requisition in writing of such number of shareholders as is prescribed by, and is made in accordance with, the relevant provisions of the Companies Act or our bye-laws; or
|
•
|
the chairman of the meeting in his absolute discretion decides that the resolution may properly be regarded as within the scope of the meeting.
|
•
|
any sale of all or substantially all of our assets;
|
•
|
the appointment of an auditor; and
|
•
|
removal of directors.
|
•
|
whitewash procedure for mandatory offers, which requires the affirmative vote of a majority of the shareholders voting in person or by proxy at a general meeting, excluding the vote of the shareholder or shareholders in question and their affiliates;
|
•
|
voting for directors, which requires directors to be elected by cumulative voting at each annual general meeting;
|
•
|
changes to our bye-laws, which require a resolution to be passed by shareholders representing not less than 75.0% of the total voting rights of the shareholders who vote in person or by proxy on the resolution;
|
•
|
any merger, consolidation, amalgamation, conversion, reorganization, scheme of arrangement, dissolution or liquidation, which requires a resolution to be passed by shareholders representing not less than 75.0% of the total voting rights of the shareholders who vote in person or by proxy on the resolution;
|
•
|
loans to any director, which require a resolution to be passed by shareholders representing not less than 90.0% of the total voting rights of the shareholders who vote in person or by proxy on the resolution; and
|
•
|
the discontinuation of VEON Ltd. to a jurisdiction outside Bermuda, which requires a resolution to be passed by shareholders representing not less than 75.0% of the total voting rights of the shareholders who vote in person or by proxy on the resolution.
|
•
|
banks and certain other financial institutions;
|
•
|
regulated investment companies;
|
•
|
real estate investment trusts;
|
•
|
insurance companies;
|
•
|
broker-dealers;
|
•
|
traders that elect to mark to market;
|
•
|
tax-exempt entities;
|
•
|
persons liable for alternative minimum tax or the Medicare contribution tax on net investment income;
|
•
|
certain U.S. expatriates;
|
•
|
persons holding our ADSs or common shares as part of a straddle, hedging, constructive sale, conversion or integrated transaction;
|
•
|
persons that actually or constructively own, or are treated as owning, 10% or more of our stock by vote or value;
|
•
|
persons that are resident or ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to our ADSs or common shares being taken into account in an applicable financial statement;
|
•
|
persons who acquired ADSs or common shares pursuant to the exercise of any employee share option or otherwise as compensation; or
|
•
|
persons holding ADSs or common shares through partnerships or other pass-through entities
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
|
•
|
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
|
•
|
a trust that (1) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
•
|
may be deemed an owner of ADSs or common shares for Dutch tax purposes pursuant to specific statutory attribution rules in Dutch tax law;
|
•
|
is, although in principle subject to Dutch corporation tax, in whole or in part, specifically exempt from that tax in connection with income from ADSs or common shares;
|
•
|
is an investment institution as defined in the Dutch Corporation Tax Act 1969;
|
•
|
owns ADSs or common shares in connection with a membership of a management board or a supervisory board, an employment relationship, a deemed employment relationship or management role;
|
•
|
has a substantial interest in VEON Ltd. or a deemed substantial interest in VEON Ltd. for Dutch tax purposes. Generally, you hold a substantial interest if (a) you - either alone or, in the case of an individual, together with your partner or any of your relatives by blood or by marriage in the direct line (including foster-children) or of those of your partner for Dutch tax purposes - own or are deemed to own, directly or indirectly, ADSs or common shares representing 5.0% or more of the shares or of any class of shares of VEON Ltd., or rights to acquire, directly or indirectly, ADSs or common shares representing such an interest in the shares of VEON Ltd. or profit participating certificates relating to 5.0% or more of the annual profits or to 5.0% or more of the liquidation proceeds of VEON Ltd., or (b) your ADSs or common shares, rights to acquire ADSs or common shares or profit participating certificates in VEON Ltd. are held by you following the application of a non-recognition provision; or
|
•
|
is for Dutch tax purposes taxable as a corporate entity and resident of Aruba, Curacao or Saint Martin.
|
•
|
you derive profits from an enterprise, whether as an entrepreneur or pursuant to a co-entitlement to the net value of such enterprise, other than as a shareholder, and such enterprise is carried on, in whole or in part, through a permanent establishment or a permanent representative in the Netherlands, and your ADSs or common shares are attributable to such permanent establishment or permanent representative; or
|
•
|
you derive benefits or are deemed to derive benefits from or in connection with ADSs or common shares that are taxable as benefits from miscellaneous activities performed in the Netherlands.
|
i.
|
you derive profits from an enterprise directly which is carried on, in whole or in part, through a permanent establishment or a permanent representative in the Netherlands, and to which permanent establishment or permanent representative your ADSs or common shares are attributable; or
|
ii.
|
you derive profits pursuant to a co-entitlement to the net value of an enterprise which is managed in the Netherlands, other than as a holder of securities, and to which enterprise your ADSs or common shares are attributable.
|
•
|
distributions in cash or in kind, deemed and constructive distributions and repayments of capital not recognized as paid-in for Dutch dividend withholding tax purposes;
|
•
|
liquidation proceeds and proceeds of repurchase or redemption of ADSs or common shares in excess of the average capital recognized as paid-in for Dutch dividend withholding tax purposes;
|
•
|
the par value of ADSs or common shares issued by VEON Ltd.to a holder of its ADSs or common shares or an increase of the par value of ADSs or common shares, as the case may be, to the extent that it does not appear that a contribution, recognized for Dutch dividend withholding tax purposes, has been made or will be made; and
|
•
|
partial repayment of capital, recognized as paid-in for Dutch dividend withholding tax purposes, if and to the extent that there are net profits, unless (a) VEON Ltd.’s shareholders have resolved in advance to make such repayment and (b) the par value of the ADSs or common shares concerned has been reduced by an equal amount by way of an amendment to its memorandum of association.
|
|
Aggregate nominal amount of total debt denominated in foreign currency outstanding as of December 31,
|
Fair Value as of December 31,
|
||||
|
2018
|
2019
|
2020
|
2021
|
2022
|
2018
|
Total debt:
|
|
|
|
|
|
|
Fixed Rate (US$)
|
565
|
263
|
262
|
-
|
-
|
606
|
Average interest rate
|
8.3%
|
7.8%
|
7.7%
|
-
|
-
|
-
|
Fixed Rate (RUB)
|
2,051
|
2,051
|
1,645
|
661
|
-
|
2,408
|
Average interest rate
|
9.6%
|
9.6%
|
9.6%
|
9.5%
|
-
|
-
|
Variable Rate (US$)
|
137
|
106
|
37
|
-
|
-
|
136
|
Average interest rate
|
4.4%
|
4.4%
|
4.4%
|
-
|
-
|
-
|
TOTAL
|
2,754
|
2,420
|
1,944
|
661
|
-
|
2,790
|
For:
|
Persons depositing or withdrawing shares or ADS holders must pay to the depositary:
|
Issuance of ADRs, including issuances resulting from a distribution of our shares or rights or other property
|
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
|
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
|
Any cash distribution to ADS holders
|
US$0.05 (or less) per ADS
|
Depositary service
|
US$0.05 (or less) per ADS per calendar year
|
Distribution of securities distributed to holders of deposited securities that are distributed to ADS holders
|
A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for ADS issuance
|
Transfer and registration of shares on our share register to or from the name of the depositary or its agent when a shareholder deposits or withdraws shares
|
Registration or transfer fees
|
Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
|
Expenses of the depositary
|
Converting foreign currency to U.S. dollars
|
Expenses of the depositary
|
Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes
|
As necessary
|
Any charges incurred by the ADS depositary or its agents for servicing the deposited securities
|
As necessary
|
•
|
certain maintenance costs for the ADS program, including expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile and telephone calls; and
|
•
|
certain investor relationship programs or special investor relations promotional activities.
|
Incorporated by Reference
|
||||||
Number
|
Description of Exhibit
|
Form
|
File No.
|
Exhibit
|
Date
|
Filed Herewith
|
1.1
|
|
|
|
|
|
*
|
1.2
|
20-F
|
001-34694
|
1.2
|
4/03/2017
|
|
|
2.1
|
F-6
|
333-164781
|
1
|
12/22/2017
|
|
|
2.2
|
F-4
|
333-164770
|
2.3
|
2/8/2010
|
|
|
2.3
|
13D
|
005-85442
|
99.1
|
12/5/2013
|
|
|
2.4
|
6-K
|
001-34694
|
4.1
|
9/26/2016
|
|
|
2.5
|
6-K
|
001-34694
|
4.1
|
9/22/2016
|
|
|
2.6
|
20-F
|
001-34694
|
2.6
|
4/03/2017
|
|
|
4.1
|
20-F
|
001-34694
|
4.3
|
6/30/2011
|
|
|
4.2
|
S-8
|
333-180368
|
4.3
|
3/27/2012
|
|
|
4.3
|
S-8
|
333-183294
|
4.3
|
8/14/2012
|
|
|
4.4
|
S-8
|
333-166315
|
4.3
|
4/27/2010
|
|
|
4.5
|
S-8
|
333-166315
|
4.4
|
4/27/2010
|
|
|
4.6
|
|
|
|
|
*
|
|
8
|
|
|
|
|
*
|
|
12.1
|
|
|
|
|
*
|
|
12.2
|
|
|
|
|
*
|
|
13.1
|
|
|
|
|
*
|
15.1
|
|
|
|
|
*
|
|
99.1
|
|
|
|
|
*
|
|
99.2
|
|
|
|
|
*
|
|
101.INS
|
XBRL Instance Document
(2)
|
|
|
|
|
*
|
101.SCH
|
XBRL Taxonomy Extension Schema
(2)
|
|
|
|
|
*
|
101.CAL
|
XBRL Taxonomy Extension Scheme Calculation Linkbase
(2)
|
|
|
|
|
*
|
101.DEF
|
XBRL Taxonomy Extension Scheme Definition Linkbase
(2)
|
|
|
|
|
*
|
101.LAB
|
XBRL Taxonomy Extension Scheme Label Linkbase
(2)
|
|
|
|
|
*
|
101.PRE
|
XBRL Taxonomy Extension Scheme Presentation Linkbase
(2)
|
|
|
|
|
*
|
(1)
|
The following materials from the our Annual Report on Form 20-F for the year ended December 31, 2018, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated income statement for the year ended December 31, 2018, 2017 and 2016; (ii) Consolidated statement of comprehensive income for the year ended December 31, 2018, 2017 and 2016; (iii) Consolidated statement of financial position for the year ended December 31, 2018 and 2017; (iv) Consolidated statement of changes in equity for the year ended December 31, 2018, 2017 and 2016; (v) Consolidated statement of cash flows for the year ended December 31, 2018, 2017 and 2016; and (vi) Notes to consolidated financial statements. Users of this data are advised, in accordance with Rule 406T of Regulation S-T promulgated by the SEC, that this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.
|
|
Note
|
2018
|
|
2017*
|
|
2016*
|
|
|||
(In millions of U.S. dollars, except per share amounts)
|
|
|
|
|
||||||
|
|
|
|
|
||||||
Service revenue
|
|
8,526
|
|
9,105
|
|
8,553
|
|
|||
Sale of equipment and accessories
|
|
427
|
|
244
|
|
184
|
|
|||
Other revenue
|
|
133
|
|
125
|
|
148
|
|
|||
Total operating revenue
|
3
|
9,086
|
|
9,474
|
|
8,885
|
|
|||
|
|
|
|
|
||||||
Service costs
|
|
(1,701)
|
|
(1,879)
|
|
(1,769)
|
|
|||
Cost of equipment and accessories
|
|
(415)
|
|
(260)
|
|
(216)
|
|
|||
Selling, general and administrative expenses
|
4
|
(3,697)
|
|
(3,748)
|
|
(3,668)
|
|
|||
Depreciation
|
12
|
(1,339)
|
|
(1,491)
|
|
(1,439)
|
|
|||
Amortization
|
13
|
(495)
|
|
(537)
|
|
(497)
|
|
|||
Impairment (loss) / reversal
|
11
|
(858)
|
|
(66)
|
|
(192)
|
|
|||
Gain / (loss) on disposal of non-current assets
|
|
(57)
|
|
(26)
|
|
(20)
|
|
|||
Gain / (loss) on disposal of subsidiaries
|
15
|
30
|
|
—
|
|
—
|
|
|||
Total operating expenses
|
|
(8,532)
|
|
(8,007)
|
|
(7,801)
|
|
|||
|
|
|
|
|
||||||
Operating profit
|
|
554
|
|
1,467
|
|
1,084
|
|
|||
|
|
|
|
|
||||||
Finance costs
|
|
(816)
|
|
(935)
|
|
(830)
|
|
|||
Finance income
|
|
67
|
|
95
|
|
69
|
|
|||
Other non-operating gain / (loss), net
|
5
|
(68)
|
|
(97)
|
|
(82)
|
|
|||
Share of profit / (loss) of joint ventures and associates
|
|
—
|
|
(22)
|
|
(11)
|
|
|||
Impairment of joint ventures and associates
|
|
—
|
|
(110)
|
|
(99)
|
|
|||
Net foreign exchange gain / (loss)
|
|
15
|
|
(70)
|
|
157
|
|
|||
Profit / (loss) before tax from continuing operations
|
|
(248)
|
|
328
|
|
288
|
|
|||
|
|
|
|
|
||||||
Income tax expense
|
9
|
(369)
|
|
(472)
|
|
(635)
|
|
|||
Profit / (loss) for the period from continuing operations
|
|
(617)
|
|
(144)
|
|
(347)
|
|
|||
|
|
|
|
|
||||||
Profit / (loss) after tax from discontinued operations
|
10
|
(300)
|
|
(390)
|
|
979
|
|
|||
Gain / (loss) on disposal of discontinued operations
|
10
|
1,279
|
|
—
|
|
1,788
|
|
|||
Profit for the period from discontinued operations
|
|
979
|
|
(390)
|
|
2,767
|
|
|||
Profit / (loss) for the period
|
|
362
|
|
(534)
|
|
2,420
|
|
|||
|
|
|
|
|
||||||
Attributable to:
|
|
|
|
|
||||||
The owners of the parent (continuing operations)
|
|
(397)
|
|
(115)
|
|
(439)
|
|
|||
The owners of the parent (discontinued operations)
|
|
979
|
|
(390)
|
|
2,767
|
|
|||
Non-controlling interest
|
|
(220)
|
|
(29)
|
|
92
|
|
|||
|
|
362
|
|
(534)
|
|
2,420
|
|
|||
|
|
|
|
|
||||||
Basic and diluted gain / (loss) per share attributable to ordinary equity holders of the parent:
|
|
|
|
|
||||||
From continuing operations
|
20
|
|
($0.23
|
)
|
|
($0.07
|
)
|
|
($0.25
|
)
|
From discontinued operations
|
20
|
|
$0.56
|
|
|
($0.22
|
)
|
|
$1.58
|
|
Total
|
20
|
|
$0.33
|
|
|
($0.29
|
)
|
|
$1.33
|
|
|
|
|
|
|
|
Note
|
2018
|
|
2017*
|
|
2016*
|
|
(In millions of U.S. dollars)
|
|
|
|
|
|||
|
|
|
|
|
|||
Profit / (loss) for the period
|
|
362
|
|
(534
|
)
|
2,420
|
|
|
|
|
|
|
|||
Items that may be reclassified to profit or loss
|
|
|
|
|
|||
|
|
|
|
|
|||
Share of other comprehensive loss of joint ventures
|
10
|
(18
|
)
|
(12
|
)
|
—
|
|
Foreign currency translation
|
|
(819
|
)
|
(637
|
)
|
85
|
|
Other
|
|
(2
|
)
|
(7
|
)
|
13
|
|
|
|
|
|
|
|||
Items reclassified to profit or loss
|
|
|
|
|
|||
|
|
|
|
|
|||
Accumulated share of other comprehensive income / (loss) of Italy Joint Venture
|
10
|
31
|
|
—
|
|
—
|
|
Accumulated foreign currency translation reserve
|
10
|
(79
|
)
|
—
|
|
(259
|
)
|
Accumulated cash flow hedge reserve
|
|
—
|
|
—
|
|
53
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||
Other comprehensive income / (loss) for the period, net of tax
|
|
(887
|
)
|
(656
|
)
|
(108
|
)
|
|
|
|
|
|
|||
Total comprehensive income / (loss) for the period, net of tax
|
|
(525
|
)
|
(1,190
|
)
|
2,312
|
|
|
|
|
|
|
|||
Attributable to:
|
|
|
|
|
|||
The owners of the parent
|
|
(138
|
)
|
(1,081
|
)
|
2,233
|
|
Non-controlling interests
|
|
(387
|
)
|
(109
|
)
|
(79
|
)
|
|
|
(525
|
)
|
(1,190
|
)
|
2,312
|
|
|
Note
|
2018
|
|
2017*
|
(In millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property and equipment
|
12
|
4,932
|
|
6,237
|
Intangible assets
|
13
|
1,854
|
|
2,168
|
Goodwill
|
14
|
3,816
|
|
4,618
|
Investments in joint ventures and associates
|
|
—
|
|
1,921
|
Deferred tax assets
|
9
|
197
|
|
336
|
Other assets
|
7
|
193
|
|
263
|
Total non-current assets
|
|
10,992
|
|
15,543
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
|
141
|
|
72
|
Trade and other receivables
|
6
|
577
|
|
755
|
Other financial assets
|
16
|
88
|
|
1,130
|
Other assets
|
7
|
479
|
|
648
|
Cash and cash equivalents
|
17
|
1,808
|
|
1,314
|
Total current assets
|
|
3,093
|
|
3,919
|
|
|
|
|
|
Assets classified as held for sale
|
|
17
|
|
22
|
|
|
|
|
|
Total assets
|
|
14,102
|
|
19,484
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
Equity
|
|
|
|
|
Equity attributable to equity owners of the parent
|
19
|
3,670
|
|
4,331
|
Non-controlling interests
|
|
(891)
|
|
(441)
|
Total equity
|
|
2,779
|
|
3,890
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Financial liabilities
|
16
|
6,567
|
|
10,362
|
Provisions
|
8
|
110
|
|
123
|
Deferred tax liabilities
|
9
|
180
|
|
376
|
Other liabilities
|
7
|
53
|
|
83
|
Total non-current liabilities
|
|
6,910
|
|
10,944
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
1,432
|
|
1,544
|
Other financial liabilities
|
16
|
1,289
|
|
1,268
|
Provisions
|
8
|
398
|
|
422
|
Other liabilities
|
7
|
1,290
|
|
1,401
|
Total current liabilities
|
|
4,409
|
|
4,635
|
|
|
|
|
|
Liabilities associated with assets held for sale
|
|
4
|
|
15
|
|
|
|
|
|
Total equity and liabilities
|
|
14,102
|
|
19,484
|
|
|
|
Attributable to equity owners of the parent
|
|
|
||||||||||||||
(In millions of U.S. dollars)
|
Note
|
Number of shares outstanding
|
|
Issued capital
|
|
Capital Surplus
|
|
Other capital reserves
|
|
Accumulated deficit
|
|
Foreign currency translation
|
|
Total
|
|
Non-controlling interests
|
|
Total equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As of December 31, 2017*
|
|
1,749,127,404
|
|
2
|
|
12,753
|
|
729
|
|
(1,486
|
)
|
(7,667
|
)
|
4,331
|
|
(441
|
)
|
3,890
|
|
Adjustments arising due to new accounting standards
|
25
|
—
|
|
—
|
|
—
|
|
—
|
|
46
|
|
—
|
|
46
|
|
11
|
|
57
|
|
As of January 1, 2018
|
|
1,749,127,404
|
|
2
|
|
12,753
|
|
729
|
|
(1,440
|
)
|
(7,667
|
)
|
4,377
|
|
(430
|
)
|
3,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Profit / (loss) for the period
|
|
—
|
|
—
|
|
—
|
|
—
|
|
582
|
|
—
|
|
582
|
|
(220
|
)
|
362
|
|
Other comprehensive income / (loss)
|
|
—
|
|
—
|
|
—
|
|
11
|
|
5
|
|
(736
|
)
|
(720
|
)
|
(167
|
)
|
(887
|
)
|
Total comprehensive income / (loss)
|
|
—
|
|
—
|
|
—
|
|
11
|
|
587
|
|
(736
|
)
|
(138
|
)
|
(387
|
)
|
(525
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Dividends declared
|
21
|
—
|
|
—
|
|
—
|
|
—
|
|
(509
|
)
|
—
|
|
(509
|
)
|
(93
|
)
|
(602
|
)
|
Other
|
|
—
|
|
—
|
|
—
|
|
3
|
|
(50
|
)
|
(13
|
)
|
(60
|
)
|
19
|
|
(41
|
)
|
As of December 31, 2018
|
|
1,749,127,404
|
|
2
|
|
12,753
|
|
743
|
|
(1,412
|
)
|
(8,416
|
)
|
3,670
|
|
(891
|
)
|
2,779
|
|
|
|
|
Attributable to equity owners of the parent
|
|
|
||||||||||||||
(In millions of U.S. dollars)
|
Note
|
Number of shares outstanding
|
|
Issued capital
|
|
Capital Surplus
|
|
Other capital reserves
|
|
Accumulated deficit
|
|
Foreign currency translation
|
|
Total
|
|
Non-controlling interests
|
|
Total equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As of January 1, 2017
|
|
1,749,004,648
|
|
2
|
|
12,753
|
|
753
|
|
(439
|
)
|
(7,109
|
)
|
5,960
|
|
83
|
|
6,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loss for the period *
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(505
|
)
|
—
|
|
(505
|
)
|
(29
|
)
|
(534
|
)
|
Other comprehensive loss
|
|
—
|
|
—
|
|
—
|
|
(18
|
)
|
—
|
|
(558
|
)
|
(576
|
)
|
(80
|
)
|
(656
|
)
|
Total comprehensive loss
|
|
—
|
|
—
|
|
—
|
|
(18
|
)
|
(505
|
)
|
(558
|
)
|
(1,081
|
)
|
(109
|
)
|
(1,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Dividends declared
|
21
|
—
|
|
—
|
|
—
|
|
—
|
|
(536
|
)
|
—
|
|
(536
|
)
|
(168
|
)
|
(704
|
)
|
Share-based payment transactions
|
|
122,756
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Changes in ownership interest in a subsidiary
that do not result in a loss of control |
15
|
—
|
|
—
|
|
—
|
|
(12
|
)
|
—
|
|
—
|
|
(12
|
)
|
(247
|
)
|
(259
|
)
|
Reallocation to legal reserve in Algeria
|
|
—
|
|
—
|
|
—
|
|
6
|
|
(6
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
As of December 31, 2017*
|
|
1,749,127,404
|
|
2
|
|
12,753
|
|
729
|
|
(1,486
|
)
|
(7,667
|
)
|
4,331
|
|
(441
|
)
|
3,890
|
|
|
|
|
Attributable to equity owners of the parent
|
|
|
||||||||||||||
(In millions of U.S. dollars, except for share amounts)
|
Note
|
Number of shares outstanding
|
|
Issued capital
|
|
Capital Surplus
|
|
Other capital reserves
|
|
Accumulated deficit
|
|
Foreign currency translation
|
|
Total
|
|
Non-controlling interests
|
|
Total equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As at January 1, 2016
|
|
1,749,004,648
|
|
2
|
|
12,753
|
|
667
|
|
(2,706
|
)
|
(6,951
|
)
|
3,765
|
|
129
|
|
3,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Profit / (loss) for the period
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,328
|
|
—
|
|
2,328
|
|
92
|
|
2,420
|
|
Other comprehensive income
|
|
—
|
|
—
|
|
—
|
|
63
|
|
—
|
|
(158
|
)
|
(95
|
)
|
(13
|
)
|
(108
|
)
|
Total comprehensive income
|
|
—
|
|
—
|
|
—
|
|
63
|
|
2,328
|
|
(158
|
)
|
2,233
|
|
79
|
|
2,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Dividends declared
|
21
|
—
|
|
—
|
|
—
|
|
—
|
|
(61
|
)
|
—
|
|
(61
|
)
|
(106
|
)
|
(167
|
)
|
Changes in ownership interest in a subsidiary
that do not result in a loss of control |
15
|
—
|
|
—
|
|
—
|
|
23
|
|
—
|
|
—
|
|
23
|
|
(19
|
)
|
4
|
|
As at December 31, 2016
|
|
1,749,004,648
|
|
2
|
|
12,753
|
|
753
|
|
(439
|
)
|
(7,109
|
)
|
5,960
|
|
83
|
|
6,043
|
|
(In millions of U.S. dollars)
|
Note
|
2018
|
|
2017*
|
|
2016*
|
|
|
|
|
|
|
|||
Operating activities
|
|
|
|
|
|||
Profit / (loss) before tax from continuing operations
|
|
(248
|
)
|
328
|
|
288
|
|
Non-cash adjustments to reconcile profit before tax to net cash flows:
|
|
|
|
|
|||
Depreciation, amortization and impairment loss / (reversal)
|
|
2,692
|
|
2,094
|
|
2,128
|
|
(Gain) / loss on disposal of non-current assets
|
|
57
|
|
26
|
|
20
|
|
(Gain) / loss on disposal of subsidiaries
|
15
|
(30
|
)
|
—
|
|
—
|
|
Finance income
|
|
(67
|
)
|
(95
|
)
|
(69
|
)
|
Finance costs
|
|
816
|
|
935
|
|
830
|
|
Other non-operating (gain) / loss, net
|
5
|
68
|
|
97
|
|
82
|
|
Share of loss and impairment of joint ventures and associates
|
10
|
—
|
|
132
|
|
110
|
|
Net foreign exchange (gain) / loss
|
|
(15
|
)
|
70
|
|
(157
|
)
|
|
|
|
|
|
|||
Changes in trade and other receivables and prepayments
|
|
96
|
|
(168
|
)
|
(129
|
)
|
Changes in inventories
|
|
(88
|
)
|
54
|
|
(13
|
)
|
Changes in trade and other payables
|
|
274
|
|
311
|
|
(107
|
)
|
Changes in provisions and pensions
|
|
40
|
|
(119
|
)
|
(645
|
)
|
|
|
|
|
|
|||
Interest paid
|
16
|
(736
|
)
|
(834
|
)
|
(789
|
)
|
Interest received
|
|
60
|
|
89
|
|
63
|
|
Income tax paid
|
9
|
(404
|
)
|
(445
|
)
|
(420
|
)
|
|
|
|
|
|
|||
Net cash flows from operating activities of discontinued operations
|
|
—
|
|
—
|
|
683
|
|
|
|
|
|
|
|||
Net cash flows from operating activities
|
|
2,515
|
|
2,475
|
|
1,875
|
|
|
|
|
|
|
|||
Investing activities
|
|
|
|
|
|||
Purchase of property and equipment and intangible assets
|
|
(1,948
|
)
|
(2,037
|
)
|
(1,651
|
)
|
Proceeds from sale of property and equipment and intangible assets
|
|
17
|
|
8
|
|
15
|
|
Proceeds from sale of Italy Joint Venture
|
10
|
2,830
|
|
—
|
|
—
|
|
Receipts from / (payment on) deposits
|
16
|
1,034
|
|
(898
|
)
|
19
|
|
Receipts from / (investment in) financial assets
|
|
62
|
|
(101
|
)
|
(87
|
)
|
Acquisition of subsidiaries, net of cash acquired
|
|
—
|
|
—
|
|
7
|
|
Proceeds from sale of shares in subsidiaries, net of cash disposed
|
|
2
|
|
12
|
|
(325
|
)
|
|
|
|
|
|
|||
Net cash flows from investing activities of discontinued operations
|
|
—
|
|
—
|
|
(649
|
)
|
|
|
|
|
|
|||
Net cash flows from / (used in) investing activities
|
|
1,997
|
|
(3,016
|
)
|
(2,671
|
)
|
|
|
|
|
|
|||
Financing activities
|
|
|
|
|
|||
Acquisition of non-controlling interest
|
|
—
|
|
(259
|
)
|
(5
|
)
|
Proceeds from borrowings, net of fees paid **
|
16
|
807
|
|
6,193
|
|
1,882
|
|
Repayment of borrowings
|
16
|
(4,122
|
)
|
(5,948
|
)
|
(1,816
|
)
|
Dividends paid to owners of the parent
|
21
|
(508
|
)
|
(518
|
)
|
(61
|
)
|
Dividends paid to non-controlling interests
|
21
|
(93
|
)
|
(201
|
)
|
(106
|
)
|
|
|
|
|
|
|||
Net cash flows from financing activities of discontinued operations
|
|
—
|
|
—
|
|
(20
|
)
|
|
|
|
|
|
|||
Net cash flows from / (used in) financing activities
|
|
(3,916
|
)
|
(733
|
)
|
(126
|
)
|
|
|
|
|
|
|||
Net increase / (decrease) in cash and cash equivalents
|
|
596
|
|
(1,274
|
)
|
(922
|
)
|
Net foreign exchange difference
|
|
(119
|
)
|
(354
|
)
|
(64
|
)
|
Classified as held for sale at the beginning of period
|
|
—
|
|
—
|
|
314
|
|
Classified as held for sale at the end of the period
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|||
Cash and cash equivalents at beginning of period
|
|
1,314
|
|
2,942
|
|
3,614
|
|
|
|
|
|
|
|||
Cash and cash equivalents at end of period, net of overdraft
|
17
|
1,791
|
|
1,314
|
|
2,942
|
|
2
|
SEGMENT INFORMATION
|
|
External customers
|
Inter-segment
|
Total revenue
|
|||||||||||||||
Revenue
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Russia
|
4,632
|
|
4,698
|
|
4,059
|
|
22
|
|
31
|
|
38
|
|
4,654
|
|
4,729
|
|
4,097
|
|
Pakistan
|
1,481
|
|
1,525
|
|
1,293
|
|
13
|
|
—
|
|
2
|
|
1,494
|
|
1,525
|
|
1,295
|
|
Algeria
|
810
|
|
914
|
|
1,040
|
|
3
|
|
1
|
|
—
|
|
813
|
|
915
|
|
1,040
|
|
Bangladesh
|
521
|
|
574
|
|
621
|
|
—
|
|
—
|
|
—
|
|
521
|
|
574
|
|
621
|
|
Ukraine
|
663
|
|
600
|
|
566
|
|
25
|
|
22
|
|
20
|
|
688
|
|
622
|
|
586
|
|
Uzbekistan
|
314
|
|
513
|
|
662
|
|
1
|
|
—
|
|
1
|
|
315
|
|
513
|
|
663
|
|
HQ
|
—
|
|
—
|
|
10
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10
|
|
Others
|
665
|
|
650
|
|
634
|
|
(64
|
)
|
(54
|
)
|
(61
|
)
|
601
|
|
596
|
|
573
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total segments
|
9,086
|
|
9,474
|
|
8,885
|
|
—
|
|
—
|
|
—
|
|
9,086
|
|
9,474
|
|
8,885
|
|
|
Adjusted EBITDA
|
Capital expenditures
excluding licenses
|
||||||||||
Other disclosures
|
2018
|
2017
|
2016
|
|
2018
|
|
2017*
|
|
2016*
|
|
||
|
|
|
|
|
|
|
||||||
Russia
|
1,677
|
|
1,788
|
|
1,574
|
|
742
|
|
667
|
|
643
|
|
Pakistan
|
714
|
|
703
|
|
507
|
|
199
|
|
240
|
|
215
|
|
Algeria
|
363
|
|
426
|
|
547
|
|
107
|
|
132
|
|
165
|
|
Bangladesh
|
183
|
|
233
|
|
267
|
|
93
|
|
101
|
|
137
|
|
Ukraine
|
387
|
|
347
|
|
306
|
|
115
|
|
98
|
|
104
|
|
Uzbekistan
|
136
|
|
261
|
|
395
|
|
39
|
|
63
|
|
174
|
|
HQ
|
(357
|
)
|
(325
|
)
|
(421
|
)
|
11
|
|
31
|
|
24
|
|
Other
|
170
|
|
154
|
|
57
|
|
109
|
|
128
|
|
130
|
|
|
|
|
|
|
|
|
||||||
Total segments
|
3,273
|
|
3,587
|
|
3,232
|
|
1,415
|
|
1,460
|
|
1,592
|
|
|
|
2018
|
|
2017*
|
|
2016*
|
|
|
|
|
|
|
|||
Total Segments Adjusted EBITDA
|
|
3,273
|
|
3,587
|
|
3,232
|
|
|
|
|
|
|
|||
Depreciation
|
|
(1,339
|
)
|
(1,491
|
)
|
(1,439
|
)
|
Amortization
|
|
(495
|
)
|
(537
|
)
|
(497
|
)
|
Impairment (loss) / reversal
|
|
(858
|
)
|
(66
|
)
|
(192
|
)
|
Gain / (loss) on disposal of non-current assets
|
|
(57
|
)
|
(26
|
)
|
(20
|
)
|
Gain / (loss) on sale of subsidiaries
|
|
30
|
|
—
|
|
—
|
|
Finance costs
|
|
(816
|
)
|
(935
|
)
|
(830
|
)
|
Finance income
|
|
67
|
|
95
|
|
69
|
|
Other non-operating gain / (loss), net
|
|
(68
|
)
|
(97
|
)
|
(82
|
)
|
Share of loss of joint ventures and associates
|
|
—
|
|
(22
|
)
|
(11
|
)
|
Impairment of joint ventures and associates
|
|
—
|
|
(110
|
)
|
(99
|
)
|
Net foreign exchange gain / (loss)
|
|
15
|
|
(70
|
)
|
157
|
|
|
|
|
|
|
|||
Profit / (loss) before tax from continuing operations
|
|
(248
|
)
|
328
|
|
288
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
||
Russia
|
|
4,794
|
|
5,969
|
|
Pakistan
|
|
1,661
|
|
2,270
|
|
Algeria
|
|
1,890
|
|
2,151
|
|
Bangladesh
|
|
773
|
|
988
|
|
Ukraine
|
|
748
|
|
552
|
|
Uzbekistan
|
|
211
|
|
213
|
|
HQ
|
|
17
|
|
55
|
|
Other
|
|
898
|
|
3,345
|
|
|
|
|
|
||
Total segments
|
|
10,992
|
|
15,543
|
|
3
|
OPERATING REVENUE
|
|
|
December 31, 2018
|
|
January 1, 2018
|
|
Contract balances
|
|
|
|
||
Receivables (billed)
|
|
673
|
|
780
|
|
Contract assets (unbilled)
|
|
43
|
|
18
|
|
Contract liabilities
|
|
(161
|
)
|
(157
|
)
|
|
|
|
|
||
Capitalized costs
|
|
|
|
||
Customer acquisition costs
|
|
83
|
|
93
|
|
|
|
|
|
4
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|||
Network and IT costs
|
|
1,176
|
|
1,185
|
|
1,043
|
|
Personnel costs
|
|
889
|
|
927
|
|
775
|
|
Customer associated costs
|
|
867
|
|
893
|
|
822
|
|
Losses on receivables
|
|
62
|
|
59
|
|
58
|
|
Taxes, other than income taxes
|
|
217
|
|
219
|
|
244
|
|
Other
|
|
486
|
|
465
|
|
726
|
|
Total selling, general and administrative expenses
|
|
3,697
|
|
3,748
|
|
3,668
|
|
|
|
2018
|
2017
|
|
|
|
|
Less than 1 year
|
|
102
|
70
|
Between 1 and 3 years
|
|
211
|
151
|
Between 3 and 5 years
|
|
139
|
78
|
More than 5 years
|
|
180
|
167
|
Total commitments
|
|
632
|
466
|
5
|
OTHER NON-OPERATING LOSSES, NET
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|||
Loss from early debt redemption
|
|
(30
|
)
|
(124
|
)
|
—
|
|
Change of fair value of other derivatives
|
|
(58
|
)
|
(13
|
)
|
(120
|
)
|
Impairment loss of other financial assets
|
|
(2
|
)
|
(20
|
)
|
—
|
|
Gains relating to past acquisitions and divestments
|
|
4
|
|
70
|
|
21
|
|
Other gains / (losses)
|
|
18
|
|
(10
|
)
|
17
|
|
Other non-operating gain / (loss), net
|
|
(68
|
)
|
(97
|
)
|
(82
|
)
|
6
|
TRADE AND OTHER RECEIVABLES
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|||
Trade receivables (gross)*
|
|
716
|
|
798
|
|
769
|
|
Allowance for doubtful debt
|
|
(171
|
)
|
(169
|
)
|
(160
|
)
|
Trade receivables (net)
|
|
545
|
|
629
|
|
609
|
|
|
|
|
|
|
|||
Other receivables
|
|
32
|
|
126
|
|
76
|
|
Total trade and other receivables
|
|
577
|
|
755
|
|
685
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|||
Balance as of January 1 before IFRS 9 adjustment
|
|
169
|
|
160
|
|
182
|
|
Adjustment due to IFRS 9 (see Note 25)
|
|
14
|
|
—
|
|
—
|
|
Balance as of January 1 after IFRS 9 adjustment
|
|
183
|
|
160
|
|
182
|
|
|
|
|
|
|
|||
Allowance for doubtful debts
|
|
47
|
|
36
|
|
73
|
|
Recoveries
|
|
(17
|
)
|
(9
|
)
|
(5
|
)
|
Accounts receivable written off
|
|
(18
|
)
|
(13
|
)
|
(44
|
)
|
Acquisitions and divestments of subsidiaries
|
|
—
|
|
—
|
|
(48
|
)
|
Foreign currency translation adjustment
|
|
(15
|
)
|
(4
|
)
|
2
|
|
Other movements
|
|
(9
|
)
|
(1
|
)
|
—
|
|
|
|
|
|
|
|||
Balance as of December 31
|
|
171
|
|
169
|
|
160
|
|
|
|
|
Days past due
|
|
||||||||
December 31, 2018
|
Contract assets
|
|
Current
|
|
< 30 days
|
|
Between 31 and 120 days
|
|
> 120 days
|
|
Total
|
|
|
|
|
|
|
|
|
||||||
Expected loss rate, %
|
0.2
|
%
|
1.2
|
%
|
9.6
|
%
|
33.6
|
%
|
81.5
|
%
|
|
|
Trade receivables, gross
|
44
|
|
389
|
|
61
|
|
44
|
|
178
|
|
716
|
|
Expected credit losses
|
(1
|
)
|
(5
|
)
|
(6
|
)
|
(15
|
)
|
(144
|
)
|
(171
|
)
|
|
|
|
|
|
|
|
||||||
Trade receivables, net
|
43
|
|
384
|
|
55
|
|
29
|
|
34
|
|
545
|
|
|
|
|
Days past due
|
|
||||||||
January 1, 2018
|
Contract assets
|
|
Current
|
|
< 30 days
|
|
Between 31 and 120 days
|
|
> 120 days
|
|
Total
|
|
|
|
|
|
|
|
|
||||||
Expected loss rate, %
|
1.1
|
%
|
1.3
|
%
|
7.6
|
%
|
27.6
|
%
|
63.9
|
%
|
|
|
Trade receivables, gross
|
18
|
|
371
|
|
92
|
|
87
|
|
230
|
|
798
|
|
Expected credit losses
|
—
|
|
(5
|
)
|
(7
|
)
|
(24
|
)
|
(147
|
)
|
(183
|
)
|
|
|
|
|
|
|
|
||||||
Trade receivables, net
|
18
|
|
366
|
|
85
|
|
63
|
|
83
|
|
615
|
|
7
|
OTHER ASSETS AND LIABILITIES
|
|
|
2018
|
|
2017
|
|
Other non-current assets
|
|
|
|
||
Customer acquisition costs (see Note 3)
|
|
83
|
|
—
|
|
Non-current income tax advances (see Note 9)
|
|
32
|
|
28
|
|
Other financial assets
|
|
58
|
|
34
|
|
Advances to suppliers
|
|
11
|
|
17
|
|
Deferred costs related to connection fees
|
|
6
|
|
7
|
|
Indemnification assets
|
|
3
|
|
177
|
|
Total other non-current assets
|
|
193
|
|
263
|
|
|
|
|
|
||
Other current assets
|
|
|
|
||
Advances to suppliers
|
|
151
|
|
162
|
|
Input value added tax
|
|
149
|
|
181
|
|
Current income tax assets (see Note 9)
|
|
112
|
|
230
|
|
Prepaid taxes
|
|
39
|
|
31
|
|
Deferred costs related to connection fees
|
|
8
|
|
12
|
|
Other assets
|
|
20
|
|
32
|
|
Total other current assets
|
|
479
|
|
648
|
|
|
|
2018
|
|
2017
|
|
Other non-current liabilities
|
|
|
|
||
Long-term deferred revenue (see Note 3)
|
|
10
|
|
12
|
|
Pensions and other post-employment benefits
|
|
29
|
|
54
|
|
Other liabilities
|
|
14
|
|
17
|
|
Total other non-current liabilities
|
|
53
|
|
83
|
|
|
|
|
|
||
Other current liabilities
|
|
|
|
||
Short-term deferred revenue (see Note 3)
|
|
151
|
|
146
|
|
Customer advances
|
|
200
|
|
228
|
|
Customer deposits
|
|
192
|
|
189
|
|
Current income tax payables (see Note 9)
|
|
32
|
|
48
|
|
Other taxes payable
|
|
352
|
|
427
|
|
Other payments to authorities
|
|
86
|
|
91
|
|
Due to employees
|
|
198
|
|
173
|
|
Other liabilities
|
|
79
|
|
99
|
|
Total other current liabilities
|
|
1,290
|
|
1,401
|
|
8
|
PROVISIONS AND CONTINGENT LIABILITIES
|
|
Income tax provisions
|
|
Non-income tax provisions
|
|
Decommi-ssioning provision
|
|
Legal provision
|
|
Other provisions
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
As of January 1, 2017
|
244
|
|
96
|
|
98
|
|
157
|
|
27
|
|
622
|
|
|
|
|
|
|
|
|
||||||
Arising during the year
|
57
|
|
28
|
|
5
|
|
28
|
|
26
|
|
144
|
|
Reclassified to assets held for sale
|
(1
|
)
|
—
|
|
(4
|
)
|
—
|
|
—
|
|
(5
|
)
|
Utilized
|
(4
|
)
|
(16
|
)
|
(1
|
)
|
(66
|
)
|
(13
|
)
|
(100
|
)
|
Unused amounts reversed
|
(32
|
)
|
(4
|
)
|
(2
|
)
|
(68
|
)
|
(9
|
)
|
(115
|
)
|
Discount rate adjustment and imputed interest (change in estimate)
|
—
|
|
—
|
|
10
|
|
—
|
|
—
|
|
10
|
|
Translation adjustments and other
|
(6
|
)
|
(6
|
)
|
—
|
|
(2
|
)
|
3
|
|
(11
|
)
|
|
|
|
|
|
|
|
||||||
As of December 31, 2017
|
258
|
|
98
|
|
106
|
|
49
|
|
34
|
|
545
|
|
Current
|
—
|
|
—
|
|
106
|
|
16
|
|
1
|
|
123
|
|
Non-current
|
258
|
|
98
|
|
—
|
|
33
|
|
33
|
|
422
|
|
|
|
|
|
|
|
|
||||||
As of January 1, 2018
|
258
|
|
98
|
|
106
|
|
49
|
|
34
|
|
545
|
|
|
|
|
|
|
|
|
||||||
Arising during the year
|
11
|
|
11
|
|
4
|
|
5
|
|
43
|
|
74
|
|
Reclassified to assets held for sale
|
(1
|
)
|
(1
|
)
|
(4
|
)
|
—
|
|
—
|
|
(6
|
)
|
Utilized
|
(6
|
)
|
(11
|
)
|
(1
|
)
|
(2
|
)
|
(15
|
)
|
(35
|
)
|
Unused amounts reversed
|
—
|
|
—
|
|
(2
|
)
|
(8
|
)
|
—
|
|
(10
|
)
|
Transfer and reclassification
|
(65
|
)
|
65
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Discount rate adjustment and imputed interest (change in estimate)
|
—
|
|
—
|
|
8
|
|
—
|
|
—
|
|
8
|
|
Translation adjustments and other
|
(33
|
)
|
(12
|
)
|
(18
|
)
|
—
|
|
(5
|
)
|
(68
|
)
|
|
|
|
|
|
|
|
||||||
As of December 31, 2018
|
164
|
|
150
|
|
93
|
|
44
|
|
57
|
|
508
|
|
Non-current
|
—
|
|
—
|
|
93
|
|
17
|
|
—
|
|
110
|
|
Current
|
164
|
|
150
|
|
—
|
|
27
|
|
57
|
|
398
|
|
|
|
|
|
|
|
|
9
|
INCOME TAXES
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|||
Current income taxes
|
|
|
|
|
|||
Current year
|
|
477
|
|
397
|
|
615
|
|
Adjustments in respect of previous years
|
|
9
|
|
(28
|
)
|
(3
|
)
|
Total current income taxes
|
|
486
|
|
369
|
|
612
|
|
|
|
|
|
|
|||
Deferred income taxes
|
|
|
|
|
|||
Origination / reversal of temporary differences
|
|
(419
|
)
|
(159
|
)
|
(217
|
)
|
Changes in tax rates
|
|
6
|
|
10
|
|
(7
|
)
|
Current year tax losses unrecognized
|
|
283
|
|
146
|
|
172
|
|
Recognition / utilization of previously unrecognized tax losses or tax credits
|
|
(16
|
)
|
—
|
|
(15
|
)
|
Derecognition of previously recognized tax losses
|
|
—
|
|
—
|
|
95
|
|
Write off deferred tax assets
|
|
—
|
|
20
|
|
—
|
|
Adjustments in respect of previous years
|
|
28
|
|
86
|
|
—
|
|
Other
|
|
1
|
|
—
|
|
(5
|
)
|
Total deferred tax expense
|
|
(117
|
)
|
103
|
|
23
|
|
|
|
|
|
|
|||
Income tax expense
|
|
369
|
|
472
|
|
635
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|||
Profit / (loss) before tax from continuing operations
|
|
(248
|
)
|
328
|
|
288
|
|
Income tax benefit / (expense) at statutory tax rate (25.0%)
|
|
62
|
|
(82
|
)
|
(72
|
)
|
|
|
|
|
|
|||
Difference due to the effects of:
|
|
|
|
|
|||
Different tax rates in different jurisdictions
|
|
89
|
|
84
|
|
(152
|
)
|
Non-deductible expenses
|
|
(120
|
)
|
(117
|
)
|
(89
|
)
|
Non-taxable income
|
|
49
|
|
35
|
|
66
|
|
Adjustments in respect of previous years
|
|
(39
|
)
|
(52
|
)
|
3
|
|
Movement in (un)recognized deferred tax assets
|
|
(354
|
)
|
(166
|
)
|
(247
|
)
|
Withholding taxes
|
|
45
|
|
(123
|
)
|
(62
|
)
|
Tax claims
|
|
(17
|
)
|
(24
|
)
|
(59
|
)
|
Change in income tax rate
|
|
(6
|
)
|
(10
|
)
|
7
|
|
Minimum taxes and other
|
|
(78
|
)
|
(17
|
)
|
(30
|
)
|
|
|
|
|
|
|||
Income tax benefit / (expense)
|
|
(369
|
)
|
(472
|
)
|
(635
|
)
|
|
|
|
|
|
|||
Effective tax rate
|
|
-148.8
|
%
|
143.9
|
%
|
220.5
|
%
|
|
|
|
|
|
Reason
|
Explanation
|
Different tax rates in different jurisdictions
|
Certain jurisdictions in which VEON operates have income tax rates which are different to the Dutch statutory tax rate of 25%. Profitability in countries with higher tax rates (including Pakistan, Uzbekistan and Bangladesh) has a negative impact on the effective tax rate.
