VEON Ltd. (VEON) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to VEON Investor Day. After drawing your attention, as customary, to our disclaimer, I'd like to move on straight away to the agenda. Plan is, Kaan, VEON CEO, will start with me to turn next 5 countries. Serkan, our CFO, will finish. Kaan will then take a few minutes for wrapping up, and we will be then straight moving to Q&A. Please, Kaan, over to you now.

Alex, thank you very much, and thanks for joining us today. I see that we have already almost 120 people online. I really appreciate your attention and interest with VEON. Today, we have a busy day. I will focus on our next 3 years' ambitions and tell you about our strategy in terms of creating customer value. I have the great honor to have 5 of our general managers also share their plans for the next 3 years. We're going to hear from Ukraine, from Pakistan, from Bangladesh, from Kazakhstan and finally from Russia. Serkan, our Chief Financial Officer, will be here as well to validate all the financials and the projections in terms of our ambitions and then we will have a Q&A session. So let's go over who we are as VEON. [indiscernible] business in Myanmar, in Cambodia, in Italy. This is our portfolio. We have fantastic 9 markets that we operate today. As you can see, Russia represents the biggest portion of our business. We have more than 50 million subscribers. In this beautiful developed digital economy, it represents about 46% of our business. Pakistan, 17% of our business comes from Pakistan, close to 72 million subscribers. And we have Ukraine, a very profitable -- world record-breaking profitability operation, representing 12% of our business. Algeria, 8% of our business. Algeria is in our hearts, it's not in our numbers. Since Q3, actually, we are not including Algeria in our consolidated numbers, but I wanted to give you a flavor of our size of the business that we have there as well. Today, we will also hear from Bangladesh and Kazakhstan, each representing 7% of our operation, and the 3 small operations, Uzbekistan, Kyrgyzstan and Georgia, representing about 5% of our business. And I think you will see that we -- as an operator, VEON, we are specialized in large population, young demographics and a huge upside representing digitalization process countries. Let's also remind ourselves the stock markets that we are in. We are in Amsterdam. It's VEON in Euronext. We are also in NASDAQ. We do also do trading as a stock market sponsored stock in Moscow under VEON-RX, and we are also trading in St. Petersburg. And of course, I know most of you have in your minds, Kaan, when VEON is going to be -- is included in an index? It's part of our ambition over the next quarters to make sure that we qualify in the right indexes so that we can also not only have active investors, but also the passive investors in place. Now let me start with 2021. Because we have talked a lot about growth potential in our markets, and I'm very happy to report to you that in the last 2 quarters, we have achieved double-digit growth on the revenues, 11.3%, 11.2% % in Q3. And year-to-date, we have actually grown our business, in the first 9 months, 9.7% on revenues, 8.7% on EBITDA. We created, in the first 9 months, slightly more than $300 million of free cash flow as well. And yes, Russia is back in the game. You will hear more from Torbakhov about our progress in Russia with 5.3% revenue growth. We have also promised a lot in terms of moving into the asset-light environment. And Russia was the first transaction we successfully completed in the tower monetization and value crystallization process, with close to $1 billion of cash generated. 2021 was also quite a progress in terms of our governance. We moved away from being a centrally-run organization to a distributed decision making. We have large countries who are at the heart of the economies of the countries that they are operating at. And today, we aligned ourselves with local Board of Directors, running each one of our operations into a country-driven decision-making platform. We have invested, yes, to bring 4G for all. Over the last 24 months, we have increased our 4G penetration in our subscriber base, almost 1 single percentage point every single month, and now 46% of our customers are enjoying 4G on a 3-month active basis. And we have developed methods and technologies and bundles to embrace the digital operator business model. I will talk more about this. And we have done targeted CapEx investments, reaching almost to 22%, 24% of our sales in terms of our CapEx intensity, but delivering solid results driving our revenue growth as well. 2021 also show the results of our active portfolio management strategy. Just like on 1 side, crystallization of value on the towers. On the other side, we sold our menu operation. We managed to consolidate our shares in Pakistan by buying out the minority partners as well as our put option in Algeria in terms of our next stage of development. We have also acquired the minority stakes in Georgia to make sure that we have full flexibilities in the destiny of our operations. Today is about the next 3 years. And I would like to share with you that looking through our business, our shareholder value creation strategy and the dynamics that we see in our business, I can confidently say that our ambition to grow the business in VEON is on a cumulative average growth rate of 10% to 14% for the next 3 years. And we see 3 percentage points of EBITDA margin expansion as we do that and, as Serkan will focus later on, execute on our cost management initiatives. We haven't changed our dividend strategy. Our dividend strategy is there, which says that a minimum of 50% of free cash flow after spectrum payments as long as our leverage stays in 2.4. And we commit to executing on that as we move on and return to dividend in terms of shareholder expectations. We want to see the elevated levels of CapEx spending and investments to continue