Investor Presentation February 2016
Disclaimer This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Global Telecom Holding(the"Company"). Further, it does not constitute a recommendation by the Company or any other party to sell or buy shares in the Company or any other securities. This presentation includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates","expects","intends","plans","goal","target","aim","may","will","would","could" or"should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company s strategic priorities and objectives and the anticipated benefits therefrom, exploration of various funding options to refinance the shareholder loan, and prospects are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance, liquidity, dividend policy or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. Important factors that could cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, the prices of the Company's products and services, the actions of competitors, the availability of credit, governmental regulation of the telecommunications industry in countries in which the Company operates, the effects of political uncertainty and economic conditions in the relevant areas in the world, the impact of foreign currency rates, taxation and unforeseen litigation. Forward-looking statements should, therefore, be construed in light of such factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this presentation. The Company expressly disclaims any obligation or undertaking (except as required by applicable law or regulatory obligation including under the rules of the Egyptian Exchange and the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority), to release publicly any updates or revisions to any forward-looking statement, whether as a result of new information, future events or otherwise. 2
GTH a leading mobile operator in attractive emerging markets 409 million population coverage 1 Revenue 2015 85.5 million mobile customers (excluding Zimbabwe) 2 Pakistan Bangladesh Population 196m 20% Mobile Penetration 77% (real Algeria 59%) 46% # of customers 36.2m Pakistan 34% USD 2.9 billion Algeria Population 39m Mobile Penetration 110% # of customers 17.0m Zimbabwe Population 14m # of customers 2.0m (signed for sale) Bangladesh Population 160m Mobile Penetration 80% # of customers 32.3m Bangladesh 18% Pakistan 30% EBITDA 2015 Bangladesh 13% USD 1.3 billion OpFCF 2015 Algeria 52% Pakistan 19% USD 0.6 billion Algeria 68% 1. Population figures are provided by CIA The World Factbook 2. Based on consolidated mobile customers as at December 31, 2015; excluding Zimbabwe as signed for sale 3. Operating free cash flow defined as EBITDA Capex(excluding licenses) 4. % contribution calculated excluding HQ costs and other adjustments Note: All financials exclude Zimbabwe as it s held for sale 3
4Q15 Financial highlights Service revenue (USD million) EBITDA (USD million) 687 +0.2% organic 1 YoY - 12% reported YoY 295 Mobile customers (million) 85.5-4.3 million YoY EBITDA margin (%) 41.5 Service revenue organic increase of 0.2% YoY due to: Continued strong growth in Bangladesh and Pakistan Offset by decrease in Algeria EBITDA organic increase of 21.5% due to: The execution of the transformation program Continued cost efficiency initiatives Continued strong EBITDA margin of 41.5% Mobile data growth 70% YoY in 4Q15 + 21% organic YoY - 1% reported YoY +3.7p.p. YoY Mobile customers decreased. However customer growth, excluding the impact of blocked unverified SIMs in Pakistan 1 Revenue organic growth are non-gaap financial measures that exclude the effect of foreign currency translation and certain items such as liquidations and disposals 4