|
Non-deductible expenses
|
Impairment losses on property and equipment, intangible assets and goodwill are generally treated as non-deductible expenses for tax purposes, except where the impairment loss results in a change to a temporary difference. In 2018, impairment losses described in Note 11 had a negative impact on the effective tax rate, except for Bangladesh, where existing deferred tax liabilities on these assets had the effect of offsetting this impact.
|
Non-taxable income
|
The Group earns non-taxable income primarily in its holding companies, relating to gains on sale of subsidiaries, unrealized foreign exchange gains and certain income classified as non-taxable in accordance with the Final Tax Regime in Pakistan.
|
Adjustments in respect of previous years
|
The tax legislation in the markets in which VEON operates is unpredictable and gives rise to significant uncertainties (see ‘Sources of estimation uncertainty’ below).
The effect of prior year adjustments mainly related to updated tax positions in these countries. |
Movement in (un)recognized deferred tax assets
|
Movements in recognized deferred tax assets are primarily caused by tax losses for which no deferred tax asset has been recognized.
This generally occurs in holding entities in the Netherlands (2018: $147, 2017: $112, 2016: $247) and in GTH (2018: $213, 2017: $49, 2016: $21). |
Withholding taxes
|
Withholding taxes are recognized to the extent that dividends from foreign operations are expected to be paid in the foreseeable future.
In 2018, the cancellation of dividends in Pakistan resulted in a reversal of withholding tax liabilities equal to US$45. In previous years, expenses relating to withholding taxes were primarily influence by dividends expected from Russia, Algeria and Pakistan. |
Tax claims
|
Tax claims relate primarily to increases in uncertain tax positions in GTH.
|
Change in income tax rate
|
Changes in tax rates impact the valuation of existing temporary differences.
The nominal tax rates in decreased Uzbekistan in 2018 and 2017, and also decreased in Pakistan in 2018 and 2016. Minimum taxes and other relate primarily to the recording of alternative minimum taxes in Pakistan. |
Minimum taxes and other
|
Minimum taxes and other relate primarily to the recording of alternative minimum and local taxes in Pakistan.
|
|
|
2018
|
|
2017
|
|
|
|
|
|
||
Deferred tax assets
|
|
197
|
|
336
|
|
Deferred tax liabilities
|
|
(180
|
)
|
(376
|
)
|
|
|
|
|
||
Net deferred tax position
|
|
17
|
|
(40
|
)
|
|
|
Movement in deferred taxes
|
|
|||||||||
|
Opening balance
|
|
Net income statement movement
|
|
Changes in composition of the group
|
|
Other comprehensive & other
|
|
Currency translation
|
|
Closing balance
|
|
|
|
|
|
|
|
|
||||||
Property and equipment
|
(443
|
)
|
126
|
|
—
|
|
(3
|
)
|
45
|
|
(275
|
)
|
Intangible assets
|
(165
|
)
|
94
|
|
—
|
|
(2
|
)
|
13
|
|
(60
|
)
|
Trade receivables
|
36
|
|
(6
|
)
|
—
|
|
3
|
|
(1
|
)
|
32
|
|
Provisions
|
33
|
|
2
|
|
—
|
|
(5
|
)
|
—
|
|
30
|
|
Accounts payable
|
133
|
|
7
|
|
—
|
|
(11
|
)
|
(16
|
)
|
113
|
|
|
|
|
|
|
|
|
||||||
Withholding tax on distributed earnings
|
(116
|
)
|
70
|
|
—
|
|
(3
|
)
|
(1
|
)
|
(50
|
)
|
|
|
|
|
|
|
|
||||||
Tax losses and other balances carried forwards
|
2,434
|
|
(191
|
)
|
—
|
|
(19
|
)
|
(51
|
)
|
2,173
|
|
Non-recognized deferred tax assets
|
(1,980
|
)
|
—
|
|
—
|
|
25
|
|
—
|
|
(1,955
|
)
|
|
|
|
|
|
|
|
||||||
Other
|
28
|
|
15
|
|
—
|
|
(33
|
)
|
(1
|
)
|
9
|
|
|
|
|
|
|
|
|
||||||
Net deferred tax positions
|
(40
|
)
|
117
|
|
—
|
|
(48
|
)
|
(12
|
)
|
17
|
|
|
|
Movement in deferred taxes
|
|
|||||||||
|
Opening balance
|
|
Net income statement movement
|
|
Changes in composition of the group
|
|
Other comprehensive & other
|
|
Currency translation
|
|
Closing balance
|
|
|
|
|
|
|
|
|
||||||
Property and equipment
|
(420
|
)
|
(6
|
)
|
—
|
|
(13
|
)
|
(4
|
)
|
(443
|
)
|
Intangible assets
|
(166
|
)
|
—
|
|
—
|
|
(4
|
)
|
5
|
|
(165
|
)
|
Trade receivables
|
30
|
|
19
|
|
—
|
|
(4
|
)
|
(9
|
)
|
36
|
|
Provisions
|
29
|
|
3
|
|
—
|
|
(3
|
)
|
4
|
|
33
|
|
Accounts payable
|
94
|
|
38
|
|
—
|
|
28
|
|
(27
|
)
|
133
|
|
|
|
|
|
|
|
|
||||||
Withholding tax on distributed earnings
|
(73
|
)
|
(43
|
)
|
—
|
|
1
|
|
(1
|
)
|
(116
|
)
|
|
|
|
|
|
|
|
||||||
Tax losses and other balances carried forwards
|
2,270
|
|
(47
|
)
|
—
|
|
261
|
|
(50
|
)
|
2,434
|
|
Non-recognized deferred tax assets
|
(1,849
|
)
|
—
|
|
—
|
|
(131
|
)
|
—
|
|
(1,980
|
)
|
|
|
|
|
|
|
|
||||||
Other
|
97
|
|
(67
|
)
|
—
|
|
(35
|
)
|
33
|
|
28
|
|
|
|
|
|
|
|
|
||||||
Net deferred tax positions
|
12
|
|
(103
|
)
|
—
|
|
100
|
|
(49
|
)
|
(40
|
)
|
As of December 31, 2018
|
0-5 years
|
|
6-10 years
|
|
More than 10 years
|
|
Indefinite
|
|
Total
|
|
|
|
|
|
|
|
|||||
Tax losses expiry
|
|
|
|
|
|
|||||
Recognized losses
|
(83
|
)
|
—
|
|
—
|
|
(425
|
)
|
(508
|
)
|
Recognized DTA
|
17
|
|
—
|
|
—
|
|
146
|
|
163
|
|
|
|
|
|
|
|
|||||
Non-recognized losses
|
(968
|
)
|
(2,421
|
)
|
—
|
|
(6,346
|
)
|
(9,735
|
)
|
Non-recognized DTA
|
198
|
|
497
|
|
—
|
|
1,260
|
|
1,955
|
|
|
|
|
|
|
|
|||||
Other credits carried forwards expiry
|
|
|
|
|
|
|||||
Recognized credits
|
(55
|
)
|
—
|
|
—
|
|
—
|
|
(55
|
)
|
Recognized DTA
|
55
|
|
—
|
|
—
|
|
—
|
|
55
|
|
|
|
|
|
|
|
|||||
Non-recognized credits
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Non-recognized DTA
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
As of December 31, 2017
|
0-5 years
|
|
6-10 years
|
|
More than 10 years
|
|
Indefinite
|
|
Total
|
|
|
|
|
|
|
|
|||||
Tax losses expiry
|
|
|
|
|
|
|||||
Recognized losses
|
(347
|
)
|
(12
|
)
|
—
|
|
(833
|
)
|
(1,192
|
)
|
Recognized DTA
|
85
|
|
3
|
|
—
|
|
234
|
|
322
|
|
|
|
|
|
|
|
|||||
Non-recognized losses
|
(420
|
)
|
(2,639
|
)
|
—
|
|
(6,396
|
)
|
(9,455
|
)
|
Non-recognized DTA
|
95
|
|
660
|
|
—
|
|
1,232
|
|
1,987
|
|
|
|
|
|
|
|
|||||
Other credits carried forwards expiry
|
|
|
|
|
|
|||||
Recognized credits
|
(68
|
)
|
—
|
|
—
|
|
—
|
|
(68
|
)
|
Recognized DTA
|
68
|
|
—
|
|
—
|
|
—
|
|
68
|
|
|
|
|
|
|
|
|||||
Non-recognized credits
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Non-recognized DTA
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
10
|
SIGNIFICANT TRANSACTIONS
|
|
|
2018
|
|
|
|
|
|
Cash consideration received
|
|
2,830
|
|
|
|
|
|
Derecognition of assets classified as held for sale
|
|
(1,599
|
)
|
Release cumulative share of other comprehensive income / (loss) of Italy Joint Venture
|
|
(31
|
)
|
Release cumulative foreign currency translation reserve related to Italy Joint Venture *
|
|
79
|
|
Gain / (loss) on disposal of discontinued operations
|
|
1,279
|
|
Discontinued operations
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|||
Share of profit / (loss) of Italy Joint Venture
|
(300
|
)
|
(390
|
)
|
59
|
|
Share of other comprehensive income / (loss) of Italy Joint Venture
|
(18
|
)
|
(12
|
)
|
—
|
|
|
|
|
|
|
Balance sheet as reported
|
|
Retrospective depreciation recorded in 2017
|
|
Reclassification
|
|
Adjusted balance sheet
|
|
Assets
|
|
|
|
|
||||
Property and equipment
|
6,097
|
|
(37
|
)
|
177
|
|
6,237
|
|
Goodwill
|
4,394
|
|
—
|
|
224
|
|
4,618
|
|
Deferred tax assets
|
272
|
|
—
|
|
64
|
|
336
|
|
Other non-current assets
|
199
|
|
—
|
|
2
|
|
201
|
|
Other current assets
|
2,443
|
|
—
|
|
44
|
|
2,487
|
|
Assets classified as held for sale
|
533
|
|
—
|
|
(511
|
)
|
22
|
|
|
|
|
|
|
||||
Equity
|
|
|
|
|
||||
Equity attributable to equity owners of the parent
|
4,352
|
|
(21
|
)
|
—
|
|
4,331
|
|
Equity of non-controlling interest
|
(425
|
)
|
(16
|
)
|
—
|
|
(441
|
)
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Non-current liabilities
|
10,937
|
|
—
|
|
7
|
|
10,944
|
|
Current liabilities
|
4,607
|
|
—
|
|
28
|
|
4,635
|
|
Liabilities associated with assets held for sale
|
50
|
|
—
|
|
(35
|
)
|
15
|
|
|
|
|
|
|
11
|
IMPAIRMENT OF ASSETS
|
2018
|
|
Property and equipment
|
|
Intangible assets
|
|
Goodwill
|
|
Total impairment
|
|
|
|
|
|
|
|
||||
Algeria
|
|
—
|
|
—
|
|
125
|
|
125
|
|
Armenia
|
|
46
|
|
10
|
|
25
|
|
81
|
|
Bangladesh
|
|
221
|
|
230
|
|
—
|
|
451
|
|
Georgia
|
|
31
|
|
19
|
|
—
|
|
50
|
|
Kyrgyzstan
|
|
—
|
|
—
|
|
74
|
|
74
|
|
Other
|
|
37
|
|
40
|
|
—
|
|
77
|
|
|
|
335
|
|
299
|
|
224
|
|
858
|
|
2017
|
|
Property and equipment
|
|
Goodwill
|
|
Total impairment
|
|
|
|
|
|
|
|||
Armenia
|
|
—
|
|
34
|
|
34
|
|
Kyrgyzstan
|
|
—
|
|
17
|
|
17
|
|
Other
|
|
15
|
|
—
|
|
15
|
|
|
|
15
|
|
51
|
|
66
|
|
|
Discount rate (local currency)
|
|
Average annual revenue growth rate during forecast period
|
|
Terminal growth rate
|
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Russia
|
10.3
|
%
|
10.6
|
%
|
9.7
|
%
|
1.1
|
%
|
1.9
|
%
|
2.4
|
%
|
1.3
|
%
|
1.0
|
%
|
1.0
|
%
|
Ukraine
|
16.3
|
%
|
17.1
|
%
|
17.2
|
%
|
4.4
|
%
|
3.9
|
%
|
3.6
|
%
|
4.0
|
%
|
2.0
|
%
|
1.0
|
%
|
Algeria
|
11.1
|
%
|
10.7
|
%
|
9.8
|
%
|
0.7
|
%
|
1.0
|
%
|
(0.8
|
)%
|
0.9
|
%
|
3.0
|
%
|
3.0
|
%
|
Pakistan
|
14.4
|
%
|
15.0
|
%
|
14.3
|
%
|
3.5
|
%
|
5.0
|
%
|
7.6
|
%
|
4.0
|
%
|
4.0
|
%
|
4.0
|
%
|
Bangladesh
|
12.2
|
%
|
12.7
|
%
|
11.9
|
%
|
0.6
|
%
|
5.0
|
%
|
6.4
|
%
|
4.0
|
%
|
4.6
|
%
|
4.7
|
%
|
Kazakhstan
|
8.4
|
%
|
10.8
|
%
|
12.4
|
%
|
2.8
|
%
|
3.2
|
%
|
4.4
|
%
|
1.1
|
%
|
2.4
|
%
|
2.0
|
%
|
Kyrgyzstan
|
14.8
|
%
|
15.5
|
%
|
14.5
|
%
|
2.8
|
%
|
(1.5
|
)%
|
(1.8
|
)%
|
5.0
|
%
|
3.5
|
%
|
2.5
|
%
|
Uzbekistan
|
13.1
|
%
|
15.3
|
%
|
15.4
|
%
|
5.5
|
%
|
6.9
|
%
|
1.7
|
%
|
6.3
|
%
|
6.5
|
%
|
1.0
|
%
|
Armenia
|
12.5
|
%
|
13.0
|
%
|
12.0
|
%
|
0.2
|
%
|
(1.0
|
)%
|
(2.8
|
)%
|
0.8
|
%
|
3.0
|
%
|
1.0
|
%
|
Georgia
|
10.6
|
%
|
11.0
|
%
|
10.3
|
%
|
2.1
|
%
|
5.6
|
%
|
6.4
|
%
|
3.0
|
%
|
1.0
|
%
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average operating margin
|
Average CAPEX as a percentage of revenue
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
||||||
Russia
|
34.6
|
%
|
36.4
|
%
|
38.6
|
%
|
19.8
|
%
|
15.7
|
%
|
15.9
|
%
|
Ukraine
|
54.0
|
%
|
49.9
|
%
|
44.9
|
%
|
16.3
|
%
|
15.6
|
%
|
17.0
|
%
|
Algeria
|
44.0
|
%
|
46.2
|
%
|
50.8
|
%
|
15.1
|
%
|
14.8
|
%
|
15.8
|
%
|
Pakistan
|
47.9
|
%
|
43.6
|
%
|
33.3
|
%
|
16.7
|
%
|
15.3
|
%
|
14.3
|
%
|
Bangladesh
|
35.4
|
%
|
38.7
|
%
|
44.9
|
%
|
14.9
|
%
|
14.3
|
%
|
14.6
|
%
|
Kazakhstan
|
46.5
|
%
|
44.5
|
%
|
43.6
|
%
|
17.7
|
%
|
17.9
|
%
|
18.8
|
%
|
Kyrgyzstan
|
39.9
|
%
|
42.0
|
%
|
43.9
|
%
|
17.2
|
%
|
16.4
|
%
|
17.0
|
%
|
Uzbekistan
|
43.9
|
%
|
42.9
|
%
|
58.2
|
%
|
16.2
|
%
|
14.1
|
%
|
18.2
|
%
|
Armenia
|
23.6
|
%
|
29.7
|
%
|
37.8
|
%
|
21.0
|
%
|
19.6
|
%
|
14.1
|
%
|
Georgia
|
24.5
|
%
|
25.2
|
%
|
25.7
|
%
|
23.8
|
%
|
23.3
|
%
|
17.3
|
%
|
|
|
|
|
|
|
|
12
|
PROPERTY AND EQUIPMENT
|
Net book value
|
Telecomm-unications equipment
|
|
Land,
buildings and constructions |
|
Office and other equipment
|
|
Equipment not installed and assets under construction
|
|
Total
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
As of January 1, 2017
|
5,166
|
|
243
|
|
456
|
|
854
|
|
6,719
|
|
|
|
|
|
|
|
|||||
Additions
|
39
|
|
14
|
|
26
|
|
1,194
|
|
1,273
|
|
Disposals
|
(36
|
)
|
—
|
|
(7
|
)
|
(6
|
)
|
(49
|
)
|
Depreciation charge for the year
|
(1,307
|
)
|
(32
|
)
|
(152
|
)
|
—
|
|
(1,491
|
)
|
Impairment
|
(5
|
)
|
—
|
|
—
|
|
(10
|
)
|
(15
|
)
|
Transfers
|
1,440
|
|
16
|
|
147
|
|
(1,603
|
)
|
—
|
|
Reclassified to assets held for sale
|
(13
|
)
|
(1
|
)
|
(2
|
)
|
(1
|
)
|
(17
|
)
|
Translation adjustment
|
(152
|
)
|
—
|
|
2
|
|
(33
|
)
|
(183
|
)
|
|
|
|
|
|
|
|||||
As of December 31, 2017
|
5,132
|
|
240
|
|
470
|
|
395
|
|
6,237
|
|
|
|
|
|
|
|
|||||
Additions
|
52
|
|
8
|
|
14
|
|
1,173
|
|
1,247
|
|
Disposals
|
(51
|
)
|
(2
|
)
|
(10
|
)
|
(5
|
)
|
(68
|
)
|
Depreciation charge for the year
|
(1,165
|
)
|
(31
|
)
|
(143
|
)
|
—
|
|
(1,339
|
)
|
Impairment
|
(280
|
)
|
(10
|
)
|
(8
|
)
|
(37
|
)
|
(335
|
)
|
Transfers
|
979
|
|
22
|
|
136
|
|
(1,137
|
)
|
—
|
|
Reclassified to assets held for sale
|
(15
|
)
|
(1
|
)
|
—
|
|
—
|
|
(16
|
)
|
Translation adjustment
|
(644
|
)
|
(24
|
)
|
(66
|
)
|
(60
|
)
|
(794
|
)
|
|
|
|
|
|
|
|||||
As of December 31, 2018
|
4,008
|
|
202
|
|
393
|
|
329
|
|
4,932
|
|
Cost
|
10,758
|
|
443
|
|
1,271
|
|
459
|
|
12,931
|
|
Accumulated depreciation and impairment
|
(6,750
|
)
|
(241
|
)
|
(878
|
)
|
(130
|
)
|
(7,999
|
)
|
|
|
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
Less than 1 year
|
|
433
|
555
|
Between 1 and 5 years
|
|
4
|
262
|
|
|
|
|
Total commitments
|
|
437
|
817
|
Class of property and equipment
|
Useful life
|
Telecommunication equipment
|
3 – 20 years
|
Buildings and constructions
|
10 – 50 years
|
Office and other equipment
|
3 – 10 years
|
13
|
INTANGIBLE ASSETS
|
Net book value
|
Telecommuni-cation licenses, frequencies & permissions
|
|
Software
|
|
Brands and trademarks
|
|
Customer relationships
|
|
Other intangible assets
|
|
Total
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
As of January 1, 2017
|
1,128
|
|
380
|
|
358
|
|
337
|
|
54
|
|
2,257
|
|
|
|
|
|
|
|
|
||||||
Additions
|
332
|
|
178
|
|
—
|
|
—
|
|
8
|
|
518
|
|
Disposals
|
(1
|
)
|
(2
|
)
|
—
|
|
—
|
|
(1
|
)
|
(4
|
)
|
Amortization charge for the year
|
(161
|
)
|
(206
|
)
|
(83
|
)
|
(75
|
)
|
(12
|
)
|
(537
|
)
|
Transfer
|
—
|
|
4
|
|
—
|
|
—
|
|
(4
|
)
|
—
|
|
Translation adjustment
|
(42
|
)
|
(3
|
)
|
(13
|
)
|
(7
|
)
|
(1
|
)
|
(66
|
)
|
|
|
|
|
|
|
|
||||||
As of December 31, 2017
|
1,256
|
|
351
|
|
262
|
|
255
|
|
44
|
|
2,168
|
|
|
|
|
|
|
|
|
||||||
Additions
|
526
|
|
171
|
|
—
|
|
—
|
|
20
|
|
717
|
|
Disposals
|
(6
|
)
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(7
|
)
|
Amortization charge for the year
|
(176
|
)
|
(179
|
)
|
(74
|
)
|
(54
|
)
|
(12
|
)
|
(495
|
)
|
Impairment
|
(251
|
)
|
(48
|
)
|
—
|
|
—
|
|
—
|
|
(299
|
)
|
Transfer
|
—
|
|
2
|
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
Translation adjustment
|
(154
|
)
|
(32
|
)
|
(10
|
)
|
(24
|
)
|
(10
|
)
|
(230
|
)
|
|
|
|
|
|
|
|
||||||
As of December 31, 2018
|
1,195
|
|
264
|
|
178
|
|
177
|
|
40
|
|
1,854
|
|
Cost
|
2,365
|
|
1,006
|
|
527
|
|
1,675
|
|
254
|
|
5,827
|
|
Accumulated amortization and impairment
|
(1,170
|
)
|
(742
|
)
|
(349
|
)
|
(1,498
|
)
|
(214
|
)
|
(3,973
|
)
|
|
|
|
|
|
|
|
•
|
25
MHz (paired) at UAH
1.325 billion
(US
$47
); and
|
•
|
two
lots of
5
MHz (paired) at UAH
1.512 billion
(US
$53
).
|
|
|
2018
|
|
2017
|
|
|
|
|
|
||
Less than 1 year
|
|
23
|
|
40
|
|
Between 1 and 5 years
|
|
—
|
|
4
|
|
|
|
|
|
||
Total commitments
|
|
23
|
|
44
|
|
14
|
GOODWILL
|
CGU
|
December 31,
2018 |
|
Impairment
|
|
Currency translation
|
|
December 31,
2017 |
|
|
|
|
|
|
||||
Russia
|
2,018
|
|
—
|
|
(416
|
)
|
2,434
|
|
Algeria
|
1,176
|
|
(125
|
)
|
(39
|
)
|
1,340
|
|
Pakistan
|
371
|
|
—
|
|
(97
|
)
|
468
|
|
Kazakhstan
|
153
|
|
—
|
|
(24
|
)
|
177
|
|
Kyrgyzstan
|
54
|
|
(74
|
)
|
—
|
|
128
|
|
Uzbekistan
|
44
|
|
—
|
|
(2
|
)
|
46
|
|
Armenia
|
—
|
|
(25
|
)
|
—
|
|
25
|
|
|
|
|
|
|
||||
Total
|
3,816
|
|
(224
|
)
|
(578
|
)
|
4,618
|
|
CGU
|
December 31,
2017 |
|
Impairment
|
|
Translation adjustment
|
|
December 31,
2016 |
|
|
|
|
|
|
||||
Russia
|
2,434
|
|
—
|
|
122
|
|
2,312
|
|
Algeria
|
1,340
|
|
—
|
|
(53
|
)
|
1,393
|
|
Pakistan
|
468
|
|
—
|
|
(29
|
)
|
497
|
|
Kazakhstan
|
177
|
|
—
|
|
1
|
|
176
|
|
Kyrgyzstan
|
128
|
|
(17
|
)
|
—
|
|
145
|
|
Uzbekistan
|
46
|
|
—
|
|
(68
|
)
|
114
|
|
Armenia
|
25
|
|
(34
|
)
|
—
|
|
59
|
|
Total
|
4,618
|
|
(51
|
)
|
(27
|
)
|
4,696
|
|
15
|
INVESTMENTS IN SUBSIDIARIES
|
|
|
|
Equity interest held by the Group
|
|||
Name of significant subsidiary
|
Country of incorporation
|
Nature of subsidiary
|
2018
|
|
2017
|
|
|
|
|
|
|
||
VEON Amsterdam B.V.
|
Netherlands
|
Holding
|
100
|
%
|
100
|
%
|
VEON Holdings B.V.
|
Netherlands
|
Holding
|
100
|
%
|
100
|
%
|
PJSC VimpelCom
|
Russia
|
Operating
|
100
|
%
|
100
|
%
|
JSC “Kyivstar”
|
Ukraine
|
Operating
|
100
|
%
|
100
|
%
|
LLP “KaR-Tel”
|
Kazakhstan
|
Operating
|
75
|
%
|
75
|
%
|
LLC “Unitel”
|
Uzbekistan
|
Operating
|
100
|
%
|
100
|
%
|
LLC “VEON Georgia”
|
Georgia
|
Operating
|
80
|
%
|
80
|
%
|
CJSC “VEON Armenia”
|
Armenia
|
Operating
|
100
|
%
|
100
|
%
|
LLC “Sky Mobile”
|
Kyrgyzstan
|
Operating
|
50
|
%
|
50
|
%
|
VEON Luxembourg Holdings S.à r.l.
|
Luxembourg
|
Holding
|
100
|
%
|
100
|
%
|
VEON Luxembourg Finance Holdings S.à r.l.
|
Luxembourg
|
Holding
|
100
|
%
|
100
|
%
|
VEON Luxembourg Finance S.A.
|
Luxembourg
|
Holding
|
100
|
%
|
100
|
%
|
Global Telecom Holding S.A.E
|
Egypt
|
Holding
|
58
|
%
|
58
|
%
|
Omnium Telecom Algérie S.p.A.*
|
Algeria
|
Holding
|
26
|
%
|
26
|
%
|
Optimum Telecom Algeria S.p.A.*
|
Algeria
|
Operating
|
26
|
%
|
26
|
%
|
Pakistan Mobile Communications Limited
|
Pakistan
|
Operating
|
49
|
%
|
49
|
%
|
Banglalink Digital Communications Limited
|
Bangladesh
|
Operating
|
58
|
%
|
58
|
%
|
LLC “Tacom” **
|
Tajikistan
|
Operating
|
—
|
|
98
|
%
|
VimpelCom Lao Co. Ltd. **
|
Lao PDR
|
Operating
|
—
|
|
78
|
%
|
|
|
|
|
|
|
|
Laos
|
|
Tajikistan
|
|
Other
|
|
Total
|
|
|
|
|
|
|
|
||||
Net cash consideration received
|
|
22
|
|
—
|
|
—
|
|
22
|
|
|
|
|
|
|
|
||||
Derecognition of assets classified as held for sale
|
|
(21
|
)
|
(13
|
)
|
—
|
|
(34
|
)
|
Derecognition of liabilities classified as held for sale
|
|
13
|
|
25
|
|
10
|
|
48
|
|
Derecognition of non-controlling interests
|
|
(6
|
)
|
—
|
|
—
|
|
(6
|
)
|
Release cumulative other comprehensive income related to disposal group
|
|
1
|
|
(1
|
)
|
—
|
|
—
|
|
Gain on disposal
|
|
9
|
|
11
|
|
10
|
|
30
|
|
|
Equity interest
held by NCIs |
Book values of
material NCIs |
Profit / (loss) attributable to material NCIs
|
|||
Name of significant subsidiary
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
|
|
LLP “KaR-Tel” (
“Kar-Tel”
)
|
25.0%
|
25.0%
|
228
|
252
|
19
|
8
|
LLC “Sky Mobile” (
“Sky Mobile”
)
|
49.8%
|
49.8%
|
133
|
167
|
(32)
|
3
|
Global Telecom Holding S.A.E (
“GTH”
)
|
42.3%
|
42.3%
|
(1,190)
|
(793)
|
(217)
|
(40)
|
Omnium Telecom Algérie S.p.A. (
“OTA”
)
|
73.7%
|
73.7%
|
1,091
|
1,235
|
1
|
100
|
|
|
|
|
|
|
|
|
Kar-Tel
|
Sky Mobile
|
GTH
|
OTA
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017*
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating revenue
|
410
|
|
348
|
|
308
|
|
81
|
|
108
|
|
136
|
|
2,828
|
|
3,015
|
|
2,955
|
|
813
|
|
915
|
|
1,040
|
|
Operating expenses
|
(319
|
)
|
(296
|
)
|
(255
|
)
|
(144
|
)
|
(97
|
)
|
(162
|
)
|
(2,810
|
)
|
(2,421
|
)
|
(2,463
|
)
|
(754
|
)
|
(703
|
)
|
(753
|
)
|
Other (expenses) / income
|
6
|
|
(7
|
)
|
2
|
|
—
|
|
(2
|
)
|
(12
|
)
|
(377
|
)
|
(450
|
)
|
(213
|
)
|
(11
|
)
|
(27
|
)
|
(33
|
)
|
Profit / (loss) before tax
|
97
|
|
45
|
|
55
|
|
(63
|
)
|
9
|
|
(38
|
)
|
(359
|
)
|
144
|
|
279
|
|
48
|
|
185
|
|
254
|
|
Income tax expense
|
(20
|
)
|
(13
|
)
|
(14
|
)
|
(1
|
)
|
(4
|
)
|
(5
|
)
|
(124
|
)
|
(375
|
)
|
(144
|
)
|
(47
|
)
|
(49
|
)
|
(69
|
)
|
Profit / (loss) for the year
|
77
|
|
32
|
|
41
|
|
(64
|
)
|
5
|
|
(43
|
)
|
(483
|
)
|
(231
|
)
|
135
|
|
1
|
|
136
|
|
185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total comprehensive income / (loss)
|
77
|
|
32
|
|
41
|
|
(64
|
)
|
5
|
|
(43
|
)
|
(483
|
)
|
(231
|
)
|
135
|
|
1
|
|
136
|
|
185
|
|
Attributed to NCIs
|
19
|
|
8
|
|
10
|
|
(32
|
)
|
3
|
|
(21
|
)
|
(204
|
)
|
(56
|
)
|
116
|
|
1
|
|
100
|
|
141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Dividends paid to NCIs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
80
|
|
116
|
|
—
|
|
76
|
|
82
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kar-Tel
|
Sky Mobile
|
GTH
|
OTA
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017*
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property and equipment
|
192
|
|
184
|
|
76
|
|
79
|
|
1,652
|
|
2,166
|
|
498
|
|
517
|
|
Intangible assets
|
69
|
|
92
|
|
10
|
|
12
|
|
1,042
|
|
1,324
|
|
214
|
|
291
|
|
Other non-current assets
|
177
|
|
204
|
|
55
|
|
131
|
|
1,766
|
|
2,094
|
|
1,178
|
|
1,361
|
|
Trade and other receivables
|
13
|
|
22
|
|
3
|
|
6
|
|
263
|
|
260
|
|
48
|
|
31
|
|
Cash and cash equivalents
|
29
|
|
14
|
|
43
|
|
32
|
|
420
|
|
385
|
|
53
|
|
125
|
|
Other current assets
|
15
|
|
74
|
|
12
|
|
12
|
|
317
|
|
363
|
|
88
|
|
66
|
|
Financial liabilities
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,938
|
)
|
(3,072
|
)
|
(63
|
)
|
(128
|
)
|
Provisions
|
(4
|
)
|
(5
|
)
|
(2
|
)
|
(4
|
)
|
(312
|
)
|
(348
|
)
|
(25
|
)
|
(31
|
)
|
Other liabilities
|
(85
|
)
|
(84
|
)
|
(19
|
)
|
(22
|
)
|
(1,690
|
)
|
(1,865
|
)
|
(355
|
)
|
(400
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Total equity
|
406
|
|
501
|
|
178
|
|
246
|
|
520
|
|
1,307
|
|
1,636
|
|
1,832
|
|
|
|
|
|
|
|
|
|
|
||||||||
Attributed to:
|
|
|
|
|
|
|
|
|
||||||||
Equity holders of the parent
|
178
|
|
249
|
|
45
|
|
79
|
|
1,710
|
|
2,100
|
|
545
|
|
597
|
|
Non-controlling interests
|
228
|
|
252
|
|
133
|
|
167
|
|
(1,190
|
)
|
(793
|
)
|
1,091
|
|
1,235
|
|
|
|
|
|
|
|
|
|
|
|
Kar-Tel
|
Sky Mobile
|
GTH
|
OTA
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net operating cash flows
|
148
|
|
105
|
|
99
|
|
29
|
|
23
|
|
58
|
|
900
|
|
877
|
|
1,077
|
|
245
|
|
345
|
|
446
|
|
Net investing cash flows
|
(42
|
)
|
(73
|
)
|
(124
|
)
|
(18
|
)
|
(24
|
)
|
45
|
|
(695
|
)
|
(924
|
)
|
(473
|
)
|
(118
|
)
|
(172
|
)
|
(238
|
)
|
Net financing cash flows
|
(90
|
)
|
(48
|
)
|
(83
|
)
|
—
|
|
—
|
|
(115
|
)
|
(110
|
)
|
(157
|
)
|
(492
|
)
|
(193
|
)
|
(350
|
)
|
(288
|
)
|
Effect of exchange rate changes on cash and
cash equivalents |
(3
|
)
|
—
|
|
1
|
|
—
|
|
—
|
|
(1
|
)
|
(60
|
)
|
(18
|
)
|
(14
|
)
|
(5
|
)
|
(7
|
)
|
(14
|
)
|
Net increase / (decrease) in cash equivalents
|
13
|
|
(16
|
)
|
(107
|
)
|
11
|
|
(1
|
)
|
(13
|
)
|
35
|
|
(222
|
)
|
98
|
|
(71
|
)
|
(184
|
)
|
(94
|
)
|
16
|
FINANCIAL ASSETS AND LIABILITIES
|
|
Carrying value
|
Fair value
|
||||||
Financial assets
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Financial assets at fair value through profit or loss
|
|
|
|
|
||||
Derivatives not designated as hedges
|
14
|
|
10
|
|
14
|
|
10
|
|
Derivatives designated as net investment hedges
|
45
|
|
—
|
|
45
|
|
—
|
|
Investments in debt instruments *
|
36
|
|
71
|
|
36
|
|
71
|
|
Other
|
3
|
|
—
|
|
3
|
|
—
|
|
|
98
|
|
81
|
|
98
|
|
81
|
|
|
|
|
|
|
||||
Financial assets at amortized cost
|
|
|
|
|
||||
Cash pledged as collateral **
|
31
|
|
998
|
|
31
|
|
998
|
|
Other investments
|
17
|
|
85
|
|
17
|
|
85
|
|
|
48
|
|
1,083
|
|
48
|
|
1,083
|
|
|
|
|
|
|
||||
Total financial assets
|
146
|
|
1,164
|
|
146
|
|
1,164
|
|
Non-current
|
58
|
|
34
|
|
|
|
||
Current
|
88
|
|
1,130
|
|
|
|
||
|
|
|
|
|
|
Carrying value
|
Fair value
|
||||||
Financial Liabilities
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Financial liabilities at fair value through profit or loss
|
|
|
|
|
||||
Derivatives not designated as hedges
|
65
|
|
—
|
|
65
|
|
—
|
|
Derivatives designated as net investment hedges
|
—
|
|
59
|
|
—
|
|
59
|
|
Contingent consideration
|
40
|
|
49
|
|
40
|
|
49
|
|
Other
|
2
|
|
1
|
|
2
|
|
1
|
|
|
107
|
|
109
|
|
107
|
|
109
|
|
|
|
|
|
|
||||
Financial liabilities at amortized cost
|
|
|
|
|
||||
Principal amount outstanding
|
7,298
|
|
11,103
|
|
7,349
|
|
11,548
|
|
Interest accrued
|
81
|
|
129
|
|
81
|
|
130
|
|
Discounts, unamortized fees, hedge basis adjustment
|
(13
|
)
|
(34
|
)
|
—
|
|
—
|
|
Bank loans and bonds
|
7,366
|
|
11,198
|
|
7,430
|
|
11,678
|
|
|
|
|
|
|
||||
Put-option liability over non-controlling interest
|
306
|
|
310
|
|
306
|
|
310
|
|
Other financial liabilities
|
77
|
|
13
|
|
77
|
|
13
|
|
|
|
|
|
|
||||
|
7,749
|
|
11,521
|
|
7,813
|
|
12,001
|
|
|
|
|
|
|
||||
Total financial liabilities
|
7,856
|
|
11,630
|
|
7,920
|
|
12,110
|
|
Non-current
|
6,567
|
|
10,362
|
|
|
|
||
Current
|
1,289
|
|
1,268
|
|
|
|
||
|
|
|
|
|
Bank loans and bonds at amortized cost
|
2018
|
|
2017
|
|
|
|
|
||
Balance as of January 1
|
11,198
|
|
10,702
|
|
|
|
|
||
Cash flows
|
|
|
||
Proceeds from borrowings, net of fees paid
|
807
|
|
6,193
|
|
Repayment of borrowings
|
(4,122
|
)
|
(5,948
|
)
|
Interest paid
|
(736
|
)
|
(834
|
)
|
|
|
|
||
Non-cash movements
|
|
|
||
Interest expense
|
738
|
|
774
|
|
Early redemption premium accrued *
|
44
|
|
168
|
|
Foreign currency translation
|
(573
|
)
|
138
|
|
Other non-cash movements
|
10
|
|
5
|
|
|
|
|
||
Balance as of December 31
|
7,366
|
|
11,198
|
|
•
|
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
|
•
|
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
|
•
|
Level 3: unobservable inputs are used for the asset or liability
|
|
Financial assets at fair value
|
|
Financial liabilities at fair value
|
|
|
Investments in debt instruments
|
|
Contingent consideration
|
|
|
|
|
||
As of January 1, 2017
|
29
|
|
47
|
|
|
|
|
||
Impairment loss
|
(20
|
)
|
—
|
|
Change in fair value recognized in other comprehensive income
|
(9
|
)
|
—
|
|
Change in fair value recognized in the income statement
|
—
|
|
2
|
|
|
|
|
||
As of December 31, 2017
|
—
|
|
49
|
|
|
|
|
||
Change in fair value recognized in the income statement
|
—
|
|
(9
|
)
|
|
|
|
||
As of December 31, 2018
|
—
|
|
40
|
|
Hedging instruments*
|
Designated rate
|
Excluded component
|
Hedged
item |
Currency
|
Aggregated designated nominal value of hedged items, million
|
|
||
|
|
|
|
|
2018
|
|
2017
|
|
Cross currency interest rate swaps **
|
Forward
|
foreign currency basis spread
|
Italy Joint Venture
|
EUR
|
—
|
|
537 ***
|
|
Euro-denominated loans **
|
Spot
|
n/a
|
Italy Joint Venture
|
EUR
|
—
|
|
627
|
|
Foreign currency forward contracts
|
Forward
|
foreign currency basis spread
|
PJSC VimpelCom
|
RUB
|
68,639 ****
|
|
—
|
|
|
|
|
|
|
|
|
•
|
the value of a net investment falling below the related designated nominal value of the hedging items, or
|
•
|
counterparties’ credit risk impacting the hedging item (where applicable) but not the hedged net investment.
