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Executives

Jo Lunder - Chief Executive Officer

Henk van Dalen - Chief Financial Officer

Khaled Bichara - President and Chief Operating Officer

Gerbrand Nijman - Investor Relations.

Analysts

Cesar Tiron - Morgan Stanley

Herve Drouet - HSBC

Alex Balakhnin - Goldman Sachs.

Tibor Bokor - ING

Alex Wright - UBS

Alex Kazbegi - Renaissance Capital

Dalibor Vavruska - Citi

Victor Klimovich - VTB Capital

Igor Semenov - Deutsche Bank

Nadezhda Golubeva - UniCredit

Sean Johnstone - Bank of America

VimpelCom (VIP) Q2 2011 Results September 7, 2011 3:30 AM ET

Operator

Good morning and welcome to VimpelCom’s conference call to discuss the company’s second quarter 2011 financial and operating results. Before getting started, I would like to remind everyone that, except for historical information, statements made on this conference call may constitute forward-looking statements that involve certain risks and uncertainties.

These statements relate in part to one, the benefit of the Wind Telecom transaction, including expected synergies; two, expected future debt positions, dividends and capital expenditures; and three, the company’s value agenda strategy.

Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including the risks detailed in one, the company's press release announcing second quarter 2011 financial and operating results and related presentations; two, the company's annual report on Form 20-F for the year ended December 31, 2010; and three, other public filings made by the company with the SEC, each of which are posted on the company's website at www.vimpelcom.com and the and on the SEC’s website at www.sec.gov.

If you have not received a copy of the second quarter 2011 financial and operating results press release, please call investor relations at +31 (0) 20 79 77 234 and it will be forwarded to you. In addition, the press release and the earnings presentation, each of which includes reconciliations of non-GAAP financial measures presented on this conference call, can be downloaded from the VimpelCom website.

At this time, I would like to turn the call over to Jo Lunder, chief executive officer of VimpelCom. Please go ahead.

Jo Lunder

Thank you and good morning everyone. Welcome to our second quarter earnings presentation. I’m looking forward to discussing with your our first set of earnings results following the closing of our transformational transaction with Wind Telecom on April 15, reflecting the combined companies.

As many of you know, I have been involved with VimpelCom for over 10 years, previously serving as CEO, board member, and chairman of the board. I’m very excited to be rejoining the management team of the company and I’m optimistic about our outlook for the future.

We are pleased with the positive trends in revenues and subscriber base that we saw across all our business segments. At the same time, we had stable EBITDA performance in the quarter as we continued to make investments that allowed us to improve our mobile service revenue market share position in Russia.

In Italy, our second largest market, we saw relative outperformance of the market and our emerging markets growth engines continued to deliver profitable growth. The integration of Kievstar continues ahead of plan and our integration with Wind Telecom remains on track.

We have started to develop the value agenda for 2012 to 2014 for our new enlarged group. I will provide you with some initial highlights today and we will follow up with an investor day in November in which we will walk you through further details of our strategy going forward.

Let me start by introducing to you the members of the team here in Amsterdam who are with us today: Khaled Bichara, our president and chief operating officer. Khaled will present the operational performance of our five business units. Henk van Dalen, our chief financial officer. Henk will be covering the financials in detail. And finally, Gerbrand Nijman, our head of investor relations.

We have the pleasure of reporting on our progress, but it goes without saying that our performance is due to the efforts of our 70,000 employees of VimpelCom across 21 countries. We have organized our group into the following five business units: 1) Russia, 2) Europe and North America, 3) Africa and Asia, 4) Ukraine, and 5) CIS.

Each of our five business units has impressive leadership, and it is a testament to their efforts that our company delivered solid results in the quarter. As I mentioned before, I believe that we have a strong telecommunications team, each leader with extensive experience in their area of expertise in order to drive this company forward.

Now, I’ll turn to some of the highlights of the quarter. Our performance and execution in the quarter confirms the confidence in our group going forward. We achieved solid revenue and subscriber growth across all business units, and importantly both our mobile and fixed line offerings. Revenue increased 9% year over year driven by growth in all business units.

We also delivered stable EBITDA performance. [Unintelligible] EBITDA in local currency in Russia was compensated by growth in our emerging markets business units. In Italy, our second largest market, we saw relevance outperformance versus the market.

We made significant progress in a number of the key areas. First and foremost, we successfully launched the integration of our operations with Wind Telecom and reorganized our structure into five business units reporting to headquarters in Amsterdam. And finally, we ended the quarter with long term financing for the combination with Wind Telecom secured.

I’d like to share with you that I’ve been working on our value agenda for 2012 to 2014. I know many of you have questions about our strategy, and later in this call I will provide some initial components. Now I’ll pass the floor to our CFO, Henk van Dalen, who will discuss the group’s financial performance. Henk?

Henk van Dalen

Thank you Jo. As a reminder, we are presenting our results today on a pro forma basis unless otherwise noted. We believe pro forma financials provide the most meaningful comparison of financial performance for the quarter. Accordingly, the financial information presented here reflects what the company’s results of operations would have looked like had the company’s transactions with Wind Telecom and Kievstar occurred on the first of January 2010.

As a reference, the combination of OJSC, VimpelCom, and Kievstar, which resulted in the formation of VimpelCom Limited, occurred on April 21, 2010 and then on April 15, 2011 acquired 100% of Wind Telecom. An annualized rate of the Wind Telecom acquisition, the company owns indirectly 51.7% of Orascom Telecom and 100% of Wind Italy.

The pro forma financial information also assumes that all spinoffs that are part of the transaction considerations for Wind Telecom would have happened on January 1, 2010 and that the sale of Orascom Telecom Tunisie also happened on that date. Furthermore, all financing related to the Wind Telecom transaction is assumed to have taken place as per the same date.

Additionally, group financials are presented on a U.S. GAAP basis. However, our Europe and North America business units, as well as the Africa and Asia business units, excluding our operations in Southeast Asia are IFRS-based, and on the consolidated level, the required adjustments of IFRS to U.S. GAAP have been performed on the business unit level and group level. The results per business unit presented later by Khaled are expressed in the local currencies without such adjustments.

Let me just brief you on the actual results for the group first. Actuals in the second quarter of 2011 are influenced by Kievstar, now for the full quarter, and Wind Telecom as of April 15, in the quarter. The second quarter 2010 was still only the old VimpelCom, with the Kievstar included as of April 21.

