Q1 2020 Earnings Call

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Thanks Mitch.

Thank you all participants.

Thank you for joining us for developers on tissue or results Q1 has been an exceptional playing for everyone.

All lines have been touched by because then it and many have seen their loves thoughts to change throughout much of that looked also taken hold.

I hope that you can you loved ones oldest themselves.

First let's see how cold 19 is impacting or services is slow think on answered your chilling their attention too.

Later in the presentation.

So let me go straight to our for sports and numbers, which are summarized on slides flights.

At the group level, all remaining for the ports in the local Joan storms, well walk the smelter where you upped your 0.3 person it's around 2.1 billion euro so.

Excluding the impact on it but you still text vision change in April 2019.

Sure well really neat.

Plus 2.7% in local tours the terms.

On the reported basis, the utility you're changing the Ribena was minus 1.3 person wants to negatively impact will tell us that moment I loved your just go to 4 million U.S. dollar articles pool.

Once again, they took the rule or really news rising 18.3% remember you didn't local currency terms pool.

Boy, 6% only report shows a basis, so 652 million yourself.

Our continued focus on Fourg.

This does so shoot the growth in data revenues that she really <unk> corporate groups.

It did decline, 41.8% local currency terms totaling 20 million U.S. dollar, which excludes the wolfbone dependent alternatives to making your solar which was recorded in Q1 last year.

Well the reported basis.

They could stood at 29.1% utilize your decline.

It's one of payments included loves it was a result.

The impact or this payment was also if you don't know where it's a margin.

Which boosted or where are your margin close there.

There was a local tours the terms when excluding this family the utility a declining to beat the merger was motivates it's like only one percentage point.

Well what did you go was also negatively impacted by the tax regime change as opposed to stay neutral to intelligent, which we have spoken about at night.

And our recent earnings calls.

[laughter] really good cultural change from last year.

The what kind of Logan boy, plus 1% you or your this quarter.

Operational capex, which could be fine as excluding license payments if that's the most noodles.

Among two to 368 million, you're still in the quarter corresponding to last 12 month couples to root Nsaids racial 19.5%.

Which is 3.3 percentage points higher than Q1 loves to you.

We stepped up investment you know on hold units books, Fortunately in Pakistan 'cause that's on somebody to this.

Funded on this Lloyd that's 1.8 times well one that's up to EBITDA ratio was marginally lower down to 191.9 times.

This was positively impacted by the weakness in the ruble towards courts around which resulted in lower coal sold it to grouped up levels in the older times.

Moving to slide six to our key financial Florida.

You can see the impact to put systems parks machine changes, although revenue performance here.

Your dog, which you would have recorded to 2.7% increase group revenues in local currency terms.

Our service costs, well keep went quite well some higher year over year principle is.

Good thing higher net cost in Russia.

We continue to make progress in reducing or corporate costs, which we do crews plaintiffs sort of the each person concerts be its two one lawsuit.

This was the main Tim Wallace than their payment is close sport here on the other look with me income.

Did you say in fact or rich did you have you that's treats it does it meet the justice values.

Net profit for the quarter was founded 22 million yourselves.

There you are your declines or not posted he's a james substation that you'd be due to the one offs than they are paying them last year.

Although higher service cost should believe it's a small increase in financial costs also contributed to this fall.

Finally, the large degree than it used to free cash flow for partly reflects the received all hopeful the Wallace vendor payment.

One last year amongst them too soon supplementing yourselves.

Recall that second half was paid in two to 19 and so we will have the same comparison is fixing it and it could to free cash flows, but looking a bit Doug when we report our next quarter.

Moving to slide seven.

Turning to contra contributions to revenue and EBITDA during the quarter.

Two of our growth engine markets, Ukraine in Kazakhstan, once again made solid contributions towable ribena performance.

So two did Pakistan.

This is distorted on reported basis by the tax regime changes in Q1.

Thank you.

Oh, something this was Russia, which is the main focus for the group two children.

The net effect was abroad the slot revenue performance before currency effect. So go to 4 million you're still there.

When it comes to poor result, could you know 1.2% decline in the reports integrated.

Baby took pictures similar and here, we break out the one of them their family in the second column.

That's true this index.

Moving to slide.

Troubled kept the structure.

Look we know it's all a captive structure, we have continued to manage our Burlington pretty sensitive accident.

Sure about how the chapter he loved it could it is true to navigate the group successfully during this volatile periods.

This includes active hedging or what are your sort of diabetes nurses or ruble revenues.

We have continued to optimize our funding mix in amended that reflects the functional chances of or accretion.

Each has resulted in our rubina bolivians raising over the last 18 months is going to structure, our depth out of your sotos towards global intra that's sort of sunk towards purchase and everything.

Weakness in the ruble during the first cultural twentytwenty reduce the proportional or libbey bargains to 42% or total grouped up.

Compared to 4% to 7% that ended last year.

When translated into dollars turns. This also resulted in a lower level, though absolute up giving yourselves.

The group currently has taught to cash and Undrawn facilities available I'm old Gen. Two 2.7 billion yourself.

The close when a buffer, which we believe is more than sufficient diminished the business through this challenging time.

Similarly, we continue to manage the tender or boating using that for changes in depth markers to define those new debt maturities and to look in longer dated maturities at lower coupon rates.