|
|
Foreign currency translation reserve
|
|
Cost of hedging reserve
|
|
|
|
|
||
|
|
|
||
As of January 1, 2017
|
(7,109
|
)
|
—
|
|
|
|
|
||
Foreign currency revaluation of the foreign operations and other
|
(433
|
)
|
—
|
|
Effective portion of foreign currency revaluation of the hedging instruments *
|
(125
|
)
|
—
|
|
|
|
|
||
As of December 31, 2017
|
(7,667
|
)
|
—
|
|
|
|
|
||
Foreign currency revaluation of the foreign operations
|
(753
|
)
|
—
|
|
Effective portion of foreign currency revaluation of the hedging instruments *
|
83
|
|
—
|
|
Change in fair value of foreign currency basis spreads
|
—
|
|
(4
|
)
|
Amortization of time-period related foreign currency basis spreads
|
—
|
|
5
|
|
Net investment hedge amount reclassified to profit or loss – sale of Italy Joint Venture
|
80
|
|
4
|
|
Disposal of subsidiaries – reclassification to profit or loss
|
(159
|
)
|
—
|
|
|
|
|
||
As of December 31, 2018
|
(8,416
|
)
|
5
|
|
|
|
|
|
Related amounts not set off in the statement of financial position
|
|
|||||||
|
Gross amounts recognized
|
|
Gross amounts set off in the statement of financial position
|
|
Net amounts presented in the statement of financial position
|
|
Financial
instruments
|
|
Cash
collateral
received
|
|
Net amount
|
|
|
|
|
|
|
|
|
||||||
As of December 31, 2018
|
|
|
|
|
|
|
||||||
Other financial assets (non-current)
|
58
|
|
—
|
|
58
|
|
—
|
|
—
|
|
58
|
|
Other financial liabilities (non-current)
|
6,567
|
|
—
|
|
6,567
|
|
—
|
|
—
|
|
6,567
|
|
|
|
|
|
|
|
|
||||||
Other financial assets (current)
|
88
|
|
—
|
|
88
|
|
—
|
|
—
|
|
88
|
|
Other financial liabilities (current)
|
1,289
|
|
—
|
|
1,289
|
|
—
|
|
—
|
|
1,289
|
|
|
|
|
|
|
|
|
||||||
Trade and other receivables
|
617
|
|
(40
|
)
|
577
|
|
—
|
|
—
|
|
577
|
|
Trade and other payables
|
1,472
|
|
(40
|
)
|
1,432
|
|
—
|
|
—
|
|
1,432
|
|
|
|
|
|
|
|
|
||||||
As of December 31, 2017
|
|
|
|
|
|
|
||||||
Other financial assets (non-current)
|
34
|
|
—
|
|
34
|
|
—
|
|
—
|
|
34
|
|
Other financial liabilities (non-current)
|
10,362
|
|
—
|
|
10,362
|
|
—
|
|
—
|
|
10,362
|
|
|
|
|
|
|
|
|
||||||
Other financial assets (current)
|
1,130
|
|
—
|
|
1,130
|
|
—
|
|
—
|
|
1,130
|
|
Other financial liabilities (current)
|
1,268
|
|
—
|
|
1,268
|
|
—
|
|
—
|
|
1,268
|
|
|
|
|
|
|
|
|
||||||
Trade and other receivables
|
817
|
|
(72
|
)
|
745
|
|
—
|
|
—
|
|
745
|
|
Trade and other payables
|
1,595
|
|
(72
|
)
|
1,523
|
|
—
|
|
—
|
|
1,523
|
|
|
|
|
|
|
|
|
17
|
CASH AND CASH EQUIVALENTS
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
|
|
|
|
||
Cash and cash equivalents at banks and on hand
|
|
756
|
|
850
|
|
Cash equivalents with original maturity of less than three months
|
|
1,052
|
|
464
|
|
Cash and cash equivalents
|
|
1,808
|
|
1,314
|
|
Less overdrafts
|
|
(17
|
)
|
—
|
|
Cash and cash equivalents, net of overdrafts, as presented in the consolidated statement of cash flows
|
|
1,791
|
|
1,314
|
|
18
|
FINANCIAL RISK MANAGEMENT
|
|
Amounts in millions of transactional currency
|
US$ equivalent amounts
|
|||||
|
Final availability period
|
Facility amount
|
Utilized
|
Available
|
Facility amount
|
Utilized
|
Available
|
2018
|
|
|
|
|
|
|
|
VEON Holdings B.V. – Revolving Credit Facility
|
Feb 2022
|
US$1,688*
|
—
|
US$1,688
|
1,688
|
—
|
1,688
|
Pakistan Mobile Communications Limited - Syndicated Term Loan Facility
|
Jun 2019
|
PKR 26,750
|
PKR 17,000
|
PKR 9,750
|
191
|
122
|
69
|
Pakistan Mobile Communications Limited - Term Loan Facility
|
Jun 2019
|
PKR 10,000
|
PKR 5,463
|
PKR 4,537
|
72
|
39
|
33
|
|
|
|
|
|
|
|
|
|
Amounts in millions of transactional currency
|
US$ equivalent amounts
|
|||||
|
Final availability period
|
Facility amount
|
Utilized
|
Available
|
Facility amount
|
Utilized
|
Available
|
2017
|
|
|
|
|
|
|
|
VEON Holdings B.V. – Revolving Credit Facility *
|
Feb 2021
|
US$1,688
|
US$250
|
US$1,438
|
1,688
|
250
|
1,438
|
VEON Holdings B.V. – Term Loan Facility
|
May 2018
|
RUB 45,000
|
RUB 30,000
|
RUB 15,000
|
781
|
520
|
261
|
Banglalink Digital Communications Ltd. – Syndicated Term Loan Facility
|
Sep 2018
|
BDT 29,300
|
—
|
BDT 29,300
|
353
|
—
|
353
|
Pakistan Mobile Communications Limited - Syndicated Term Loan Facility
|
Jun 2018
|
PKR 26,750
|
PKR 17,000
|
PKR 9,750
|
242
|
154
|
88
|
Pakistan Mobile Communications Limited - Term Loan Facility
|
Jun 2018
|
PKR 10,000
|
PKR 5,000
|
PKR 5,000
|
90
|
45
|
45
|
|
|
|
|
|
|
|
|
|
Less than 1 year
|
|
1-3
years
|
|
3-5 years
|
|
More than 5 years
|
|
Total
|
|
At December 31, 2018
|
|
|
|
|
|
|||||
Bank loans and bonds
|
1,697
|
|
3,866
|
|
2,642
|
|
579
|
|
8,784
|
|
Derivative financial liabilities
|
|
|
|
|
|
|||||
Gross cash inflows
|
(368
|
)
|
(54
|
)
|
—
|
|
—
|
|
(422
|
)
|
Gross cash outflows
|
394
|
|
68
|
|
—
|
|
—
|
|
462
|
|
Trade and other payables
|
1,425
|
|
—
|
|
—
|
|
—
|
|
1,425
|
|
Other financial liabilities
|
—
|
|
62
|
|
—
|
|
—
|
|
62
|
|
Warid non-controlling interest put option liability
|
—
|
|
306
|
|
—
|
|
—
|
|
306
|
|
Total financial liabilities
|
3,148
|
|
4,248
|
|
2,642
|
|
579
|
|
10,617
|
|
|
|
|
|
|
|
|||||
Related derivatives financial assets
|
|
|
|
|
|
|||||
Gross cash inflows
|
(300
|
)
|
(610
|
)
|
(330
|
)
|
—
|
|
(1,240
|
)
|
Gross cash outflows
|
286
|
|
634
|
|
354
|
|
—
|
|
1,274
|
|
Related derivative financial assets
|
(14
|
)
|
24
|
|
24
|
|
—
|
|
34
|
|
|
|
|
|
|
|
|||||
Total financial liabilities, net of derivative assets
|
3,134
|
|
4,272
|
|
2,666
|
|
579
|
|
10,651
|
|
|
Less than 1 year
|
|
1-3
years
|
|
3-5 years
|
|
More than 5 years
|
|
Total
|
|
At December 31, 2017
|
|
|
|
|
|
|||||
Bank loans and bonds
|
1,862
|
|
4,141
|
|
4,958
|
|
2,774
|
|
13,735
|
|
Derivative financial liabilities
|
|
|
|
|
|
|||||
Gross cash inflows
|
(37
|
)
|
(49
|
)
|
(12
|
)
|
—
|
|
(98
|
)
|
Gross cash outflows
|
29
|
|
27
|
|
51
|
|
—
|
|
107
|
|
Trade and other payables
|
1,523
|
|
—
|
|
—
|
|
—
|
|
1,523
|
|
Other financial liabilities
|
—
|
|
62
|
|
—
|
|
—
|
|
62
|
|
Warid non-controlling interest put option liability
|
—
|
|
310
|
|
—
|
|
—
|
|
310
|
|
Total financial liabilities
|
3,377
|
|
4,491
|
|
4,997
|
|
2,774
|
|
15,639
|
|
|
|
|
|
|
|
|||||
Related derivatives financial assets
|
|
|
|
|
|
|||||
Gross cash inflows
|
(275
|
)
|
—
|
|
—
|
|
—
|
|
(275
|
)
|
Gross cash outflows
|
270
|
|
—
|
|
—
|
|
—
|
|
270
|
|
Related derivative financial assets
|
(5
|
)
|
—
|
|
—
|
|
—
|
|
(5
|
)
|
|
|
|
|
|
|
|||||
Total financial liabilities, net of derivative assets
|
3,372
|
|
4,491
|
|
4,997
|
|
2,774
|
|
15,634
|
|
19
|
ISSUED CAPITAL AND RESERVES
|
|
2018
|
|
2017
|
|
|
|
|
||
Authorized common shares (nominal value of US$0.001 per share)
|
1,849,190,670
|
|
2,759,171,830
|
|
|
|
|
||
Issued shares
|
1,756,731,135
|
|
1,756,731,135
|
|
Treasury shares
|
(7,603,731
|
)
|
(7,603,731
|
)
|
Outstanding shares
|
1,749,127,404
|
|
1,749,127,404
|
|
Shareholder
|
Common shares
|
|
% of common and voting shares
|
|
|
|
|
||
L1T VIP Holdings S.à r.l. (“
LetterOne
”)
|
840,625,001
|
|
47.9
|
%
|
Telenor East Holding II AS (“
Telenor
”)
|
256,703,840
|
|
14.6
|
%
|
Stichting Administratiekantoor Mobile Telecommunications Investor *
|
145,947,562
|
|
8.3
|
%
|
Free Float
|
513,454,732
|
|
29.6
|
%
|
Shares held by the Company or its subsidiaries
(
“Treasury shares”
)
|
(7,603,731
|
)
|
(0.40
|
)%
|
Total outstanding common shares
|
1,749,127,404
|
|
100
|
%
|
|
|
|
20
|
EARNINGS PER SHARE
|
Continuing operations
|
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
|
||||||
(In millions of U.S. dollars, except share and per share amounts)
|
|
|
|
|
||||||
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
||||||
Profit / (loss) for the period attributable to the owners of the parent
|
|
(397
|
)
|
(115
|
)
|
(439
|
)
|
|||
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
||||||
Weighted average common shares outstanding for basic earnings per share (in millions)
|
|
1,749
|
|
1,749
|
|
1,749
|
|
|||
Denominator for diluted earnings per share (in millions)
|
|
1,749
|
|
1,749
|
|
1,749
|
|
|||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
Basic (loss) / earnings per share
|
|
|
($0.23
|
)
|
|
($0.07
|
)
|
|
($0.25
|
)
|
Diluted (loss) / earnings per share
|
|
|
($0.23
|
)
|
|
($0.07
|
)
|
|
($0.25
|
)
|
Discontinued operations
|
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
|
||||||
(In millions of U.S. dollars, except share and per share amounts)
|
|
|
|
|
||||||
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
||||||
Profit / (loss) for the period attributable to the owners of the parent
|
|
979
|
|
(390
|
)
|
2,767
|
|
|||
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
||||||
Weighted average common shares outstanding for basic earnings per share (in millions)
|
|
1,749
|
|
1,749
|
|
1,749
|
|
|||
Denominator for diluted earnings per share (in millions)
|
|
1,749
|
|
1,749
|
|
1,749
|
|
|||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
Basic (loss) / earnings per share
|
|
|
$0.56
|
|
|
($0.22
|
)
|
|
$1.58
|
|
Diluted (loss) / earnings per share
|
|
|
$0.56
|
|
|
($0.22
|
)
|
|
$1.58
|
|
21
|
DIVIDENDS PAID AND PROPOSED
|
(a)
|
VEON is, or would after the payment be, unable to pay its liabilities as they become due, or
|
(b)
|
the realizable value of VEON assets would, as a result of the dividend, be less than the aggregate of VEON liabilities.
|
Description
|
Dividends declared
|
Payment date
|
Dividends, US$ cents per share
|
|
|
|
|
Final for 2018
|
February 25, 2019
|
Expected March 20, 2019
|
17
|
Interim for 2018
|
August 2, 2018
|
August 20, 2018
|
12
|
|
|
|
|
Final for 2017
|
February 22, 2018
|
March 13, 2018
|
17
|
Interim for 2017
|
August 3, 2017
|
September 6, 2017
|
11
|
|
|
|
|
Name of subsidiary
|
Dividend declared
|
Dividend paid
|
Paid or payable to non-controlling interests
|
|
|
|
|
Omnium Telecom Algeria S.p.A
|
June 21, 2018
|
August 29, 2018
|
76
|
TNS Plus LLP
|
April 19, 2018
|
August 29, 2018
|
2
|
Rascom CJSC
|
June 27, 2018
|
July 24, 2018
|
2
|
TNS Plus LLP
|
April 19, 2018
|
April 23, 2018
|
11
|
|
|
|
|
VIP Kazakhstan Holding AG
|
October 6, 2017
|
October 10, 2017
|
11
|
Omnium Telecom Algeria S.p.A
|
June 21, 2017
|
August 18, 2017
|
82
|
TNS Plus LLP
|
May 12, 2017
|
May 15, 2017
|
12
|
VIP Kyrgyzstan Holding AG
|
February 13, 2017
|
February 16, 2017
|
55
|
TNS Plus LLP
|
January 24, 2017
|
January 25, 2017
|
7
|
|
|
|
|
22
|
RELATED PARTIES
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|||
Short-term employee benefits
|
33
|
|
42
|
|
37
|
|
Long-term employee benefits
|
—
|
|
1
|
|
—
|
|
Share-based payments
|
—
|
|
1
|
|
—
|
|
Termination benefits
|
2
|
|
1
|
|
4
|
|
Total compensation to directors and senior management *
|
35
|
|
45
|
|
41
|
|
|
Ursula Burns
|
Jean-Yves Charlier
|
Trond Westlie
|
Andrew Davies
|
Kjell Johnsen
|
Scott Dresser
|
||||||||||||||||||
Group CEO and Chairman
(iii)
|
Former Group CEO
(iv)
|
Group CFO
(v)
|
Former Group CFO
(v)
|
Group COO
|
Group General Counsel
|
|||||||||||||||||||
|
EUR
|
|
US$
|
|
EUR
|
|
US$
|
|
EUR
|
|
US$
|
|
EUR
|
|
US$
|
|
EUR
|
|
US$
|
|
EUR
|
|
US$
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term employee benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Base salary
(i)
|
4,602,902
|
|
5,429,871
|
|
1,902,600
|
|
2,244,426
|
|
1,500,000
|
|
1,769,494
|
|
—
|
|
—
|
|
1,425,000
|
|
1,681,019
|
|
1,233,333
|
|
1,454,917
|
|
Annual incentive
(ii)
|
—
|
|
—
|
|
7,717,900
|
|
9,104,518
|
|
127,313
|
|
150,186
|
|
—
|
|
—
|
|
—
|
|
—
|
|
405,899
|
|
478,824
|
|
Other
|
104,645
|
|
123,446
|
|
489,070
|
|
576,938
|
|
21,695
|
|
25,593
|
|
—
|
|
—
|
|
70,442
|
|
83,098
|
|
927,489
|
|
1,094,124
|
|
Long-term employee benefits
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Share-based payments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Termination benefits
|
—
|
|
—
|
|
1,340,278
|
|
1,581,076
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Total gross remuneration
|
4,707,547
|
|
5,553,317
|
|
11,449,848
|
|
13,506,958
|
|
1,649,008
|
|
1,945,273
|
|
—
|
|
—
|
|
1,495,442
|
|
1,764,117
|
|
2,566,721
|
|
3,027,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term employee benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Base salary
(i)
|
—
|
|
—
|
|
2,500,000
|
|
2,819,125
|
|
375,000
|
|
422,869
|
|
1,125,000
|
|
1,268,606
|
|
—
|
|
—
|
|
925,000
|
|
1,043,076
|
|
Annual incentive
(ii)
|
—
|
|
—
|
|
4,125,000
|
|
4,651,556
|
|
—
|
|
—
|
|
3,518,295
|
|
3,967,405
|
|
—
|
|
—
|
|
977,272
|
|
1,102,021
|
|
Other
|
—
|
|
—
|
|
91,916
|
|
103,649
|
|
5,400
|
|
6,089
|
|
1,284,248
|
|
1,448,182
|
|
—
|
|
—
|
|
31,186
|
|
35,166
|
|
Long-term employee benefits
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Share-based payments
|
—
|
|
—
|
|
709,661
|
|
800,249
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Termination benefits
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
250,000
|
|
281,912
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Total gross remuneration
|
—
|
|
—
|
|
7,426,577
|
|
8,374,579
|
|
380,400
|
|
428,958
|
|
6,177,543
|
|
6,966,105
|
|
—
|
|
—
|
|
1,933,458
|
|
2,180,263
|
|
|
Retainer
|
Committees
|
Other compensation
|
Total
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
||||||||
Guillaume Bacuvier
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
105,000
|
|
—
|
|
21,000
|
|
—
|
|
—
|
|
—
|
|
126,000
|
|
—
|
|
US$ equivalent
|
123,869
|
|
—
|
|
24,774
|
|
—
|
|
—
|
|
—
|
|
148,643
|
|
—
|
|
Osama Bedier
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
105,000
|
|
—
|
|
10,500
|
|
—
|
|
—
|
|
—
|
|
115,500
|
|
—
|
|
US$ equivalent
|
123,869
|
|
—
|
|
12,387
|
|
—
|
|
—
|
|
—
|
|
136,256
|
|
—
|
|
Ursula Burns
|
|
|
|
|
|
|
|
|
||||||||
In whole euro *
|
—
|
|
436,213
|
|
—
|
|
12,500
|
|
—
|
|
1,517,500
|
|
—
|
|
1,966,213
|
|
US$ equivalent *
|
—
|
|
491,896
|
|
—
|
|
14,096
|
|
—
|
|
1,711,209
|
|
—
|
|
2,217,201
|
|
Stan Chudnovsky
|
|
|
|
|
|
|
|
|
||||||||
In whole euros
|
145,833
|
|
193,918
|
|
—
|
|
—
|
|
—
|
|
—
|
|
145,833
|
|
193,918
|
|
US$ equivalent
|
172,039
|
|
218,672
|
|
—
|
|
—
|
|
—
|
|
—
|
|
172,039
|
|
218,672
|
|
Mikhail Fridman
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
40,000
|
|
40,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40,000
|
|
40,000
|
|
US$ equivalent
|
47,188
|
|
45,106
|
|
—
|
|
—
|
|
—
|
|
—
|
|
47,188
|
|
45,106
|
|
Gennady Gazin
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
250,000
|
|
194,048
|
|
65,500
|
|
55,000
|
|
—
|
|
4,757
|
|
315,500
|
|
253,805
|
|
US$ equivalent
|
294,925
|
|
218,818
|
|
77,270
|
|
62,021
|
|
—
|
|
5,364
|
|
372,195
|
|
286,203
|
|
Andrei Gusev
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
40,000
|
|
40,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40,000
|
|
40,000
|
|
US$ equivalent
|
47,188
|
|
45,106
|
|
—
|
|
—
|
|
—
|
|
—
|
|
47,188
|
|
45,106
|
|
Gunnar Holt
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
250,000
|
|
133,950
|
|
50,000
|
|
20,833
|
|
—
|
|
—
|
|
300,000
|
|
154,783
|
|
US$ equivalent
|
294,925
|
|
151,049
|
|
58,985
|
|
23,492
|
|
—
|
|
—
|
|
353,910
|
|
174,541
|
|
Sir Julian Horn-Smith
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
250,000
|
|
194,048
|
|
10,500
|
|
—
|
|
—
|
|
5,145
|
|
260,500
|
|
199,193
|
|
US$ equivalent
|
294,925
|
|
218,818
|
|
12,387
|
|
—
|
|
—
|
|
5,802
|
|
307,312
|
|
224,620
|
|
Nils Katla
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
—
|
|
36,666
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36,666
|
|
US$ equivalent
|
—
|
|
41,346
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
41,346
|
|
Jørn P. Jensen
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
163,333
|
|
195,538
|
|
—
|
|
30,000
|
|
—
|
|
—
|
|
163,333
|
|
225,538
|
|
US$ equivalent
|
192,684
|
|
220,498
|
|
—
|
|
33,829
|
|
—
|
|
—
|
|
192,684
|
|
254,327
|
|
Robert Jan van de Kraats
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
105,000
|
|
—
|
|
12,600
|
|
—
|
|
—
|
|
—
|
|
117,600
|
|
—
|
|
US$ equivalent
|
123,869
|
|
—
|
|
14,864
|
|
—
|
|
—
|
|
—
|
|
138,733
|
|
—
|
|
Guy Laurence
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
250,000
|
|
110,619
|
|
41,600
|
|
20,833
|
|
16,250
|
|
1,250
|
|
307,850
|
|
132,702
|
|
US$ equivalent
|
294,925
|
|
124,740
|
|
49,076
|
|
23,492
|
|
19,170
|
|
1,410
|
|
363,171
|
|
149,642
|
|
Alexander Pertsovsky
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
40,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40,000
|
|
—
|
|
US$ equivalent
|
47,188
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
47,188
|
|
—
|
|
Alexey M. Reznikovich
|
|
|
|
|
|
|
|
|
||||||||
In whole euro
|
—
|
|
40,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40,000
|
|
US$ equivalent
|
—
|
|
45,106
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
45,106
|
|
Total (in whole euro)
|
1,744,166
|
|
1,615,000
|
|
211,700
|
|
139,166
|
|
16,250
|
|
1,528,652
|
|
1,972,116
|
|
3,282,818
|
|
Total (US$ equivalent)
|
2,057,594
|
|
1,821,155
|
|
249,743
|
|
156,930
|
|
19,170
|
|
1,723,785
|
|
2,326,507
|
|
3,701,870
|
|
Tranche
|
Grant date
|
Performance period
|
KPIs based on
|
Other information
|
2015 Tranche
|
March 2016
|
January 1, 2015 to June 30, 2018 (42 months)
|
TSR evolution compared to peer companies in the markets in which VEON operates
|
The Compensation Committee regularly reviews the peer group to ensure that its composition is still appropriate.
|
2016 Tranche
|
October 2017
|
January 1, 2016 to June 30, 2019 (42 months)
|
TSR evolution compared to peer companies in the markets in which VEON operates
|
The Compensation Committee regularly reviews the peer group to ensure that its composition is still appropriate.
|
2017 Tranche
|
October 2017
|
January 1, 2017 to June 30, 2020 (42 months)
|
Absolute share price performance target
|
KPIs designed to create a direct link between management focus and real return to shareholders.
|
2018 Tranche
|
July 2018
|
July 1, 2017 to December 31, 2020 (42 months)
|
Absolute share price performance target
|
KPIs designed to create a direct link between management focus and real return to shareholders.
|
23
|
EVENTS AFTER THE REPORTING PERIOD
|
24
|
BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
|
25
|
SIGNIFICANT ACCOUNTING POLICIES
|
Significant accounting judgement / source of estimation uncertainty
|
Described in
|
Revenue recognition
|
Note 3
|
Deferred tax assets and uncertain tax positions
|
Note 8 and Note 9
|
Provisions
|
Note 8
|
Impairment of non-current assets
|
Note 11
|
Control over subsidiaries
|
Note 15
|
Depreciation and amortization of non-current assets
|
Note 12 and Note 13
|
Fair value of financial instruments
|
Note 16
|
|
December 31, 2017*
|
|
Impact of IFRS 9
|
Impact of IFRS 15
|
|
|
||||
|
Classification and measurement
|
|
Impairment
|
|
Revenue and customer acquisition costs
|
|
January 1, 2018
|
|
||
|
|
|
|
|
|
|||||
Assets
|
|
|
|
|
|
|||||
Non-current assets
|
|
|
|
|
|
|||||
Investments in joint ventures and associates
|
1,921
|
|
(25
|
)
|
(10
|
)
|
38
|
|
1,924
|
|
Deferred tax assets
|
336
|
|
—
|
|
2
|
|
(12
|
)
|
326
|
|
Other financial assets
|
|
|
|
|
|
|||||
Available for sale
|
18
|
|
(18
|
)
|
—
|
|
—
|
|
—
|
|
Fair value through other comprehensive income
|
—
|
|
18
|
|
—
|
|
—
|
|
18
|
|
Other assets
|
263
|
|
—
|
|
—
|
|
93
|
|
356
|
|
|
|
|
|
|
|
|||||
Current assets
|
|
|
|
|
|
|||||
Trade and other receivables
|
|
|
|
|
|
|||||
Trade and other receivables, gross
|
924
|
|
—
|
|
—
|
|
—
|
|
924
|
|
Allowance for doubtful debt
|
(169
|
)
|
—
|
|
(14
|
)
|
|
(183
|
)
|
|
|
|
|
|
|
|
|||||
Other financial assets
|
|
|
|
|
|
|||||
Available for sale
|
53
|
|
(53
|
)
|
—
|
|
—
|
|
—
|
|
Fair value through profit or loss
|
|
20
|
|
|
|
20
|
|
|||
Fair value through other comprehensive income
|
—
|
|
33
|
|
—
|
|
—
|
|
33
|
|
Other assets
|
418
|
|
—
|
|
—
|
|
(4
|
)
|
414
|
|
|
|
|
|
|
|
|||||
Equity
|
|
|
|
|
|
|||||
Equity attributable to equity owners of the parent
|
4,331
|
|
(25
|
)
|
(16
|
)
|
87
|
|
4,377
|
|
Non-controlling interests
|
(441
|
)
|
—
|
|
(4
|
)
|
15
|
|
(430
|
)
|
|
|
|
|
|
|
|||||
Liabilities
|
|
|
|
|
|
|||||
Other liabilities (current)
|
1,353
|
|
—
|
|
—
|
|
(1
|
)
|
1,352
|
|
Deferred tax liabilities
|
376
|
|
—
|
|
(2
|
)
|
14
|
|
388
|
|
|
|
|
|
|
|
•
|
Amortized cost, where the effective interest rate method will apply;
|
•
|
Fair value through other comprehensive income, with subsequent recycling to the income statement upon disposal of the financial asset; or
|
•
|
Fair value through profit or loss.
|
•
|
Fair value through other comprehensive income, with no subsequent recycling to the income statement upon disposal of the financial asset; or
|
•
|
Fair value through profit or loss.
|
|
December 31, 2018
|
|
Impact of IFRS 16
|
|
January 1,
2019
|
|
Assets
|
|
|
|
|||
Non-current assets
|
|
|
|
|||
Property and equipment
|
|
|
|
|||
Property and equipment
|
4,932
|
|
(71
|
)
|
4,861
|
|
Right-of-use assets
|
—
|
|
2,023
|
|
2,023
|
|
Intangible assets
|
1,854
|
|
(15
|
)
|
1,839
|
|
Goodwill
|
3,816
|
|
—
|
|
3,816
|
|
Deferred tax assets
|
197
|
|
—
|
|
197
|
|
Other financial assets
|
193
|
|
(1
|
)
|
192
|
|
Total non-current assets
|
10,992
|
|
1,936
|
|
12,928
|
|
|
|
|
|
|||
Current assets
|
|
|
|
|||
Trade and other receivables
|
577
|
|
(61
|
)
|
516
|
|
Other current assets
|
2,516
|
|
—
|
|
2,516
|
|
Total current assets
|
3,093
|
|
(61
|
)
|
3,032
|
|
|
|
|
|
|||
Assets classified as held for sale
|
17
|
|
4
|
|
21
|
|
|
|
|
|
|||
Total assets
|
14,102
|
|
1,879
|
|
15,981
|
|
|
|
|
|
|||
Equity
|
|
|
|
|||
Equity attributable to equity owners of the parent
|
3,670
|
|
(3
|
)
|
3,667
|
|
Non-controlling interest
|
(891
|
)
|
(1
|
)
|
(892
|
)
|
Total equity
|
2,779
|
|
(4
|
)
|
2,775
|
|
|
|
|
|
|||
Non-current liabilities
|
|
|
|
|||
Financial liabilities
|
6,567
|
|
(45
|
)
|
6,522
|
|
Provisions
|
110
|
|
—
|
|
110
|
|
Lease liabilities
|
—
|
|
1,638
|
|
1,638
|
|
Deferred tax liabilities
|
180
|
|
—
|
|
180
|
|
Other liabilities
|
53
|
|
(9
|
)
|
44
|
|
Total non-current liabilities
|
6,910
|
|
1,584
|
|
8,494
|
|
|
|
|
|
|||
Current liabilities
|
|
|
|
|||
Trade and other payables
|
1,432
|
|
(54
|
)
|
1,378
|
|
Other financial liabilities
|
1,289
|
|
(6
|
)
|
1,283
|
|
Lease liabilities
|
—
|
|
361
|
|
361
|
|
Provisions
|
398
|
|
(3
|
)
|
395
|
|
Other liabilities
|
1,290
|
|
(3
|
)
|
1,287
|
|
Total current liabilities
|
4,409
|
|
295
|
|
4,704
|
|
|
|
|
|
|||
Liabilities associated with assets held for sale
|
4
|
|
4
|
|
8
|
|
|
|
|
|
|||
Total equity and liabilities
|
14,102
|
|
1,879
|
|
15,981
|
|
•
|
Change in lease price due to indexation or rate which has become effective in reporting period
|
•
|
Modifications to the lease contract
|
•
|
Reassessment of the lease term
|
•
|
to apply IFRS 16 only to contracts that were previously assessed as leases in accordance with the previous IFRS standards (IAS 17
Leases
and IFRIC 4
Determining whether and Arrangement contains a Lease
)
|
•
|
to apply a single discount rate to a portfolio of leases with reasonably similar characteristics as permitted by IFRS 16
|
•
|
to exclude initial direct cost from the measurement of if the right-of-use asset as at January 1, 2019.
|
•
|
Application of the Group onerous contract provision process as the impairment assessment of right-of-use assets upon transition.
|
1.
|
Definitions
|
2.
|
Registered Office
|
3.
|
Power to Issue Shares
|
4.
|
Power of the Company to Purchase its Shares
|
5.
|
Rights Attaching to Shares
|
6.
|
Calls on Shares
|
7.
|
Forfeiture of Shares
|
8.
|
Share Certificates
|
9.
|
Trading Facilities
|
10.
|
Fractional Shares
|
11.
|
Register of Shareholders
|
12.
|
Registered Holder Absolute Owner
|
13.
|
Transfer of Registered Shares
|
14.
|
Transmission of Registered Shares
|
15.
|
Foreign Securities Laws
|
16.
|
Interests in Shares
|
17.
|
Mandatory Offers
|
18.
|
Power to Alter Capital
|
19.
|
Variation of Rights Attaching to Shares
|
20.
|
Dividends
|
21.
|
Power to Set Aside Profits
|
22.
|
Method of Payment
|
23.
|
Capitalisation
|
24.
|
Governance Structure
|
25.
|
Matters Requiring Shareholder Approval
|
26.
|
Annual General Meetings
|
27.
|
Special General Meetings
|
28.
|
Notice and Record Dates
|
29.
|
Meeting Notice and Access
|
30.
|
Postponement or Cancellation of General Meeting
|
31.
|
Attendance and Security at General Meetings
|
32.
|
Quorum at General Meetings
|
33.
|
Chairman to Preside at General Meetings
|
34.
|
Voting on Resolutions
|
35.
|
Voting on a Poll Required
|
36.
|
Voting by Joint Holders of Shares
|
37.
|
Instrument of Proxy
|
38.
|
Representation of Corporate Shareholders
|
39.
|
Adjournment of General Meeting
|
40.
|
Directors' Attendance at General Meetings
|
41.
|
Duties and Powers of the Board
|
42.
|
Composition of the Board and Appointment of Chairman
|
43.
|
Board Committees
|
44.
|
Election of Directors
|
45.
|
Alternate Directors
|
46.
|
Removal of Directors
|
47.
|
Vacancy in the Office of Director
|
48.
|
Remuneration of Directors
|
49.
|
Defect in Appointment of Director
|
50.
|
Register of Directors and Officers
|
51.
|
Board Meetings
|
52.
|
Notice of Board Meetings
|
53.
|
Conduct of Board Meetings
|
54.
|
Written Resolutions of the Board
|
55.
|
Validity of Prior Acts
|
56.
|
Appointment of CEO and Officers
|
57.
|
Powers, Duties and Remuneration of CEO and Officers
|
58.
|
Duties and Remuneration of the Secretary
|
59.
|
Disclosure of Conflicts
|
60.
|
Indemnification and Exculpation of Directors and Officers
|
61.
|
Minutes
|
62.
|
Place Where Corporate Records Kept
|
63.
|
Form and Use of Seal
|
64.
|
Books of Account
|
65.
|
Financial Year End
|
66.
|
Annual Audit
|
67.
|
Appointment of Auditor
|
68.
|
Financial Statements
|
69.
|
Distribution of Auditor's Report
|
70.
|
Winding-Up
|
1.
