VIVACOM RESULTS FOR 2013 Sofia, 4 March 2014 Confidential 0 - PowerPoint PPT Presentation

VIVACOM RESULTS FOR 2013 Sofia, 4 March 2014 Confidential 0

Forward looking statements This presentation includes information and statements which are or may constitute forward- looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the results of operations, financial condition, liquidity, prospects, growth and strategies of the Company and the industry in which the Company operates. However , whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, uncertainties and assumptions. The Company cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates may differ materially from those made in, implied or projected by, the forward-looking statements contained in this presentation. The Company does not undertake any obligation, and does not expect, to review or confirm analyst expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation. This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to purchase, sell or issue, or a solicitation of any offer to purchase, sell or subscribe for any securities of the Company or any of its subsidiaries or parent companies nor shall it (or any part of it), nor the fact of its distribution, form the basis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment or investment decision whatsoever. Confidential 1 1

Table of contents 1. Overview 2. Performance highlights 3. Financial review 4. Q&A session Confidential 2 2

1. OVERVIEW Atanas Dobrev Chief Executive Officer Confidential 3 3

Macroeconomic environment GDP growth recovering slowly GDP per capita is on the rise, but remains low (%) (USD 000) 1.0 1.0 10.0 0.7 0.6 7.3 7.6 0.4 7.0 6.4 6.4 0.2 0.0 5.0 2009 2010 2011 2012 2013E Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 CPI in negative territory Unemployment remains high (%) (%) 12.0 5.0 11.9 4.2 11.5 11.2 3.6 11.1 2.2 10.8 10.0 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 -0.6 -1.5 -2.0 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Source: NSI : GDP growth, inflation and unemployment (2013 preliminary data) Confidential IMF : GDP per capita 4 4

Performance overview #1 Telco company on total revenues in 2013 Gaining share in mobile revenues (BGN m) (%) 812 781 49% 670 41% 36% 35% 23% 22% 19% 17% 15% 206 194 168 Q4 2013 Q4 2013 Q4 2013 FY 2013 FY 2013 FY 2013 FY 2010 FY 2011 FY 2012 FY 2013 Q4 2013 Solid adjusted EBITDA prior to regulation Capex supporting 3G and fiber roll-out (BGN m) (BGN m) 40.7% -7.1% 40.0% 22.1% -19.1% 349 204 20.3% 325 28 5 165 322 319 FY 2012 FY 2013 FY 2012 FY 2013 Adjusted EBITDA Regulatory effect EBITDA margin CAPEX CAPEX share of revenue Source: Company data, Telekom Austria reports, Telenor reports. Confidential Revenues and EBITDA ex-regulatory effect represent the financial metrics as they would have been, had regulated rates 5 5 been constant at their H2 2013 levels throughout the relevant period

2. HIGHLIGHTS Confidential 6 6

Change in mobile subscribers reporting Subscriber market share Q4 2013 Total subscribers Q4 2013 (%) (000s) 20% 1 026 15% 749 33% 37% Monthly Churn (%) 7% 200 44% 4 181 39% 3 995 2 556 24% 23% After restate Before restate ARPU blended Q4 2013 (BGN) 12.3 Prepaid counting only customers with 3 months activity. • 11.2 11.1 21% 5% Subscriber decreases: Vivacom – 200k (Q4), Mtel – 498k 18% 10.6 10.1 (Q4), Globul (1) – 687k (Q3) 9.4 Postpaid reassessment: • Mtel – 528k (Box and ITS services), Globul – 62k Fixed-line connections via mobile technology are counted • as mobile by Mtel and Globul and as fixed by Vivacom Source: Company data, Telekom Austria reports, Telenor reports. Confidential (1) Globul prepaid subscribers adjustment is estimated as Q3 prepaid net adds 7 7 (2) Globul ARPU prior to adjustment is estimated

51% of 2013 Revenue Mobile key metrics Subscribers Highlights (000s) Postpaid Share 90 2 0 11 5% 2 70 0 2 556 Subscriber acquisition • 2 524 2 429 Monthly Churn (%) continues with strong focus 50 2 0 2 355 2 319 on postpaid and longer term 84% 2 30 83% 83% 82% 81% 85 % contracts 2 10 0 90 1 0 Smartphones and tablets • driven market supports 70 1 0 postpaid customer growth 1 50 0 55 % Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 ARPU blended Data share (BGN) 11.8 11.5 11.5 11.2 11.2 Pressures on voice ARPUs • remain with customers 19% 18% 17% 17% increasingly moving to flat 16% tariffs with bundled minutes Growing share of data • Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Source: Company data Confidential 8 8