There's there's all told is that foods is six cylinder bips you over your fault in our average cost of that has been achieved.

It is also worth mentioning Doug during the quarter of your tubs, Hello, 20 to 21.

Twentytwenty flight the older bond sort of slowed their rounding the newest solar.

And those extended both maturities and size or all the groups bilateral liberals facilities.

Moving to slide nine.

We have managed to keep leverage brought to slow over the past few months. Despite the shortfall in devalued the ruble into one.

The let you all are we moved up to our ruble that pizza is the keys collector.

Group leverage stood at 1.8 times. It is it the close of the quarter versus 1.9 times at Stendal translated.

We dig into a God I know two times, yes, that's where our subs or the close of courses.

In summary, I love to reiterate that these sports both onshore can impact and duration of the core banking pandemic. The group's focus in recent years on strengthening its balance sheet been improving liquidity Leila comfortable that we have decided she is true to the their disappear.

Yes.

This is no matter, who must presentation I'm little to no post the calls over to kind of surgery to discuss will push and performance of the group June 1st quarter, and Oakland impact locally 19 pandemic one of our business.

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Second thank you very much welcome to the team and good morning, everyone.

For the vast majority of you listening to this fall from your own today, you want me to remind you that this current pandemic has said that profound impact on the way we live.

Communities lightly and individual likes us.

19 itself and its entirely impact through oil prices and foreign currency devaluations, and most importantly, lockdowns represent short to midterm and long term impact of our industry and for our company.

Hold it itself has achieved no other Ceos CIO see deal could achieve in terms of these utilization of our remote.

It is obvious how the current lockdowns are transforming the role of telecommunications industry in the day. He lives for many of us and businesses.

This is only the beginning telecom industry they'll be integra to the value chains all industries.

All the other side no one is immune to the short term impact of currency movements restrictions to mobility of individuals and pressure of income and spending power of businesses and consumers.

It will therefore come as little sheep rights that you have seen considerable impact on the operational performance of our services as look don't hold at cross 10 operating markets towards the latter part of Q1 and the month of April.

The dominant team. He is one of them divergence every market has its own dynamics and is impacted in its unique way. But this is also evident is a clear pattern of digital adoption, which we believe will be a long, let's let's think legacy or corporate 19 year.

The key trends you already experiencing are outlined here in this slide results from a number of broader sense across all industries. These sensing loot.

Higher usage patterns in voice and data and festive depletion of packages and migration towards fixed networks, while population the main locked up.

A sharp drop in roaming revenues as migrant workforce driven gross adds while cross border travel restrictions remain in place.

Disruption in our retail channels, resulting from store closures curfews, including lowered the watch sales and top ups for pay as you go products.

Disruption to seasonal workers migration daily job and visibility putters beaches in turn resulting in lower did I Miss census, and lowering cups.

Migration of customers, if they from urban centers toward suburban and rural areas, resulting in a ship in voice and data load across our networks impacted by the run different coverage situations.

Disruptions of daily majors, and lack of credit card and mobile banking platforms in some of test phase a corner.

Instructor net financial impact of these trends I have outlined is of course negative and is likely to remain so while current lockdowns persist.

For our business. This is likely to be more apparent during Q2 as a number of up our markets little deeper into the pending.

More on this will be covered by second addressing the guidance at the end of this presentation.

As we look to the next slide please as we look to mitigate the impact of course 19 on our business. We have to be focused on extended payment terms with our key vendors optimizing cost and capex as appropriate across our operations focusing on optimizing our balance.

Structure in the coming quarters.

It is important that we do not lose focus on our plant operational improvements throughout the balance of the year vitro Stan.

With us in the medium term. This is nothing crisis that we can't afford to ways.

There are some clear long term opportunities for us as digital adoption becomes a necessity rather than a lifestyle luxury.

We have already respond to those through new products, such as the free in Russia, which provides homeworkers industrial business resources in recognition of that business for home is likely be a significant channel local fortunately for us going forwards.

We believe the current environment provides telecom operators the real unfortunate to bridge the financial device, which is prevalent across a number of our borrowers and we will remain alert to potential opportunities that offer us the ability to expand our service capabilities or provide us with additional.

We'll scale in our existing operations started you will be covering more dystopic lasers.

Turning deep dives next slide into our performance, let me start with the progress we have made in Russia.

We have appointed a new CEO. Please be line, Russia Alexandre toward <unk>, who started his role at the beginning of paper.

I'm very excited to have Alexandre join our team and I'm confident that he has a drive and passion to execute the necessary improvements you know Russian business.

We have continued our accelerated network rollout, we said one toward increasing the number of base stations in Q1.

This move belied already two third position from Fort in terms of total number of base stations in the month of March.

We continue to optimize our distribution footprints closing three or more stores. In addition to the 200 to be close last year.

That leaves us well on track to achieve 600 closures. We have you Mark wheels, all the time listening customer engagement through online and self care jobs.

We have made further progress in enhancing utilize customer proposition through the expansion of our digital services in areas. We believe.

Current environment.

We believe.

Such as mobile financial services Society will impact services on the bad contact including light digital concerts.

And most importantly, we put the customer at the top table in everything we do our first priority is to improve the entire customer experience and to drive levels of customer satisfaction and detection upwards.

Turning into Russia operational performance.