|
Definitions
|
1.1
|
In these Bye-laws, the following words and expressions shall, where not inconsistent with the context, have the following meanings, respectively:
|
Act
|
the Companies Act 1981 (as amended);
|
Affiliate
|
with respect to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person, including, if such Person is an individual, any relative or spouse of such Person, or any relative of such spouse of such Person, any one of whom has the same home as such Person, and also including any trust or estate for which any such Person(s) specified herein, directly or indirectly, serves as a trustee, executor or in a similar capacity (including any protector or settlor of a trust) or in which such Person(s) specified herein, directly or indirectly, has a substantial (being greater than 10 per cent) beneficial interest and any Person who is controlled by any such trust or estate. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean, with respect to any Person, the possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by Contract, or otherwise) of such Person; provided, however, that for the purposes of this definition, neither the Company nor any of its Controlled Affiliates shall be deemed Affiliates of any Shareholder or Beneficial Owner;
|
Alternate Director
|
an alternate director appointed in accordance with these Bye-laws;
|
Appointed Stock Exchange
|
has the meaning given to such term in the Act;
|
Auditor
|
any Person appointed as the auditor of the Company;
|
Beneficial Ownership
|
the power to vote or direct the voting of, or to dispose or direct the disposition of, the securities in question, and “Beneficially Owned” and “Beneficial Owner” shall be construed accordingly;
|
Board
|
the board of Directors of the Company appointed or elected pursuant to these Bye-laws and acting by resolution in accordance with the Act and these Bye-laws, or the Directors present at a meeting of Directors at which there is a quorum present throughout;
|
Board Delegation of Authority
|
has the meaning given to such term in Bye-law 57.2;
|
Board Reserved Matters
|
the approval of any of the following: (i) the Budget; (ii) the audited accounts of the Company; (iii) the recommendation for appointment of the Auditors of the Company by the Shareholders; (iv) any Reserved Financing Transaction; (v) any Reserved Share Capital Matter; (vi) any Reserved Fundamental Transaction; (vii) any Reserved Contractual Obligation; (viii) any Reserved M&A Transaction; (ix) any Reserved Sale Transaction; (x) any Reserved Down-Sizing; (xi) any Reserved Lease Obligation; (xii) any Reserved Legal Matter; (xiii) any Reserved Settlement; and (xiv) the appointment, re-appointment or early termination of the employment of any Senior Executive; and (xv) the Board Delegation of Authority and the authorities of the CEO and other Officers granted pursuant thereto;
|
Budget
|
the annual budget of the Company and the Group;
|
Business Day
|
a day on which banks are generally open for business in each of Hamilton, Bermuda and Amsterdam, the Netherlands;
|
Casual Vacancy
|
has the meaning given to such term in Bye-law 47.2;
|
CEO
|
the chief executive officer of the Company;
|
CFO
|
the chief financial officer of the Company;
|
Clear Days
|
in relation to the period of a notice, that period excluding the day on which the notice is given or served, or deemed to be given or served, and the day for which it is given or on which it is to take effect;
|
Common Shares
|
common shares of par value US$0.001 each (or such other par value as may result from any reorganisation of capital) in the capital of the Company, having the rights and being subject to the restrictions set out in these Bye-laws;
|
Company
|
the company for which these Bye-laws are adopted;
|
Compensation Committee
|
the compensation committee established by the Board;
|
Contract
|
any agreement, letter of intent, lease, license, evidence of Indebtedness, mortgage, indenture, security agreement or other contract or understanding (whether written or oral), in each case, to the extent legally binding;
|
Controlled Affiliate
|
with respect to any Person, any Affiliate of such Person in which such Person owns or controls, directly or indirectly, securities having more than 50 per cent of the voting power for the election of directors or other governing body thereof or more than 50 per cent of the partnership or other ownership interests therein (other than as a limited partner);
|
Cumulative Voting
|
the system of voting for Directors in which each voting share confers on its holder a total number of votes which is equal to the total number of Directors to be elected and which the holder may cast for candidates in any proportion (including, without limitation, casting all votes for a single candidate);
|
CXO
|
the CFO, the General Counsel and other positions in the Company that report directly to the CEO;
|
Director
|
a director of the Company and shall include an Alternate Director;
|
General Counsel
|
the general counsel of the Company;
|
Governmental Entity
|
in any applicable jurisdiction or international forum, any: (a) federal, state, territorial, oblast, okrug, regional, municipal, local or foreign government; (b) court, arbitral or other tribunal; (c) governmental or quasi-governmental authority of any nature (including any political subdivision, instrumentality, branch, department, official or entity), and including international organisations having jurisdiction over matters concerning intellectual property; or (d) agency, commission, ministry, committee, inspectorate, authority or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature;
|
Group
|
the Company and its Subsidiaries;
|
Group Company
|
any of the Company or its Subsidiaries;
|
Indebtedness
|
with respect to any Person, without duplication, all obligations of such Person, whether incurred as principal or surety and whether present, future, actual or contingent, for the payment or repayment of money, net of unrestricted cash, cash equivalents and loans receivable in relation to capital leases, including: (a) all indebtedness for borrowed money or for the deferred purchase price of property or services (other than ordinary course of business trade credit); (b) all vendor financing obligations; (c) any amounts payable by such Person under capital leases or similar arrangements over their respective periods; (d) any credit (other than ordinary course of business trade credit) to such Person from a supplier of goods or under any instalment purchase or other similar arrangement; (e) any liabilities and obligations of third parties to the extent that they are guaranteed by such Person or such Person has otherwise assumed or become liable for the payment of such liabilities or obligations or to the extent that they are secured by any Lien upon property owned by such Person whether or not such Person has assumed or become liable for the payment of such liabilities or obligations; and (f) all accrued and unpaid obligations in respect of employee salaries and benefits, other than those arising in the ordinary course of business;
|
Law
|
any law, statute, constitution, treaty, rule, regulation, policy, guideline, directive, ordinance, code, judgment, ruling, order, writ, decree, normative act, instruction, information letter, injunction or determination of any Governmental Entity or any other pronouncement having the effect of law or regulation of any other country or any state, county, city or other political subdivision;
|
Lien
|
any mortgage, pledge, security interest, lease, lien, adverse claim, levy, charge or other encumbrance, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing;
|
M&A Transaction
|
the purchase or acquisition, or the entry into an agreement to purchase or acquire, by the Company or any of its Subsidiaries, of an interest in one or more companies or business assets, including a transaction in which (a) the Company issues new equity interests (or derivative securities representing an interest therein) as consideration and/or (b) any of the Company's Subsidiaries issue or transfer any equity interests (or derivative securities representing an interest therein) in such Subsidiary as consideration, in each case in any one transaction or series of related transactions. For purposes of this definition, value shall be calculated as follows: (1) in the case of the acquisition of a business, the value shall mean the enterprise value of the acquired business; (2) in the case of a merger, the value shall mean the enterprise value of the business contributed by Group Companies; and (3) in the case of an asset acquisition, the value shall mean the higher of the gross purchase price (excluding any assumed liabilities) and the book value of the acquired assets, in each of the above cases, as determined by any two of the CEO, the CFO and the General Counsel;
|
NASDAQ
|
the NASDAQ Stock Market;
|
Officer
|
any person appointed by the Board to hold an office in the Company;
|
Ordinary Course Contract
|
any contract (a) entered into by any Group Company on a regular basis as part of the day-to-day operation of its principal business, or (b) that is otherwise consistent with the Annual Budget, in each case, as reasonably determined (with respect to an individual contract or type of contract) by the CEO, the CFO and the General Counsel. Ordinary Course Contract does not include any contract involving a potential conflict of interest (as described in Bye-law 59), as determined by the CFO and the General Counsel;
|
Person
|
any natural person, corporation, general partnership, simple partnership, limited partnership, limited liability partnership, limited liability company, proprietorship, other business
|
Register of Shareholders
|
the register of shareholders referred to in these Bye-laws (including any branch register of shareholders maintained by the Company) in each case as maintained in accordance with the Act;
|
Registered Office
|
the registered office of the Company for the time being;
|
Obligation
|
the entry by any Group Company (whether by renewal or otherwise) into any Contract or group of related Contracts involving obligations or requiring payments by one or more Group Companies, in the case of Ordinary Course Contracts, in excess of US$300 million, and in the case of other Contracts, in excess of US$50 million, in each case, as determined by the CFO and the General Counsel;
|
Reserved Down-Sizing
|
any Group Company's exit from or closing of a business or business segment, or a down-sizing, reduction in force or streamlining of any operation, that results in cash expenditures outside the ordinary course of business for which the aggregate cash expense would exceed US$50 million for any such projects or series of related projects, as determined by the CFO and the General Counsel;
|
Transaction
|
any financing transaction, incurrence of Indebtedness, guarantee or provision of security entered into by any Group Company that (1)(X) exceeds US$300 million and (Y) is not solely among Group Companies or (2) involves pledging or otherwise encumbering the shares of any Group Company (or any Affiliate of any Group Company) with respect to Indebtedness in an amount greater than US$50 million, in each case, as determined by the CFO and General Counsel;
|
Transaction
|
any merger, consolidation, amalgamation, conversion, reorganisation, scheme of arrangement, dissolution or liquidation involving any Group Company, other than any such transaction which involves solely Group Companies directly or indirectly wholly-owned by one or more Group Companies and is not expected to result in a net increase in liability for the Group in excess of US$20 million, as determined by the CFO and the General Counsel;
|
Reserved Lease Obligation
|
any Group Company's entry into any lease obligation wherein the present value of the aggregate lease obligation is greater than US$300 million, as determined by the CFO and the General Counsel;
|
Reserved Legal Matter
|
any Group Company's initiation of any litigation, claim, arbitration or other legal matter (or appeal in respect of a determination) involving any Governmental Entity that is (i) material to the reputation or operations of the Group or (2) is expected at the time of initiation to result in claims or counterclaims or a series of counterclaims exceeding US$50 million, in each case as determined by the CFO and the General Counsel;
|
Reserved M&A Transaction
|
any M&A Transaction (i) with a value exceeding US$50 million (in any transaction or series of related transactions); (ii) with an aggregate value exceeding US$200 million in any fiscal year for all M&A Transactions not otherwise requiring Board approval hereunder; or (iii) which is considered to be material, as determined by any two of the CEO, the CFO and the General Counsel;
|
Reserved Sale Transaction
|
any sale of assets of any Group Company (i) where the aggregate value of such assets exceeds US$50 million (in any transaction or series of related transactions) to one or more entities that are not Group Companies; (ii) that results in the Group’s exit or closing of the Group’s operations comprising one or more segments by country; or (iii) that comprises a sale of all or substantially all of the assets of such Group Company, where the aggregate value of such assets exceeds US$20 million, as determined by the CFO and the General Counsel;
|
Reserved Settlement
|
the settlement by any Group Company of any action, suit, claim or proceeding involving a Governmental Entity, including any investigation by a Governmental Entity, whether or not a Group Company is a claimant or defendant in such action, suit, claim or proceeding, (1) that would impose any material restrictions on the operations of the Group, (2) pursuant to which the amount to be paid by the Group, together with any other related expected financial impact, exceeds, in the case of tax claims, US$50 million, and in other cases, US$30 million, per matter or series of related matters, in each case of (1) and (2), as determined by the CFO and the General Counsel or (3) that involves matters which are subject to an internal investigation being coordinated by the Board or a committee of the Board or impacting any Director in his or her personal capacity;
|
Reserved Share Capital Matter
|
any change in the authorised or issued share capital of any Group Company if as a result of such change the shareholding of any person not forming part of the Group increases (except for issues of shares, or interests in shares of the Company, in connection with employee compensation awards (which authority shall be delegated to the Compensation Committee);
|
Resident Representative
|
any person appointed to act as resident representative and includes any deputy or assistant resident representative;
|
Secretary
|
the Person ordinarily resident in Bermuda appointed to perform any or all of the duties of secretary of the Company and includes any deputy or assistant secretary and any person appointed by the Board to perform any of the duties of the secretary in accordance with the Act;
|
Section 13(d) Group
|
the meaning given in Bye-law 17.1;
|
Senior Executives
|
the CEO, the CXOs, the chief executive officers of the Company’s Significant Subsidiaries and such other positions as the Board may determine to be Senior Executives;
|
Shareholder
|
the Person registered in the Register of Shareholders as the holder of shares in the Company and, when two or more Persons are so registered as joint holders of shares, means the Person whose name stands first in the Register of Shareholders as one of such joint holders or all of such Persons, as the context so requires;
|
Significant Subsidiary
|
any operating Subsidiary of the Company with service revenues in excess of US$300 million in the most recent fiscal year;
|
Special Resolution
|
a resolution of the Company passed by Shareholders representing not less than 75 per cent of the total voting rights of the Shareholders who (being entitled to do so) vote in person or by proxy on the resolution at a general meeting of Shareholders;
|
Stock Exchange Regulation
|
any rule, regulation rule, regulation, policy, guideline, or directive of any Appointed Stock Exchange relevant to the Company;
|
Subsidiary
|
with respect to any Person, any other Person in which such Person owns or controls, directly or indirectly, more than 50 per cent of the securities having voting power for the election of directors or other governing body thereof or more than 50 per cent of the partnership or other ownership interests therein (other than as a limited partner);
|
Treasury Share
|
a share of the Company that is treated as having been acquired and held by the Company and has been held continuously by the Company since it was so acquired and has not been cancelled; and
|
US$
|
United States Dollars.
|
1.2
|
In these Bye-laws, where not inconsistent with the context:
|
(a)
|
words denoting the plural number include the singular number and vice versa;
|
(b)
|
words denoting the masculine gender include the feminine and neuter genders;
|
(c)
|
the words:
|
i.
|
"may" shall be construed as permissive; and
|
ii.
|
"shall" shall be construed as imperative;
|
(d)
|
a corporation shall be deemed to be present in person at a meeting if its representative, duly authorised pursuant to these Bye-laws, is present;
|
(e)
|
references to a company include any body corporate or other legal entity, whether incorporated or established in Bermuda or elsewhere;
|
(f)
|
references to writing include typewriting, printing, lithography, photography, electronic mail and other modes of representing or reproducing words in a legible and non-transitory form;
|
(g)
|
a reference to anything being done by electronic means includes its being done by means of any electronic or other communications equipment or facilities and references to any communication being delivered or received, or being delivered or received at a particular place, include the transmission of an electronic or similar communication, and to a recipient identified in such manner or by such means, as the Board may from time to time approve or prescribe, either generally or for a particular purpose;
|
(h)
|
references to a signature or to anything being signed or executed include such forms of electronic signature or other means of verifying the authenticity of an electronic or similar communication as the Board may from time to time approve or prescribe, either generally or for a particular purpose;
|
(i)
|
references to a dividend include a distribution paid in respect of shares to Shareholders out of contributed surplus or any other distributable reserve;
|
(j)
|
any reference to any statute or statutory provision (whether of Bermuda or elsewhere) includes a reference to any modification or re-enactment of it for the time being in force and to every rule, regulation or order made under it (or under any such modification or re-enactment) and for the time being in force and any reference to any rule, regulation or order made under any such statute or statutory provision includes a reference to any modification or replacement of such rule, regulation or order for the time being in force;
|
(k)
|
references to shares carrying the general right to vote at general meetings of the Company are to those shares (of any class or series) carrying the right to vote, other than shares which entitle the holders to vote only in limited circumstances or upon the occurrence of a specified event or condition (whether or not those circumstances have arisen or that event or condition has occurred); and
|
(l)
|
unless otherwise provided herein, words or expressions defined in the Act shall bear the same meaning in these Bye-laws, except that the definition of "attorney" in the Act shall not apply.
|
1.3
|
Headings used in these Bye-laws are for convenience only and are not to be used or relied upon in the construction hereof.
|
2.
|
Registered Office
|
3.
|
Power to Issue Shares
|
3.1
|
Subject to these Bye-laws
and to any resolution of the Shareholders to the contrary, and without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, to the extent there are enough unissued Common Shares, the Board shall have the power to issue in total up to five per cent of the total authorised capital of the Company as Common Shares on such terms and conditions as it may determine; provided that the limitation contained in this Bye-law 3.1 shall not apply to the issue of shares, or interests in shares of the Company, in connection with employee compensation awards approved by the Compensation Committee.
|
3.2
|
Other than as permitted under Bye-law 3.1, the Board shall not be authorised to issue any unissued shares of the Company.
|
4.
|
Power of the Company to Purchase its Shares
|
4.1
|
The Company may purchase its own shares for cancellation or acquire them as Treasury Shares in accordance with the Act on such terms as the Board shall think fit.
|
4.2
|
The Board may exercise all the powers of the Company to purchase or acquire all or any part of its own shares in accordance with the Act.
|
5.
|
Rights Attaching to Shares
|
5.1
|
At the date of adoption of these Bye-laws, the authorised share capital of the Company is divided into Common Shares.
|
5.2
|
The holders of Common Shares shall, subject to the provisions of these Bye-laws:
|
(a)
|
except where Cumulative Voting applies, be entitled to one vote per Common Share;
|
(b)
|
be entitled to such dividends as the Board may from time to time declare;
|
(c)
|
in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or upon any distribution of capital, be entitled to the surplus assets of the Company (subject to the rights of the holders of any preference shares in the Company then in issue having preferred rights on a return of capital) in respect of their holdings of Common
|
(d)
|
generally be entitled to enjoy all of the rights attaching to common shares.
|
5.3
|
At the discretion of the Board, whether or not in connection with the issue and sale of any shares or other securities of the Company, the Company may issue Common Shares, Contracts, warrants or other instruments evidencing any Common Shares, option rights for Common Shares or securities having conversion or option rights for Common Shares, or obligations on such terms, conditions and other provisions as are fixed by the Board, including, without limiting the generality of this authority, conditions that preclude or limit any Person or Persons owning or offering to acquire a specified number or percentage of the issued Common Shares, option rights, securities having conversion or option rights, or obligations of the Company, or transferee of the Person or Persons from exercising, converting, transferring or receiving the Common Shares, option rights, securities having conversion or option rights, or obligations, provided that any issuance or sale pursuant to this Bye-law 5.3 shall be subject to (and count towards) the limitation on the Board’s power to issue unissued Common Shares contained in Bye-law 3.
|
5.4
|
All the rights attaching to a Treasury Share shall be suspended and shall not be exercised by the Company while it holds such Treasury Share and, except where required by the Act, all Treasury Shares shall be excluded from the calculation of any percentage or fraction of the issued share capital, or shares, of the Company.
|
5.5
|
Subject to the provisions of these Bye-laws, any shares of the Company held by the Company as Treasury Shares shall be at the disposal of the Board, which may hold all or any of the shares, dispose of or transfer all or any of the shares for cash or other consideration on such terms and conditions as it may determine, or cancel all or any of the shares.
|
5.6
|
The Board may in connection with the issue of any shares exercise all powers of paying commission and brokerage conferred or permitted by Law. Subject to the provisions of the Act, any such commission or brokerage may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other.
|
5.7
|
Except as ordered by a court of competent jurisdiction or as required by Law, no person shall be recognised by the Company as holding any share upon trust and the Company shall not be bound by or required in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or in any fractional part of a share or (except only as otherwise provided in these Bye-laws or by Law) any other right in respect of any share except an absolute right to the entirety thereof in the registered holder.
|
6.
|
Calls on Shares
|
6.1
|
The Board may make such calls as it thinks fit upon the Shareholders in respect of any moneys (whether in respect of nominal value or premium) unpaid on the shares allotted to or held by such Shareholders (and not made payable at fixed times by the terms and conditions of issue), and, if a call is not paid on or before the day appointed for payment thereof, the Shareholder may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment. The Board may differentiate
|
6.2
|
Any amount which by the terms of allotment of a share becomes payable upon issue or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall for all the purposes of these Bye-laws be deemed to be an amount on which a call has been duly made and payable, on the date on which, by the terms of issue, the same becomes payable, and in case of non-payment all the relevant provisions of these Bye-laws as to payment of interest, costs, charges and expenses, forfeiture or otherwise shall apply as if such amount had become payable by virtue of a duly made and notified call.
|
6.3
|
The joint holders of a share shall be jointly and severally liable to pay all calls and any interest, costs and expenses in respect thereof.
|
6.4
|
The Company may accept from any Shareholder the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up or become payable.
|
7.
|
Forfeiture of Shares
|
7.1
|
If any Shareholder fails to pay, on the day appointed for payment thereof, any call in respect of any share allotted to or held by such Shareholder, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward such Shareholder a notice in writing in the form approved by the Board, notifying the Shareholder that the shares in question will be liable to be forfeited if the call remains unpaid.
|
7.2
|
If the requirements of such notice are not complied with, any such share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to that effect, and such share shall thereupon become the property of the Company and may be disposed of as the Board shall determine.
|
7.3
|
A Shareholder whose share or shares have been so forfeited shall, notwithstanding such forfeiture, be liable to pay to the Company all calls owing on such share or shares at the time of the forfeiture together with all interest due thereon and any costs and expenses incurred by the Company in connection therewith.
|
7.4
|
The Board may accept the surrender of any shares which it is in a position to forfeit on such terms and conditions as may be agreed. Subject to those terms and conditions, a surrendered share shall be treated as if it had been forfeited.
|
8.
|
Share Certificates
|
8.1
|
Every Shareholder shall be entitled to a certificate under the common seal of the Company or bearing the signature (or a facsimile thereof) of a Director or Officer or a person expressly authorised to sign specifying the number and, where appropriate, the class of shares held by such Shareholder and whether the same are fully paid up and, if not, specifying the amount paid on such shares. The Board may by resolution determine, either generally or in a particular case, that any or all signatures on certificates may be printed thereon or affixed by mechanical means.
|
8.2
|
The Company shall be under no obligation to complete and deliver a share certificate unless specifically called upon to do so by the Person to whom the shares have been allotted.
|
8.3
|
If any share certificate shall be proved to the satisfaction of the Board to have been worn out, lost, mislaid, or destroyed the Board may cause a new certificate to be issued and request an indemnity for the lost certificate if it sees fit.
|
9.
|
Trading Facilities
|
9.1
|
Notwithstanding any provisions of these Bye-laws, the Directors shall, subject always to the Act and any other applicable Laws and the facilities and requirements of any relevant system concerned, have power to implement any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of uncertificated shares and to the extent such arrangements are so implemented, no provision of these Bye-laws shall apply or have effect to the extent that it is in any respect inconsistent with the holding or transfer of shares in uncertificated form. Unless otherwise determined by the Directors and permitted by the Act and any other applicable Laws, no Person shall be entitled to receive a certificate in respect of any share for so long as the title to that share is evidenced otherwise than by a certificate and for so long as transfers of that share may be made otherwise than by a written instrument.
|
9.2
|
Without prejudice to Bye-law 9.1 but notwithstanding any other provisions of these Bye-laws, the Directors shall, subject always to the Act and any other applicable Laws and the facilities and requirements of any relevant system concerned, have power to implement and/or approve any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of interests in shares in the capital of the Company in the form of depositary receipts or similar interests, instruments or securities, and the holding and transfer of such receipts, interests, instruments or securities in uncertificated form and to the extent such arrangements are so implemented, no provision of these Bye-laws shall apply or have effect to the extent that it is in any respect inconsistent with the holding or transfer thereof or the shares in the capital of the Company represented thereby. The Directors may from time to time take such actions and do such things as they may, in their absolute discretion, think fit in relation to the operation of any such arrangements.
|
10.
|
Fractional Shares
|
11.
|
Register of Shareholders
|
11.1
|
The Board shall cause to be kept in one or more books a Register of Shareholders and shall enter therein the particulars required by the Act.
|
11.2
|
The Register of Shareholders shall be open to inspection without charge at the Registered Office on every Business Day, subject to such reasonable restrictions as the Board may impose, so that not less than two hours in each Business Day be allowed for inspection.
|
12.
|
Registered Holder Absolute Owner
|
13.
|
Transfer of Registered Shares
|
13.1
|
An instrument of transfer shall be in writing in the usual form prevalent in Bermuda, or in any such other written form as the Board may reasonably accept, save that for such time as the Company’s shares are traded or admitted to trading on an Appointed Stock Exchange, nothing in this bye-law 13 shall operate to restrict transfer of shares in accordance with Stock Exchange Regulations.
|
13.2
|
Except as otherwise provided in these Bye-laws, such instrument of transfer shall be signed by or on behalf of the transferor and transferee, provided that, in the case of a fully paid share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such share until the same has been registered as having been transferred to the transferee in the Register of Shareholders.
|
13.3
|
If shares are certificated, the Board may refuse to recognise any instrument of transfer unless it is accompanied by the certificate in respect of the shares to which it relates and by such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer.
|
13.4
|
The joint holders of any share may transfer such share to one or more of such joint holders, and the surviving holder or holders of any share previously held by them jointly with a deceased Shareholder may transfer any such share to the executors or administrators of such deceased Shareholder.
|
13.5
|
The Board may in its absolute discretion and without assigning any reason therefor refuse to register the transfer of a share which is not fully paid. The Board shall refuse to register a transfer unless all applicable consents, authorisations and permissions of any Governmental Entity in Bermuda have been obtained.
|
13.6
|
If the Board refuses to register a transfer of any share the Secretary shall, within two months after the date on which the transfer was lodged with the Company, send to the transferor and transferee notice of the refusal.
|
14.
|
Transmission of Registered Shares
|
14.1
|
In the case of the death of a Shareholder, the survivor or survivors where the deceased Shareholder was a joint holder, and the legal personal representatives of the deceased Shareholder where the deceased Shareholder was a sole holder, shall be the only Persons recognised by the Company as having any title to the deceased Shareholder's interest in the shares. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by such deceased Shareholder with other Persons. Subject to the Act, for the purpose of this Bye-law, legal
|
14.2
|
Any Person becoming entitled to a share in consequence of the death or bankruptcy of any Shareholder, or otherwise by operation of applicable Law, may be registered as a Shareholder upon such evidence as the Board may deem sufficient, or may elect to nominate a Person to be registered as a transferee of such share, and in such case the Person becoming entitled shall execute in favour of such nominee an instrument of transfer in favour of his nominee.
|
14.3
|
On the presentation of the foregoing materials to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Shareholder. Notwithstanding the foregoing, the Board shall, in any case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the share by the deceased Shareholder before such Shareholder's death or bankruptcy, as the case may be.
|
14.4
|
Where two or more Persons are registered as joint holders of a share or shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to such share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.
|
15.
|
Foreign Securities Laws
|
15.1
|
The Board may, in its absolute and unfettered discretion, decline to register the transfer of any shares if it believes that registration of such shares or transfer is required under the Laws of any jurisdiction and such registration has not been effected, save that the Board may request and rely on an opinion of counsel to the transferor or transferee, in form and substance satisfactory to the Board, that no such registration is required.
|
15.2
|
The Board shall have the authority to request from any direct or indirect holder of shares, and such holder shall provide, such information as the Board may request for the purpose of determining whether any transfer contemplated by Bye-law 15.1 should be permitted.
|
16.
|
Interests in Shares
|
16.1
|
The Company may by notice in writing require a Person whom the Board knows or has reasonable cause to believe to be or, at any time during the three years immediately preceding the date on which the notice is issued, to have been interested (legally or beneficially) in the Company’s shares:
|
(a)
|
to confirm that fact or (as the case may be) to indicate whether or not it is the case, and
|
(b)
|
where he holds or has during that time held an interest in shares, to give such further information as may be required in accordance with Bye-law 16.2.
|
16.2
|
A Person who has received a notice under Bye-law 16.1 shall respond, in writing, to the Board within 10 Business Days (or such other period as the Board shall specify in the notice) and shall:
|
(a)
|
state their full name and address, and, where the Person interested in shares is a body corporate, include a confirmation that the signatory to such response is duly authorised on behalf of such body corporate to give the relevant confirmation to the Company;
|
(b)
|
confirm the number of shares in which he is or was interested as at the date of the notice;
|
(c)
|
in a case where the Person no longer has an interest in the Company’s shares, state that he no longer has such an interest.
|
16.3
|
Where the Company has served a notice under Bye-law 16.1 on a Person who is or was interested in shares in the Company, and that person fails to give the Company the information required by the notice within the time specified in it, the Board, in its sole discretion, may direct that for so long as the shares are held by that Person and the default continues, the shares in question be subject to restrictions including (without limitation) that:
|
(i)
|
no voting rights are exercisable in respect of the shares;
|
(ii)
|
any transfer of the shares is void;
|
(iii)
|
except in a liquidation, no payment may be made of sums due from the Company on the shares, whether in respect of dividend, capital or otherwise.
|
16.4
|
For the purposes of this Bye-law 16, a Person is taken to be interested in any shares:
|
(a)
|
in which his spouse or any child or step-child or other Affiliate of his is interested;
|
(b)
|
if a body corporate is interested in them, and
|
(i)
|
that body or its directors are accustomed to act in accordance with his directions or instructions, or
|
(ii)
|
he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of that body corporate; or
|
(c)
|
he enters into a Contract for their purchase by him (whether for cash or other consideration); or
|
(d)
|
not being the registered holder, he is entitled to exercise or receive any right conferred by the holding of the shares or is entitled to control the exercise of any such right; or
|
(e)
|
where property is held on trust and shares in the Company are comprised in such trust property, and the Shareholder or a person identified in Bye-law 16.4(a) or 16.4(b) is a beneficiary of the trust.
|
16.5
|
The Company shall keep a register for purposes of this Bye-law 16, and whenever the Company issues a notice in accordance with Bye-law 16.1 and receives a response in consequence thereof, the Company shall (within 10 Business Days of such response) cause
|
17.
|
Mandatory Offers
|
17.1
|
Any Person who, individually or together with any of its Affiliates or any other members of a "group", within the meaning of Section 13(d)(3) of the United States Securities Exchange Act of 1934, as amended (a "
Section 13(d) Group
") of which it is a part, directly or indirectly, in any manner, acquires Beneficial Ownership of any Common Shares (including, without limitation, through the acquisition of ownership or control of another Shareholder or a Controlling Person of another Shareholder or through the direct or indirect acquisition of derivative securities) which, taken together with Common Shares already Beneficially Owned by it or any of its Affiliates or its Section 13(d) Group, in any manner, carry 50 per cent or more of the voting rights of the Company (the "
Limit
"), shall, within 30 days of acquiring such shares, make a general offer to all holders of Common Shares.
|
17.2
|
Where any Person breaches the Limit and does not make an offer as required by Bye-law 17.1, that Person is in breach of these Bye-laws.
|
17.3
|
The Board may do all or any of the following where it has reason to believe that the Limit is or may be breached:
|
(a)
|
require any Shareholder or Person appearing or purporting to be interested in any shares of the Company to provide such information as the Board considers appropriate to determine any of the matters under this Bye-law 17;
|
(b)
|
have regard to such public filings as it considers appropriate to determine any of the matters under this Bye-law 17;
|
(c)
|
make such determinations under this Bye-law 17 as it thinks fit, either after calling for submissions from affected Shareholders or other Persons or without calling for such submissions;
|
(d)
|
determine that the voting rights attached to all shares held by such Persons, or in which such Persons are or may be interested ("
Relevant Shares
") are from a particular time suspended and incapable of being exercised for a definite or indefinite period and such Person (and any proxy to the extent appointed by him to act in that capacity) shall for this period of time cease to be entitled to receive notice of any meeting of the Shareholders;
|
(e)
|
determine that some or all of the Relevant Shares will not carry any right to any dividends or other distributions from a particular time for a definite or indefinite period; and
|
(f)
|
take such other action as it thinks fit for the purposes of this Bye-law 17 including:
|
(i)
|
prescribing rules (not inconsistent with this Bye-law 17);
|
(ii)
|
setting deadlines for the provision of information;
|
(iii)
|
drawing adverse inferences where information requested is not provided;
|
(iv)
|
making determinations or interim determinations;
|
(v)
|
executing documents on behalf of a Shareholder;
|
(vi)
|
converting any Relevant Shares held in uncertificated form into certificated form, or vice-versa; and
|
(vii)
|
changing any decision or determination or rule previously made.
|
17.4
|
A general offer under Bye-law 17.1 complies with this Bye-law if:
|
(a)
|
the offer is unconditional in all respects and is open for acceptance for a period of not less than 30 days;
|
(b)
|
the making or implementation of the offer is not dependent on the passing of a resolution at any meeting of shareholders of the offeror; and
|
(c)
|
the offer is in cash or is accompanied by a cash alternative, in each case, at an offer price per Common Share not less than the greater of:
|
(i)
|
the highest price paid by the offeror, any of its Affiliates or any member of its Section 13(d) Group for any interest in Common Shares during the six months prior to the date on the Limit was exceeded,
|
(ii)
|
the 180 day volume weighted average price on NASDAQ of the Common Shares on the date on which the Limit was exceeded. In this Bye-law, a reference to the price of a Common Share will be deemed to include the price of a depository receipt or similar interest representing a Common Share, if Common Shares are evidenced by listed depository receipts or similar interests at any applicable time, and
|
(iii)
|
if, before the offer closes for acceptance, the offeror, any of its Affiliates or any member of its Section 13(d) Group acquires any interest in Common Shares at above the offer price, the highest price paid for the interest in the Common Shares so acquired,
|
17.5
|
The requirement for an offer to be made in accordance with this Bye-law may be waived by a vote of a majority of votes cast and entitled to vote on the matter by Shareholders voting in person or by proxy at a general meeting, excluding for all purposes of the vote the Shareholder(s) or Person(s)in question and their Affiliates.
|
17.6
|
Any one or more of the Directors may act as the attorney(s) of any Shareholder or Person in questionin relation to the execution of documents and other actions to be taken for the sale of Relevant Shares determined by the Board under this Bye-law 17.
|
18.
|
Power to Alter Capital
|
18.1
|
The Company may if authorised by resolution of the Shareholders increase, divide, consolidate, subdivide, change the currency denomination of, diminish or otherwise alter or reduce its share capital in any manner permitted by the Act.
|
18.2
|
Where, on any alteration or reduction of share capital, fractions of shares or some other difficulty would arise, the Board may deal with or resolve the same in such manner as it thinks fit including (without limitation) in the way prescribed in Bye-law 18.3 below.
|
18.3
|
The Board may sell shares representing the fractions to any Person (including the Company) for the best price reasonably obtainable and distribute the net proceeds of sale in due proportion amongst the Persons to whom such fractions are attributable (except that if the amount due to a Person is less than US$20.00, or such other sum as the Board may decide, the Company may retain such sum for its own benefit). To give effect to such sale the Board may authorise a Person to execute an instrument of transfer of shares in the name and on behalf of the holder of, or the Person entitled by transmission to, them to the purchaser or as the purchaser may direct or implement any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of uncertificated shares.
|
18.4
|
The purchaser will not be bound to see to the application of the purchase moneys in respect of any such sale. The title of the transferee to the shares shall not be affected by any irregularity in or invalidity of the proceedings connected with the sale or transfer. Any instrument or exercise referred to in Bye-law 18.3 shall be effective as if it had been executed or exercised by the holder of the shares to which it relates.
|
19.
|
Variation of Rights Attaching to Shares
|
19.1
|
Subject to the Act and, if relevant, the approval required pursuant to Bye-law 25.8, all or any of the special rights for the time being attached to any class of shares in issue may, unless otherwise expressly provided in the rights attaching to or by the terms of issue of the shares of that class, from time to time (whether or not the Company is being wound up), be altered or abrogated with the consent in writing of the holders of the issued shares of such class carrying 75 per cent or more of all of the votes capable of being cast at the relevant time at a separate general meeting of the holders of the shares of that class or with the sanction of a resolution passed at a separate general meeting of the holders of shares of that class by a majority of the votes cast.
|
19.2
|
All the provisions of these Bye-laws relating to general meetings of the Company shall apply
mutatis mutandis
to any separate general meeting of any class of Shareholders, except that the necessary quorum shall be one or more Shareholders present in person or by proxy holding or representing at least one third of the shares of the relevant class.
|
19.3
|
The special rights conferred on the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be altered or abrogated by: (a) the creation or issue of further shares ranking
|
20.
|
Dividends
|
20.1
|
The Board may, subject to these Bye-laws and in accordance with the Act, declare a dividend to be paid to the Shareholders holding shares entitled to the payment of dividends, in proportion to the number of shares held by them, and such dividend may be paid in cash or wholly or partly in specie, including without limitation the issue by the Company of shares or other securities, in which case the Board may fix the value for distribution in specie of any assets, shares or securities. No unpaid dividend shall bear interest as against the Company. The exact amount and timing of any dividend declarations and payments shall, subject to the requirements of the Act, be determined by the Board.
|
20.2
|
The Board may fix any date as the record date for determining the Shareholders entitled to receive any dividend.
|
20.3
|
The Company may pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.
|
20.4
|
The Board may declare and make such other distributions (in cash or in specie) to the Shareholders holding shares entitled to distributions as may be lawfully made out of the assets of the Company. No unpaid distribution shall bear interest as against the Company.
|
21.
|
Power to Set Aside Profits
|
22.
|
Method of Payment
|
22.1
|
Any dividend or other moneys payable in respect of a share may be paid by cheque or warrant sent through the post directed to the address of the Shareholder in the Register of Shareholders (in the case of joint Shareholders, the senior joint holder, seniority being determined by the order in which the names stand in the Register of Shareholders), or by direct transfer to such bank account as such Shareholder may direct. Every such cheque shall be made payable to the order of the Person to whom it is sent or to such Persons as the Shareholder may direct, and payment of the cheque or warrant shall be a good discharge to the Company. Every such cheque, warrant or direct transfer shall be sent at the risk of the Person entitled to the money represented thereby. If two or more Persons are registered as joint holders of any shares any one of them can give an effectual receipt for any dividend paid in respect of such shares.
|
22.2
|
The Board may deduct from the dividends or distributions payable to any Shareholder (either alone or jointly with another) by the Company in respect of any shares all moneys (if any)
|
22.3
|
Any dividend or other moneys payable in respect of a share which has remained unclaimed for 6 years from the date when it became due for payment shall, if the Board so resolves, be forfeited and cease to remain owing by the Company. The payment of any unclaimed dividend or other moneys payable in respect of a share may (but need not) be paid by the Company into an account separate from the Company's own account. Such payment shall not constitute the Company a trustee in respect thereof.
|
22.4
|
The Company shall be entitled to cease sending dividend cheques and warrants by post or otherwise to a Shareholder if those instruments have been returned undelivered to, or left uncashed by, that Shareholder on at least three consecutive occasions, or, following one such occasion, reasonable enquiries have failed to establish the Shareholder's new address. The entitlement conferred on the Company by this Bye-law in respect of any Shareholder shall cease if the Shareholder claims a dividend or cashes a dividend cheque or warrant.
|
23.
|
Capitalisation
|
23.1
|
The Board may capitalise any amount for the time being standing to the credit of any of the Company's share premium or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such amount in paying up unissued shares to be allotted as fully paid up bonus shares pro-rata (except in connection with the conversion of shares of one class to shares of another class) to the Shareholders.
|
23.2
|
The Board may capitalise any amount for the time being standing to the credit of a reserve account or amounts otherwise available for dividend or distribution by applying such amounts in paying up in full partly or nil paid up shares of those Shareholders who would have been entitled to such amounts if they were distributed by way of dividend or distribution.
|
24.
|
Governance Structure
|
24.1
|
the registered Shareholders of the Company acting in accordance with these Bye-laws;
|
24.2
|
the Board
acting in accordance with these Bye-laws; and
|
24.3
|
the CEO and other Officers as appointed by the Board and acting in accordance with these Bye-laws.
|
25.
|
Matters Requiring Shareholder
Approval
|
25.1
|
any merger, consolidation, amalgamation, conversion, reorganisation, scheme of arrangement, dissolution or liquidation involving the Company, which shall require a Special Resolution;
|
25.2
|
any sale of all or substantially all of the Company’s assets, which shall require a resolution passed by the affirmative vote of a simple majority of the votes cast and entitled to vote on the matter;
|
25.3
|
any issue of securities of the Company described under NASDAQ Listing Rule 5635 (
Shareholder Approval
) (or any successor thereto), except that approval of the Shareholders will not be required under this Bye-law for any stock option plans or other equity compensation plans or in any other circumstance described under NASDAQ Listing Rule 5635(c) (
Equity Compensation
) (or any successor thereto);
|
25.4
|
the election of Directors, which shall be done by Cumulative Voting in accordance with Bye-law 44;
|
25.5
|
the appointment of the Auditor, which shall require a resolution passed by the affirmative vote of a simple majority of the votes cast and entitled to vote on the matter;
|
25.6
|
loans to any Director, the approval of which shall be subject to the Act;
|
25.7
|
the discontinuance of the Company to a jurisdiction outside Bermuda pursuant to the Act, which shall require a Special Resolution; and
|
25.8
|
the rescission, alteration or amendment of these Bye-laws, or the adoption of any new bye-laws, which shall require approval by a resolution of the Board and by a Special Resolution.
|
26.
|
Annual General Meetings
|
27.
|
Special General Meetings
|
28.
|
Notice and Record Dates
|
28.1
|
At least 30 Clear Days’ notice of an annual general meeting (other than an adjourned meeting) shall be given to each Shareholder entitled to attend and vote thereat, stating the date, place and time at which the meeting is to be held, that the election of Directors will take place thereat, and as far as practicable, the other business to be conducted at the meeting.
|
28.2
|
At least 30 Clear Days’ notice of a special general meeting shall be given to each Shareholder entitled to attend and vote thereat, stating the date, time, place and the general nature of the business to be considered at the meeting.
|
28.3
|
The CEO or Board may fix any date as the record date for determining Shareholders’ eligibility to: (i) receive notice of and to vote at any general meeting (which record date shall be not more than 60 Clear Days prior to any general meeting); and (ii) receive any dividends declared from time to time by the Board.
|
28.4
|
A general meeting shall, notwithstanding that it is called on shorter notice than that specified in these Bye-laws, be deemed to have been properly called if it is so agreed by: (i) all the Shareholders entitled to attend and vote thereat in the case of an annual general meeting; and (ii) by a majority in number of the Shareholders having the right to attend and vote at the meeting and together holding not less than 95 per cent in nominal value of the shares giving a right to attend and vote thereat in the case of a special general meeting.
|
28.5
|
The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by, any Person entitled to receive notice shall not invalidate the proceedings at that meeting. A Shareholder present, either in person or by proxy, at any annual general meeting or special general meeting, or meeting of the holders of any class of shares shall be deemed to have received proper notice of that meeting and, where required, the purpose for which it was called.
|
29.
|
Meeting Notice and Access
|
29.1
|
A notice or other document may be given by the Company to a Shareholder:
|
(a)
|
by delivering it to such Shareholder in person; or
|
(b)
|
by sending it by letter mail or courier to such Shareholder’s address in the Register of Shareholders; or
|
(c)
|
(excluding a share certificate) by transmitting it by electronic means (including by electronic mail, but not by telephone) in accordance with such directions as may be given by such Shareholder to the Company for such purpose or by such other means as the Board may decide and which are permitted by Law and not prohibited by the Act; or
|
(d)
|
in accordance with Bye-law 29.3 or Bye-law 29.8.
|
29.2
|
Any notice required to be given to a Shareholder shall, with respect to any shares held jointly by two or more Persons, be given to whichever of such Persons is named first in the Register
|
29.3
|
Each Shareholder shall be deemed to have acknowledged and agreed that any notice or other document (excluding a share certificate) may be provided by the Company by way of accessing them on a website instead of being provided by other means.
|
29.4
|
Save as provided by Bye-laws 29.5 and 29.6, any notice shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission and, in proving such service, it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted, at the time when it was posted, delivered to the courier or transmitted by electronic mail, or such other method as the case may be.