until we see 70% of subscriber base enjoying 4G services. The last 2 years showed us a lot of things, including 4G for all, not 5G for all, should be at the heart of our strategy. You will see, as we reach this objective, our CapEx intensity will slowly go down to the levels of below 20% in 2024. I'm also happy to mention that we have managed to align management rewards and the incentive systems for our executives into total shareholder creation. I will talk a little bit more about that. We are planning to roll out our digital operator offers this year, which will grow our businesses, the wallet share that we represent in the markets that we operate. Our tower value crystallization will continue. We have, already in Pakistan, in Ukraine, companies owning our towers and we are already in a process in Bangladesh, looking how to sell our tower assets based on the regulatory environment in the country. The digital assets that we managed to create in markets where there is hunger for financial services, hunger for mobile Internet, hunger for entertainment like in Bangladesh and Pakistan, are in a healthy stage and growing every single month over month. And the financial and operational discipline which we will commit to keeping alive in terms of cost management, balance sheet management and hedging strategies and inflationary pricing are the cornerstones of our decisions. Three vectors of value creation. I would like to explain you, over the next 3 years, how we intend to create value for our shareholders and for our customers. On 1 side, we own 50,000 towers, and over the next 3 years, we have 20,000 additional build-to-suit investment sites. We truly believe that infrastructure today is something that no telecom operator can afford to have exclusivity on. We will share infrastructure and we will monetize our tower assets so that the right independent tower operators can do the right execution when it comes to sharing the infrastructure in an effective way. We already have a future-ready infrastructure in terms of virtualization of our networks, massive MIMO antenna rollouts, carrier aggregation technologies, and we are going to make sure that the asset-light strategy will allow us to do right capital market allocation decision for our business. On the other extreme, we have our digital assets. And these digital assets, the high potential businesses that can create potentially billions dollars of value, like JazzCash and Toffee in Pakistan and in Bangladesh, are also managed in the right way. And that's also another area where you're going to see us getting serious and active on. And in the heart, it's the transformation from the traditional telco to the digital operator. A traditional telco selling number of minutes, number of SMSs and number of gigabytes to a digital operator, which provides lifestyle services for its customers and which addresses a much bigger wallet share as we go from minutes to moments, heart of the double-digit growth story that I will tell you. Crystallizing the infrastructure assets. I think we have talked a lot about the value that inherently exists in our balance sheet today, which does not reflect its real value in terms of the shareholders' expectations. Russia was a fantastic example. And the deal we had in Russia is not a simple sale and leaseback operation. We managed to push CapEx requirements to the independent tower operators that we have selected, service telecom. We managed to cash in the synergies that will come from sharing the towers with other operators, and we managed to tap into the added value of extra tenancy that we will see in the towers over the next 8 years. That's how we managed to get 11.7x enterprise value to EBITDA ratio from this transaction, and I'm very happy to see that it has already closed. Next in line, over the next couple of quarters, 2022, maybe in 2023, some of them; Pakistan, Ukraine, Bangladesh, Kazakhstan continue coming on this cycle. Vector 2 of value creation, the digital operator. The traditional telecom business of having just 30 minutes of calls and SMS with customers is not enough for today's business. Unfortunately, mobile industry, over the last 30 years, failed to create any innovative business model that could match the opportunities in the digital economy. Our digital operator strategy is all about focusing on the customer and moving that 32-minute relationship to every single minute in a day, 1,440 minutes. We want to be the platform not serving only the lucky 3% of the populations that we represent in Bangladesh, in Pakistan, the 3% who can afford maybe the Spotify or Netflix, but we want to serve 100% of our customers with the right TV platforms, video on-demand platforms, local music platforms, radio stations, newspapers, magazines, payment solutions, e-commerce, cloud offers. And that 100% of the population will pay back in terms of additional ARPU, lower churn. It has been proven over and over again, every time a customer moves from just using our voice services to voice and data, the ARPU doubles up. But every time the same customer consumes one of our digital services, be it our self-care application or TV application or the news media that we provide the news on, the ARPU increases another multiple. And that's how we would like to make sure that we capitalize on these digital experiences and drive our wallet share as we grow our business. Digital operator strategy is already delivering results. Today, 34% of our subscribers enjoy a digital service or a 4G service from us. And they create almost twice as big a revenue share, 34% of our customers delivering 63% of our revenues. And single-play voice customer to double-play 4G customer, to multiplay customer, it's a coefficient of 3.9x the revenues. And the churn is only 30% of what the churn for a single-play customer is. On every single area, we have a very solid, ultimate objective, a strategy that is defined at the high level. But in reality, we have a different playbook for