There is some next slide on 13, you'll see some encouraging early evidence that our focus on network improvement is driving fourg and digital adoption rates higher as these metrics in the right Healthbox illustrate there's a huge upside in front of us.

This is important says as we pointed out during our Q4 presentation in February it de line Fourg subscriber generates an ARPU close to see times that often would you subscriber.

Underpinning.

This is a substantial step up in investment in be lines, Fourg network, which is evident in record deployment of Fourg network. These investments brought our capex to sales ratio just under 25% in Q1, as we make the necessary investments eliminates our foremost gifts and restore confidence with our customers.

That's a russias portfolios performance financial performance will still continue to the lag offset the broader.

Revenue for the quarter fell 2.6% year on year with mobile service revenues falling by 4.4 per se as a consequence of a drop off 1.4% customer base and 2.9% in our.

Offsetting this is a very good performance of our fixed line business, which show services revenue rose, 7.2% during the quarter.

Strong growth in our fixed mobile convergence customer base, which expanded by 21.3% to over 1.4 million.

Be line is the market leader in Ft, TV subscriber growth.

Data revenue growth was solid they gave up 8.5% year on year and overall data volumes grew considerably by over 60% as we increase our fourg coverage by six percentage points to 86% of the population and 99.4 in Moscow.

And other growth area is easily.

And increased working from home culture benefited our beat to the mobile service revenues, which rose 6.6% year on year.

But be lines tailored solution for a semi is like be free, which I mentioned earlier, which takes as it birthplace as a service approach to provide IP communications and HR solutions to employees this regardless of their location.

Store closures as a result of looked on later in the quarter as a direct impact on our Occupancies.

Which are 1.7% lower during the quarter as well as our service revenues given their point of sale growth driving since sales and tops.

As I said during Q4 results presentation back in February reversing Russia, Germany, France is the key priority for our leadership in 2000 trend.

A limited data bundles across the market is neither fitting to the realities of Cobiz 19, nor helping the industry as a whole to grow its value generation protection.

However, our success will be ultimately defined by the perception of our customers and here. We will continue to direct our efforts. They should that realize value proposition is second to love both in terms of quality off networks and impact of our distribution channels and the range of services the off.

This will remain the core focus from Alexander and his team in the months ahead as we work to return the line to growth.

Next slide is about kind of axa.

This is a market that demonstrates how focused investments in fourg infrastructure can lead growth hires when bundled with a strong customer proposition built around digital services.

Our business in Kazakhstan, so revenues grow by almost 20% in Q1.

And mobile data revenues registered the growth close to 47%.

'cause it Sun is another markets, though we are pursuing a strategy of accelerated fourg investments our capex in that market increased two and a whole fall during the quarter compared to Q1 last year, allowing us to increase our fourg coverage and grow our fourg subscriber base by over 40%.

We also signed spectrum sharing agreements with K sell relating to the use of five megahertz spectrum during the quarter, which will increase our fourg coverage even further.

Next slide looking into the line 'cause it sounds performance in numbers year on year growth in both revenue and EBITDA of close to 18%.

Steady upward trajectory in data revenues over the past quarters, resulting in almost 47% increase year on year.

An expansion of our Fourg footprint, which covers almost 70% of the transact population and a fourg customer base, which grew 40% year over year become 44% of our overall mobile subscribers.

On the right on site you can see a small decline in our overall subscriber base as a result of introduction of I and registration, which means that we are losing lower multi values in users.

We believe the introduction of easy will be a key differentiator for us in the markets our confidence in the Fourg value proposition in Kazakhstan gave rise to easy digital only service that even Sim cards are ordered and registered and provision online.

In March we have seen a significant uptick in our customers enthusiasts and to try it out and it will be a test bed for devalue the can deliver via digital services on Fourg network.

What is particularly important here is that the rate of data revenue growth much almost precisely the growth in our customer data use during the quarter.

This demonstrates our ability to translate consumption directly into revenues, Randy Taylor, our services effectively to customer needs.

In Kazakhstan, I'm happy to say that not just roll data, but growing range of mobile financial services on demand TV content and interactive self care applications is on a healthy growth trajectory as well.

Let me know handover to started to update on used to other high growth markets for Fourg services, Pakistan Im.

Sorry.

Thank you Karen and good morning, everyone I'm, turning first to our business in Pakistan.

It's an eventful first quarter for us in Pakistan as you know, we announced a write off and we can get a lot as our new CEO for Jessica.

Hearing brings more than 20 years of experience in financial services and a successful track record on building on scaling digital payments across Africa and Asia.

We look forward to welcoming him when he joins desk guys. Later this month.

We also started a new partnership with Mastercard and I'm pleased to that which will enable merchants to accept digital payments for customers you dice the supply chain and move to catches operations.

The success of these and other digital services have been unable for their continued investment in our Fourg network, which double its user base and during the past 12 months and a 17% growth we recorded in our data revenues.

I think all of our markets. Our success is ultimately defined by the strength of our customer value proposition.

A good example of this approach is a huge adoption rate we've enjoyed put out west healthcare up just will.

Which has grown tenfold in the 12 plus months and by the 5 million Mark.

Yes, well has become the entry point to these color personalized offers loyalty programs and that by many customer support China.

Did you just don't focus aims to connect with Pakistan's young aspirational demographic and their strong demand for digital and mobile centric product.

Moving to slide 17.