As you can see, revenues increased over 100% to $5.5 billion, demonstrating a substantially increased scale and scope of our business. EBITDA increased by 73% to $2.2 billion, which represents a substantial additional gross cash flow to our business.

Net income declined by 29%, mainly due to higher interest expenses resulting from higher gross debt after the acquisition of Wind Telecom. In addition, net income was also negatively impacted by higher depreciation and amortization charges associated with the Wind Telecom transaction. Net cash from operating activities increased by 23% to $1.2 billion.

Now turning to the financial highlights on a pro forma basis, which as I said will give a better reflection of the real, underlying development of the business. Revenues in the second quarter grew 9% to $6 billion, driven by 3% organic growth and favorable currency movements. Organic growth was driven by revenue growth across almost all of our business units.

EBITDA was stable at $2.4 billion. Our business units in Africa and Asia, Ukraine, and CIS, delivered high single digit organic growth and EBITDA from our business units in Russia and Europe and North America was more or less stable in U.S. dollars. In local currency, Russia declined as expected year-on-year, primarily due to lower mobile margins as a result of our investments in that market. And Khaled will discuss this further on in the presentation.

EBITDA margin for the group stood at 39.5%, with 43.1% reported in the same period last year. This is due to a mix of higher margin in the business units Ukraine and Africa-Asia and lower margins in the other business units, mainly Russia.

Net income increased 42% year on year, as a result of favorable currency movements, partially offset by increased depreciation and tax expenses. The increase in our tax expenses is mainly attributable to certain net operating losses that we had not recognized.

On the basis of our first quarter 2011, the pro forma net result that you might have expected might have been around $550 million lower. There are, however, some important differences between the first quarter and the second quarter 2011, as you can see from attachment C in the press release. One of the differences is a $200 million net foreign exchange loss and gain that mainly has to do with the net debt situation in Russia.

Some of the higher tax expenses explain the difference and the significant delta of $40 million in loss income attributable to noncontrolling interest. By the way, the EBITDA, as well as the operating income in the second quarter of 2011 were higher than the first quarter 2011 with 5% and 2.5% respectively.

As you can see on the slide, capex increased 41% to $1 billion, and this is within our expected 21% of revenue range for the year and mainly reflects the slow phasing of investments in Russia and the CIS last year.

On a last-12-months basis of the second quarter, this is broadly in line with the year 2010, capex to revenue if you correct that [40 capex] effect. Then on the slide on debt, cash and [rebated] ratios, you can see our financial position is in line with the pro forma first quarter 2011 figures provided in June, and we already provided you with some early insight into debt and net debt.

On a consolidated basis, in the first half of 2011, the net operating cash flow was $2.2 billion and the actual second quarter net cash from operating activities was $1.2 billion, so 23% higher than a year ago, as said before. This more than funded capex investments, which totaled $1.5 billion on a cash basis. We already paid as well cash dividends of $5 million this year relating to the 2010 financial results.

Gross debt at the end of the second quarter stood at $24.7 billion. This is in line with our expectations that we also expressed at the preliminary pro forma gross debt that we shared with you in the first quarter. We finished the quarter with a balance of cash and cash equivalents of almost $3.3 billion.

The resulting net debt was $24.1 billion, which led to a net debt to EBITDA ratio of 2.6 at the end of the quarter on a pro forma basis. Though our financial expenses increased as a result of higher debt, our last 12 month EBITDA to financial income and expense ratio is at a comfortable 4.8 on a pro forma annual basis.

Then, jumping into the debt composition and maturity profile, I think that’s [uninteresting] except for you to monitor. The gross debt [unintelligible] to $27 billion, with an average weighted interest rate of 8%. There is a peak in 2017, caused by the Wind Italy debt, but we clearly plan to refinance, as I said before, that package before that date. However, this will not be completed before the end of 2013.

Our balance of foreign exchange exposures in gross debt is [unintelligible], growth of the euro, ruble, U.S. dollar, and other currencies compared to the mainly U.S. dollar and Russian ruble at the end of the first quarter 2011 if you look at the old VimpelCom before the combination with Wind.

The full financing and refinancing package for the Wind Telecom transaction is now finalized. Orascom Telecom Holding external debt has been fully refinanced through intercompany loan with VimpelCom and a bridge loan of $2.2 billion was taken out by successful placement of a $2.2 billion bond in the euro bond market, achieving the lowest coupon ever attained by VimpelCom.

As announced yesterday, we will pay an interim dividend for 2011 of $0.45 per common share in the fourth quarter. In total, this represents approximately $733 million. This reflects a payout of 33% over the first half of 2011 net cash from operating activities.

This interim dividend is in line with our dividend guidelines as presented last quarter and following this 2011 interim dividend, a final dividend for 2011 will be proposed in the first half of 2012 to our board.

With that, I would now like to turn the floor over to Khaled to discuss the performance of our five business units.

Khaled Bichara

Thank you Henk. Let’s get to performance of our five business units. Let me start with Russia. As you can see on the slide, our revenues in Russia increased 6% year over year and amounted to 65 billion rubles, driven by the growth in both fixed and mobile revenues. On the mobile side, data revenues increased 38% year over year to 4.1 billion rubles and the total number of mobile broadband subscribers increased by 82%.

Fixed broadband revenues were nearly 1.9 billion rubles, growing 45%, supported by strong growth in subscribers, which were up 39% and [unintelligible]. Quarterly, EBITDA margin in Russia was 41.5%, reflecting our intensified network development and increased sales and marketing as well as our plan to strengthen our market position.

We are extremely pleased with the growth of subscribers in Russia. On the back of our positive momentum we are seeing in this market, we will continue to develop our network and marketing activities [unintelligible]. At the same time, to strengthen our [unintelligible], we are taking measures with our business excellence program. This program will focus on increased efficiency of the operations and [unintelligible] reduction in network maintenance, [unintelligible] costs, commissions, and other G&A expenses.

Capex was 19% of revenue, in line with our plans. As I mentioned, we continued to execute on the plan that we adopted a year ago, which was aimed at enhancing our market position. We are pleased to report that we are seeing very positive results. For 2 quarters in a row, we have now achieved the highest net additions in the Russian market, and this quarter [unintelligible] will grow to more than 2 million net adds of mobile subscribers. We reached 55.2 million in the quarter, up 9% from last year. Including [630,000] subscribers acquired [unintelligible].