every single country. As we build our offers from watching to listening, to paying, to playing games, to providing self-care applications, we are going to enrich what we have on the shelf today. The product of the digital operator will be very different from the product of the regular telecom companies. And 1 model, market-specific playbooks. The reason it is so important to be relevant to each market because the development of the digital economy in Bangladesh and Pakistan is very different than the development of digital economy in Russia. On 1 side, we have opportunities to build. On 1 side, we have opportunities to partner and build a bigger ecosystem. And you will see our execution on every country as our general managers will talk about their own countries. Of course, the same opportunities exist in the business-to-business side as well. It's not only about changing the value propositions for our customers, it's also about changing the value propositions to our B2B customers. Moving from basic connectivity services to digital capabilities integrated in our offers from credit scoring, from mobile ID authentication that we actually announced today, to data protection, cybersecurity, cloud PBX solutions and digital marketing opportunities. You will see more about these solutions and their impacts to our business from our Russia and Ukraine operations today. Now let me tell you why this growth strategy on the digital operator is so sustainable and predictable. First, and this is the first square you see, grow with our markets. We are blessed to be operating in countries where ocean -- blue ocean strategy still is valid. Next year, just in Bangladesh and Pakistan, 5 million people -- 5 million young people turn 14 from 13, another 5 million will turn from 14 to 15, 15 to 16. Every single age group has 5 million people in it. Most of the populations almost 60% younger than 25 years of age. Smartphone penetration is half of what we have in Russia. So growing with our markets, the linear growth, basic population growth, the 95 million smartphones that they will have over the next 3 years, almost 80 million more people will come into our 4G coverage, will create the baseline growth impact. On top of this will come our movement of our customers from 2G to 3G to 4G. Over the next 3 years, we are going to be moving 70% of our subscribers into 4G. And a significant portion of them will also start utilizing our bundles. We're going to be creating an additional 78 million people enjoying 4G services. And this is going to increase the growth momentum from the linear growth to accretive growth. The third engine, growing with the multiplay, not only providing raw data services but tapping into multiplay, tapping into areas of digital services and basically graduating the customers from just consuming raw data to being a consumer of our digital lifestyle bundles. When we do that, brings the exponential growth. Churn goes down, ARPU goes up. And these 3 important momentum drivers will sustain our business in a way that VEON overall will be able to grow 10% to 14% over the next 6 -- 3 years in a sustainable way. And that actually is exactly our ambition and aspiration. Now let me also briefly talk about the vector 3, the big digital assets that we are building. I won't go into the details. Aamir Ibrahim will talk about JazzCash, and how we are serving almost 15 million users in Pakistan with this mobile fintech platform. Later on, we will also hear from Erik from Bangladesh how Toffee changes the entertainment space in Bangladesh, serving close to 7 million users. The important thing about these type of digital assets, they represent the unique value of our demographics in the countries that we operate, and the opportunities that we can grab by being the first in the place and the best in the place. Let me also highlight where we are with our leadership team. Over the last 2 years, we put together a very strong leadership team and enhanced the capabilities of this leadership team with the right data and fact-driven dashboard that allows us to make agile decisions. I'm also very happy to see that our country team running every single country are the best-in-class and creating the best enterprises in their reflective countries. We will soon be also announcing our Head of Ventures business, who will be taking care of those digital assets representing huge potentials in the emerging markets. I'm also happy to say, today, we announced the alignment of our executive reward program to the shareholder value creation. You will see that in our announcement, we talk about increasing the linkage between pay and long-term performance, creating a long-term incentive plan for our executives with a 3-year vesting. We have created also alignment of the short-term bonus program so that 50% of that will be paid in VEON shares. And by these incentive systems, our executives committing to carry equivalent of 2 years of salary -- baseline salaries in VEON shares and myself 6 years of salaries. I think this puts us in the same boat with our shareholders. Our destination in terms of creating value is in line with the expectations of creating value of VEON. I'm also happy to report that we have been upgraded to A from BBB in the most recent MSCI rating for sustainability. Sustainability is in the heart of everything we do. In every country, the enterprises we have are known for their standards -- high standards in ethics, integrity and governance. In the last upgrade, we were greatly appreciated for the independency of our Board and the Board members' dedication of time into VEON business. And I'm very happy also to see that our company, every single moment, improving in the sustainable development goals race, from cutting carbon emissions to making sure that we mobilize our customers as the movement for the earth's well-being. To summarize our 3-year ambitions, to grow our business 10% to 14% on a cumulative average growth rate basis; to improve our EBITDA margin 3 percentage points; to moderate the CapEx to revenue ratio from its current elevated levels of 22% to 24% down to 20% and below; and manage our balance sheet and keep the financial discipline in such a way that we convert that 10% to 14% local currency growth to mid-single-digit revenue and EBITDA growth in reporting currency; and returning to dividend, keeping our current dividend policy intact. Thank you for listening me. I would like to now invite our general managers and start hearing from them their plan of value creation. First, we are going to be going to Bangladesh to Dhaka, and Erik Aas will be joining us. Erik, the floor is yours. Erik, you might be on mute.