|
29.5
|
Notice delivered by letter mail shall be deemed to have been served 48 hours after the time on which it is deposited, with postage prepaid, in the mail of any member state of the European Union, the United States, or Bermuda.
|
29.6
|
In the case of information or documents delivered in accordance with Bye-law 29.3, service shall be deemed to have occurred when: (i) the Shareholder is notified in accordance with Bye-law 29.1 of the website posting; and (ii) the information or document is published on the website.
|
29.7
|
The Company shall be under no obligation to send a notice or other document to the address shown for any particular Shareholder in the Register of Shareholders if the Board considers that the legal or practical problems under the Laws of, or the requirements of any regulatory body or Stock Exchange Regulation in, the territory in which that address is situated are such that it is necessary or expedient not to send the notice or document concerned to such Shareholder at such address and may require a Shareholder with such an address to provide the Company with an alternative acceptable address for delivery of notices by the Company.
|
29.8
|
If at any time, by reason of the suspension or curtailment of postal services within Bermuda or any other territory, the Company is unable effectively to convene a general meeting by notices sent through the post, a general meeting may be convened by a notice advertised in at least one national newspaper published in the territory concerned and such notice shall be deemed to have been duly served on each Person entitled to receive it in that territory on the day, or on the first day, on which the advertisement appears. In any such case, the Company shall send confirmatory copies of the notice to the Shareholders with registered addresses in that territory by post if at least five Clear Days before the meeting the posting of notices to addresses throughout that territory again becomes practicable.
|
30.
|
Postponement or Cancellation of General Meeting
|
31.
|
Attendance and Security at General Meetings
|
31.1
|
If so permitted by the Board or the chairman in relation to a general meeting, Shareholders may participate in such general meeting by such electronic means as permit all Persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.
|
31.2
|
The Board may, and at any general meeting, the chairman of such meeting may, make any arrangement and impose any requirement or restriction it or he considers appropriate to ensure the security of a general meeting including, without limitation, requirements for evidence of identity to be produced by those attending the meeting, the searching of their personal property and the restriction of items that may be taken into the meeting place. The Board and, at any general meeting, the chairman of such meeting, are entitled to refuse entry to a Person who refuses to comply with any such arrangements, requirements or restrictions.
|
32.
|
Quorum at General Meetings
|
32.1
|
Except as otherwise provided by the Act or these Bye-laws, at any general meeting two or more Persons present in person at the start of the meeting and having the right to attend and vote at the meeting and holding or representing in person or by proxy at least 50 per cent plus one voting share of the total issued voting shares in the Company at the relevant time shall form a quorum for the transaction of business.
|
32.2
|
If within half an hour from the time appointed for the meeting a quorum is not present, then, in the case of a meeting convened on a requisition, the meeting shall be deemed cancelled and, in any other case, the meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the CEO may determine. If the meeting shall be adjourned to the same day one week later or the CEO shall determine that the meeting is adjourned to a specific date, time and place, it shall not be necessary to give notice of the adjourned meeting other than by announcement at the meeting being adjourned. If the CEO shall determine that the meeting be adjourned to an unspecified date, time or place, fresh notice of the resumption of the meeting shall be given to each Shareholder entitled to attend and vote thereat in accordance with these Bye-laws. A meeting may not be adjourned under this Bye-law 32.2 to a day which is more than 90 days after the day originally appointed for the meeting.
|
33.
|
Chairman to Preside at General Meetings
|
34.
|
Voting on Resolutions
|
34.1
|
Subject to the Act and these Bye-laws, a resolution may only be put to a vote at a general meeting of the Company or of any class of Shareholders if:
|
(a)
|
it is proposed by or at the direction of the Board;
|
(b)
|
it is proposed at the direction of a court;
|
(c)
|
it is proposed on the requisition in writing of such number of Shareholders as is prescribed by, and is made in accordance with, the relevant provisions of the Act or these Bye-laws; or
|
(d)
|
the chairman of the meeting in his absolute discretion decides that the resolution may properly be regarded as within the scope of the meeting.
|
34.2
|
Subject to the Act and any Stock Exchange Regulation, and unless otherwise specified by these Bye-laws, any question properly proposed for the consideration of the Shareholders at any general meeting shall be decided by the affirmative vote of a simple majority of the votes cast and entitled to vote on the matter, and in the case of an equality of votes, the chairman of such meeting shall not be entitled to a second or casting vote and the resolution shall fail.
|
34.3
|
No Shareholder shall be entitled to vote at a general meeting unless such Shareholder has paid all the calls or other sums presently payable on all shares held by such Shareholder.
|
34.4
|
No amendment may be made to a resolution, at or before the time when it is put to a vote, unless the chairman of the meeting in his absolute discretion decides that the amendment or the amended resolution may properly be put to a vote at that meeting. At any general meeting if an amendment is proposed to any resolution under consideration and the chairman of the meeting rules on whether or not the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.
|
34.5
|
At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to these Bye-laws, be conclusive evidence of that fact.
|
34.6
|
Section 77A of the Act shall not apply to the Company.
|
35.
|
Voting on a Poll Required
|
35.1
|
Notwithstanding anything in these Bye-laws to the contrary, at any meeting of the Shareholders a resolution put to the vote of the meeting shall, in each instance, be voted upon by a poll. Except where Cumulative Voting applies, every Person present at a meeting of the Shareholders shall have one vote for each share of which such Person is the holder or for which such Person holds a proxy and such vote shall be counted by ballot as described herein, or in the case of a general meeting at which one or more Shareholders are present by electronic means, in such manner as the chairman of the meeting may direct and the result of such poll vote shall be taken to be the resolution of the meeting at which the poll
|
35.2
|
A poll for the purpose of electing a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll on any other question shall be taken in such manner during such meeting as the chairman of the meeting may direct.
|
35.3
|
Each Person physically present and entitled to vote shall be furnished with a ballot paper on which such Person shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken. Each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. Each Person present by telephone, electronic or other communications facilities or means shall cast his vote in such manner as the chairman shall direct. At the conclusion of the poll, the ballot papers and votes cast in accordance with such directions shall be examined and counted by a committee of not less than two Persons appointed by the chairman for the purpose or an independent scrutineer at the chairman's discretion. The result of the poll shall be declared by the chairman.
|
36.
|
Voting by Joint Holders of Shares
|
37.
|
Instrument of Proxy
|
37.1
|
A Shareholder may appoint a proxy by: (a) an instrument appointing a proxy in writing in such form as the Board may determine from time to time; or (b) such telephonic, electronic or other means as may be approved by the Board from time to time.
|
37.2
|
The appointment of a proxy or a corporate representative in relation to a particular meeting shall, unless the contrary is stated, be valid for any adjournment of the meeting.
|
37.3
|
A Shareholder may appoint one or more standing proxies, with or without the power of substitution, or (if a corporation) one or more standing representatives by delivery to the Registered Office (or at such other place as the Board may from time to time specify for such purpose) of evidence of such appointment(s). If a Shareholder appoints more than one standing proxy or standing representative which appointments may allow the standing proxy or standing representative to vote generally or only in respect of a specified item of business, each appointment shall specify the number and class of shares held by the relevant Shareholder in respect of which the standing proxy or standing representative has been appointed and any restrictions or limitations pursuant to which the standing proxy or standing representative is subject. The appointment of such a standing proxy or representative shall be valid for every general meeting and adjourned meeting until such time as it is revoked by notice to the Company or the Shareholder ceases to be a Shareholder, but:
|
(a)
|
the appointment of a standing proxy or representative may be made on an irrevocable basis and may be limited to any particular item or items of business or be unlimited and the Company shall recognise the vote or abstention of the proxy or representative given in accordance with the terms of such an appointment, to
|
(b)
|
(subject to Bye-law 37.3(a)) the appointment of a standing proxy or representative shall be deemed to be suspended at any meeting or poll taken at any meeting at which the Shareholder is present or in respect of which the Shareholder has specifically appointed another proxy or representative; and
|
(c)
|
the Board may from time to time require such evidence as it deems necessary as to the due execution and continuing validity of the appointment of any proxy or representative and, if it does so, the appointment of the proxy or representative shall be deemed to be suspended until such time as the Board determines that it has received the required evidence or other evidence satisfactory to it.
|
37.4
|
The appointment of a proxy must be received by the Company at the Registered Office or at such other place or in such manner as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting at which the Person named in the appointment proposes to vote, and an appointment of proxy which is not received in the manner so permitted may be treated as invalid. The Board may waive any requirements as to the delivery of proxies, either generally or in any particular case.
|
37.5
|
Subject to Bye-law 37.10 and subject as mentioned in this Bye-law, an instrument or other form of communication appointing or evidencing the appointment of a proxy or corporate representative shall be accompanied by such evidence as to its due execution as the Board may from time to time require, and shall be delivered to the Registered Office (or to such other place or places as the Board may from time to time specify for the purpose).
|
37.6
|
If the terms of appointment of a proxy include a power of substitution, any proxy appointed by substitution under such power shall be deemed to be the proxy of the Shareholder who conferred such power. All the provisions of these Bye-laws relating to the execution and delivery of an instrument or other form of communication appointing or evidencing the appointment of a proxy shall apply,
mutatis mutandis
, to the instrument or other form of communication effecting or evidencing such an appointment by substitution.
|
37.7
|
The appointment of a proxy, whether a standing proxy or a proxy relating to a particular meeting, shall be deemed, unless the contrary is stated, to confer authority to vote on any amendment of a resolution and on any other resolution put to a meeting for which it is valid in such manner as the proxy thinks fit.
|
37.8
|
A vote given by proxy, whether a standing proxy or a proxy relating to a particular meeting, shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the appointment of the proxy or of the authority under which it was executed, unless notice of such death, insanity or revocation was received by the Company at the Registered Office (or at any other place as may be specified for the delivery of instruments or other forms of communication appointing or evidencing the appointment of proxies in the notice convening the meeting or in any other information sent to Shareholders by or on behalf of the Board in relation to the meeting) at least one hour before the commencement of the meeting or adjourned meeting at which the vote is given or by such later time as the Board may decide, either generally or in any particular case.
|
37.9
|
Notwithstanding the preceding provisions of these Bye-laws, the Board may decide, either generally or in any particular case, to treat an instrument or other form of communication appointing or evidencing the appointment of a proxy or a corporate representative as properly delivered for the purposes of these Bye-laws if a copy or facsimile image of the instrument is sent by electronic means to the Registered Office (or to such place as may be specified in the notice convening the meeting or in any notice of any adjournment or, in either case, in any other information sent by or on behalf of the Board in relation to the meeting or adjourned meeting).
|
37.10
|
Subject to the Act, the Board may also, at its discretion, waive any of the provisions of these Bye-laws relating to the execution and deposit of an instrument or other form of communication appointing or evidencing the appointment of a proxy or a corporate representative or any ancillary matter (including, without limitation, any requirement for the production or delivery of any instrument or other communication to any particular place or by any particular time or in any particular way) and, in any case in which it considers it appropriate, may accept such verbal or other assurances as it thinks fit as to the right of any Person to attend and vote on behalf of any Shareholder at any general meeting.
|
37.11
|
A Shareholder who is the holder of two or more shares may appoint more than one proxy, with or without the power of substitution, to represent him and vote on his behalf in respect of different shares.
|
37.12
|
A proxy need not be a Shareholder.
|
38.
|
Representation of Corporate Shareholders
|
38.1
|
A corporation which is a Shareholder may, by written instrument, authorise such person or persons as it thinks fit to act as its representative at any meeting and any person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as that corporation could exercise if it were an individual Shareholder, and that Shareholder shall be deemed to be present in person at any such meeting attended by its authorised representative or representatives.
|
38.2
|
A Shareholder which is a corporation may, by written instrument, appoint more than one such authorised representative (with or without appointing any Persons in the alternative) at any such meeting provided that such appointment specifies the number of shares in respect of which each such appointee is authorised to act as representative, not exceeding in aggregate the number of shares held by the appointor and carrying the right to attend and vote at the relevant meeting.
|
38.3
|
Notwithstanding the foregoing, the chairman of the meeting may accept such assurances as he thinks fit as to the right of any person to attend and vote at general meetings on behalf of a corporation which is a Shareholder.
|
39.
|
Adjournment of General Meeting
|
39.1
|
The chairman of any general meeting at which a quorum is present may with the consent of Shareholders holding a majority of the voting rights of those Shareholders present in person or by proxy (and shall if so directed by Shareholders holding a majority of the voting rights of those Shareholders present in person or by proxy), adjourn the meeting.
|
39.2
|
In addition, the chairman may adjourn the meeting to another time and place or
sine die
without such consent or direction, and whether or not a quorum is present, at the direction of the Board (prior to or at the meeting) or if it appears to him that:
|
(a)
|
it is likely to be impracticable to hold or continue that meeting because of the number of Shareholders wishing to attend who are not present; or
|
(b)
|
the unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting; or
|
(c)
|
an adjournment is otherwise necessary so that the business of the meeting may be properly conducted.
|
39.3
|
Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Shareholder entitled to attend and vote thereat in accordance with these Bye-laws.
|
39.4
|
When a meeting is adjourned for three months or more or
sine die
, not less than ten Clear Days’ notice of the adjourned meeting shall be given in the same manner as in the case of the original meeting. Except as expressly provided by these Bye-laws, it shall not be necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting. No business shall be transacted at any adjourned meeting except business which might properly have been transacted at the meeting from which the adjournment took place.
|
40.
|
Directors' Attendance at General Meetings
|
41.
|
Duties and Powers of the Board
|
41.1
|
The business and affairs of the Company shall be managed under the direction of the Board, which may exercise all such powers of the Company and do all such lawful acts and things as are not required by the Act or by these Bye-laws required to be exercised by the Company in a general meeting of Shareholders.
|
41.2
|
Subject to these Bye-laws, the Board may delegate to any company, firm, person, or body of persons any power of the Board (including the power to sub-delegate), other than the power to approve any Board Reserved Matter, which power may not be delegated except to a committee of the Board established in accordance with Bye-law 43. The Board may appoint by power of attorney any company, firm, person or body of persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company. Any such delegation of authority or appointment of an attorney must be made in accordance with the limitation on the delegation of Board Reserved Matters, but may otherwise be made for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and
|
42.
|
Composition of the Board, and Appointment of Chairman
|
42.1
|
The Board shall consist of such number of Directors being not less than seven Directors and not more than thirteen Directors, as the Board shall from time to time determine, subject to approval by a resolution of the Company passed by Shareholders representing a simple majority of the total voting rights of the Shareholders, who (being entitled to do so) vote in person or by proxy on the resolution.
|
42.2
|
The chairman of the Board shall be selected by the Board. The chairman of the Board shall not have a casting vote on resolutions of the Board.
|
43.
|
Board Committees
|
44.
|
Election of Directors
|
44.1
|
Save as otherwise provided in this Bye-law 44 and Bye-laws 46 and 47, the Directors shall be elected at each annual general meeting of the Company.
|
44.2
|
All Directors shall be elected by Cumulative Voting. By way of illustration only, if there are ten candidates proposed to the Shareholders at a general meeting for election as Directors but only nine available Director positions, a Shareholder holding 100 voting shares would be entitled to apportion 900 votes among the ten candidates, and the nine candidates achieving the highest total number of votes would be elected to the Board.
|
44.3
|
A Director shall (unless he is removed from office or his office is vacated in accordance with these Bye-laws) hold office until the next following annual general meeting in accordance with these Bye-laws.
|
44.4
|
All Directors, prior to election or appointment (but not on re-appointment), must provide written acceptance of their appointment (conditional upon such appointment being effected), in such form as the Board may think fit, by notice in writing to the Registered Office.
|
45.
|
Alternate Directors
|
45.1
|
Any Director may appoint and remove, from time to time, another Director or an individual approved by the Board to act as a Director in the alternative to himself by notice in writing to the Registered Office. Any person so appointed shall have all the rights and powers of the Director or Directors for whom such person is appointed in the alternative provided that such person shall not be counted more than once in determining whether or not a quorum is present.
|
45.2
|
An Alternate Director shall be entitled to receive notice of all meetings of the Board and committees of the Board of which the appointing Director is a member and to attend and vote at any such meeting at which the Director for whom such Alternate Director was appointed in the alternative is not present and generally to perform at such meeting all the functions of such Director.
|
45.3
|
An Alternate Director shall cease to be such if the Director for whom he was appointed to act as a Director in the alternative ceases for any reason to be a Director.
|
46.
|
Removal of Directors
|
46.1
|
The Shareholders may, at any special general meeting convened and held in accordance with these Bye-laws, remove a Director by a resolution of the Company passed by Shareholders representing a simple majority of the total voting rights of the Shareholders, who (being entitled to do so) vote in person or by proxy on the resolution; provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 14 days before the meeting and at such meeting the Director shall be entitled to be heard on the motion for such Director's removal.
|
46.2
|
If a Director is removed from the Board under the provisions of Bye-law 46.1, the Shareholders may propose a nominee to fill the vacancy at the special general meeting at which such Director is removed only if a Shareholder or Shareholders holding in aggregate five per cent or more of all issued Common Shares has requisitioned in writing a proposal to nominate a replacement candidate for Director stating the information listed below with respect to such nominee and notice of such proposal is given to the Shareholders in accordance with Bye-law 28 at least five Clear Days in advance of the date of such special general meeting:
|
(a)
|
the name and address of the Shareholders who intend to make the nomination;
|
(b)
|
a representation that the Shareholders are holders of shares in the Company and that the Shareholders intend to vote such shares at such meeting;
|
(c)
|
the name, age, business address and residence address of the nominee proposed in the notice;
|
(d)
|
the principal occupation or employment of the nominee;
|
(e)
|
the number and class of shares in the Company which are beneficially owned by the nominee;
|
(f)
|
the consent in writing of the nominee to serve as a Director (if so elected) and to comply with all applicable corporate governance, conflict of interest, confidentiality and other policies and guidelines of the Company applicable to all Directors;
|
(g)
|
a representation that the Shareholders intend to appear in person or by proxy at the meeting to nominate each person specified in the notice;
|
(h)
|
a description of all arrangements or understandings between the Shareholders and the nominee or any other Person (naming such Person) pursuant to which each nomination is to be made by the Shareholders; and
|
(i)
|
such other information concerning such nominee as would be required to be disclosed to Shareholders in connection with the election of Directors pursuant to applicable Law, including without limitation any applicable Stock Exchange Regulation, had the nominee been nominated, or intended to be nominated, by the Board.
|
46.3
|
In the absence of an election under Bye-law 46.2, the Board may itself fill the vacancy.
|
47.
|
Vacancy in the Office of Director
|
47.1
|
The office of Director shall be vacated if the Director:
|
(a)
|
is removed from office pursuant to these Bye-laws or is prohibited from being a Director by Law;
|
(b)
|
is or becomes bankrupt, or makes any arrangement or composition with his creditors generally;
|
(c)
|
is or becomes of unsound mind or dies;
|
(d)
|
resigns his office by written notice to the Company; or
|
(e)
|
on his term of office expiring.
|
47.2
|
Any one or more vacancies in the size of the Board resulting from the circumstances described in Bye-law 47.1(a)-(d) shall in each case be deemed Casual Vacancies (and each a “
Casual Vacancy
”) for the purposes of these Bye-laws.
|
47.3
|
Without prejudice to the power of the Shareholders to elect or appoint a Director pursuant to Bye-law 44 and 46.2, and subject always to Bye-law 47.6, the Board shall have power at any time and from time to time to appoint any individual to be a Director so as to fill a Casual Vacancy, provided always that the number of Directors appointed to fill Casual Vacancies shall not exceed more than 50 per cent of the Board size (as determined in accordance with Bye-law 42.1).
|
47.4
|
At such time as the number of Board appointments to fill Casual Vacancies equals more than 50 per cent of the Board size (as determined in accordance with Bye-law 42.1), the Board shall forthwith convene a special general meeting in accordance with the Act and these Bye-laws for the purpose of confirming the appointment of each Director.
|
47.5
|
Any person appointed to fill a Casual Vacancy shall hold office until the next annual general meeting of the Company but shall be eligible for re-election.
|
47.6
|
The Board may act notwithstanding any vacancy in its number but, if and so long as the actual number of Directors in office is reduced below 1/3 of the Board size determined in accordance with Bye-law 42.1, the continuing Directors or Director may act only for the
|
48.
|
Remuneration of Directors
|
48.1
|
The amount of any fees payable to Directors shall be determined by the Board upon the recommendation of the Compensation Committee and shall be deemed to accrue from day to day. Directors who are also employees of a Group Company shall not be paid any such fees by the Company in addition to their remuneration as an employee.
|
48.2
|
Any Director who serves on any committee, or who, at the request of the Board, goes or resides outside his home jurisdiction, makes any special journey or otherwise performs services which in the opinion of the Board are outside the scope of the ordinary duties of a Director, may be paid such remuneration by way of salary, commission or otherwise as the Board may determine in addition to or in lieu of any fee payable to him for his services as Director pursuant to these Bye-laws.
|
48.3
|
The Company shall repay to any Director all such reasonable expenses as he may properly incur in the performance of his duties including attending meetings of the Directors or of any committee of the Directors or general meetings or separate meetings of the holders of any class of shares or debentures of the Company or otherwise in or about the business of the Company.
|
48.4
|
Without prejudice to the generality of the foregoing, the Directors may exercise all the powers of the Company to establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions, allowances or emoluments to, any individuals who are or were at any time in the employment or service of or who are or were at any time directors or officers of the Company, any Subsidiary or Affiliate of the Company or any Person which is in any way allied to or associated with the Company or any Subsidiary or Affiliate of the Company and the families and dependants of any such individuals, and also establish and subsidise or subscribe to any institutions, associations, clubs or funds calculated to be for the benefit of or to advance the interests and well-being of the Company, any such Subsidiary or Affiliate or any such other Person, or of any such individuals as aforesaid, and, subject to the Act, make payments for or towards the insurance of any such individuals as aforesaid, and do any of the matters aforesaid either alone or in conjunction with any such other Person.
|
49.
|
Defect in Appointment of Director
|
50.
|
Register of Directors and Officers
|
51.
|
Board Meetings
|
52.
|
Notice of Board Meetings
|
53.
|
Conduct of Board Meetings
|
53.1
|
Directors may participate in any Board meeting by such electronic means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.
|
53.2
|
The quorum necessary for the transaction of business at a meeting of the Board shall be the presence in person, or (subject to the provisions of Bye-law 45) represented by his Alternate Director, of the nearest odd number of Directors above 1/2 of the number of Directors in office as at the date of the meeting.
|
53.3
|
If a quorum is not present at any meeting of the Board, then the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of Directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
|
53.4
|
Unless otherwise agreed by a majority of the Directors attending, the chairman, if there be one, shall act as chairman at all meetings of the Board at which such person is present. In his or her absence a chairman shall be appointed or elected by the Directors present at the meeting from one of their number.
|
54.
|
Written Resolutions of the Board
|
55.
|
Validity of Prior Acts
|
56.
|
Appointment of CEO and Officers
|
56.1
|
The Board may appoint such Officers as the Board may determine, which Officers shall include a chairman, CEO, CFO, General Counsel, treasurer and Secretary. All such Officers shall be deemed to be Officers for the purposes of the Act and these Bye-laws. The CEO may also serve as a member of the Board.
|
56.2
|
Any person appointed pursuant to this Bye-law 56 shall hold office for such period and upon such terms as the Board may determine and the Board may revoke or terminate any such appointment. Any such revocation or termination shall be without prejudice to any claim for damages that such Officer may have against the Company or the Company may have against such Officer for any breach of any Contract of service between him and the Company which may be involved in such revocation or termination. Save as provided in the Act or these Bye-laws, the powers and duties of the Officers of the Company shall be such (if any) as are determined from time to time by the Board.
|
57.
|
Powers, Duties and Remuneration of CEO and Officers
|
57.1
|
Other than those actions that require the approval of the Shareholders, Board Reserved Matters, or as otherwise required by the Act or by applicable Law, the Board may delegate management of the business and affairs of the Company to the CEO and the Officers of the Company under the direction of the Board and on such terms as the Board may from time to time determine.
|
57.2
|
The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time pursuant to a delegation of authority (the “Board Delegation of Authority”).
|
57.3
|
The Officers and Senior Executives shall receive such remuneration as the Compensation Committee of the Board may determine.
|
58.
|
Duties and Remuneration of the Secretary
|
58.1
|
The duties of the Secretary shall be those prescribed by the Act, together with such other duties as shall from time to time be prescribed by the Board.
|
58.2
|
A provision of the Act or these Bye-laws requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same Person acting both as Director and as, or in the place of, the Secretary.
|
58.3
|
The Secretary shall receive such remuneration as the Board may determine.
|
59.
|
Disclosure of Interests
|
59.1
|
Interests of any kind, whether direct or indirect, of the Officers or the Directors in any material transaction or matter (or proposed material transaction or matter) (in each case, as determined by the General Counsel) or any transaction or matter (or proposed transaction or matter) to be considered by the Board in respect of the Company or any Group Company must be fully disclosed to the Board as required by the Act in all material respects at the first opportunity at a meeting of the Board and prior to any discussion of, or voting on, such transaction or matter by the Board.
|
59.2
|
Following a declaration being made pursuant to Bye-law 59.1, a Director may not vote in respect of any Contract, transaction or arrangement or any proposed Contract, transaction or arrangement in which such Director has an interest. Interested Directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee of the Board which authorizes such Contract, transaction or arrangement.
|
59.3
|
A Director may hold any other office or place of profit with any Group Company (except that of Auditor) in addition to his office of Director for such period and upon such terms as the Board may determine and may be paid such extra remuneration for so doing (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, in addition to any remuneration or other amounts payable to a Director pursuant to any other Bye-law.
|
59.4
|
A Director, subject to Board approval, may act directly or indirectly in a professional capacity for the Company (other than as Auditor).
|
59.5
|
Subject to the Act, and to the requirements set out in this Bye-law 59, a Director: (a) may be a party to, or otherwise interested in, any Contract, transaction or arrangement with any Group Company or in which any Group Company is otherwise interested; and (b) may be a director or officer of, or employed by, or a party to any Contract, transaction or arrangement with, or otherwise interested in, any company or other Person promoted by any Group Company or in which any Group Company is interested.
|
59.6
|
So long as, where it is necessary, he declares the nature of his interest in accordance with this Bye-law 59, a Director shall not be accountable to the Company for any benefit which he derives from any office or employment to which these Bye-laws allow him to be appointed or from any transaction or arrangement in which these Bye-laws allow him to be interested, and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit.
|
60.
|
Indemnification and Exculpation of Directors and Officers
|
60.1
|
The Directors, Resident Representative and Officers (such term to include any person appointed to any committee by the Board) for the time being acting in relation to any of the
|
60.2
|
The Company may purchase and maintain insurance for the benefit of any Director or Officer against any liability incurred by him under the Act in his capacity as a Director or Officer or indemnifying such Director or Officer in respect of any loss arising or liability attaching to him by virtue of any rule of Law in respect of any negligence, default, breach of duty or breach of trust of which the Director or Officer may be guilty in relation to the Company or any Subsidiary thereof.
|
60.3
|
The Company may advance moneys to a Director or Officer for the costs, charges and expenses incurred by the Director or Officer in defending any civil or criminal proceedings against him, on condition that the Director or Officer shall repay the advance if any allegation of fraud or dishonesty is proved against him.
|
60.4
|
No amendment or repeal of any provision of this Bye-law 60 shall alter detrimentally the rights to the advancement of expenses or indemnification related to a claim based on an act or failure to act which took place prior to such amendment or repeal.
|
61.
|
Minutes
|
(a)
|
of all elections and appointments of Officers;
|
(b)
|
of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and
|
(c)
|
of all resolutions and proceedings of general meetings of the Shareholders, meetings of the Board, and meetings of committees appointed by the Board.
|
62.
|
Place Where Corporate Records Kept
|
63.
|
Form and Use of Seal
|
63.1
|
The Company may adopt a seal in such form as the Board may determine. The Board may adopt one or more duplicate seals for use in or outside Bermuda.
|
63.2
|
A seal may, but need not, be affixed to any deed, instrument or document, and if the seal is to be affixed thereto, it shall be attested by the signature of: (a) any Director; or (b) any Officer; or (c) the Secretary; or (d) any person authorised by the Board for that purpose.
|
63.3
|
A Resident Representative may, but need not, affix the seal of the Company to certify the authenticity of any copies of documents relating to the Company.
|
64.
|
Books of Account
|
64.1
|
The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:
|
(a)
|
all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;
|
(b)
|
all sales and purchases of goods by the Company; and
|
(c)
|
all assets and liabilities of the Company.
|
64.2
|
Such records of account shall be kept at the Registered Office, or subject to the Act, at such other place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours.
|
65.
|
Financial Year End
|
66.
|
Annual Audit
|
67.
|
Appointment of Auditor
|
67.1
|
Subject to the Act, at the annual general meeting or at a subsequent special general meeting in each year, the Shareholders shall appoint one or more Auditors to hold office until the close of the next annual general meeting.
|
67.2
|
No Director, Officer or employee of the Company shall, during his continuance in office, be eligible to act as an Auditor of the Company.
|
68.
|
Financial Statements
|
69.
|
Distribution of Auditor's Report
|
70.
|
Winding-Up
|
Clause
|
|
Page
|
1.
|
Interpretation.........................................................................................................................
|
2
|
2.
|
Sale and Purchase of the Sale Shares....................................................................................
|
2
|
3.
|
Antitrust Covenant................................................................................................................
|
3
|
4.
|
Conditions Precedent............................................................................................................
|
5
|
5.
|
Sellers’ and VEON Guarantor’s Warranties..........................................................................
|
7
|
6.
|
HET and HET Guarantor’s Warranties.................................................................................
|
7
|
7.
|
Taxation................................................................................................................................
|
7
|
8.
|
Sanctions Events...................................................................................................................
|
7
|
9.
|
Shareholders’ Deed, Contribution and Framework Agreement, etc.....................................
|
11
|
10.
|
Services Arrangements with VLH.........................................................................................
|
12
|
11.
|
Pre-Completion Covenants...................................................................................................
|
12
|
12.
|
Completion............................................................................................................................
|
13
|
13.
|
Termination...........................................................................................................................
|
13
|
14.
|
VEON Guarantee..................................................................................................................
|
14
|
15.
|
HET Guarantee......................................................................................................................
|
15
|
16.
|
Waiver of Legacy Rights.......................................................................................................
|
16
|
17.
|
Restriction on Disposal of Interests......................................................................................
|
17
|
18.
|
Information, Records and Assistance Post-Completion........................................................
|
18
|
19.
|
Protective Covenants.............................................................................................................
|
19
|
20.
|
Power of Attorney.................................................................................................................
|
19
|
21.
|
Costs and Expenses...............................................................................................................
|
20
|
22.
|
Announcements and Confidentiality.....................................................................................
|
20
|
23.
|
Notices...................................................................................................................................
|
21
|
24.
|
Further Assurances................................................................................................................
|
23
|
25.
|
Assignments..........................................................................................................................
|
23
|
26.
|
Payments...............................................................................................................................
|
23
|
27.
|
No Double Recovery.............................................................................................................
|
24
|
28.
|
General..................................................................................................................................
|
24
|
29.
|
Whole Agreement..................................................................................................................
|
25
|
30.
|
Invalid Terms.........................................................................................................................
|
25
|
31.
|
Jurisdiction............................................................................................................................
|
26
|
32.
|
Governing Law......................................................................................................................
|
26
|
33.
|
Language...............................................................................................................................
|
26
|
Schedule
|
|||
1.
|
|
Shareholding Details for the JVC and FinCo.............................................................
|
28
|
|
Part 1
|
Shareholding details for the JVC...............................................................................
|
28
|
|
Part 2
|
Shareholding details for FinCo
|
28
|
|
|
Sellers’ and VEON Guarantor’s Warranties...............................................................
|
29
|
2.
|
Part 1
|
Seller’s Warranties......................................................................................................
|
29
|
|
Part 2
|
VEON Guarantor’s Warranties...................................................................................
|
30
|
3.
|
|
HET’s and HET Guarantor’s Warranties....................................................................
|
31
|
|
Part 1
|
HET Warranties..........................................................................................................
|
31
|
|
Part 2
|
HET Guarantor’s Warranties......................................................................................
|
32
|
4.
|
|
Completion Obligations.............................................................................................
|
33
|
|
Part 1
|
VLH Obligations........................................................................................................
|
33
|
|
Part 2
|
VLF Obligations.........................................................................................................
|
34
|
|
Part 3
|
HET Obligations........................................................................................................
|
35
|
|
Part 4
|
General.......................................................................................................................
|
36
|
5.
|
|
Agreed Form Announcements....................................................................................
|
37
|
6.
|
|
Definitions and Interpretation....................................................................................
|
38
|
(1)
|
VEON LUXEMBOURG HOLDINGS
,
a private limited liability company (
société à
responsabilité limitée
) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 1, Avenue du Bois, L-1251 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register (
Registre de Commerce et des Sociétés de Luxembourg
) under number B199019 (formerly known as Vimpelcom Luxembourg Holdings S.à R.L.) (
VLH
);
|
(2)
|
VEON LUXEMBOURG FINANCE HOLDINGS S.à R.L.
, a private limited liability company (
société á responsabilité limitée
)
incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 1, Avenue du Bois, L-1251 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register (
Registre de Commerce et des Sociétés de Luxembourg
) under number B98414 (formerly known as Weather Capital S.à r.l.) (
VLF
);
|
(3)
|
VEON LTD.
, an exempted company limited by shares incorporated under the laws of Bermuda having its registered office at Victoria Place, 31 Victoria Street, Hamilton HM10, Bermuda, registered with the Registrar of Companies in Bermuda under number 43271 and having its principal executive offices at Claude Debussylaan 88, 1082 MD, Amsterdam, the Netherlands (formerly known as Vimplecom Ltd.) (the
VEON Guarantor
);
|
(4)
|
HUTCHISON EUROPE TELECOMMUNICATIONS S.à R.L.
,
a private limited liability company (
société à
responsabilité limitée
)
incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 7, rue du Marché-aux-Herbes, L-1728 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register (
Registre de Commerce et des Sociétés de Luxembourg
) under number B74649 (
HET
);
|
(5)
|
CK HUTCHISON HOLDINGS LIMITED
, an exempted company incorporated under the laws of the Cayman Islands whose principal place of business is 12th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong registered with the Registrar of Companies in the Cayman Islands under number MC-294571 (the
HET Guarantor
);
|
(6)
|
VIP-CKH LUXEMBOURG S.à R.L.
,
a private limited liability company (
société à
responsabilité limitée
) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 1, route d’Esch, L-1470 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register (
Registre de Commerce et des Sociétés de Luxembourg
) under number B77457 (formerly known as Hutchison 3G Italy Investments S.à R.L.) (the
JVC
);
|
(7)
|
VIP-CKH IRELAND LIMITED
, a private company limited by shares incorporated under the laws of the Republic of Ireland, having its registered office at 70 Sir John Rogerson's Quay, Dublin 2, Ireland and registered with the Irish Companies Registration Office under number 588489 (
FinCo
);
|
(8)
|
VEON AMSTERDAM B.V.