As we announced, [unintelligible] in the far east region, that provides voice and data services through a wide range of wireless and fixed broadband solutions as well as IPTV and [unintelligible]. This bolt-on acquisition substantially strengthens our position in that region. Additionally, we have also received four [unintelligible] in the [unintelligible] region. Combined with that, our subscribers increased by 82%.

Our fixed line broadband business also continues to evolve with strong growth in both subscriptions and [unintelligible]. We also launched IPTV in 8 new cities, bringing the total number of cities where the service is available to 32 out of the 94 cities we provide [unintelligible].

Overall, we are pleased with the development in Russia this quarter and we intend to maintain this momentum going forward, supported by improved customer confidence. At the same time, we are focused on improving profitability in this market.

Moving to Italy, we continue to outperform the market. Our total revenues in the second quarter were up almost 1% on an organic basis. On a reported basis, our revenues were marginally down as a result of nonorganic items in Q2 2010.

Cuts in mobile and fixed [unintelligible] rates are having a visible impact on our incoming revenue when compared to the same period last year. EBITDA was stable over the previous year on an organic basis, while the reported EBITDA was negatively impacted by the nonorganic items.

EBITDA was also impacted by [unintelligible] monthly access fees paid to the incumbent and by an increase in bad debt in our fixed line business. That said, margins remained very solid at 37.6%, with Wind delivering a mobile EBITDA margin of 44.2%, which is considered the highest among Western European [unintelligible].

In the second quarter of 2011, we continued to invest in growing our business, in particular our focus area, increasing our coverage of 3G and [unintelligible], we [unintelligible] expending our LLU fixed line coverage, increasing our capacity on the backbone, which serves both our fixed and mobile business.

Also, as most of you are surely aware, we are currently in the middle of the 4G spectrum auction in Italy, which officially kicked off on August 30. Wind is actively participating in that auction, and there are three mobile operators in Italy. The other three mobile operators in the spectrum that is being auction include 800, 1800, 2000, and 2600 mHz spectrum.

In Italy, our performance in Q2 remains strong despite competitive and [unintelligible] pressure and a changing macroeconomic environment. Our subscribers increased by almost 7% over the previous year as the combined result of our simple and [unintelligible] offering, our market-leading customer care, and the quality of our [unintelligible].

In the second quarter, we continue to focus on our core strategic [pillars], maintaining our focus on all key segments, capturing opportunity in the high value [unintelligible] segments in the mobile and exploiting the [mobile data] growth potential.

RPU in the quarter declined over the previous year, mainly as a result of the cut in mobile termination rate, also as a result of the increasing portion of the data-only [SIM cards], which [do not generate any voice revenue].

Our fixed line business also continued to perform strongly, with voice subscribers growing almost 8% to 3.1 million subscribers, the vast majority of which are higher value-added voice, connected to our own network. We also continued to deliver an exceptional performance in the fixed broadband, where we grew our subscribers by 18% while maintaining a growing RPU as we did in Russia.

Turning now to our Africa and Asia business units, we saw strong improvements in our performance driven primarily by increasing [unintelligible] voice traffic and by focusing on customer [unintelligible]. Net operating revenue increased by 5%, driven by a 12% subscriber growth as well as [unintelligible]. EBITDA increased by 8% as a result of management’s continued focus on cost optimization, leading to a strong EBITDA margin of 42.9%.

[unintelligible], our main [unintelligible] specific performance, our operation in Algeria has [unintelligible], operating limitations we have forced us put in place a tight cost management initiative, which led to the improvement in EBITDA margin reaching 59.2%. That said, we do not think that this is [unintelligible] situation in the medium term, and we intend to do our best to find a balanced way forward that is acceptable to all stakeholders.

In Pakistan, Mobilink now counts over 33 million subscribers and maintains its market leadership position despite high competitive pressure in the Pakistani telecommunications market.

In Bangladesh, strong subscriber acquisition over the first half of the year and the reduced impacts of [unintelligible] had a positive effect on EBITDA, which increased 85% in comparison with the same period of last year. We believe the second quarter is a testament to the stability and strength of the company, and look forward to continuing to drive cost [unintelligible] growth in these emerging markets.

Let’s move to our next business, Ukraine. Here we continue to deliver solid results in the second quarter, driven by healthy revenue growth, improved operating margins, and realized synergies from the integration. Total revenue increased 7%, mainly driven by the growth in mobile revenue as our subscriber base increased 3% to 24.7 million. Our RPU increased 3%.

This growth was largely due to our continued transition toward new bonded tariff plans, [unintelligible] 11% increase in [unintelligible]. Mobile data revenue grew 48%, driven by increased usage of data services, [unintelligible] offers, and within the new bonded tariff plans.

Fixed [unintelligible] broadband continues to show strong growth as well. Fixed broadband revenue increased 87% year over year, driven by 174% in subscribers, which reached [290,000] in the quarter. We continue to be the fastest-growing alternative broadband provider in the country, and driving toward becoming the number one alternative broadband operator in Ukraine.

The EBITDA margin improved to 54.8% on the back of higher revenue, higher mobile gross margin due to lower mobile termination rate, realized synergies ahead of plan, and effective cost control.

The synergies from the integration of the VimpelCom business [unintelligible] continue to deliver positive results ahead of our plan and our expectations for [unintelligible] MPV of $120 million realized since inception.

We also continue to invest in our network to accommodate the growing voice and data traffic. Overall, we are very pleased with the trends we are seeing in both the mobile and fixed line business in Ukraine, the success of the synergy program, and margin performance. We will continue to focus on actively managing our market position, sustaining operating margin and cash flow [unintelligible] and cost control, and aggressively building our fixed broadband business as the year progresses.

Now let’s turn to the CIS business unit. Overall, the CIS continues to demonstrate strong operational and financial results. Despite intensified competition in key CIS countries, revenues are growing at double-digit rates year over year, in nearly all CIS markets as a result of improving product quality and efficiencies [unintelligible]. We remain focused on growing voice and data traffic and our comprehensive data [unintelligible] resulted in [unintelligible] revenue growth of 83% year over year for the data service.

Despite continued and intensified competition in key markets, we also remained solidly focused on enhancing market positions. I would say the marketing efforts are paying off, and resulted in [unintelligible] increase in subscribers this quarter.

Of note in our largest CIS market, [unintelligible] we achieved continued fiber growth of 24% and solid revenue growth rate over 9% in the second quarter. EBITDA increased 9%, but EBITDA margin declined by 3% to 45%, primarily due to intensified competition in Kazakhstan, increased volume of equipment sales, and higher sales and marketing expenses.