4Q15 Income Statement USD millions 4Q15 4Q14 Change Service Revenue 687.2 777.0 (12%) Other Revenue 22.6 14.1 60% Total Expense (417.7) (492.4) (15%) EBITDA 294.6 298.7 (1%) Depreciation and amortization (155.3) (166.9) (7%) Gains/(losses) on sold property, equipment, intangibles, goodwill and (3.0) (4.9) (39%) scrapping Impairment loss & other operating gains / losses (82.5) (51.0) 62% Operating Income 53.8 75.9 (29%) Financial expense (65.1) (155.3) (58%) Financial income 2.7 (5.8) n.m. Foreign Exchange Gain / Loss 8.7 (3.0) n.m. Profit (Loss) Before Tax 0.1 (88.2) n.m. Income Tax 21.7 (62.5) n.m. Profit for the Period 21.8 (150.7) n.m. Attributable to: Equity holders of the Parent (12.3) (153.6) (92%) Non controling Interest 34.1 2.9 n.m. Net Income (loss) 21.8 150.7 (86%) Earning per share (0.00) (0.03) (100%) Organic increase of 0.2% YoY 4Q15 lower depreciation is mainly related to the impairment of fixed assets 4Q15 mainly related to the impairment of the fixed assets Substantially decreased due to repayment of shareholder loan to VimpelCom in 1Q15 FOREX gain on EGP tax provision Tax gain from reversal of deferred tax liability on with-holding tax on undistributed dividends in Algeria in 4Q15 Minority interest increased due to sale of 51% in OTA in Algeria 5
Debt by entity As at 31 December 2015 Net debt / underlying 1 LTM EBITDA 1.5x Gross debt / underlying 1 LTM EBITDA 1.9x stable QoQ - 0.5x YoY - 0.1x QoQ - 2.1x YoY Outstanding debt(usd million) Type of debt Entity Loans Bonds Other Total GTH Holding 1,164 - - 1,164 Pakistan 309 75 3 387 Banglalink 85 300 19 404 Algeria 513 - - 514 Total at principalamount 2,072 375 22 2,469 Interest accrued& arrangement fees 24 (3) nil 21 Total grossdebt 2,096 372 22 2,490 1 Underlying EBITDA excludes Algeria transaction 6
Significant upside in terms of mobile penetration & data usage Mobile Penetration 1 (%) Mobile Data Penetration 2 (%) Data Usage (MB / User) Western Europe Avg: 133% Western Europe Avg: 66% 43% 44% 398 75% 85% 298 53% 7% 60 Pakistan Bangladesh Algeria Algeria Bangladesh Pakistan Bangladesh Pakistan Algeria Notes 1. Mobile real penetration is for the market, based on sim cards number. Sources: AnalysysMason Research, Pakistan Telecommunications Authority, Bangladesh Telecommunications Authority (2014) 2. Based on Company estimates 2Q 15, where mobile data penetration = data users (number of SIM cards with data subscribed tariff plans) / mobile customers 7
Leading mobile operator with diversified footprint in attractive emerging markets Algeria Pakistan Bangladesh Market share 1 Market share 2 Market share 2 27.0% 30.0% 43.0% Djezzy Ooredoo ATM 8.7% Mobilink 19.3% 15.5% 29.1% Telenor Ufone Zong 27.4% Warid 21.6% 4.2% 6.9% 25.4% 41.8% Grameenphone Banglalink Robi Airtel Other Djezzy is the market leader in Algeria with the best customer experience Transformation program is ongoing; however, the market remains challenging with aggressive price competition. Mobilink holds the number 1 market position in Pakistan Combination with Waridto further strengthen market position and create best in class network Banglalink holds the number two market position since 2007 Strong lead in NPS due to strengthened network and attractive data offers 1 Market share as provided by regulator 8
Investor Presentation Global Telecom Holding S.A.E. 2015 GTH focuses on the following six strategic priorities 6 5 4 Structural improvements Algeria turnaround Optimize capital structure World class operations NPS leadership Best in class team Portfolio rationalization and consolidation Asset-light network model Disposal of non-core assets Expected sustainable increase in cash flow of USD 250 million 1 per annum by year 3 New revenue streams: Data growth B2B focus Digital leadership: MFS Big Data OTT partnerships 1 Performance transformation Transformation of cost base Increased Capex efficiency WC reduction 2 3 ¹ Is part of the VimpelComGroup target of USD 750 million 9
Algeria: transformation program ongoing DZD BILLION, UNLESS STATED OTHERWISE Service revenue -7% YoY Mobile customers (million) -3.9% YoY Transformation program ongoing, however market remains challenging with aggressive price competition Service revenue declined YoY due to highvalue customer churn and ARPU erosion 33.5 33.1 31.2 17.7 17.0 Remained strong leader in NPS Data revenue doubled YoY 4Q14 3Q15 4Q15 Mobile 4Q14 4Q15 EBITDA Margin robust at 54.3% due to EBITDA and EBITDA margin 12.4 36.9% +39% YoY +11% (underlying) 1 18.3 17.3 54.8% 54.3% CAPEX excl. licenses and LTM CAPEX/revenue 7.0 7.3 22.9% +5.5% YoY 15.3% Favorable change in interconnect rates Impact of performance transformation program CAPEX increased due to further expansion of 3G to new regions 4Q14 3Q15 4Q15 4Q14 4Q15 1 4Q15 EBITDA negatively impacted by a one-off of DZD 1.3 billion related to transformation costs 4Q14 EBITDA negatively impacted by a one-off of DZD 4.3 billion related to Algeria closing transaction 10
