VEON INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED VEON

INTEGRATED ANNUAL REPORT 2019 VEON provides essential communications and digital services to 212 million customers in ten countries with growing economies, exciting demographics and rising disposable incomes.

CONTENTS Our FY 2019 highlights Introduction ​ Our Reach 2 Our Potential 4 Our Opportunity 6 At a Glance 8 Our Purpose 10 Chairman's Statement 12 Our CEOs in Conversation 18 $8.9bn $4.2bn Our Value Creation Framework ​ Reported revenue1 Reported EBITDA Our Strategy 26 Our Business Model 28 Our Sustainability Strategy​ 32 Stakeholder Engagement 36 Materiality Assessment 40 Focused on Outcomes 46

Performance Summary ​ 2019 Financial Review 56 Our Cornerstone, Russia 60 Our Growth Engines 62 $1.4bn $2.4bn Our Frontier Markets 68 Equity free cash flow2 Data revenue​ Talent Management​ 70 Managing Our Risks​ 74

Corporate Governance ​ Our Governance Structure 82 Our Board of Directors 86 Our Group Executive Committee​ 89 Nominating and Corporate Governance Committee 92 Finance Committee 93 Audit and Risk Committee 94 Compensation Committee 95 46,492 14% Remuneration Report 96 Total employees Reduction CO2 emissions/ Number of employees Financial Information ​ unit of traffic Selected Financial Information 100 working across the Group Independent Assurance Statement 101 (tonnes/terabyte)

Additional Information ​ Glossary of Financial Terms 111 1. All financial information in this report is provided in US dollars unless stated otherwise. Shareholder Information 112 2. Excluding licenses. Please see Glossary on page 111 for a full definition Report Disclaimer​ 113 of this and other financial terms used throughout this report.

VEON Integrated Annual Report 2019 WHERE CONNECTIVITY MEETS AMBITION

Creating a better future for our customers, employees and communities is what matters to us. Connecting people through technology is how we achieve this. 2 OUR REACH

WHERE SCALE MEETS REACH Rua

Connecting people through voice, data and a growing ecosystem of new services. VEON is a leading emerging markets connectivity and digital services company serving ten countries, which together Te Neterland aatan are home to around 10% of the Urane Georga world’s population.

We are the company behind some of the Uetan world’s leading emerging market mobile Arena rgtan operators, providing expertise, technology and capital to help serve their customers with the best connectivity experiences our Patan industry can offer. Algera

Banglade

VEON is headquartered in the Netherlands and operates through five local brands that make sure our customers stay connected, wherever they are.

VEON Integrated Annual Report 2019 3 INTRODUCTION VALUE CREATION

Rua SUMMARY PERFORMANCE

Te Neterland GOVERNANCE CORPORATE

aatan Urane Georga

Uetan Arena rgtan INFORMATION FINANCIAL

Patan Algera

Banglade INFORMATION ADDITIONAL

10% 212m +66m Global coverage Total active subscribers Growth in population One-tenth of the world’s Combined subscriber base Predicted population growth population covered by of our ten operating markets of our ten operating markets our networks by 2030 (source: United Nations)

Integrated Annual Report 2019 VEON 4 OUR POTENTIAL

WHERE EXPERIENCE MEETS POTENTIAL

Customers are at the heart of everything we do. Our goal is to serve our customers as their digital concierge, connecting them with resources that satisfy their day-to-day needs and helping them to realise their long-term ambitions. We are achieving this through investment in a growing range of connectivity and new services, from traditional voice and access data through to digital banking and other data-driven digital services.

137m ~34% 18.4% Data subscribers 4G smartphone Improvement in penetration data accessibility Group-wide smartphone Year-on-year improvement penetration calculated as versus 2018 customer weighted average

VEON Integrated Annual Report 2019 5 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE GOVERNANCE CORPORATE INFORMATION FINANCIAL INFORMATION ADDITIONAL

~11% 7.3m 19.6m Mobile financial services Digital wallets Self-care MAUs (MFS) penetration Monthly active users of Percentage of subscribers self-care applications and using mobile financial services web services in total subscriber base

Integrated Annual Report 2019 VEON 6 OUR OPPORTUNITY

WHERE INNOVATION MEETS OPPORTUNITY

VEON is a technology-led company with a bright digital future. By investing in the very best technology platforms, we have the capability to offer a whole new range of digital services with the potential to transform the experiences of our customers. We see these services as a major source of value over time as we extend the reach of our company beyond traditional voice and data services, helping to drive growth, prosperity and opportunity in the markets we serve.

22.8m Financial services users Total monthly active users of mobile financial services

19.6m 3.2m Self-care users Content consumers Total monthly active users of Total monthly active users self-care apps and web services of our content services

VEON Integrated Annual Report 2019 7 INTRODUCTION

OUR THREE BUSINESS PILLARS VALUE CREATION

SUMMARY PERFORMANCE Strengthening our connectivity business with investment in our 3G and 4G networks.

Unlocking additional GOVERNANCE CORPORATE sources of long-term value and customer opportunity through new services and future assets. CONNECTIVITY INFORMATION FINANCIAL BUSINESS INFORMATION ADDITIONAL

NEW FUTURE SERVICES ASSETS

CONNECTIVITY NEW SERVICES FUTURE ASSETS

Mobilising a Transforming customer Imagining tomorrow’s connected world experiences possibilities VEON is strengthening its Our goal is to be a digital VEON is investing in future networks to bring market-leading concierge for our customers assets that have the potential connectivity to our markets through a range of new services to define the products and everywhere through the best built around digital technologies services of tomorrow. value voice and data services. wherever people need them.

Integrated Annual Report 2019 VEON 8 AT A GLANCE

VEON AT A GLANCE

Our markets VEON operates across ten markets through some of the leading mobile operators in Eastern Europe, Central and South Asia and North Africa. Our markets comprise around 10% of global population. Each is rich in diversity but shares an unmet need for digital connectivity services. Our markets naturally form three clusters, each of which plays an important role in sustaining the balance of our business.

NASDAQ and Euronext Amsterdam listed

100% 100% 100% 85% 100% 45.6% Russia Ukraine Uzbekistan1 Pakistan Bangladesh Algeria3

Other2 Kazakhstan (75%); Kyrgyzstan (50.1%); Armenia (100%); Georgia (80%)

Note: This chart represents a simplified overview of VEON’s ownership structure. For more details please refer to VEON’s 2019 20-F Report. 1. Uzbekistan operating company is 100% held through the Russia operating company. 2. Other operating companies including Kazakhstan, Kyrgyzstan and Armenia are held through Russia. Georgia is partially owned through Russia operating company and partially through VEON Group level. 3. VEON’s ownership in Algeria operating company is held through Global Telecom Holding, of which VEON’s current ownership is 98.24%.

VEON Integrated Annual Report 2019 9 INTRODUCTION

Our three business clusters Collectively, ours is a portfolio of markets that enjoys strong organic growth, which VALUE CREATION we are positioned to capture through continued investment and the development of new services that we adapt continuously to the evolving needs of our customers.

Cornerstone Growth Engines Frontier Markets

The first is Russia, our The second comprises The third cluster is our Frontier SUMMARY PERFORMANCE Cornerstone and the largest Pakistan, Ukraine, Uzbekistan Markets, where long-term contributor to our revenues and Kazakhstan – collectively, demographics and growth and cash flows. our Growth Engines – each of trends point to an exciting which is in a sweet-spot of rapid future for our business. services adoption and growth.

Russia Pakistan Algeria 146m ​ 50% 216m ​ 27% 43m ​ 54% GOVERNANCE CORPORATE Population 4G smartphone Population 4G smartphone Population 4G smartphone penetration penetration penetration

Ukraine Bangladesh ​ ​

44m 27% 165m 10% INFORMATION FINANCIAL Population 4G smartphone Population 4G smartphone penetration penetration

Uzbekistan Kyrgyzstan 33m ​ 24% 6m ​ 50% Population 4G smartphone Population 4G smartphone

penetration penetration INFORMATION ADDITIONAL

Kazakhstan Georgia 19m ​ 55% 4m ​ 55% Population 4G smartphone Population 4G smartphone penetration penetration

Armenia 3m ​ 22% Population 4G smartphone penetration

EBITDA contribution* EBITDA contribution* EBITDA contribution* FY 2019 FY 2019 FY 2019

** EBITDA contributions exclude corporate costs. See page 109 for reconciliation.

Integrated Annual Report 2019 VEON 10 OUR PURPOSE

OUR PURPOSE

Growth: Our goal Opportunities: VEON Vision: Our vision is to enable growth, has a wealth of growth is to empower prosperity and opportunity opportunities underpinned customer ambitions through connectivity by dynamic, rapidly through technology. and digital services. urbanising populations that share a voracious appetite for data and new services.

VISION

STRATEGY

GROWTH SERVICES

TECHNOLOGY CUSTOMERS at the heart of OPPORTUNITIES everything we do COMMUNITIES

INDIVIDUALS

VALUES

VEON VALUES

CUSTOMER COLLAORATIVE ENTREPRENEURIAL INNOVATIVE TRUTFUL OSESSED

VEON Integrated Annual Report 2019 11 INTRODUCTION VALUE CREATION

STRATEGY ​ Our vision is to serve our customers as their digital concierge, connecting them with resources that satisfy A customer-driven their day-to-day needs and help them realise their strategy long-term ambitions. SUMMARY PERFORMANCE

SERVICES ​ We tailor our services around individuals, GOVERNANCE CORPORATE addressing unmet opportunities in the markets Providing tailored we serve. We believe this will deepen the bond services between us and our customers as smartphone ownership grows and their demand for data-driven connectivity services broadens. INFORMATION FINANCIAL

TECHNOLOGY ​ We lead change by harnessing technology, deploying a growing range of digitally-enabled Using technology services that transform customer experiences leadership though data-driven, predictive tools. INFORMATION ADDITIONAL

COMMUNITIES ​ Our technology and services can transform the communities we serve. We have a responsibility Inspiring to foster economic and social improvement, from communities advancing digital literacy and nurturing new-economy entrepreneurship, to providing financial services access for some of the world’s most unbanked nations.

INDIVIDUALS ​ We empower customer ambitions through services designed around lifestyle, social improvement Empowering and economic opportunity. We extend this through individuals dedicated programmes to foster digital skills and connect people with educational and vocational opportunities in the communities we serve.

Integrated Annual Report 2019 VEON 12 CHAIRMAN’S STATEMENT

CHAIRMAN’S STATEMENT

A year of considerable change

Ursula Burns Chairman

VEON Integrated Annual Report 2019 13 INTRODUCTION

As Chairman, I am pleased to present the Integrated Annual Report for VEON Limited (“VEON” or “the Group”) for the financial year ended December 31, 2019. VALUE CREATION SUMMARY PERFORMANCE

2019 was a watershed year for the Both transactions sharpened 2019 was another GOVERNANCE CORPORATE Group. Geographically, it was a year VEON’s emerging markets focus, year of solid growth in which we continued our pivot providing our shareholders with towards emerging markets, which a greater exposure to the exciting for the Group and our began with our exit from Italy demographics and growth prospects financial achievements in the summer of 2018 and of our businesses there. The Italy came alongside important culminated 12 months later with transaction also dampened the milestones in compliance, the consolidation of our businesses cyclicality of our portfolio with in Pakistan and Bangladesh through respect to the pricing pressures governance and social INFORMATION FINANCIAL our successful tender offer for Global that remain a feature of more mature responsibility. Telecom Holding S.A.E. (“GTH”). markets, in turn helping us to deliver Strategically, the year saw VEON strong organic EBITDA growth at the unveil a new framework that Group level throughout the year focused our business on ambitions despite recent weakness in our to grow market presence in a host of largest market, Russia.

innovative services with the potential INFORMATION ADDITIONAL to transform our product capabilities. Simplifying our corporate structure Operationally, 2019 was another year has for some time been a priority for of solid growth for the Group and VEON. Here, both the Wind Tre and our financial achievements came GTH transactions were milestones, alongside important milestones particularly through the subsequent in compliance, governance and transfer of GTH assets following our social responsibility. tender offer, which has helped us achieve our goal of consolidating A period of considerable VEON’s businesses in Pakistan, Bangladesh and Algeria within change our Group structure; a process The Group entered 2019 in a stronger that is now substantially complete. position financially following the successful sale of our Italian As well as reducing complexity, business, Wind Tre, to our joint- 2019 saw us reduce costs across venture partner CK Hutchison our business. This initiative started Holdings Ltd. The proceeds of this with our Headquarters function transaction allowed us to strengthen and a pledge to halve the run-rate our balance sheet and helped fund in our corporate costs from their a series of transactions that would FY 2017 levels by the end of 2019. eventually see us substantially I am pleased to report we have consolidate ownership of VEON’s achieved this goal alongside businesses in Pakistan and success in reducing the cost Bangladesh through a successful intensity of our operations. tender offer to the minority shareholders of GTH, which Elsewhere, 2019 was a watershed was completed in August 2019. year for our corporate strategy. In February, I was pleased to announce the appointment of Alex Kazbegi as Chief Strategy Officer for our Group,

Integrated Annual Report 2019 VEON 14 CHAIRMAN’S STATEMENT CONTINUED

a new role that acknowledged the The creation in July 2019 of VEON Both Kaan and Sergi’s appointments need for a unifying framework to Ventures, a new division tasked were made alongside a number harness and direct the variety of with utilising VEON’s brands and of changes to our management exciting product initiatives we have customer base to develop these structure to ensure our operating underway across the Group. Alex future products and services, was companies are empowered to delivered this at our Capital Markets given leadership with the hiring of pursue the growth opportunities Day in September, unveiling a Sergi Herrero, formerly Facebook’s they identify. These included new strategy framework that aligns Global Director of Payments and enhancements made to local our business with our services in Commerce Partnerships, as the Boards, which draw on the three complementary verticals – division’s Chief Operations Officer. considerable talent pools of our connectivity, new services and future Sergi’s expertise in digital payments, operating companies and include assets – stretching our ambitions which included overseeing the launch independent directors to increase beyond our core voice and data of payment platforms for Messenger, local expertise and ensure effective connectivity services in the process. WhatsApp and Instagram, is a perfect governance. Crowning this process match for Ventures given its early was the appointment of Kaan and This framework built upon our focus on mobile financial services Sergi as co-CEOs from March 1, 2020 considerable investment in IT and our leading franchise in that alongside me as Group Chairman. infrastructure in a process we have field, JazzCash in Pakistan. With this change at the top of referred to as digitising our core. This our organisation, we have two has involved installing the very latest October saw another significant outstanding individuals who I have Digital Business Support Systems in addition to VEON’s management no doubt will define the next growth a growing number of markets, which team when I welcomed Kaan phase for our businesses. are in turn enabling us to deploy a Terzioğlu as Joint Chief Operating new range of self-care applications Officer to work alongside Sergi in November saw our company and other digitally enabled products a new joint leadership role from receive another accolade that I with the potential to transform the November 1. For industry observers, am particularly proud of. VEON customer experience of our services. Kaan needs little introduction. His is now recognised as one of the considerable experience and track most transparent companies in 2019 also saw VEON invest in the record at the helm of Turkcell, where the Netherlands by the Dutch people and technologies that will he served as Chief Executive for four Transparency Benchmark. Ranked 32 allow us to develop and grow new years, bring a wealth of resources to out of over 480 companies assessed revenue opportunities. Here, we are VEON and are fantastic complements by the Dutch Ministry of Economic investing in adjacent services and to the skills and experience of Sergi. Affairs and Climate Policy, the result markets that we refer to as future underscored the progress VEON has assets – products and businesses that made in its ongoing commitment offer VEON scale and advantage in the to transparency, compliance and products and services of tomorrow. responsible business.

Key strategic milestones

1992 1996 1998 2001 2004 2005 VimpelCom founded VimpelCom listed Telenor becomes a Alfa (now L1 KaR-Tel (Kazakhstan) Acquisitions in and registered as a on NYSE strategic investor Technology) acquired Ukraine, Tajikistan, joint stock company becomes a Uzbekistan, Georgia in Russia strategic investor and Armenia

VEON Integrated Annual Report 2019 15 INTRODUCTION

As I look ahead to a new decade for our November also saw Telenor complete business, I see a wealth of opportunities and a the sale of its shareholding in VEON Group, in line with its previously company that is better equipped than ever to announced intention of fully VALUE CREATION serve the diversity of its stakeholders. divesting. The sale resulted in VEON Group’s free float increasing to 43.8% and saw us welcome a number of new shareholders to our register. FY 2019 ACHIEVEMENTS Financial performance 1. POSITIONED FOR GROWTH 2. OPERATIONAL EXECUTION 2019 was another solid year for the SUMMARY PERFORMANCE • Increased 4G penetration • Strong organic EBITDA growth Group operationally. We delivered • Accelerated capex roll out • Solid equity free consistent financial performance, • Further strengthened cash flow generation fulfilling our guidance commitments corporate governance • Corporate cost reduction on organic revenue and EBITDA growth • World class leadership team • Monitor certified while progressively reinvesting in compliance programme our future. And at the Group level, we generated a return on equity of • Deferred prosecution agreement GOVERNANCE CORPORATE 27% for the year – a considerable concluded achievement in the context of an 4. PORTFOLIO DEVELOPMENT 3. CAPITAL ALLOCATION industry which some view as being characterised by low returns. • Successful conclusion of • Issued USD 700 million the GTH MTO senior unsecured notes Our Pakistan and Ukraine businesses, • Telenor sell-down completed • Group gearing at 1.7x (pre-IFRS 16)* Jazz and Kyivstar, were particularly

• Free float increased to 43.8% • FY 2019 dividend of US 28 cents strong and each demonstrate the range INFORMATION FINANCIAL of growth opportunities we enjoy. For ** 1.9x excluding a one-off USD 350million Jazz, our immediate growth opportunity payment from Ericsson: see page 58 is in digital financial services given a for details. large unmet need in that society for access to retail banking. Addressing this opportunity, our JazzCash franchise 27% now leads the market in providing INFORMATION ADDITIONAL Return on equity mobile wallets to over seven million users and now contributes around 6% of our local revenues. EMPOWERING CUSTOMER AMBITIONS

2010 2011 2013 2015 2017 2018 2019 Headquarters VimpelCom VimpelCom listed Telenor VimpelCom Completion Mandatory tender moved to acquires Wind on NASDAQ announces its becomes VEON of sale of 50% offer for Global Amsterdam Telecom including intention to divest interest in Telecom Holding VEON listed its operating its VimpelCom Wind Tre JV S.A.E. (GTH) on Euronext companies in shareholding completed and Italy, Pakistan, GTH delisted Sale of 51% Algeria and interest in Bangladesh Djezzy Algeria to Algerian National Investment Fund Wind Tre JV created in partnership with CK Hutchison

Integrated Annual Report 2019 VEON 16 CHAIRMAN’S STATEMENT CONTINUED

VEON Integrated Annual Report 2019 17 INTRODUCTION

COVID-19 has resulted in profound changes in the individual, social and environment way we organise our daily lives. We see our services as part imprints they leave behind. And it summarises our commitment to forging of the solution as home becomes the new workplace and sustainable businesses that enrich the VALUE CREATION communities adapt to new ways of interacting with trusted communities we serve. information, essential resources and each other. Outlook As I look ahead to a new decade for our business, I see a wealth of opportunities For Kyivstar, the growth opportunity positive development with respect and a company that is better equipped is similarly in data and new digital to liquidity and the broadening of our than ever to serve the diversity of SUMMARY PERFORMANCE services. These include mobile and fixed shareholder register. That said, 2019 its stakeholders. line TV and extend to our developing was a volatile year for holders of our capabilities in cloud, IoT and AI-enabled shares and the relationship between More immediately, the world is facing business services. We are matching the Group’s financial performance an unprecedented challenge. The demand here with investments in our and VEON’s market valuation remains COVID-19 pandemic has resulted 4G infrastructure and an approach an ongoing focus of our Board. in profound changes in the way we to retail pricing that ensures we can organise our daily lives. Our industry provide value for our customers GOVERNANCE CORPORATE Compliance and sustainability has a social responsibility to ensure while we grow with them. Kyivstar that communities everywhere stay This is the first year we have adopted underscores the considerable growth connected, whatever the circumstances. an integrated approach to presenting we can achieve as we harness a growing At VEON, we see our services as part both our financial and sustainability connectivity business to an expanding of the solution as home becomes the credentials in a single report. ecosystem of new services delivered new workplace for many millions and It coincides with an important milestone alongside a migration from 3G to 4G communities adapt to new ways of for VEON – the end of our compliance networks. This is a strong foundation interacting with trusted information, INFORMATION FINANCIAL monitorship, which I announced in from which to expand our market essential resources and each other. opportunity in Ukraine further as we October. This brought to a close a three-year period of consultation and develop from a traditional telecoms Throughout, we will stand ready review through which we transformed business to a provider of technology- to help societies in whatever way our approach to ethics, compliance driven experiences. we can to manage and recover stronger and risk management. from this pandemic, using connectivity As ever in a diverse portfolio of and technology to support and The monitorship process required INFORMATION ADDITIONAL markets, 2019 was not without its strengthen the communities we serve. us to reflect deeply on our purpose challenges. Chief amongst these was This extends most immediately to and the impact our business has on Russia, where we faced headwinds a number of measures to help our the communities in the ten markets in relation to pricing, network quality customers, details of which may be we serve. It also illustrated how deeply and the efficiency of our distribution. found on page 79. We have since taken measures to rooted our services are in the daily lives of our customers, from facilitating address these through the introduction Our technology journey is on an social interaction to providing access to of simplified tariff plans while stepping exciting new tangent and is only financial services and meeting a variety up investment in our networks to beginning to identify the possibilities of vocational and professional needs. ensure the customer experience of that fusing big data with artificial For me personally, it underscored the Beeline’s services is consistently strong. intelligence can deliver through our fundamental importance of building At the same time, we are optimising services. Financially we are strong and nurturing sustainable businesses our retail channels by closing branches and we serve markets with growth in which customers can place their while boosting investment in online opportunities in abundance. And trust, from the simple availability of channels in order to reduce costs. never before has our awareness of the our networks to our ability to act as Taken together, we are confident fundamental importance of compliance, a resource for individual empowerment. that these measures will enable ethics and governance to building our Russian business to return sustainable businesses been so deeply This report is a snapshot of that to growth, which is a key priority engrained in our culture. That is an interdependence. It catalogues a year for our leadership team. enduring legacy of our monitorship and in the life of our business alongside one I am proud to have helped secure VEON in the lives of our customers More broadly, our Board recognises as we equip VEON for the challenges and their communities. It is a review the importance of total shareholder and opportunities to come. return to our investors. We were of our operational performance as well pleased to distribute dividends as a record of how we have performed amounting to 28 cents per share through the voices of some of for the financial year, which as we our 212 million customers. It is our discuss on page 59 was above acknowledgement that all responsible Ursula Burns the value guided to by our new businesses need to measure Chairman dividend policy. In addition, the themselves against a variety of increase in our free float following benchmarks that extend beyond April 2020 Telenor’s divestment was a financial reporting to address the

Integrated Annual Report 2019 VEON 18 OUR CEOs IN CONVERSATION

FORWARD TOGETHER

In conversation with VEON’s co-Chief Executive Officers

Sergi Herrero & Kaan Terzioğlu Co-CEOs

VEON Integrated Annual Report 2019 19 INTRODUCTION

Appointed to the role of Joint Chief Operating Officer in November 2019 before becoming co-CEO in March 2020, Kaan Terzioğlu brings a wealth of industry experience to the operational helm of VEON. As well as VALUE CREATION leading Turkey’s largest mobile service provider Turkcell as CEO before joining VEON’s Board of Directors in June 2019, Kaan is a GSMA Board member and is recognised by the United Nations as a pioneer of its Sustainable Development Goals through his championing of humanitarian causes through the power of mobile technologies. SUMMARY PERFORMANCE

exempted from lockdowns. Our Technology is at the heart of this role in supporting public health unprecedented transformation of initiatives, from disseminating the customer experience. Mobile essential information through to operators are more capable contact tracing, demonstrates the than ever in engaging customers contribution our infrastructure can through a rapidly evolving range

make in helping governments flatten of personalised and exciting GOVERNANCE CORPORATE infection curves. At the same time, experiences. Given this, it appals the measures companies like VEON me that the three basic functions Kaan Terzioğlu have taken to help our customers1 – offered by telcos – the Dialer, SMS Co-CEO from re-purposing self-care apps with and Contacts – remain essentially COVID-19 information to offering unchanged since the early days Here, Kaan shares his thoughts free access to content services, of the industry. Had operators on some of the fundamental free roaming and waived late fees – chosen to be the true owners of questions that define the long- underscore the fundamental duty of these services, rather than allowing INFORMATION FINANCIAL term sustainability of a mobile social responsibility that comes with third-party providers leadership telecoms company and how providing essential services. in developing these, the fortunes VEON can play its role in seizing of the industry could have been the opportunities and overcoming As the world recovers, our industry quite different. the challenges they raise. must build upon the new relationships that communities have forged Equally, we still live in an online

Q. COVID-19 is an unprecedented with connectivity services during this world where cookies dominate the INFORMATION ADDITIONAL challenge for the global community. pandemic, using these to accelerate choices that third-party providers What will be its legacy for the economic healing and restore dish up to our customers, which telecoms industry? pathways to individual empowerment so often fall short of their real and prosperity. This, too, is a huge needs. The result is a mismatch of A. First and foremost, COVID-19 is social responsibility as we work to ambitions and opportunities and a human tragedy and our thoughts eliminate the digital divide that persists a growing customer scepticism of are with those who have been, and even in the most developed societies online experiences. continue to be, affected by the and ensure the benefits of universal cruelty of this pandemic. connectivity become the basic right of all, not the privileged few. COVID-19 is redefining the role of our industry in the global fight Q. How do you think about the We must never against this virus. The ability of our customer in your day-to-day networks and services to enable the management of our business? forget that doing good world to stay connected at a time of is good business. As a A. Placing the customer at the centre physical isolation is providing society of everything we do is fundamental provider of essential with a degree of continuity that to the success of our company. connectivity to markets would have been unimaginable just Staying relevant to customers a few decades ago. For millions of that are home to close through the products we offer home workers around the world, to 10% of the world’s and earning their loyalty every day telecommunications now form an through services they can depend population, we have essential platform for their livelihood on are vital to the sustainability of a huge opportunity – a behavioural change we expect will our business. So, too, is our ability outlive the current pandemic. – and responsibility – to innovate as the needs of our to be a positive force customers evolve. Here, we have Our industry’s relationship with a huge opportunity to broaden the for innovation and governments is also changing. scope of our services as we focus betterment in an Telecoms has naturally been treated on our goal of empowering era of unprecedented as an essential service during this customer ambitions. pandemic and its workers often technological and social change. 1. A full list of these measures is outlined on page 79.

Integrated Annual Report 2019 VEON 20 OUR CEOs IN CONVERSATION CONTINUED​

Technology has reached a point 5G will bring about a true But there comes a point beyond where we, as telcos, can move revolution in online experiences which overuse of smartphones risks beyond understanding mobile users and opportunities. But it will also a detrimental impact on individual through cookies and re-think basic extend the privacy debate from well-being as the peer pressures services to serve them better. This safeguarding the data of customers surrounding social media contribute, begins with understanding their to the context in which these data in extreme instances, to stress and goals and behaviours and configuring make sense. In other words, the anxiety and as the insidious impact products and services around them. intelligence of the individual user of misinformation or “fake news” This will not happen overnight but will soon be the prize – the very compounds the reputation of requires that we refocus our thinking thoughts, motivations, inclinations online material as a source of now as we re-imagine the future and relationships that comprise their misinformation rather relationship between ourselves identity in the digital space. This will than enlightenment. and our customers. be the new oil of the 5G era. As a leading connectivity provider, Q. How can a company like Handling individual intelligence we must play our part in promoting VEON help safeguard the in a responsible manner will be a responsible smartphone use in order privacy of our customers? major challenge for tomorrow’s ICT to guard against the dangers of industry and will broaden the privacy excess. This is important if we are A. I think we can play a major role debate way beyond the boundaries to raise today’s children as full digital here – and in ways which the current previously imagined by GDPR. Telcos citizens, aware of their rights and debate around data privacy is yet have a natural leadership role here influence in the digital sphere and to grasp. given the regulated, intermediary the good that they can achieve role they have historically played through its capabilities. It also For too long, third-party providers between services and customers, means guarding them against the have appropriated data from compared with the opportunistic risks of addictive use and helping customers with little regard to their and often unaccountable activities them navigate the blurred online privacy. This raises the fundamental of third-party providers. But legacy boundaries between honesty issue of data sovereignty – who owns, alone is not enough – foresight and and manipulation. and has rights over, the data people leadership are vital here if we are to generate through digital interaction. maintain the trust of our customers As well as helping to raise the The European Union’s General and help them keep their own digital quotient of young people Data Protection Regulation (GDPR) intelligence sovereign. in a responsible, positive manner, went some way to restoring the I also see a huge unmet opportunity sovereignty of the individual over Q. How can you help promote to serve special needs through the his and her data. But as providers responsible smartphone use whilst smartphone – whether it be through of connectivity, telecoms companies managing a successful business? sign language or the spoken word need to act as the day-to-day for those with aural or visual guardians of this sovereignty A. While our business model disabilities, or through translation to ensure that the continuous naturally encourages our customers and localisation capabilities for technological innovation that to use their smartphones to the the world’s growing diaspora of drives our industry does nothing full extent of their capabilities, as displaced individuals. to undermine this basic right. a responsible company we must acknowledge the risks of overuse, Throughout, we must never forget The advent of 5G is a case in point. particularly those that contribute that doing good is good business. The 4G revolution saw the shift from to the rising trend of smartphone As a provider of essential connectivity raw to processed data as gigabytes addiction amongst young people. to markets that are home to close entered our world as solutions to to 10% of the world’s population, our real needs for the first time. This Smartphones have the capability we have a huge opportunity – and brought about a profound change to empower individuals through responsibility – to be a positive force in the delivery of personalised online connecting them with resources for innovation and betterment in an experiences. But it also facilitated and opportunities that would era of unprecedented technological data appropriation by third-party otherwise lie beyond their reach. and social change. providers, as well as the extraction This is particularly evident in the of these data from the local markets developing markets VEON serves, Kaan Terzioğlu from which they were gathered. The where educational, financial Co-CEO result was a loss in local economic and vocational opportunities opportunity as data was monetised are but three of the benefits that elsewhere, as well as a parallel loss smartphone use has helped to in data sovereignty that retroactive nurture, enabling people to overcome regulation has often struggled social and infrastructural challenges to tackle. in the process.