Thank you very much, Kaan, and a very good evening from Dhaka. Bangladesh and Banglalink are moving fast. Good underlying growth of the economy and Bangladesh is in the top 5 countries in the world in real GDP growth. The population is still widespread with more than 60% rural and, important, a very young and digital savvy population with 45% of the population being younger than 25 years old. We have a stable currency, good foreign reserves. And what I feel is very important is that we are now seeing a development in the country going across many geographical areas instead of only in the capital. The background you're seeing is from Dhaka. Previously, most of the visual development was around Dhaka and their harbor city, Chittagong. But now you are seeing infrastructure projects in many regions. You are seeing higher-end shopping streets in many cities around the country, and the country is more connected with new bridges across the big rivers. We are seeing power plants coming up, metro line in Dhaka and many other essential infrastructure projects. Basic education is also important and illiteracy is going down quite fast. Bangladesh is currently defined by United Nations as a least developed country, but is expected to graduate to a developing country by 2026. Next page, please. Moving over to the telecom market and Banglalink. We have a very fast growth of 4G-enabled customers. Last quarter, we reported 33% of our customers using 4G and it has grown 63% year-on-year. You have also see us -- seen us reporting that around 40% of these 4G customers are multiplay customers and multiplay customers are in general higher ARPU customers with lower churn. With 4G handset prices coming down and with good 4G networks, the potential is massive. And as you can see, we expected the growth of 4G smartphones to grow very fast. Moving on to next page. We have some very unique building blocks in Banglalink. First of all, we had, through 2 rounds of spectrum auctions, acquired 25% of the total available spectrum. Compared to competition, this gives us a huge advantage because we then have much more spectrum per customer than any other operator. And we will deliver high speed and stable data connections. We have been certified by Okla as the best speed operator since the beginning of 2020. By focusing on data quality, we have, despite a disadvantage on 4G coverage, managed to gain data revenue market share. And I believe it's quite unusual that a third player with network coverage handicap is able to take a consistent speed position and, in fact, increasing the market share. Next page. And that is why you will see us coming into double-digit growth. On this map, in the orange areas where we have a very good 4G coverage, we are holding a very decent market share of 22% to 25%. In some districts, we have, in fact, more than 40% market share. However, in the gray areas, and the gray areas represent 60% of the population, we have less 4G and only 12% market share. We have now established an essential CapEx commitment in the coming 2, 3 years, and this will bring us to a nationwide competitive 4G coverage. Vendor deals are in place. In fact, one of them was announced only a couple of weeks ago. And we have started executing this plan. Again, I would like to remind about the spectrum advantage, which we have across the whole country. This will allow us to maintain discipline in pricing and sell a quality data product at rational price level above inflationary level. Over time, we can expect our revenue market share to convert towards the spectrum market share, which is 25%. So this is the structural growth which will be the primary revenue growth driver in the next 2 to 3 years. While we are still on this page, I would like to mention that we are, like other VEON opcos, in process of selling our tower portfolio. 5,500 towers are for sale and we expect to sell these towers in 2022 or latest 2023. For our network expansion, all 7,000 to 8,000 towers in the coming years, we have secured deals with the established tower companies to do either sharing of existing towers or to do build-to-suit according to our needs. Next page. Now we are also very active in the digital services space and we are a forerunner in this area. This most visible is, of course, Toffee, which covers the whole video streaming area. But as you can see, we have launched a number of other services. Two examples, we have the gaming arcade, which is now available through our self-service app. We have ad tech, music, education and a health hub, and Messenger and news are in the workings. Let me now show you a video explaining the Toffee platform. [Presentation]

So Toffee users, they use more and they churn less. This service is network agnostic. In fact, more than 70% of the Toffee users are using other networks than Banglalink. It's a clear example of how we find innovative ways of delivering our digital operator strategy. Now to summarize Bangladesh. Next page, please. We are heading towards double-digit growth. We already have the best data service and we have good growth traction. We are committed to a nationwide 4G network rollout. We will continue developing the digital operator portfolio. Thank you very much. And with those words, I would like to hand over to [indiscernible].