Pakistan: continued revenue and EBITDA growth PKR BILLION, UNLESS STATED OTHERWISE Service revenue 24.3 24.5 25.3 4Q14 3Q15 4Q15 Mobile +4.2% YoY EBITDA and EBITDA margin +8% YoY +10% YoY(underlying 1 ) 10.1 10.6 10.9 39.5% 41.0% 40.5% Mobile customers (million) 38.5 36.2 4Q14 9.1-5.9% YoY 4Q15 CAPEX excl. licenses and LTM CAPEX/revenue 35.0% -21% YoY 7.2 24.0% Mobile customers declined due to market SIM verification process (underlying customer base +3% YoY) Successful launch of co-branded handsets and smartphones Strong data revenue increase of 79% YoY and MFS revenue increase of 72% -MFS now 3% of service revenue EBITDA margin >40% for three consecutive quarters CAPEX decreased due to the completion of 2G modernization program at the end of 2014, with a substantial improvement in network and service quality 4Q14 3Q15 4Q15 4Q14 4Q15 1 4Q15 EBITDA negatively impacted by a one-off of PKR 0.2 billion related to transformation costs 11
Bangladesh: continued strong performance BDT BILLION, UNLESS STATED OTHERWISE Service revenue 11.2 11.8 11.8 4Q14 3Q15 4Q15 Mobile +5.7% YoY EBITDA and EBITDA margin 4.6-14.1% YoY +24% YoY (underlying 1 ) 5.3 40.8% 44.7% 4.0 33.1% Mobile customers (million) 30.8 32.3 4Q14 4.6 +4.9% YoY 4Q15 CAPEX excl. licenses and LTM CAPEX/revenue 31.7% -28.6% YoY 3.3 22.2% Customer growth 5% YoY driven by attractive simple tariff offering Strong lead in NPS due to strengthened network and attractive data offers Ongoing strong growth in data revenue at 65% YoY Robust underlying EBITDA Margin at 48%, excluding performance transformation costs and movements in provisions 4Q14 3Q15 4Q15 4Q14 4Q15 1 4Q15 EBITDA negatively impacted by a one-off of BDT 1.8 billion related to transformation costs 12
Strengthening our leadership position in Pakistan
Disclaimer This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts, and include statements regarding among other things, the expected timing of completion of the transaction, the expected final ownership stake that the Dhabi Group shareholders would acquire at completion; the expected benefits of the transaction, including synergies and network improvements; the expected level of network improvements and investments (including in 4G/LTE), and the expected timing of dividends. Any statement in this presentation that expresses or implies VimpelCom s or GTH s intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. Forward-looking statements involve inherent risks, uncertainties and assumptions, including, without limitation, the possibility that: the conditions to completion will not be satisfied or waived or that the requisite regulatory approvals will not be obtained or will be obtained on terms not acceptable to the parties to the transaction; the expected benefits of the transaction may not materialize as expected or at all, due to, among other things, the parties inability to successfully implement integration strategies or otherwise realize the synergies anticipated; the businesses of either or both of Mobilink or Warid may not perform as expected prior to or following completion of the transaction due to uncertainty or other market factors; and other risks and uncertainties beyond the parties control may materialize. If such risks or uncertainties materialize or such assumptions prove incorrect, actual results could differ materially from those expressed or implied by such forward-looking statements and assumptions. Certain other risks that could cause actual results to differ materially from those discussed in any forward-looking statements include the risk factors described in VimpelCom s Annual Report on Form 20-F for the year ended December 31, 2014, and other public filings made by the VimpelCom with the U.S. Securities and Exchange Commission. The forward-looking statements contained in this presentation are made as of the date hereof, and VimpelCom and GTH expressly disclaim any obligation to update or correct any forward-looking statements made herein due to the occurrence of events after the issuance of this presentation. 14