VEON Integrated Annual Report 2019 21 INTRODUCTION

Formerly Facebook’s Global Director of Payments and Commerce Partnerships, Sergi Herrero joined VEON in July 2019 to lead VEON Ventures, a new division of the

Group tasked with defining VEON’s growth ambitions beyond traditional connectivity VALUE CREATION services. Sergi’s expertise in digital payments, which included overseeing the launch of payment platforms for Messenger, WhatsApp and Instagram, now pairs with that of Kaan Terzioğlu as co-Chief Executive Officer following their respective appointments to the joint role in March 2020. SUMMARY PERFORMANCE

capacity, compliance and localisation resources of our networks. And We are no longer occasionally we may partner with just a telecoms company. – and perhaps invest directly in Our future growth will be – companies and assets that have the potential to add scale to our existing defined by a host of other,

capabilities or to define a future very different customer GOVERNANCE CORPORATE product offering. This is where VEON experiences – what we Ventures – the new business division refer to as new services I led when I joined VEON last summer Sergi Herrero and future assets – from Co-CEO – will take the lead, prospecting, conducting due diligence on and digital access to financial Here, Sergi shares his views on nurturing assets with the potential products to a growing VEON’s digital strategy and how to transform the VEON of the future. range of data-driven INFORMATION FINANCIAL he sees the Group’s services predictive services. transforming the experiences Overall, we must be a products- of our customers. based business built around our customers, who will always be at Q. How does VEON’s strategy the centre of what we do. That framework shape your day-to-day means solving their real day-to-day management of our business? problems through services that go

beyond basic communications and INFORMATION ADDITIONAL A. A key message of our strategy help to bring about wider community framework is that we are no longer benefits – digitising KYC procedures just a telecoms company. What we and helping to eliminate money call connectivity – our basic voice, laundering through digital financial fixed line and access data services services, for example. Or, more – will always be a feature of what immediately, the repurposing of our we do. But our future growth will self-care applications with COVID-19 be defined by a host of other, very information to help our customers different customer experiences deal with the current pandemic. – what we refer to as new services and future assets – from digital access to financial products to a growing range of data-driven VEON: Digital financial services in Pakistan predictive services. # of Active Wallets (millions) / Total Value Processed (PKR billions)

These are where we see the greatest 450 opportunity to add incremental value over time, particularly in areas where .3 400 we are currently hosting third-party 350 .2 services which so often lack the 5. 300 tailored experience we could bring to 5 5.5 these through a better understanding 4. 250 4 4.2 of our customers. 3. 200 3 3.5 Active wallets 150 Value processed There is no single solution here. In 2 some markets, we will own those 100 services, as we do with JazzCash in 1 50 Pakistan. Elsewhere, we may defer 0 0 to the expertise of others and 11 21 31 41 119 219 319 419 provide them with the scale, Active wallets Value processed

Integrated Annual Report 2019 VEON 22 OUR CEOs IN CONVERSATION CONTINUED​

To be successful Q. How can services like digital phone goes beyond the convenience we must listen to our financial services (DFS) in Pakistan benefit and has the potential to bring about social and economic change people’s social and financial customers – to what they empowerment in the markets circumstances profoundly. like, dislike and what they they serve? lack – and develop the JazzCash is a branchless banking products and resources A. Our DFS business in Pakistan, service provider and currently makes JazzCash, is a great example of up over 16% of all bank accounts in to match. Follow that rule how connectivity services can Pakistan. It has the ability to benefit and there should always bridge the access divide in an all members of society, including be an audience for entirely different sector – in this minority groups and those in rural our services. instance, financial services. areas. The empowerment this can bring about is massive, from the VEON operates in some of the world’s simple ability of individuals and most unbanked nations. In half our small businesses to send money markets, more than half of the adult instantaneously to the greater population has no bank account. inclusion of women in the financial Pakistan tops this list, with around economy, who previously needed to 80% of men and close to 95% of pass money through the men in their women without basic banking access. families but now have direct control Bridging this gap by offering access over their finances. to financial services through a mobile

Expanding digital routes and deploying new services

Ecosystems Content (self-care apps) (TV)

MAU1 TV MAU1 (million) (million)

19. 2.2

10.1

0.5 3.5 0.3 0.9 0. 1. 0.5 0.5 0.3 0.2 0.2 0.1 Total Russia Russia Algeria Ukraine Ukraine Georgia Pakistan Pakistan Kyrgyzstan Uzbekistan Uzbekistan Kazakhstan Kazakhstan Bangladesh

VEON Integrated Annual Report 2019 23 INTRODUCTION

Q. Other than financial mini-series. And although we don’t unmet need in a market we serve, services, what other activities find the low margin opportunities we would certainly prospect can you see VEON’s digital of fulfilment businesses like Amazon that opportunity.

services transforming? attractive, I can certainly see how our VALUE CREATION capabilities in geolocation and the The crucial point is that ours is a A. DFS is only the beginning of our machine-to-machine IoT services we digital services company built around journey into new services. Over may develop for a 5G world could the competitive advantage of large, time, any activity that can be readily act as enablers of these businesses regulated connectivity networks in accessed via our networks and in the local markets in which multiple markets. How we choose demands the type of problem- we operate. to configure services within these solving that lends itself to big should draw no distinction between data processing through artificial Q. How do you view the our expertise and that of other SUMMARY PERFORMANCE intelligence will be within our reach. relationship between over-the-top companies. To be successful we (OTT) service providers and mobile must listen to our customers – to Cloud storage and data security are operators? Where should our what they like, dislike and what they already part of our product offering. expertise end and theirs begin? lack – and develop the products Predictive content services like and resources to match. Follow that Beeline TV in Russia are another A. I no longer see a distinction rule and there should always be an example, where I see scope for us between what these types audience for our services. GOVERNANCE CORPORATE to negotiate direct partnerships with of companies can offer their local studios in order to serve our customers. We have no desire to be Sergi Herrero customers with captive content and the next Facebook, but if for example Co-CEO early access to the latest movies and unencrypted social messaging is an INFORMATION FINANCIAL

Financial services (MFS2, DFS) INFORMATION ADDITIONAL

Total MFS users (and digital wallets)3 (million)

9.0 .3

4.9

2.5

1. 1.

0.2

1. MAU refers to Monthly Active Users. All values as at end-December 2019. 2. MFS (mobile financial services) is a variety of innovative services, such as mobile commerce

Russia or m-commerce, that use a mobile phone as the primary payment user interface and allow Ukraine Pakistan mobile customers to conduct money transfers to pay for items such as goods at an online Uzbekistan Kazakhstan store, utility payments, fines and state fees, loan repayments, domestic and international remittances, mobile insurance and tickets for air and rail travel, each via their mobile phone. 3. Total MFS users in Pakistan amount to 9.0 million of which 7.3 are digital wallets.

Integrated Annual Report 2019 VEON 24

OUR VALUE CREATION FRAMEWORK

Our Value Creation Framework Our Strategy 26 Our Business Model 28 Our Sustainability Strategy 32 Stakeholder Engagement 36 Materiality Assessment 40 Focused on Outcomes 46

VEON Integrated Annual Report 2019 25 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE GOVERNANCE CORPORATE INFORMATION FINANCIAL INFORMATION ADDITIONAL

Integrated Annual Report 2019 VEON 26 OUR STRATEGY

OUR STRATEGY

As a provider of communications and digital services, VEON aspires to be a leader in the use of predictive, cognitive technologies that can anticipate and serve the evolving demands of all our customers, drawing on our capabilities in big data analytics to develop the products and services of tomorrow.​

Appointed as Group Chief • the behavioural capital we Strategy Officer in February 2019, gather through the data our Alex Kazbegi is the key architect of customers share with us, VEON’s new strategy framework. which helps us understand Unveiled in September 2019, Alex and anticipate their needs; outlines its vision in harnessing • the cognitive capital we create the power of technology and through applying analytics and connectivity to customer ambition algorithms to these data, which through a wealth of new and enables us to interpret and future services. predict our customers’ needs Creating a better and aspirations; future for customers and Our vision • the network capital we create through our ability to create and the communities we serve VEON’s vision is to empower customer grow telecoms platforms that is what matters to us. ambitions through technology. combine the multitude of our Connecting people with products and services, which help Our industry is at an exciting new technologies is how us forge lasting relationships with juncture where the possibilities we achieve this. our customers. offered by new digital technologies are converging with a fundamental Harnessing these resources Alex Kazbegi change in what customers demand effectively will help VEON create Group Chief Strategy Officer from their connectivity provider. Our value for all our stakeholders, from ambition is to be an indispensable the communities we serve through partner to each of them: a digital network resources that drive concierge that helps shape, guide economic prosperity and social and fulfil their day-to-day needs and empowerment, to our investors realise their long-term ambitions. as we grow our businesses through the delivery of best-in-class services. Equipping us for this challenge is a strategy that extends VEON’s reach Our three pillars beyond providing traditional voice Our customers experience our and data to the products and services services not through VEON but of the future. through the brands of our various operating companies (OpCos), Achieving our goal means combining most of which enjoy leading the latest analytical technologies market positions in the communities with big data in order to better they serve. understand and serve our customers. It also means drawing on three Although the richness and diversity of additional resources that we possess each local market differ considerably, alongside the financial and human each of these businesses comprises capital that underpin our business: three interlocking sources of value around which we configure our products and services and structure our investment activities.

VEON Integrated Annual Report 2019 27 INTRODUCTION

our customer relationships though providing services like digital finance and access to a wealth of new media

content and lifestyle experiences – VALUE CREATION a theme Sergi Herrero, our co-Chief Executive Officer, discusses further Ethics, Compliance, Sustainability on pages 21 to 23.

A thorough capital allocation and risk CONNECTIVITY management discipline governs all BUSINESS of our capital choices. Our objective is to maximise shareholder returns SUMMARY PERFORMANCE through investing in the growth opportunities of new services and future assets whilst enhancing our Capital & Risk Management traditional connectivity businesses, the attractive cash flows from which we use to reward our shareholders

through our dividend. GOVERNANCE CORPORATE

FUTURE NEW Sustaining value for all SERVICES ASSETS A sustainable corporate strategy must address the interests and Leadership, Culture, Values needs of all our stakeholders and combine these with an unwavering

observance of the highest ethical INFORMATION FINANCIAL and compliance standards.

For our customers, this means The first source of value is our and future assets, in which we are providing best in class experiences connectivity business, which actively investing while ensuring through continuous innovation comprises our traditional mobile that our activities are sustainable in and improvement, while fulfilling and fixed line voice and data services nature and their results help enable their day-to-day connectivity needs and forms the bedrock of our Group. the community benefits we aspire INFORMATION ADDITIONAL through dependable mobile and Investing in networks and best-in- to. For a discussion of these, see our fixed line services. For the societies class technology is our first priority Sustainability Strategy section on we serve, this means blending our in delivering these fundamental page 32 onwards. commitment to operational reliability services to our customers and and resilience with resources tailored the communities we serve. We are already seeing the value to individual needs that foster digital of our growing ecosystem of new literacy and promote new economy The second is our growing ecosystem digital services. These include a new entrepreneurship. For our investors, of new services, which fuse advanced generation of self-care applications this means a rigorous approach to technologies with customer insights that transform the relationship capital and risk management that to provide new, digitally-enabled between us and our customers, allows us to evaluate and deploy experiences tailored individually enabled by our investment in the capital into new services and future to the needs and aspirations of latest digital business support assets with the potential to raise our our customers. systems (DBSS). They also include financial returns. financial services partnerships and the very latest in online content The third is our investment in None of this would be possible delivery (Beeline TV). And as the future assets, which led by VEON without our greatest asset of all, success of JazzCash, Pakistan’s Ventures will explore new ideas and our people, for whom our strategy leading digital financial services emerging technologies through which provides a shared sense of direction platform demonstrates, the scope to develop the products and services and ambition as we continue for these services to empower of tomorrow that can scale globally to evolve our business beyond local communities that have and offer our company long-term traditional connectivity services limited access to resources like basic strategic value. into a digital operator of the future. financial services is considerable – a theme we explore in the Focused Alex Kazbegi Value redefined On Outcomes section of this report Group Chief Strategy Officer Our strategy rethinks how a (pages 46 to 53). communications and digital services company like ours can both create Looking ahead, we are excited by and preserve value. Here, we see the prospect of future assets drawn significant potential in new services from adjacent industries to redefine

Integrated Annual Report 2019 VEON 28 OUR BUSINESS MODEL

A MODEL FOR GROWTH

VEON and the International Integrated Reporting Council capitals VEON recognises the importance of the guiding principles of the International Integrated Reporting Framework (IIRC). Our value chain takes key socioeconomic issues into account to ensure that we create sustainable, long-term value for our key stakeholders against each of the capitals we draw upon. Our approach to value creation is driven by sector-relevant IIRC capitals, which form the basis of our value creation model. These capitals illustrate VEON’s interaction with our external environment and the resulting social and economic value we create over time.

In our value creation model, we We openly recognise the We operate in competitive markets provide insights into how VEON’s environmental impact of our and the telecommunications industry different capitals create opportunities extensive network and its carbon is highly capital-intensive. The quality for us and our key stakeholders. footprint. As part of our focus on of our services, and therefore our For example, VEON’s flagship digital environmental sustainability, we have overall commercial success, depends literacy programme helps people committed to reductions in carbon on our ability to keep pace with new shape their own future and, at the usage year-on-year. We have made developments in technology. This same time, creates a demand for strong progress in this respect, requires developing and innovating more advanced, data-driven services which we detail in the environmental products, services and processes, including digital payment platforms management section of our 2019 all of which will require additional and cloud computing. Full details of Sustainability Report, although we capital in the future. this and our other community-based have not completely removed our programmes may be found in our need for conventional energy. For each of the IIRC capitals, we 2019 Sustainability Report. define the factors that are crucial for Our base stations, for example, us, both in the short and long term. In 2019, technological capital gained are partially powered through new strategic importance. As a fossil fuels, which have an adverse customer-focused business, VEON environmental impact. To decrease analyses large data sets to better our emissions, we apply energy- understand usage patterns and efficiency and management trends. This offers us the opportunity measures across our network to improve our portfolio of products infrastructure. We continually and services by anticipating our add more energy-efficient, hybrid customers’ needs. At the same time, and renewable energy-powered we carefully safeguard personal equipment, both as part of our information to ensure the network infrastructure expansion confidentiality, authenticity, and as a replacement for outdated, and integrity of customer data. fossil-fuel powered systems.

VEON Integrated Annual Report 2019 29 INTRODUCTION

OUR VALUE CREATION APPROACH VALUE CREATION SUMMARY PERFORMANCE

VISION STRATEGY

Our vision is to empower customer Our strategy is to serve our customers as ambitions through technology. their digital concierge, connecting them with resources that satisfy their day-to-day needs

and help them realise their long-term goals. GOVERNANCE CORPORATE

INPUT OUTPUT R Human and INTE NET D S 295,000+ E * intellectual capital N R total e-learning hours A V INFORMATION FINANCIAL I A C T E

A

Social and S 212 million

D

– total active subscribers

relationship capital –

V

S O

E

I

C

C

I

E 5.3 billion

Digital and V

–

R mobile data traffic (GB)

D E INFORMATION ADDITIONAL

S

I

G L I A technological capital T $8.9 billion Financial capital revenue (USD)

IMPACT *Total hours on Coursera and LinkedIn Learning

Digital Digital Corporate inclusion empowerment sustainability

120,010 192 19.6m 7.3m 12 16.4% Participants Start-ups Monthly active users Digital Cyber security Improvement in m-literacy incubated at of self-care apps and wallets incidents managed in voice call programmes tech-hubs web-services preventatively drop rate

Ensure inclusive Achieve gender Promote inclusive Build resilient and equitable quality equality and and sustainable infrastructure, education and promote empower all economic growth, promote inclusive lifelong learning women and girls full and productive and sustainable opportunities for all employment and industrialisation, decent work for all and foster innovation

Integrated Annual Report 2019 VEON 30 OUR BUSINESS MODEL CONTINUED

Human and intellectual capital enhance the quality of our products We create human capital by and services. providing training and development opportunities for our employees, Across our operating countries, planned with the business’s future we also support a variety of digital needs in mind as well as their own literacy and education programmes. personal progression. As VEON These initiatives help to drive digital grows, we also seek to recruit new inclusion and empower members talent. These activities are conducted of our communities to embark on in accordance with our talent and fulfilling careers through which they performance management strategy, can support their families and wider which is based around our goal to economic growth. create the VEON of the future together, today. Short-term focus: Long-term focus: • Seeking new talent to help • Future-proofing our existing VEON generates intellectual capital develop the products and services workforce to meet predicted by investing in both employee and of tomorrow. business demands by providing product development. We recognise relevant training schemes • Developing the talent of our that if we are unable to hire, retain and identifying development existing employees and and motivate key personnel, we risk opportunities. supporting employee retention not maintaining our competitive through training schemes. • Creating compensation plans market position. to attract high-calibre prospective • Supporting the development of employees and retain our our tech-hubs and smart schools. We invest in knowledge systems existing staff. to support our effectiveness and • Continuing to invest in mobile- productivity. This, in turn, allows us to based literacy initiatives.

Social and relationship capital Our global workforce shares five We create social and relationship core corporate values: customer capital by working closely obsessed, entrepreneurial, and collaboratively with key innovative, collaborative and truthful. stakeholders with the aim to These values are deeply ingrained in build trust. Our engagements with VEON’s identity, guiding the way governments, business partners we do business and interact with and our communities are proactive colleagues, business partners and transparent and help us and customers. to work together in a mutually beneficial manner. Short-term focus: • Engaging with business In many of the countries in partners for commercially Long-term focus: which we operate, the application viable strategic partnerships. and interpretation of laws and • Conducting risk-based • Pursuing proactive industry regulations is often unclear and may evaluations of prospective dialogue to ensure VEON is result in unpredictable outcomes. and existing business partners. positioned as a credible We recognise that non-transparent corporate entity. • Partnering with NGOs to business relationships can result • Working with governments in operational risk for the Group. create impactful corporate responsibility initiatives. and regulators to develop more This is one of the many reasons conducive business conditions. why VEON holds its employees and • Promoting a culture of ethics business partners to high ethical and integrity and requiring our and compliance standards. partners to do the same. • Continuing to invest in literacy and skills development programmes in the countries in which we operate to create future demand for data-driven and advanced products and services.

VEON Integrated Annual Report 2019 31 INTRODUCTION VALUE CREATION Digital and technological capital our customers’ data while Our digital and technological capital simultaneously ensuring that we includes network infrastructure, deliver good quality and reliable customer data management systems digital services. This includes an and online retail channels. We have ongoing security risk management introduced self-care applications programme, prioritising the allowing customers in many of protection of strategic assets our operating countries to manage and identification of any high- SUMMARY PERFORMANCE their mobile accounts from their risk vendors. smartphones in real time. A large proportion of people in several Short-term focus: of our operating countries remain • Building and offering self-care unbanked. Realising this as an applications to digitise the opportunity, we develop digital Long-term focus: customer experience.

financial services that offer a GOVERNANCE CORPORATE • Continuing to develop our strong • Building community support variety of modern financial tools. internal policies and practices to to safeguard technology and These include online and mobile safeguard the data privacy and business infrastructure in money transfers, bill payments, security of our customers. remote rural locations within e-commerce, insurances, debit our operating countries. cards and international remittances. • Improving the quality and variety of our services through • Priming new market segments technology-enabled analysis of by offering digital services such At the same time, we understand as content, mobile health, mobile customer usage patterns in order INFORMATION FINANCIAL that our business prospects may be education and mobile agriculture. harmed in the event of cyber-attacks to reduce churn and encourage or severe systems and network new customer acquisitions. failures. We strive to protect the privacy and protection of INFORMATION ADDITIONAL Financial capital Short-term focus: We invest the Group’s financial • Expanding new digital services capital to equip and strengthen our to enrich the experience of our operating businesses, enabling each customers and forge long-term to offer products and services that relationships with them, based on benefit our customers and the wider an understanding of their needs. communities we serve. Financial • Delivering solid operational capital is allocated in order to results by providing best-in-class generate the long-term returns services matched to the demands we require from our investments. of our customers. We are exposed to foreign currency volatility, particularly the movement Long-term focus: of the US dollar against our operating • Investing in connectivity currencies, which may impact our Further information on our dividend infrastructure by working reported financial performance. policy and financial performance with governments and other can be found in the Performance relevant authorities. We strive for continuous Summary section of this report • Investing in digital financial improvement to help ensure we and in our Form 20-F. services to help the economically operate as efficiently as we can, disenfranchised. through a business structure that best matches our needs • Empowering customer ambitions and those of both our customers through the development of and our investors. We reward our predictive data-driven services shareholders for their long-term tailored to the individual needs support of our business through of each customer. our dividend.

Integrated Annual Report 2019 VEON 32 OUR SUSTAINABILITY STRATEGY

OUR SUSTAINABILITY STRATEGY Our approach to sustainability goes socioeconomic value to the It emphasises good corporate beyond corporate philanthropy. It is communities we serve. Through citizenship, ethical behaviours centred around the notion of using promoting digital inclusion and and operational performance. technology to empower communities. creating new opportunities for our The approach consists of two important beneficiaries, these programmes also VEON is committed to creating elements: our licence to grow and our contribute to the demand for digital social and business value by making licence to operate and reflects our products and services, which in impactful investments that help desire to forge valuable partnerships turn creates new opportunities create new services, partnerships that benefit all our stakeholders. for our business. and forums, which in turn enable and empower the people we serve VEON’s Digital Entrepreneurship and In parallel, our approach to earning across our markets. Full details of Digital Skills & Literacy programmes and preserving our licence to operate is these may be found in our 2019 emphasise our licence to grow and focused on efforts aimed at improving Sustainability Report. help us to contribute long-term and sustaining our global operations.

LICENCE TO GROW

Fostering Bridging digital the skills and entrepreneurship literacy gap

VEON’s flagship Make Your Mark VEON supports technology-centric programme supports digital educational initiatives that help people entrepreneurs in our operating who lack access to basic education, countries with the goal of fostering vocational training, and digital skills due start-up ecosystems. We stimulate the to limited socio-economic opportunities. local digital economy by investing in Through our initiatives we digitise tech incubators, cohort-based curriculums, strengthen educational mentorship programmes, bootcamps institutions, and increase their and our hackathons. Our efforts reach through connectivity. encourage the use of connectivity and create Empowerment the demand for a broad range of through services including digital payments, cloud services technology and M2M connectivity.

Corporate sustainability

VEON’S approach to corporate sustainability focuses on our business ethics, good governance and operational reliability, as well as the ecological impact of our business operations. By identifying and responding to key operational and corporate governance issues, including potential bribery and corruption, carbon emissions, privacy, and health and safety, we contribute to building enduring, world-class businesses which contribute positively to the societies we operate in.

LICENCE TO OPERATE

VEON Integrated Annual Report 2019 33 INTRODUCTION

SUSTAINABILITY PROGRAMME FRAMEWORK VALUE CREATION

Since 2017, VEON’s Sustainability team has set yearly goals to track our progress against various Group-wide initiatives. SUMMARY PERFORMANCE

​ MATERIAL & BUSINESS SIGNIFICANCE MATERIAL TOPICS CUMULATIVE PROGRESS AND GOALS

​ By fostering digital entrepreneurship –– Impact on society/ in our operating countries, VEON social involvement contributes to the sustainable –– Digital inclusion GOVERNANCE CORPORATE DIGITAL development of its communities and –– Digital innovation economies. Our Make Your Mark digital entrepreneurship programme supports early stage start-ups to grow and thrive, 7 2,243 which not only improves employment Total tech-hubs Total start-ups operational supported* ENTREPRENEURSHIP opportunities within the countries but also unlocks potential new revenue ** In 2019, only directly Goal 2020: 10 Goal 2020: 5,000 streams for our business. supported start-ups INFORMATION FINANCIAL LINK TO INNOVATIVE at the tech-hubs are VALUES ENTREPRENEURIAL included to improve the robustness of reporting.

​ Low levels of literacy and education –– Impact on society/ are challenges across all the developing social involvement countries where we operate. By supporting –– Digital inclusion literacy and digital skills uplift initiatives, we open beneficiaries up to new INFORMATION ADDITIONAL opportunities and ensure they

AND LITERACY ** In 2019, the number of DIGITAL SKILLS can make the most of the digital world. 56,026 192,990 beneficiaries with free Benefitting from Participating Consequently, we also broaden our internet connections potential market of customers. was combined with donated ICT in literacy LINK TO CUSTOMER those of ICT equipment equipment** programmes to reduce the risk of VALUES OBSESSED Goal 2020: 50,000 Goal 2020: 50,000 double-counting.

​ We are driven to improve our operational –– Talent management reliability without compromising on our and employee ethical standards. More than 90% of education our employees have received Code of –– Ethics and integrity Conduct training, and commit to adhering –– Environmental CORPORATE to our Code whilst delivering the highest performance

SUSTAINABILITY quality product and services to our –– Data privacy and ~2,000 14% global customer base. Our initiatives cyber security Potentially Reduction in

and commercial offerings, including –– Quality of services adverse events CO2 emissions digital wallets, mobile health and smart –– Supply chain analysed per unit of traffic​ literacy solutions, are helping to uplift transparency ​ communities, while also diversifying our –– Financial customer services portfolio. We take data performance privacy and cyber security very seriously –– Digital innovation as it is critical to our service quality and reputation. We measure our impact on the environment and aim to reduce our carbon footprint through a combination of resource optimisation, behavioural changes and technological innovation. 19.6m 0.51% LINK TO TRUTHFUL For a full list of our Monthly active Average voice VALUES CUSTOMER OBSESSED material topics, refer users (MAU) call drop rate COLLABORATIVE to our Materiality of self-care apps Matrix on page 40. and web services

Integrated Annual Report 2019 VEON 34 OUR SUSTAINABILITY STRATEGY CONTINUED

VEON AND THE SUSTAINABLE DEVELOPMENT GOALS

As a responsible company operating As a leading provider of designers, urban mappers, data in ten emerging markets, we view telecommunications and digital analysts, community organisers, the United Nations Sustainable services, VEON is uniquely positioned researchers, journalists, and Development Goals (SDGs) to help local communities become government data to reboot as an opportunity to drive more prosperous. Access to local services by creating open socioeconomic development. connectivity not only contributes to source digital web, mobile and local economic growth but also helps SMS applications. Each of the United Nations’ 193 to combat inequality. Our business member states have committed to and technology are not only perfectly All our operating companies are using the SDGs to coordinate efforts positioned to help local communities engaging with relevant international alongside NGOs and the international communicate. Providing access development agencies and local business community to end poverty, to our digital services and training governments to ensure our efforts fight inequalities, and tackle climate beneficiaries on their use drives complement local SDG roadmaps. change. VEON fully supports these digital entrepreneurship and In the emerging markets we operate efforts, and has chosen four SDGs opens up a whole new world in, the SDGs are not just an integral to focus on where we believe we of employment opportunities. part of top-down international can have the most significant impact. agenda but are also essential for These are Quality Education, Decent We also take the opportunity to apply their prosperity, and the development Work and Economic Growth, Gender our staff’s creativity and ingenuity to and well-being of their citizens. Equality, and Industry, Innovation the global challenge represented by and Infrastructure. the SDGs. For example, 2019 saw For a full discussion of how VEON is the second year of Jazz Pakistan’s working towards the UN SDGs, please SDG-themed Hackathon, which refer to pages 65 to 70 of our 2019 brought together programmers, Sustainability Report.

VEON Integrated Annual Report 2019 35 INTRODUCTION

OUR COMMITMENT TO CORPORATE VALUE CREATION SUSTAINABILITY SUMMARY PERFORMANCE

Corporate sustainability represents synergistic relationships with Every element of this pillar relates the ‘licence to operate’ component our customers, employees, wider directly to one of VEON’s material of VEON’s Sustainability Strategy. society, and the environment. topics. These include data privacy This important pillar focuses on and cyber security, service quality, business ethics, good governance, Corporate sustainability also digital innovation, digital inclusion, environmental management, helps to identify and respond diversity and inclusion, talent and operational reliability. to key operational and corporate management, health and safety, GOVERNANCE CORPORATE governance issues and risks, and environmental management. Corporate sustainability reinforces the including bribery and corruption, importance of operational reliability privacy, labour practices and and resilience, while helping to build health and safety.

2019 sustainability awards INFORMATION FINANCIAL

Global Good Awards 2019 The International BN Intelligence

CSR Excellence Awards Sustainability Awards INFORMATION ADDITIONAL BEST EDUCATION AWARD VEON and Jazz Smart Schools (Gold) SUSTAINABILITY INITIATIVE VEON and Jazz Smart Schools OF THE YEAR PROJECT Programme (Finalist) VEON and Jazz Pakistan

BN Intelligence Corporate Engagement Awards Sustainability Awards BEST CSR ACTIVITY OR PROGRAMME SUSTAINABILITY LEADERSHIP AWARD TO SUPPORT OR DEVELOP A CORPORATE REPUTATION VEON and Kyivstar Jazz Pakistan and VEON (Gold)

4.6% $498 137 Faster downloads (improvement in 4G million million download speed) Tax paid Data subscribers Group income tax in 2019

Integrated Annual Report 2019 VEON 36 STAKEHOLDER ENGAGEMENT

STAKEHOLDER ENGAGEMENT

At VEON, transparency and effective dialogue are the two key tenets of our approach to stakeholder engagement. This approach helps support our objective of forging relationships based on mutual trust.