EBITDA margin was also impacted by [unintelligible] mandatory [unintelligible] of [unintelligible] in Kazakhstan, introduction by the national [unintelligible] in 2011. In Uzbekistan and Armenia, intensified competition is also affecting margin, together with active extension of data services and distribution of customer devices.

We continued successfully accelerating the rollout of 2G and 3G networks in the CIS markets. In the quarter we substantially increased capex related to continued mobile and fixed network expansion in order to support growth in the CIS market going forward.

Overall, we are again pleased with our positioning and focused on continuing to grow our business in this market. Thank you very much. Now I’ll turn it back to Jo.

Jo Lunder

Thank you Khaled. I will now spend a few minutes providing you with an initial overview of our value agenda for 2012 to 2014. VimpelCom today is a truly global telecom company. We are designed to deliver sustainable, profitable growth going forward.

We have a well-diversified revenue base with balanced exposure across attractive markets, including rapidly growing emerging markets. They are a more balanced and less volatile business than many regional and local peers.

Our emerging market exposure covers three quarters of a billion people. This gives us an extensive opportunity for growth going forward. We also have strong positioning across both mobile and fixed broadband businesses, which provides another platform for growth as these continue to develop across our markets.

Importantly, we are in a good starting position to capture the shift from voice to data, which today already exceeds 10% of our total revenues. Finally, we have an attractive financial profile, with revenues per share of $14 and a free cash flow per share at almost 25% thereof.

Turning now to one key element of our integration, following the closing of the acquisition of Wind Telecom, we launched a comprehensive integration program to capture the strategic benefits of the combination and to achieve the expected synergies from the enlarged group. The first results from the program are very promising, with early savings in procurement already achieved through harmonizing of the [unintelligible] current price levels across the company.

We continue to believe that we can achieve total synergies on the net present value of at least $2.5 billion as promised. In fact, current initiatives have already secured synergies in the amount of $1.6 billion on that present value basis.

In the next phase, we will continue implementing best practices in terms of vendor rationalization and redistribution on the group level and we will target additional categories at the local level. We’re progressing on track and looking forward to reporting continued progress to you in the coming quarters.

I would now like to give you the basic starting point for what we call our value agenda. We view the company as a well-diversified, balanced mix of businesses, in essence comprising three strategic clusters, each with its own strategic approach to drive growth at their different stages of development.

The first cluster consists of our larger and more mature markets, Italy and Russia, where we are focused increasing profits and increasing cash flow generation. These markets have strong potential for broadband growth, both in fixed and in mobile. Here, we will remain actively focused on maintaining our solid market positions and sustained cash flow generation.

Cluster two is our growth engine, comprising Ukraine, CIS, Bangladesh, Pakistan and Algeria. These markets have in common that they are large potentially addressable markets with high revenue growth and relative low penetration and an untapped growth potential for mobile data.

The third cluster is focused on the opportunities for growth. This last group is comprised of early stage operations that require investments to reach their full potential. However, they also need to be realigned and refocused within the new VimpelCom.

The emerging markets where the company has its largest exposure will follow the developed markets in their development. Therefore, VimpelCom has a clear advantage. We can utilize the knowledge and the experience in Italy and Russia in our growth engine markets. In other parts of the group, there will be experience and knowledge sharing and product transfer, enhancing our local competitive positions.

This brings me to how we will translate our strategy into shareholder value. We start with driving profitable growth--growth at higher margins that generate cash, and we are refocusing the businesses to accomplish this goal. This is the first pillar in our value agenda.

Next is cost leadership. We will launch corporate cost efficiency programs as well as continue to deliver our synergy programs.

The final pillar in our value agenda is capital efficiency. Investment is a part of the nature of the telecom business, and it always will be. A cutting edge network is, after all, our lifeblood. However, we can be more efficient with our capital, and we are focused on being better stewards going forward. Capital efficiency and cost optimization are very closely linked, and our philosophy is that it starts with capital efficiency improvements, followed by cost efficiency and then eventually increased cash generation.

So as you can see, generating free cash flow growth is our priority number one. In this way, we will drive even better returns for our shareholders, including an attractive dividend. For each strategic cluster and entities therein, we are defining the optimum operational strategy, and in addition to that, we will, at group level, define a review of listings, portfolio strategies, leverage, and also return of capital.

I think this is more than a goal. It is something that we are driving into our culture. We are developing a clear and unified organization aligned around performance. Everyone, top to bottom, is accountable based on solid governance and effective business [steering].

Let me bring this all back together. Our results this second quarter are just the beginning of what we believe will be a rewarding journey. We are a growing global telecom company with attractive markets and prospects. We are focused on leveraging our new strength to deliver business excellence and synergies. And we are ahead of plan.

We will provide all of you a further level of detail at the investor day in the second half of November, and you will have the opportunity to meet the team that will deliver on the strategy, those at group level as well as business unit leaders. We hope you will join us.

With this, thank you very much for taking the time this morning. We are of course now happy to take questions, and I would like the operator to please instruct the audience on how to forward their questions.

Question-and-Answer Session

Operator

Thank you. [Operator instructions.] Our first question comes from Cesar Tiron from Morgan Stanley.

Cesar Tiron - Morgan Stanley

You seem to be on track to achieve your targets [unintelligible] in Russia, but it seems like the burden on margin is quite significant. Can you please tell us what we should expect in the next quarters? Should we expect some acceleration in service growth in Russia or should we expect less pressure on margins?

Jo Lunder

I think as everyone has seen, the dynamic in the Russian market has been very competitive over the last years and I think going forward for VimpelCom, our priority number one in Russia will be profitable growth and we will set cash generation, as I tried to outline in my presentation, as well, as a priority number one. We are now doing a number of projects that are launched as part of our business excellence program in order to improve focus in that direction. But to be a little bit more specific, I think for the rest of 2011 we expect mobile margins to be in the mid-40s and the low 40s for the consolidated mobile and fixed margin for 2011 as a year.

Cesar Tiron - Morgan Stanley

Can I just also ask, on Italy, you obviously outperformed the market, but here it seems that the trend of revenue is accelerating significantly. Can you please say what was the main driver and what is going to happen in the next quarters as well?

Khaled Bichara

I think as I said, we are outperforming the market there, comparing to the same quarter of last year there was some unusual items. But also there is the termination rate. Sometimes when they change it takes some time for us to catch up. We are confident that eventually we will get back to growth on that asset, so we’re not that worried about this quarter.