In-market consolidation in Pakistan executing on strategy 6 Structural improvements New revenue streams 1 5 World class operations Delivering on strategy Digital leadership 2 4 Portfolio rationalization and consolidation Performance transformation 3 15
Mobilinkand Waridto merge, strengthening leadership position in Pakistan Strengthening leadership position in Pakistan Largest combined footprint and customer base of 45 million Largest network, with best quality and leading in high-speed data with almost 5,000 3G and 4G/LTE sites Delivering innovative, best-in-class mobile financial services to consumer, SME and corporate customers A superior customer experience through best-in-class service quality and focus on digital innovation Investment and innovation Enlarged and improved mobile network with over 80% population coverage (2G) Accelerated roll-out of 3G and 4G/LTE services Digital & MFS leader: Providing Waridcustomers with Mobilink MFS products Clear corporate governance VIP/GTH, through PMCL Mobilink, acquires 100% of the shares of Warid Telecom in exchange for the Dhabi Group shareholders receiving approximately 15% of the shares of PMCL Mobilink Substantive shareholder agreement to govern relationship between parties MergeCo management team led by Jeffrey Hedberg (CEO of Mobilink) and Andrew Kemp (CFO of Mobilink) Board consisting of 7 directors (6 nominated by VIP/GTH, 1 by the Dhabi Group shareholders) 4-year lock-in period, after which VIP/GTH has a right to acquire 100% Value creation USD 115 million annual run-rate cost synergies, 90% expected by third year post-closing; in excess of USD 500 million NPV cost synergies expected, net of integration costs Distributions projected within the first two years post-closing Leverage: Mobilink 1.8x Net debt/ebitda at signing Pro forma revenue and EBITDA margin of USD 1.4 billion and above 40% respectively 16
Transaction rationale A leading operator in Pakistan telecom market + - Superior customer experience New revenue opportunities Best-in-class mobile network Cost synergies 17
A leading operator in the Pakistan telecoms market A leading mobile operator (Mobile customer market share 1 ) Mobilink holds the number 1 market position (Market share 1 based on customers) Market position 38% 27% 19% 16% 29% 27% 19% 16% 9% Mobilink + Warid Telenor Zong Ufone 2011 2012 2013 2014 3Q15 Mobilink Telenor Ufone Zong Warid Largest tower portfolio # of towers Wide high-speed data networks # of high-speed stations c.5k 1.0k Network Scale c.8k c.9-10k 3.6k 1.0k 3.6k 4G/LTE 3G Mobilink Warid pro forma2 3G (Mobilink) 4G/LTE (Warid) Data networks (combined) Notes: 1 As of September 2015 2 after decommissioning 18
Superior customer experience Best coverage of over 80% population by 2G High quality of customer services Simple and transparent pricing Enhanced service delivery through digital platform To become #1 in NPS ranking, leveraging from the current solid position: Mobilink#2 Warid#1 19
New revenue opportunities + Owning and winning in the High Value and the B2B segments: Leading position in high-value and postpaid customers Serve corporates with full enterprise solution and M2M Digital & MFS leader: Mobilinkthe fastest growing MFS player in the market MobilinkMFS revenue 2.7% of total 2.5 million Mobilink MFS customers Providing Waridcustomers with access to our full range of MFS services including Mobicash Expanded MFS portfolio including: Money transfer Bill and loan payments Mobicash ATM Card Corporate solutions, etc. 20
Best-in-class mobile network Our plan is to enhance network capacity and qualityof service Targeted network investments in quality and coverage Network consolidation through migration of customers and integration of network elements Decommissioning of overlapping sites within two years of closing Accelerated expansion of 4G/LTE services 21
Identified cost synergies -total run-rate of USD 115 mln 1 Market facing & customer operations Integrated customer service Efficient channel and distribution model - Synergies run rate (USD million) 115 Network & IT Site decommissioning Common IT platforms Capex c. 25% OPEX c. 75% SG&A Scale impact Optimized organizational structure More than USD 500 million NPV from synergies 1, 90% expected by third year post-closing EPS accretive from the third year post-closing 2 1 After tax, NPV from synergies after integration costs 2 Assumes legal merger completed 22