We define stakeholders as the parties or individuals we influence through our operations, products and services, and who in turn affect our ability to achieve our goals. Our relationships allow us to identify which aspects of our businesses are considered most relevant and current in the realm of sustainability, and plan our activities accordingly.

Based on this, we have identified stakeholder groups that are material to the sustainable success of our business and consider their opinions in our decision-making. Here, customers, our communities, employees, host governments, regulators and investors are amongst our most important stakeholders.

Stakeholder engagement includes the formal and informal ways we stay connected with our stakeholders that have an actual or potential interest in, or impact on, VEON.

Rather than having one-off consultations, we prefer to take an integrated approach and maintain regular dialogue both at the operating company and at the Group level. Working groups, meetings, conferences, workshops, surveys and town hall meetings are just a few examples of how we interact with our stakeholders.

These engagements are transparent and help ensure that we are closely connected to the socioeconomic and environmental issues which are crucial to optimising our contribution to society.

VEON Integrated Annual Report 2019 37 INTRODUCTION VALUE CREATION

VEON’s approach to stakeholder engagement SUMMARY PERFORMANCE

Strategic alignment Align, review and set Share the goals for the future Understanding s GOVERNANCE CORPORATE s feedback our operating e environments I n Maintain a continual n e c two-way dialogue to Investigate internal and l v u i reinforce co-creation external influences s s i n v

o i

t p y

s INFORMATION FINANCIAL

e R

Responsive Identify our action stakeholders Identify opportunities Define criteria, and create goals for prioritise and select

the future engagements INFORMATION ADDITIONAL

Tailor our Engage with methods purpose Engineer engagement Ensure equitable strategy mechanisms for contributions while each stakeholder maintaining focus Plan our group engagement Focus on long-term goals to drive forward and develop our approach

Materiality

Integrated Annual Report 2019 VEON 38 STAKEHOLDER ENGAGEMENT CONTINUED

Government and regulators Employees Investors

This group consists of local This group consists of dedicated This group consists of institutional governments, regulators and state individuals working for VEON across investors and other shareholders, sector organisations which support our geographies. as well as the broader financial us in delivering products and services community VEON frequently engages across our markets. We engage with our employees with, including financial analysts. in a number of ways, such as town We have a responsibility to hall meetings. Led by our senior Our shareholders appoint the contribute to the public debate on management, these are forums directors who constitute our a wide range of issues relevant to for engagement and to announce our Supervisory Board. In addition our industry, as well as broader financial results, strategy and other to meetings and conference calls sustainable development issues. important business developments. on quarterly and annual results Our knowledge and understanding We use a variety of digital tools and announcements, we hold of the industry and the markets including social media (such as meetings and calls with analysts and in which we operate enable us Facebook at Work), Microsoft institutional investors on a regular to inform and advise government Sharepoint, newsletters and targeted basis. These are elements of our and regulatory authorities surveys to communicate with our ongoing engagement with the on high priority issues. These workforce. Our values help to further broader financial community. We include spectrum policy, digital unite the VEON community with a also meet with market participants transformation, innovation in the common purpose. to discuss financial results, market mobile and fixed telecommunications trends and business strategy, and to sector and delivery of public services A Joint Works Council exists at address other topics of interest and through technology. Our engagement the Group HQ and a separate areas of attention. These activities with government and regulatory Works Council for VEON’s are coordinated and carried out by authorities is proactive and Wholesale Services (VWS) has also our Investor Relations department, transparent. We communicate our been established. These employee which is responsible for engaging aims, prioritise international best representative bodies are regularly with potential equity and credit practices and provide empirical informed of issues affecting HQ investors, current shareholders, evidence when developing public employees and where legally bondholders, and both buy-side policy positions. required, consulted on intended and sell-side analysts. business decisions concerning personnel at our HQ. We also work with trade unions in Armenia, Ukraine, Kyrgyzstan and Georgia on employee remuneration and welfare issues.

VEON Integrated Annual Report 2019 39 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE GOVERNANCE CORPORATE

Communities Customers

This group consists of NGOs, This group consists of individuals Finally, we provide a range community based organisations and and businesses that use VEON of point-of-sale options to civil society groups who we partner service offerings. our customers to facilitate INFORMATION FINANCIAL with for corporate responsibility- engagement with our operating related initiatives. Our company values firmly companies. We conduct customer embed customer focus across the and market research to provide We engage, coordinate and organisation. We employ an adaptive appropriate-sized offerings for collaborate with prominent learning style including Net Promoter individual users, families and local and international non- Scores (NPS) to better understand households. It is our intention government organisations (NGOs). customer needs and gain feedback. to make our offerings easy to

Our operating companies partner Customer experience management understand and fit-for-purpose, INFORMATION ADDITIONAL with a wide variety of NGOs and is a particular focus in our supporting a wide range of community-based organisations. operational companies where we needs for all customers. We These organisations are typically develop customers’ journeys on seek to innovate with digital focused on development issues an ongoing basis. Our operating services providing customers new such as education, livelihood companies’ customers engage with experiences on an ongoing basis. support, economic alleviation, us in a number of ways. In various and disaster-risk reduction and markets, we provide them with a rehabilitation. Our commitment fully digital online experience via to these partnerships helps us self-care apps as well as our social to effectively contribute to the media channels. We also offer a socioeconomic prosperity of strong retail presence, specifically our communities. through mono-brand stores, which enables us to provide a more dedicated experience. Our call centres provide an increasingly personalised approach for customers given our use of digital data analytics.

Integrated Annual Report 2019 VEON 40 MATERIALITY ASSESSMENT

MATERIALITY ASSESSMENT

In 2019, VEON conducted a detailed Committee and operating companies’ The materiality assessment is materiality assessment to determine management. The final response the basis of our VEON Materiality the topics and issues deemed most helped to generate a ranked list of Matrix: a graphical demonstration material for the success of our business. topics, based on their respective which sets forth key areas contribution to VEON’s economic, of importance to VEON, our Ten of the highest-graded topics environmental, and social impact. stakeholders and our communities. were shared with selected internal The list also reflects each topic’s and external respondents, including respective influence on business members of VEON’s Group Executive decisions and outcomes.

Result of the assessment

●1 Impact on society/social involvement

6 ●2 Talent management and 10 skills development

3 ●3 Ethics and integrity 8 ●4 Diversity and integrity

●5 Digital inclusion

●6 Data privacy and cyber security

●7 Quality of services

●8 Corporate governance 7 ●9 Financial performance 4 ●10 Digital innovation 5

INFLUENCE ON STAKEHOLDER ASSESSMENTS AND DECISIONS ASSESSMENTS AND STAKEHOLDER ON INFLUENCE 1 Determining a list of the 2 most material topics is key to determining our business 9 and social value creation approach. It also helps to integrate our business and sustainability priorities with the United Nations Sustainable Development Goals (SDGs).

SIGNIFICANCE OF ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS

Based on the outcome of the 2019 assessment, the following five topics are considered most material to our company, ranked in order of their importance. Each is discussed in more detail on the pages that follow:

DATA PRIVACY AND DIGITAL ETHICS AND CORPORATE QUALITY OF CYBER SECURITY INNOVATION INTEGRITY GOVERNANCE SERVICES

VEON Integrated Annual Report 2019 41 INTRODUCTION

DATA PRIVACY & CYBER SECURITY VALUE CREATION

12 SUMMARY PERFORMANCE Critical incidents managed and solved preventively without negative impact GOVERNANCE CORPORATE ~2,000 Events analysed potentially adverse

events analysed INFORMATION FINANCIAL

91% Data privacy comprehensive data protection Average security score VEON takes the utmost care to frameworks (e.g. Ukraine). Where VEON Security Programme INFORMATION ADDITIONAL comply with data privacy rules as we laws are changing, we maintain an minimum target by 2020 is 95% consider these as key to maintaining open dialogue with lawmakers to customer trust. discuss lessons we can learn from the best practices in countries with This strategy encompasses all domains more established data protection Alongside data privacy laws, we also of cyber security practice. It is an iterative, frameworks. By sharing experiences have our own VEON Group Privacy continuous improvement process that from more mature data privacy Policy that sets the minimum data expands its perimeter and elevates its environments, we hope to encourage privacy standard across the VEON minimum baselines at every iteration, the creation of more advanced and Group. This standard includes with the objective of progressively harmonised data privacy regimes to privacy principles such as lawfulness, increasing the overall cyber security safeguard the privacy and trust of transparency, data minimisation, maturity across our footprint. our customers. retention and security, as well as privacy processes such as privacy While in the course of analysing assessments, vendors’ assessments, Cyber security many thousands of events, we have and individual rights processes. Our Our Cyber Security team sets the investigated 12 major incidents that operating companies ensure that technical and organisational were managed in a timely manner this standard is integrated in their measures that protect company and led to no serious consequences. business practices across our Group. information and personal data against unauthorised access. We did, however, experience an The VEON Group Privacy Policy is incident in which a subsidiary’s also helping us to anticipate future The telecommunications industry is collection of fixed-line customer changes in data privacy legislation. In targeted by a variety of threats and information containing historical 2019, several countries in which we has an even broader attack surface personal data was publicly leaked. operate started introducing their first than many other industries. To tackle As a consequence of this, new data privacy laws (e.g. Uzbekistan, these threats, VEON has implemented enforcement processes and Pakistan and Bangladesh) or started a Group-wide holistic cyber security technical data loss prevention discussing the replacement of their strategy that is based on international capabilities were introduced. existing data privacy laws with more security standards and best practices.

Integrated Annual Report 2019 VEON 42 MATERIALITY ASSESSMENT CONTINUED

DIGITAL INNOVATION

19.6m Self-care users total monthly active users of self-care apps and web-services

22.8m Financial services users total monthly active users of mobile financial services

3.2m Content consumers Digital innovation is at the VEON and its technology partners heart of our business. Through are geared to use our connectivity total monthly active users constant innovation, we are able to infrastructure and outreach in of our content services provide best-in-class service to our socially transformative ways. customers across all of our operating Self-care apps are the medium countries. One of the most exciting through which we plan to offer 5G and the future technological achievements of 2019 our customers a variety of these of our business was the successful trial of 5G across opportunities. These will include In many of the developing countries some of our operating countries, services which aim to provide where VEON operates, the potential of including Kazakhstan. vocational, professional and the technology to accelerate sustainable socioeconomic opportunities. Just socioeconomic development is limitless. Digital innovation helps us to push as our JazzCash app in Pakistan is Seeing this as an opportunity, our what is possible and create greater providing millions of our customers operating companies across multiple opportunities for all. Ranging from access to financial services for the countries conducted large-scale, the everyday, such as app-based first time, we see opportunities to end-to-end 5G trials during 2019. management of customer connect customers with medical accounts, to the extraordinary, services, vocational opportunities One of these trials was conducted such as pioneering surgical and educational resources using by Beeline Kazakhstan in Shymkent procedures conducted via remote our self-care apps as we expand – a city of a million people. The conference, VEON continued its our ecosystem of services. trial covered 13 square kilometres, legacy of innovation in 2019. allowing a number of fixed, wireless For examples of how we are and mobile use cases to be tested in From offering a big-data-enabled exploring medical, agricultural and real-life conditions, including robotics mobile health solution to optimising geolocational applications of our for industry applications and virtual farming with Internet of Things services, please refer to page 54 reality experiences such as gaming (IoT) solutions, our expertise has of our 2019 Sustainability Report. and 360-degree TV streaming, and changed lives in the countries successfully demonstrated downlink where we operate. speeds of 1.0G per second.

For further examples of our 5G trials in 2019, please refer to page 53 of our 2019 Sustainability Report.

VEON Integrated Annual Report 2019 43 INTRODUCTION

ETHICS & INTEGRITY VALUE CREATION

31,372 SUMMARY PERFORMANCE Employees completed annual Code of Conduct training

6,279 GOVERNANCE CORPORATE Employees completed annual anti-bribery and corruption training selected functions were invited INFORMATION FINANCIAL 80% Employees trust We firmly believe that better compliance personnel tailor their their managers business performance and programmes to suit local regulatory

employees who trust their INFORMATION ADDITIONAL our success are earned through requirements and operational needs. managers and consider transparency, honesty, and keeping E&C* effective our promises. Therefore, VEON holds We continuously reinforce our employees and business partners commitment to compliance through to high governance, ethical and annual training and awareness Employees across the Group have access compliance standards. A strong campaigns, leadership messages, to a confidential and anonymous, culture of integrity drives better internal media posts, videos, if desired, externally supported business results and is essential screensavers, micro-learning reporting system for raising compliance to our success. sessions, and refreshers. concerns, which is accessible by email as well as an internet portal. Reports Anti-bribery and In 2019, 6,279 employees to this ‘SpeakUp’ system are assessed completed anticorruption and anti-corruption and, if appropriate, investigated by bribery training. This training is internal or external teams. VEON does not tolerate bribery mandatory for employees identified or corruption in its operations or as medium- and high-risk. We maintain a strict anti-retaliation on its behalf and is committed to policy and do not tolerate retribution maintaining an effective compliance against anyone who reports concerns programme to manage bribery and VEON’s Code of Conduct in good faith. corruption risks. VEON’s Code of Conduct provides Group-wide standards designed We also expect our business While compliance is everyone’s to promote honest and ethical partners to meet standards responsibility within VEON, the business conduct, full, fair and of good business conduct, ethics and compliance programme accurate reporting, compliance with including complying with applicable is managed by dedicated compliance applicable laws, prompt reporting anti-bribery and anti-corruption professionals in its headquarters and of violations and accountability. laws and regulations and our in each of its operating companies. We conduct annual, online Code of Business Partner Code of Conduct. With oversight and governance from Conduct training for all VEON staff. In addition, our business partners are headquarters, operating company subject to risk-based due diligence, which is refreshed periodically.

** Ethics and compliance programmes.

Integrated Annual Report 2019 VEON 44 MATERIALITY ASSESSMENT CONTINUED

GOVERNANCE CASE STUDY

A journey to set ever-higher expectations of accountability 2019 brought the conclusion of VEON’s deferred prosecution agreement with the US Department of Justice arising from 2016 settlements with US and Dutch authorities relating to VEON’s business in Uzbekistan. This brought an end to a three-year external monitorship: a transformational period for the Group during which a new compliance programme was implemented and certified by the Monitor in October 2019. The episode left a deep impression on the Group culturally and a legacy of continuous improvement which underpins our approach to embedding ethics and compliance throughout our business processes and everyday decision-making.

Monitorship as a catalyst been remarkable and crucial to Training on our new Code of for change ensuring that the culture we have Conduct, for example, was delivered created has cascaded throughout through bespoke, interactive, online A monitorship holds a mirror up our Group. The efforts we have courses. Screensavers reinforced to an organisation. It reflects – undertaken to build an effective the key message that compliance is but does not fix – its blemishes. ethics and compliance programme everyone’s responsibility. We have The organisation must work were not to deliver a project or also focused on case studies adapted collaboratively with a monitor, be for the Monitor; what we have from our own experiences to help proactive and take ownership of established is part of our way our people make the right choices the process. We did just that and of working now and in the future in instances where the rules may not embarked on a huge undertaking, for the benefit of our stakeholders specifically address a situation. Ethics spanning our operations in at large. and values play a vital role – get ten countries. these right, and compliance becomes We recognise that as a Group a natural extension of workplace It was imperative that appropriate our reputation is defined by our thinking, rather than an add-on to governance was put in place operating companies and in our local an employee’s working practices. across the Group, which included markets, which reinforces the need a modernised Code of Conduct to align the Group behind a single Monitorship and and new or improved policies or set of values that define the way continuous improvement procedures covering, for example, we do business and behave towards a policy on policies; anti-bribery Settlement does not automatically the various stakeholders we serve. and corruption; director conflicts mean betterment. Neither is it the To ensure our continued success, of interest; business partner end of anything, except a company’s we have the appropriate local due diligence; and mergers and relationship with its monitor. VEON resources to monitor, detect and acquisitions due diligence. We also is on a journey to set ever-higher respond immediately to issues. At launched training and awareness expectations of accountability the same time, we maintain strategy, campaigns around the new throughout our organisation. leadership, advice and oversight governance and tested how well we The changes we have brought from Headquarters. were doing with monitoring initiatives about since our agreement and employee surveys. Although our with the US authorities in 2016 efforts increased significantly due Engaging employees as agents have been nothing short of to the presence of the Monitor, the of betterment transformational. The process lasting benefits in the areas of ethics While Board members and leadership of organisational self-improvement and compliance are of immeasurable play an invaluable role in influencing does not end. The monitorship gave long-term value to the Group. organisational change, individual us the direction of travel – it is now employees must take ownership of down to each of us to continually VEON’s Board of Directors has their own conduct. With that in mind, challenge ourselves around ethics, provided its full support for this we placed considerable emphasis compliance and the behaviours that process from the outset, which has on communicating new policies, underpin a sustainable business. been essential to our success. The procedures and behaviours in time devoted to this topic at Board ways that would resonate the most. level over the past three years has

VEON Integrated Annual Report 2019 45 INTRODUCTION

QUALITY OF SERVICES VALUE CREATION

16.3% SUMMARY PERFORMANCE Improvement in voice accessibility

18.4% GOVERNANCE CORPORATE Improvement in data accessibility

16.4% INFORMATION FINANCIAL Improvement in voice call drop rate

Service quality covers the reliability This investment is captured via our Improving and enriching of our network, our service delivery Group Quality Dashboard, which the customer experience capacity and the perceived quality tracks customer satisfaction, quality INFORMATION ADDITIONAL At VEON, we place customers at the of our service offerings. Customer of service, network performance and centre of our business. We believe interaction and retail experience network assets at both Group and in developing products that enable play an important role in how our country levels. them to lead richer lives. Our target customers see us, meaning VEON’s is to deliver a customer experience business success relies on the quality VEON’s investment in new that exceeds the standards of service we provide. technologies has resulted in a set by our peers and provide significant enhancement of the an easy-to-use, intuitive digital mobile data speed available to Enhancing network coverage experience that is consistent our customers. In 2019, Ookla across our channels. and security recognised us as the speed leader We continue to deploy state-of-the- in Ukraine and Pakistan. In parallel, In all of our operating companies, art communication infrastructure we also continue to increase our we regularly upgrade our services across our global footprint. 4G use of environmentally sustainable to ensure that customer needs and services are now available in all our practices and our aim is to operate feedback are addressed proactively. operating counties, reaching more in a manner that is sustainable for Ongoing engagement with our users than 260 million potential customers. the environment and beneficial for is key to this process. This is an increase of 25% from 2018. our business. In addition, 3G services now reach 185 million people and 2G reaches more than 218 million people. We continue to invest in modernising and enhancing our network to improve coverage, network availability, capacity, user experience, capability and sustainability.

Integrated Annual Report 2019 VEON 46 FOCUSED ON OUTCOMES

FOCUSED ON OUTCOMES

Sustainability case studies At VEON, we acknowledge the importance of the licence to grow and the licence to operate that underpin our Sustainability Strategy. From these foundations, our operating companies have developed a variety of local initiatives to support individual empowerment and social prosperity. Organised collectively under VEON’s Digital Entrepreneurship programme, Make Your Mark, and a range of local Digital Skills and Literacy initiatives, our goal is to extend socioeconomic, educational and vocational opportunity in the communities we serve. Complementing these is the ability of our networks and services to connect individuals with livelihood resources that might otherwise lie beyond their reach. These include digital financial services in communities that often lack basic banking infrastructure. The pages that follow provide a flavour of these initiatives alongside the experiences of some of those who have experienced their outcomes first-hand. Further examples may be found in our 2019 Sustainability Report and in the Sustainability section of our website.​

VEON Integrated Annual Report 2019 47 INTRODUCTION It is a unique experience to visit the National Incubation Centre and witness the great work being done by young founders. I believe, if provided with the same opportunities and platforms, they will play an important role in building a prosperous digital Pakistan. VALUE CREATION

Syed Zulfiqar Abbas Bukhari Special Assistant to The Prime Minister on Ministry Overseas Pakistanis & HRD SUMMARY PERFORMANCE Pakistan: Jazz xlr8 This pioneering public-private partnership – the first of its kind and the National in Pakistan – teams Jazz with 162 Teamup and Pakistan’s Ministry Incubation Centre of Information Technology & Start-ups Telecommunication, with the latter (assisted by the programme)

“Jazz xlr8 has been instrumental in providing a USD 5.4m grant for GOVERNANCE CORPORATE helping us scale our business,” says the five-year programme. Ali Moeen, the proud Co-founder of car rental app start-up Roamer. Running since 2016, this year the NIC “We are now looking to raise a series took on over 50 start-ups in domains $4m A round. And, with the support of as diverse as artificial intelligence, Investment Jazz through Jazz xlr8 and NIC, we e-commerce, fin-tech and agri-tech. are getting good traction from local And with more female entrepreneurs (total USD raised by the INFORMATION FINANCIAL and international VC funds.” now enrolled, a new day-care graduates’ start-ups) centre has been a lifeline for Indeed, since joining the Jazz those with children. National Incubation Center (NIC) and its accelerator programme In fact, inclusivity underpins 5,000 Jazzxlr8, Roamer has blossomed, the facility, which was built securing investments totalling to be accessible by users with Jobs

USD 2,500 and enabling it to disabilities. This helps it support (created by the INFORMATION ADDITIONAL create 1,200 jobs. UN Sustainable Development participating businesses) Goal 8, which advocates for: As Ali reflects, it is a far cry from “sustained, inclusive and sustainable early-stage struggles to balance economic growth, full and productive new customer acquisition with employment and decent work for all.” protection of limited funds – 55 challenges that the centre helped There is a commercial upside Women his team navigate through marketing for Jazz too, in that products mentorships, bulk SMS support and services incubated at the NIC (female participants and access to data, analytics and frequently dovetail with its own in the programme) technology credits. business, providing the operator with privileged access to Ali is one of a growing number of new technology. digital entrepreneurs emerging from Pakistan’s so-called “youth “An indication of our success bulge”. Representing 64% of the has been that the government population according to the United has supported the creation of Nations Development Programme, four more NICs on the model of the these under-30s are tech-savvy first launched with Jazz in Islamabad. and instinctively entrepreneurial. We believe that the next big idea will But they face barriers to success, come from one of these start-ups namely accessing funds and and hope that we can partner industry expertise. with them to introduce innovative tech-enabled ideas,” says Aamir A torchbearer for Pakistan’s burgeoning Ejaz, Chief Digital and Strategy start-up scene, the NIC paves the way Officer, Jazz. by bringing entrepreneurs, innovators, mentors and investors together in a state-of-the-art incubation facility offering technical training and networking opportunities.

Integrated Annual Report 2019 VEON 48 FOCUSED ON OUTCOMES CONTINUED

I’ve always wanted to be an entrepreneur, but I’d never thought about a diversity focus until I took part in the Hackathon. It made me pay attention to the issues that people encounter in everyday life and understand how technology can help.

Ilham Sellami Hackathon winner and co-creator of Accesso

Algeria: DevFest diversifying Algeria’s traditionally fossil fuel-dependent economy. Hackathon 100+ Events like DevFest Hackathon support this development. Hackathon participants “Our university courses are Organised in partnership with GDG theoretical and practical, (Google Developers Group) Algiers but the practical classes get and Women Techmakers Algiers, oversubscribed, so we need to the 2019 Hackathon was hosted find other opportunities outside of in Djezzy’s ENP Incubator, with the university,” says 21-year-old Ilham operator also providing data for the Sellami, a third-year computer 4 36-hour event. “The attractive space science student at ESI Alger, and logistics that we provide inspires Partner the Higher National School people to innovate,” explains Assia universities of Computer Science in Algiers. Driouche, Djezzy’s Manager of Corporate Social Responsibility. Which is why Ilham embraced the Most of all, she adds, participants chance to take part in the diversity- also gain business skills such as and inclusion-themed DevFest leadership and teamwork. Hackathon at ENP Incubator by 15 Djezzy, in which her team won And while the Hackathon offered 100 Projects first prize for its Accesso app, young innovators the chance to tap submitted a notification service for users into expert guidance, it also made with disabilities. sound business sense, enabling Djezzy to promote its ENP Incubator Ilham explains that this was her and talent spot a new generation of first opportunity to work with potential employees. mobile technology. “Mobile apps are becoming such an important Highlighting the event’s contribution part of our lives, so my experience to UN Sustainable Development at the Hackathon was a big Goals 8 (Decent Work and Economic development for me,” she says. Growth) and 9 (Industry, Innovation and Infrastructure), Driouche adds: Moreover, thanks to their success at “As a corporate citizen it is our duty the Hackathon, Ilham and her team to provide spaces where people can have been offered a place on the innovate and to help produce future ENP (Ecole Nationale Polytechnique) employers by encouraging start-ups.” Incubator run by Djezzy, VEON’s operating company in Algeria, where they can receive support to take their product to market.

Opportunities like these count for a lot in Algeria, which has 30% youth unemployment and, to date, has made limited progress in nurturing a culture of innovation and entrepreneurship. That said, the newly elected government is now introducing dedicated initiatives aimed at enabling aspiring young entrepreneurs to play their part in

VEON Integrated Annual Report 2019 49 INTRODUCTION This is the second year I have mentored school children at GoCamp. When these children develop their ideas for mobile applications, they inspire me with their creativity and originality.

Pavel Daniman VALUE CREATION Chief Marketing Officer, Kyivstar SUMMARY PERFORMANCE Ukraine: GoCamp thinking, the basics of leadership, and use of digital tools. Kyivstar has the resources – both technological 3,500 “When you start working on a and expert – which is why it has challenging task, you don’t believe supported the GoCamp project Children participated you can do it,” reflects 14-year-old for three years. Educational

Andriy Dyachuk. “But when you development is a priority for our GOVERNANCE CORPORATE realise that you can, you experience company. It is our investment in such feelings of confidence, pride the future of Ukraine.” and achievement.” Furthermore, he adds, the 96 A graduate of GoCamp 2019, the programme is paying commercial eighth-grader says the programme and reputational dividends, with Schools joined also taught him essential life skills market research showing a direct such as collaboration and problem- link between customer retention INFORMATION FINANCIAL solving: “I really enjoyed learning and awareness of Kyivstar’s how to generate ideas in teams social programmes. and to think creatively.” Building on last year’s success, the Andriy is one of over 3,000 school 2019 programme reached over 3,500 170 students in Ukraine’s rural regions children (compared to 2,000 in 2018) App ideas generated enjoying educational opportunities from 96 schools across 24 regions, INFORMATION ADDITIONAL ordinarily restricted to their urban with 600 teachers receiving webinar peers, thanks to Kyivstar-supported training. Crucially, by providing initiative GoCamp. normally inaccessible digital and entrepreneurial training to Ukraine’s Taught by foreign volunteers, rural communities, GoCamp’s and based on a Kyivstar-created impact dovetails with UN Sustainable 600 multimedia curriculum, the Development Goal 4 aimed at Teachers trained programme encourages ensuring “inclusive and equitable schoolchildren to use modern quality education and lifelong techniques and creative thinking learning opportunities for all”. to unleash their entrepreneurial skills and develop ideas for mobile As Oksana Nechiporenko, Director applications. In Andriy’s case, a of project partner Global Office, navigational app for blind people. points out: “Imagine over 3,500 kids realising what entrepreneurship is GoCamp also offers nationwide for the first time in their lives! We training webinars for teachers hope this programme will scale and and would-be support staff. In together we can prepare Ukrainians fact, in 2019 more than 50 Kyivstar for a progressive new path of employees (compared to 25 in economic development.” 2018), including CEO Aleksandr Komarov, signed up as mentors. For Andriy, that means pursuing A more personal service introduced his dream of becoming a maths this year saw volunteers engage with professor. “To be good at maths students face-to-face, in addition to you need to think logically and find conducting online sessions. solutions. The challenging tasks we were set at GoCamp covered both Komarov says: “It is important for us those skills and more.” to give students the opportunity to learn 21st-century skills, creative

Integrated Annual Report 2019 VEON 50 FOCUSED ON OUTCOMES CONTINUED

Facebook aims to boost digital literacy to help bridge the digital gender gap by enabling more women to come online and to gain access to digital services that could have a positive and far-reaching impact on their lives. We’re pleased to be part of this campaign.

Facebook spokesperson

Bangladesh: Learn Pivotal to the programme is the recruitment of local influencers. More, Be More The women, who encourage their 16,000 peers to sign up, are on-boarded to community-based knowledge- Female participants For Afroza, the power of social media sharing Facebook group, Amader has been a revelation. “I didn’t know Sathi. In 2020, 1,500 of these anything about Facebook,” says women will be trained as the Learn More, Be More graduate. independent Bangalink retailers, “But this programme made me specialising in sales and digital realise that you can learn so much literacy training to ready-made through the site, whether it’s about garments industry workers. In this 30,000 health, self-defence or how to save Way, Bangalink reaps commercial New data users money. Now, even with less income, rewards by attracting a new segment I can manage to put aside funds for of data users. the family.” “We believe that one of the Afroza, who lives in Gazipur, most effective ways of eradicating central Bangladesh, is one of over the digital divide is to ensure four million workers employed in women’s participation in the digital 90% the country’s ready-made garments movement,” says a spokesperson Growth in data usage industry. Like her, the majority of for Banglalink. “The campaign will the employee workforce comprises encourage participants to explore the women. Many migrate to the city world of the internet and embrace a from under-served rural regions and digital way of life.” are painfully lacking in basic life skills, including digital literacy. As such, the programme supports UN Sustainable Development This has important social and Goals 5 (Gender Equality) and 8 economic ramifications, according to (Decent Work and Economic Growth) a report by the Bangladesh Institute by empowering women with the of Development Studies which finds digital skills they need to play a a positive correlation between productive role in the economy. mobile phone ownership and women’s employment, access to Indeed, for Afroza, being able to markets and purchasing power. better manage household finances is the start of something much Now, thanks to the Learn More, bigger. “I always wanted to open a Be More programme, funded tailoring shop. Now I can promote it equally by Banglalink and Facebook, through Facebook and it will help me at least 16,000 female ready-made improve the quality of my and my garments industry workers can family’s life.” acquire digital skills by learning how to use Facebook. Also provided are workshops on health, safety, nutrition, child education and household finances, with certified training and materials supplied by Banglalink.