Hi, everyone. So let me introduce myself. I'm Aleksandr Komarov. I'm Chief Executive Officer of our Ukrainian business, Kyivstar brand. And I will present you the opportunities we see in Ukraine within our overall, let's say, strategic framework that we are developing in VEON. So very briefly about Ukraine, of course, today is a specific day for Ukraine from the geopolitical perspective. But I want to show you a different side of the Ukrainian business -- of the Ukraine. So first, we were able to achieve a steadily GDP growth during the last 3, 4 years since 2016, except 2020, of course. It's a relatively big country, #7 by population in Europe with 44 million people in Ukraine. It's quite developed country from technology perspective. So as you can see, so it's the fastest adoption of the 4G technologies across the globe. Yes, it's very much driven by the late launch of the 4G technologies, but the trajectory is actually the best one in the world. We were able to reach almost 90% coverage of the population with almost 45% of 4G customers in less than 3 years. And this is very much supported by a high figure of smartphone penetration. And as a result, this strategy of 4G for everyone, double-digit growth of mobile data consumption and the very disciplined inflation target demonstrated by the market, it actually brings us a very significant result. Last 3 years, the whole telecom market of Ukraine was growing with a 16 percentage CAGR, which is, from my perspective, quite significant. And moreover, we were able to double the market size during the last 5 years. And this is a part of the overall Ukrainian development. So Ukraine, from my perspective, is a kind of hot spot from digital development. We see growing numbers of the Ukrainian [indiscernible] of course, purely Ukrainian, as a company that were established, originated in Ukraine that relocated partially to the states. So it's a kind of combination of the Ukrainian talent plus global funding help us to create a number of really visible unicorns. Just a few examples you see on this slide. GitLab probably is the latest one. The Ukrainian company established in Kharkiv with a current valuation of USD 17 billion. Ajax is the most awarded security, hardware, software company in Europe. Grammarly is the most popular cloud-based text-correcting platform in the globe. So all these new ventures were created in Ukraine. It's a special atmosphere and this special atmosphere, from my perspective, is very supportive for our strategy into the digital implementation. So where we are as Kyivstar? So we are undisputed market leader with a very, very strong market position with a market -- with a revenue market share around 48%. And we are stable. So our market is growing 16% during the last 3 years. We are growing 15.8% during the last 3 years. Our market growth is very much supported by double-digit revenue growth. We have outstanding profitability. Since 2019, according to the JSMA ranking, Kyivstar star is the most efficient, the most profitable operator in the world. We are managing -- we are developing 40% of the country infrastructure -- telco-specific infrastructure. And we are considering that it is a very big asset for the potential value creation for the shareholders. Despite our leadership position, despite a competitive market, we are really successful to keep our customer base loyal. We have the lowest churn. We are among top 5 global operators for managing prepaid customer base from churn perspective. They are very much supported by our fixed and the bioconvergent approach to the business. So we are convergent and the operator. And until recently, it was a unique business proposition -- customer proposition on the market, double play and triple play. We are amongst top valuable, most valuable brands in Ukraine, and we are one of the best employer, mainly competing with the digital ventures in the country. And this is a really, really good base for further development -- for further double-digit development and for actually further growth. So what are the key pillars? We see actually 2 main platforms for our development that should be merged efficiently. The first one is our telco business where we can boost a number of opportunities. The first opportunity is in a new value approach. We just launched a quite unique value proposition based on swappable benefits available for our customers. Our idea is to enrich monthly bundles to our customers with extra telco, with extra digital service and with extra services that will be provided probably not only by Kyivstar. So it's a kind of platform that will let us, in the nearest future, to efficiently commercialize our digital assets development. Of course, our leadership is very much based on strengthening our technical leadership. With decent investments around 20% -- little bit less than 20% CapEx to revenue ratio, we are able to maintain and actually improve our leadership positions in the technical domain. So we are right now managing the best network