Cesar Tiron - Morgan Stanley

Could you possibly say how much would have been the growth if you were to exclude the exceptional items you mentioned and the MTRs?

Khaled Bichara

The exceptional items is 1%.

Operator

Our next question comes from Herve Drouet from HSBC.

Herve Drouet - HSBC

Two questions. The first one is on the margins again in Russia. Where do you believe you have the most room to improve margins? In which segments do you think you have more room? Is it more in the mobile voice? Is it more in the mobile broadband? Is it more in the fixed broadband? That’s my first question.

The second question is if you can give us a bit of an update on what’s happening in Algeria. Where do you see the Algerian business going? Are you in some type of discussions in terms of what may happen to Djezzy? And do you still have some constraint in terms of importing equipment, SIM cards, there?

Jo Lunder

Let me try to expand a little bit on my first answer, on Russia. I think if you look at performance in Russia, we have improvement opportunities, basically throughout the whole P&L. We are now addressing the gross margins and implementing projects to improve gross margin level as well as we are addressing a number of operating expenses further down the P&L in order to improve EBITDA margin. Of course, this is a very big company, and things take time. So having the needed effect of our change program like that, naturally it takes time. But this is basically a holistic move, with 15-20 improvement projects addressing cash flow, improved margins, and higher profitability in the Russian market. And also data growth will help the overall picture here.

Then moving to Algeria, we’re still working on a solution to keep this asset. We like the asset very much. We think it’s a good market, it’s a lot of growth to come there still on voice. Data will come, and for that reason our aim is the keep the asset. We would very much like to develop it in the best interest of the people in Algeria and to have a good working relationship with the government and with all stakeholders. Given the sensitivity of this topic, we don’t want to disclose specifics when it comes to progress and dialog that we’re having there, but as I said, still working on a solution and our main target is to keep the assets.

Herve Drouet - HSBC

Okay, anything you can be maybe more specific on? Either on targets, on margins, segments, or in terms of how you see forward in Algeria. Can we hope for some [releasing] of some of the constraint that Djezzy has in terms of equipment, do you think in the short or medium term?

Jo Lunder

I would very much like to share information with you if I were in a position to share it, but right now we’re not in that position, and for that reason we need now to work on progress and not have this debate in the public domain.

Operator

Thank you our next question comes from Alex Balakhnin from Goldman Sachs.

Alex Balakhnin - Goldman Sachs.

Two questions if I may. First is on your Russia operations, and my question is basically if you see the subscriber number dynamics and profitability dynamics, is quite difficult not to link them together, so it looks like your margin [unintelligible] because you’re too aggressive with subscriber acquisition. Can you explain what is behind your subscriber acquisition? What plans are you proceeding? And another thing here is that in your presentation you mentioned that your strategy for Russia and Italy is to actively maintain market share, which sometimes may not be consistent with the profitability growth. Because if you look at your EBITDA in Russia, it’s minus 9% year on year in rubles. So maybe that gives you an idea then to grow in Russia is not really profitable. So what should change here for you to discontinue or scale back your [unintelligible] in the country? Because that may give you a higher profitability uptick than pretty much any of the cost [unintelligible] programs probably. Just your thinking on this question would be really helpful.

And second question is you were saying, in the presentation, talking about [unintelligible]. You mentioned that you planned to distribute a significant part of your free cash flow and just a clarification here. Are you talking about cash flow from all the operations? Because previously you had mentioned only Russia and Ukraine. And second, what is significant for you? Is it 50%? Two thirds? Three fourths? Just for some visibility. Thanks.

Khaled Bichara

In terms of margin [unintelligible], for Italy and for Russia, I think the question was the same. Clearly, as Jo mentioned, our strategy is profitable growth and creating value and the value agenda. But clearly for us there are guidelines to which we want to focus on keeping our market share. Having said that, it means we will not be fighting on a 0.1 or even a 1% market share if we think it does not affect our market position. Yet we have some guidelines where we believe specific market share and clearly these are numbers we cannot share for competitive reasons, if we lose them it could effect on the long term, the value of the company. Because we’re not only looking at generating cash flow now, we’re always looking at the long term value creation, because we have long term [unintelligible] in that business.

In terms of Russia, I think it’s very clear, and I agree with you, that the [churn] level in the market is very high, and if you compare [unintelligible], you’re right, it’s minus in ruble terms. So it’s unfortunately [unintelligible], so the whole market has not been a very mature market on that front. We see some signs that the market is going to slow down. What we can say is we will not instigate any price war or any driving of the margins down. Yet, as we mentioned before, we’ll continue to defend what we think is our fair share that we need to keep.

Henk van Dalen

On the dividend policy, I think when we were discussing the first quarter we also clearly identified what the new dividend guideline is, so actually that means we aim to pay $0.80 per share, assuming the 1.6 billion common shares outstanding. So when we talk about $0.45 as an interim dividend now, then let’s say the most logical thing is that the final dividend will be around $0.35, to be established in 2012, based on the full year 2011 results.

The relation to free cash flow that you’ll find there is the definition of net cash from operating activities as it is published in the cash flow statement, minus the cash capex. If you would do going forward what is now factually done in the first quarter, that would mean that we have 100% payout of that delta, and that is certainly not our definition of significant. So it is important, I think, to take the $0.80 as a reference, and that is also the focus that we have.

Alex Balakhnin - Goldman Sachs.

Thank you. And maybe I can ask just a quick followup on the last answer. Basically, I see that you recognize the comparative situation in the market, but what is your plan in this circumstance? Do you plan to play by the market rules, [unintelligible] or not? Or do you plan to make any steps toward rationalization of the market?

Khaled Bichara

I think we clearly cannot say what we’re going to do in this market, because we’re competing with four other players in that market. But we can again reiterate, we will not start any price war. We are very pro-rationalizing in that market. We’ve been doing that in most of our markets. Russia was a special situation. If you look at all the markets we’re in, Italy or even Ukraine and CIS, we’ve been working very aggressively not to push these markets down. Specific moves clearly we cannot announce because of competitive reasons.

Operator

[Operator instructions.] our next question comes from Tibor Bokor from ING.

Tibor Bokor - ING

I have a question on Euroset. Do you plan to increase your stake in Euroset and consolidate this asset? If so, what would be the impact on your EBITDA margin?