Before diving into debt its performance, it's important to point out the distortion that changes in the tax regime had in our reported revenues.

But the revenue growth shown here of minus 2.6% must a growth rate, which without the tax change would have been of 12.8%.

Similarly, EBITDA would have grown by 4.2% ascend excluding this impact on by 7.7% without the reclassification of the payment. We made in respect of our X. What do you expect to license then what position of which has now been growth above the line into every day.

They just don't performance was led by the continued growth of our data revenues up 17% year over year.

Held by further expansion all of our Fourg network and subscriber base, which at 14% growth easily replaced the growth rate. We so in our total subscriber base.

The discussion.

Deserves a this just discuss obsessed these epic what I mentioned, given the substantial growth it recorded its up 42% year over year, bringing the total number of mobile wallets up to 7.8 million, which in turn drove more than 230 million transactions.

All of these have been possible through expansion of our customer proposition.

During Q1, we launched a new Remington services for freelancers, we expanded our uses the based offerings and we also enable bank cash to be linked to desk actually wallets as a funding mechanism.

Moving now to Ukraine slight they didnt.

We continue to invest heavily in the Fourg network deployment in Q1, cementing our market leadership, both on coverage and speed.

These enable us to grow our fourg customer base considerably up 87% year over year and achieve close to 30% penetration of our total subscribers with Fourg services.

Also we continued to experience growing demand for our fixed line business, which experienced a double digit growth as we expanded our ft TV on FMC subscriber base.

We saw similar growth rates happening in our mobile services revenues as we invest in our Fourg network and grow our ecosystem of local digital services.

Taken together they did a strong performance for long term growth, even fourg adoption still remains at relatively early stage.

Moving to slide 19, we are now focusing or into the numbers.

You start revenues grew by 16% during the quarter, which along with lower service on commercial cost enable at 25% growth you name It did.

Data revenues were once again strong growing by 22% helped by the near doubling of our Fourg subscribers compared to Q1 last year.

Similarly, strong was keeps the ability to increase fourg smartphone penetration amongst its subscriber base, which at 50%. It's almost twice of that bothered markets penetration rate at the start of the court.

This progress is reflected in the adoption rates of our digital services, which have accelerated in recent weeks.

Our newly launched it converts in digital TV service, so, but at 200000 active user mark I'd be another quarter.

On Keystone self care up Tc its user base right by 55% in much.

If we move to slide 20, I would like to end with the somebody of our keep that trends across our other markets, which is summarized in these is like.

The key themes here after essentially similar to our other markets purposeful investment in our Fourg network, enabling strong double digit growth in data revenues and that will expansion as we strengthened our customer but position through media digital services.

For example is because then you need dealt recorded more than a doubling any data traffic and close to 27% rice in data revenues.

In Algeria, the introduction of new tariff range in the second half of 29 billion. So positive results. During Q1 with GE is ARPU growing for the second quarter in a row by 8%.

I mean, Bangladesh the introduction of simplify Terry's alongside further investment it's called you network enabled bundling to post close to 43% growth in data usage during the quarter. An increase is data revenues by almost one fees compared to Q1 last year.

With that let me hand, it back to certain to discuss our outlook and guidance.

Thank you Sir.

Let's now turn to the outlook for the remainder of the financially.

The first four months or Twentytwenty had been an unprecedented periods for the global economy and global business community.

No one is immune to the dramatic reorganizational, social and economic activity that has taken place such a short period of time.

And although our industry, maybe a potential beneficiary or many of these new patterns of behavior in the long term.

It is too early to predict the longer term operational and financial impact or these once as one society and return to a decrease in normality.

So now as a consequence or the uncertainty surrounding both the duration.

And eventually economic impact or do look downs, we believe it is no longer prudent to provide financial guidance for the year Transit Wendy.

However, we note that in the month of April we saw the high single digit year over year decline in our revenues.

And then mid teens decline in EBITDA.

Both in local currency terms.

As the group experienced a significant impact from the content disruption of our retail networks and product revenues.

Despite our immediate business challenges, we remain committed to executing varies operational improvements we have underway across our markets.

Which we expect to be support the group's operating performance over the medium term.

This includes moving ahead with the expansion and up create all our Fourg networks, which provide us with clear long term growth opportunities.

As we expand and launch our living range of local digital services.

With that let me hand, the flow over to your question. Thanks can stay houses.

Ladies and gentlemen, we will now begin the question and answer session and mine that if you wish to ask a question. Please press Taiwan on your Tennyson and wait for your name to being.

Our next question comes from the line of Andreas.

Please go ahead. Your line is now open.

Hi, Thank you for that he Tokenization your question, Ted and Jamie Yes.

A couple of questions of course, but I'm going to start with one the most obvious when I guess and the covert impacts that you mentioned and April if you could I, perhaps provide a bit or color and Sam so where the biggest cell types are coming from if she said maybe speak about Russia at the best thing. This is the more emerge.

End markets in Asia and Africa.

Also if you if any updates from governments on it on one societies and then claims can be opened up again.

But other than any of regulatory impacts in your business at this time.

So for example in Ukraine, there I believe theres been some.

Price increases for example of than disallowed. So if you could provide a bit more color on the breakdown workings and pockets and.

And any details that would be very helpful. Thank you.

Sure.