VEON Integrated Annual Report 2019 51 INTRODUCTION The programme has positively impacted learning outcomes of thousands of female students in our schools. Initiatives such as the Jazz Smart Schools Programme, and an increasing future emphasis on public-private partnerships, will surely propel us toward a brighter future for Pakistan. VALUE CREATION

Syed Umair Javed Director General, Federal Directorate of Education, Islamabad, Pakistan SUMMARY PERFORMANCE Pakistan: Jazz While providing a vital service to society, the initiative is also helping Smart Schools Jazz meet commercial and strategic 38,000 goals. The operator is exploring expansion options with project Female students Since participating in the Jazz Smart partner Knowledge Platform (KP), Schools programme, Faria Iqbal has with Jazz’s provision of necessary GOVERNANCE CORPORATE gained a whole new perspective on hardware and connectivity to other learning. What was once a “passive” schools likely to unleash new experience has been transformed business opportunities. Moreover, into something “active and creative”. integration of a payment facility 1,000 into the online version of learning Trained teachers “Jazz Smart Schools has gifted platforms is already delivering us a new way to engage with our commercial benefits. curriculum that contrasts with the INFORMATION FINANCIAL typical text book-based approach,” In total, since 2017, more than says the 10th grader. “It has created 38,000 female students, along with a great sense of interest and 1,046 female teachers, including motivation among my classmates school principals, across 75 public- 75 and I. And the videos, games and sector schools in Islamabad have Partner schools assessments have really helped benefitted from the Jazz Smart us improve our English vocabulary

Schools programme. Evaluation has INFORMATION ADDITIONAL and pronunciation.” shown significant improvements in learning outcomes, teaching quality, Of the population of over 200 million student engagement, technology people, approximately 43% under users, accountability and 15 years old are not as fortunate as results monitoring. 60% Faria. According to Pakistan’s 2018 Improved outcome Education Statistics Report, almost Meanwhile, with its focus on educating 23 million school-age children – girls, Jazz Smart Schools makes a including 12 million girls – are not in notable contribution to UN Sustainable any form of education. For those who Development Goals 4 and 5, which are being educated, basic numeracy promote Quality Education and and literacy skills often lag behind Gender Equality respectively. international benchmarks. With her renewed enthusiasm To help improve digital skills and for learning and improved literacy among female students, grades, Faria is testament to the Jazz – the country’s largest mobile programme’s success. “My heartiest operator – launched the Jazz Smart gratitude goes to Jazz for this Programme in 2017. creative idea,” says the schoolgirl.

Using laptops supplied by Jazz and loaded with its learning management software, the programme deploys mobile technology to improve the quality of teaching and assessments, with techniques such as app-based performance dashboards and web-portals to track results.

Integrated Annual Report 2019 VEON 52 FOCUSED ON OUTCOMES CONTINUED

VEON Integrated Annual Report 2019 53 INTRODUCTION JazzCash helped me when the lives of my wife and child were in danger. I saved 10% by using Healthpass and also received PKR 6,000 as a Sehat Mubarak gift in my JazzCash Wallet. I used the money saved to buy medicines and to commute back to my village. Thank you JazzCash and Healthpass for helping me at the VALUE CREATION most difficult time of my life.

Muhammad Uzair Bakery owner SUMMARY PERFORMANCE Pakistan: JazzCash JazzCash breaks down this barrier, Technology has also been a key empowering its users with the ingredient of JazzCash’s success. ability to pay bills, transfer money Its unique platform combines an There are over 7 million monthly and take out micro-loans, and easy-to-use smartphone app with active users of JazzCash, a digital therefore promoting financial the QuickPay method of QR Code financial services application offered inclusion. JazzCash aims to provide scans and integrates seamlessly

by Jazz, our operating company in every Pakistani – regardless of their with all of the nation’s main billing GOVERNANCE CORPORATE Pakistan, which allows its customers gender, location or socioeconomic systems. Signing up to the service to access a range of banking services status – with its services so they is also easy, with many payment from their phones. Launched three can participate fully in the financial options already integrated into the years ago, JazzCash has grown economy and enjoy the opportunities app, reducing the barrier to entry quickly into Pakistan’s market leader this brings. for first-time Jazz users. for these services, putting basic banking into the hands of many for JazzCash’s success in Pakistan is The ability of JazzCash to help realise the first time. no accident. The nation’s banking the ambitions of its customers is clear, INFORMATION FINANCIAL sector is slow and inefficient and particularly in markets where lack of Pakistan ranks as one of the world’s discourages borrowing due to high access to basic financial services is a most unbanked nations, with over rates, making it difficult to meet significant impediment to individual 80% of the adult population with no immediate cash needs. Mobile empowerment and socioeconomic account at a financial institution. That banking via JazzCash sidesteps these development. Likewise, JazzCash is percentage is nearer 95% for women, barriers, providing a quick and easy also helping to improve access to

reflecting a gender disparity in an way to conduct various transactions other community resources like INFORMATION ADDITIONAL economy where access to financial like paying utility bills with the healthcare through partnerships services is a significant impediment click of a button. It also enables with product providers such to sustainable development. all-important money transfers as Healthpass, which seeks to between individuals, which for revolutionise healthcare payments many households in Pakistan in Pakistan through easy access comprise a vital financial lifeline. and discounted prices.

Muhammad Uzair, a small bakery owner, brought his wife from the village of Gujjar Khan to Nusrat Hospital in Rawalpindi. His wife was in obstructed labour for an entire day and in dire need of an emergency caesarean section due to life-threatening complications that could impact both the mother and child. The cost of the procedure was PKR 55,000 – a hefty sum in a nation where the minimum wage amounts to PKR 17,000. By paying through JazzCash, Muhammad was able to receive a 10% discount through Healthpass. Furthermore, he received PFR 6,000 in his mobile wallet from the Sehat Mubarik Fund – a complimentary financial support service provided by those utilising Healthpass.

Noor ul Amin has been selling chickpeas (channas) since 2007 and only started using JazzCash three years ago. With over 150 people buying chickpeas from him every day, he needed a convenient payment option as people would defer payments because they didn’t have change to buy them. Using JazzCash has helped him avoid that problem and has made a difference both in his life and that of his family members. The transfer happens instantly and the income has increased significantly. He doesn’t have to travel all the way back to his village to send money to his family anymore, either. Whenever they need money, he sends it to them with one click.

Noor ul Amin Street vendor

Integrated Annual Report 2019 VEON 54

PERFORMANCE SUMMARY

Performance Summary 2019 Financial Review 56 Our Cornerstone, Russia 60 Our Growth Engines 62 Our Frontier Markets 68 Talent Management 70 Managing Our Risks 74

VEON Integrated Annual Report 2019 PERFORMANCE CORPORATE FINANCIAL ADDITIONAL INTRODUCTION VALUE CREATION 55 SUMMARY GOVERNANCE INFORMATION INFORMATION VEON Integrated Annual Report 2019 56 2019 FINANCIAL REVIEW

2019 FINANCIAL REVIEW

Another year of solid Group performance

2019 was another year of solid growth for the Group. Our performance either matched or exceeded the financial goals we set ourselves at the start of the year and was achieved alongside important milestones in compliance, governance and social responsibility.

Our growth is dominated by the Taken together, the diversification considerable opportunity we enjoy benefits of ten operating markets, in data revenue given relatively low each varied in nature but together levels of smartphone adoption in the sharing exciting demographics and markets we serve. This is evident in strong demand for data and digital the Group’s revenue performance in services, were again evident in 2019 2019, which on an organic1 basis as we met our financial guidance grew by 3.4% year-on-year to USD 8.9 despite significant challenges in our billion in 2019 and was underpinned largest market. $8.9bn by growth in data revenues, which Reported revenue rose by over one-fifth (+21.2% We were similarly encouraged by the organic) to USD 2.4 billion. growing contribution to our revenues of new services, which our strategy Our profitability continued to framework has identified as a clear improve during the financial year, value opportunity over the long term. led by strong organic revenue Enabled by our investment in 4G performances from our Growth networks and new digital business Engine markets of Pakistan, Ukraine support systems (DBSS) in a number and Kazakhstan. Coupled with of markets, we are developing local successful cost control across our ecosystems of digitally enabled $4.2bn business, the Group delivered 9.6% services, which over time have the Reported EBITDA EBITDA organic growth for the year potential to lift average revenue per and reported an EBITDA margin user (ARPU) and reduce customer of 47.6%. churn as we configure resources and services that match the evolving As with any portfolio of businesses, needs of our customers. performance across the Group is rarely uniform and 2019 was no Our digital financial services franchise exception. Our Russian business, in Pakistan, JazzCash, is a strong case Beeline, faced a number of in point. Serving one of the world’s operational challenges which most unbanked nations in terms of impacted its financial performance basic financial services access, $1.4bn as the year progressed. We have JazzCash has grown quickly and Equity free cash flow2 set out these challenges in some established a market-leading position detail in the following pages and in Pakistan and now accounts for are confident that we now have around 6% of our local revenues. an effective turnaround strategy in place with the aim of returning Controlling our costs Beeline to growth. Reducing costs remained a core focus In the meantime, we were pleased for management in 2019. This was to see strong performance from our evident in our Headquarters, where Growth Engines offset weakness in we reduced overhead by 23% from $2.4bn Russia, while our Frontier Markets its FY 2018 level to USD 277 million, continued to post solid results in broadly in line with our goal of Data revenue challenging market conditions. reducing corporate costs during the year by one-quarter. 1. See Glossary on page 111. 2. Excluding licences. See Glossary on page 111.

VEON Integrated Annual Report 2019 57 INTRODUCTION

Cost discipline also extended ratio rose as a consequence, from disputed licence renewal fee in order throughout our operating companies, 15.6% in 2018 to 19.6% in 2019 on a to maintain its appeal regarding the where we successfully reduced the pre-IFRS 16 basis (or 23.1% reported). PTA’s underlying decision on the

Group’s cost intensity ratio by over licence renewal. There were no VALUE CREATION five percentage points on an organic Russia was a prime recipient of specific terms and conditions attached basis during the course of 2019, additional investment since we to the deposit. The deposit is recorded principally reflecting lower costs have encountered network quality as a financial asset in our statement of of our operations in Russia, issues that require an accelerated financial position. Ukraine and Uzbekistan. network deployment programme. Our network investments in Russia Simplifying our structure rose considerably as a consequence

Reinvesting cash for SUMMARY PERFORMANCE (+35% year-on-year pre-IFRS 16) and Historically, VEON has been a complex long-term growth resulted in Beeline deploying more Group organisationally, which reflects Our business is cash-generative, base stations in 2019 than any other the series of acquisitions and divestitures which is reflected in the equity free operator. This investment programme that took the company, formerly cash flow excluding licences (EFCF) remains underway and we believe we known as Vimpelcom, from its roots we were able to generate during the are on track to close Beeline’s network as a predominantly Russia and CIS- year. This amounted to USD 1.362 quality gap versus its competitors. focused operator to today’s portfolio of ten geographically diverse markets

billion, or a little over USD 1.0 billion GOVERNANCE CORPORATE on a pre-IFRS 16 basis, which was In Pakistan, we faced the renewal (see ‘milestones’ timeline on pages in line with our financial guidance of one of our licences in May 2019 14-15 for details of these). for 2019. These amounts include a relating to spectrum formerly owned one-off payment of USD 350 million by Warid, a mobile operator acquired Simplifying our organisational received from Ericsson (details below by the Group in 2015. This renewal structure has been a long- on page 58). remains subject to a legal appeal in the standing ambition of VEON’s Board Islamabad High Court with respect of Directors. Our exit from Italy in Elsewhere, 2019 saw the Group increase to the price required by the Pakistan the third quarter of 2018 through INFORMATION FINANCIAL investments in 3G and 4G networks Telecommunications Authority (PTA). the sale of our share in Wind Tre significantly to match strong demand for to our joint-venture partner, CK data and secure the network capacity In September 2019, our operating Hutchison, was an important step to deliver new services. Our capex company Jazz deposited approximately in this process and served to (excluding licences) to revenue US$225 million in relation to the increase our Group’s emerging markets focus considerably. INFORMATION ADDITIONAL

Integrated Annual Report 2019 VEON 58 2019 FINANCIAL REVIEW CONTINUED

Similar in significance was our The result of these activities saw our FY 2019 Revenue breakdown mandatory tender offer in July 2019 weighted average cost of debt fall (USD million) for the 42.31% of minority-owned slightly year-on-year to 7.4% at shares in our subsidiary Global the end of 2019 against 7.5% at Telecom Holding S.A.E. (GTH). The the end of 2018. This was achieved successful outcome of this tender despite a mix shift towards ruble- offer, along with the subsequent denominated paper which naturally transfer process of GTH’s assets attracts a higher coupon as we target to VEON following the company’s a currency mix of debt that reflects delisting from the Egyptian Exchange that of our revenues. in September 2019, enabled us to further consolidate the ownership In parallel, we succeeded in of our operating companies in maintaining broadly stable net Pakistan (Jazz), Algeria (Djezzy) and debt and leverage trends across Bangladesh (Banglalink) and served, the financial year, exiting 2019 with in turn, to bind VEON shareholders our Group leverage ratio (net debt/ Russia Uzbekistan Pakistan Algeria closer to the attractive long-term EBITDA) steady at 1.7x on a pre-IFRS Ukraine Bangladesh fundamentals of these early- 16 basis (or 1.9x excluding the Kazakhstan Other stage markets. USD 350million payment received from Ericsson, outlined below). FY 2019 EBITDA breakdown By the end of 2019, VEON had This leverage ratio was below our completed the intra-group transfers tolerance of 2.0x (pre-IFRS 16) (USD million) of Jazz, Banglalink and Med Cable. despite a rise in cash capex towards The intra-group transfers for the the end of the financial year relating remainder of GTH’s operating to increased network investment, assets, including Djezzy and Mobilink particularly in Russia. (Pakistan), are continuing. Since the operating assets of GTH had Revised partnership agreement previously been, and will continue to be, fully consolidated within the with Ericsson balance sheet of the VEON Group, In February 2019, VEON announced there is no material impact on a revised arrangement with Ericsson the selected financial information to upgrade its core IT systems in presented in this report stemming several countries in the coming from these asset transfers. years and to release Ericsson from Russia Uzbekistan the development and delivery Pakistan Algeria The restructuring of GTH was of Ericsson’s Full Stack Revenue Ukraine Bangladesh achieved alongside an agreement Manager Solution. Both parties Kazakhstan Other1 reached with the Egyptian Tax signed binding terms to vary the Authority to settle all outstanding tax existing agreements and as a result 1. Other includes interconnect, VEON received a payment of USD 350 roaming and intercompany liabilities of GTH and its subsidiaries eliminations and excludes million from Ericsson during the first for the tax years 2000 through 2018 corporate costs. for a total amount of USD 136 million, half of 2019. which was settled by VEON in two FY 2019 Operating The revised arrangement enables payments during the course of Cash Flow (EBITDA-CAPEX) H2 2019. VEON to continue upgrading its IT infrastructure with new digital of VEON’s markets business support systems (DBSS) (USD million) Strengthening our using existing software from Ericsson capital position which is already deployed in certain The fourth quarter of 2019 saw operating companies within VEON. us optimise our Group borrowings These upgrades are expected to through an offering of USD 700 million support the creation of a more in senior unsecured notes, the proceeds personalised, richer experience of which we subsequently used to of VEON’s services for customers repay our revolving credit facility, and, over time, reduce our overall which had been drawn upon operating costs. to fund the GTH transaction, as well as to refinance or settle a number of existing bonds and upcoming maturities. Russia Uzbekistan Pakistan Algeria Ukraine Bangladesh Kazakhstan Other

VEON Integrated Annual Report 2019 59 INTRODUCTION

Announcing a new dividend policy In September 2019, VEON announced a new dividend policy designed to VALUE CREATION provide us with greater flexibility in setting our investment priorities.

The new policy targets paying at least 50% of prior year equity free cash flow after licences in dividends

to shareholders. SUMMARY PERFORMANCE

We believe this formula provides greater clarity around the link between our financial performance and shareholder returns while providing us with the appropriate financial flexibility to invest for long-term growth. In this respect, dividend GOVERNANCE CORPORATE payments will remain subject to review by VEON’s Board of Directors, which will take into consideration our medium-term investment opportunities and the Group’s capital structure, where our aim remains to keep net debt/

EBITDA around 2.0x (2.4x post-IFRS 16). INFORMATION FINANCIAL

In line with the new policy, VEON’s Board of Directors approved the distribution of a final gross dividend of US 15 cents per share for FY 2019. Together with the USD 13 cents per share interim dividend declared, this brought the total dividend payment INFORMATION ADDITIONAL for FY 2019 to US 28 cents per share, which corresponds to approximately 70% of 2019 equity free cash flow after licences.

Setting 2019’s distribution above the 50% minimum threshold is a clear demonstration of our commitment to return excess cash to shareholders while managing an appropriate level of balance sheet leverage at the Group level.

Adoption of IFRS 16 standards VEON adopted IFRS-16 (Leases) for its statutory reporting from January 1 2019. In our internal management reporting and for comparative purposes in our presentation materials, we have continued to adjust for the benefit to EBITDA and EFCF from the capitalisation of operating leases that IFRS 16 brings about. Where we have made this adjustment, we have clearly stated so. From 2020, we shall no longer make this adjustment given that 2019 numbers will capture IFRS 16 treatment, eliminating comparison VEON Group’s Amsterdam Headquarters distortions as a consequence.

Integrated Annual Report 2019 VEON 60 2019 FINANCIAL REVIEW CONTINUED

OUR CORNERSTONE, RUSSIA

Our largest market, Russia is the Cornerstone of our business, contributing 43% of Group EBITDA1 in 2019. Our operating business, Beeline, serves 55 million customers through a growing range of services, from traditional voice, data and broadband through to streamed media content (Beeline TV) and mobile financial services. A mature market with four main providers, Russia saw continued price competition in 2019 through the promotion of unlimited data tariff plans.

Beeline experienced a challenging New services year in 2019 as aggressive competition Russia is a sophisticated, competitive Key economic indicators2 in the market exacerbated our market with a proven customer ​ relative weakness in network and appetite for the growing range 146m 4.7% distribution, resulting in a year-on- of services Beeline can offer. This Population Inflation rate year decline in our revenues of 0.6% customer journey often starts with ​ ​ ​ on an organic basis. our self-care application, MyBeeline; ​ a personalised portal through which -0.1% 1.3% Mobile service revenues led this we can interact with our customers Population Real GDP decline, falling by 2.0% year-on- and configure a range of services growth growth year on an organic basis as ARPUs that match their needs based on softened in response to continued their preferences and other data price competition in unlimited data they share with us. By applying Market characteristics tariffs. This was compounded by algorithmic analysis to these data, ​ a decline in our customer base we are demonstrating higher levels 159% 60% which partly reflected the restructuring of ARPU and customer retention Market 4G market of our store distribution network rates through the more tailored penetration share under our Beeline brand, service choices we are able to offer. completed in 2018. This refocused ​ ​ ​ ​ our distribution strategy around MyBeeline had 10.1 million monthly 76% 50% higher-value customers and resulted active users (MAUs) at the end of Prepaid share 4G smartphone in some customers leaving our 2019 and had helped to secure penetration network as a consequence. 2.2 million MAUs for BeelineTV, our online streaming service that 1 Weaker mobile service revenues configures movie and other video FY 2019 EBITDA contribution more than offset the progress we content to individual subscriber (Percentages) achieved in growing our fixed mobile profiles, and Beeline’s growing range convergence (FMC) products during of mobile financial services which 2019, which contributed to a 5.8% recorded 4.9 million MAUs at the increase in our broadband revenues end of 2019. and offset lower fixed line sales as we pivot away from voice-only business. Although Russia’s total mobile Success here was enabled through penetration rate rivals many effective tariff structures and efficient developed markets (159% in 2019), sales strategies as well as the growth 4G smartphone penetration still of new revenue contributions in our accounts for only half of the B2B business. market’s subscriber base, suggesting a strong future for the Despite the dip in revenues, good growth of new, 4G-enabled services. Cornerstone Other cost control enabled Beeline to This is reflected in the headroom expand its organic EBITDA margin by we see for Beeline to expand its 4G 0.3% and deliver a similar amount of footprint, which stood at 38% of our organic EBITDA in 2019 as in the year total customer base at the end of prior on a pre-IFRS 16 basis. 2019, and to deliver new services 1. EBITDA excluding corporate costs to match the capabilities 4G offers. 2. Key economic indicators sourced from IMF database

VEON Integrated Annual Report 2019 61 INTRODUCTION

Challenges and opportunities Pricing The number of mobile customers Beeline’s operational challenges in Pricing, similarly, has been an and data customers in Russia 2019 stem from a combination of industry-wide issue, with strong decreased in 2019 year-on-year, company-specific issues and wider competition around unlimited data in each case driven by a reduction in VALUE CREATION industry problems. bundles. Beeline’s strategy here sales through alternative distribution has been to restore pricing power channels following the expansion of through an expanded customer Beeline monobrand stores. Network offer of digital applications and The network perception issues Beeline bundled products, including FMC has experienced reflect a degree of Mobile ARPU decreased by 2% services, which by the end of 2019 underinvestment in our networks in year-on-year to US$5.3, mainly were being taken by half of our driven by devaluation of the Russian recent years that we are now correcting. SUMMARY PERFORMANCE broadband customers (1.3 million ruble. In local currency terms, ARPU FMC subscribers in total). increased by 1%. Beeline increased network investment by 35% in 2019, and by Taken together, we are confident the end of Q4 2019 had 38% more that these measures to address 4G base stations than a year before. our network perception issues, This investment has boosted our 4G our distribution strategy and our coverage considerably, with 86% of

approach to pricing will be successful GOVERNANCE CORPORATE our customers with access to our in reversing the revenue trends of 4G network at the end of 2019, up recent quarters. from 74% at the close of 2018. That is important for revenues, since based on 2019 numbers a Beeline Placing the customer at the centre Revenue 4G subscriber generates, on average, of each of these will be a vital aspect (RUB billion) close to three times the ARPU of a of our success. Here, the creation of a new role within Beeline – our

2G subscriber. INFORMATION FINANCIAL Chief Customer Experience Officer +6.2% – underscores our commitment to The impact of this active putting the customer at the top 291. 289.9 deployment strategy has since 23.0 2.9 table and engaging each through been evident in March 2020 products and services that will earn statistics from the Federal Service their loyalty. for Supervision of Communications, Information Technology and Mass Media Distribution, which show 2019 Performance INFORMATION ADDITIONAL Beeline moving from 3rd place, On a reported basis, total operating from 4th, in terms of total number revenue in Russia decreased in 2019 of base stations. by 4% year-on-year, mainly due to the devaluation of the Russian Distribution ruble. In local currency terms, total Distribution efficiency is an industry- operating revenue declined by 0.6% FY16 FY1 FY18 FY wide problem rather than a year-on-year compared to 2018. challenge for Beeline alone. The EBITDA Pre-IFRS 161 Russian market is overserved by 1 Adjusted EBITDA increased (RUB billion) retail stores, which places an undue in 2019 by 16% year-on-year to financial burden on its operators. US$1.96 billion, primarily due to the adoption of IFRS 16. The rise +0.2%1 Beeline has taken major strides was impacted by savings in structural towards addressing its own operating expenses, including savings 104.8 104.3 104. 10.0 distribution footprint, which in commercial costs, lower spectrum underwent a significant restructuring costs and the reversal of certain in 2018 when it consolidated retail provisions, which was partially offset stores formerly owned by Euroset by the devaluation of the Russian under the Beeline brand. It closed ruble. In local currency terms, around 200 of these stores in the our adjusted EBITDA increased second half of 2019 and plans to by 21% year-on-year and by 0.3% close a further 400 in 2020. on a pre-IFRS 16 basis.

At the same time, Beeline has been deepening digital routes to market by developing its online sales channels, FY16 FY1 FY18 FY leveraging the growing presence of our MyBeeline self-care application 1. Adjusted EBITDA is a non-IFRS financial within our customer base to drive measure. See Glossary on page 111 for 1. Growth excludes IFRS 16 impact engagement and customer retention. a full definition. in FY 2019

Integrated Annual Report 2019 VEON 62 2019 FINANCIAL REVIEW CONTINUED

OUR GROWTH ENGINES

Comprising the four growth markets of Pakistan, Ukraine, Uzbekistan and Kazakhstan, our Growth Engines are markets in the sweet spot of rapid services adoption. Collectively contributing 37% of Group EBITDA1 in 2019, these markets are typified by strong demand for data and relatively low levels of smartphone adoption, suggesting significant scope for future growth.

Once again, our Growth Engine to be used. Given that more than markets enjoyed levels of revenue 90m handsets in Pakistan are still 2G, Key economic indicators2 growth well above the Group’s an operating system like KaiOS and ​ average in 2019, although in two affordable handsets like Jazz Digit 216m 10.2% instances (Pakistan and Uzbekistan) have a huge adoption opportunity. Population Inflation rate underlying growth was masked by the accounting treatment of tax This goes hand-in-hand with ​ ​ ​ regime changes. stronger engagement of our digital ​ wallet users through the launch of 1.9% 3.3% Population Real GDP Pakistan key remittance services for freelance workers, as well as the linking of growth growth With over 60 million subscribers, bank cards as a funding mechanism Pakistan is the largest of our and the overall enrichment of our Market characteristics Growth Engines. Here, our growing USSD and app-based ​ operating company, Jazz, enjoys financial services. market leadership and the fastest 77% 37% 4G network. Jazz’s growth is being Market 4G market propelled by strong subscriber 2019 Performance penetration share demand for data, revenues for which Total operating revenue ​ ​ ​ grew by 45% year-on-year in 2019 decreased by 12% year-on-year ​ on an organic basis. Jazz continues to to US$1,321 million as a result of 97% 27% match this growth opportunity with a devaluation of the local currency. Prepaid share 4G smartphone 4G network expansion, which helped In local currency terms, total penetration support a 7.6% year-on-year growth operating revenue increased by in our customer base in 2019. 8.7% as a result of continuing mobile FY-2019 EBITDA contribution1 data revenue growth of 45% year- (Percentages) Our ambition for Jazz is to strengthen on-year. The growth in data revenue our market leadership through was driven by the growth in data growing an ecosystem of services customers and increased data usage matched to the particular needs due to higher bundle penetration and and preferences of the local market. continued data network expansion. These start with self-care and include a range of e-commerce and content Adjusted EBITDA decreased platforms like Jazz TV, extending to by 6% year-on-year, driven by the nation’s largest mobile health devaluation of the Pakistani rupee initiative BIMA and our market- and partially offset by the impact of leading digital financial services the introduction of IFRS 16. In local application, JazzCash. currency terms, Pakistan Adjusted EBITDA growth was 15% mainly To help accelerate the adoption of due to the positive development Growth Other Engines our new services, we have launched in total revenues as well as savings an affordable phone, Jazz Digit, that in structural operating expenses converts a traditional feature 4G on year-on-year basis. On a pre-IFRS phone into a smartphone by using 16 basis, Adjusted EBITDA increased the KaiOS operating system, allowing by 7.3% in local currency terms. 1. EBITDA excluding corporate costs commonly used applications like 2. Key economic indicators sourced from IMF database Facebook, WhatsApp and YouTube

VEON Integrated Annual Report 2019 63 INTRODUCTION

As of December 31, 2019, we had 60.5 million customers in Pakistan, representing an increase of 7.6%

year-on-year driven primarily VALUE CREATION by a continued growth in mobile data customers, which grew 17.6% year-on-year due to bundled tariff plans and 4G expansion coupled with increase in customer acquisition, lower churn as a result of simplifying prices and more efficient distribution channel management. SUMMARY PERFORMANCE

Our mobile ARPU in Pakistan decreased by 16.6% year-on-year Jazz TV Revenue to US$1.7 driven by devaluation of (PKR billion) the local currency. In local currency In Jazz TV, we own the leading terms, mobile ARPU in Pakistan paid-for streaming app in Pakistan. Jazz TV offers 65-plus channels increased by 3% year-on-year to +30.2% GOVERNANCE CORPORATE PKR 261 driven by a one-off tax that provide our customers with impact, an increase in usage and interactive access to over 5,000 hours 19.6 several price monetisation initiatives. of on-demand content, including 181. live sports, entertainment channels 160. and major cricketing events. Jazz TV 11.8 has seen encouraging traction within our subscriber base, with

over 4 million downloads, a current INFORMATION FINANCIAL monthly active user base of over 1 million and growing levels of engagement.

BIMA Health & Life Insurance Jazz dominates the market for FY16 FY1 FY18 FY mobile-based healthcare through INFORMATION ADDITIONAL its partnership with BIMA, one EBITDA Pre-IFRS 16 of Pakistan’s leading insurance (PKR billion) providers. Our BIMA service offers Jazz’s customers access to a wealth 1 of healthcare services, including +63.9% a 24-hour teledoctor consultation 93.1 4.0M+ service, home delivery of medicines 86.8 at discounted prices and sample Downloads test collection from home at 4.1 discounted prices. Customer uptake has been positive since its launch in 6.8 late-2018. As at the end of 2019, the service had over 1.7 million active users and over 2.6 million monthly active policies.