Khaled Bichara

As you know, we have an option to increase our stake in Euroset. We’re studying this option, and we have not made a decision on that yet. As soon as we do, of course we’ll communicate to the market.

Tibor Bokor - ING

Can you tell us at least what was the net income of Euroset in the second quarter?

Khaled Bichara

I don’t have that data off the top of my head. I will send you that.

Tibor Bokor - ING

And a quick follow up on the other negative EBITDA. When we look at the sector breakdown there is a negative number on a pro forma basis, $86 million. Is that headquarters? Is it a one-off? Should we expect this item to remain in the following quarters?

Henk van Dalen

Yes, that is absolutely a one-off for this year. Of course, it has to do with the whole Wind Telecom transaction. It actually falls apart in two blocks. One block, which has to do with the payment of the various fees to the advisory banks, and the other block is costs related to the integration process, let’s say the explanation given by Jo on the synergies. Of course getting all these synergies in detail organized and structured, those things also cost money in order to come to the right focus internally. So there will be, most probably, in the next two, three quarters, some additional of these integration costs as well, but over time it will clearly fade out and we will get to the normal levels as we [unintelligible] that quarter.

Operator

Thank you our next question comes from Alex Wright from UBS.

Alex Wright - UBS

My first question is a follow up on Algeria please. As you stated your preference is to maintain ownership. But could you just update us on what your thinking is regarding the value-sharing agreement? Because I think that expires in a few weeks’ time. And clearly if there is no change in ownership there, then it would appear that there's no immediate scope for exercising that agreement. So do you see scope to prolong or renew the agreement? Or would you expect that to lapse?

And the second question is on Bangladesh. Do you have clarity there on how much you will be asked to pay for the 2G license renewal fee? And could you share your thoughts on that?

Jo Lunder

I’ll kick off with Algeria. I clearly understand the questions and the interest for Algeria. It’s an important question, and I can tell you for sure that I am personally involved and very focused on finding a way to deal with this in the best interests of shareholders and everybody. It’s correct what you said about the re-sharing. It expires in October. We have the right to trigger the re-sharing mechanism when it expires. So this is in the control of the board of directors of VimpelCom. We are now analyzing in detail what is in the best interest to do. We haven’t made the decision yet. We continue to work on it, and basically this is an option we have until mid-October, and for that reason it’s basically too early to confirm what we will decide to do. But as I said, I can for sure confirm that we spend a lot of energy, me personally involved with the board, to work for a solution, again in the best interest of our shareholders.

Khaled Bichara

And for Bangladesh, the 2G renewal cost will be around $250 million. It will not be paid at once. It will be paid around three payments. The first one will be around 35% and then we will make the payments as we go. So in terms of payment terms and value, it’s well in line with our [unintelligible] expectations.

Alex Wright - UBS

And the second and third payments are in 2012, is that correct?

Khaled Bichara

’12 and ’13.

Operator

Our next question comes from Alex Kazbegi from Renaissance Capital.

Alex Kazbegi - Renaissance Capital

Two questions also. One on data. First of all, I was wondering if you could allow us to compare more apples to apples in terms of let's say in Italy. Your RPU on data presumably includes the smartphones and the dongles as well as in Russia you just give us the USB modems. So I was wondering if you add the total data on Russia, how the picture would look.

And a general question with regards to that as well. In Italy specifically it seems to be data RPU has been fairly stagnant over the past sort of four, five quarters. What is there you think either impedes the further growth or what do you expect this growth to become? And when and why, so to say?

The second question would be just on M&A in general. Given, again, your focus on capital discipline and return of cash to either shareholders or the bondholders through deleveraging, would you say that you have nothing on the M&A agenda in the foreseeable future, neither in terms of buying nor selling? Would that be too strong to say? Or is it actually what is the next two, three year agenda, nothing really on M&A, just focus on operations?

Jo Lunder

Let me answer the second question and then Khaled will enlighten us on data in Italy and your question there. I think business is all about priorities, and we now believe that the right priority for our company going forward is to focus on results, on operations, on integration, and eventually increase cash flow. So that is the umbrella for everything that we’re doing. However, of course for a company our size to say that we are completely out of the M&A market for the next, let’s say, 18 months, I think is a little bit on the aggressive side. We clearly said that in this cluster number 3, we need to realign and refocus the businesses. We need to look at how they fit into the overall group. There might be in-market consolidations coming up. We all know there’s a lot of synergies in in-market consolidations, and for that reason we also said we want to strengthen our market position, so I wouldn’t exclude the opportunity of this maybe not being our preference on timing, but that we will be forced into something when it comes to in-market consolidations. But a larger transformational deal, with the speed we’ve seen now, on first the establishment of VimpelCom Ltd and then the Wind transaction, we will not do the next 18-24 months.

Khaled Bichara

And in terms of comparing the Russian broadband to the Italian broadband, I agree, it’s not the same way the numbers are presented for now. And I’m sure as you know, as a group, we’re currently working on standardizing how we report data and broadband to the market. In Italy, data numbers include mobile broadband, SMS, and [unintelligible] services, so clearly looking at the numbers in total you have to look into the internal dynamics. The SMS pricing has gone down, while broadband revenue has gone up. And also at these growth rates both for fixed and mobile, you would see us either having a stable or increasing RPU growing at 2 digits in terms of customer base. So that’s our focus, with very high growth, clearly RPU sometimes goes down. Also, you would look at multiple SIM cards per user. As we said, general RPU in Italy went down because now we see customers with multiple SIM cards, one for their iPads or PCs, and one for their handsets and so on. So basically the revenue per SIM card goes down, but the revenue per customer goes up.

Alex Kazbegi - Renaissance Capital

And in Russia, would you say that if you add also your non-dongle subscribers, do you see a fairly dynamic increases in terms of smartphone penetration usage, RPU levels? What's the general, so to say, at least qualitatively?

Khaled Bichara

The dongles usually have higher RPU than data on the handset, but it’s also very different. You’re actually looking at 3 types of data customers. So we have small screen, medium screen, and large screen. And we have [unintelligible] for each. I don’t want to give you a number that might be wrong, but if we add the lower end data services to the USB, it would probably take the RPU down, but we’ve seen growth on the three different types of screens, and we have plans to stimulate that usage. Our goal is to try to continue to grow both customer base NR. We still think there is space to go up.

Operator

Our next question comes from Dalibor Vavruska from Citi.