, a private limited liability company (
besloten vennootschap
) incorporated under the laws of the Netherlands having its corporate seat in Amsterdam, the Netherlands whose registered office is at Claude Debussylaan 88, Amsterdam 1082 MD, the Netherlands and registered with the Dutch Chamber of Commerce under number 34378904 (
VEON Amsterdam
); and
|
(9)
|
HET INVESTMENTS
, a public limited liability company (
société anonyme
) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 7, rue du Marché-aux-Herbes, L-1728 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register (
Registre de Commerce et des Sociétés de Luxembourg
) under number B207910 (
HET LuxCo
),
|
(A)
|
VLH, HET and HET LuxCo, together, currently hold 100% of the issued share capital of the JVC. Details of their current shareholdings are set out in Part 1 of Schedule 1.
|
(B)
|
VLF and HET, together, currently hold 100% of the issued share capital of FinCo. Details of their current shareholdings are set out in Part 2 of Schedule 1.
|
(C)
|
VLH wishes to sell, and HET wishes to purchase, all of the JVC Sale Shares and VLF wishes to sell, and HET wishes to purchase, all of the FinCo Sale Shares, in each case on the terms and subject to the conditions set out in this agreement.
|
(D)
|
The sale and purchase of the Sale Shares shall be effected by taking the steps set out in this agreement and is conditional upon receipt or waiver of the competition and regulatory approvals in accordance with this agreement.
|
(E)
|
The VEON Guarantor is the ultimate holding company of VLH and VLF, and is willing to guarantee the obligations of VLH and VLF under this agreement.
|
(F)
|
The HET Guarantor is the ultimate holding company of HET and is willing to guarantee the obligations of HET under this agreement.
|
(G)
|
Each of the parties to the JVC Shareholders’ Deed is a Party to this agreement, which Parties wish to (a) make certain amendments to the JVC Shareholders’ Deed as set out in this agreement and (b) acknowledge that the terms of the JVC Shareholders’ Deed shall continue to apply subject to the amendments and provisions agreed between them in this agreement.
|
(H)
|
Each of the parties to the FinCo Shareholders’ Deed is a Party to this agreement, which Parties wish to (a) make certain amendments to the FinCo Shareholders’ Deed as set out in this agreement and (b) acknowledge that the terms of the FinCo Shareholders’ Deed shall continue to apply subject to the amendments and provisions agreed between them in this agreement.
|
(I)
|
VEON Amsterdam is a Party to this agreement for the specific purpose of agreeing to the provisions relating to the termination and waiver of its rights under the Contribution and Framework Agreement under Clauses 9.5 and 16 respectively.
|
(J)
|
HET LuxCo is a Party to this agreement for specific purpose of agreeing to the amendments and provisions in respect of the JVC Shareholders’ Deed and the JVC Shareholder Side Letters.
|
(K)
|
It is the intention of the Parties that this document be executed as a deed.
|
1.
|
INTERPRETATION
|
1.1
|
The definitions and other provisions in Schedule 6 apply throughout this agreement.
|
1.2
|
In this agreement, unless indicated otherwise, a reference to a Clause, paragraph or Schedule is a reference to a Clause, paragraph or Schedule to this agreement. The Schedules form part of this agreement.
|
1.3
|
The headings in this agreement do not affect its interpretation.
|
2.
|
SALE AND PURCHASE OF THE SALE SHARES
|
2.1
|
Subject to the Conditions being satisfied or, where applicable, waived, at Completion:
|
(a)
|
VLH shall sell and HET shall purchase all of the JVC Sale Shares; and
|
(b)
|
VLF shall sell and HET shall purchase all of the FinCo Sale Shares.
|
2.2
|
The total price for all of the JVC Sale Shares and FinCo Sale Shares (together, the
Sale Shares
) shall be EUR 2,450,000,000 (the
Sale Shares Price
).
|
2.3
|
The sale and purchase of the Sale Shares shall complete as further described in Clause 12.
|
2.4
|
The sale and purchase of the Sale Shares shall be:
|
(a)
|
on the terms set out in this agreement;
|
(b)
|
with full legal and beneficial title (and on the basis that the same covenants shall be deemed to be given by the relevant Sellers in relation to the JVC Sale Shares as are implied under Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994 where a disposition is expressed to be made with full title guarantee);
|
(c)
|
free from Third Party Rights; and
|
(d)
|
with all rights attaching to the Sale Shares
including the right to receive all distributions and dividends declared, paid or made in respect of the Sale Shares
with effect from Completion.
|
3.
|
ANTITRUST COVENANT
|
3.1
|
HET shall, at its own cost, use best endeavours to obtain the requisite approvals to satisfy the Conditions. The following undertakings shall apply in relation to satisfying the Conditions:
|
(a)
|
HET shall procure the submission, as soon as reasonably practicable, of all filings and applications required to be filed by it to satisfy the Conditions (and in the case of the first draft of the Form CO no later than 15 Business Days following the date of this agreement, or such longer period which is reasonably acceptable to the Sellers);
|
(b)
|
HET shall keep the Sellers informed, in a timely and effective manner, as to the progress towards satisfaction of the Conditions and shall immediately inform the Sellers if it becomes aware of any fact or circumstance that might prevent or materially delay a Condition being satisfied;
|
(c)
|
HET shall promptly notify the Sellers of any material communications (whether written or oral) from any Regulatory Authority including any material communications from an official of a Regulatory Authority. For the purpose of this Clause 3.1(c), a material communication shall include, but not be limited to, any decision, order, or request for information from a Regulatory Authority relating to any of the Conditions or any communication that concerns (i) any conditions needed to obtain, (ii) the timeframe for obtaining, or (iii) HET’s ability to obtain, any Regulatory Authority approval, waiver, or confirmation needed to satisfy any of the Conditions;
|
(d)
|
HET shall keep the Sellers informed of all material telephone calls and meetings with any Regulatory Authority and, if so requested by the Sellers, the Sellers shall, where appropriate, be offered an opportunity to participate in such material telephone calls and meetings and to be provided with a summary of such telephone calls or meetings as soon as practicable thereafter. For the purpose of this Clause 3.1(d), a material telephone call or meeting shall include, but not be limited to, any telephone call or meeting that concerns (i) any conditions needed to obtain, (ii) the timeframe for obtaining, or (iii) HET’s ability to obtain, any Regulatory Authority approval, waiver, or confirmation needed to satisfy any of the Conditions;
|
(e)
|
HET shall provide the Sellers with advance drafts of all material written communications submissions and other material documents which HET intends to send to any Regulatory Authority, giving the Sellers all reasonable opportunity to comment thereon. HET shall provide the Sellers with final copies of all material written communications, submissions or other material documents made to or otherwise provided to any Regulatory Authority. For the purpose of this Clause 3.1(e), a material written communication, submission or other material document shall include, but not be limited to, any written communication, submission or document consisting of a filing (draft or final), a response to an information request from a Regulatory Authority, or any other submission or communication to a Regulatory Authority that concerns (i) any conditions needed to obtain, (ii) the timeframe for
|
(f)
|
the Sellers shall not, and will respectively procure that no member of the VLH Group or VLF Group shall and HET shall not and will procure that no member of the HET Group shall, undertake any actions nor enter into any other agreement or arrangement where the effect of any such actions, agreement or arrangement is likely to affect, delay, impede or in any respect prejudice the fulfilment of the Conditions.
|
3.2
|
The Sellers shall, and shall procure that their advisers shall, co-operate in providing HET with such assistance as is necessary and which the Sellers are reasonably able to provide, and shall provide all Regulatory Authorities with such information as may reasonably be necessary and which the Sellers are reasonably able to provide, to ensure that in connection with satisfying the Conditions:
|
(a)
|
HET may make all regulatory filings to the relevant Regulatory Authorities to obtain the requisite approvals to satisfy the Conditions in accordance with this Clause 3; and
|
(b)
|
any request for information relating to the transactions contemplated by this agreement from a Regulatory Authority is fulfilled promptly and in any event in accordance with any relevant time limit.
|
3.3
|
From Completion, HET will assume all of the Commitments in place of the obligations of VLH under the Commitments except if VLH’s obligations under the Commitments are no longer in force as a result of the transactions contemplated by this agreement. From Signing, HET shall use reasonable endeavours to procure the release of VLH as soon as reasonably practicable following Completion from all its obligations and liabilities under the Commitments and the removal of VLH from the Commitments (the
Commitments Release
) (including by confirming to the European Commission that HET will assume all of the Commitments in place of the obligations of VLH under the Commitments except if VLH’s obligations under the Commitments are no longer in force as a result of the transactions contemplated by this agreement).
|
3.4
|
Notwithstanding the provisions of Clause 3.1, HET shall provide the Sellers with an opportunity to comment on all submissions and other communications made to the European Commission relating to the Commitments Release (including the submission of any remedies required by the European Commission in relation to the Commitments Release). HET shall not, without VLH’s prior written consent, accept any remedy required by the European Commission in relation to the Commitments Release which imposes any liability or obligation on VLH without the prior written approval of VLH. HET shall also provide the Sellers with a copy (if in writing) or a summary of all material communications received from the European Commission and an opportunity to join all substantive telephone calls and meetings with the European Commission, in each case to the extent such communication, telephone call or meeting relates to the Commitments Release.
|
3.5
|
From Completion and until such time as VLH is confirmed in writing by the European Commission to have been released from all its obligations and liabilities under the Commitments and VLH is removed from the Commitments, HET shall indemnify and hold harmless on an after Taxation basis those members of the VLH Group that are bound by the Commitments against any and all Losses (including reasonable legal fees) to the extent related to any matter arising following Completion under, in connection with or based on VLH’s obligations or liabilities under the Commitments.
|
3.6
|
With the prior written consent of HET, each indemnified entity under Clause 3.5 may enforce Clause 3.5 against HET under the Contracts (Rights of Third Parties) Act 1999. The provisions of this Clause 3.6 may be varied or terminated by agreement between the HET and VLH (and VLH may also release or compromise in whole or in part any liability in respect of rights contemplated by this Clause 3.6) without the consent of any such indemnified entity.
|
3.7
|
If VLH becomes aware of any claim or potential claim, or of any other matter or circumstance that might result in a Commitment Indemnity Claim
(a
Relevant Claim
), VLH shall:
|
(a)
|
promptly (and in any event within 5 Business Days of becoming aware of it) give notice of the Relevant Claim
to HET and ensure that HET is given all relevant information to investigate it (but failure to give such notice to HET shall not relieve HET from any liability under this Clause 3.7(a) except to the extent such liability is materially increased as a result of such failure);
|
(b)
|
not (and ensure that each member of the VLH Group shall not) admit liability, make any agreement or compromise or otherwise enter into substantial communications or engagements with any Regulatory Authority or other party in relation to the Relevant Claim
without the prior written approval of HET (such approval not to be unreasonably withheld or delayed); and
|
(c)
|
ensure that it and each member of the VLH Group shall, at HET’s expense: (i) take such action as HET may reasonably request to avoid, resist, dispute, appeal, compromise or defend the Relevant Claim; (ii) allow HET (if it elects to do so) to take over the conduct of all proceedings and/or negotiations arising in connection with the Relevant Claim (in which case HET shall: (A) take account of the reasonable requirements of the members of the VLH Group; (B) keep VLH promptly informed of the progress of the Relevant Claim, including by informing VLH in advance of any hearings or proceedings; and (C) not admit liability, make any agreement or compromise or otherwise enter into substantial communications or engagements with any Regulatory Authority or other party in relation to the Relevant Claim without the prior written approval of VLH (such approval not to be unreasonably withheld or delayed); and (iii) provide such information and assistance as HET may reasonably require in connection with the preparation for and conduct of the Relevant Claim.
|
3.8
|
Any transmission of information between the Parties contemplated by this Clause 3 shall not require any Party to disclose to any other Party any commercially sensitive or otherwise confidential information, provided that any such commercially sensitive or otherwise confidential information is, to the extent legally permissible, provided to the external legal advisors of the other Parties on a counsel-to-counsel basis. Each of the Parties hereby agrees that their respective legal counsels may only receive such information on a counsel-to-counsel basis and for use in connection with any filings or submissions to or to otherwise engage with Regulatory Authorities for the purposes set out in this Clause 3.
|
4.
|
CONDITIONS PRECEDENT
|
4.1
|
The obligations of the Parties to effect Completion is conditional on the satisfaction (or waiver (as applicable) by HET) of the conditions set out in paragraphs (a) to (d) (inclusive) below (the
Conditions
):
|
(a)
|
in the case of merger control approval of the concentration contemplated hereby (the
Concentration
):
|
(i)
|
the European Commission declaring that the Concentration is compatible with the internal market pursuant to Article 6(1)(b), Article 6(2), Article 8(1) or Article 8(2) of the EU Merger Regulation (if the Commission makes its clearance dependent on HET offering remedies, then HET shall accept any Acceptable Remedies but HET shall, subject to Clause 4.2, have sole discretion over whether or not it is willing to accept any other remedies); or
|
(ii)
|
there has been a deemed approval in respect of the Concentration pursuant to Article 10(6) of the EU Merger Regulation; or
|
(b)
|
where the European Commission has referred the Concentration in whole or in part to the Italian Competition Authority under Article 9 of the EU Merger Regulation, the Italian Competition Authority (A) issuing a decision not to open an investigation under Article 16(4) of Italian Law number 287/1990 or (B) after initiating proceedings issuing a decision under Article 16(8) of Italian Law number 287/1990 (on an unconditional basis), and if the European Commission has retained jurisdiction over any part of the Concentration, the European Commission declaring that such part of the Concentration is compatible with the internal market pursuant to Article 6(1)(b), Article 6(2), Article 8(1) or Article 8(2) of the EU Merger Regulation (if the Commission makes its clearance dependent on HET offering remedies, then HET shall accept any Acceptable Remedies but HET shall, subject to Clause 4.2, have sole discretion over whether or not it is willing to accept any other remedies); and
|
(c)
|
insofar as approval is required in the context of the so-called "Golden Powers" under Italian law (in the reasonable opinion of HET), the Presidency of the Council of Ministers or any other competent Regulatory Authority under Italian law confirming in writing pursuant to Article 1 (Defence and National Security Golden Powers) and/or Article 2 (Communication, Energy and Transport Golden Powers), as applicable, of the Golden Powers Legislation, that it has unconditionally or subject only to Acceptable Remedies (but HET shall, subject to Clause 4.2, have sole discretion over whether or not it is willing to accept any other remedies) approved and/or cleared all transactions contemplated hereby or that the relevant deadlines for tacit consent "
silenzio-assenso
" of the Golden Powers Legislation have elapsed without any veto or consent having been communicated by the Presidency of the Council of Ministers or any other competent Regulatory Authority; and
|
(d)
|
insofar as approval is required pursuant to Article 14 ter of Legislative Decree No. 259 of 1 August 2003 (as amended from time to time, the
Electronic Communications Code
), the Italian Ministry of Economic Development confirming in writing that it has unconditionally, or subject only to Acceptable Remedies (but HET shall, subject to Clause 4.2, have sole discretion over whether or not it is willing to accept any other remedies), authorised the transfer of all individual rights to use radiofrequencies granted to Wind Tre arising from the indirect change of control of Wind Tre by virtue of the transactions contemplated in this agreement pursuant to Article 14 ter of the Electronic Communications Code.
|
4.2
|
If HET considers that any remedy required to satisfy any Condition is not an Acceptable Remedy (a
New Remedy
), then:
|
(a)
|
to the extent that such New Remedy imposes any Cost, liability or obligation on HET or any JVC Group Company, HET shall only be obliged to accept such New Remedy if such Cost, liability or obligation can be quantified financially and VLH has undertaken in a form satisfactory to HET to reimburse HET or the relevant JVC Group Company in respect of all financial effects of such Cost, liability or obligation; and
|
(b)
|
to the extent that such New Remedy imposes any Cost, liability or obligation on VLH, HET shall only accept such New Remedy if (i) such Cost, liability or obligation can be quantified financially and HET has reimbursed VLH in respect of all financial effects of such Cost, liability or obligation, or (ii) VLH has otherwise given its prior written approval.
|
4.3
|
The Conditions set out in Clauses 4.1(c) and/or 4.1(d) may be waived (in whole or in part) in writing by HET.
|
4.4
|
HET shall notify the Sellers promptly when any of the Conditions have been fulfilled. The first Business Day on or by which the Conditions have been fulfilled or waived (if applicable) is the
Unconditional Date
.
|
4.5
|
Subject to Clause 13, upon satisfaction (or waiver (as applicable)) of the Conditions, Completion shall take place in accordance with Clause 12.
|
5.
|
SELLERS’ AND VEON GUARANTOR’S WARRANTIES
|
5.1
|
The Sellers severally warrant to HET on the date of this agreement that each of the Sellers’ Warranties is true, accurate and not misleading.
|
5.2
|
The Sellers shall be deemed to warrant to HET at Completion that, by reference to the facts and circumstances then existing and as if references in the Sellers’ Warranties to the date of this agreement were references to the date of Completion, the Sellers’ Warranties are true, accurate and not misleading, save to the extent that a Party or Wind Tre becomes or may be a Sanctioned Person after the date of Signing.
|
5.3
|
The VEON Guarantor warrants to HET on the date of this agreement that the warranty in Part 2 of Schedule 2 is true, accurate and not misleading. The VEON Guarantor shall be deemed to warrant to HET at Completion that, by reference to the facts and circumstances then existing, that the same warranty is true accurate and not misleading, save to the extent that a Party or Wind Tre becomes or may be a Sanctioned Person after the date of Signing.
|
5.4
|
The Sellers acknowledge that HET is entering into this agreement in reliance on the warranties and undertakings on the part of the Sellers and the VEON Guarantor set out in this agreement.
|
6.
|
HET AND HET GUARANTOR’S WARRANTIES
|
6.1
|
HET warrants to the Sellers on the date of this agreement that each of the HET Warranties is true, accurate and not misleading.
|
6.2
|
HET shall be deemed to warrant to the Sellers at Completion that, by reference to the facts and circumstances then existing and as if references in the HET Warranties to the date of this agreement were references to the date of Completion, the HET Warranties are true, accurate and not misleading, save to the extent that a Party or Wind Tre becomes or may be a Sanctioned Person after the date of Signing.
|
6.3
|
The HET Guarantor warrants to the Sellers on the date of this agreement that the warranty in Part 2 of Schedule 3 is true, accurate and not misleading. The HET Guarantor shall be deemed to warrant to the Sellers at Completion that, by reference to the facts and circumstances then existing, that the same warranty is true accurate and not misleading, save to the extent that a Party or Wind Tre becomes or may be a Sanctioned Person after the date of Signing.
|
6.4
|
HET acknowledges that the Sellers are entering into this agreement in reliance on the warranties and undertakings on the part of HET and the HET Guarantor set out in this agreement.
|
7.
|
TAXATION
|
8.
|
SANCTIONS EVENTS
|
8.1
|
If, at any time from and including the date of Signing and prior to Completion, any Party, Wind Tre or any other member of the JVC Group becomes a Sanctioned Person and as a result thereof:
|
(a)
|
it is unlawful for any Party to perform its obligations to effect Completion under this agreement; or
|
(b)
|
any Party would be in breach of US secondary sanctions laws (including, but not limited to, by engaging in conduct that results in the imposition of sanctions under Section 228 of CAATSA) if it were to perform its obligations to effect Completion under this agreement; or
|
(c)
|
any Party is otherwise restricted or prevented from lawfully performing its obligations to effect Completion under this agreement,
|
8.2
|
For the purposes of Clause 8.1, as soon as practicable following a Sanctions Event and, to the extent necessary and subject to Clauses 8.3 and 8.4, the Parties shall engage with each other and, to the extent necessary, any relevant Sanctions Authority in respect of the relevant Sanctions Event and each Party shall, and shall procure that its respective officers, directors, employees, representatives and advisers shall:
|
(a)
|
apply for all necessary or desirable consents, permissions, authorisations and licences (a
Sanctions Licence
) from, or otherwise contact any competent Sanctions Authority in order to achieve a Sanctions Solution (but subject always to Clause 8.3);
|
(b)
|
fully support any Party’s request to any competent Sanctions Authority for directions as to how a Sanctions Solution may be achieved;
|
(c)
|
promptly provide all information and documentation, provide such access to officers, directors, employees, representatives and advisers, and attend such calls and meetings, in each case as may be requested or required by any Sanctions Authority for the purposes of achieving a Sanctions Solution; and
|
(d)
|
provide all such other cooperation and assistance reasonably necessary to achieve a Sanctions Solution.
|
8.3
|
No Party shall be required in any circumstances to do any of the following to achieve a Sanctions Solution or to perform its obligations to effect Completion:
|
(a)
|
accept, agree to, satisfy or perform any condition, requirement, direction or obligation in any Sanctions Licence that conflicts with the terms of this agreement;
|
(b)
|
accept or agree to any amendment to the terms of this agreement;
|
(c)
|
make or accept a payment (or any part thereof) to or from any account (including any account that is a blocked, frozen or escrow account) other than the account designated by the relevant Party under Clause 26; or
|
(d)
|
breach applicable law (including Sanctions Law) or US secondary sanctions (including, but not limited to, by engaging in any conduct that results in the imposition of sanctions under Section 228 of CAATSA),
|
8.4
|
In respect of any communication, discussion or correspondence with or application or submission to any Sanctions Authority pursuant to Clause 8.2 or any other such communication, discussion or correspondence directly related to any other Party or any member of the JVC Group, each Party shall and shall procure that its respective officers, directors, employees, representatives and advisers shall, in each case subject to and to the extent permitted under applicable laws (including Sanctions Laws):
|
(a)
|
promptly notify the other Parties (and provide copies or, in the case of non-written communications, details) of any communications with or from any Sanctions Authority relating to a Sanctions Event; and
|
(b)
|
communicate with any Sanctions Authority only after prior consultation with the other Parties and their advisers (and taking into account any reasonable comments and requests of the other Parties and their advisers) and provide the other Parties and their advisers with copies of all submissions, notifications, filings and other communications in written form submitted or sent to any Sanctions Authority,
|
8.5
|
In the period between Signing and Completion, subject to being permitted to do so by law:
|
(a)
|
each Party shall promptly inform each other Party if the first Party receives any written notice from any Sanctions Authority relating to the potential or possible occurrence of a Sanctions Event (and shall provide each other Party with details of any such communication); and
|
(b)
|
each Party shall (and shall procure that its respective advisers shall) use all reasonable endeavours to co-operate with any Sanctions Authority, other competent regulatory or supervisory body or relevant financial institution to the extent necessary, desirable or expedient in connection with the consummation of the transactions contemplated in this agreement, amongst other things, to minimise the risk of occurrence and any actual or potential consequences of a Sanctions Event.
|
8.6
|
The Parties agree that the occurrence of a Sanctions Event shall not constitute a breach of this agreement or otherwise give any Party the right to terminate this agreement or not proceed to Completion in accordance with this agreement save as may be required under applicable laws (including applicable Sanctions Laws) or permitted in accordance with Clause 8.7 or 8.8 below.
|
8.7
|
If a Sanctions Event has occurred and as at the date falling three months after the occurrence of such Sanctions Event:
|
(a)
|
such Sanctions Event is continuing;
|
(b)
|
the Adversely Affected Party (as defined below) has complied with its obligations under Clauses 8.2 to 8.5 above; and
|
(c)
|
either:
|
(i)
|
it remains unlawful for a Party to perform, a Party would be in breach of US secondary sanctions laws (including, but not limited to, by engaging in any conduct that results in the imposition of sanctions under Section 228 of CAATSA) if it were to perform, or a Party is otherwise restricted or prevented from lawfully performing, its obligations to effect Completion pursuant to this agreement under Sanctions Law; or
|
(ii)
|
it is only lawful for a Party to perform its obligations to effect Completion pursuant to this agreement if that Party takes an action that it is not required to take under Clause 8.3, including making or accepting a payment (or any part thereof) to or from any account (A) other than
|
8.8
|
If at any time from and including the date of Signing and prior to Completion, either (i) the VEON Guarantor or any of its Associates becomes a Sanctioned Person or (ii) the JVC, Wind Tre or any JVC Group Company becomes a Sanctioned Person as a result of the VEON Guarantor or any of its Associates becoming a Sanctioned Person and as a result:
|
(a)
|
there is, or there is an imminent threat that there will be, a grave disruption to the business of the JVC Group taken as a whole (a
Grave Business Disruption
), and for these purposes a Grave Business Disruption shall include:
|
(i)
|
any JVC Group Company receiving notice from one or more third party(ies) (including Iliad S.A. in respect of any relevant Material Contract) of any:
|
(A)
|
event of default by any JVC Group Company in respect of any Material Indebtedness;
|
(B)
|
breach by any JVC Group Company or force majeure event under any Material Contract;
|
(C)
|
termination of, or intention to cease or suspend the supply of goods or services to a JVC Group Company under, any Material Contract; or
|
(D)
|
termination of any Material Authorisation or prevention from registering or participating in any auction, bid or tender for a Material Authorisation, or having participated, from being granted, any Material Authorisation; or
|
(ii)
|
no financial institution authorised to conduct business as a bank in any member state of the European Union or in the United States (an
Acceptable Financial Institution
) being willing to make or accept payments on behalf of any JVC Group Company following all reasonable endeavours by the JVC Group to identify a replacement Acceptable Financial Institution to make or accept payments; or
|
(b)
|
no Acceptable Financial Institution has agreed to accept payment of the Sale Shares Price in accordance with the terms of this agreement,
|
(i)
|
without prejudice to HET’s right to terminate this agreement under (ii) below, the Parties shall work collaboratively and in good faith in accordance with applicable laws (including Sanctions Laws) and use their reasonable endeavours to mitigate and/or prevent the circumstances in (a) or (b) above; and
|
(ii)
|
HET may give the other Parties notice in writing to terminate this agreement (a
Termination Notice
) with effect not earlier than three Business Days after the date of such Termination Notice unless HET, VLH and VLF agree otherwise and, when such Termination Notice
|
(x)
|
HET will not be entitled to give notice of termination in accordance with this Clause 8.8 if HET has failed to comply in all material respects with its obligations under Clauses 8.1 to 8.5 or (i) and (ii) above (if and to the extent applicable in accordance with their respective terms) and such failure has caused the circumstances in (a) or (b) above to occur; and
|
(y)
|
HET will not be entitled to give notice of termination in accordance with this Clause 8.8 in the circumstances in (a) above if:
|
(A)
|
the Unconditional Date has already occurred;
|
(B)
|
the JVC Group has not already suffered any actual grave disruption in its ability to conduct its business; and
|
(C)
|
the occurrence of Completion under this agreement would be lawful in accordance with all applicable Sanctions Laws (or any US secondary sanctions laws referred to in Clause 8.1(b)) and would result in the cessation of the circumstances in (a) above (or the imminent occurrence thereof).
|
9.
|
SHAREHOLDERS’ DEED, CONTRIBUTION AND FRAMEWORK AGREEMENT, ETC.
|
9.1
|
The Parties hereby agree that during the period from Signing to Completion: (a) each Party will procure that any chairman of the board of directors of the JVC appointed by that Party shall not exercise any casting vote; and (b) clause 5.6(b) and paragraph 7.2 of schedule 3 of the JVC Shareholders’ Deed (on casting votes) shall not apply.
|
9.2
|
Subject to and unless otherwise provided in Clause 16:
|
(a)
|
pursuant to clause 24.2(c) of the JVC Shareholders’ Deed, the parties to the JVC Shareholders’ Deed hereby agree that the JVC Shareholders’ Deed shall terminate with immediate effect at Completion and that all rights and obligations under the JVC Shareholders’ Deed shall cease to have effect upon termination thereof (subject to Clause 19 and except to the extent the JVC Shareholders’ Deed provides otherwise in the event of termination);
|
(b)
|
pursuant to clause 17.2(b) of the FinCo Shareholders’ Deed, the parties to the FinCo Shareholders’ Deed hereby acknowledge that the FinCo Shareholders’ Deed will terminate with immediate effect at Completion (upon termination of the JVC Shareholders’ Deed) and that all rights and obligations under the FinCo Shareholders’ Deed shall cease to have effect upon termination thereof (except to the extent the FinCo Shareholders’ Deed provides otherwise in the event of termination); and
|
(c)
|
pursuant to paragraph 5(a) of the FinCo Distribution Policy Deed, the parties to the FinCo Distribution Policy Deed hereby acknowledge that the FinCo Distribution Policy Deed will automatically terminate with immediate effect at Completion (upon termination of the FinCo Shareholders’ Deed) and that all rights and obligations under the FinCo Distribution Policy Deed shall cease to have effect upon termination thereof (except to the extent the FinCo Distribution Policy Deed provides otherwise in the event of termination).
|
9.3
|
HET, HET LuxCo and VLH executed three letter agreements dated 5 November 2016 relating to: (i) amendments to the Initial Budget referred to in the JVC Shareholders’ Deed (the
JVC Initial Budget Side
|
(a)
|
the terms of the JVC Initial Budget Side Letter and the LTIP KPIs Side Letter have been performed before Signing;
|
(b)
|
no party to either the JVC Initial Budget Side Letter or the LTIP KPIs Side Letter has any outstanding rights or liabilities thereunder and each party waives any claim it may have or may have had (whether past, present or future) with effect from Signing against any other party, pursuant to the JVC Initial Budget Side Letter or the LTIP KPIs Side Letter;
|
(c)
|
the terms of the Reserved Matters Side Letter have, to the extent that they relate to matters prior to Signing, been performed before Signing; and
|
(d)
|
the Reserved Matters Side Letter shall terminate with immediate effect at Completion and that all rights and obligations under the Reserved Matters Side Letter shall cease to have effect from Completion, and each party waives any claim it may have or may have had (whether past, present or future) against any other party under the Reserved Matters Side Letter upon termination thereof.
|
9.4
|
The VEON Guarantor and HET hereby agree that the EP Term Sheet shall terminate with immediate effect at Completion and that all rights and obligations under the EP Term Sheet shall cease to have effect from Completion, and each party waives any claim it may have or may have had (whether past, present or future) against the other under the EP Term Sheet upon termination thereof.
|
9.5
|
Subject to and unless otherwise provided in Clause 16, the parties to the Contribution and Framework Agreement hereby agree that the Contribution and Framework Agreement shall terminate with immediate effect at Completion and that all rights and obligations under the Contribution and Framework Agreement shall cease to have effect upon termination thereof (except to the extent the Contribution and Framework Agreement provides otherwise in the event of termination).
|
9.6
|
Subject to and unless otherwise provided in Clause 16, the parties to the Allocation Agreement hereby agree that the Allocation Agreement shall terminate with immediate effect at Completion and that all rights and obligations under the Allocation Agreement shall cease to have effect upon termination thereof (except to the extent the Allocation Agreement provides otherwise in the event of termination).
|
9.7
|
For the purposes of clause 8.1 of the JVC Shareholders’ Deed and clause 6.1 of the FinCo Shareholders’ Deed, each of VLH, VLF, HET and HET LuxCo hereby gives its approval (such approval to be deemed to have been given prior to Signing) for the entry into and performance by each of the JVC and FinCo of this agreement and/or any documents which are to be entered into by the JVC and/or FinCo pursuant to or otherwise in connection with this agreement.
|
10.
|
SERVICES ARRANGEMENTS WITH VLH
|
11.
|
PRE-COMPLETION COVENANTS
|
11.1
|
Without prejudice to the Parties’ rights and obligations under the JVC Shareholders’ Deed and the FinCo Shareholders’ Deed, the Parties shall (and shall procure that their respective Affiliates, officers, employees, agents, advisers and representatives, including the directors of any JVC Group Company or FinCo nominated by them or by their Affiliates, shall):
|
(a)
|
not engage in any act, omission or conduct (including via the exercise of their respective rights under the JVC Shareholders’ Deed or the FinCo Shareholders’ Deed) that is contrary to this agreement and/or the Transaction Documents (including adversely affecting the prospects or timing of Completion); and
|
(b)
|
use all their rights and powers as shareholders or directors (as applicable) of each JVC Group Company or FinCo to ensure that each JVC Group Company and FinCo (i) continues to carry on its business (and manage affairs relating to Tax) in the ordinary and usual course and in compliance with the Agreed Fundamental Business Objectives (as defined in the JVC Shareholders’ Deed) and applicable law and regulations and (ii) takes all reasonable steps to preserve its business and assets.
|
11.2
|
Each Party agrees and covenants to comply at all times with all applicable Anti-Corruption Laws in relation to (a) obtaining of any approvals, authorisations or permissions required to be obtained or (b) entering into any agreement with any governmental or Regulatory Authority or private party, in each case, in anticipation or in connection with this agreement or the transactions contemplated herein.
|
12.
|
COMPLETION
|
12.1
|
Completion shall take place in Luxembourg at the offices of Arendt & Medernach SA on the fifth Business Day after the Unconditional Date provided that all the Conditions (other than those that have been waived by HET in accordance with this agreement) remain fulfilled at that date or on such other date and in such other place as VLH and HET may jointly agree in writing.
|
12.2
|
At Completion, each of the Parties shall deliver or perform (or ensure that there is delivered or performed) all those documents, items and actions respectively listed in relation to that Party or any of its Affiliates (as the case may be) in Schedule 4.
|
12.3
|
VLH, HET and HET LuxCo hereby grant powers to any director of the JVC, acting individually and with full power of substitution, to register HET as holder of the JVC Sale Shares in the shareholder register of the JVC as of Completion and to make any filings and publications required by applicable law in relation thereto and to give effect to the provisions of this agreement.
|
12.4
|
If for any reason any of the documents, items or actions required from the Sellers, the VEON Guarantor or any of their respective Affiliates under Schedule 4 are not delivered or performed when due and subject to HET being in compliance with its obligations under this agreement, then HET in its full and absolute discretion may elect (in addition and without prejudice to all other rights or remedies available to it), by giving written notice to each of the Sellers, either not to proceed to Completion or to fix a new time and date for Completion (which shall be a Business Day not less than five Business Days after such written notice). There shall be no limit on the number of times HET may elect to fix a new time and date for Completion, provided that such date is not later than the Long Stop Date.
|
12.5
|
Subject to the Sellers being in compliance with their respective obligations under this agreement, if for any reason any of the documents, items or actions required from HET, the HET Guarantor or any of their respective Affiliates under Schedule 4 are not delivered or performed when due, then VLH in its full and absolute discretion may elect (in addition and without prejudice to all other rights or remedies available to it), by giving written notice to HET, either not to proceed to Completion or to fix a new time and date for Completion (which shall be a Business Day not less than five Business Days after such written notice). There shall be no limit on the number of times VLH may elect to fix a new time and date for Completion, provided that such date is not later than the Long Stop Date.
|
13.
|
TERMINATION
|
13.1
|
This agreement shall automatically terminate with immediate effect and each Party's rights and obligations under this agreement shall cease to have effect if Completion has not occurred on or before the Long Stop Date or if each of the JVC Shareholders and the FinCo Shareholders have so agreed in writing.
|
13.2
|
Other than in accordance with Clause 8.7, 8.8 or 13.1, no Party shall be entitled to rescind or terminate this agreement in any circumstances whatsoever (whether before or after Completion). This shall not exclude any liability for (or remedy in respect of) fraud or fraudulent misrepresentation.
|
13.3
|
If this agreement terminates in accordance with Clause 8.7, 8.8 or 13.1:
|
(a)
|
the provisions of this agreement, other than the Surviving Provisions, shall lapse and cease to have effect (so that no Party shall have any liability under them) except in relation to a breach under this agreement prior to any such termination;
|
(b)
|
neither the lapsing of those provisions nor their ceasing to have effect shall affect any accrued rights or liabilities of any Party in respect of: (i) damages for non-performance of any obligation under this agreement falling due for performance prior to such lapse and cessation or (ii) claims or damages for breach of warranties under this agreement relating to the period prior to termination; and
|
(c)
|
each Party shall bear its own costs and expenses in relation to the negotiation, preparation and execution of this agreement and all ancillary matters.
|
13.4
|
The surviving provisions in the event of a termination of this agreement in accordance with Clause 13.1 are Clauses 1, 9.3(a) to 9.3(c), 13 to 15, 21 to 23 and 25 to 33, the provisions of Schedule 6 and any other provisions which are expressly stated in this agreement to survive termination or in respect of which it is reasonably clear that the Parties had intended for such provisions to survive termination (the
Surviving Provisions
).
|
13.5
|
If this agreement terminates in accordance with its terms without Completion having taken place, then following such termination the JVC Shareholders’ Deed and the FinCo Shareholders’ Deed shall continue in effect in accordance with their respective terms excluding any of the amendments or modifications to them set out in this agreement.
|
14.
|
VEON GUARANTEE
|
14.1
|
The VEON Guarantor unconditionally and irrevocably:
|
(a)
|
guarantees to HET the payment when due of all amounts payable by the Sellers to HET under or pursuant to this agreement and undertakes to ensure that the Sellers will perform when due all of their obligations and undertakings under or pursuant to this agreement; and
|
(b)
|
agrees that if and each time that either Seller fails to perform when due any of its obligations to pay or any of its other obligations or undertakings under or pursuant to this agreement, the VEON Guarantor shall as principal debtor and primary obligor (without requiring HET first to take steps against the relevant Seller(s) or any other person) upon demand by HET:
|
(i)
|
either:
|
(A)
|
in respect of any non-payment of amounts payable by the relevant Seller(s) under or pursuant to this agreement, pay that amount to HET; or
|
(B)
|
in respect of the non-performance by the relevant Seller(s) of any other obligation or undertaking under or pursuant to this agreement, unconditionally perform (or procure performance of) and satisfy (or procure satisfaction of) the obligation or undertaking in accordance with this agreement; and
|
(ii)
|
indemnify HET against all Losses sustained by HET flowing from any non-payment or non-performance by the Sellers under or pursuant to this agreement.
|
14.2
|
The VEON Guarantor's obligations under this Clause 14 will not be affected by any matter or thing which but for this provision might operate to affect or prejudice those obligations, including without limitation:
|
(a)
|
any time or indulgence granted to, or composition with, either Seller or any other person;
|
(b)
|
the taking, variation, renewal or release of, or neglect to perfect or enforce this agreement, or any right, guarantee, remedy or security from or against either Seller or any other person;
|
(c)
|
any variation or change to the terms of this agreement; or
|
(d)
|
any unenforceability or invalidity of any obligation of either Seller, so that this agreement shall be construed as if there were no such unenforceability or invalidity.
|
14.3
|
|
(a)
|
Until all amounts, obligations and undertakings which may be or become payable or due to be performed under this agreement (as applicable) have been irrevocably paid or performed in full (as applicable), the HET Guarantor shall not as a result of this agreement or any payment or performance under this agreement be subrogated to any right or security of either Seller or claim or prove in competition with either Seller against HET or any other person or claim any right of contribution, set-off or indemnity.
|
(b)
|
The VEON Guarantor will not take or hold any security from the Sellers in respect of this agreement and any such security which is held in breach of this provision will be held by the VEON Guarantor in trust for HET.
|
14.4
|
The VEON Guarantor shall indemnify HET against any reasonable Loss arising as a result of or in connection with the enforcement of the VEON Guarantor's obligations under this agreement.
|
15.
|
HET GUARANTEE
|
15.1
|
The HET Guarantor unconditionally and irrevocably:
|
(a)
|
guarantees to the Sellers the payment when due of all amounts payable by HET to the Sellers under or pursuant to this agreement and undertakes to ensure that HET will perform when due all of its obligations and undertakings under or pursuant to this agreement; and
|
(b)
|
agrees that if and each time that HET fails to perform when due any of its obligations to pay or any of its other obligations or undertakings under or pursuant to this agreement, the HET Guarantor shall as principal debtor and primary obligor (without requiring the relevant Seller(s) first to take steps against HET or any other person) upon demand by the relevant Seller(s):
|
(i)
|
either:
|
(A)
|
in respect of any non-payment of amounts payable by HET under or pursuant to this agreement, pay that amount to the relevant Seller(s); or
|
(B)
|
in respect of the non-performance of any other obligation or undertaking under or pursuant to this agreement, unconditionally perform (or procure performance of) and satisfy (or procure satisfaction of) the obligation or undertaking in accordance with this agreement; and
|
(ii)
|
indemnify the Sellers against all Losses sustained by the Sellers flowing from any non-payment or non-performance by HET under or pursuant to this agreement.
|
15.2
|
The HET Guarantor's obligations under this Clause 15 will not be affected by any matter or thing which but for this provision might operate to affect or prejudice those obligations, including without limitation:
|
(a)
|
any time or indulgence granted to, or composition with, HET or any other person;
|
(b)
|
the taking, variation, renewal or release of, or neglect to perfect or enforce this agreement, or any right, guarantee, remedy or security from or against HET or any other person;
|
(c)
|
any variation or change to the terms of this agreement; or
|
(d)
|
any unenforceability or invalidity of any obligation of HET, so that this agreement shall be construed as if there were no such unenforceability or invalidity.
|
15.3
|
|
(a)
|
Until all amounts and obligations which may be or become payable or due to be performed under this agreement have been irrevocably paid or performed in full, the HET Guarantor shall not as a result of this agreement or any payment or performance under this agreement be subrogated to any right or security of either Seller or claim or prove in competition with either Seller against HET or any other person or claim any right of contribution, set-off or indemnity.
|
(b)
|
The HET Guarantor will not take or hold any security from HET in respect of this agreement and any such security which is held in breach of this provision will be held by the HET Guarantor in trust for the Sellers.
|
15.4
|
The HET
Guarantor shall indemnify the Sellers against any reasonable Loss arising as a result of or in connection with the enforcement of the HET
Guarantor's obligations under this agreement.
|
16.
|
WAIVER OF LEGACY RIGHTS
|
16.1
|
Subject to Clause 16.2, with effect from and subject to Completion of this agreement:
|
(a)
|
each of VLH, VLF and the VEON Guarantor hereby irrevocably (and each of VLH, VLF and the VEON Guarantor shall procure that each of their respective Affiliates shall irrevocably):
|
(i)
|
waive(s), release(s) and discharge(s) all Legacy Rights, that it or any of its Affiliates has or may have against any one or more of HET, HET LuxCo, the HET Guarantor, the JVC or FinCo (or their respective Affiliates), and
|
(ii)
|
covenant(s) that (i) it shall not sue and that (ii) it, and anyone authorised to act on its behalf, will not commence, authorise, or accept any benefit from any Claims or any other judicial or administrative action or other proceeding anywhere in the world, in each case, against any one or more of HET, HET LuxCo, the HET Guarantor, the JVC or FinCo (or their respective Affiliates) in connection with the Legacy Rights.
|
(b)
|
each of HET, HET LuxCo, the HET Guarantor, the JVC and FinCo hereby irrevocably (and each of HET, HET LuxCo, the HET Guarantor, the JVC and FinCo shall procure that each of their respective Affiliates shall irrevocably):
|
(i)
|
waive(s), release(s) and discharge(s) all Legacy Rights, that it or any of its Affiliates has or may have against any one or more of VLH, VLF or the VEON Guarantor (or their respective Affiliates), and
|
(ii)
|
covenant(s) that (i) it shall not sue and that (ii) it, and anyone authorised to act on its behalf, will not commence, authorise, or accept any benefit from any Claims or any other judicial or administrative action or other proceeding anywhere in the world, in each case, against any one or more of VLH, VLF or the VEON Guarantor (or their respective Affiliates) in connection with the Legacy Rights.
|
16.2
|
This Clause 16 shall not exclude or prejudice any Claims arising in connection with (a) the Alliance Agreement or any agreement or arrangement made pursuant to the Alliance Agreement, (b) any Existing VEON Service(s) to the extent such services continue to be provided following the Completion Date in accordance with Clause 10 and the terms of this agreement or (c) this agreement including any Commitment Indemnity Claim.
|
16.3
|
Subject to Clause 16.2,
to the extent any Claim in relation to Legacy Rights is brought by any Party (or any of their respective Affiliates) in breach of this Clause 16, then the Party bringing the action (or whose Affiliate is bringing the action) shall be required to indemnify the party against which the action is brought for all Losses suffered as a result, including legal fees.
|
16.4
|
The waivers, covenants and obligations set out in this Clause 16 shall be without prejudice to the Parties’ rights and obligations under this agreement (including any Commitment Indemnity Claim).
|
17.
|
RESTRICTION ON DISPOSAL OF INTERESTS
|
17.1
|
The Parties hereby agree that clauses 15 (Right of First Offer) and 19 (Buy-Sell Agreement) of the JVC Shareholders’ Deed shall not apply during the period from Signing to Completion.
|
17.2
|
Notwithstanding the provisions of clause 14 of the JVC Shareholders’ Deed and clause 12 of the FinCo Shareholders’ Deed, during the period from Signing to Completion the JVC Shareholders and the FinCo Shareholders shall not, and shall procure that none of their Affiliates shall, directly or indirectly:
|
(a)
|
sell, transfer, encumber, dispose of or create any interest in any of the JVC Shares or FinCo Shares (or Stapled Interests, as defined in the JVC Shareholders’ Deed), whether in a single transaction or a series of transactions, or enter into any agreement or arrangement (whether oral or written or by conduct and whether or not conditional) in relation to any of the foregoing (any of the foregoing being a
Sale Transaction
) except, in the case of the Sellers, to or with HET or its Affiliates under this agreement or, in the case of HET or HET LuxCo, to any of their respective Affiliates (and in the case of HET or HET LuxCo, only to the extent permitted under clause 14.2(b)(i), 14.2(b)(ii) or 14.4 of the JVC Shareholders’ Deed);
|
(b)
|
solicit, initiate or encourage the submission of proposals or offers from any person (other than, in the case of the Sellers, to or with HET or its Affiliates under this agreement or, in the case of HET, to any of its Affiliates) in relation to any Sale Transaction;
|
(c)
|
enter into or participate in any discussions or negotiations or otherwise communicate with any person (other than, in the case of the Sellers, to or with HET or its Affiliates under this agreement or, in the case of HET, to any of its Affiliates) in relation to any Sale Transaction or negotiate or enter into arrangements whereby a third party may direct or influence the exercise of voting or other rights relating to any JVC Shares or FinCo Shares (or Stapled Interests, as defined in the JVC Shareholders’ Deed);
|
(d)
|
provide information to any person (other than, in the case of the Sellers, to or with HET or its Affiliates under this agreement or, in the case of HET, to any of its Affiliates) in response to, or otherwise co-operate with, assist or participate in, any approach, proposal or offer (including, without limitation, taking any action to assist any person in obtaining any regulatory consents or approvals in connection with such proposal or offer) in relation to any Sale Transaction,
|
17.3
|
Each Party warrants that:
|
(a)
|
all negotiations and other communications between (i) it or any of its Affiliates and (ii) any party (other than, in the case of the Sellers, to or with HET or its Affiliates under this agreement) in respect of any approach, proposal or offer in relation to any Sale Transaction, whenever received, have been discontinued; and
|
(b)
|
prior to the date of this agreement neither it nor any of its Affiliates has entered into any arrangements or agreements, whether oral or written or by conduct and whether or not conditional, with any party relating to any Sale Transaction which have not lapsed or been terminated.