1.0M+ JazzCash JazzCash is Pakistan’s leading digital FY16 FY1 FY18 FY MAUs financial services platform, with 7.3 million digital wallets as of Q4 2019. JazzCash provides access to a host of financial services to customers, many of whom lack basic access to banking in what, according to World Bank data, is one of the world’s most unbanked nations. JazzCash has grown rapidly 80.6% and now comprises around 6% of 1. Growth excludes IFRS 16 impact Q4 19 YoY growth Jazz’s total revenues. in FY 2019

Integrated Annual Report 2019 VEON 64 2019 FINANCIAL REVIEW CONTINUED

Ukraine As of December 31, 2019, we had Ukraine is another growth market 26.2 million mobile customers in in which we enjoy a leadership Ukraine representing a decrease of position. Here, our Kyivstar franchise 1% year-on-year. The decrease was has been one of our fastest-growing a result of demographic trends in businesses in recent years, with Ukraine and the reduction in multi revenues rising close to 50% SIM users. The number of our mobile between 2016 and 2019. data customers increased by 15% year-on-year mainly due to increased 4G user penetration. In Kyivstar we have scope to grow both our connectivity and new services in tandem and progressively In 2019, our mobile ARPU in modernise our tariff plans to match Ukraine increased by 28% to growing demand for data. This is US$2.6 compared to 2018. In enabling double-digit growth in local currency terms, mobile ARPU Kyivstar’s fixed line business as we in Ukraine increased in the year expand our FTTB and FMC subscriber by 21% to UAH 66 compared to bases. At the same time, our focus UAH 54 in 2018, driven by on 4G network investment is driving increased 4G penetration. strong growth in our 4G subscriber base – up 121% year-on-year – with nearly three-quarters of the population under our 4G coverage Revenue by the end of 2019. Here, the (UAH billion) strategic opportunity to expand our product offering is considerable as we leverage our big data capabilities +49.3% to a host of new services, from 22.4 mobile and fixed line TV through to our strategic partnership with 18. Microsoft, announced in December 2019, to leverage the power of IoT, 16. 1.0 big data, AI and Cloud Computing to our business customers.

The combination of strong revenue growth and prudent cost control has driven impressive margin expansion at Kyivstar, which at 65.6% in 2019 is the highest in our Group. Key economic indicators1 FY16 FY1 FY18 FY ​ 2019 Performance 44m 7.9% Total operating revenue increased by EBITDA Pre-IFRS 16 Population Inflation rate 26% year-on-year to US$870 million (UAH billion) in 2019. The increase was primarily ​ ​ ​ ​ due to continued strong growth in +80.2%2 mobile service revenue, driven by -0.4% 3.2% Population Real GDP successful commercial activities 14.1 stimulated by the continued 4G growth growth roll-out and increased penetration of data-centric tariffs. In local currency Market characteristics 10. terms, our total operating revenue in ​ 9.2 Ukraine increased by 20% year-on-year. 133% 29% .8 Market 4G market Adjusted EBITDA increased by penetration share 48% year-on-year to US$572 million, primarily due to higher revenues and ​ ​ ​ lower service costs and the impact ​ of IFRS 16 adoption. In local currency 87% 27% terms, adjusted EBITDA increased Prepaid share 4G smartphone FY16 FY1 FY18 FY by 39% year-on-year and by 34% penetration on a pre-IFRS 16 basis. 1. Key economic indicators sourced from 2. Growth excludes IFRS 16 impact IMF database in FY 2019

VEON Integrated Annual Report 2019 65 INTRODUCTION

Uzbekistan Increasing mobile data penetration remains the key growth driver of our business in Uzbekistan, where VEON VALUE CREATION operates under the Beeline brand. Beeline enjoys a leading market position here and has secured success through a focus on securing the loyalty of quality customers where ARPU opportunities are greater. SUMMARY PERFORMANCE Uzbekistan is a market where 4G penetration remains in its infancy, with less than a quarter of total mobile users owning a smartphone. This offers Beeline considerable opportunity to grow data and pioneer new digital services, which it is pursuing through similar content and mobile financial GOVERNANCE CORPORATE services-related offers as Beeline Russia, including BeelineTV which is showing encouraging signs of early adoption amongst our 5.2 million Key economic indicators1 Revenue data subscribers in the local market. ​ (UZS billion) Enabling this is a concerted investment 33m 14.5% programme to broaden our 4G network Population Inflation rate INFORMATION FINANCIAL across Uzbekistan, which led to a +1.% ​ ​ ​ 182% increase in 4G base stations 2,3.8 in 2019 following a 44% increase in ​ 2,341.8 network capex. 1.4% 5.6% 2,2.3 Population Real GDP 1,96.0 growth growth 2019 Performance

Total revenue decreased by 18% Market characteristics INFORMATION ADDITIONAL year-on-year in 2019, and by 10% in local currency terms, primarily as a ​ result of the negative impact from the 69% 20% reduction in mobile termination rates Market 4G market and the introduction of the 15% excise penetration share tax. Adjusted EBITDA was broadly ​ ​ ​ stable with 2018. In local currency ​ FY16 FY1 FY18 FY terms, adjusted EBITDA increased by 97% 24% 10%, primarily due to IFRS 16 impact Prepaid share 4G smartphone EBITDA Pre-IFRS 16 and structurally lower operating penetration (UZS billion) expenditures. On a pre-IFRS 16 basis, Adjusted EBITDA rose by 6% in local currency terms. -0.%2

1,13.3 1,160.1 1,16.0 As of December 31, 2019, the 1,09.9 number of mobile customers in our Uzbekistan segment decreased by 11% to 8.1 million. The decrease was the result of our strategic focus on profitable customers.

In 2019, our mobile ARPU in Uzbekistan was US$2.4 compared to US$2.8 in 2018, a decrease year-on-year due to the impact of excise duty and decreased voice ARPU, partially offset by increased data ARPU. In FY16 FY1 FY18 FY local currency terms, mobile ARPU in Uzbekistan decreased by 4% 1. Key economic indicators sourced from 2. Growth excludes IFRS 16 impact year-on-year. IMF database in FY 2019

Integrated Annual Report 2019 VEON 66 2019 FINANCIAL REVIEW CONTINUED

Kazakhstan As of December 31, 2019, we had Until recently one of our smaller 10.2 million mobile customers markets, Kazakhstan has grown in Kazakhstan representing an rapidly in recent years and in increase of 3% year-on-year. 2019 accounted for 6.3% of Group The increase was a result of the reported EBITDA compared with improvements in the quality of 4.9% in 2016. Our business here, also sales and Beeline Kazakhstan’s operated under the Beeline brand, value proposition in the market. has been one of the Group’s most The number of our mobile data successful in growing its data customers in Kazakhstan increased subscriber base, which as at the end by 10% year-on-year mainly due to of 2019 comprised over two-thirds an increase in 4G user penetration. of our total subscribers, helped by a year-on-year expansion in our 4G In 2019, our mobile ARPU in subscriber base of 49%. Kazakhstan increased by 2% year-on-year to US$3.1. In local Beyond 4G, Beeline Kazakhstan currency terms, mobile ARPU in has been a pioneer in 5G, having Kazakhstan increased by 14% to conducted one of the largest 5G KZT 1,192 driven by an increase trials in Central Asia to date in in 4G user penetration. early Q4 over an area of 13 square kilometres, which demonstrated data downlink speeds of up to 1.0G per Revenue second. Kazakhstan is also a leading (KZT billion) market for the Group in the pace of adoption of new services. These include stand-alone products such +49.6% as mobile financial services, where 186.0 our revenues grew 31% year-on-year in 2019, and on a converged basis, where our bundled fixed and mobile 11.8 offers grew 76% in 2019, helping us 13.6 124.3 to raise our ARPU in the process.

2019 Performance Total operating revenue increased by 10% year-on-year to US$486 million in 2019, primarily due to growth in mobile data revenue and higher 1 ARPU during the year, partially Key economic indicators FY16 FY1 FY18 FY offset by a devaluation of the local ​ currency. In local currency terms, 19m 5.2% EBITDA Pre-IFRS 16 our total operating revenue in Population Inflation rate (KZT billion) Kazakhstan increased by 23%. ​ ​ ​

​ 2 Adjusted EBITDA increased by 1.3% 4.5% +.0% 31% year-on-year to US$270 million, Population Real GDP 9.0 primarily due to higher revenues growth growth and the impact of IFRS 16 adoption. In local currency terms, adjusted EBITDA increased by 46% year- Market characteristics 1.1 on-year and by 36% on a ​ 8. pre-IFRS 16 basis. 127% 35% 4.8 Market 4G market penetration share ​ ​ ​ 90% ​ 55% Prepaid share 4G smartphone FY16 FY1 FY18 FY penetration

1. Key economic indicators sourced from 2. Growth excludes IFRS 16 impact IMF database in FY 2019

VEON Integrated Annual Report 2019 67 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE GOVERNANCE CORPORATE INFORMATION FINANCIAL INFORMATION ADDITIONAL

Introducing our 5G trial in Shymkent, Kazakhstan, in October 2019

Integrated Annual Report 2019 VEON 68 2019 FINANCIAL REVIEW CONTINUED

OUR FRONTIER MARKETS

Dominated in size by Algeria and Bangladesh, our five Frontier Markets (which also include Armenia, Georgia and Kyrgyzstan) are defined by the long-term growth optionality they provide the Group rather than the financial contribution they are currently making. Collectively contributing 20% of Group EBITDA1 in 2019, these markets possess strong demographics with young, rapidly urbanising populations that provide us with the opportunity to meet data demand through expanding our 3G and 4G networks and, over time, introducing new services.

Algeria In the meantime, Djezzy is focusing Algeria is a challenging market but is one on digitising its core and on deepening Revenue in which our operating company, Djezzy, its customer relationships and (DZD billion) has outperformed its competitors, engagement through its new, highly successfully gaining revenue share of ranked self-care app Djezzy, which was -18.6% a market that has experienced a enabled by last year’s DBSS upgrade. significant contraction in total revenue 113. over the past four years. Despite a 2019 Performance difficult regulatory context (particularly 101. Total operating revenue decreased 94.8 92. the recent asymmetric and arbitrary in 2019 by 5% year-on-year primarily 29% reduction in mobile termination due to decreased mobile ARPU rates), fierce price competition and as a result of price competition tough macroeconomic conditions, in both voice and data services Djezzy stabilised its top line and regained and the devaluation of the local the top Net Promoter Score (NPS) spot in currency. Data revenue growth the market in 2019. To mitigate revenue remained strong due to higher erosion, Djezzy has modernised its usage and an increase in data operating model, focusing on its core customers as a result of the rollout productive functions and optimising of our 4G network. In local currency resources allocation thanks to big data. FY16 FY1 FY18 FY terms, total operating revenue These efforts resulted in the company decreased by 2% year-on-year. 1 securing a significantly higher EBITDA EBITDA Pre-IFRS 16 share over its competitors in 2019 (DZD billion) compared to the previous years; 2 a commendable achievement in Key economic indicators -36.1%3 these circumstances. ​ 43m 2.0% 9.8 Revenue performance was delivered Population Inflation rate through solid growth in mobile data ​ ​ ​ 4.2 revenues (+26% YoY in 2019) and a ​ 42.4 successful segmented approach to 2.0% 0.7% 38.2 customers. This strategy has put Population Real GDP Djezzy in a strong position to seize growth growth the considerable mid- to long-term opportunities in data and digital service revenues that Algeria has Market characteristics to offer. Djezzy has been growing ​ its share of 4G users strongly over 120% 54% the past year and aspires to secure Market 4G market FY16 FY1 FY18 FY the highest share of data market penetration share opportunities by further expanding ​ ​ ​ its 3G and 4G networks. Progress here is demonstrated in Djezzy’s ​ 1. EBITDA excluding corporate costs 95% 54% 2. Key economic indicators sourced subscriber mix: out of Djezzy’s 15 from IMF database million customers, 9 million are data Prepaid share 4G smartphone penetration 3. Growth excludes IFRS 16 impact users and 25% of them are using 4G. in FY 2019

VEON Integrated Annual Report 2019 69 INTRODUCTION

Adjusted EBITDA decreased by relevance with a growing customer 22% year-on-year and by 0.2% 3% year-on-year primarily due to base and achieve an impressive rate on a pre-IFRS 16 basis. a decrease in total revenues, coupled of data customer acquisition. with an increase in technology Total customers increased by 4% VALUE CREATION and commercial costs offset by the 2019 Performance year-on-year to 33.6 million. The impact of IFRS 16 adoption. In local increase was mainly due to improved currency terms, adjusted EBITDA Total operating revenue increased distribution and network quality. The decreased by 0.3% year-on-year by 3% year-on-year primarily due to number of mobile data customers and by 9.9% on a pre-IFRS 16 basis. an acceleration of service revenue increased by 10% year-on-year due growth following spectrum acquisition to increased efforts to attract new In 2019, our customer base in Algeria and enhanced network availability, customers, successful targeting decreased by 8% year-on-year to along with the continued expansion of voice-only customers for data SUMMARY PERFORMANCE 14.6 million, driven by a higher of Banglalink’s distribution footprint. services and network expansion. churn rate that also impacted our In local currency terms, total operating mobile data customer base, which revenue in Bangladesh increased In 2019, our mobile ARPU in Bangladesh declined in size by 5% year-on-year. by 4% year-on-year. increased by 0.5% and remained broadly level year-on-year with 2018 Mobile ARPU in Algeria decreased by 3% Adjusted EBITDA increased by at US$1.3. In local currency terms, 21% year-on-year due to increased year-on-year to US$4.2 mainly due to mobile ARPU in Bangladesh increased GOVERNANCE CORPORATE continued and intense price competition revenue and the impact of IFRS 16 by 1% year-on-year to BDT 112. in both voice and data services and adoption. In local currency terms, local currency devaluation. In local adjusted EBITDA increased by currency terms, our mobile ARPU decreased by 1% year-on-year. Revenue (BDT billion)

Bangladesh INFORMATION FINANCIAL

Bangladesh is another market where -6.9% we enjoy a strong market presence through our operating company, 48. 46. 4.3 Banglalink. It is an early-stage market 43. for digital services adoption but one where data demand is growing swiftly. At an industry level, this is INFORMATION ADDITIONAL currently being met largely through 3G networks, with 4G smartphone penetration still at comparatively low levels (around 10% at the end of 2019). This is a prime long-term opportunity for Banglalink, which already in the course of 2020 has seen the proportion of its data 1 Key economic indicators FY16 FY1 FY18 FY traffic carried on its 4G networks ​ rise to almost 50%. 165m 5.7% EBITDA Pre-IFRS 16 Population Inflation rate (BDT billion) Bangladesh is an example of how ​ ​ ​ 3G network expansion can provide abundant opportunities for growth in a ​ -26.%2 nascent mobile services marketplace. 1.0% 7.9% Here, we have continued to optimise our Population Real GDP 21.0 growth growth 3G network footprint through continued 18.8 investment, driving our population coverage to 72% by the end of 2019. Market characteristics 1.3 1.4 ​ At the same time, the rapid expansion 97% 18% of our 4G capacity is providing us with Market 4G market opportunities to actively engage our penetration share customers with various bundled offers ​ ​ ​ and digital products, including the video streaming platform Toffee ​ and the recent launch of our new 97% 10% Prepaid share 4G smartphone MyBanglalink self-care app. Taken FY16 FY1 FY18 FY together, these initiatives have enabled penetration Banglalink to strengthen its market 1. Key economic indicators sourced from 2. Growth excludes IFRS 16 impact in IMF database FY 2019

Integrated Annual Report 2019 VEON 70 TALENT MANAGEMENT

TALENT MANAGEMENT

VEON’s People Strategy is to create the VEON of the future together, today. To achieve this, we rely on our employees, and especially our leaders, to promote the VEON Values through their behaviour.

VEON VALUES

CUSTOMER OSESSED ENTRERENEURIAL TRUTFUL

COLLAORATIE INNOATIE

Our People and Organisation (P&O) 2. Enable people to shape This approach is delivered in departments ensure that we have and share VEON’s success part through our global Learning the right talent in place for each Management System (LMS) and Our values-based leadership role, and that each employee’s the VEON Academy, a self-service programme continued in 2019. The talents are nurtured through a platform that caters to employees’ programme focuses on aligning our range of innovative development individual learning needs. It also leadership development framework schemes to enable VEON to achieve provides guidelines on developing with VEON’s purpose, values and its organisational and business goals. skills on the job, as well as through business strategy. It supports our With this in mind, VEON’s approach consulting with peers and senior senior leaders to bring our values to to talent management focuses on leaders. The LMS is offered through life and lead cultural transformation the following priorities: partnerships with leading e-learning within the business. To cascade these content providers and custom-built messages throughout our business, learning interventions. 1. Having the right skills we also offer a tailored version of the for the future programme to middle management employees designated as ‘high There is a significant relationship 4. Working as one team potential’. This marks part of our between talent management The P&O community across VEON efforts to deliver a great employee and organisational performance. strives to work as one team by experience that drives engagement VEON’s senior management team sharing best practices, expertise and performance. is actively involved in the selection, and delivering results collectively. development and deployment of To ensure that the perspective strong leaders throughout the 3. Building a future-ready of all stakeholders is taken into business. This robust process has organisation consideration, all global initiatives enabled the placement of internal are designed and implemented Transformation is one of the biggest talent in key leadership roles. collectively. Similarly, locally led challenges for leaders in today’s business initiatives and priorities are discussed environment. Organisations must keep From mid-2018 through to 2019, regularly so team members can up with rapidly evolving customer learn from each other’s experiences. 42 appointments were made in needs and shifting industry dynamics. leadership roles including 60% sourced from internal talent. To To support VEON’s transformation How VEON develops talent prepare the succession pipeline, needs, a strategic workforce planning At every level in the organisation, employees attend talent reviews approach has been initiated. VEON’s we are exploring ways to develop at least once per year where they strategic workforce planning efforts employee talent. The VEON discuss their development and set are aimed at shaping and structuring Academy provides digital learning goals for the year ahead. our workforce in critical capability opportunities to VEON’s employees areas. This approach ensures through partnerships with world- sufficient and sustainable renowned digital learning providers, capability and capacity within as well as through the development the workforce to deliver on of custom content in collaboration VEON’s organisational objectives. with industry experts.

VEON Integrated Annual Report 2019 71 INTRODUCTION VALUE CREATION

This digital learning portfolio also Our collaboration with the telecommunications industry covers programmes focused on Coursera and LinkedIn Learning average of eight. unconscious bias, anti-harassment The VEON Academy, supported and building awareness of Similarly, for LinkedIn Learning, by CrossKnowledge, integrates VEON’s Code of Conduct. Similarly, 5,809 active learners accessed e-learning content from Coursera and SUMMARY PERFORMANCE to enhance female inclusion in 377,026 videos and spent over LinkedIn Learning. It provides VEON our leadership team, talented 21,000 learning hours on the employees with the opportunity to female leaders are developed platform. These statistics are develop their skill-set and further through a custom-designed above the 50th percentile of their education by managing their development programme. LinkedIn benchmarks for the learning journey at their own pace. technology industry. VEON has been recognised at VEON’s strong learning culture is the Brandon Hall Awards for GOVERNANCE CORPORATE demonstrated through the results From marketing to Best Learning Technology of our Coursera partnership. In 2019, Implementation. The award is programming with Coursera we had 20,076 course enrolments, recognition of VEON’s Group- VEON Academy operates in each leading to 273,500+ learning hours. wide efforts in rolling out the of our ten operating countries. It The average learning hours per VEON Academy. provides all our employees with the participant was 13.6, well above opportunity to expand their abilities in any way they choose, whether it is to take themselves to the next level INFORMATION FINANCIAL in their current role or branch out in another direction.

Hakob Baghdasaryan, a member of the marketing team at Beeline Armenia, chose to study Python Data

Structures, Data Structure, Tuple INFORMATION ADDITIONAL and Python Programming through a University of Michigan course.

As a child, I always wanted to become a programmer. I’ve always been good with technology. So recently, I decided to combine my knowledge in marketing with programming. I started to study Python and fell in love with it. I am very thankful to VEON and Coursera for these courses. The way you provide the information, the interactivity, the simplicity… everything is awesome! It’s very motivating.

Hakob Beeline Armenia

Integrated Annual Report 2019 VEON 72 TALENT MANAGEMENT CONTINUED

I had the Djezzy Academy The VEON Global Digithon has opportunity to In Algeria, Djezzy runs Djezzy proven to be an excellent learning and development opportunity, participate in an Academy, a digital platform designed to strengthen communication with as well as a chance for employees internal knowledge- employees. It includes personalised to network with colleagues from sharing training coaching and intensive development other functions and countries. programme. Doing courses that help employees reach It also provides exposure to senior management and inspiring mentors. the training in such a their professional goals and prepare supportive environment for promotion. Diversity and inclusion helped me to better A key part of the platform is internal at VEON understand the knowledge-sharing, where one VEON is committed to diversity and employee with specialist knowledge content. inclusion. To reinforce this commitment, is chosen to champion their subject employees’ feedback related to the and provides training to employees workplace and management practices Walid Zoubir of a different department, according are captured through focused surveys. Contract Manager, Djezzy to the needs of the business. All employees are invited to complete these surveys and to contribute So far, 304 employees have to turning the findings into action. been trained and many others In 2019, the participation rate Learning to lead at have been coached to lead future increased by three percent. Banglalink University training sessions. As part of our commitment to VEON strictly prohibits any form sustainable leadership development, VEON Global Digithon 2019 of discrimination or harassment. Banglalink has formed an initiative Employees who believe they termed Banglalink University and 2019 marked the fourth year have been discriminated against Virtual University. These programmes of VEON’s Global Digithon or harassed are encouraged to deliver classroom and e-learning for corporate Hackathon. The event report any incidents that violate different business units, including invites employees from each of VEON’s Code of Conduct and may leadership, sales and retail, and our operating companies and our do so via available SpeakUp channels. technology academies. headquarters to develop innovative solutions to a real-life business All contacts and investigations are treated confidentially. One of the University’s most problem. The Digithon had a strong successful programmes is ‘The Great business focus; participants were VEON’s policy also strictly prohibits Managers Programme’. This focuses given a business use case on the retaliation against any employee on honing leadership skills including commercial application of 5G. who has submitted a concern in people skills, financial acumen and The event brought together good faith, or participated in Banglalink-specific competencies. It is 53 participants from all ten an investigation. designed to turn good managers into operating companies, who great managers, preparing them for formed ten cross-market teams the next step in their careers. and battled to be crowned VEON’s 2019 Digithon champions. I can describe it in one sentence: an event with boundless learning possibilities. It felt like we were pitching for our own real start-ups. With a presentation skills coach on board to train us and assistance with the complex financial calculations, VEON supported Digithoners to think big and achieve more.

Ana Charkviani Digital Product Manager at Beeline Georgia, Global Digithon 2019 participant

VEON Integrated Annual Report 2019 73 INTRODUCTION

VEON is an equal opportunity employer and diversity is critical to the way VALUE CREATION we do business. We firmly believe that gender equality and inclusion is imperative for the growth of our business as well as our communities. Across our SUMMARY PERFORMANCE operations, we actively recruit and promote women, and ensure our female employees feel empowered to succeed at work. GOVERNANCE CORPORATE Jackie Simmonds Former Group Chief People Officer

Building a diverse workforce VEON’s commitment to operations. In countries where unions VEON’s workforce is comprised continuous improvement are established legitimately and duly represent members of our workforce, of more than 45 nationalities. This To ensure that VEON continues to we work together on matters including INFORMATION FINANCIAL provides richness of perspectives become a more diverse and inclusive employee remuneration and welfare. and opportunities for cross-cultural workplace where all employees We respect the various regulatory and growth. Additionally, 44% of our can reach their full potential, we cultural approaches to employees’ employees globally are female. In the are focused on development and freedom of association and collective developing economies where VEON progression paths and continuous bargaining paired together within operates, women are less present in listening. In 2020 and beyond, we will the framework of national laws and office environments. We are making continue to focus on building internal regulations of the countries in which strides in providing more women with capability and infrastructure across the INFORMATION ADDITIONAL we operate. the opportunity to join our business Company to support a diverse culture by providing benefits such as day-care and workplace. Our business leaders allowances and transportation. at all levels are committed to this goal, Furthermore, we do not impose Hiring on merit is critical; creating an and own the collective progress of restrictions or limitations on employees’ inclusive environment and providing advancing diversity and inclusion freedom to associate, unionise, equal opportunities to women across the organisation. We are also or to request collective bargaining. is equally critical. focused on increasing the level of transparency around these efforts. In markets where unions are VEON also benefits from the established and represent members representation of diverse age of our workforce, including Algeria, groups at different management Championing diversity Armenia, Kyrgyzstan, Ukraine and levels within the organisation. Young, from the top down the Netherlands, we work together high-potential employees are given a In recognition of our focus on on matters including employee chance to perform in key leadership diversity and inclusion, our then remuneration and welfare. We roles. Through global workforce Group Chief People Officer Jacky estimate that approximately 10% mobility, we build diverse teams and Simmonds was Highly Commended of our employees are covered by promote cross-market experiences. as Diversity Ally of the Year (2019) collective bargaining agreements at the European Diversity Awards. VEON’s broader continued Realising the importance of being commitment to human rights is demonstrated throughout our flexible about how, when and where Human rights work gets done, VEON also offers Group’s business principles and programmes that help employees VEON operates across numerous policies. Human rights issues are balance their work and life. These emerging market countries and is integral aspects of both the Group programmes include flexible working committed to human rights as a core Code of Conduct and Business Partner arrangements and the option to value that is intrinsic to how we conduct Code of Conduct, which all suppliers work from home. These benefits our business activities. Customer are required to comply with in order to contribute to employee satisfaction privacy, appropriate labour practices, work with our companies. In parallel, and retention, whilst increasing health and safety, equal employment the Group Health and Safety Policy productivity across VEON’s footprint. opportunities, diversity, anti-bribery, provides guidelines to maintain a safe and anti-corruption are considered and effective working environment for every day during the course of our all VEON employees and third parties.

Integrated Annual Report 2019 VEON 74 MANAGING OUR RISKS

MANAGING OUR RISKS

VEON has adopted the relevant criteria from the Committee of Sponsoring Organisations of the Treadway Commission (COSO) and Enterprise Risk Management (ERM) – Integrated Framework (2017) as the foundation of our enterprise risk management approach. Through VEON’s ERM framework, our management aims to identify, assess, adequately manage, monitor and report risks that could jeopardise the achievement of our strategic objectives. A unified and consistent ERM framework is used throughout the organisation.

Strengthening our risk culture: The second line of defence monitors Our Group Internal Control three lines of defence and facilitates the implementation of department has established and effective risk management practices maintains uniform governance, The ‘three lines of defence’ approach and internal controls by the first line. policies and control standards provides a simple and effective way The second line comprises Group that apply to controlled subsidiaries. to enhance communications around Internal Control, Group Enterprise Our ICFR testing results are reported risk management and control by Risk Management, Group Ethics and into our Board of Management, clarifying roles and responsibilities. Compliance, Group Legal, Group Risk, Ethics, and Assurance VEON has adopted this model Revenue Assurance and Fraud Committee (REAC) and our Audit to provide reasonable assurance Management, and Group and Risk Committee on a quarterly that risks to achieving important Cybersecurity. The second line basis as part of our assurance model. objectives are identified and mitigated. supports the business functions in identifying what could go wrong The Group Internal Audit team VEON recognises that the first and provides the methods, tools and comprises the third line of defence line of defence consists of the guidance necessary to support the and is responsible for providing business functions who own and first line in managing their risks. independent assurance to senior are responsible and accountable for management on the effectiveness directly assessing, controlling and As a publicly traded company on of the first and second lines of mitigating risks. Since 2016, targeted a U.S. stock exchange registered defence. The function conducts communication campaigns have with the U.S. Securities and ad hoc financial, information been launched globally to foster Exchange Commission, we must technology, strategic and operational risk and control awareness across comply with the Sarbanes Oxley Act audits and special investigations. the Group. (“SOX”). SOX Section 404 requires that Throughout, Internal Audit conducts management perform an assessment its activities in a manner based on a During 2019, an awareness of the Internal Controls over Financial continuous evaluation of perceived campaign using sport, games Reporting (“ICFR”) to confirm both the business risks. and the idea of teamwork to design and operational effectiveness highlight the importance of of the controls. To ensure strong oversight of and every individual’s contribution alignment between the three lines to effective risk management and Our internal control system is of defence, we established our Risk, a strong control environment was designed to provide reasonable Ethics and Assurance Committee launched to reinforce accountability assurance regarding the reliability (REAC), which is co-chaired by the and ownership for risk management of financial reporting and the Group Chief Financial Officer and and the internal control environment. preparation and fair presentation of Group General Counsel and includes VEON Ltd.’s published consolidated the Group Directors of each of the As part of this initiative, over 3,000 financial statements under generally assurance departments. employees were invited to take accepted accounting principles. The part in an e-learning campaign, VEON ICFR Framework incorporates including all local control and risk risk assessment as part of our owners, all assurance functions scoping process, an assessment and senior business leaders. As of of the design effectiveness of the 31 December 2019, 69% of these required controls, testing of the employees (2,164 out of the 3,137 operating effectiveness of the key invited) have completed the training. control activities and monitoring of As a next step, this training will be our financial reporting at entity-wide added to the onboarding materials and functional levels. of any new employee.