Let me, let me try to answer that question, because I think it's really important to understand the impact of specific the lockdowns because the April shows us that it's not the core with 19, but the execution of the look those who actually the extreme measures like curfew, they just setting impact because of.

A couple of reasons one.

Consumer behavior change is significant.

First of all the change happens from mobile networks to fix that so in markets that we do have a six franchise like in Russia. The impact of this leakage of revenues will be of course less the second issue consumers move from.

Urban centers.

Literally to the rural areas and suburbs clearly we are covering overall, 62% of the population in our 10 markets. For example, Moscow has 99.4% coverage. However, the entire Russia as 68% coverage when it comes out.

So moving from urban areas to rural areas at Chili's, another leakage of revenues.

Clearly people not being able to visit our stores do the top ups in markets, where we have a higher percentage of pay as you go products is also in other sorts, though.

Revenue leakage, yes consumption increases, but depletion of packages also gets faster, which means that customer's needs to up the top and inability to top up.

Through digital means because lack of credit card penetration mobile banking platforms or simply not being able to go to a terminal has actually another leakage point in the impact now in markets like Russia, where financial services platforms are much more robust then in places like compared to places like.

Bangle dish.

This is the impact which is in.

Felt less.

The other issue is international travel restrictions.

We have two important elements here one is rami and this is basically impacts places like George you have more rapid tourism is 20%.

But it didn't that's also Russia, because there is the migrant workforce moving from as Vicki something this is done Kazakhstan, Armenia on a consistent basis to Russia, almost four or 5 million migrant workers each year, creating a seasonal business now we see also this business disappearing.

And as this business disappears.

Reminiscences disappear putting pressure on consumer spending.

And also places like the have they joiners like Angola, and Pakistan again, and other pressures on consumer spending.

So if you look to all these categories of impacts different countries have different levels of actually.

Getting good impact.

I would rank Russia on the lower side of these impacts given the fact that we haven't bells fixed mobile infrastructure, we have a growing b to b business you have been growing ft th business, we have a better bankable so sites, even more credit card penetration all these factors put accurately.

Russia, and the low sites and countries like Georgia, and Bangle. Additionally, higher side of the impact averaging what second mentioned at high single digit impact on the revenue leakage on the topline.

I hope it answers your question.

I think out to do that.

As Scott mentioned, there was definitely a negative impact in some of our operations, but I would like referred to highlight the positive impact that we so, especially in Russia because of other topics.

So all our digital products that were at the beginning off the year initial bets, we so tremendous growth a in some of these assets.

To give you just an example is specifically in Russia, we pilot that dislikes concept of course content and we had almost two concepts already the first one a week so 200000 customers be we need.

And the customer said range was said certainly young between 32 and three yet so it's 38 years old.

The second one had already 150000 people registered I'm certainly younger 24 to 30. So we are seeing that our proposition when it comes to this middle east fitting the expectations on needs of these young population that focus on quality of service, but also in quality of content.

It will get to a more emerging economies I just cash you see the good example, there we saw as we mentioned a huge increase when it comes to digital wallet usage, but not only on b to b, but also on the usage of at least of these services to pay taxes and to pay or I know that type of Oh merchants.

Finally, you referred to government I think that our relationship with governments, it's quite close and we continue to talk with all of them to ensure that we can be of support in this type of crises and that we also share what the realities.

In our operations unless one its Bangladesh, we mentioned last quarter. The launch of Toffee, we're seeing a huge growth when it comes to top producers, we surpassed 200000 user mark and with the same type of putting more time spending our platform I know many young demographic asking for this type of services.

[noise] that is all thanks very helpful color. Thank you very much I just one follow up on this time with my second question. Peter can you, perhaps provide a more concrete numbers for Russia in particular, what impacts you're seeing or you're just going to stick to that that the group level numbers.

I think you know if you stick to the group level numbers at this stage it will be better because you can imagine you know high single team for the group lower end higher end you can give yourself it range on that.

Okay, Okay understood and the second question piece that I had it relating to your Capex plans for their because clearly you went into 2020 with some investment targets I guess, especially for Russia. So if you could please just update us on where you are and that was.

Whether you expect any sort of disruptions and executing on these targets, perhaps because of a supply chain disruptions or mobility restrictions et cetera, and how that potentially impact your outperformance currently as well. Thank you.

Sure we are focused on making sure that we have a higher reach on the for the customer base and the increase the quality of services across the board, but specifically in Russia as well and we are continuing to execute on that I think it's very important that we keep our smart and purposeful in.

Vestments in place despite the fluctuations we see in the markets, having said that always itself had a couple of impacts on the supply chain.

We see six to eight weeks or delays in shipment of equipment, but more importantly, due to currency. We also see delays in the ability of us deploying some networks. This will naturally result in shifting or some of our capex.

Q1 off next year and threw off next year as we try to deploy the investments we have in mind.

But our focus on investing in the right areas to make sure that the provided right quality of service to the right customers with Fourg remains intact.

I would say color. Thank you very much.

Following question comes from the line slot Dan <unk> from Goldman Sachs. Please go ahead. Your line is now open.

Yes. Thank you very much schaeffler presentations or can you. Please elaborate a bit small oncologists T mobile service revenue progression in Russia in the coming quarters, and what do you expect that you want to be the weakest point of the year or using that that Q2 and three can deteriorates does on the back on their own and get back.