|
17.4
|
Each Party shall, and shall procure that its Affiliates shall, notify each other Party of all offers for, indications of interest in or other communications received from any person in relation to any JVC Shares or FinCo Shares (or Stapled Interests, as defined in the JVC Shareholders’ Deed), the JVC, FinCo, and/or their respective assets and undertakings.
|
17.5
|
The Parties agree that, notwithstanding clause 14.3 of the JVC Shareholders’ Deed, during the period from Signing to Completion, each Party shall procure that:
|
(a)
|
no Indirect Transfer (as defined in the JVC Shareholders’ Deed) is made; and
|
(b)
|
no Encumbrance (as defined in the JVC Shareholders’ Deed) is made, any term of which may result in an Indirect Transfer being granted,
|
17.6
|
The parties to the JVC Shareholders’ Deed agree that, during the period from Signing to Completion, clause 16.2 of the JVC Shareholders’ Deed shall be deemed amended to read as follows:
|
17.7
|
The parties to the FinCo Shareholders’ Deed agree that, during the period from Signing to Completion, clause 13.2 of the FinCo Shareholders’ Deed shall be deemed amended to read as follows:
|
18.
|
INFORMATION, RECORDS AND ASSISTANCE POST-COMPLETION
|
18.1
|
Each of HET and HET LuxCo acknowledges that VLH, VLF, the VEON Guarantor, VEON Amsterdam and/or any member of the VLH Group or the VLF Group may need access on the terms set out in this Clause 18 after Completion to certain accounting, tax and other records and information held by members of the JVC Group or FinCo, to the extent such records and information pertain to events occurring prior to Completion for the purpose of:
|
(a)
|
up to and including the date falling 24 months from the Completion Date, filing their tax returns or dealing with the relevant Taxation Authority in respect of such returns; or
|
(b)
|
up to and including 31 December 2019, enabling them to carry out any internal investigation, including where doing so in response to any request, enquiry or investigation of VLH, VLF, the VEON Guarantor, VEON Amsterdam and/or any member of the VLH Group or the VLF Group from any judicial, governmental, regulatory or other similar body (including any securities exchange) or any independent representative acting on behalf of such bodies.
|
(c)
|
to properly retain and maintain the relevant records until the earlier of the date that is two years after Completion or such time as VLH agrees that such retention and maintenance is no longer necessary; and
|
(d)
|
allow, until date that is two years after Completion, VLH, VLF, the VEON Guarantor, VEON Amsterdam and/or any of their respective officers or auditors to inspect, review and make copies of such records and information (in each case, at the requesting Party’s cost), subject to receiving reasonable notice thereof from the requesting Party, JVC Group and FinCo not being in breach of any confidentiality restrictions to which they are subject under applicable Laws or regulations or under any contract and only to the extent reasonably necessary for the purposes set out in Clauses 18.1(a) to 18.1(b).
|
18.2
|
The rights and obligations in this Clause 18 are subject to the provisions of Clause 22.
|
18.3
|
Nothing in this Clause 18 requires access to information to be made available if to do so would, in the reasonable opinion of HET, HET LuxCo, any JVC Group Company and/or FinCo:
|
(a)
|
result in the loss of privilege or would constitute a breach by any JVC Group Company and/or FinCo of any applicable law or regulation or any obligation of confidentiality owed to a third party or imposed by law provided that the relevant JVC Group Company and/or FinCo (as applicable) shall use its reasonable efforts to permit disclosure of such information; or
|
(b)
|
materially disrupt, or have a material adverse effect on, the business or operations of any JVC Group Company and/or FinCo.
|
19.
|
PROTECTIVE COVENANTS
|
20.
|
POWER OF ATTORNEY
|
20.1
|
VLF irrevocably and unconditionally (and by way of security for the performance of its obligations under this agreement) appoints such persons as may be nominated by HET as its attorney and on its behalf to execute, deliver and carry out in its name or otherwise on its behalf:
|
(a)
|
the transfer of the FinCo Sale Shares in accordance with the terms of this agreement; and/or
|
(b)
|
any other documents, acts and things necessary to effect the matters that VLF is obliged to effect pursuant to Clause 12.2 and Schedule 4 of this agreement and which VLF is obliged, but fails, to effect when due in accordance with this agreement.
|
20.2
|
The appointment in Clause 20.1 shall in all circumstances remain in force and be irrevocable until such time as VLF ceases to have any obligations under the relevant provisions of this agreement, but shall have no further effect after that date.
|
20.3
|
Immediately on Signing VLH shall give an irrevocable and unconditional power of attorney in favour of HET in the Agreed Form.
|
21.
|
COSTS AND EXPENSES
|
22.
|
ANNOUNCEMENTS AND CONFIDENTIALITY
|
22.1
|
Subject to Clauses 22.3 and 22.4, each Party shall (and shall procure that each member of its relevant group and each such person's advisers and connected persons, shall):
|
(a)
|
not make any announcement concerning this agreement, the transactions contemplated by this agreement or any ancillary matter, save for the agreed form announcements set out in Schedule 5 to be made on Signing (the
Agreed Form Announcements
); and
|
(b)
|
keep confidential the provisions and subject matter of, and the negotiations relating to, each Transaction Document.
|
22.2
|
The provisions of Clause 22.1 shall apply before, at and after Completion.
|
22.3
|
Nothing in Clause 22.1 prevents any announcement being made or any confidential information being disclosed:
|
(a)
|
where such announcement is in the Agreed Form or the confidential information disclosed comprises only information set out in an announcement in the Agreed Form; or
|
(b)
|
with the written approval of the other Parties, which in the case of any announcement shall not be unreasonably withheld or delayed; or
|
(c)
|
subject to Clause 8, by any Party to any Regulatory Authority, Sanctions Authority, other competent regulatory or supervisory body or relevant financial institution to the extent that such disclosure is, in the sole opinion of the disclosing Party, necessary, desirable or expedient in connection with the consummation of the transactions contemplated in this agreement (including in connection with satisfying the Conditions and/or addressing any Sanctions Law related issues); or
|
(d)
|
to the extent required by law, any court of competent jurisdiction or any competent regulatory body (including a stock exchange) or supervisory body or authority of competent jurisdiction, but if a person is so required to make any announcement or to disclose any confidential information, the relevant Party shall promptly notify the other Parties, where practicable and lawful to do so, before the announcement is made or disclosure occurs (as the case may be) and shall use its reasonable efforts to co-operate with the other Parties regarding the form, timing and content of such announcement or disclosure (as the case may be) or any action which the other Parties may reasonably elect to take to challenge the validity of such requirement.
|
22.4
|
Nothing in Clause 22.1 prevents any confidential information being disclosed to the extent:
|
(a)
|
required to enable any person to enforce its rights under any Transaction Document or for the purpose of any judicial proceedings;
|
(b)
|
that the information is disclosed on a strictly confidential basis by a person to its professional advisers, auditors or bankers;
|
(c)
|
that the information is disclosed by a Party on a strictly confidential and need-to-know basis to another member of its group;
|
(d)
|
the information was lawfully in the possession of the disclosing Party or any of its advisers and connected persons (in either case as evidenced by written records) without any obligation of secrecy before it being received or held by that disclosing Party and its advisers and connected persons;
|
(e)
|
that the information is in or comes into the public domain (other than through the disclosing Party's acts or omissions);
|
(f)
|
that the information is required to be disclosed by VLH, VLF, the VEON Guarantor, VEON Amsterdam or any member of the VLH Group or the VLF Group to the U.S. Department of Justice and/or to an independent compliance monitor retained by VEON Ltd in accordance with the terms of a deferred prosecution agreement entered into between the U.S. Department of Justice and VEON Ltd on 10 February 2016; or
|
(g)
|
such disclosure is required to be made to lending banks or other funding or prospective (whether debt or equity) funding parties of any Party or any of its Affiliates or arrangers or underwriters of such funding (or their respective Affiliates) or related agent, security agent, trustee or hedge counterparty or rating agency engaged by or on behalf of such Party, together with their directors, officers and advisers.
|
23.
|
NOTICES
|
23.1
|
Any notice or other communication to be given under this agreement must be in writing and must be delivered by hand or courier using an internationally recognised courier company or sent by post, by email or fax to the Party to whom it is to be given at its address appearing in this agreement as follows:
|
(a)
|
to VLH and/or VLF at:
|
(ii)
|
Andrew Ballheimer and Simon Toms of the VLH Solicitors (email:
Andrew.Ballheimer@allenovery.com
and
Simon.Toms@allenovery.com
);
|
(b)
|
to the VEON Guarantor and/or VEON Amsterdam at:
|
(c)
|
to HET and/or HET LuxCo at:
|
(d)
|
to the HET Guarantor at:
|
(e)
|
to JVC at:
|
(f)
|
to FinCo at:
|
23.2
|
Any notice or other communication shall be deemed to have been given:
|
(a)
|
if delivered by hand or courier, at the time of delivery provided that where delivery occurs outside working hours, notice shall be deemed to have been received on the next following Business Day;
|
(b)
|
if sent by fax or email at the time of transmission if delivered by fax or email (as applicable); or
|
(c)
|
if sent by post, on the second Business Day after it was put into the post.
|
23.3
|
In proving the giving of a notice or other communication, it shall be sufficient to prove that delivery was made or that the envelope containing the communication was properly addressed and posted by prepaid recorded delivery post or by prepaid airmail.
|
23.4
|
This Clause 23 shall not apply in relation to the service of any claim form, notice, order, judgment or other document relating to or in connection with any proceedings, suit or action arising out of or in connection with this agreement.
|
24.
|
FURTHER ASSURANCES
|
24.1
|
On or after Completion each Party shall, at its own cost and expense, execute and do (or, where within its control, procure to be executed and done) all such deeds, documents, acts and things as may from time to time be required in order to give full effect to this agreement and the Transaction Documents and secure to the other Parties the full benefit of the rights, powers and remedies conferred upon such Party under the Transaction Documents.
|
24.2
|
In relation to each JVC Group Company and FinCo, the Parties shall (and shall procure that their respective Affiliates, officers, employees, agents, advisers and representatives, including the directors of any JVC Group Company or FinCo nominated by them or by their Affiliates, shall) procure the convening of all meetings, the giving of all waivers and consents and the passing of all resolutions as are necessary under statute, its constitutional documents or any agreement or obligation affecting it to give effect to this agreement and the Transaction Documents.
|
24.3
|
In relation to the VEON Guarantor, the Sellers shall procure the convening of all meetings, the giving of all waivers and consents and the passing of all resolutions as are necessary under statute or its constitutional documents to give effect to this agreement and the Transaction Documents.
|
24.4
|
In relation to the HET Guarantor, HET shall procure the convening of all meetings, the giving of all waivers and consents and the passing of all resolutions as are necessary under statute or its constitutional documents to give effect to this agreement and the Transaction Documents.
|
24.5
|
HET undertakes to, the Sellers undertake to, and HET and the Sellers undertake to procure that each member of the HET Group and the VLH Group and the VLF Group respectively shall, take all necessary steps and act in compliance with its obligations under Clauses 3 and 4.
|
25.
|
ASSIGNMENTS
|
26.
|
PAYMENTS
|
26.1
|
Unless otherwise expressly stated (or as otherwise agreed in the case of a given payment), each payment to be made under this agreement or any other Transaction Document shall be made in Euro by transfer of the relevant amount into the relevant account on the date (and, if applicable, at or before the time) the payment is due for value on that date and in immediately available funds. Unless otherwise expressly stated (or as otherwise agreed in the case of a given payment), all sums due under this agreement or any other Transaction Document shall be made without set‑off or counterclaim. The relevant account for a given payment is:
|
(a)
|
if that payment is to VLH, the VLH Bank Account;
|
(b)
|
if that payment is to VLF, the VLF Bank Account; or
|
(c)
|
if that payment is to HET, the HET Bank Account.
|
26.2
|
Sums payable under this agreement shall be paid net of any deductions or withholdings for, or on account of, any Tax or other legal requirements or the provisions of this agreement. Receipt by a payee of the net sum
|
26.3
|
Each Party shall, upon request by the other Party, cooperate in good faith and take reasonable measures available to it in order to minimise any deduction or withholding referred to in Clause 26.2. For the avoidance of doubt, such reasonable measures shall not include any change to the operations of either Party (or any of its Affiliates) or require either Party (or any of its Affiliates) to carry out any restructuring activities or implement any Tax planning techniques.
|
27.
|
NO DOUBLE RECOVERY
|
28.
|
GENERAL
|
28.1
|
Each of the obligations, warranties and undertakings set out in this agreement (excluding any obligation which is fully performed at Completion) shall continue in force after Completion and shall not be affected by the waiver of any condition or any notice given by the relevant Party in respect of any condition.
|
28.2
|
Except as otherwise expressly stated in this agreement, where any obligation, warranty or undertaking in this agreement is expressed to be made, undertaken or given by two or more parties, they shall be jointly and severally responsible in respect of it.
|
28.3
|
If there is any conflict between the terms of this agreement and the JVC Shareholders’ Deed, FinCo Shareholders’ Deed or any other Transaction Document, the terms of this agreement shall prevail.
|
28.4
|
Time is not of the essence in relation to any obligation under this agreement unless:
|
(a)
|
time is expressly stated to be of the essence in relation to that obligation; or
|
(b)
|
one Party fails to perform an obligation by the time specified in this agreement and the other Party/ies serve(s) a notice on the defaulting Party requiring it to perform the obligation by a specified reasonable time and stating that time is of the essence in relation to that obligation.
|
28.5
|
This agreement may be executed in any number of counterparts, all of which, taken together, shall constitute one and the same agreement, and any Party (including any duly authorised representative of a Party) may enter into this agreement by executing a counterpart. Faxed or scanned signatures are taken to be valid and binding to the same extent as original signatures. Delivery of a counterpart of this agreement by email attachment shall be an effective mode of delivery.
|
28.6
|
The rights of each Party under this agreement:
|
(a)
|
may be exercised as often as necessary (in whole or in part);
|
(b)
|
except as otherwise expressly provided in this agreement, are cumulative and not exclusive of rights and remedies provided by law; and
|
(c)
|
may be waived only in writing and specifically.
|
28.7
|
Nothing in this agreement or any other Transaction Document will be deemed to constitute a partnership between the parties or, unless this agreement expressly provides otherwise, make any Party the agent of any other Party for any purpose.
|
28.8
|
The entities specified in Clause 16 (including Wind Tre and the other relevant Affiliates of the Parties) shall each have the right to enforce the relevant terms of that Clause by reason of the Contracts (Rights of Third
|
28.9
|
Subject to Clause 28.8 and except as otherwise expressly stated in this agreement, a person who is not a Party to this agreement may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.
|
28.10
|
No amendment of this agreement (or of any other Transaction Document) shall be valid unless it is in writing and duly executed by or on behalf of all of the Parties to it.
|
28.11
|
The Parties acknowledge and agree that nothing in this agreement (or any other Transaction Document) will require any other Party to carry out any act or make any omission that may constitute or result in an actual breach of any Sanctions Law.
|
29.
|
WHOLE AGREEMENT
|
29.1
|
This agreement and the other Transaction Documents contain the whole agreement between the Parties relating to the transactions contemplated by this agreement and the Transaction Documents and supersede all previous draft agreements, arrangements or understandings whether oral or in writing, between the Parties relating to these transactions.
|
29.2
|
Each Party:
|
(a)
|
acknowledges that in agreeing to enter into this agreement and the other Transaction Documents it has not relied on any express or implied statement, representation, warranty, undertaking, collateral contract or other assurance, except those warranties and undertakings set out in this agreement and the other Transaction Documents, made by or on behalf of any other Party before the entering into of this agreement;
|
(b)
|
waives all rights and remedies which, but for this Clause 29, might otherwise be available to it arising under or in respect of any such express or implied statement, representation, warranty, undertaking, collateral contract or other assurance; and
|
(c)
|
acknowledges that, except for any liability in respect of a breach of this agreement and the other Transaction Documents, no Party shall owe any duty of care or have any liability in tort or otherwise to the other Parties in relation to the subject matter of this agreement.
|
29.3
|
Nothing in this Clause 29 limits or excludes any liability for fraud or fraudulent misrepresentation.
|
30.
|
INVALID TERMS
|
30.1
|
Each of the provisions of this agreement is severable.
|
30.2
|
If and to the extent that any provision of this agreement:
|
(a)
|
is held to be, or becomes, invalid or unenforceable under the law of any jurisdiction (other than as a result of any person becoming a Sanctioned Person, to which the provisions of Clause 8 apply); but
|
(b)
|
would be valid, binding and enforceable if some part of the provision were deleted or amended,
|
31.
|
JURISDICTION
|
31.1
|
Governing law of this Clause
|
31.2
|
Jurisdiction
|
31.3
|
Waiver of objections
|
31.4
|
Service of process agent
|
(a)
|
each of VLH, VLF, the VEON Guarantor and VEON Amsterdam irrevocably appoints Law Debenture Corporate Services Limited of 5th Floor, Wood Street, London EC2V 7EX, England; and
|
(b)
|
each of HET, the HET Guarantor and HET LuxCo irrevocably appoints Hutchison Whampoa Agents (UK) Limited of Hutchison House, 5 Hester Road, London SW11 4AN, United Kingdom,
|
31.5
|
Alternative service of process agent
|
31.6
|
Failure to notify by process agent
|
32.
|
GOVERNING LAW
|
33.
|
LANGUAGE
|
EXECUTED
as a deed by
VEON LUXEMBOURG HOLDINGS
|
)
)
)
|
|
|
)
)
)
|
..............................................................
By:
Title: Authorised signatory
|
in the presence of:
|
|
|
Witness's Signature ......................................
|
|
|
|
|
|
Name: ......................................
|
|
|
Address: ......................................
|
|
|
......................................
|
|
EXECUTED
as a deed by
VEON LUXEMBOURG FINANCE HOLDINGS S.à R.L.
|
)
)
)
|
|
|
)
)
)
|
..............................................................
By:
Title: Authorised signatory
|
in the presence of:
|
|
|
Witness's Signature ......................................
|
|
|
|
|
|
Name: ......................................
|
|
|
Address: ......................................
|
|
|
......................................
|
|
EXECUTED
as a deed by
VEON LTD.
|
)
)
)
|
|
|
)
)
)
|
..............................................................
By:
Title: Authorised signatory
|
in the presence of:
|
|
|
Witness's Signature ......................................
|
|
|
|
|
|
Name: ......................................
|
|
|
Address: ......................................
|
|
|
......................................
|
|
EXECUTED as a deed by
HUTCHISON EUROPE TELECOMMUNICATIONS S.à R.L.
|
)
)
)
|
|
..............................................................
By:
Title: Manager
|
|
|
in the presence of:
|
|
|
Witness's Signature ......................................
|
||
|
||
Name: ......................................
|
||
Address: ......................................
|
||
......................................
|
EXECUTED
as a deed by
CK HUTCHISON HOLDINGS LIMITED
in the presence of
|
)
)
)
|
|
Director
|
||
|
|
|
|
|
|
|
|
Director
|
EXECUTED as a deed by
VIP-CKH LUXEMBOURG S.à R.L.
|
)
)
)
|
|
..............................................................
By:
Title: Class A Manager
|
|
..............................................................
By:
Title: Class B Manager
|
in the presence of:
Witness's Signature ......................................
Name: ......................................
Address: ......................................
......................................
|
|
|
GIVEN
under the common seal
|
|
|
of
VIP-CKH IRELAND LIMITED
|
)
|
|
and
DELIVERED
as a
DEED
|
)
|
Director
|
EXECUTED
as a deed by
VEON AMSTERDAM B.V.
|
)
)
)
|
|
|
)
)
)
|
..............................................................
By:
Title: Authorised signatory
|
in the presence of:
|
|
|
Witness's Signature ......................................
|
|
|
|
|
|
Name: ......................................
|
|
|
Address: ......................................
|
|
|
......................................
|
|
EXECUTED as a deed by
HET INVESTMENTS S.A
.
|
)
)
)
|
|
..............................................................
By:
Title: Director
|
|
|
in the presence of:
Witness's Signature ......................................
Name: ......................................
Address: .....................................
|
|
|
Name of significant subsidiary
|
Country of incorporation
|
Nature of subsidiary
|
Percentage of ownership interest
|
|
|
|
|
VEON Amsterdam B.V.
|
Netherlands
|
Holding
|
100%
|
VEON Holdings B.V.
|
Netherlands
|
Holding
|
100%
|
PJSC VimpelCom
|
Russia
|
Operating
|
100%
|
JSC “Kyivstar”
|
Ukraine
|
Operating
|
100%
|
LLP “KaR-Tel”
|
Kazakhstan
|
Operating
|
75%
|
LLC “Unitel”
|
Uzbekistan
|
Operating
|
100%
|
LLC “VEON Georgia”
|
Georgia
|
Operating
|
80%
|
CJSC “VEON Armenia”
|
Armenia
|
Operating
|
100%
|
LLC “Sky Mobile”
|
Kyrgyzstan
|
Operating
|
50%
|
VEON Luxembourg Holdings S.à r.l.
|
Luxembourg
|
Holding
|
100%
|
VEON Luxembourg Finance Holdings S.à r.l.
|
Luxembourg
|
Holding
|
100%
|
VEON Luxembourg Finance S.A.
|
Luxembourg
|
Holding
|
100%
|
Global Telecom Holding S.A.E
|
Egypt
|
Holding
|
58%
|
Omnium Telecom Algérie S.p.A.*
|
Algeria
|
Holding
|
26%
|
Optimum Telecom Algeria S.p.A.*
|
Algeria
|
Operating
|
26%
|
Pakistan Mobile Communications Limited
|
Pakistan
|
Operating
|
49%
|
Banglalink Digital Communications Limited
|
Bangladesh
|
Operating
|
58%
|
1.
|
I have reviewed this annual report on Form 20-F of VEON Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
|
5.
|
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 20-F of VEON Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
|
5.
|
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
Abbreviation
|
|
Definition
|
“
2G
”
|
|
The second-generation mobile telephony system based on the standards defined by the ITU.
|
“
3G
”
|
|
The third-generation mobile telephony system based on the standards defined by the ITU
|
“
4G/LTE
”
|
|
The fourth-generation/long-term evolution mobile technologies, including WiMax, based on the standards defined by the ITU
|
“
5G
”
|
|
Fifth generation mobile networks
|
“
ADSL
”
|
|
Asymmetric digital subscriber line
|
“
ANO
”
|
|
Alternative network operator
|
“
API
”
|
|
Application programming interface
|
“
ARPU
”
|
|
Average revenue per user of telephone services, calculated over a given period of time for the average number of total customers or of active customers in the same period
|
“
B2B
”
|
|
Business to business
|
“
B2C
”
|
|
Business to company
|
“
B2O
”
|
|
Business to operation
|
“
Broadband
”
|
|
A high-capacity network backbone providing connectivity between sites and that picks up and conveys the traffic of lower-capacity peripheral rings
|
“
BTS
”
|
|
Base transceiver station: fixed transmitter/receiver equipment located within cells of a mobile telecommunications network that enables communications by means of radio signals with mobile telephones
|
“
CAMEL
”
|
|
Customized Applications for Mobile network Enhanced Logic
|
“
CDMA
”
|
|
Code division multiple access
|
“
Churn
”
|
|
A measure of the proportion of a business unit’s customer base that disconnects from such business unit’s service over a period of time. Prepaid and postpaid churn rates are each calculated by dividing the respective total number of prepaid or postpaid customer disconnections (including customers who disconnect and reactivate with the same phone number) for the period by the average number of prepaid or postpaid customers for the period. The average number of customers for the period is calculated by taking the average of each month’s average number of prepaid or postpaid customers (calculated as the average of the total number of customers at month-end and the total number of customers at the end of the previous month) during the period. A business unit’s total churn rate is the weighted average of such business unit’s prepaid churn rate and postpaid churn rate over the period, based on weighted number of prepaid and postpaid customers
|
“
Customer
”
|
|
For mobile line telephone services, the terms refer to anyone: (a) who is a holder of a SIM card; and (b) in the event of prepaid services, anyone who has made at least one recharge after the second month of making the SIM purchase
|
“
DFS
”
|
|
Digital financial services
|
“
DSL
”
|
|
Digital subscriber line
|
“
DWDM
”
|
|
Dense wavelength divisions multiplexing
|
“
EDGE
”
|
|
Enhanced data rates for GSM Evolution: evolution of data communications within the existing GSM standard. Designed as a step forward from GPRS, EDGE improves the GSM radio interface in that it increases the data transfer speed by optimizing use of the available spectrum
|
“
FMC
”
|
|
Fix mobile convergence (charging subscribers who use both mobile and fixed fiber connect from a single account)
|
“
FOL
”
|
|
Fiber optical line
|
“
FTR
”
|
|
Fixed termination rate
|
“
FTTB
”
|
|
Fiber-to-the-building
|
“
GPRS
”
|
|
General packet radio service: data transmission technology using packet-based transmission for providing mobile telecommunications
|
“
GSM
”
|
|
Global System for Mobile Communications: a mobile-telephony standard based on digital transmission and cellular network architecture with a roaming system
|
“
GSM900
”
|
|
Mobile telephone services using GSM in the 900 MHz frequency range
|
“
GSM900/1800
”
|
|
Mobile telephone services using the GSM standard in the 900 MHz and 1800 MHz frequency ranges
|
“
GSM1800
”
|
|
Mobile telephone services using GSM in the 1800 MHz frequency range
|
“
HSPA
”
|
|
High-speed packet access
|
“
ICX
”
|
|
Interconnection exchange
|
“
IEEE
”
|
|
Institute of Electrical and Electronics Engineers (a professional association which creates and maintains standards for wireless network products)
|
“
IGW
”
|
|
International gateway
|
“
IIG
”
|
|
International internet gateway
|
“
ILD
”
|
|
International long distance
|
“
Incumbent
”
|
|
The term defining the telephone carrier company which once had a monopoly on the market, and now has a dominating position on a free market
|
“
Internet
”
|
|
Internet of things
|
“
IP
”
|
|
Internet protocol: the universal communications protocol based on the exchange of packets of information between telecommunications equipment. It is the standard protocol used on the internet
|
“
IPTSP
”
|
|
Internet protocol telephony service provider
|
“
IPTV
”
|
|
Internet protocol television
|
“
IP VPN
”
|
|
IP virtual private network
|
“
ISDN
”
|
|
Integrated services digital network
|
“
ISP
”
|
|
Internet service provider: provider of access to the internet and to the service linked to the latter
|
“
IVR
”
|
|
Interactive voice response
|
“
L2VPN
”
|
|
Layer-2 virtual private network
|
“
LDI
”
|
|
Long distance and international
|
“
LLU
”
|
|
Local loop unbundling (In Italy, this is the regulatory process of allowing multiple telecommunications operators to use connections from Telecom Italia’s local exchanges to the customer’s premises)
|
“
M2M
”
|
|
Machine to machine
|
“
Mbps
”
|
|
Megabytes per second
|
“
MFS
”
|
|
Mobile financial services
|
“
MHz
”
|
|
Mega hertz: the hertz is a unit of frequency of one cycle per second. A mega hertz refers to a frequency of one million hertz
|
“
MMS
”
|
|
Multimedia messaging service: an evolution of SMS services that, in addition to text messages, offer several types of multimedia contents such as images, audio and video-clips
|
“
MNP
”
|
|
Mobile number portability: a service, recently approved by the BTRC in Bangladesh, which allows customers to keep their mobile number when switching between mobile operators. The BTRC directive, instructing mobile telecommunications operators to make this service available to customers in Bangladesh, was approved by the BTRC on May 6, 2013
|
“
Mobile operator
”
|
|
Provider of telecommunications services using the range of radio frequencies assigned to it
|
“
MOU
”
|
|
Minutes of use
|
“
MPLS
”
|
|
Multiprotocol label switching
|
“
MSAN
”
|
|
Multi-service access nodes
|
“
MTR
”
|
|
Mobile termination rates
|
“
Multimedia
”
|
|
Communications using any combination of different media and which may comprise text, audio, music, images, animation and video
|
“
MVNO
”
|
|
Mobile virtual network operator
|
“
OTT
”
|
|
Over-the-top. Refers to content service providers such as Google and Facebook
|
“
PBX
”
|
|
Private branch exchange
|
“
Penetration rate
”
|
|
This is a measure of access to telecommunications, normally calculated by dividing the number of customers to a particular service by the population to whom it is available and multiplying by 100. It is also referred to as teledensity (for fixed-line networks) or mobile density (for cellular networks)
|
“
Prepaid
”
|
|
Mobile telephony service paid for in advance by the customer
|
“
Postpaid
”
|
|
Mobile telephony service paid for after usage by the customer has occurred
|
“
Protocol
”
|
|
The standard communication rules between two computers or within a computer network. Two computers using the same protocol can exchange data. The internet is based on a series of protocols, for example www is based on http protocol. The most popular is IP, Internet Protocol, which is a data transfer protocol
|
“
PSTN
”
|
|
Public switched telephone network: the circuit-switched public telephone network
|
“
RBT
”
|
|
Customized ring back tones
|
“
REF
”
|
|
Radio electronic facilities
|
“
RIO
”
|
|
Reference interconnection offers
|
“
Roam
”
or
“
roaming
”
|
|
The ability to make and receive calls on the same mobile phone even when travelling outside the area covered by the “home” network operator
|
“
SaaS
”
|
|
Software as a service
|
“
SDH
”
|
|
Synchronous digital hierarchy
|
“
SIM
”
or
“
SIM card
”
|
|
Customer identity module card: magnetic cards with a memory for data storage and software applications
|
“
SME
”
|
|
Small- and medium-size enterprise market which consists of businesses having between 3 and 50 employees
|
“
SMS
”
|
|
Short message service: a protocol that uses the signaling channel to transmit text messages up to 160 characters long
|
“
SOHO
”
|
|
Small office/home office
|
“
TDD
”
|
|
Time division duplex
|
“
ULL
”
|
|
Unbundled local loop
|
“
UMTS
”
|
|
Universal Mobile Telecommunications System
|
“
USB
”
|
|
Universal serial bus
|
“
Value Added Services”
or
“
VAS
”
|
|
These are services that provide a higher level of functionality than those offered by basic transmission services made available by a telecommunications network for transferring information via terminals
|
“
VoIP
”
|
|
Voice over IP: digital technology enabling the transmission of voice packages via the internet, intranet, extranet and VNP networks. The packets are carried according to H.323 specifications, that is to say the ITU standard forming the basis for data, audio, video and communications services over IP type networks
|
“
VPN
”
|
|
Virtual private network
|
“
VSAT
”
|
|
Very small aperture terminals, which are two-way satellite ground stations used to transmit data
|
“
WBA
”
|
|
Wholesale broadband access
|
“
WiMax
”
|
|
Worldwide interoperability for microwave access communication standard
|
“
WLL
”
|
|
Wireless local loop
|
“
WLR
”
|
|
Wholesale line rental
|
“
xDSL
”
|
|
All types of DSL
|
Regulatory bodies
|
In accordance with the Russian Constitution and the Federal Law “On Communications,” (the “Communications Law”), the regulation of activity in the field of communications is controlled by the President of the Russian Federation, the Russian Government, the federal body of executive power in the field of communications and other federal executive authorities within their competence. The Ministry of Digital Development, Communications and Mass Media of the Russian Federation (formerly, the Ministry of Telecom and Mass Communications of the Russian Federation) (the “Ministry”) is responsible for the regulation of telecommunications, mass media, information technology and postal services. In Russia, regulation of the use of the radio frequency spectrum is exercised by the State Commission on Radio Frequencies, which establishes the procedure for the allocation of radio frequencies.
The name and responsibilities of the Ministry were modified in 2018, but the Ministry remains responsible for developing and implementing national policy and legal regulation in the following areas, all of which are important to our business:
•
information technology, including the use of information technology in public resources and promotion of access to such resources;
•
telecommunications, including the allocation and conversion of the radio frequency spectrum, and postal communications;
•
mass media, including electronic media, development of the internet, television and radio broadcasting (including developments based on digital technology), and new related technologies;
•
publishing, printing, and distribution of printed media;
•
personal data processing, management over specified state property and provision of public services in the area of information technology including organization public information resources and access to it; and
•
national policy and legal regulation relating to protection of children from information harmful to their health or development.
The Ministry in turn controls and coordinates the activity of: (i) the Federal Communications Agency, or “Rossvyaz;” (ii) the Federal Agency on Press and Mass Media and (iii) the Federal Supervisory Service for Communications, Information Technologies and Mass Media, or “Roskomnadzor.” The functions of Rossvyaz and Roskomnadzor are particularly relevant to our business. Rossvyaz is responsible for allocating numbering resources and certifying communication facilities. Roskomnadzor’s responsibilities include telecommunications licensing activities; issuing permissions for, among other things, radio frequency use, control over telecommunications and information technologies and devices utilizing frequencies, including handsets.
|
Regulatory framework
|
The Communications Law is the principal legal act regulating the Russian telecommunications industry. The Communications Law sets forth general principles for the regulation of the telecommunications industry, including a description of the institutional framework for the federal government’s involvement in the regulation and the administration and operation of the telecommunications industry. The most important aspects of the Communications Law with respect to our business include the federal government’s authority to:
•
license communications service providers;
•
allocate radio frequencies;
•
certify telecommunications equipment;
•
allocate numbering resources;
•
ensure fair competition and fair pricing; and
•
conduct oversight of operators’ compliance with the terms of their licenses and Russian law.
|
Licenses
|
In accordance with Russian legislation, licenses to provide telecommunications services are issued by Roskomnadzor on the basis of an application from an eligible applicant or, when applicable, on the basis of results of a tender or an auction. Licenses are generally issued for a term of three to twenty-five years. Roskomnadzor has the right to renew an existing license upon application. An application may be rejected if, as of the date of its submission, the operator has been found to have violated the terms of the license and such violations have not been cured. The Communications Law also regulates the procedures for reissuing a license in the case of a reorganization of the license holder or a transfer of a communications network or operation to another person or persons.
In addition to obtaining a license, wireless telecommunications operators have to receive a permit for radio frequency usage for every radio transmitter they operate. The permit for radio frequency usage is issued by Roskomnadzor on the basis of decisions of the State Radio Frequency Commission and the conclusion of an examination by the Main Radio Frequency Center. This examination evaluates the electromagnetic compatibility of the radio electronic devices and coordinates radio transmitter usage with the Defense Ministry, the Federal Protective Service and the Federal Security Service of the Russian Federation. Under the Communications Law, permits for the use of radio frequencies are granted for ten years, or a shorter period if such shorter period is requested in the application. Radio frequency permit duration may be extended on the basis of existing regulations and State Radio Frequency Commission decisions. Radio frequency allocation permission may be suspended or terminated for a number of reasons, including failure to comply with the conditions to which the frequency allocation was subject.
Furthermore, the Communications Law regulates material communications equipment, for example a base station, in the same way as real estate property. In particular, wireless telecommunications operators are required to receive construction permits for the base stations, register title to land plots underlying the base stations or establish other legal grounds to use the underlying land, and consider other regulatory aspects of the network before putting the base stations into operation.
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Mobile Termination Rates
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The Communications Law and the Federal Law “On the Protection of Competition” allow telecommunications operators, including wireless service operators, to freely establish tariffs for the telecommunications services provided to customers, with the exception of significant operators’ interconnection tariffs and tariffs on universal services. PJSC VimpelCom is not considered a significant operator and therefore can independently establish tariffs. However, since PJSC VimpelCom is considered to have a dominant market position in Russia (as determined by the Federal Antimonopoly Service of the Russian Federation ("FAS")), this independence is limited by the antitrust legislation and requires us to consider the prices of similar services provided by other operators to avoid being sanctioned for abusing a dominant market position. For a description of MTRs in Russia, see “
Item 4-Information on the Company-Interconnection Agreements
.”
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Significant Market Power
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An operator is presumed to have SMP if it has a share of more than 25% of all active numbers or if it can sustain traffic throughput of more than 25% of traffic in the particular geographical region or all of Russia. Roskomnadzor maintains an exhaustive list of SMP operators. Operators with SMP must provide interconnect services to all other operators in the market, following mandatory interconnection tariffs, which are regulated. PJSC VimpelCom is not included on this list.
However, PJSC VimpelCom has a “dominant market position” in Russia, which requires us to have economical and technical reasons behind our commercial policies, such as pricing or contracting. If the FAS finds a dominant operator’s proposed commercial policies to be groundless, that dominant operator may face legal consequences, such as fines and obligatory requirements to undertake corrective actions.
Pursuant to the Federal Law “On the Protection of Competition”, a company which holds a dominant market position, individually or collectively with other unrelated companies, is subject to restrictions aiming to prevent the abuse of such position to the detriment of other market participants or customers. In particular, the restrictions relate to (i) pricing (among other restrictions, it is prohibited to (a) increase or decrease an existing “monopolistic” (unreasonable) price if it is not caused by an increase or decrease in cost or market conditions or (b) set a different price for the same goods without economic or technological reasons); and (ii) conduct (among other restrictions, it is prohibited to impose unfavorable or unrelated contractual terms on a counterparty or to create barriers to market entry).
If the FAS finds that a company holds a dominant market position (individually or collectively) and abuses such position, the FAS may initiate an administrative action and impose on such company or its officers a fine or another administrative liability depending on the type of violation. In particular, an abuse of a dominant market position which may not and does not result in the restriction of competition may trigger, among other penalties, a fine of between RUB300,000 and RUB1,000,000. An abuse of a dominant market position which may result or did result in the restriction of competition may trigger, among other penalties, a fine of between 1% and 15% of (i) revenue generated from the sale of goods on the market on which the abuse was committed; or (ii) the cost of the goods sold on the market on which the abuse was committed (the fine has a minimum threshold of RUB100,000 and a maximum of 2% of the company’s aggregate revenue).
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Mobile Number Portability
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Since December 1, 2013, customers have been allowed to port mobile numbers. The maximum charge to the customer to port a mobile number is RUB 100 (US$1.43 as of December 31, 2018) per ported number. PJSC VimpelCom’s business has not been significantly affected from the implementation of mobile number portability.
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Data Protection
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The Communications Law and the Federal Law “On Personal Data” protects two categories of information: (i) provided telecommunications services and (ii) personal data. Personal data is any information directly or indirectly concerning an individual. Information on provided services includes the personal data of the subscriber and the details of his or her activity on the telecommunications operator’s network. Therefore, the operator has to invest considerable resources to protect both categories of data and comply with rules that relate to collection, processing, storage and use of such data. The rules were amended in July 2014 to require that operators process the personal data of Russian citizens using servers located in Russia. The Russian data localization regime is evolving quickly, and there has been conflicting guidance on some of the requirements. The technical restrictions on the processing of this data affect how we are able to deploy new technologies, particularly with respect to cloud services, leveraging our data and sharing such information for marketing purposes. The Federal Law “On Personal Data” requires us to receive explicit written consent from individuals before we may transfer data beyond the scope of subscriber’s agreement. Non-compliance could result in administrative sanctions, which could materially impact our operations.
Federal Law No 374-FZ (commonly referred to as the Yarovaya laws) amended anti-terrorism legislation and imposed certain obligations on communication providers, including, among others, the obligation to store information confirming the fact of receipt, transmission, delivery and/or processing of voice data, text messages, pictures, sounds, video or other communications (i.e., meta-data reflecting these communications) for a period of three years, as well as to store the contents of communications, including voice data, text messages, pictures, sounds, video or other communications for a period of up to six months. This requirement came into force on July 1, 2018. In addition, in accordance with Federal Law No 374-FZ, communication providers are obliged to supply information to the investigation and prosecution authorities about users and any other information “which is necessary for these authorities to achieve their statutory goals,” and to provide to the investigation and prosecution authorities any information and codes necessary to decode the information. In addition, under local law, operators are required to block services for users whose personal data does not correspond to the data registered and stored by the operator. Failure to comply may lead to administrative fines and could impact the effectiveness of our licenses. Most of the provisions of Federal Law No 374-FZ entered into force on July 20, 2016. However, the practical effects of Federal Law No 374-FZ are still unclear, since the implementing legislation does not provide sufficient detail. The implementation and support of measures to comply with the legislation led to substantial investments for the design of our IT systems in Russia, and the purchase of specialized equipment and tools. The Russian authorities require, among other things, the use of specific storage equipment (such as data storage, interception devices, fiberoptic cables and technical platforms). Total expenses may be quantifiable after all technical and administrative measures are completed. Government Decree No 445, dated April 12, 2018, established the progressive order of installation of required storage capacity under the new law. Technical requirements for the data storage systems under the new law are not fully clear and often subject to agreement with the authorities, so in the near future these requirements could necessitate additional investments to be compliant.