VEON Integrated Annual Report 2019 75 INTRODUCTION

Effective risk management requires a continuous and 1. CLARIFY 2. ASSESS OBJECTIVES AND AND

iterative process and IDENTIFY RISKS PRIORITISE VALUE CREATION RISKS involves the following five steps: Risk management

5. ASSURE in execution 3. RESPOND TO RISK SUMMARY PERFORMANCE

4. MONITOR, REPORT AND ESCALATE

REAC oversees and aligns the 1. Clarify objectives and VEON’s management also monitors GOVERNANCE CORPORATE activities of the Group’s various identify risks: and evaluates risk through our Risk risk and assurance functions to Ethics and Assurance Committee VEON’s strategy is developed with a coordinate and manage actions (REAC), which is co-chaired by the comprehensive understanding of the efficiently across the Group, Group Chief Financial Officer and strategic and inherent risks involved which includes (i) advising Group General Counsel and includes in doing business. We consider the senior management on matters the Group Directors of each of potential effects of the business concerning the risk, ethics and the assurance departments. REAC

context on risk profile as well as INFORMATION FINANCIAL compliance, including an overall oversees and aligns the activities possible ways of mitigating the risk and assurance vision and of the Group’s various risk and risks we are exposed to. strategy; (ii) overseeing activities assurance functions to coordinate to develop and maintain a and manage actions efficiently fit-for-purpose risk and assurance 2. Assess and prioritise risks: across the Group, which include: programme; (iii) engaging with Risks identified as relevant for VEON’s senior management VEON are assessed in order to • Advising senior management on on important developments in understand the severity of each matters concerning the risk, ethics INFORMATION ADDITIONAL the context of risk, ethics and risk to the ability to execute on and compliance, including an compliance; and (iv) acting as an VEON’s strategy and business overall risk and assurance vision escalation body to resolve issues objectives. The severity of risk is and strategy. around the management of assessed at multiple levels of the • Overseeing activities to develop Group risks. business as it may not be the same and maintain a fit-for-purpose across divisions, functions, and risk and assurance programme. Defining our risk appetite operating companies. • Engaging with VEON’s senior management on important In line with the COSO Framework, developments in the context the VEON ERM Framework 3. Respond to risk: of risk, ethics and compliance. categorises risk into four risk The assessed severity of the risk • Acting as an escalation body categories: strategic, operational, is utilised by management to to resolve issues around the financial and legal, and compliance determine an appropriate risk management of Group risks. and regulatory. Our risk appetite response (Take, Treat, Transfer is defined for each of the four or Terminate) which may include The Board of Directors maintains risk categories by considering implementing mitigations, taking a number of committees, including our business objectives, as well as into account the risk appetite. the Audit and Risk Committee, potential threats to achieving these. which expressly refers to its role in overseeing VEON’s On an annual basis, for each 4. Monitor, report and escalate: ERM framework in its charter. category of risk the Group Executive VEON’s Group Executive Committee Committee, Audit Committee and reviews significant risks assessed 5. Assure: Board of Directors define the risk and prioritised based on the Group’s appetite statements, which are then ERM framework. Members of the On a quarterly basis, through the integrated into the business through Group Executive Committee also management certification process, our global policies and procedures. regularly speak with VEON’s Board local CEO and CFOs certify significant of Directors, in particular with risks have been considered and the Audit and Risk Committee, appropriate measures have been to evaluate material Group risks. taken to manage the identified risks in accordance to the Group’s ERM policies and procedures.

Integrated Annual Report 2019 VEON 76 MANAGING OUR RISKS CONTINUED

Below is a summary of the key risks we face in operating our business and a discussion of certain mitigation efforts associated with these risks. For a more detailed discussion of the risks and uncertainties relating to our business, see Item 3D. – Risk Factors of our annual report on Form 20-F for the year ended December 31, 2019 filed with the SEC.

RISK EXAMPLES OF HOW WE MITIGATE

1. Market Our business is subject to a variety of market-related • We manage our capital structure and use market risks across our geographies. These include: opportunities where possible to manage risks • Foreign exchange-related risks since a significant relating to the impact of currency movements proportion of our costs and liabilities are in US on our financial performance. dollars and Russian rubles whereas our revenues • We are monitoring and responding to technology are in a variety of local currencies. developments and competitor activity that could • Competition since we operate in highly have an impact on us achieving our goals. competitive markets which may impact our • We continue to engage in dialogue with local ability to attract and retain customers and industry regulators to ensure we understand achieve our financial targets. the requirements and challenges of local • Keeping pace with technology since our markets and adapt our services accordingly. future success will depend on our ability to keep • We are continuing to assess and take what we pace with investments in current technologies believe are the necessary steps to ensure the and technological changes in our industry and continuity of our operations and the safety of deploying networks and services that these enable. our employees during the COVID-19 pandemic • Macroeconomic developments given that we and have implemented a broad range of operate in a variety of markets that may be subject measures to help our customers, including tariff- to adverse economic, political and regulatory factors free access to public health resources and our which may impact the operating environment for content services, additional data and minutes and our services. waived late fees. For a summary of these measures • Implications of the COVID-19 pandemic, or those by market, please refer to the table on page 79. relating to similar public health developments, which may impact our operations and those of our customers and suppliers, as well as the economies in which we operate.

2. Liquidity and capital Our business requires considerable financial capital in • We have a centralised treasury function whose job order to invest in the growth opportunities we identify. is to manage liquidity and funding requirements as This requires us to manage a number of risks relating well as our exposure to financial and market risks. to capital and liquidity. These include: • We adopt a prudent approach to managing our • Liquidity risk since as a holding company, VEON Ltd. balance sheet leverage and have been increasing the depends on the performance of its subsidiaries and level of our local currency borrowing and maintain their ability to pay dividends, and may therefore borrowing headroom in our revolving credit facilities. be affected by changes in exchange controls and currency restrictions in the countries in which its subsidiaries operate. • Banking and financial counterparty risk given that the banking systems in many countries in which we operate remain underdeveloped and there are a limited number of creditworthy banks in these countries with which we can conduct business, and currency control requirements restrict activities in certain markets in which we have operations. • Debt service risks given that substantial amounts of indebtedness and higher debt service obligations could materially impact our cash flow and affect our ability to raise additional capital. • Access to capital since a significant rise in our indebtedness would imply higher debt service obligations, which may not be fully covered by our cash flow and could hinder our ability to access capital markets on acceptable terms.

VEON Integrated Annual Report 2019 77 INTRODUCTION VALUE CREATION

RISK EXAMPLES OF HOW WE MITIGATE​

3. Operational SUMMARY PERFORMANCE Ours is a complex business operating across ten • Our new strategy framework has been conceived markets at various levels of development and each with our local businesses in mind and their ability with a variety of opportunities and challenges. to expand their services beyond traditional voice These give rise to operational risks, which include: and data connectivity. • Challenges in local implementation of our • We remain committed to simplifying our business strategic initiatives, which could be affected by structure, which extends to our local partnerships.

a variety of unforeseen issues, including (but not • We monitor and log our network and systems, and GOVERNANCE CORPORATE limited to) technological limitations, regulatory keep raising our employees’ security awareness constraints and insufficient customer engagement. through training, and operate a structured • Partnership risks given that we participate in vulnerability scanning process within our security strategic partnerships and joint ventures in a operations centres. number of our markets, agreements around which • We maintain good bilateral relationships with the may affect our ability to execute on our strategy regulatory authorities in our operating markets and, where the consent of our partners is required, in order to help us understand and adapt to their

to withdraw funds and dividends from these entities. concerns and needs with respect to local regulation. INFORMATION FINANCIAL Partnerships could also give rise to reputational • We conduct risk-based due diligence on our business and indirect regulatory risks with respect to the partners and mitigate apparent risks through behaviours and actions of our partners, as well as contractual requirements, representations, risks surrounding losing a partner with important indemnities, warranties, etc. insights in the local market. • We regularly monitor the media presence and • Cyber-attacks and denials of service, to which reputations of our partners and respond accordingly. telecoms providers are vulnerable given the open INFORMATION ADDITIONAL nature of their networks and services, which could result in financial, reputational and legal harm to our business should these succeed in disrupting our services and result in the leakage of customer data or of our intellectual property. • Dependence on our vendors, since we depend on third parties for certain services and products important to our business. • Spectrum and licence rights given that the success of our operations depends on acquiring and maintaining spectrum and licences in each of our markets, most of which are granted for specified terms with no assurance that they will be renewed once expired, or at what price.

Integrated Annual Report 2019 VEON 78 MANAGING OUR RISKS CONTINUED

RISK EXAMPLES OF HOW WE MITIGATE​

4. Legal Our business is subject to a variety of laws and • Our Ethics & Compliance and Legal teams regulations, including: maintain oversight and expertise from HQ and • Unethical or inappropriate behaviour, which could rely on dedicated local teams with knowledge result in fraud or a breach of regulation or legislation of the legal and regulatory requirements of each and could, in turn, expose VEON to significant of our operating markets and supplement with penalties, criminal prosecution and damage to external counsel when required. our brand and reputation. • We maintain a privacy programme that includes data • Regulation and compliance risks given that we privacy controls such as privacy assessments, data operate in a highly regulated industry, operate in breach response processes and individual rights uncertain regulatory environments and are subject processes, to ensure we comply with EU and local to a large number of laws and regulations, which data privacy laws for the collection and processing change from time to time, vary between jurisdictions of personal data for our services, human resource and can attract considerable costs with respect to management and compliance processes. regulatory compliance. • We maintain appropriate know-your-customer (KYC) • Unpredictable tax claims, decisions, audits and anti-money laundering (AML) controls across our and systems which could give rise to significant DFS products and services as required by local rules uncertainties and risks that could complicate and international best practices. our tax planning and business decisions. • Data privacy since we collect and process customer personal data, we are subject to an increasing amount of data privacy laws and regulations. In some cases, these laws and regulations also bring restrictions on cross border transfers of personal data and surveillance related requirements to store data and contents of communication for minimum periods. The costs and operating consequences of these laws and regulations may affect the performance of our business. • Money laundering rules which require anti-money laundering (AML) and counter-terrorism financing (CTF) systems and controls due to our expansion of digital financial services (DFS) offerings beyond our core telecommunications services. • Sanctions and export controls risks since we may be subject to, depending on the transaction or business dealing, laws and regulations prescribed by various jurisdictions, including the United States, the United Kingdom and the European Union. Applicable requirements remain subject to change and may impact our ability to conduct business in certain countries and with certain parties with which we have services, supply or other business arrangements.

VEON Integrated Annual Report 2019 79 INTRODUCTION

RISK EXAMPLES OF HOW WE MITIGATE​

5. Geographical and political VALUE CREATION Our geographic footprint subjects us to a variety of • We manage a diverse portfolio of emerging markets political factors and uncertainties which could have businesses, which helps ensure that in the event of a bearing on our business operations. These include: a market underperforming for whatever reason its • Sanction and export controls risks since we impact on the financial and operating performance may be subject to, depending on the transaction of the Group as a whole is limited. or business dealing, laws and regulations prescribed • We act as long-term investors in the network by various jurisdictions, including the United States, infrastructure of our operating markets and ensure the United Kingdom and the European Union. that our networks are adequately served, including SUMMARY PERFORMANCE Applicable requirements remain subject to change through the provision of off-grid power where and may impact our ability to conduct business necessary. By helping to generate economic activity in certain countries and with certain parties and prosperity within the communities we serve, we with which we have services, supply or other believe our operations can act as a positive catalyst business arrangements. for the broader development of the nations that • Emerging markets-related risks given that nine host us.

of our ten operating markets are in the developing GOVERNANCE CORPORATE world and are subject to a varying degree of political, economic and legal variability around issues such as foreign exchange policy, capital controls and rules on foreign investment. • Infrastructure risks given that the physical infrastructure in some of our markets is in poor condition and may require significant investment by local governments or additional expenditures by us INFORMATION FINANCIAL in order to sustain our operations and services. INFORMATION ADDITIONAL COVID-19: Supporting the communities we serve At the time of writing, we are seeing first-hand how the Set out in the table below is a summary of measures COVID-19 pandemic is affecting individuals, families, we have taken to help our customers, including offering businesses and industries across our ten operating additional data and minutes, enabling free access to our markets. As a provider of vital infrastructure, we content services and waiving late fees. We will continue to recognise that in moments like these, we must ensure work with our operating companies to deliver the services that communities stay connected and work together that our employees, customers and communities need to overcome this unprecedented global challenge. while doing whatever we can to share helpful information on government guidance. Our priority has been the health and safety of our employees and our 212 million customers. Helping to VEON would like to acknowledge and thank all of those protect lives, safeguard livelihoods and enhance lifestyles around the world who are working on the front line of this at this difficult time defines our role in the global effort to crisis to protect us all. fight this pandemic.

Russia Pakistan Ukraine Kazakhstan Uzbekistan Bangladesh Algeria Georgia Armenia Kyrgyzstan Free access to emergency healthcare and foreign affairs hot lines and websites Increased or free roaming data and voice stranded citizen Free or discounted access to educational platforms or resources on mobile More flexible payment terms for affected customers B2B customer support for home working Free TV access (e.g. Beeline TV, Toffee) for all those who are quarantined Healthcare awareness (through apps, sms, social media, hotlines etc.) Content services free for new & discounted for existing customers Subsidised data and calls for front line companies Self care apps re-purposed for COVID-19

Full details of our activities may be found on each operating company’s website.

Integrated Annual Report 2019 VEON 80

CORPORATE GOVERNANCE

Corporate Governance Our Governance Structure 82 Our Board of Directors 86 Our Group Executive Committee 89 Nominating and Corporate Governance Committee 92 Finance Committee 93 Audit and Risk Committee 94 Compensation Committee 95 Remuneration Report 96

VEON Integrated Annual Report 2019 PERFORMANCE CORPORATE FINANCIAL ADDITIONAL INTRODUCTION VALUE CREATION 81 SUMMARY GOVERNANCE INFORMATION INFORMATION VEON Integrated Annual Report 2019 82 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

VEON is committed to delivering high standards of corporate governance, both now and in the future. Our governance structure is designed to promote integrity in everything we do and we are committed to responsible and effective governance as a core element of our culture.

GROUP BOARD OF DIRECTORS Ursula Burns

BOARD COMMITTEES

NOMINATING FINANCE AUDIT AND RISK COMPENSATION AND CORPORATE GOVERNANCE

Gennady Gazin Andrei Gusev Robert Jan van de Kraats Guillaume Bacuvier

VEON Integrated Annual Report 2019 83 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE

VEON’s governance structure individuals with sufficiently diverse We ensure appropriate Our governance structure reinforces and independent backgrounds. integrity by providing appropriate All members of the Board possess oversight through: oversight over the decisions we relevant industry experience, including • Active Board supervision of make and the actions we take. all seven independent members. the Chief Executive Officers. Our governance emanates from • Effective oversight of senior requirements imposed on our The Company’s bye-laws empower management and Group. GOVERNANCE CORPORATE ultimate parent company, a Bermuda the Board to direct the management operating companies through corporation listed on NASDAQ and of the business and affairs of the the Group Authority Matrix. Group. Our bye-laws require that the Euronext Amsterdam. All activities • Committing to the alignment Board approves important matters of VEON and its Group operating of management compensation including, among others, the Group’s companies must comply with with the long-term interests of annual budget and audited accounts, applicable corporate governance our shareholders. statutes and listing rules. organisational or reporting changes INFORMATION FINANCIAL to the management structure, In order to ensure our Accordingly, the Company has significant transactions as well as Board is as effective as adopted bye-laws which establish changes to share capital or other significant actions. possible, we have brought clear rules of governance, ranging together a diverse group from matters requiring approval of uniquely qualified of the Company’s shareholders Moreover, under Bermuda law, the and members of its Board, conflict Board has the right to require that individuals. of interest requirements, and any matter come to the Board for • The Board’s majority of INFORMATION ADDITIONAL Director and management duties approval and any Board member independent members and obligations. may bring forward an item for the ensures independent Board agenda, ensuring that the decision-making. The main governance bodies of the Board provides appropriate oversight • Our female Board chair and Group include the Company’s Board over Group matters. the diverse backgrounds of and the Board’s Committees, the our Board members reflect Company’s Chief Executive Officers In addition to the Nominating and the Group’s commitment and its Group Executive Committee, Corporate Governance Committee, to diversity. the Chief Executive Officers of the the Board has established an Audit • All Board members have operating companies of the ten and Risk Committee, a Compensation relevant industry experience. Committee and a Finance Committee, countries in which the Group • An annual self-evaluation each of which is profiled individually operates and the Board of process ensures ongoing in the rest of this section. Directors (or equivalent) of effectiveness of our these operating companies. Board membership. The Board takes great efforts to ensure its effectiveness and alignment with VEON Board of Directors the long-term interests the Company’s The Board consists of 11 members, shareholders. The Nominating and a majority of whom are independent Corporate Governance Committee as defined in the NASDAQ rules*. periodically conducts an evaluation of All Board members are elected the Board to determine whether it is by our shareholders through functioning effectively and meeting its a cumulative voting process. objectives and goals. In doing so, the Nominations to the Board are Committee solicits comments from managed by its Nominating and all Directors, the Company’s senior Corporate Governance Committee, executives and everyone else it which is led by an independent deems appropriate and reports its member of the Board. The conclusions and recommendations Committee looks to ensure that for maximising the Board’s Board membership consists of effectiveness to the Board.

** As determined by the Board in 2019.

Integrated Annual Report 2019 VEON 84 CORPORATE GOVERNANCE CONTINUED

Likewise, in order to ensure of the Company and its subsidiaries company’s governing documents alignment with the long-term as a whole, including execution of and local law. These members also interests of the Company’s the Group’s strategy, driving financial work to create greater clarity on shareholders, the Compensation performance, and overseeing and expectations for the operating Committee periodically evaluates the coordinating Group-wide initiatives. company Chief Executive Officers compensation of Company Directors and tighten information between the taking into account the competitive The Group Executive Committee is operating company and the Group. landscape, the compensation currently comprised of the Group In doing so, these members work to of directors at other comparable co-Chief Executive Officers, their promote a culture of collaboration companies and recommendations direct reports, including the Chief and entrepreneurship between the regarding best practices. Following Financial Officer, the Deputy Chief Group and our operating companies. review by the Nominating and Financial Officer, the Group Chief Corporate Governance Committee, Strategy Officer, the Chief Technology Sustainability team both the Compensation Committee Officer, the Group General Counsel, and the Nominating and Corporate the Group Chief People Officer, As part of the Corporate Governance Committee make and the Group Chief Compliance Communications department, recommendations to the Board Officer, as well as the Chief Executive the Sustainability team reports on Board compensation. Officers of certain of the Company’s to the Group Head of Investor significant operating subsidiaries. Relations, who in turn reports to the Group Chief Strategy Officer. Group management Prior to their appointment as Group co-Chief Executive Officers in March During 2019 the team reported To ensure appropriate oversight, 2020, the Company’s Chief Operating to the Chief People Officer who in the Board delegates to the Officers served on the Group turn reported to the Group Chief Company’s Chief Executive Officers Executive Committee. Executive Officer. the power to manage the Company’s business, except in certain important The team regularly carries matters that are reserved for Board Group Operating Company out employee communication approval. These include, among Governance around the Group’s approach others, the Company’s annual The Group’s commitment to to sustainability, reinforcing our budget and audited accounts, delivering high standards of commitment to doing business organisational or reporting changes corporate governance extends with integrity and transparency. to the management structure, and to our operating companies. The We also share best practices, significant transactions, as well as Group Authority Matrix empowers ongoing challenges and emerging changes to share capital or other the Chief Executive Officer of each of issues across the businesses significant actions. its operating subsidiaries to manage through monthly update calls. the business and affairs of his or her Operating company sustainability To further reinforce integrity respective operating company within teams regularly share programmatic and accountability and provide certain parameters, which are set updates with their respective appropriate oversight, the Board out in the matrix. Each operating senior management. These has adopted a Group Authority company and its Chief Executive include major developments as Matrix which identifies matters Officer are fully accountable for all well as any challenges encountered requiring the approval of the Board, business and affairs of the operating in the implementation of projects. matters requiring the approval of company, including operational the Group Chief Executive Officers performance and ensuring proper We publish our Sustainability and matters which are within the compliance and controls. The Chief Strategy, performance and authority of certain members of the Executive Officer of each operating programmes in our annual Group Executive Committee. In doing company is also responsible for Sustainability Report which so, the Board ensures that the Group ensuring that all matters are properly also contains information on as a whole operates in an efficient, approved in accordance with the our environmental, social, and effective and compliant matter while Group Authority Matrix, Group governance-related performance. providing that all activities and policies and the Company’s bye-laws. Information on our sustainability transactions across the Group are programmes and commitments is analysed and executed with proper Each operating company, as required also available on our website. authorities and accountability within by local law, maintains a board of a clear framework of compliance directors or equivalent governing and controls. body. These operating company boards have specific duties and Group Executive Committee responsibilities under the operating company’s organisational documents. The Chief Executive Officers in turn The composition of the operating delegate certain matters to members company boards includes in part of the Company’s Group Executive certain members of the Group Committee. This operates as an Executive Committee, who advisory committee focused on the ensure full compliance with the management of the business affairs requirements of the operating

VEON Integrated Annual Report 2019 85 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE GOVERNANCE CORPORATE INFORMATION FINANCIAL INFORMATION ADDITIONAL

Integrated Annual Report 2019 VEON 86 BOARD OF DIRECTORS

BOARD OF DIRECTORS

Ursula Burns Guillaume Bacuvier Osama Bedier Mikhail M. Fridman Chairman

Ursula Burns has served as Guillaume Bacuvier has been Osama Bedier has been a Mikhail M. Fridman has been the Chairman of the Board a member of the Board since member of the Board since a member of the Board since since July 2017 and served as the July 2018 and is serving as July 2018. April 2010. Company’s CEO from December the chairman of the Board’s 2018 until February 2020. Compensation Committee. Mr. Bedier is the founder and Mr. Fridman was a member of Chief Executive Officer of Poynt, the board of directors of OJSC Ms. Burns has served as Director Mr. Bacuvier has served as which develops and markets a VimpelCom from July 2001 of Exxon Mobil since 2012, and the Chief Executive Officer of credit card processing terminal until April 2010. He currently Nestlé and Uber Technologies Dunnhumby Limited, a global for small businesses. Mr. Bedier serves as the Chairman of since 2017 and previously provider of customer data also serves on the Boards of the Supervisory Boards of the served as a director of Xerox science, since 2017. From 2007 QIWI, WePay and PayRange. Alfa Group Consortium and Corporation from 2007 to 2017, to 2017, Mr. Bacuvier held a a member of the board of as Chairman of its Board of number of senior positions Prior to founding Poynt, directors of JSC Alfa-Bank Directors from 2010-2017 and at Google: Vice President Mr. Bedier served as the Vice since 1994, ABH Holdings as its Chief Executive Officer of Advertising Solutions, President of Payments at Google S.A. since 2015, LetterOne from 2009 to 2016. EMEA (2015-2017); Managing from 2011 to 2013, where he Holdings SA since 2013, Director, Products, Solutions & created Google Wallet. Prior to LetterOne Investment Holdings Ms. Burns was appointed by U.S. Innovations, Southern & Eastern Google, Mr. Bedier spent nine SA since 2015 and LetterOne President Barack Obama to help Europe, Middle East & Africa years running product and Core Investments SARL since lead the White House national (2011-2014); Director of Mobile engineering at PayPal. He 2019. Mr. Fridman has also program on Science, Technology, Sales & Operations, Southern & has also held engineering served as a member of the Engineering and Math (STEM) Eastern Europe, Middle East leadership roles at eBay, Supervisory Board of X5 from 2009 to 2016. Ms. Burns and Africa (2010-2011); Gateway Computers and RETAIL GROUP N.V. since 2006. also served as chair of the Head of Global Key Accounts, AT&T Wireless. President’s Export Council from Technology (2007-2010); and Mr. Fridman is a member 2015 to 2016 as well as vice Head of Industry Marketing, of the Public Chamber of Technology EMEA (2006). Mr. Bedier holds a bachelor’s chair from 2010 to 2015. She degree in Computer Science from the Russian Federation. From also provides leadership counsel University of California, Riverside. 1986 until 1988, he served to several other community, Prior to Google, Mr. Bacuvier as an engineer at Elektrostal educational and non-profit was with global mobile Metallurgical Works. organisations including the Ford telecommunications provider Foundation, the Massachusetts Orange from 2005 to 2006 Mr. Fridman graduated Institute of Technology (MIT) and with technology strategy with honours from the Corporation, Cornell Tech Board consulting firm Booz Allen Faculty of Non-Ferrous Metals of Overseers and the New York Hamilton from 1998 to 2005. of the Moscow Institute of City Ballet among others. Steel and Alloys in 1986 and Mr. Bacuvier holds an in 1989, together with his Ms. Burns is a member of the M.B.A from INSEAD-Europe partners, founded the National Academy of Engineers Campus, a master’s degree Alfa Group Consortium. and the American Academy of in Telecommunications Arts and Sciences. She holds a from Telecom ParisTech master’s degree in Mechanical and a bachelor’s degree from Engineering from Columbia École Polytechnique de Paris. University and a bachelor’s degree in Mechanical Engineering from Polytechnic Institute of New York University.

VEON Integrated Annual Report 2019 87 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE

Gennady Gazin Andrei Gusev Gunnar Holt Sir Julian Horn-Smith GOVERNANCE CORPORATE

Gennady Gazin has served as a Andrei Gusev has been a Gunnar Holt has been a Sir Julian Horn-Smith has been member of the Board since June member of the Board since member of the Board since a member of the Board since 2015, and served as an alternate April 2014. Mr. Gusev is June 2015. Mr Holt is serving July 2014. Sir Julian is a member director of the VEON Ltd. Board serving as chairman of the as a member of the Board’s of the Board’s Nominating from October 2014 until his Board’s Finance Committee Audit and Risk Committee, of and Corporate Governance appointment as a director. and as a member of its its Finance Committee and of Committee. Sir Julian served Nominating and Corporate its Compensation Committee. as a member of the Board’s INFORMATION FINANCIAL Mr Gazin is serving as the Governance Committee. special committee overseeing chairman of the Board’s Mr. Holt was a Senior Advisor at the internal investigation Nominating and Corporate Mr. Gusev is a senior partner at Telenor ASA from 2006 to 2017 and the Company’s response Governance Committee and LetterOne Technology (UK) LLP, and previously served as Group to the inquiries by various as a member of its Audit and joining in 2014, and was a Finance Director. From 1995 to authorities until its dissolution Risk Committee. He served managing director at Altimo 1999, he worked at Aker ASA on August 3, 2016. as Chairman of its special from 2013 to 2014. Mr. Gusev and Aker RGI ASA, serving as committee overseeing was Chief Executive Officer Executive Vice President and Sir Julian is active in the global the internal investigation of X5 Retail Group N.V. from CFO. From 1986 to 1995, telecommunications sector and the Company’s response 2011 to 2012 and prior to that, he held various leadership as a Senior Advisor to UBS INFORMATION ADDITIONAL to the inquiries by various from 2006 to 2010, served positions in the Aker Group, Investment Bank in London and authorities until its dissolution as its Director of Business including Deputy President Senior Advisor to CVC (Telecoms on August 3, 2016. Development and M&A. of Norwegian Contractors AS, and Media). He also serves as an Executive Vice President and advisor to LetterOne. Mr. Gazin has served as an From 2001 to 2005, Mr. Gusev Chief Financial Officer of Aker Affiliate Partner at Lindsay served as Managing Director Oil and Gas Technology AS, Sir Julian previously served as Goldberg, a New York based of the Alfa Group with overall President of Aker Eiendom AS, Senior Advisor to the Etisalat private equity firm, since 2015; responsibility for investment and Finance and Accounting Group board from 2011 to 2014. Chairman of the Board at planning. Prior to that, Mr. Gusev Director of Aker Norcem AS. Sir Julian was a member of the Genesis Philanthropy Group worked at Bain & Company and From 1978 to 1986, he served founding management team of since 2014; and a member of Deloitte Consulting. as Executive Officer and Special Vodafone Group Plc. He retired the advisory board of LetterOne Advisor in the Norwegian from Vodafone in July 2006, Ministry of Petroleum and Technology LLP since 2015 and Mr. Gusev received an M.B.A. where he held a number of DVO Private Equity since 2018. Energy. Mr. Holt has served on senior positions, including from the Wharton School at a number of corporate boards. From 2007 to 2012, Mr. Gazin the University of Pennsylvania Deputy Chief Executive Officer served as CEO of EastOne, in 2000 and a diploma with and member of the board. He an international investment honours from the Department Mr. Holt holds a Doctor of currently serves as a member of advisory group. Prior to EastOne, of Applied Mathematics and Business Administration the board of Digicel, a Caribbean Mr. Gazin worked at McKinsey & Computer Science at Lomonosov degree and Advanced and Pacific operator. Company’s New York and Moscow State University in 1994. Postgraduate Diploma in Moscow offices for 14 years, Management Consultancy During his career in international during which time he was from Henley Management telecommunications, Sir Julian an active member of the College, Brunel University, has served as Chair of both the Telecommunications practice in the United Kingdom; an Mannesmann Supervisory and and also served as the Senior M.B.A. from the University of Management boards, as well Partner responsible for Queensland in Australia, and as a Director on a number of McKinsey’s CIS practice. an M.B.A. in finance from the company boards, including University of Wisconsin. He Lloyds Banking Group plc, Mr. Gazin received a bachelor’s also received a Diplomøkonom Smiths Group, China Mobile, degree in Electrical Engineering from The Norwegian School eAccess in Japan, De la Rue plc, from Cornell University in 1987, of Management. Verizon Wireless and SFR a master’s degree in Electrical in France. Sir Julian earned Engineering from Stanford a Bachelor of Science University in 1988 and an M.B.A. in Economics from the from the Wharton School of University of London in 1970 Business at the University of and a Master of Science from Pennsylvania in 1993. the University of Bath in 1979.