Enhanced profitability and cash generation An operator with USD 1.4bn revenue (USD mln, LTM Sept 2015) EBITDA margin of 42% (USD mln, LTM Sept 2015 and % margin) Revenue and EBITDA 1,009 357 1,366 35% 483 7pp 42% 569 Mobilink Warid pro forma MergeCo 1 pro forma Mobilink Warid Run-rate synergies Operating Cash Flows (USD mln, LTM Sept 2015) Net Debt position (USD mln, Sept 2015) 290 Mobilink 380 OpCF 2 and Debt 175 Warid pro forma 470 850 MergeCo 3 pro forma Limited impact on VIP Group leverage (+0.1x) acceptable impact on GTH Group leverage (+0.3x) Notes: 1 Including run-rate Opex synergies only 2 Defined as EBITDA Capex (excl. licenses) 3 Including run-rate Opexand Capex synergies 23
Key transaction terms Key terms VIP/GTH, though PMCL Mobilink, acquires 100% of the shares of WaridTelecom in exchange for the Dhabi Group shareholders receiving approximately 15% of the shares of PMCL Mobilink No cash contributions expected from VimpelCom/GTH or the Dhabi Group shareholders Conditional on fulfilment of various conditions; no break up fees VimpelCom/GTH will consolidate MergeCo Distribution policy will be at the discretion of VimpelCom/GTH; distributions expected within the first two years postclosing If the MergeCo stower assets are sold within four years post closing, the Dhabi Group shareholders will get an additional stake based on a pre-agreed formula Governance The Board of MergeCowill be composed of 7 directors of which 6 will be nominated by VimpelCom/GTH; resolutions of the Board shall in general be decided by majority, except for certain limited reserved matters MergeCois managed by: Jeffrey Hedberg Mobilink CEO Andrew Kemp Mobilink CFO Termination and Exit 4-year lock-in period, after which VimpelCom/GTH secured possibility to acquire 100%: The Dhabi Group shareholders can put shares of MergeCo to VimpelCom/GTH at fair market value VimpelCom/GTH can call shares of MergeCo at fair market value Key dates and approvals Expected closing of the share acquisition within next 6 months, subject to receiving required approvals The transaction is subject to approvals of Competition Commission of Pakistan, the Pakistan Telecommunication Authority, the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan 24
Transaction structure Step 1 share acquisition Step 2 legal merger VimpelCom VimpelCom 51.9% 51.9% GTH GTH ~85% ~85% PMCL Mobilink ~15% Dhabi Group shareholders PMCL Mobilink ~15% Dhabi Group shareholders 100% Warid Telecom Closing 6 months after announcement Merger 6 months after closing 25
Summary In-market optimization Algeria transaction Italy JV Pakistan transaction September 2014 October 2014 January 2015 March 2015 August 2015 November 2015 WIND Canada disposal TelecelGlobe Limited CAR and Burundi disposal Italy tower sale Zimbabwe disposal Portfolio rationalization Pakistan transaction: yet another step in strategy execution 26
Appendix
GTH accounting implications Mobilink and Warid transaction Upon closing of the share acquisition The acquisition of Warid will be accounted for as a business combination under IFRS The fair value of Warid sassets and liabilities will be taken over into the GTH consolidated balance sheet as of the date of closing The difference between the fair valued net asset of Waridtaken up in the GTH consolidated balance sheet and the fair value of consideration paid for Warid(including contingent consideration) will result in goodwill Goodwill is not amortized but an annual impairment test is performed Contingent consideration (i.e. tower earn-out) will be recorded as a liability at fair value on the closing date with any subsequent value changes recorded directly in the consolidated income statement The put option granted to the seller will be accounted for as a liability on the GTH consolidated balance sheet at the net present value of the future expected cash outflow to buy out the minority shares in Mobilink 28
Contacts For your inquiries, please contact: Ola Tayel Investor Relations Manager E: IR@gtelecom.com T: +202 2461 5120 F: +202 2461 5055/54 W: www.gtelecom.com 29