Dalibor Vavruska - Citi

Hello, just a quick technical question. If I look at your P&L pro forma consolidated below the EBIT line, I was just wondering if you can shed some light about the items like taxes, the other operating, or your cost of debt and FX. I'm just wondering obviously with all these strategy questions, investors are also trying to forecast the net profits. Just as a sort of ballpark idea, is it going to $1 billion? $2 billion? And then could it be this year or next year? So I'm just wondering if you can shed any light on any one-offs or any development that you can expect on that side to help to basically estimate your P/E with some kind of degree of precision?

Henk van Dalen

I think you will get a reasonable picture on how the second quarter and the year to date association on the pro forma was on attachment C in the press release, which describes that in more detail. I’d say historically the results of VimpelCom have always been significantly influenced by movements in the FX, particularly in [unintelligible] gain and losses that are related to our funding and most particularly to the net debt position that we have in rubles in Russia, and of course that from time to time can move significantly versus the dollar. Looking at all of the other lines that you mentioned, there might from time to time be one of those on the tax side, particularly because some of our expenses are not tax deductible. There are smaller elements related to hedges, and this of course an effect that has to do with net income or net loss attributable to the noncontrolling interest, which particularly in the first half was quite significant due to a strong contribution from Eurosat in the first quarter of 2011. But if you take, let’s say, the year to date picture which has pluses and minuses in it, leading to a net income of $875 million for the first half year, then I think it’s fair to assume that, under comparable circumstances, you will be looking at a net income somewhere between 1.6 and 2.2.

Operator

Our next question comes from Victor Klimovich from VTB Capital.

Victor Klimovich - VTB Capital

I have two questions. First of all, I would like to say about the merger of Orascom Telecom Holding's assets. Can you please shed light on the current situation with that?

Jo Lunder

The de-merger you mean?

Victor Klimovich - VTB Capital

De-merger.

Jo Lunder

Exactly. We’re still finalizing the process there with the financial and supervisory authorities. The authorities have requested a committee that’s going to review some underlying accounting documents that will serve as the basis for the merger. This has created delays in the implementation of the de-merger, and right now, given the situation in Egypt, we don’t have a clear visibility on the timeline. We are, of course, doing our utmost to finalize with the authorities as soon as possible, but it’s very hard right now to give an estimate on the timeline.

Victor Klimovich - VTB Capital

But do you still consider this as a Plan A, I would say, so that you don't have to pay the former shareholder, controlling shareholder of OTH, the certain amount of cash which is mentioned in your contract?

Jo Lunder

This is still Plan A for the company, to get the approval and implement the de-merger, and then we have a Plan B if that is not possible. But as of now, Plan A is still in place, and we work to implement it.

Victor Klimovich - VTB Capital

And may I follow up with several questions regarding Russian performance? Yesterday we had a conference call with MTS, which is actually a laggard in terms of net additions. And they said that probably they will have to be more aggressive if they will not see signs from other market participants, presumably VimpelCom and MegaFon, if they will not decrease volumes of sales. So it's not a secret that MTS they have negative net additions for several months and MegaFon and VimpelCom are more aggressive in terms of sales. So don't you expect that there will be even increase of competition in Russia if your sales and MegaFon sales will not go down? 

Jo Lunder

I think the way we look at this now is basically that priority number one in Russia for VimpelCom is cash generation, which means that we will not measure subscriber market share and revenue market share on a monthly basis. As long as we are able to operate within a band that we are comfortable with not destroying long term cash flow ability of VimpelCom in Russia, we will not necessarily jump on a monthly basis and destroy the long term plan, being higher cash generation. So I agree, it’s a very difficult market. There’s a lot of competition there, and we see clearly that historically over the last years there has been a lot of what I call kick and run. We now would like to put together a long term plan for Russia focused on cash flows and as I said, establish a band for subscriber market share and revenue market share where we believe is necessary to support long term cash flows.

Victor Klimovich - VTB Capital

But do you have a goal, for example, to return to number two position in terms of revenues, in the short term or in the longer term?

Jo Lunder

No, we don’t. I think this is important maybe for the media and it’s been sort of a lot of focus on who’s number one, two, and three. We’re in that market to generate value for shareholders and to me, and to our board, it’s not important if we are number one, two, or three, as long as we are able to grow our ability to generate more cash. So it’s not a goal for VimpelCom to be number one, two, or three, measured in subscribers or revenue market share.

Operator

Our next question comes from Igor Semenov from Deutsche Bank.

Igor Semenov - Deutsche Bank

I just wanted to follow up on one of the financial questions. So can you explain in a little bit in more detail what are the other expenses of about $107 million for the quarter? And also, on Euroset, to follow up, do I understand correctly that the decision is not entirely in your hands? You are essentially in a position to take the valuation agreed by the majority shareholders of Euroset? And when should we expect any announcement regarding Euroset?

Henk van Dalen

I will take the first and I assume Khaled will take the second one. The $106 million, that is another cost. It effectively has two components in it. The first component has to do with the consolidation of our activities in Vietnam, which were not consolidated last year, and when you consolidate it you have to kind of readdress the effective accounting of how it was part of the books. So you look at the translation adjustments that now need to go through the P&L. And then there was an element of roughly $50 million related to an ineffective hedge in Italy. Of course that is not a factor of relevance when you do pro forma to pro forma. But when you do actual to actual you will probably see in the coming quarters from time to time a few of those adjustments going through the [unintelligible].

Khaled Bichara

For the Eurosat, to be clear we have a call option. It’s unconditional, so if we want to call we can call. There is a process of [unintelligible] valuation and it should be done based on the agreement with the majority shareholder. As we mentioned, it’s not only the value that we’re looking at. Strategically we have not decided if we want to exercise or not exercise this option yet. As soon as we have a decision, we will communicate that to the market.

Igor Semenov - Deutsche Bank

Is it not correct that if Mamut agrees to the valuation, then you have exercise the 20%?

Khaled Bichara

No, the call is our option. There is a put with a totally different valuation that the major shareholder has. If he wants to exercise the put at the valuation it is, we would not be able to disclose, we would be happy to receive it on that.

Operator

Our next question comes from Nadezhda Golubeva from UniCredit.

Nadezhda Golubeva - UniCredit

I have two questions. First of all, on the Italian margin, when you mention the MTR cut as a factor behind the margin drop, do you mean the exact cut which took place last year? And do I understand correctly that there is another cut coming from July 12 this year? So effectively it took place already? And does this mean that we should expect further pressure on margin in Italy in the second half? Or do you see some potential to offset this reduction in the profitability? This is my first question and I'll ask my second question after.