Integrated Annual Report 2019 VEON 88 BOARD OF DIRECTORS CONTINUED

Robert Jan van de Kraats Guy Laurence Alexander Pertsovsky Directors: gender

Robert Jan van de Kraats has Guy Laurence has been a Alexander Pertsovsky has been a member of the Board member of the Board since been a member of the Board since July 2018, serving as the July 2017. since July 2018 and is serving Chairman of the Board’s Audit as a member of Board’s and Risk Committee. He was Mr. Laurence brings more than Compensation Committee. appointed as Chairman of the 30 years of global experience in Board of TMF Group earlier telecommunications, media and Mr. Pertsovsky joined LetterOne this year. He has served as pay television. Mr. Laurence Technology in London in a non-executive director/ was previously CEO at Rogers, January 2018 from Bank of supervisory board director with a CDN$14bn telecoms and America Merrill Lynch. At Royal Schiphol NV since 2015 media group in Canada, Bank of America Merrill Lynch, and OCI NV since 2014. He has and prior to that he worked Mr. Pertsovsky served as the served as an advisor to the at Vodafone for 13 years Country Executive for Russia & 9% Female Dutch Authority for the Financial holding several senior positions CIS from February 2013. 91% Male Markets (AFM) and previously including CEO of Vodafone UK, served as the Chief Financial operating in one of the most Officer and a member of the Prior to Merrill Lynch, Mr. competitive and mature Pertsovsky was at Renaissance Non-Executive Executive Board of Randstad communications markets Holding NV from 2001 to 2018, Capital, which he joined in 2002 Directors: years in the world, and CEO of and oversaw the institutional serving as the Vice Chairman Vodafone Netherlands. of service of the Executive Board from securities business and our 2006 to 2018. activities in Russia. He became Mr. Laurence holds a number Chief Executive Officer of of directorships, including of Renaissance Capital in 2007. Mr. Van de Kraats served as a Vodafone UK Ltd., Maple Leaf member of the Commission on Sports & Entertainment, Chelsea Dutch Corporate Governance Mr. Pertsovsky holds an MS FC plc and Chelsea Football degree in Applied Mathematics from 2013 to 2017, which Club Ltd. designed a new corporate from the Moscow Institute governance code for the of Radio, Engineering and Netherlands. He was a member Automation. He also received an of the supervisory boards of M.B.A. from Columbia University bank and insurance provider in 2002. SNS Reaal from 2006 to 2013, financial services provider SRLEV NV, and information 0-3 years: 55% and telecommunication services 3-6 years: 27% provider Ordina NV from 2004 to 2012. In addition, he served on 6-10 years: 18% the management board of Dutch credit insurance company NCM Directors: ages Holding NV (now Atradius) from 1999 to 2001 as Chief Financial Officer and Chief Operating Officer for a business line. Mr. Van de Kraats began his career in 1979 with Deloitte Dijker van Dien (now part of PwC). In 2007, he founded the Barcode for Life Foundation, an organisation that supports research into DNA analysis in order to improve treatment of cancer. 41-50: 27% 51-60: 46% 61-71: 27%

VEON Integrated Annual Report 2019 89 INTRODUCTION GROUP EXECUTIVE

COMMITTEE VALUE CREATION SUMMARY PERFORMANCE

Kaan Terzioğlu Sergi Herrero Murat Kirkgöz Scott Dresser GOVERNANCE CORPORATE Co-Chief Executive Officer Co-Chief Executive Officer Group Deputy Chief Group General Counsel Financial Officer

Kaan Terzioğlu has served as Sergi Herrero has served as Murat Kirkgöz has served as Scott Dresser has served Group co-Chief Executive Officer Group co-Chief Executive Officer Group Deputy Chief Financial as VEON’s General Counsel since March 2020. Previously, since March 2020. Previously Officer since July 2019. He since September 2014. Prior to he served as a joint Chief he served as Chief Operating joined VEON in December 2016 joining VEON, Mr. Dresser was Operating Officer of the Officer of VEON Ventures from as Chief Financial Officer Eurasia. most recently Vice President

Company from November September 2019. of Global Strategic Initiatives at INFORMATION FINANCIAL 2019, and as a member of the Prior to joining VEON, Mr Kirkgöz BirdLife International, a global Company’s Board from June Prior to joining VEON, served as Group CFO of Turk conservation organisation. 2019 until November 2019. Mr. Herrero was Facebook’s Telekom from 2012 to 2016, Between 2006 and 2012, Mr. Global Director of Payments where he held a leading role in Dresser was with Virgin Media Mr. Terzioğlu was Turkcell’s Chief and Commerce Partnerships its business transformation in in the UK, including serving as Executive Officer from April 2015 where he oversaw the launch becoming the largest integrated General Counsel, where he led until March 2019. Mr. Terzioğlu and growth of payment and telecom operator in Turkey. its legal department and acted is the recipient of the 2019 commerce capabilities for as principal liaison with Virgin Outstanding Contribution Award Messenger, WhatsApp and Media’s Board of Directors, as

Mr Kirkgöz has 18 years of INFORMATION ADDITIONAL to the Mobile Industry in Turkey. Instagram. He also led the well as being a member of its finance and telecom experience Executive Management Team. He has served as a member of deployment of Charitable Giving, under various roles in several the Board of Directors of Digicel the scaling and optimisation telecom operators (Aria, Avea, since July 2019. of the Facebook Ads Oger Telecom, TurkTelekom). Mr. Dresser previously held payments business and drove He holds a BS degree in positions with White Mountains Mr. Terzioğlu has served the expansion of the platform’s Mechanical engineering from RE Group in the role of Senior on the GMSA board, the global marketplace. Before Bogazici University in Turkey. Vice President and Associate leading international mobile joining Facebook in 2014, General Counsel from 2005 to communication organisation, he held several senior roles 2006. From 2002 to 2005, he for three consecutive terms in technology, banking served as Senior Advisor for and is currently on the board of and consulting. Legal and Financial Affairs the GSMA Foundation focusing for the International Global on “Mobile Communications Mr. Herrero holds an MSc Conservation Fund (an for Development”. He is also in Telecommunications international environmental on the advisory board of the Management from Spain’s conservation organisation), World Economic Forum Center Ramon Llull University, prior to which he held positions for Fourth Industrial Revolution. in addition to an earlier at Morgan, Lewis & Bockius Mr. Terzioğlu also served as a undergraduate degree LLP and at Lord Day & Lord, board member for “Turkey’s Car” in Electrical Engineering. Barrett Smith. Initiative and was the chairman of the Mobile Telecommunications Mr. Dresser studied at the Operators Association (m-TOD). Vanderbilt University School From 2012 to 2015, Mr. Terzioğlu of Law and University of New served as a member of the Hampshire and was admitted board of directors at Akbank, to the Bar, in New York Aksigorta A.Ş., Teknosa Iç ve Diş and Connecticut, in 1993. Ticaret A.Ş. and Carrefoura A.Ş. Mr. Dresser is on the advisory board of BirdLife International. Mr. Terzioğlu began his professional life at Arthur Andersen Turkey, and later undertook several roles in information technologies at Arthur Andersen in the United States and Belgium. He graduated from the Department of Business Administration at Boğaziçi University.

Integrated Annual Report 2019 VEON 90 GROUP EXECUTIVE COMMITTEE CONTINUED

Joshua Drew Alex Kazbegi Jacky Simmonds Oleksandr Komarov Group Chief Compliance Group Chief Strategy Group Chief People Officer CEO Kyivstar (Ukraine) Officer Officer

Joshua Drew has been VEON’s Alex Kazbegi was appointed as Jacky Simmonds was appointed Oleksandr Komarov has Group Chief Compliance Officer Chief Strategy Officer of VEON as VEON’s Group Chief People served as CEO of Kyivstar in since October 2017. Mr. Drew in February 2019. Officer in October 2017. Ukraine since December 2018, joined VEON in July 2016 as previously serving as interim Associate General Counsel and Prior to joining VEON, Ms. Simmonds has experience CEO of Kyivstar from July 2018 was appointed Acting Group Mr. Kazbegi was Head of across a number of sectors to December 2018. In addition, Chief Compliance Officer in Research and an equity including travel, tourism and Mr. Komarov served as CEO March 2017. analyst for Renaissance aviation in over 25 years working of Beeline Kazakhstan from Capital from 2002. From 1995 as an HR Executive, bringing 2016 to 2019 and as the In his role as VEON’s Group Chief to 2002, Mr. Kazbegi was an particular expertise in leading Chief Commercial Officer of Compliance Officer, Mr. Drew is equity research analyst for significant transformations of Beeline Kazakhstan from 2013 responsible for leading a team of Salomon Brothers. organisations to become more until 2016. compliance professionals across digitally enabled businesses. all of VEON’s operating markets Mr. Kazbegi received an MA Ms. Simmonds regularly features Previously, Mr. Komarov served to establish and implement from Tbilisi State University’s in the annual list of the top ten as the Chief Executive Officer an effective compliance Physics Faculty in 1984 and a Most Influential HR Practitioners of GroupM from 2007 to 2013, programme, while also advising PhD in Physics from Tbilisi State in the United Kingdom. Acting Chief Executive Officer of senior management and the University (in a joint degree MediaCom from 2009 to 2010, VEON Board on core compliance, programme with Moscow State Prior to joining VEON, Ms. the Chief Executive Officer of risk and governance issues. University) in 1993. Mr. Kazbegi Simmonds was Group People Video International Advertising obtained an MBA from Tulane Director at easyJet plc where Group Kiev from 2006 to 2007 Prior to joining VEON, University in 1995. she focused on organisational and the Chief Executive Officer Mr. Drew was Vice President change, updating the ways of of Adell Saatchi & Saatchi from and Associate General working, employee engagement 2004 to 2006. Counsel for over five years and talent development. She at Hewlett-Packard Enterprise played a crucial role in helping Mr. Komarov received an and Hewlett-Packard, with it shape itself for further Executive M.B.A. from the responsibility for investigations growth and scale in Europe. Stockholm School of Economics and anti-corruption compliance. Before joining easyJet plc, in 2006 as well as a Postgraduate Mr. Drew also previously served Ms. Simmonds was Group HR Diploma in Marketing from the as a prosecutor with the U.S. Director at TUI Group for over Chartered Institute of Marketing Department of Justice for five years. in 2001. ten years. Ms. Simmonds is also a Mr. Drew holds a B.A. from Non-Executive Director at Wesleyan University and a J.D. Ferguson Plc, where she from Northwestern University chairs the Remuneration School of Law. Committee, and is a member of the Nominations and Audit Committee.

VEON Integrated Annual Report 2019 91 INTRODUCTION VALUE CREATION SUMMARY PERFORMANCE

Aamir Hafeez Ibrahim Yogesh Malik GOVERNANCE CORPORATE CEO Jazz (Pakistan) Group Chief Technology Officer

Aamir Hafeez Ibrahim has Yogesh Malik has served as the been the Chief Executive Officer Group Chief Technology Officer of our operations in Pakistan of VEON since March 2014. since July 2016. Prior to his position as CEO, Mr. Ibrahim Mr. Malik joined from Uninor, was Mobilink’s Deputy CEO an Indian mobile network INFORMATION FINANCIAL and Chief Commercial Officer. operator, where he was its Chief Executive Officer. Before Mr. Ibrahim has over two becoming CEO at Uninor, he decades of international held a variety of senior positions experience as a senior executive including as Chief Operating across multiple industries and Officer, covering the areas of continents. Prior to joining Technology, Regulatory and Mobilink, he was the Senior Customer care. Vice President for Telenor INFORMATION ADDITIONAL Group, where he led Mr. Malik has held the positions distribution initiatives across of CTO with Grameenphone Asia. Mr. Ibrahim has also held in Bangladesh, CTO with senior leadership positions Kyivstar in Ukraine and as at Ford Motor Company, Head of Technology & Sourcing Jaguar & Land Rover. at Group level with Telenor. He has also worked for TIW, Mr. Ibrahim has extensive Tata/AT&T and Ericsson in experience specifically in the Czech Republic, Brazil, strategic marketing, sales and China and Canada in various distribution, analytics, product senior positions. development, government and regulatory management, Mr. Malik holds an engineering business planning, M&A, public degree in electronics from relations and crisis management. MSU University Baroda and is an Executive MBA graduate of Mr. Ibrahim has an IMD in Lausanne, Switzerland. undergraduate degree in Accounting from the University of Texas and an MBA from IMD in Switzerland. In 2012, he received an Advanced Management Program diploma from Harvard Business School.

Integrated Annual Report 2019 VEON 92 OUR BOARD COMMITTEES

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

Our high standing in the 2019 Dutch Transparency Benchmark, which placed us among the top 10% of Dutch companies, is testament to the significant progress we have made in pursuing the highest standards of compliance, transparency and responsible business.

Gennady Gazin Chairman

Mandate Key activities in 2019 Members The purpose of the Board’s • Conducted an evaluation of Gennady Gazin (Chairman) Nominating and Corporate the Board with respect to its Andrei Gusev Governance Committee is to assist composition, effectiveness, Julian Horn-Smith in the nomination of members of the objectives and goals Board and to advise the Board on the • Reviewed and assessed the fulfilment of the Board’s corporate performance, operations and governance obligations. membership of each of the Board’s Committees The Committee’s responsibilities • Reviewed and assessed the for nominating Directors include Group’s corporate governance identifying qualified individuals processes in the context of its and making recommendations with operations in emerging markets, respect to new candidates and the and recommended to the Board re-election of existing Directors. enhancements to the boards of local operating companies to In its governance oversight role, the increase local expertise and Committee makes recommendations ensure effective governance to the Board on Committee structure, • Reviewed and advised on membership and operations and recommendations from the advises the Board on the adoption Compensation Committee of corporate governance principles regarding Director compensation appropriate to the conduct of the • Oversaw the re-election Company’s business. In doing so, the of 11 Directors previously Committee periodically evaluates the serving as Board members, Company’s corporate governance which was approved by VEON’s processes as well as the Board and shareholders at their 2019 annual its Committees. general meeting

The Committee is currently comprised of three members of the Board, each of whom is appointed or re-elected annually, and is chaired by Gennady Gazin.

VEON Integrated Annual Report 2019 93 INTRODUCTION

FINANCE COMMITTEE VALUE CREATION SUMMARY PERFORMANCE 2019 was a transformative year for VEON’s capital structure and portfolio of businesses, the achievements of which are a testament to our financial strength and agility, as well as the experience and vision of our leadership. GOVERNANCE CORPORATE

Andrei Gusev Chairman

Mandate Key activities in 2019 Members INFORMATION FINANCIAL The Board’s Finance Committee • Advised on and oversaw the Andrei Gusev (Chairman) advises the Board with respect to Group’s mandatory tender offer Gennady Gazin the Board’s oversight of the Group’s for shares of Global Telecom Gunnar Holt business plan, management of the Holdings S.A.E. (“GTH”), which Group’s capital structure and the concluded successfully in August execution of material transactions. • Provided advice on, and oversight of, the asset transfer offer by VEON The Committee acts in an advisory to GTH and the subsequent and INFORMATION ADDITIONAL capacity to the Board, providing ongoing consolidation of these advice and recommendations assets into the Group on these and other matters, • Reviewed and advised on including mergers, acquisitions the Group’s new Strategy and divestitures, the incurrence of Framework, which was unveiled indebtedness and finance policies, in September 2019 as well as on any material litigation, • Oversaw the Group’s offering and arbitration or similar proceedings. issuance of new senior notes in The Committee also reviews September-October 2019 and advises on the Company’s • Reviewed and provided advice on dividend policy. the Group’s new dividend policy, implemented in September 2019 The Committee is currently comprised of three members of the Board, each of whom is appointed or re-elected annually, and is chaired by Andrei Gusev.

Integrated Annual Report 2019 VEON 94 OUR BOARD COMMITTEES CONTINUED

AUDIT AND RISK COMMITTEE

The end of compliance monitorship in October 2019 was a major milestone for the Group and the culmination of a process that underscored the imperative of a strong risk management culture throughout our organisation.

Robert Jan van de Kraats Chairman

Mandate Key activities in 2019 Members The Board’s Audit and Risk • Oversaw the Group’s required Robert Jan van de Kraats Committee is responsible for compliance monitorship, (Chairman) overseeing the Group’s financial culminating in the completion Gennady Gazin reporting, audit process, compliance of this three-year programme Gunnar Holt programme and systems of in October 2019 enterprise risk management and • Reviewed the mandate, internal controls. performance and independence of the Company’s external In overseeing the audit process, auditor, PwC, and approved the Committee is responsible PwC’s reappointment for for the appointment, retention financial year 2020 and oversight of the Company’s independent auditor, as well as • Periodically evaluated the Group’s establishing procedures to receive risk management structure and and review complaints related to policies and the key risks facing the accounting or audit matters. Group and its operating companies • Evaluated management’s The Committee also supervises evaluation regarding the adequacy activities related to our relationships of the Group’s internal controls with the US and Dutch authorities over the Group’s financial with respect to ongoing disclosure reporting process requirements and inquiries. • Oversaw the implementation of changes to IFRS reporting and the The Committee is currently comprised disclosure of associated non-IFRS of three Board members, each financial information of whom is appointed or re-elected annually, and is chaired by Robert Jan van de Kraats.

VEON Integrated Annual Report 2019 95 INTRODUCTION

COMPENSATION COMMITTEE VALUE CREATION SUMMARY PERFORMANCE Retaining the best talent while ensuring their incentives are aligned with both the long-term ambitions of our business and the interest of our stakeholders is fundamental to any sustainable business. GOVERNANCE CORPORATE

Guillaume Bacuvier Chairman

Mandate Key activities in 2019 Members INFORMATION FINANCIAL The Board’s Compensation • Reviewed and advised on the Guillaume Bacuvier (Chairman) Committee advises the Board Group’s executive compensation Gunnar Holt with respect to the Board’s policies to ensure alignment with Alexander Pertsovsky responsibilities in overseeing both VEON’s corporate goals and the selection, performance the interests of our stakeholders and compensation of the • Evaluated the terms and Company’s Chief Executive administration of the Group’s Officers, their direct reports, and INFORMATION ADDITIONAL benefit plans and long- and the chief executive officers of the short-term incentive programmes Company’s significant subsidiaries. to ensure consistency with the Group’s goals and objectives In addition, the Committee assesses and makes • Reviewed and assessed VEON’s recommendations to the Board executive salary structure ranges on Board member compensation. and discussed the same with the members of the Board and the The Committee is also responsible Company’s Chief Executive Officer for evaluating and approving the • Conducted an evaluation of our Group’s Director, executive and Director compensation taking into employee compensation and benefit account the competitive landscape, plans, as well as the administration the compensation of directors of the Group’s compensation and at other comparable companies incentive programmes. and recommendations regarding best practices The Committee is currently • Reviewed and assessed the comprised of three Board members, performance and compensation of each of whom is appointed or our Chief Executive Officer against re-elected annually, and is chaired agreed performance indicators and by Guillaume Bacuvier. overall Group performance • Evaluated the performance and compensation of the Company’s senior executives

Integrated Annual Report 2019 VEON 96 REMUNERATION REPORT

REMUNERATION REPORT

VEON’s remuneration policy contributes to the Company’s strategy, long-term interests and sustainability by aligning employee compensation and incentives with value creation over the short, medium and long term.

It approaches this through two The KPIs are partially based on the The participants in the LTI Plans may key policies: financial and operational results receive cash payouts after the end (such as EBITDA and total operating of each relevant award performance revenue) of the Company, or the period. For senior management, Short Term Incentive Scheme affiliated entity employing the vesting is based on the attainment The Company’s Short Term employee, and partially based on of certain KPIs based on an absolute Incentive (“STI”) Scheme individual targets that are agreed share price performance target. provides cash pay-outs to with the participant at the start of For the Company’s Chairman participating employees based the performance period based on and co-CEOs, vesting is based on on the achievement of established his or her specific role and activities. total return per share, and may be Key Performance Indicators The weight of each KPI is decided on exercised by the participant at any (“KPIs”) over the period of one an individual basis. time during a defined exercise calendar year. period, subject to the Company’s insider trading policy. KPIs are set every year at Value growth cash-based the beginning of the year and long-term incentive plans For full details of our incentive evaluated in the first quarter To stimulate and reward plans, please refer to page F-59 of the following year. leadership efforts that result in of our 2019 Form 20-F. sustainable success, value growth cash-based multi-year incentive plans (“LTI Plans”) were designed for members of our recognised leadership community.

VEON Integrated Annual Report 2019 97 INTRODUCTION VALUE CREATION

Compensation of key senior managers The following table sets forth the total compensation paid to the key senior managers in 2019 and 2018 (gross amounts in whole euro and whole US dollar equivalents):

Ursula Jean-Yves Trond Murat Kirkgoz Kjell Kaan Terzioglu Sergi Herrero Scott Dresser Burns Charlier Westlie Deputy Group Johnsen Joint Group Joint Group Group General SUMMARY PERFORMANCE In whole euros Group CEO Group CEO Group CFO5 CFO5 Group COO6 COO6 COO6 Counsel 2019 ​ ​ ​ ​ ​ ​ ​ ​ Short-term employee benefits ​ ​ ​ ​ ​ ​ ​ ​ Base salary1 5,500,000 – 1,500,000 264,500 1,250,000 220,500 342,036 1,300,000 Annual incentive2 10,461,000 – 1,455,216 211,713 2,684,355 472,151 514,460 2,258,882 Other3 1,146,503 – 24,100 35,750 46,857 105,999 1,560,229 29,100

Long-term employee benefits – – – – – – – – GOVERNANCE CORPORATE Share-based payments4 – – 64,842 8,242 (828,047) – – (697,504) Termination benefits – – – – – – – – Total remuneration expense 17,107,503 – 3,044,158 520,205 3,153,165 798,650 2,416,725 2,890,478 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ Short-term employee benefits ​ ​ ​ ​ ​ ​ ​ ​ 1 Base salary 5,500,000 – 1,500,000 264,500 1,250,000 220,500 342,036 1,300,000 INFORMATION FINANCIAL Annual incentive2 8,263,690 – 1,412,613 – 3,766,855 – – 2,470,653 Other3 1,146,503 – 24,100 35,750 46,857 105,999 1,560,229 29,100 Long-term employee benefits – – – – – – – – Share-based payments – – – – – – – – Termination benefits – – – – – – – – Total remuneration paid 14,910,193 – 2,936,713 300,250 5,063,712 326,499 1,902,265 3,799,753

​ ​ ​ ​ ​ ​ ​ ​ ​ INFORMATION ADDITIONAL 2018 ​ ​ ​ ​ ​ ​ ​ ​ Short-term employee benefits ​ ​ ​ ​ ​ ​ ​ ​ Base salary1 4,602,902 1,902,600 1,500,000 – 1,425,000 – – 1,233,333 Annual incentive2 – 7,717,900 127,313 – – – – 405,899 Other3 104,645 489,070 21,695 – 70,442 – – 927,489 Long-term employee benefits – – – – – – – – Share-based payments – – – – – – – – Termination benefits – 1,340,278 – – – – – – Total remuneration paid 4,707,547 11,449,848 1,649,008 – 1,495,442 – – 2,566,721

1. Base salary includes holiday and/or pension allowances pursuant to the terms of an individual’s employment agreement. 2. Annual incentive expense includes amounts accrued under the short-term incentive in respect of performance during the current year, while annual incentive paid includes amounts paid under the short-term incentive in respect of performance during the previous year. 3. Other includes certain allowances and support (for example, relocation support). 4. Share-based payments expense relates to amounts accrued under the value growth cash-based long-term incentive plan, see below for further details. 5. Trond Westlie stepped down from the role of Group CFO on September 30, 2019. Murat Kirkgoz commenced duties as Deputy Group CFO on August 1, 2019. 6. Kjell Johnsen stepped down from the role of Group COO, and Sergi Herrero and Kaan Terzioglu commenced their duties as Joint Group COO’s on November 1, 2019.

Integrated Annual Report 2019 VEON 98 REMUNERATION REPORT CONTINUED

Ursula Jean-Yves Trond Murat Kirkgoz Kjell Kaan Terzioglu Sergi Herrero Scott Dresser Burns Charlier Westlie Deputy Group Johnsen Joint Group Joint Group Group General In whole US dollars Group CEO Group CEO Group CFO5 CFO5 Group COO6 COO6 COO6 Counsel 2019 Short-term employee benefits Base salary1 6,155,568 – 1,678,791 296,027 1,398,993 246,782 382,805 1,454,952 Annual incentive2 11,707,890 – 1,628,669 236,948 3,004,314 528,429 575,781 2,528,128 Other3 1,283,159 – 26,973 40,011 52,442 118,633 1,746,199 32,569 Long-term employee benefits – – – – – – – – Share-based payments4 – – 72,571 9,224 (926,745) – – (780,642) Termination benefits – – – – – – – – Total remuneration expense 19,146,617 – 3,407,004 582,210 3,529,004 893,844 2,704,785 3,235,007

2019 Short-term employee benefits Base salary1 6,155,568 – 1,678,791 296,027 1,398,993 246,782 382,800 1,454,952 Annual incentive2 9,248,674 – 1,580,988 – 4,215,842 – – 2,765,140 Other3 1,283,160 – 26,973 40,011 52,442 118,633 1,746,175 32,569 Long-term employee benefits – – – – – – – – Share-based payments – – – – – – – – Termination benefits – – – – – – – – Total remuneration paid 16,687,402 – 3,286,752 336,038 5,667,277 365,415 2,128,975 4,252,661

2018 Short-term employee benefits Base salary1 5,429,871 2,244,426 1,769,494 – 1,681,019 – – 1,454,917 Annual incentive2 – 9,104,518 150,186 – – – – 478,824 Other3 123,446 576,938 25,593 – 83,098 – – 1,094,124 Long-term employee benefits – – – – – – – – Share-based payments – – – – – – – – Termination benefits – 1,581,076 – – – – – – Total remuneration paid 5,553,317 13,506,958 1,945,273 – 1,764,117 – – 3,027,865

1. Base salary includes holiday and/or pension allowances pursuant to the terms of an individual’s employment agreement. 2. Annual incentive expense includes amounts accrued under the short-term incentive in respect of performance during the current year, while annual incentive paid includes amounts paid under the short-term incentive in respect of performance during the previous year. 3. Other includes certain allowances and support (for example, relocation support). 4. Share-based payments expense relates to amounts accrued under the value growth cash-based long-term incentive plan, see below for further details. 5. Trond Westlie stepped down from the role of Group CFO on September 30, 2019. Murat Kirkgoz commenced duties as Deputy Group CFO on August 1, 2019. 6. Kjell Johnsen stepped down from the role of Group COO, and Sergi Herrero and Kaan Terzioglu commenced their duties as Joint Group COO’s on November 1, 2019.

VEON Integrated Annual Report 2019 99 INTRODUCTION

Compensation of Board of Directors The following table sets forth the total compensation paid to the members of the Board of Directors members in 2019 and 2018 (gross amounts in whole euro and whole US dollar equivalents): VALUE CREATION

Retainer Committees Other compensation Total In whole euros 2019 2018 2019 2018 2019 2018 2019 2018 Guillaume Bacuvier 250,000 105,000 53,909 21,000 – – 303,909 126,000 Osama Bedier 250,000 105,000 25,000 10,500 – – 275,000 115,500 Ursula Burns* – – 14,048 – – – 14,048 – Stan Chudnovsky – 145,833 – – – – – 145,833

Mikhail Fridman 40,000 40,000 – – – – 40,000 40,000 SUMMARY PERFORMANCE Gennady Gazin 250,000 250,000 80,000 65,500 – – 330,000 315,500 Andrei Gusev 40,000 40,000 – – – – 40,000 40,000 Gunnar Holt 250,000 250,000 69,643 50,000 – – 319,643 300,000 Sir Julian Horn-Smith 250,000 250,000 25,000 10,500 – – 275,000 260,500 Jørn P. Jensen – 163,333 – – – – – 163,333 Robert Jan van de Kraats 250,000 105,000 30,000 12,600 – – 280,000 117,600

Guy Laurence 250,000 250,000 30,000 41,600 – 16,250 280,000 307,850 GOVERNANCE CORPORATE Alexander Pertsovsky 40,000 40,000 – – – – 40,000 40,000 Kaan Terzioglu 92,708 – 9,063 – – – 101,771 – Total compensation 1,962,708 1,744,166 336,663 211,700 – 16,250 2,299,371 1,972,116

Retainer Committees Other compensation Total In whole US dollars 2019 2018 2019 2018 2019 2018 2019 2018

Guillaume Bacuvier 279,799 123,869 60,335 24,774 – – 340,134 148,643 INFORMATION FINANCIAL Osama Bedier 279,799 123,869 27,980 12,387 – – 307,779 136,256 Ursula Burns* – – 15,722 – – – 15,722 – Stan Chudnovsky – 172,039 – – – – – 172,039 Mikhail Fridman 44,768 47,188 – – – – 44,768 47,188 Gennady Gazin 279,799 294,925 89,536 77,270 – – 369,335 372,195 Andrei Gusev 44,768 47,188 – – – – 44,768 47,188

Gunnar Holt 279,799 294,925 77,944 58,985 – – 357,743 353,910 INFORMATION ADDITIONAL Sir Julian Horn-Smith 279,799 294,925 27,980 12,387 – – 307,779 307,312 Jørn P. Jensen – 192,684 – – – – – 192,684 Robert Jan van de Kraats 279,799 123,869 33,576 14,864 – – 313,375 138,733 Guy Laurence 279,799 294,925 33,576 49,076 – 19,170 313,375 363,171 Alexander Pertsovsky 44,768 47,188 – – – – 44,768 47,188 Kaan Terzioglu 103,758 – 10,143 – – – 113,901 – Total compensation 2,196,655 2,057,594 376,792 249,743 – 19,170 2,573,447 2,326,507

** Ursula Burns was appointed Group CEO and Chairman of the VEON Ltd. Board of Directors on December 12, 2018. Accordingly, her total compensation for 2019 and 2018 has been included in the section “Compensation of key senior managers” above, except for payments received in respect of her role on the Board.