from coverage perspective, the best network from speed perspective, the best network from reliability perspective. So this is kind of fundament for our further development. It is very supportive to have, let's say, convergent business proposition. So our fixed business is growing even faster than our mobile business. The CAGR for the last few years in our fixed business, it's a strong double digit, more than 20% year-on-year growth, as we were able to deliver through our business development. And we have great potential because market is extremely fragmented. We have up to 5,000 active operators. Kyivstar, as a market leader, owns only 15% market share. And from our perspective, we can develop organically, and we can develop nonorganically through some extra efforts into the market consolidation. And of course, TowerCo. So as it was mentioned by Kaan, so we are moving forward. We already established a new company, Ukrainian tower company. We are in process of carving out our massive infrastructure into this new entity. And we are working together in order to develop the most, let's say, customized for Ukraine commercialization strategy that will help us to extract extra value from these assets. This is our telco business. And also, we are developing our digital business quite efficiently. So Ukraine is a well-developed market. There are not so many niches. So our development is very much based on the partnership with the big established players in different domains. A few examples, like partnership with Microsoft, probably one of the fastest growing new business in Kyivstar, very much based on a holistic approach. So for the time being, we are a licensed service provider. We are a managed service provider, and we are a cloud service provider on behalf of the Microsoft. And what we are trying to do is to combine all this unique value proposition into the -- enriched with telecom services proposition. As an example, our year-on-year growth of Microsoft development in the revenue perspective is around 140%. So our first steps in e-health are very much based on the partnership with a local e-health provider company Helsi. For your understanding, Helsi is 1.8 million monthly active users, who are connected with doctors, with hospitals in Ukraine through advanced applications. We are developing fintech in cooperation with Alfa-Bank. We have a fintech platform, Sense, that was launched in February of this year. And since February, we were able to achieve almost 800,000 customers on this fintech platform. 0.5 million from these customers decided to combine their financial profile with their telco profile, which gives both of us enormous opportunity to propose a customized unique offer for these specific customers. And a few words about our cooperation with 1+1. So we relaunched this cooperation in 2019. This cooperation is based on a self-developed platform, fully competitive from different perspectives. So it's more than 300 TV channels. 50 from them are actually customized channels that we build for our customers. We have more than 20,000 titles of video content on demand. We have unique content that is being produced by the 1+1 as one of the leading local content provider. We will -- we already start to propose some unique exclusive access to the [ business ] of content for our customer base. As a result of these focused efforts and constant development, in 3 years, we were able to occupy #2 OTT TV platform position in Ukraine. We are growing together in line with our leader. So our current market share is 25%, and we are managing [ 600 customers ] monthly active users on this platform. And as you can see, so we suppose that we will grow with a CAGR around 40%, 50% for the next few years. So we have a very serious and strong plans to develop in this domain and other domains. So our main idea is to actually make a kind of evolution of the partnership into commercial partnership based on a different scheme, for example, -- in this specific example, is a revenue share scheme together with 1+1. And further to see any kind of opportunities to convert our commercial partnership into the equity partnership in order to create extra shareholders' value on this way of developing our new business in Ukraine. So how we see our kind of ultimate objective for the next few years? LTE for all that will actually fuel our growth; disciplined inflation targeting; development of our digital assets and increased engagement of our customer base into the digital proposition on behalf of the Kyivstar and our partners. And as a result, we will be able to ensure a further double-digit growth. I think Kyivstar is a very good example that our ambitious targets are actually achievable. We were able to ensure a double-digit growth during the last few years, and I'm quite confident that we will be able to grow with the same price during the next few years. And I'm really, really glad to give a voice to my good friend, my colleague, the CEO of our Kazakhstan operations, Evgeniy Nastradin.