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Other
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Roaming
All commercial policies, including roaming prices, are subject to antitrust monitoring and control on an ongoing basis. On July 14, 2017, the FAS issued an injunction requiring all telecom operators to abolish “intra-network roaming” surcharges. This term describes the surcharges applied by operators to subscribers making and receiving calls when travelling outside of their home regions. On March 12, 2018, the FAS opened an investigation into the intra-network roaming tariffs applied by PJSC VimpelCom. In order to comply with the FAS’s injunction, PJSC VimpelCom abolished the surcharges applied to subscribers for receiving calls when traveling outside of their home regions. Russian legislators subsequently amended the Communications Law to prohibit these surcharges. The FAS closed its investigation by imposing nominal fines on PJSC VimpelCom.
Restrictions on foreign investment
The Federal Law “On the Procedure for Foreign Investments in Business Entities of Strategic Importance for National Defense and State Security” (the “Russian Foreign Investment Law”) limits foreign investment in companies that are deemed to be strategic. Our subsidiary PJSC VimpelCom is deemed to be a strategic enterprise under the Russian Foreign Investment Law. As a result, any acquisition by a foreign investor of direct or indirect control over more than 50% of its voting shares, or 25% in the case of a company controlled by a foreign government, requires the prior approval of the Government Commission on Control of Foreign Investment in the Russian Federation pursuant to the Russian Foreign Investment Law. The FAS, which administers the application of the Russian Foreign Investment Law, has in the past challenged acquisitions of our shares by foreign investors. In addition, the restrictions stipulated by the Federal Law dated July 27, 2006 No 149-FZ “On the Information, Information Technology and Protection of Information” affect the provision of audio-visual services by foreign entities and local companies with more than 20% of foreign investments or shares. Finally, initial drafts of the implementing regulation for Federal Law 187-FZ “On the security of Russia’s critical information infrastructure” contained provisions limiting the use of foreign contractors. While the final adopted version of this regulation does not contain such limitations, it may not be ruled that such limitations will be introduced in the future.
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Sanctions regimes imposed against Russia
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For a discussion on current sanctions regimes and their effect on our business in Russia, see —
Sanctions Regimes
. For a discussion of the risks to our business as a result of the current sanctions regimes, see
Item 3.D. Risk Factors — Market Risk — "Our operations may be adversely affected by ongoing developments in Russia and Ukraine
.”
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Regulatory bodies
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Under the Pakistan Telecommunications (Re-organization) Act, 1996, as amended (the “Telecommunications Act”), responsibility for telecommunications regulation in Pakistan lies with the Ministry of Information Technology and Telecommunication (the “MoIT”) and the Pakistan Telecommunications Authority (the “PTA”).
The MoIT is responsible for shaping and directing Pakistan’s telecommunications and information technology policies. The PTA is an autonomous body that, subject to government-issued instructions and policy directives, implements policy and monitors the activities of the various market participants through licensing, tariff regulation, investigation of complaints (including arbitration of disputes between licensees) and competition. Additionally, the Competition Commission of Pakistan regulates competition within the telecommunications sector under the Competition Act, 2010.
The Frequency Allocation Board (the “FAB”) has exclusive powers to allocate radio frequency spectrum. The PTA receives applications for the allocation and assignment of radio frequency spectrum and, after examination, refers applicants to the FAB for the allocation of frequency.
Telecommunications networks and services in Pakistan are principally regulated under the Telecommunications Act and the rules and regulations made thereunder (the "Telecommunications Rules"). The Telecommunications Act also defines general rules for the licensing and authorization of telecommunications networks and services and introduces principles of establishment and administration of special funds, which are intended for research and development and a universal services fund.
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Licenses
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Mobile telecommunications operators are required to have a radio frequency spectrum allocation, which is typically auctioned by the PTA to qualifying bidders, subject to the MoIT’s policies and includes a license to operate.
To obtain a license to provide mobile telecommunications services in Pakistan, the PTA requires a written application supported by relevant documents, as set out in the applicable regulations, and information memoranda or advertisements in respect of the relevant license.
Licenses for the provision of mobile telecommunications services in Pakistan are typically issued for 15 years and may be renewed on such terms and conditions, and with such fees and contributions, which are consistent with the policy of the Government of Pakistan (the “GoP”) at the time of expiration. The PTA may include such additional terms as it considers appropriate, or it may decline to renew a license for various reasons, including violations of applicable license terms, laws or regulations. For a discussion of the risk related to renewal of licenses, see
Item 3.D. — Risk Factors — Operational Risks — “We face uncertainty regarding our frequency allocations and may experience limited spectrum capacity for providing wireless services.”
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Mobile Termination Rates
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The PTA determines all MTRs, and, in addition, all signed contracts must be submitted to the PTA. For a description of MTRs in Pakistan, see
Item 4 — Information on the Company
.
As described further below, for licensees designated as having significant market power, the PTA proposes an appropriate cost regime for interconnection and applies it to those licensees. Operators that are not subject to SMP in the relevant market may use commercially agreed termination rates. Effective January 1, 2019, MTR rates in Pakistan were reduced from PRK 0.9/min to PRK 0.8/min.
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Significant Market Power
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According to the Pakistan Telecommunication Rules, 2000, an operator whose share of the relevant market exceeds 25% (based on revenues) will be presumed to have SMP, unless determined otherwise by the PTA. The PTA may also determine that an operator whose share of the relevant market is less than the 25% threshold nonetheless has SMP. Pursuant to the Telecommunications Policy 2015, licensees that are designated as SMP in a relevant market under the competition rules and provide infrastructure and other services (rather than services alone) are required to:
•
obtain prior approvals from the PTA for the launch of class value added services and any change in prices;
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provide, on a first-come, first-served basis, national roaming services and infrastructure sharing, meaning SMP operators will not be allowed to discriminate among operators;
•
pay MTRs as determined by the PTA (instead of the mutually agreed upon MTR paid by non-SMP licensees); and
•
offer infrastructure sharing.
Currently, industry operators are challenging the basis on which the PTA makes SMP determinations on the basis that there are differing thresholds for SMP under the Telecommunications Rules (using a 25% threshold) and the Competition Act of 2010 (using a 40% threshold).
On September 30, 2016, the PTA issued a determination declaring Pakistan Mobile Communications Ltd (PMCL) as having SMP in the retail cellular mobile telecommunications market for Pakistan. Telenor Pakistan was declared as having SMP in this market in AJK and Gilgit-Baltistan. PMCL has appealed the PTA’s determination in court. On January 22, 2018, the Islamabad High Court set aside the PTA’s determination on SMP and remitted the matter back to the PTA.
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Mobile Number Portability
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The Mobile Number Portability Regulations, 2005 provide the eligibility criteria for MNP, the rights and obligations of customers and the duties and responsibilities of mobile operators. The PTA formed a supervisory board with all mobile operators to supervise the centralized database operation and determine the best method for MNP.
MNP was launched throughout Pakistan in March 2007. The current porting rate is PKR 250 (US$1.8 as of December 31, 2018) per completed port.
The Mobile Cellular Policy 2004 and the Telecommunications Policy 2015 encourage (but do not require) domestic roaming and infrastructure sharing, and those matters are left to the various operators to negotiate commercial terms. Although a limited number of operators in Pakistan originally benefited from MNP, the impact of MNP in Pakistan has dissipated considerably over the past few years and focus has shifted away from the MNP competitive arena.
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Data Protection
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In Pakistan, there are a number of statutes and regulations on data protection to which we are subject, including the Prevention of Electronic Crimes Act, 2016, the Pakistan Telecommunications (Re-organization) Act, 1996 and Revised Standing Operating Procedure on Requisitioning of Call Data Record by Authorized Officers from Telecom Operators, 2016. We are also subject to specific conditions pertaining to privacy and confidentiality of customer information, which are contained in our telecommunications licenses and the PMCL’s customer privacy policy.
Under the applicable laws and regulatory requirements, we have a responsibility to protect customer information and to ensure that information is not disclosed without customer consent, except as required under the law. We also have a responsibility to ensure that information is not transferred/placed or stored outside of Pakistan.
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Other
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Biometric Verification
Following a number of terrorist attacks, the GoP introduced Standard Operating Procedures requiring all mobile operators to re-verify their entire customer base through biometric verification with the exception of SIM cards issued in the names of companies for use by employees. For PMCL, this involved the re-verification of more than 38 million SIM cards, and SIM cards that could not be verified had to be blocked by the operators. As a result of the re-verification, PMCL lost customers but retained 88% of its subscriber base.
Telecommunications Policy 2015
On December 11, 2015, the GoP approved a new telecommunications framework, the Telecommunications Policy 2015, which introduced approximately 50 new telecommunications regulatory frameworks to be developed by the PTA after the requisite consultation process with the telecommunications industry. Certain legislative and regulatory changes are expected in the implementation of these frameworks, including: (i) the introduction of competition rules; (ii) changes in the interconnection regime; (iii) changes in national roaming and infrastructure sharing requirements; (iv) allocation and assignment of spectrum in order to maximize social and economic benefits; (v) the establishment by the PTA of an environmental regulatory framework for the sector; and (vi) the prescription by the MoIT of rules for lawful interception.
The Pakistan Prevention of Electronic Crimes Act 2016 introduced sentencing and heavy fines for acts such as spam messaging, accessing of unauthorized data, acquiring or selling of identification information, tampering with a device identifier and the issuance of a SIM in an unauthorized manner. The powers of the Federal Investigation Agency have been enhanced in order to enforce this law. This has a direct impact on our business, as many of the usual forms of marketing in Pakistan are now prohibited by law.
Sales Tax Act
Following amendments to the Sales Tax Act 1990 in mid-2014, a requirement was imposed on operators to charge, collect and pay sales tax on the provision of SIM cards. Due to the high amount of competition in the market, we are unable to pass on the entirety of this expense to customers.
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Regulatory bodies
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The
Ministère de la Poste, des télécommunications, des technologies et du numérique
(the “MPTTN”) is responsible for shaping and directing Algeria’s telecommunications policies.
The
Autorité de Régulation de la Poste et des Communications Electroniques
(the “ARPCE”), a body established as an independent and financially autonomous regulator, acts as an advisor to the MPTTN and is in charge of implementing policies and monitoring the market, ensuring effective competition, allocating frequencies dedicated to telecommunications services and managing the numbering plan. Additionally, the ARPCE is responsible for the arbitration of disputes among operators and those between operators and end users. From January 2015, the ARPCE has been empowered to issue financial sanctions against operators who are not compliant with applicable law. In October 2015, a procedure to issue such sanctions was established.
The Algerian National Competition Council governs competition matters.
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Regulatory framework
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The main elements of the regulatory framework applicable to the telecommunications sector in Algeria are embodied in the Post and Telecommunications Law of April 2018 (the "2018 Telecommunications Law"), which replaces a previous telecommunications law of August 2000 and (i) establishes general rules for the organization of the postal and telecommunications sector; (ii) creates and determines the mandate of the national regulatory authority; (iii) defines general rules for the licensing and authorization of telecommunications networks and services; and (iv) introduces principles allowing the development of competition in the sector.
Compared to the previous law, the 2018 Telecommunications Law: (1) envisions the introduction of mobile number portability; (2) introduces national roaming and obligation for operators to grant access to their network (3) recognizes the monopoly of Algeria Telecom on the provision of international services (voice and bandwidth); (4) gives Algeria Telecom the monopoly on National Backbone and Backhaul rollout and operation;
(5) transfers to the MPTTN management of the Universal Service; and (6) grants the ARPCE the power to impose sanctions on operators that provide services to unidentified subscribers. Pending publication of the implementation decrees related to the 2018 Telecommunications Law, the provisions of the former telecommunications law remain in force (at end of 2018, only one decree was published concerning the Universal Service). In November 2018, the ARPCE instructed operators on the interpretation of the 2018 Telecommunications Law regarding international traffic and optical fiber rollout. The ARPCE, together with the MPTTN, confirmed: (1) the right for operators to rollout and operate their own networks for their own use; and (2) the obligation of operators to use Algeria Telecom's infrastructure (including international switch) for all the international traffic.
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Licenses
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The ARPCE is responsible for granting telecommunications licenses. A license can be issued to any physical or legal person who commits to comply with the conditions in the tender specifications. The procedure for a tender is determined by regulation.
Mobile licenses are automatically renewed once the license owner has satisfied all of its obligations related to the operation of the network and the provision of services. Any refusal to renew a license must be for good cause, based on a ministerial decision and following a formal recommendation by the ARPCE.
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Retail market regulation
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According to the terms of their telecommunications licenses, Algerian operators must submit all their retail offers to the ARPCE for approval 30 days before introducing such offers to the market.
From January 2009 to May 2016, the ARPCE established rules regulating the promotions that mobile operators may offer. These rules limit the frequency and duration of promotions and, to some extent, reduced the intensity of competitive promotions. Since May 2016, these rules ceased to apply to mobile operators, providing Optimum more freedom in relation to its marketing strategies.
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Significant Market Power
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From February 2007 to September 2016, Optimum was designated as an SMP operator in the retail market for GSM communications by the ARPCE. As a result, Optimum was required to follow more stringent obligations as its retail tariffs were subject to non-discrimination and margin squeeze tests prior to approval by the ARPCE. In September 2016, the ARPCE decided to withdraw the designation of Optimum as an SMP operator. Therefore, since the SMP regulations mentioned above no longer apply to Optimum, it now has more freedom in marketing and pricing its products and services.
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Mobile Termination Rates
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All interconnection agreements and interconnection prices must be approved by the ARPCE prior to becoming effective. The ARPCE monitors interconnection prices to ensure that they are cost based and reviews such prices on an annual basis.
From July 2006 to October 2018, the ARPCE set national termination rates for Optimum that were lower than those of other mobile operators.
In the reference interconnection offer approved for the 2018/2019 period, the ARPCE imposed symmetrical mobile termination rates between the three operators both for voice and SMS.
Optimum currently has interconnection agreements with the fixed incumbent operator, the other two mobile operators and the two currently authorized VoIP operators in Algeria. For a description of MTRs in Algeria, see
Item 4.B — Business Overview
.
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Mobile Number Portability
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There is currently no number portability for mobile or fixed lines in Algeria.
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Data Protection
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The relevant data protection regulations are embodied in the Constitution, the penal code and the license terms.
The new Algerian constitution states that the private life of citizens is inviolable and protected by law. Secrecy of correspondence and private communications, in all its forms, is guaranteed. The protection of individuals with regard to the processing of personal data is a fundamental right guaranteed by the law that punishes a violation.
The penal code defines the offense of deliberately violating the privacy of others by capturing, storing or transmitting, without authorization or consent of their author, communications or words spoken in private and refers to sanctions against persons or companies that fraudulently maintain databases or attempt to do so.
According to their license terms, mobile operators must take measures to ensure the protection and confidentiality of personal information they hold or process or register within the client database, compliance with legal and regulatory provisions and confidentiality of information held on users in its contractual relations with any subcontractors.
The provision of cloud computing services is subject to obtaining an authorization granted by the ARPCE. Guidelines with respect to such authorizations were published in January 2018, which provide that the hosting and storage of customers' data must be undertaken in Algeria and certain other clarifications for companies that provide cloud services.
A new personal data protection law was issued in 2018 which creates a new body in charge of all activities related to personal data protection.
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Other
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SIM card identification
For each SIM subscription, regulations in force require that operators collect and store the signed contract and a copy of the customer's identification.
The new 2018 telecommunications law introduced a new penalty scheme for mobile operators failing to identify mobile SIM cards. Mobile operators may be fined DZD1,000,000 (US$8,400 as of December 31, 2018) per observed infraction and an additional penalty of DZD 5 000 (US$44) per day until the line is suspended.
Spectrum neutrality
Spectrum neutrality allows operators to use the allocated spectral resources for providing 2G/3G and 4G services. In 2016, the principle of spectrum neutrality was enforced in all bands allocated to mobile operators under the supervision of the ARPCE. Optimum already uses part of the 900 MHz (GSM) for 3G purposes (U900) and part of the 1800 MHz band for6 4G purposes.
Universal service of telecommunications
In April 2015, the ARPCE launched a tender to select operators to provide universal services in 97 rural communes in over 28 provinces. Services provided through the framework of the universal service of telecommunications will be funded by the universal services fund. After a competitive tender in January 2016, Optimum now provides 37 communes representing more than 42% of the population covered in the framework offer.
International voice traffic
To comply with the ARPCE's interpretation of the 2018 Telecommunications Law’s provision on International traffic, Djezzy and other mobile operators were obliged to commence negotiations in December 2018 with Algeria Telecom on technical and commercial conditions in order to switch to Algeria Telecom infrastructure. Djezzy will now be obliged to use not only Algeria Telecom's infrastructure but also its international switch. On the commercial side, Djezzy will have to pay an additional charge of 0.01 euros per international outgoing minute if Djezzy uses its own international carriers and a transit tax of 0.14 euros per minute for all international incoming traffic.
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Regulatory bodies
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The Bangladesh Telecommunications Regulatory (Amendment) Act, 2010 (the “BTRA”) introduced a separation of responsibilities between the telecommunications regulator and government ministry in Bangladesh. Under the BTRA, the responsibilities of issuing licenses for telecommunications systems and services, as well as the regulation of telecommunications activities, are assigned to the Bangladesh Telecommunication Regulatory Commission ("BTRC"). However, the supervision of telecommunications licensees and the approval of the BTRC’s proposals for issuing licenses was transferred to the Posts and Telecommunications Division (“PTD”) (within the Ministry of Posts, Telecommunications and Information Technology of Bangladesh). As a result, the BTRC is currently the executive body for telecommunications policies, while the PTD supervises and monitors all activities of the BTRC.
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Regulatory framework
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The main elements of the regulatory framework for the telecommunications sector in Bangladesh are embodied in the BTRA, which establishes rules relating to the supply of telecommunications services in Bangladesh. Pursuant to the BTRA, the BTRC has issued many regulations, directives, policies, and guidelines for the telecommunications industry, including the Bangladesh Telecommunication Regulatory Commission (Licensing Procedure) Regulations, 2004, the International Long-Distance Telephony Service (ILDTS) policy, guidelines for infrastructure sharing, and regulatory and licensing guidelines for nationwide telecommunications transmission networks.
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Licenses
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The issuance of any telecommunications license is at the sole discretion of the BTRC, subject to approval from the PTD. The BTRC must submit a report to the PTD for its approval, prior to granting any license.
The BTRC reserves the right to set the criteria and conditions for license eligibility, to specify any applicable fees and charges and to determine the duration and conditions of any license. Generally, licenses are issued for a certain period of time subject to renewal, and the applicable validity period, renewal requirements and other conditions are set out in the license.
In addition, the provisions of the BTRA grant the BTRC the power to renew, suspend, cancel and control the transfer of licenses. The BTRC, with the prior permission of the PTD, may amend any condition of any license issued pursuant to the BTRA, and the PTD, on its own initiative or, at the request of a licensee, may instruct the BTRC to amend any license condition.
On February 13, 2018, the BTRC awarded us the 4G/LTE license. At the same time, we have also acquired 5 MHz and 5.6 MHz Spectrum in 2100 MHz and 1800 MHz, respectively, and converted the remaining 900 MHz and 1800 MHz tech neutral spectrum for 4G.
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Mobile Termination Rates
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For international incoming calls, MTR in 2018 was reduced to BDT 0.14 (US$0.0017) as compared to the 2017 and 2016 historical periods. The international termination rate was changed, effective February 22, 2018, after which the maximum and minimum termination rates became US$0.025/min and US$0.0175/min, respectively. Revenue share is done on the minimum termination rate while respective MNO gets 22.5% of that amount. The domestic termination rate has been changed to BDT 0.14/min or US$0.0017/min (terminating MNO gets BDT 0.10 (US$0.0012) and ICX gets BDT 0.04 (US$0.0005)), effective August 14, 2018.
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Mobile Number Portability
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On July 24, 2017, the BTRC issued a new licensing guideline for MNP service providers through which third party entities have been awarded a license to provide MNP service across the country. On October 1, 2018, MNP was launched nationwide.
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Data Protection
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There is currently no legislation in Bangladesh specifically on data protection. However, pursuant to some of our licensing terms and BTRC directives, we may be prohibited from sharing customer data.
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Other
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New Number series (014)
:
Allocation of a new number series (014) prefix occurred on September 6, 2018. Specifically, number block 0140-XXXXXXX from prefix 014 has been allocated to Banglalink. Banglalink launched its 0140 series on November 29, 2018.
Unified tariff
: BTRC issued a letter on August 13, 2018. As per the letter, voice tariffs for all the operators both for on-net and off-net should be a minimum of 0.45/min and maximum of 2.00/min (excluding VAT and other charges). Banglalink has implemented this tariff plan from October 14, 2018 as the BTRC instructed.
Tower License
: Regulatory and Licensing Guidelines for Issuing License for Tower Sharing in Bangladesh was published by the BTRC on April 1, 2018. The BTRC selected four of the eight entities who applied for the license. This introduces a new regime for Bangladesh where the mobile operators are not allowed to build their own towers.
Significant Market Power ("SMP") Regulation
: The BTRC issued a gazette notification regarding SMP on November 14, 2018, and subsequently declared GrameenPhone an SMP on February 10, 2019, and imposed several restrictions on the operator.
QoS Guideline
: On November 11, 2018, the BTRC published ANS Operators Quality of Service (QoS) Regulation 2018, which regulates the QOS of Access Network.
E-Registration
: The BTRC issued a letter on August 28, 2018 regarding implementation of the Electronic Telecom Subscriber Acquisition Form (ETSAF). In accordance with the letter, banglalink launched an electronic and paperless SIM registration process beginning September 3, 2018. Under the new process, a customer needs only to share his or her name, ID number, date of birth, present address and fingerprints with the retailer when purchasing a new SIM.
USSD Tariff
:
The BTRC issued a directive on August 14, 2018, establishing a fixed uniform unstructured supplementary service data (USSD) tariff.
DOB Directive
:
The Directive on Direct Operators Billing ("DOB") was published on the November 3, 2018 by the BTRC and introduces a DOB option in Bangladesh. The limit for payment is BDT 600 per month and BDT 3,000 per year.
National Frequency Allocation Plan (NFAP)
:
On November 11, 2018, the BTRC shared a draft of the revised National Frequency Allocation Plan (NFAP) for public consultation and feedback from the relevant stakeholders.
Telecommunication Value Added Service (TVAS) Licensing
: The BTRC has published new guidelines for value added services that requires Value Added Service (VAS) vendors to be enlisted by the BTRC and the ANS operators are bound to source external VAS only from these vendors.
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Regulatory bodies
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Pursuant to the Ukraine Telecommunications Law (“UTL”), the main governmental authorities that manage the telecommunications industry in Ukraine are the Cabinet of Ministers, State Service of Special Communications and Information Protection of Ukraine (the “Administration”) and the National Commission for the State Regulation of Communication and Informatization (“NCCIR”).
The Cabinet of Ministers is responsible for forming general policy, ensuring equal rights for developing the forms of ownership, managing state-owned assets and directing and coordinating ministries and other central governmental bodies in the area of telecommunications.
The Administration develops state policy proposals in the area of telecommunications and is responsible for their implementation within its authority granted by law. The Administration also has the authority to prepare draft legislation and define the quality requirements for telecommunications services and technical standards for telecommunications equipment.
The NCCIR is the main regulatory and controlling body in the area of telecommunications and use of radio frequencies. The NCCIR issues licenses for the provision of licensed telecommunications services and the use of radio frequencies, maintains registries of telecommunications operators and providers, allocates numbering capacity to telecommunications operators and controls the quality of telecommunications services.
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Regulatory framework
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The UTL and the Ukraine Frequency Law (“UFL”), both as amended from time to time, are the principal laws regulating the Ukrainian telecommunications industry. The UTL includes various regulations by the Ukrainian Government and other governmental authorities to supplement the legal framework of the telecommunications industry.
The UTL sets forth general principles for the regulation of the telecommunications industry in Ukraine, including a description of the institutional framework for the government’s involvement in the regulation, administration and operation of the telecommunications industry in Ukraine. The UFL regulates the allocation and use of the frequency bands in Ukraine.
The most important aspects of the law with respect to our business include the state government’s authority to: license communications service providers; allocate radio frequencies; certify telecommunications equipment; allocate numbering capacity; ensure fair competition and freedom of pricing and develop and implement government policy on telecommunications and frequency allocations; and conduct oversight of operators’ compliance with the terms of their licenses and Ukrainian law.
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Licenses
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In accordance with Ukrainian legislation, licenses to provide telecommunications services stipulate that the telecommunications operator’s activity involve the use of a radio frequency resource and the license to provide telecommunications services are issued at the same time as the license for the use of radio frequency. If the demand for radio frequency exceeds availability, licenses are issued based on the results of a tender or auction held by the NCCIR. Licenses are issued for a term of five to fifteen years. The NCCIR has the right to extend the existing license at the request of the operator, or to take a negative decision if, at the date of filing of the application for an extension, violations of licensing conditions by the operator have been recorded and such violations have not been cured.
After obtaining a license to provide telecommunications services and the use of the radio frequency resource, telecommunications operators are required to obtain permission to operate Radio Electronic Facilities ("REF") and private radio networks (radio transmitters, base stations, and microwave links). In accordance with the law on the radio frequency resource in Ukraine, permissions for REF are issued for a period not exceeding the period of validity of the relevant operator’s licenses for the use of radio frequency resource. The permit may be extended at the request of the operator to the NCCIR. The NCCIR will extend the license unless a violation of the licensing conditions has occurred and as long as there are no preconditions, such as the refarming of frequencies or the introduction of new radio technologies, for the termination of a specific radio technology in the radio frequency band.
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Mobile Termination Rates
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The UTL allows telecommunications operators, including wireless service operators, to establish tariffs for the telecommunications services provided to customers, with the exception of tariffs on universal services and data traffic channeling by SMP telecommunications operators. For a description of MTRs in Ukraine, see “
Item 4-Information on the Company-Interconnection Agreements
.”
Effective January 1, 2019, MTR rates in Ukraine are reduced from UAH 0.15/min to UAH 0.12/min. IMTR rates remain at current rate EUR 0.10/min.
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Significant Market Power
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The NCCIR regulates telecommunications services, studies the competitive environment in the telecommunications market, determines SMP operators and regulates interconnection tariffs charged to access SMP operators’ and dominant operators’ networks and the technical, organizational and economic terms of interconnection agreements involving such operators. An operator is presumed to have SMP if it has a share of more than 25% of the total revenue of all telecommunications operators and providers operating in the respective telecommunications services market. On October 20, 2011, the NCCIR determined the SMP operators in the markets for terminating calls on fixed-line and mobile networks and on December 1, 2011, it approved mandatory interconnection tariffs for the SMP operators in such markets. Our operations in the Ukraine are deemed to have SMP and are subject to these regulations. The NCCIR is planning to introduce changes in the UTL defining SMP for different markets.
A law titled “On electronic communications” is expected to be adopted in 2019, and, among other things, it increases the authority of the national regulatory authority to analyze communication services markets to determine significant market power operators. The draft legislation also includes a new list of regulatory restrictions for significant market power operators, including controls on wholesale and retail tariffs and infrastructure sharing and an obligation to verify all subscribers. As the legislation has yet to be adopted, it is unclear what effects these new provisions will have.
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Mobile Number Portability
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Although MNP has not yet been implemented in Ukraine, the government has passed legislation requiring mobile operators to provide a national roaming service and to provide customers with the ability to transfer their mobile numbers from one telecommunications network to another. The technical requirements for MNP implementation were approved in 2017. The implementation of MNP will commence on May 1, 2019.
MNP benchmarks in the CIS did not have a strong impact on total market because of bureaucracy, the fee burden and the alternative of buying a second SIM to decrease expenses. For example, the ratio of port-out subs in total subs base in the first year of MNP in Russia and Kazakhstan was low. Kyivstar expects the same impact for the Ukrainian market.
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Data Protection
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According to “On Protection Of Personal Data,” Law of Ukraine of June 2010, personal data is defined as the information or aggregate information about a natural person who is identified or may be identified (e.g. name, ID number, and passport data). In Ukraine, most customers are not identified. However, content, traffic and location are defined as customer’s data. The transmission of personal data requires the transferor to obtain consent from the person whose personal data is being transferred. The party to which the personal data is transferred is required to have implemented the requirements of the Law of Ukraine On Protection of Personal Data. This law is not expected to have a significant impact on Kyivstar’s operations.
Personal data may only be transferred to foreign parties in the specific cases stipulated by law or an international treaty and only on the condition that an adequate level of personal data protection is ensured by the relevant foreign state.
Part 3 of art. 34 of the Law of Ukraine “On telecommunications” requires telecommunications operators and providers to ensure and be responsible for protecting the confidentiality of information concerning customers which was made available to them at the time of entering into a telecommunications services agreement. Information concerning the consumer and concerning the services they have received may be provided in observance of the procedure defined by the law. In all other cases, the information described above may only be disclosed subject to the customer's written consent.
The draft law to align Ukrainian legislation to EU GDPR has been considered and revised since October 2018. This process is driven and coordinated by Ukrainian Parliament Commissioner for Human Rights (Ombudsman) in cooperation with Twinning projects of the EU Commission.
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Other
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SIM re-verification
A law entitled “On electronic communications” is expected to be adopted in 2019, and, among other things, it includes a new obligation to verify all subscribers. The entry into force of the requirements is expected to be a year and a half from the date of adoption of the law. Expenses of all operators are expected to increase due to the initial investment required for implementation.
Sanctions regimes imposed against Ukraine
For a discussion on current sanctions regimes and their effect on our business in Ukraine, see “—
Sanctions Regimes
. For a discussion of the risks to our business as a result of the current sanctions regimes, see
Item 3.D. Risk Factors
—
Markets Risks
— "
Our operations may be adversely affected by ongoing developments in Russia and Ukraine
."
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Regulatory bodies
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The government authority responsible for supervising the telecommunications industry in Uzbekistan is the Ministry for Development of Information Technologies and Communications of the Republic of Uzbekistan.
In accordance with the Uzbek Telecommunications Law, businesses offering communications services in the Republic of Uzbekistan may be privately or publicly held by Uzbek or foreign national individuals or legal entities. All owners of telecommunications networks have equal rights and enjoy equal protection guaranteed by the law, and the legislation imposes no restrictions on foreign investors.
The State Inspectorate for Supervision of Informatization and Telecommunications is responsible for monitoring compliance by telecommunications companies with license requirements and conditions.
The State Committee of the Republic of Uzbekistan for Assistance to Privatized Enterprises and Development of Competition is a government body that focuses on the expansion of economic reforms, acceleration of denationalization and privatization processes, and provision of development and support of private entrepreneurship in Uzbekistan.
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Regulatory framework
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The main statutes that govern the telecommunications industry in Uzbekistan are (i) the Uzbek Communications Law dated January 13, 1992 (as amended); (ii) the Radio Frequency Spectrum Law dated December 25, 1998; (iii) the Protection of Consumers’ Rights dated April 26, 1996; (iv) the Uzbek Telecommunications Law dated, August 20, 1999; (v) Licensing Certain Types of Business, dated May 25, 2000; and (vi) the Uzbek Competition Law, dated January 6, 2012.
These laws determine the general legal and economic basis for organizing communications systems, establishing rights and duties of a company in terms of ownership, use, disposal and management of communications equipment when setting up and operating communications networks and providing communications services.
The most important aspects of the law with respect to our business include the federal government’s authority to: license communications service providers; allocate radio frequencies; certify telecommunications equipment; allocate numbering capacity; ensure fair competition and freedom of pricing; and conduct oversight of operators’ compliance with the terms of their licenses and Uzbek law.
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Licenses
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The issuance of any telecommunications license is at the sole discretion of the Ministry for Development of Information Technologies and Communications. The Ministry will take a decision on issuing a license within 30 days from the date when an application is filed. The Ministry can deny issuing a license only if: the presented documents are not properly executed; the documents contain false information; or the applicant does not meet the license terms and requirements. The law does not provide any further grounds for denial.
Licenses are issued for a set period from five to fifteen years, subject to renewal, and the applicable renewal requirements and procedures are the same as for obtaining the license. In addition, the Ministry has the power to renew, suspend, cancel and control the transfer of licenses.
On March 31, 2017, the Republican Radiofrequencies Council in Uzbekistan published a decision ordering the equitable reallocation amongst all telecommunications providers in the market, which will affect approximately half of the 900 MHz and 1800 MHz radio frequencies of our Uzbek subsidiary, Unitel LLC. The decision came into force on March 31, 2018, and, was successfully executed by Unitel. The decision also granted tech neutrality in the 900 MHz and 1800 MHz bands.
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Mobile Termination Rates
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Local MTRs are currently not regulated in Uzbekistan. Pursuant to current legislation, MTRs are determined on the basis of the contracts between operators. However, if operators cannot agree on the MTR cost, the regulator can establish such cost itself based on prescribed methodologies. Due to the inclusion of Unitel LLC on the list of SMP operators, the State Committee of the Republic of Uzbekistan for Assistance to Privatized Enterprises and Development of Competition adopted a decision requiring Unitel LLC to establish consistent MTRs for all operators. Based on this decision, other operators filed claims with the court to establish MTR in the amount of UZS 0.05 and won. For a description of MTRs in Uzbekistan, see “
Item 4-Information on the Company-Interconnection Agreements
.”
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Significant Market Power
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On September 19, 2013, Unitel was deemed to be a company with SMP. A position is said to be dominant where a business or group of persons has a market share of 65.0% or more. Nevertheless, if a business holds a market share of between 35.0% and 65.0%, it may be deemed to have a dominant position, subject to a determination by the State Committee of the Republic of Uzbekistan for Assistance to Privatized Enterprises and Development of Competition based on the size of market share, the stability of the business’s market share, the share taken by competitors, the ease of access to the market for new competitors and other criteria relevant to the given market.
Since November 2, 2013, Unitel LLC is required to submit all of its tariffs to the Ministry of Finance of Uzbekistan for approval. Despite numerous attempts by Unitel LLC to obtain approval in accordance with the Uzbek Competition Law, the Ministry of Finance has not yet granted such approvals.
In 2016, the regulator introduced a tax rate of 50% of profits for mobile operators that have profitability over 20%. After new tariffs were submitted in 2016, we were informed by the regulator that this tax rate includes approval of tariffs, therefore making it unlikely that the regulator will provide Unitel with any other approval.
In March 2018, Unitel LLC raised its prices and has made declarations regarding these price increases to the Ministry of Finance, following receipt of a letter from the Ministry of Finance regarding increased profits taxes on Unitel.
In April 2018, amendments to the regulation on determination of monopolistically high and low prices (Resolution of Cabinet of Minister No. 249 dated March 30, 2018) were introduced that do not require the antitrust authority to pre-approve a company’s price increases. Instead, Unitel files information on its current prices quarterly, and should the antitrust authority discover a violation of antitrust legislation based on the information presented, it requests more detailed information and documentation for further investigation.
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Mobile Number Portability
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In 2018, the Ministry for Development of Information Technologies and Communications introduced a draft resolution on MNP. The resolution is under discussion. If adopted, it would result in the introduction of MNP in Uzbekistan. According to the latest version of the draft resolution, customers would be charged a nominal fee to port numbers.
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Data Protection
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Currently, data protection is regulated by Uzbek Laws “On Informatization” and “On Principles and Guarantees of Freedom of Information,” as well as by the Regulation on the Order of Documentation of Information, Registration of State Information Resources approved by an Order of the Ministry for Development of Information Technologies and Communications. Under these laws, personal data and other confidential information cannot be collected and distributed without the consent of the owner of such information. Additionally, transfer of such data abroad is limited. There are currently gaps in legislation and therefore it is a common practice to send requests to authorized state bodies for official clarification on certain issues. Unitel LLC received an official letter of the Ministry for Development of Information Technologies and Communications clarifying that customers’ personal data cannot be transferred abroad and access from abroad cannot be granted to databases containing such information. There is a draft of a new Law on Personal Data, which was expected to be adopted in 2018, but this has not yet occurred.
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Regulatory bodies
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Under the Kazakhstan Communications Law dated July 5, 2004 (the “Kazakhstan Communications Law”), the Ministry of Information and Communication (the “MIC”) is the central executive body authorized to implement state policy and governmental control with respect to telecommunications and to adopt relevant acts.
The Government sets forth the procedures and one-off payment rate to access frequencies for the provision of telecommunications services. The Inter-Agency Commission on Radio Frequencies, a consultative-advisory agency of the Kazakh government, provides recommendations on government policy regarding frequencies. The National Security Committee and certain other governmental defense bodies also maintain a level of control over the telecommunications industry as part of their investigative operations.
Competition matters in Kazakhstan are regulated by the Committee on Regulation of Natural Monopolies, Protection of Competition and Consumer Rights (the “Antimonopoly Committee”) of the Ministry of the National Economy. The Antimonopoly Committee is authorized to prepare and implement state policy for the protection of competition, for example, by coordinating with state authorities, reviewing compliance with competition laws, conducting investigations and approving concentrations of entities.
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Regulatory framework
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The Kazakhstan Communications Law is the principal act regulating the telecommunications industry in Kazakhstan and sets forth general principles for the regulation of the telecommunications industry, the authority of each regulatory body, the rules governing telecommunications network cooperation and consumer rights protections.
The Kazakhstan Communications Law grants the Kazakh government broad authority with respect to the telecommunications industry in Kazakhstan. The most important aspects with respect to our business include the government’s authority to develop and implement government policy on telecommunications and frequency allocations; regulate radio frequencies conversion; and approve procedures for auctions of telecommunications licenses.
The participation of foreign capital in Kazakhstan’s telecommunications market is limited by law. It is forbidden for foreign legal entities or individuals to control and operate backbone networks without the establishment of a legal entity in Kazakhstan and to obtain more than 10.0% of voting shares in an ILD operator without MIC consent, as well as the consent of national security authorities. In addition, foreign legal entities or individuals are not allowed to possess, use, dispose of or control (directly or indirectly) more than 49.0% of the total voting shares of an ILD operator who possesses surface communication lines (cables, including fiber optic and radio-relay cables) without governmental consent, based on the conclusion of MIC, as well as the consent of national security authorities.
In addition, all telecommunications operators in Kazakhstan are required to maintain control centers of their networks, which are responsible for monitoring, incident management, planning work and management reporting within the territory of Republic of Kazakhstan, and the management of such networks is not permitted to be transferred in any form to other persons.
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Licenses
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In accordance with legislation of the Republic of Kazakhstan, licenses to provide telecommunications services are issued by the Ministry of Information and Communication. The Law “On Permits and Notifications” regulates permits, certain types of activities or actions and the procedures for issuing and re-issuing permits. A license to provide telecommunications services is a first class permit, meaning it is inalienable and without a time limit.
In addition to obtaining a license, wireless telecommunications operators must have a permit for radio frequency usage for every radio transmitter that they operate. Permits for radio frequency usage are issued by the Ministry of Information and Communication. Under the Kazakhstan Communications Law, permits for the use of radio frequencies are subject to extension every year after the payment of the frequency fee for the first quarter of the current year. Radio frequency permits may be suspended or terminated for non-usage of assigned spectrum within one year and failure to comply with the conditions to which the frequency allocation was subject.
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Mobile Termination Rates
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The structure of interconnect agreements is set by the MIC and dominant operators are required to enter into an interconnect agreement with any operator requesting interconnection.
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Significant Market Power
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In 2007, KaR-Tel was deemed to be a company with SMP and was included in the list of dominant companies in terms of mobile services. As a result, the company is subject to the regulated market and has a range of obligations and limitations on pricing.
On January 1, 2017, the Entrepreneurial Code abolished the list of dominant companies. As a result, though Kar-Tel is still designated as a company with SMP and thus the subject of antimonopoly legislation and monitoring, as of January 1, 2017, Kar-Tel no longer has to fulfill several obligations imposed by being on this list, such as regular reporting to the antimonopoly agency.
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Mobile Number Portability
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MNP was launched on January 1, 2016. There is currently no charge for customers to port numbers, and mobile operators are required to pay annual fees for the maintenance of the MNP data base. In 2016, the annual cost for KaR-Tel was approximately US$335,759. In 2017, the price for MNP data base maintenance was decreased by 26% to approximately US$245,308. KaR-Tel’s business has not been significantly affected from the implementation of mobile number portability.
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Data Protection
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The Law of the Republic of Kazakhstan on Personal Data and Its Protection (the “Kazakhstan Data Law”) was adopted in 2013. It includes requirements with respect to gathering, processing, storing and the protection of personal data. Personal data may only be stored in Kazakhstan. There is a mandatory requirement to have a written or electronic signature consent for gathering and processing personal data, and cross-border transfers.
In 2017, a new provision was introduced into the Kazakhstan Data Law which states that cross-border transfers of service information that contains certain personal data will be subject to the Kazakhstan Communications Law. Pursuant to the Communications Law, such service information about subscribers may only be stored in Kazakhstan, and cannot be transferred abroad unless through roaming services.
Since 2018, in accordance with a new provision of the Kazakhstan Communications Law, employees who work with service information on subscribers must be citizens of the Republic of Kazakhstan. The transfer in any form from telecom operators to other persons of management over communication networks is prohibited.
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