28% of 2013 Revenue Fixed voice key metrics Subscribers Highlights (000s) 1 460 1 423 Churn stabilized, despite • 1 392 1 358 1 325 strong fixed to mobile substitution and growth in VoIP Alternative providers offer • fixed as cheap add-on Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 ARPU blended (BGN) 12.9 12.6 12.4 12.4 12.0 ARPUs affected by • increasingly flat traffic revenues and bundled offers Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Source: Company data Confidential 9 9

12%of 2013 Revenue Fixed broadband key metrics Subscribers Highlights (000s) 33 5 50 % FTTx Share 45 % Data subscriber growth 327 • 40 % driven by high quality FTTx 35 % 323 323 322 32 5 321 services 30 % 22% 25 % 18% 15% 20 % Highly competitive market • 13% 31 5 15 % 10% with many local operators 10 % and cheap bundled offers 5% from bigger players 30 5 0% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 ARPU blended (BGN) 12.7 12.3 12.0 ARPU pressures from • 11.8 11.7 fragmented competition and specifically on weaker ADSL Stabilization with growing • FTTx Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Source: Company data Confidential 10 10

3. FINANCIAL REVIEW Asen Velikov Finance Director Confidential 11 11

Financial performance summary (BGN m) Q4 2013 Q4 2012 2013 2012 Revenue 206 207 812 858 % growth (0.5%) (5.3%) Net income 19 ( 66) 29 ( 33) EBITDA 99 4 339 267 Other gains, net ( 2) ( 3) ( 5) ( 10) EBITDA adjustments ( 23) 76 ( 9) 93 Adjusted EBITDA 74 77 325 349 % of revenues 35.9% 36.9% 40.0% 40.7% Capex 67 78 165 204 % of Revenues, excl. licenses 32.3% 30.8% 20.3% 22.1% Adjusted EBITDA - Capex 7 ( 1) 160 146 Change in net working capital 7 10 ( 26) 7 Other CF items ( 2) 18 ( 7) 8 Pre-tax FCF 12 27 127 161 Source: Company data. Confidential FCF excludes net cash used in financing activities, interest received/paid, corporate income tax paid and cash deposits 12 12

Revenues Revenues Fixed Revenues Mobile (BGN m) (BGN m) 106 111 108 102 100 98 103 102 95 93 23% 21% 18% 20% 15% 25% 25% 26% 26% 25% 72% 74% 73% 76% 79% 62% 60% 59% 57% 57% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Fixed voice Fixed data Fixed other Prepaid Postpaid Mobile other Revenue bridge 2012-2013 (BGN m) 858 812 - 80 + 24 + 34 - 30 + 16 - 9 FY 2012 Regulatory Fixed Fixed Fixed Mobile Mobile FY 2013 Voice Data Other Services Other Source: Company data Confidential 13 13

Operating expenses and adjusted EBITDA EBITDA adjustments COS and Opex (BGN m) (BGN m) 76 132 131 122 117 116 16% 14% 14% 14% 15% 26% 31% 57 27% 24% 30% 10 2 1 46% 47% 45% 46% 45% -29 -23 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Fixed line impairment Provisions and penalties Interconnect expense Other operating expenses Other exceptional items Asset impairment and write-off Materials and consumables Staff costs Adjusted EBITDA bridge 2012-2013 (BGN m) 349 + 1 325 + 34 - 28 - 23 - 6 - 3 FY 2012 Regulatory Revenue Interconnect Other Materials and Staff costs FY 2013 expense operating consumables expenses Source: Company data Confidential 14 14

Capex Capex structure Highlights (BGN m) 22.1% 20.3% Network capex falling as 204 • 165 major 2G and 3G roll-outs and related transmission are almost complete 70% 69% Mobile network with sufficient • capacity to meet projected FY 2012 FY 2013 customer growth Network IT Commercial and other Licenses CAPEX share of revenue Higher commercial capex • FTTx homes passed with more CPEs for TV and 680 (000s) FTTH and capitalized 570 commissions on 2-year 512 contracts 455 402 Targets for FTTx rollout • exceeded, but capex is below last year Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Source: Company data Confidential 15 15