And actually excluding the rolling crashes, what do you envisage certain growth improvement by the younger Yeah. I'll just speaking when you expect saps, Russia to return to growth could be achieved by the end the year.

And I appreciate so hopefully that scope of then 17 and lastly.

My second question is that single digit raving Youre a high single digit revenue decline that you envisage in April can you broadly commence a again roughly how much is coming from that roaming device sales on the organic service revenue crashed and also what is the reason for the margins to decline. Thanks.

Josh.

Yeah.

So the first of all let me start seeing that you know the actions that we are taking in Russia in terms of improving Oh.

Network coverage in Moscow incident, Peter food in the top 12 cities is continuing to speed.

And the as a result of that what we have seen Q1 in terms of better than in Q4, as we have expressed and our plan is to get this improvement levels consistently throughout the year of course, the shutdowns Lockdowns has an impact which we did not foresee into one Randy.

For Q4 results in our plans for the year.

But I expect this improvement of results on service revenues will be systematic.

Our original target was getting back into year on year growth by Q4, this might be delayed by one or two quarters due to the qualities impact, but we see these improvements already happening and we have the early signs of a normalization and towards a growth markets in this area.

Mentioned, we already have our b to B business growing healthily, 6.6%. Our data revenues are on growth trajectory with 8.5% and our DCH business. Specifically also driven by the goal is 19, the disease networks getting higher consumption levels is that when a healthy growth of almost 8% all these things.

Our giving us confidence as we build our capacity and quality.

The top cities that we are on the on the right check with regard to more detailed granular analysis of April April by the way that factual number that we are constantly sharing with you, but I think the only thing I would say on top of that is Russia was on the lower side of those impacts and markets like Georgia and.

Bangladesh was on the hires but I think thats, that's the granularity that you'd like to stick to at this point.

Okay. Thanks, very much about maybe quickly on the results for the margins declined for the company. It looks like about device sales at least the I low margin business is that basically had roaming and they organic service revenue high margin business, leading to the margins.

Declines in April.

If you are specifically looking into the situation in Russia, you should understand that first of all the Lockdowns came late in effect in Q1.

And our deployment of networks has an impact on the structural opex on technology site and these are the results that you're seeing in terms of it.

Performance there.

Actually on the.

On the April results the impact is more visibility in terms of equipment sales and that's.

Really that was included in my statements earlier about Russia shutdown impact.

Our equipment sales are only down 1.7%. If you look to the results of few one announcements in Russia.

Okay, calling in for me I Love. It is this is Derek on maybe to Cheniere. The pmiers about the margin decline because they see opposed to make them in the following.

Question. This is to look at it from the high level, we have roughly 70% gross margin.

So 30% already has a richer.

We can't said direct cost of.

The other business are more or less linked to revenue trends.

Yes, we do some structural changes in our direct costs.

That that goes in line with the study so when revenues goes down our service cost goes down and then we keep the same model at the same margin.

And then we have 44% EBITDA margin.

Q1, so which means that the rest is a little effect.

However, this decline in revenues that we have seen in April.

As we all know that it happens very fast.

Commitment in impact more let's start at sometime in March and then the pro up there was in April.

So when you look at the cost structure or telecom companies. There are some costs that you can stop immediately.

And some other costs there should fit time lag.

After you implement some actions you can see the impacts with a lack of Lego time, because you do the decision today you start implementation.

Sometimes dispersed implementation or some initiatives can create additional cost as well.

So then you only compare Q2 and two one.

It is normal that the first reaction on the EBITDA margin.

Can look as efficient as the long term or the second towards the third quarter reaction because there's a time like.

So that was the main reason when you calculate the absolute numbers, you see that more or less older revenue decline in Q1.

Q2, you can see more or less a similar amount in absolute number in EBITDA line as well, but if you look at the longer perspective.

I assume that management are taken then we'll take we will gradually to absorb the sudden impact.

Thank you.

Okay. Thanks much.

Ladies and gentlemen, mind issue, it's not to ask a question. Please.

On more plentiful.

Right.

To be in.

Following question comes from the line of as internally from age.

Please go ahead. Your line is now open.

Yes.

Thank you again for quarter presentation, a couple of question, that's where it on my side.

Firstly the first one is.

Regarding your fixed line business, what you've seen during sort of looked down I mean, obviously any accessory on fixed line a a code or is it mostly purely mobile which was really affected.

Of course.

Regarding I'm showing no future constrained.

There are you experience so far in the countries, which have lighted some constrain post cook 19 impact in term of either a.

Keep them pay outcomes trains or a cash a trade to repetition, let's try.

And finally or maybe a exceptions in Tim.

Or the that comes up that structure and you on cash flows.

Firstly looking forward and with the FX movement, we seem to you believe the current or exposure in U.S. done off your debt, which is I believe around 50% to 53% is is adequate how do you think there is room to further change that capital structure. Thank you.

Maybe I'll take the first question in the fixed networks and I leave the second to answer the others.

First we see major changing consumer behavior, and the changes migration from mobile usage towards fixed usage and actually in markets, where we have it six franchise and the examples would be Russia, Armenia also crane, Kazakhstan to certain extent in these markets we have.

He also has shown.

In terms of new adds to our fixed line businesses.

The shows both in terms of.

Customer acquisition, but also utilization of TV services that we provide also at the households. So there is a strong momentum on the fixed side, which we are actually benefiting in the markets that we have a fixed franchise.