Khaled Bichara

For the MTR, the changes happen every [unintelligible], so when you compare year over year, quarter two this year had different MTR than quarter two of last year, clearly. There was another change this July. The changes are, because we’re going on a [unintelligible] sometimes smaller or less [unintelligible]. We believe that it will not have the same effect on the [unintelligible] moving forward because we’re looking at increasing the RPU by stimulating more usage.

Nadezhda Golubeva - UniCredit

And my second question is about your debt. So you said that you do not exclude that you might see some very nice opportunity for participating in consolidation in some of your markets. And so if [unintelligible] an opportunity for example and you believe that you see a deal which would be complementary and value accretive for you, and if simultaneously you will have to pay cash in connection with this de-merger, which let's assume does not take place, my question is do you see any possibility that you might further increase your debt load? And also, do I understand it correctly that your bidding, which is quite aggressive in Italy for the [unintelligible], it would require external funding?

Jo Lunder

I think there was actually a couple questions in there. Let me try to answer and then Henk can step in here. First of all, we do have some more leveraging capacity within the group. We are not fully leveraged, so it’s possible to increase. I think we’re close to the comfort level and where we should be now. So when we have declared that we have an intention to deleverage and we stick to that direction. So as you said, if the de-merger doesn’t take place, that might require an activity from the company that will limit other activities, and that’s why I also tried to explain that we have a third cluster in our strategic framework that we also might want to look at refocusing and aligning what is in the best interest of the company. So we clearly have much less financial flexibility when it comes to using that instrument for an M&A agenda going forward, and that’s why I also said focus now is cash flows and operations.

When it comes to Italy, we are actively participating in the auction in Italy. And I think for the right reasons. It would be tempting not to do that, because these are frequencies that we probably will need in maybe 2014, ’15, ’16 even. So of course short term focus of management would be to not participate there and not take that burden right now. But I think it’s in the long term interest of shareholders to secure those frequencies in Italy. We have a fantastic opportunity for data growth going forward and these frequencies will fit very good into the [unintelligible] and the strategies going forward. So we will actively participate in the auctions and we will secure the necessary [unintelligible] frequencies for building Wind at its next level. And the way it looks now, we will keep also our policies in place when it comes to keeping Wind ring-fenced and that the financing of the auction is likely to be done within the framework of that policy of having Wind ring-fenced.

Nadezhda Golubeva - UniCredit

And may I ask you, when you say full leverage, what debt to EBITDA do you assume under full leverage assumption? 

Henk van Dalen

We are not going to go into a lot of details on leverage because it is certainly not our intention to go to full leverage. What you might expect is that as a result, and of course depending also on the outcome of the current 4G auction in Italy, that gross debt of the group toward the end of the year will be somewhat higher than the gross debt level that we have now. We will retain and maintain the current funding principles that we have in place, so we feel that the financing flexibility that our Italian business has is strong enough to participate in the auction in an effective way. And for the rest it’s fundamentally, I think, focusing at the balance of what you generate as cash, what you spend in capex, and what from time to time you also need to spend in end market consolidations. But that often has also a character of [unintelligible] buying or building. And overall, of course, we have our group targets as Jo said, and we will continue to focus on those in this direction of deleverage going forward.

Operator

Our last question comes from Sean Johnstone from Bank of America.

Sean Johnstone - Bank of America

Just if we could go back to the Italian mobile business, when you look at the revenue base, it's declined quite sharply on the prior quarter. And I know you were saying part of that is MTR, but if we're looking at the past couple of quarters, you were growing this business - or on the previously Wind reported numbers - somewhere between 3% and 5%, just looking at your top line mobile numbers. And now we're at minus 1.6%. Could you give some clarity on why that's slowed so sharply? Because if you look on the prior quarter, you've actually got improvements in the RPU on Q1 and even improvements on the minutes of use. So I'm just trying to understand is there some change in the accounting?

Khaled Bichara

No, there is no change in accounting. We usually try to compare year over year more than sequential quarters because of seasonality. Because in sequential quarters there’s a lot of different usage, where there’s special indications, summer roaming and so on and so forth. So if you compare year over year it’s mostly [unintelligible], then there is a decline. So there is no special dynamic there. And as I said, it was between the MTRs was probably the biggest pressure, and moving forward the lower the MTRs are the less surprises you’ll see in the MTR coming in the future.

Sean Johnstone - Bank of America

Okay, so going forward, if I've looked at this, you've been growing at a significant premium to the other two competitors. If we ignore TI, because of their issues, you've been growing at a premium to Vodafone. Now you're growing at the same sort of level as that. Is that the sort of levels we should expect going forward? That you're not going to grow that much faster than your main competitor? 

Khaled Bichara

I’m not sure we’re looking at the same set of numbers, because Vodafone was declining and we were stable.

Sean Johnstone - Bank of America

Your reported mobile numbers are down 1.6%.

Khaled Bichara

One was at minus 3. Telecom was minus 9.

Sean Johnstone - Bank of America

But what I’m saying is the differential has come back quite significantly since we saw last Wind reported numbers, so I’m trying to establish is that the trend we should see going forward?

Khaled Bichara

I can’t speak for them. What we are saying is we would not continue to see a decline. We are looking forward to hopefully go back to small single-digit growth. Basically, as we always said, we don’t want to be very far off the path, because otherwise we can instigate price wards and aggressive reactions from the competition. I think what we’ve seen in the last couple of years was very aggressive reactions from telecom and the problem was not that they did not react. The problem was they cannibalized themselves more than they cannibalized the market. But we cannot depend on that forever. So basically keep moving forward with our value agenda. We do not instigate price wars, we only instigate price wars by reducing our price. But if we gain too much market share that’s kind of [unintelligible] price war.

Jo Lunder

I think we’ll close up the session now and if you have more questions please contact investor relations in VimpelCom. We have a team sitting here ready to interact and discuss with you during the course of the day and of course in the next days to come. We understand there are a lot of questions. This is a new company, and for that reason we also, as I said planning an investor day mid-November. We hope to give more details and more clarity on the direction we outlined today during that day, digging more into the different business units and putting some more numbers and activities on the direction going forward. I hope to see you all there so we can have an opportunity to explain our plans. And with that, I wish you all a very good day, and again thank you for joining us this morning. Goodbye.

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