Integrated Annual Report 2019 VEON 100

SELECTED FINANCIAL INFORMATION 2019

Selected Financial Information 2019 Independent Assurance Statement 101 Consolidated Income Statement 103 Consolidated Statement of Comprehensive Income 104 Consolidated Statement of Financial Position 105 Consolidated Statement of Changes in Equity 106 Consolidated Statement of Cash Flows 108 Segment Information 109

The following pages present selected information for VEON Group (“the Group”) for the financial year ended December 31, 2019.

For a full set of financial statements, please refer to the Consolidated Financial Statements and Company Financial Statements sections of our Dutch Annual Report for the year ended December 31, 2019, which may be accessed via our website.

VEON Integrated Annual Report 2019 INDEPENDENT ASSURANCE STATEMENT 101 INTRODUCTION

Scope of engagement Challenge Sustainability Limited (“Challenge Sustainability”, “us” or “we”) were commissioned by VEON Amsterdam B.V. (“VEON”) with the objective to provide assurance of specified Subject Matter (defined below) within VEON’s 2019 VALUE CREATION Integrated Report, for the reporting year ended 31st December 2019.

This work was conducted in parallel with our engagement to provide assurance of VEON’s 2019 Sustainability Report. Our agreed objective was to obtain a ‘reasonable’ level of assurance for the Subject Matter, to meet the requirements of the International Standard on Assurance Engagements (ISAE) 3000 revised.

The scope and boundary of our work is restricted to the following areas: SUMMARY PERFORMANCE Subject Matter • Security incidents managed preventively and solved without major negative impact • Number of employees that completed anti-corruption and anti-bribery training • Number of 1 month-active accounts/digital wallets

• Number of active users of self-care apps (MAU) GOVERNANCE CORPORATE • Corporate governance section on page 26 and 27 of the 2019 VEON Sustainability Report • Economic value generated and distributed (USD) • Mobile data traffic (GB)

To assess the Subject Matter, which includes an assessment of the risk of material misstatement in the Report, we have

used VEON’s Sustainability Reporting Manual (the “Reporting Criteria”). INFORMATION FINANCIAL

In addition, we performed a review of 2019 Selected Financial Information included within pages 103 to 110 of the Integrated Report. Our review comprised checks to ensure that the 2019 Selected Financial Information are properly represented based on VEON’s Dutch Annual Report. Our review did not include checks on the accuracy or completeness of the Selected Financial Information, as these are subject to separate third party assurance as part of VEON’s 2019 Dutch Annual Report.

For more details on our engagement, including: the Responsibilities of the Management of VEON; the Responsibilities INFORMATION ADDITIONAL of Challenge Sustainability; Standards and Levels of Assurance; Our Competence, Independence and Quality Control; and the Basis of our Conclusion, see our Assurance Statement included with the VEON 2019 Sustainability Report.

Integrated Annual Report 2019 VEON 102 INDEPENDENT ASSURANCE STATEMENT CONTINUED

Inherent Limitations All assurance engagements are subject to inherent limitations as selective testing (sampling) may not detect errors, fraud or other irregularities. Non-financial data may be subject to greater inherent uncertainty than financial data, given the nature and methods used for calculating, estimating and determining such data. The selection of different, but acceptable, measurement techniques may result in different quantifications between different entities.

Our assurance relies on the premise that the data and information provided to us by VEON have been provided in good faith. Challenge Sustainability expressly disclaims any liability or co-responsibility for any decision a person or an entity may make based on this Independent Assurance Statement.

Our Conclusions Based on the procedures we have performed and the evidence we have obtained, in our opinion, the Subject Matter is fairly stated and has been prepared, in all material respects, in accordance with the Reporting Criteria. We confirm that the Selected Financial Information are properly represented based on the data reported in 2019 Dutch Annual Report. This conclusion relates only to the scope and boundary of this assurance engagement and is to be read in the context of this Statement.

For and on behalf of Challenge Sustainability Limited

Jon Woodhead Rob Pearson Director Director

United Kingdom, April 2020

VEON2 VEON AnnualIntegrated report Annual 2019 Report 2019 CONSOLIDATED INCOME STATEMENT 103 for the years ended December 31 INTRODUCTION

(In millions of U.S. dollars, except per share amounts) 2019 2018 2017

Service revenues 8,240 8,526 9,105

Sale of equipment and accessories 465 427 244 VALUE CREATION Other revenues / other income 158 133 125 Total operating revenues 8,863 9,086 9,474 Service costs (1,554) (1,701) (1,879) Cost of equipment and accessories (479) (415) (260) Selling, general and administrative expenses (2,965) (3,697) (3,748) Other operating gain / (loss) 350 – – Depreciation (1,652) (1,339) (1,491) Amortisation (394) (495) (537) SUMMARY PERFORMANCE Impairment (loss) / reversal (108) (858) (66) Gain / (loss) on disposal of non-current assets (43) (57) (26) Gain / (loss) on disposal of subsidiaries 1 30 – Operating profit 2,019 554 1,467 Finance costs (892) (816) (935) Finance income 53 67 95

Other non-operating gain / (loss) 21 (68) (97) GOVERNANCE CORPORATE Share of profit / (loss) of joint ventures and associates – – (22) Impairment of joint ventures and associates – – (110) Net foreign exchange gain / (loss) (20) 15 (70) Profit / (loss) before tax 1,181 (248) 328 Income tax expense (498) (369) (472) Profit / (loss) from continuing operations 683 (617) (144) Profit / (loss) after tax from discontinued operations – (300) (390) Gain / (loss) on disposal of discontinued operations – 1,279 – INFORMATION FINANCIAL Profit / (loss) for the period 683 362 (534) Attributable to: The owners of the parent (continuing operations) 621 (397) (115) The owners of the parent (discontinued operations) – 979 (390) Non-controlling interest 62 (220) (29) 683 362 (534)

Basic and diluted gain / (loss) per share attributable to ordinary INFORMATION ADDITIONAL equity holders of the parent: From continuing operations $0.36 ($0.23) ($0.07) From discontinued operations $0.00 $0.56 ($0.22) Total $0.36 $0.33 ($0.29)

IntegratedAnnual Annual report Report 2019 2019 VEONVEON 99 104 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the years ended December 31

(In millions of U.S. dollars) 2019 2018 2017

Profit / (loss) 683 362 (534) Items that may be reclassified to profit or loss Share of other comprehensive income / (loss) of Italy Joint Venture – (18) (12) Foreign currency translation 49 (819) (637) Other 26 (7) (7) Items reclassified to profit or loss Reclassification of accumulated foreign currency translation reserve to profit or loss – (79) – Reclassification of accumulated share of other comprehensive income / (loss) of Italy Joint Venture to profit or loss – 31 – Other (19) 5 – Other comprehensive income / (loss) for the period, net of tax 56 (887) (656) Total comprehensive income / (loss) for the period, net of tax 739 (525) (1,190) Attributable to: The owners of the parent 733 (138) (1,081) Non-controlling interests 6 (387) (109) 739 (525) (1,190)

VEON100 VEON Integrated Annual report Annual 2019 Report 2019 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 105 as of December 31 INTRODUCTION

(In millions of U.S. dollars, except for share amounts) 2019 2018 Assets Non-current assets

Property and equipment 7,340 4,932 VALUE CREATION Intangible assets 5,688 5,670 Investments and derivatives 235 58 Deferred tax assets 134 197 Other assets 163 135 Total non-current assets 13,560 10,992 Current assets Inventories 169 141 Trade and other receivables 628 577 SUMMARY PERFORMANCE Investments and derivatives 82 88 Current income tax assets 16 112 Other assets 354 367 Assets held for sale – 17 Cash and cash equivalents 1,250 1,808 Total current assets 2,499 3,110

Total assets 16,059 14,102 GOVERNANCE CORPORATE Equity and liabilities Equity Equity attributable to equity owners of the parent 1,226 3,670 Non-controlling interests 994 (891) Total equity 2,220 2,779 Non-current liabilities Debt and derivatives 7,759 6,567 Provisions 138 110 INFORMATION FINANCIAL Deferred tax liabilities 141 180 Other liabilities 33 53 Total non-current liabilities 8,071 6,910 Current liabilities Trade and other payables 1,847 1,624 Debt and derivatives 2,585 1,289

Provisions 222 234 INFORMATION ADDITIONAL Current income tax payables 102 196 Other liabilities 1,012 1,066 Liabilities held for sale – 4 Total current liabilities 5,768 4,413 Total equity and liabilities 16,059 14,102

IntegratedAnnual Annual report Report 2019 2019 VEONVEON 101 106 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended December 31, 2019

Attributable to equity owners of the parent Other Foreign Non- Number of shares Issued Capital capital Accumulated currency controlling Total (In millions of U.S. dollars) outstanding capital surplus reserves deficit translation Total interests equity As of December 31, 2018 1,749,127,404 2 12,753 743 (1,412) (8,416) 3,670 (891) 2,779 Adjustments due to new accounting standards – ––– (3) – (3) (1) (4) As of January 1, 2019 1,749,127,404 2 12,753 743 (1,415) (8,416) 3,667 (892) 2,775

Profit / (loss) for the period – – – – 621 – 621 62 683 Other comprehensive income / (loss) – – – 6 1 105 112 (56) 56 Total comprehensive income / (loss) – – – 6 622 105 733 6 739

Dividends declared – – – – (525) – (525) (108) (633) Changes in ownership interest in a subsidiary that do not result in a loss of control – – – (2,594) – – (2,594) 1,986 (608) Other – – – (42) (12) (1) (55) 2 (53) As of December 31, 2019 1,749,127,404 2 12,753 (1,887) (1,330) (8,312) 1,226 994 2,220

for the year ended December 31, 2018 Attributable to equity owners of the parent Other Foreign Non- Number of shares Issued Capital capital Accumulated currency controlling Total (In millions of U.S. dollars) outstanding capital surplus reserves deficit translation Total interests equity As of December 31, 2017 1,749,127,404 2 12,753 729 (1,486) (7,667) 4,331 (441) 3,890 Adjustments due to new accounting standards – ––– 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 – – – – (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

VEON102 VEON Integrated Annual Annual report Report2019 2019 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 107 for the year ended December 31, 2017 INTRODUCTION

Attributable to equity owners of the parent Foreign Non- (In millions of U.S. dollars, Number of shares Capital Other capital Accumulated currency controlling except for share amounts) outstanding Issued capital surplus reserves deficit translation Total interests

As of January 1, 2017 1,749,004,648 2 12,753 753 (439) (7,109) VALUE CREATION Profit / (loss) for the period Other comprehensive income – – – – (505) – Total comprehensive income – – – (18) – (558) Dividends declared – – – (18) (505) (558) SUMMARY PERFORMANCE Share-based payment transactions Changes in ownership interest in a subsidiary that do not result in a loss of control – – – – (536) – Reallocation to legal

reserve in Algeria 122,756 – – – – – GOVERNANCE CORPORATE As of December 31, 2017 – – – (12) – –

INFORMATION FINANCIAL INFORMATION ADDITIONAL

IntegratedAnnual Annual report Report 2019 2019 VEONVEON 103 108 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended December 31

(In millions of U.S. dollars) 2019 2018 2017 Operating activities Profit / (loss) before tax from continuing operations 1,181 (248) 328 Non-cash adjustments to reconcile profit before tax to net cash flows Depreciation, amortisation and impairment loss / (reversal) 2,154 2,692 2,094 (Gain) / loss on disposal of non-current assets 43 57 26 (Gain) / loss on disposal of subsidiaries (1) (30) – Finance costs 892 816 935 Finance income (53) (67) (95) Other non-operating (gain) / loss (21) 68 97 Share of loss and impairment of joint ventures and associates – – 132 Net foreign exchange (gain) / loss 20 (15) 70 Changes in trade and other receivables and prepayments (224) 96 (168) Changes in inventories (28) (88) 54 Changes in trade and other payables 52 274 311 Changes in provisions, pensions and other 106 40 (119) Interest paid (714) (736) (834) Interest received 58 60 89 Income tax paid (516) (404) (445) Net cash flows from operating activities 2,949 2,515 2,475 Investing activities Purchase of property, plant and equipment and intangible assets (1,683) (1,948) (2,037) Payments on deposits (922) (32) (1,165) Receipts from deposits 698 1,066 267 Proceeds from sale of Italy Joint Venture – 2,830 – Receipts from / (investment in) financial assets (9) 62 (101) Other proceeds from investing activities, net 28 19 20 Net cash flows from / (used in) investing activities (1,888) 1,997 (3,016) Financing activities Proceeds from borrowings, net of fees paid* 2,610 807 6,193 Repayment of debt (2,978) (4,122) (5,948) Acquisition of non-controlling interest (613) – (259) Dividends paid to owners of the parent (520) (508) (518) Dividends paid to non-controlling interests (138) (93) (201) Net cash flows from / (used in) financing activities (1,639) (3,916) (733) Net increase / (decrease) in cash and cash equivalents (578) 596 (1,274) Net foreign exchange difference (9) (119) (354) Cash and cash equivalents at beginning of period 1,791 1,314 2,942 Cash and cash equivalents at end of period, net of overdraft 1,204 1,791 1,314

* Fees paid for borrowings were US$23 (2018: US$64, 2017: US$56).

VEON104 VEON Integrated Annual Annual report Report2019 2019 SEGMENT INFORMATION 109

INTRODUCTION

Management analyses the Company’s operating segments separately because of different economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies. All the segments are grouped and analysed as three main markets – our Cornerstone, our Growth Engines and our Frontier markets – representing the Company’s strategy and capital allocation framework. VALUE CREATION

Management evaluates the performance of the Company’s segments on a regular basis, primarily based on earnings before interest, tax, depreciation, amortisation, impairment, gain / loss on disposals of non-current assets, other non- operating gains / losses and share of profit / loss of joint ventures and associates (“Adjusted EBITDA”) along with assessing the capital expenditures excluding certain costs such as those for telecommunication licences and right-of-use assets (“CAPEX excl. licences and ROU”). Management does not analyse assets or liabilities by reportable segments. SUMMARY PERFORMANCE As of January 1, 2019, the Company adopted the new accounting standard IFRS 16 Leases. Accordingly, operating lease expenses are no longer recorded in the income statement but are instead considered in recording a lease liability in the statement of financial position. The Company applied a modified retrospective approach, which means that prior period comparatives were not restated. As a result, Adjusted EBITDA in 2019 is not comparable to Adjusted EBITDA in 2018 and 2017.

Financial information by reportable segment for the periods ended December 31 is presented in the following tables. Inter-segment transactions between segments are not material, and are made on terms which are comparable to GOVERNANCE CORPORATE transactions with third parties.

Total revenue Adjusted EBITDA CAPEX excl licences and ROU 2019 2018 2017 2019 2018 2017 2019 2018 2017 Our Cornerstone Russia 4,481 4,654 4,729 1,957 1,677 1,788 976 742 667 Our Growth Engines Pakistan 1,321 1,494 1,525 669 714 703 213 199 240 INFORMATION FINANCIAL Ukraine 870 688 622 572 387 347 156 115 98 Kazakhstan 486 441 416 270 206 180 108 66 75 Uzbekistan 258 315 513 136 136 261 53 39 63 Our Frontier Markets Algeria 775 813 915 354 363 426 108 107 132 Bangladesh 537 521 574 222 183 233 82 93 101

Other and eliminations 135 160 180 312 (34) (26) 38 43 53 INFORMATION ADDITIONAL HQ – – – (277) (359) (325) 7 11 31 Total segments 8,863 9,086 9,474 4,215 3,273 3,587 1,741 1,415 1,460

Integrated AnnualAnnual Reportreport 2019 VEON 110 SEGMENT INFORMATION CONTINUED

The following table provides the reconciliation of consolidated Adjusted EBITDA to consolidated income statement before tax for the years ended December 31:

2019 2018 2017 Total segments Adjusted EBITDA 4,215 3,273 3,587 Depreciation (1,652) (1,339) (1,491) Amortisation (394) (495) (537) Impairment (loss) / reversal (108) (858) (66) Gain / (loss) on disposal of non-current assets (43) (57) (26) Gain / (loss) on sale of subsidiaries 1 30 – Finance costs (892) (816) (935) Finance income 53 67 95 Other non-operating gain / (loss), net 21 (68) (97) Share of loss of joint ventures and associates – – (22) Impairment of joint ventures and associates – – (110) Net foreign exchange gain / (loss) (20) 15 (70) Profit / (loss) before tax from continuing operations 1,181 (248) 328

Geographical information of non-current assets The total of non-current assets (other than financial instruments, investments in subsidiaries and deferred tax assets, which are included in ‘HQ and eliminations’ along with consolidation eliminations), broken down by location of the assets, is shown in the following tables:

2019 2018 Our Cornerstone Russia 6,797 4,794 Our Growth Engines Pakistan 1,662 1,661 Ukraine 1,022 748 Kazakhstan 554 458 Uzbekistan 217 212 Our Frontier Markets Algeria 1,926 1,890 Bangladesh 855 773 Other and eliminations 499 438 HQ 28 18 Total segments 13,560 10,992

VEON106 VEON Integrated Annual Annual report Report2019 2019 ADDITIONAL INFORMATION 111 INTRODUCTION

GLOSSARY OF FINANCIAL TERMS VALUE CREATION SUMMARY PERFORMANCE

Adjusted EBITDA is a non-IFRS Equity free cash flow (excluding financial measure. We calculate licences) is a non-IFRS measure Adjusted EBITDA as profit / (loss) and is defined as free cash flow before tax from continuing from operating activities less cash operations before tax before flow used in investing activities, depreciation, amortisation, excluding the impact of IFRS 16,

loss from disposal of non- M&A transactions, capex for licences, GOVERNANCE CORPORATE current assets and impairment inflow/outflow of deposits, financial loss, financial expenses and costs, assets and other one-off items. See net foreign exchange gain/(loss) attachment E in our 2019 Earnings and share of associates and joint Release for reconciliations. ventures. Adjusted EBITDA should not be considered in isolation or Organic change is a non-IFRS as a substitute for analyses of the measure and reflects changes in results as reported under IFRS. revenue, EBITDA and cost intensity INFORMATION FINANCIAL ratio, that excludes the effect Corporate costs is a non-IFRS of foreign currency movements, financial measure and represents the impact of the introduction of costs incurred by the holding entities IFRS 16, exceptional income of in the Netherlands, Luxembourg, UK USD 350 million in respect of revised and Egypt, primarily comprised of partnership with Ericsson and other

salary costs and consulting costs. factors, such as businesses under INFORMATION ADDITIONAL We also present in this report liquidation, disposals, mergers “run-rate corporate costs” in order and acquisitions. See attachment to represent what our corporate E in our 2019 Earnings Release cost performance would be if results for reconciliations. for a given period were annualised or extrapolated into the future.

Cost intensity ratio is defined as service costs plus selling, general and administrative costs, less other revenue, divided by total service revenue.

Integrated Annual Report 2019 VEON 112 ADDITIONAL INFORMATION CONTINUED

SHAREHOLDER INFORMATION

Current shareholding structure Corporate Headquarters (Percentages as at March 1, 2020) Claude Debussylaan 88 1082 MD Amsterdam Netherlands Contact information Investor Relations Nik Kershaw ir@veon.com

Free float LetterOne The Stichting

$2.7bn Market capitalisation as at April 1, 2020 Current shareholding structure Percentages as at March 1, 2020 % of common and Shareholder Common shares voting shares Free Float1 770,158,572 43.8% 27% LetterOne1 840,625,001 47.9% Return on Equity FY 2019 The Stichting2 145,947,562 8.3% Total 1,756,731,135 100%

** Certain figures and percentages that appear in this table have been subject to rounding adjustments. As a result, certain numerical figures shown as totals may not be exact NASDAQ arithmetic aggregations of the figures that precede or follow them. Ticker: VEON 1. Free float shares include treasury shares, for more information please refer to Form 20-F. 2. As reported on Schedule 13D, Amendment No. 20, filed on September 13, 2019, by L1T VIP Holdings S.à r.l. (“L1T”), Letterone Core Investments S.à r.l. (“LCIS”) and Letterone Investment Holdings S.A. (“LetterOne”) with the SEC, L1T is the direct beneficial owner of 840,625,001 common shares. LCIS is the sole shareholder of L1T, and Letter One is the sole shareholder of LCIS and, in such capacity, each of L1T, LCIS and LetterOne may be deemed to be the beneficial owner of the 840,625,001 common shares held for the account of L1T. Each of L1T, LCIS and LetterOne is a Luxembourg company, with its principal business to function as a EURONEXT AMSTERDAM holding company. 3. As reported on Schedule 13G, filed on April 1, 2016, by Stichting Administratiekantoor Ticker: VEON Mobile Telecommunications Investor (the “Stichting”) with the SEC, the Stichting is the direct beneficial owner of 145,947,562 common shares. As the holder of depositary receipts issued by the Stichting, L1T VIP Holdings S.à r.l. is entitled to the economic benefits (dividend payments, other distributions and sale proceeds) of such common shares. The Stichting is a foundation incorporated under the laws of the Netherlands.

VEON Integrated Annual Report 2019 113 INTRODUCTION

REPORT DISCLAIMER VALUE CREATION SUMMARY PERFORMANCE

Cautionary note regarding • our ability to develop new revenue These statements are management’s best forward looking statements streams and achieve portfolio assessment of our strategic and financial and asset optimisations, improve position and of future market conditions, This Integrated Annual Report 2019 customer experience and optimise trends and other potential developments. (“Report”) contains estimates and forward- our capital structure; While they are based on sources believed looking statements within the meaning of • our ability to generate sufficient cash to be reliable and on our management’s Section 27A of the Securities Act of 1933, flow to meet our debt service obligations, current knowledge and best belief, they are as amended (the “Securities Act”) and our expectations regarding working merely estimates or predictions and cannot GOVERNANCE CORPORATE Section 21E of the U.S. Securities Exchange capital and the repayment of our debt be relied upon. We cannot assure you that Act of 1934, as amended (the “Exchange and our projected capital requirements; future results will be achieved. The risks Act”). These estimates and forward-looking • our plans regarding our dividend and uncertainties that may cause our actual statements are mainly based on our current payments and policies, as well as our results to differ materially from the results expectations and estimates of future events ability to receive dividends, distributions, indicated, expressed or implied in the and trends, which affect or may affect our loans, transfers or other payments forward-looking statements used in this businesses and operations. or guarantees from our subsidiaries; Report include, without limitation: Although we believe that these estimates • our expectations regarding our capital • risks relating to changes in political, INFORMATION FINANCIAL and forward-looking statements are based and operational expenditures in and economic and social conditions in each upon reasonable assumptions, they are after 2020; of the countries in which we operate and subject to numerous risks and uncertainties • our goals regarding value, experience and where laws are applicable to us (including and are made in light of information service for our customers, as well as our as a result of armed conflict) such as any currently available to us. In addition to ability to retain and attract customers harm, reputational or otherwise, that the factors discussed in the section of and to maintain and expand our market may arise due to changing social norms, this Report entitled “Managing Our Risks”, share positions; our business involvement in a particular please refer to Item 3D. – Risk Factors of • our plans to develop, provide and jurisdiction or an otherwise unforeseen INFORMATION ADDITIONAL our annual report on Form 20-F for the expand our products and services, development in science or technology; year ended December 31, 2019 filed with including operational and network • risks associated with further the SEC on March 13, 2020 (“Form 20-F”) development, optimisation and unanticipated developments related for further discussion relating to factors that investment, such as expectations to the COVID-19 pandemic that may adversely affect our results as indicated regarding the expansion or roll-out and negatively affect our operations in forward-looking statements. You should benefits of 3G, 4G/LTE and 5G networks and financial condition; read this Report completely and with the or other networks, broadband services • in each of the countries in which we understanding that our actual future results and integrated products and services, operate and where laws are applicable may be materially different and worse from such as fixed-mobile convergence; to us, risks relating to legislation, what we expect. All statements other than • our expectations as to pricing for our regulation, taxation and currency, statements of historical fact are forward- products and services in the future, including costs of compliance, looking statements. The words “may,” improving our ARPU and our future currency and exchange controls, “might,” “will,” “could,” “would,” “should,” costs and operating results; currency fluctuations, and abrupt “expect,” “plan,” “anticipate,” “intend,” “seek,” • our ability to meet licence requirements, changes to laws, regulations, “believe,” “estimate,” “predict,” “potential,” to obtain, maintain, renew or extend decrees and decisions governing “continue,” “contemplate,” “possible” and licences, frequency allocations and the telecommunications industry and similar words are intended to identify frequency channels and to obtain the taxation thereof, laws on foreign estimates and forward-looking statements. related regulatory approvals; investment, anti-corruption and anti-terror laws, economic sanctions Our estimates and forward-looking • our plans regarding marketing and and their official interpretation by statements may be influenced by various distribution of our products and services, governmental and other regulatory factors, including, without limitation: including customer loyalty programmes; bodies and courts; • our ability to implement and execute • our expectations regarding our • risks related to the impact of export our strategic priorities successfully and competitive strengths, customer controls on our and important third- to achieve the expected benefits from demands, market trends and future party suppliers’ ability to procure goods, our existing and future transactions; developments in the industry and software or technology necessary • our assessment of the impact of the markets in which we operate; for the services we provide to our COVID-19 pandemic on our operations • our expectations regarding customers, particularly on the production and financial condition; management changes; and and delivery of supplies, support services, • our targets and strategic initiatives in the • other statements regarding software, and equipment that we source various countries in which we operate; matters that are not historical facts. from these suppliers – for example, in April 2018, the U.S. Department of Commerce, Bureau of Industry and

Integrated Annual Report 2019 VEON 114 ADDITIONAL INFORMATION CONTINUED

Security (“BIS”) issued an Export • risks related to developments from These factors and the other risk factors Administration Regulation (“EAR”) competition, unforeseen or otherwise, described in Item 3D. – Risk Factors Denial Order to ZTE Corporation (“ZTE”) in each of the countries in which we contained in our Annual Report on Form which prohibited, among other things, operate and where laws are applicable 20-F are not necessarily all of the factors exports, re-exports and in-country to us, including our ability to keep pace that could cause actual results to differ transfers of goods, software and with technological change and evolving materially from those expressed in any technology (collectively, “Items”), industry standards; of our forward-looking statements. Other each of which could have led to service • risks related to the activities of our unknown or unpredictable factors also degradation and disruptions in certain strategic shareholders, lenders, could harm our future results. New risk markets, and in May and August 2019, employees, joint venture partners, factors and uncertainties emerge from BIS added Huawei Technologies representatives, agents, suppliers, time to time and it is not possible for our Company Ltd. and 114 of its affiliates customers and other third parties; management to predict all risk factors and (collectively, “Huawei”) to its “Entity List”, • risks associated with our existing uncertainties, nor can we assess the impact prohibiting companies globally from and future transactions, including of all factors on our business or the extent directly or indirectly exporting, re- with respect to realising the expected to which any factor, or combination of exporting or in-country transferring all synergies of closed transactions, factors, may cause actual results to differ Items subject to the EAR to Huawei and satisfying closing conditions for new materially from those contained in any procuring Items from Huawei when they transactions, obtaining regulatory forward-looking statements. have reason to know that the Items were approvals and implementing remedies; Under no circumstances should the originally procured by Huawei in violation • risks associated with data protection, inclusion of such forward-looking of U.S. law; cyber-attacks or systems and network statements in this Report be regarded • risks relating to a failure to meet disruptions, or the perception of such as a representation or warranty by us expectations regarding various strategic attacks or failures in each of the countries or any other person with respect to the initiatives, including, but not limited to, in which we operate, including the achievement of results set out in such changes to our portfolio; costs associated with such events statements or that the underlying • risks related to solvency and other cash and the reputational harm that could assumptions used will in fact be the case. flow issues, including our ability to raise arise therefrom; Therefore, you are cautioned not to place the necessary additional capital and incur • risks related to the ownership of our undue reliance on these forward-looking additional indebtedness, the ability of our American Depositary Receipts, including statements. The forward-looking statements subsidiaries to make dividend payments, those associated with VEON Ltd.’s status included in this Report are made only our ability to develop additional sources as a Bermuda company and a foreign as of the date of this Report. We cannot of revenue and unforeseen disruptions in private issuer; and assure you that any projected results or our revenue streams; • other risks and uncertainties as set forth events will be achieved. • risks that the adjudications by the various in Item 3D. – Risk Factors contained in Except to the extent required by law, we regulatory agencies or other parties with our Annual Report on Form 20-F. disclaim any obligation to update or revise whom we are involved in legal challenges, any of these forward-looking statements, tax disputes or appeals may not result whether as a result of new information, in a final resolution in our favour or that future events or otherwise, after the date on we are unsuccessful in our defence of which the statements are made or to reflect material litigation claims or are unable the occurrence of unanticipated events. to settle such claims; • 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 licences, frequency allocations and numbering capacity, constraints on our spectrum capacity, availability of line capacity, intellectual property rights protection, labour issues, interconnection agreements, equipment failures and competitive product and pricing pressures;

VEON Integrated Annual Report 2019 This report is printed on paper certified in accordance with the FSC® (Forest Stewardship Council®) and is recyclable and acid-free.

Pureprint Ltd is FSC® certified and ISO 14001 certified showing that it is committed to all round excellence and improving environmental performance is an important part of this strategy.

Pureprint Ltd aims to reduce at source the effect its operations have on the environment and is committed to continual improvement, prevention of pollution and compliance with any legislation or industry standards.

Pureprint Ltd is a Carbon / Neutral® Printing Company.

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