Right.

Yeah, Yeah, maybe just a follow up I don't have you taken the opportunity as well we looked down maybe to provide more ics, while you're less I mean as as people, especially as you mentioned move.

Away from the urban centers and move towards maybe places, where you know in rural or out where the coverage and pushing them about coverage was what slower.

I I did you had any specific promotions et cetera to a.

For fixed wireless access for instance in remote area.

Absolutely we do have a in the as a form factor in terms of you know dansville's or axis funds that provides the peaks wireless access solutions and I think this part segment of the business in the future will be also another growth market as we also experienced with pre fiveg type of technology.

Yes, as well. So this is an area that we're also seeing lots of activity and events.

<unk>.

Okay.

If I take the second question.

As you all know all those as we all know they're not operating in the easiest countries, we're up within emerging and frontier countries.

ER and these countries may have regulatory restrictions.

That's why we're closely monitoring what's happening in all of our footprint countries, but so far we haven't seen any significant change in the regulations or.

The others related matters regarding upstreaming cash to to the group level. So we haven't seen any significant change in the regulatory environment in that respect.

Your third question about that structure.

Of course, there's always.

Area to improve.

Obviously.

Yeah. So did the easiest way to do this actually the let's look at from two different aspects first.

General or does.

Second cost and this turtle diversification.

So I think we can improve in all aspects, we can improve our average maturity that we are working.

Yes, two or more reasonable more relaxed.

Level.

Second thing, we can improve our cost average cost adept.

And I believe that in the coming quarters, they will have some some actions and.

Almost a almost cone concluded that those actions will impact the first two K.P. has positively.

And thirdly, we can of course diversify in terms of currency in terms of source of funding.

So in the coming quarters.

They are going to focus on all three areas.

Having said that you just heard spin seem to two to U.S. dollar adapt.

Yeah of course, the one extreme is you had all the risk.

Hedging is usually an extensive avail.

Mitigating the risk.

Industry hedge hundred percent of something it means that you shouldn't to the transaction because you're hedging at home the person.

So the cheapest way to hedge is natural hedging and that's what we did in Russia as I mentioned in the slide eight.

Yeah, our if you look at our debt composition, 42% or that in ruble.

And 44% took it oh.

For the group is coming from Russia, so that that creates a natural hedge so going forward in summary, we will focus on improving tender met you towards the Dept decrease the cost of that and diversify our source of funding.

In the meantime.

We will focus on increasing as much as possible natural hedge which is free.

And the rest we will selecting the focus on how we hedged the research that's a reasonable level and at the cheapest costs.

Okay. Thank you.

Hi, following 10 comes from the line of.

Okay.

Please go ahead your line is.

Oh, well conduct an antibody may come back to your question crashing down I'm very possible every time he would be a press release, yes, Youre decline international EBITDA due to higher production of caused you to national investments or deployment of than that.

[music].

Hong Kong, because as I understand network investments deployment of the network. It so capitalized expenses in other words, it's context as an opex kalkan Capex cash ended that can you. Please elaborate.

I think it's a if you look to the increase deployments and increased.

Service capacity over our network. It is nature that there will be higher operational costs. In addition to out of course topics are happening and the as the number of.

Mobile usage base due to the Corbett president having an impact I think it is normal that we see that impact on the top line, having an impact on the EBITDA level. As second has indicated that we'll have a bigger percentage point impact on David.

But don't underestimate that as we lets up low base stations that also drives higher operational costs and interconnect. So thats why you see a higher level, though.

Erosion, but as second mentioned there will be mitigation impacts that will come over time.

That you will also see.

Second anything you would like to us.

You you've made its very clear can I think it when you make your networks mustn't there the cut this component, obviously, which doesn't hit the piano at this about EBITDA level public venue rollout and network. When you put new base stations no new transmission line first of all you have to maintain them and if you don't own the land you have to pay rent.

And you have to pay electricity, yet this kinda things, which are all opex, so maintaining a bigger network, which we are in vitro increasing the coverage or the network mainly in fourg.

Given the extra opex.

Cost us about so that that's the main reason why network rollout and fats metric rollout that what we're doing in Russia immediately hits to Opex line.

I have two questions here, how fast can you. Please quantify just opex share.

And that's your question then can you play celebrate.

If you expanded your Fourg coverage do you use any new sites or use existing club size, because if you're using existing snatch change and my perception watch that most of the side switching U.S.. It's like existing sites you don't crashed who tend to be implemented and you don't have to based on the income.

Transmission attach second can you please elaborate and try to quantify this incremental.

Except on the orchestral metroprolol thinking.

I will not specific to go through the quantification, but let me give more color on what we're doing it is neither only.

Using existing nor adding new it's a combination of these things if I will give you. Some examples we will probably introduce close to 2000 additional new sites in Moscow and most will have less this year and most importantly, we are covering as we speak the entire Moscow Metro which is actually.

In net new so it is not only about putting additional capacity on the existing locations. We are really going for the full.

Best customer experience possible, especially in Moscow that we will differentiate us services in the markets and that includes adding to existing but also adding new sites. Thank you.

Okay fair enough. Thank you.

[noise] I. Following question comes from the line of caveat.

Petchem often seen sedan.

Go ahead. Your line is now open.

Hi, Thanks, very much on what happened here.