Thank you, Aleksandr. Good evening, ladies and gentlemen, from Nur-Sultan, Kazakhstan, and I'm glad to present to you one of the most dynamic operation company in VEON Group, Beeline Kazakhstan. My name is Evgeniy Nastradin. I will start with a brief overview of the market to serve the context which we are operating in. In Kazakhstan, you might know, located in the heart of the Middle Asia country with a population of 9 million people, and it's young and growing. Market size is around $1.5 billion. The GDP per capita is USD 9,000 for 2020, which makes Kazakhstan leader at the region by the metric. And inflation rate is about 8%. It's a pretty mature market with about 130% SIM card penetration. And what is interesting, about 80% smartphone penetration here, driven by 4G coverage, which reached more than 80% in population. And Beeline Kazakhstan has the highest LTE penetration in the VEON Group and has the fastest-growing LTE penetration in the market. Mobile data users level is 77% and usage is quite high, up to 10 giga per subscriber, with pretty dynamic CAGR, about 55% in the last 3 years. Next page, please. Today, we are the market leader with constant growth of market share. Over the last 5 years, we grew our market share in revenue plus 6.5 percentage points and market grew itself for 5 to 6 years about 2 times. We are driving the change in the market as a leader and first mover, is back to grow in 2017 and reaching double-digit growth in 2019 and beyond. We drive the growth by steady modernization of our customer base, bringing them from pay-as-you-go model to bundle. And providing to the market fixed mobile convergency and driving data usage with the primary focus on 4G and, of course, strong focus on updating and modernizing our customers to multiplay customers. In our pricing excellence program, we keep the disciplinary inflationary pricing. Our operating -- operational excellence program give us ability to manage EBITDA margin on the level above 50% and CapEx to revenue ratio about 20% to 23%, supported by one of the best ROIC level in the group. Next page, please. So last year, investments help us to achieve very good results, increasing 4G coverage up to 81%. And being first operator in the group on the track to achieve more than 70% of LTE penetration, it should help us to moderate the CapEx intensity starting from year 2023. And Kazakhstan is a good example when 4G development supported by smart pricing and focus on 4G coverage converted into stable double-digit growth of the revenue. For now, that baseline give us a solid foundation in our transformation into digital operator. And another great example I want to share with you that we have an area of stimulating policy for network development. Being, just think, 9 largest country in the world, we need, of course, extra effort and extra activity for [ breaching digital divide ] in rural areas. And to encourage that, Kazakhstani government approved reduction of the annual spectrum fees by 90% for mobile operators who make corresponding investment into infrastructure in remote villages, and we are in this program for 2 years already. Next page, please. So we are transforming into digital operator as well. And we have started the journey a couple of years ago. Today, in our portfolio, we have more than a dozen of digital products, many of them marketed under separate brands and operators agnostic. We have -- such example is a self-service application, MyBeeline, which started as self-care app and gradually evolving into shopping and entertainment super app and reached by payment, shopping, gaming. So we have another good example, Izi. You called it neotelecom application with unique value proposition, fully digital customer experience in our boarding and service model to satisfy the need of young and digital native users. We have Beeline TV app. We will talk about it a little bit further. And in August this year, evolving the basis of mobile financial services in collaboration with Visa, we deployed Simply application, fully digital personal bank proposition. In B2B side, we're also providing fintech and big data as a service, cloud and cybersecurity products, IoT and private networks. Next page, please. So as I mentioned, we set ourselves in the digital journey, which is shifting us from SIM card users -- SIM card users matrix into fans of our product and services, gaining screen time of our fans. One of the good example, Izi. As I mentioned, fully digital [indiscernible] brand for use and consolidated market where 4 brands belong to the rival market players. So we expect to have about 100,000 active monthly users until end of this year. But yet we know that from the moment of launch or deploy, Izi app was downloaded 2 million times. And it opens completely different opportunity by deploying media platform. We are going to transform this digital service up into connectivity agnostic telepayment application for fans who appreciate music, video gaming, created content and engagement. And another example, Beeline TV. To get some flavor of the product, I propose to see short video and please, George open it. [Presentation]

Concluding my presentation, I'd like to set an ambitious for next 3 years. So building on top of existing experience and around our 4 key priorities, which give us confidence to set an ambition of double-digit growth. First of all, keeping 15% growth in total operating revenue in local currency and supported by above 30% growth in new businesses. Thank you for your attention.