Question I had two questions and both of them on Russia.

On pricing and the first one is on just wanted to follow up on a consequence.

Cool that you will be.

Yes.

No.

And then you highlighted.

Uh huh.

Helping.

And the same time you.

Thank you and they get you'd like to have.

Value proposition.

Okay.

Could you give a bit.

Thank you.

Pricing.

Does that mean.

At least at this stage.

And maybe.

We would rather keep.

I was trapped chair as you have including debt.

Okay. That's question one.

Maybe just looking beyond that.

And second question I think on the previous call you mentioned that.

You are trying to do some changes to the time.

Well move away from him.

I will just wondering what you have seen during the quarter how successful that.

Yes.

Thanks.

Yeah, I think you know both questions are kind of relate to each other in a way I think the realities of today what.

The Lockdowns has practically make this practice of unlimited pricing it seemed to test we cannot continue and we cannot you know push this service because it will be actually compromising the service that we can provide to all our customers that come into.

This will turn into ethics wireless access solution, which will be completely.

You know conflicting with the purpose of closure sums for positions. So you'll see us changing from that dilution to make sure that we actually provided or desktop experience, making sure that it is rich with services, but it is not providing an unlimited offer on the on the value.

Which is based on built on very scarce resources of spectrum and Capex investments. So that that is I think the message that I wonder.

That's very helpful. Thanks, very much and maybe just an awful lot one on the comment you just made and what.

I'd.

Yes, that's true.

And Oh, that's all year.

Especially in North Dakota and.

How.

Sufficient that and you can you do you have an addition now.

Such additional spectrum and considering all the constraint.

In Russia.

Yes, that's taking the psyche side just to have Fortunately for an hockey, yes, yes for Fourg and four and a healthy we're very satisfied spectrum we have.

Through utilization of advanced technologies on optimization and through utilization again at best acknowledges on video compression and optimization of data consumption, we are able to create additional capacity and a and actually our positioning in terms of spectrum ownership, even today positions us very strongly the mark.

That's right.

Hi, Thanks, Pat Thank you.

I find one question comes from T. line of on each Kaweske from me easy.

Go ahead. Your line is now open.

Yes. Thank you I had to pull up question just on your retail and distribution Rashad, maybe a bit.

But I was wondering you now have a concrete target.

Well I.

Caused by being a theater I was wondering is there upside the somebody thing because one of your peers also with <unk>.

600 store closures set that I believe that its should market permits they see upside potentially double.

That number of 600 or over over some period, so with the digitization that you've been talking about in Russia, where do you see the upside and potential we tell repair. Thank you.

I think in my earlier comments as well I made the statement that Russia overall is quite inefficient its distribution at retail.

Markets.

And it's not only about us, but I think this probably the experience gives us a unique opportunity to complete the recent not incrementally improve but rethink about the way we reached on customers. It's about selling digitally it's about servicing digitally and it's about if need be doing business.

Online ecommerce resources and deliveries at home and I think you're going to be completely rethinking our model to make sure that while the increase the service capacity to the customers the completely changed the way we operate on our retail model as well.

And can you just maybe from your perspective now that you've been appealing for some time what is the what is the where like that that the necessary conditions for you to thing not just sort of young but for the whole market scaled back simultaneously or.

As a whole.

But do you think needs to happen.

I think what is what needs to happen is already happening I think one of the most important things in this market is self registration capabilities and mobile payment capabilities I think governments actions in older markets are towards making sure that self registration.

Is becoming.

Modus operandi standards and mobile payment capabilities are also is a adjacent markets that we actually look into very strongly and invest very strongly and as those capabilities study emerge I think we will see a completely different type of a distribution and customer engagement framework for our industry and we will be the leading.

The drivers of that.

[noise] clear thank you.

Thank you.

Yeah.

Following.

Comes from the line of I mean.

From 91.

Right.

Go ahead. Your line is now open.

Hi, Thanks, I'll call today.

Can you remind us what youre available credit facilities are.

I'm not sure if you'll be able to answer this but.

I saw you launched a new MTN programs attached.

Mean, you'll be addressing all short term maturities by looking at bond markets.

My last question.

I think you'd have spectrum payments coming up in Pakistan can you remind me what they are.

Sure I live second.

Yep and regarding your first question. Please refer to page 27, you never presentation.

On that slide you will see the unused credit facilities basically we havent Rcs.

Yeah syndicated RC facility, which we have around 1 billion U.S. dollar unused.

Committed credit lines.

First we have around 200 tons or $40 million facility unused capacity in purchase them. Those are the two two items.

On page 27.

For your second question.

As you May know, we have already deposited as security deposit 50% to the license license fee.

So the other 50% is outstanding.

The there were still ongoing discussions on the process is ongoing.

About the timing and Vale payment.

The scheduled payments for the other 50%.

As you May know in Pakistan, you have options either you can pay.

In one shot or you can pay in multiple installment when a user base is up to five years. So we have both options, but as I said, there's still the process is ongoing.

Yes.

We have no further questions at this time.

And a lot just like to thank everyone for corporate dialing in today and protecting the Tom if you have any incremental questions. Keith This anfield feel free to reach out to us. Thanks, very much everyone have a good day.

Thank you.

Okay.

Thank you very much.

Thank you.

Asking Canada conference today, if Europe. Thank you for.

Okay.

[music].