Okay. I will take over from here. I'm Aamir Ibrahim and I will be in the next 10, 15 minutes talking about Pakistan, the country, the opportunities and what Jazz has done in the past few years and plans to do in the next few. This picture, in a way represents Pakistan. So I call it Pakistan the land of digital opportunities. Now everybody knows Pakistan is a big population of 220 million people, 5th largest in the world. But what we don't always remember is that more than 2/3 of that is youth. And this is the youth that you see over here. This is a youth that wants to be digitally relevant. It's the youth that is waiting for the digital revolution. And while we have more than 185 million subscribers, only half of them have ever tested or tasted the benefits of Internet, whether it's 3G or 4G. But unemployment numbers are relatively stable, but the other big opportunity that we have is in the fintech area or in the financial inclusion area. So like I said, despite being a huge country, we have only about 80% of our adults do not have any formal relationship with a banking institution. Okay. Moving on to Jazz, and we have been in the country for about 25, 26 years. We were previously called Mobilink, and now with the merger [ Vimpel ] in 2016, we are now Jazz. We are in the pole position, and we're not only a large telecom company, but we are also one of the largest businesses in the country, perhaps the fourth or fifth largest operator by revenue. The most important thing over here is that, in the most important and relevant 4G market, we are punching way above our weight. We have in the past 4 years gained more than 4% revenue market share when it comes to 4G. Again, the biggest opportunity, excuse me, for a second please -- the biggest opportunity that we have over here is 4G penetration. Again, more than 50% of our customers have not used 4G. That poses one of the other big opportunities that we have in the country. Our strategy is very clear, 3 fundamental building blocks. The first is around connectivity. And Aleksandr mentioned, we have more than 10,000 towers ready to be sold off. We are in the process, have initiated the process. We have a [indiscernible] country called where we have parked these assets, and it is now ready for a sale in the next 12 months. The core of our operations is around the digital operation, and I will talk about that in the next few minutes. And the third biggest opportunity, we call ventures are also digital assets are basically opportunities which are going to be ready and spun off into separate identities of their own. You have seen this rainbow many times with some of my colleagues, and I'm not going to planning to cover all of them. I will talk about JazzCash, Tamasha and more important Jazz World, which happens to be the largest single app in Pakistan. This is our self-care app and it's extremely important to have a good self-care app, which has the potential, especially in the context of Jazz, which has more than 70 million customers to become Pakistan's first super app. The most impressive thing about this app is that about 33% of our customers engage with us on a daily basis. That is a whopping 3.3 million customers who come on to our app to check their balances, listen to music, watch news clipping or listen to some Islamic or religious content. We are also very fortunate that we have partnered with the government, and we are working on developing the ecosystem of start-ups in Pakistan. Like I said, Pakistan is a world of digital opportunities. The digital story still has to be written. And there is nobody better positioned than Jazz to actually help the nation build the story. We have a National Incubation Center that we run in Islamabad. And we have, over the last 4 years, incubated more than 250 start-ups in partnering with the government over there. We have heard consistently about the importance of multiplay. Again, I won't bore you with all the details. You have the slides but our penetration and our increase in digital and multiplay is the most impressive story that we have right now. If you move on, I will talk about Tamasha, which, again, is very similar to talking which my friend Erik talked about. Just like Bangladesh, Pakistan is also an entertainment crazy environment, a sports and a cricket-loving environment. Tamasha is our defragmented video offering. We previously used to have 3 different offerings called Jazz TV, Dekha and JazzTube. Now have defragmented that into a telco brand agnostic, a name called Tamasha, which means a spectacular drama. It's a great story. We already -- we only launched about less than a month ago, and we already have more than 1 million subscribers. The main thing that will differentiate Tamasha with the look-a-likes and Erik, I know, and I'm very impressed that you have been the #1 app in entertainment for 83 weeks. We launched it only a month ago, and we are already #2. And hopefully, we will be #1 in entertainment category very soon. But the thing that's going to differentiate Tamasha with everybody else is that we're going to focus on hyperlocal content. The likes of Netflix will exist in Pakistan, but the relevance of that in our segment of society and our masses will be less. There will be a guy in Multan who wants to listen to saraiki music, somebody else would want to watch a Sindhi play. Those things are not going to be on the list of initiatives for Netflix for the many years to come. So again, the main story over here in Tamasha in an entertainment-starved environment is really about getting to understand our customers and providing them the content that they actually want to watch. One thing I'd like to mention, the new interface is absolutely incredible. We have already seen the daily engagement almost double since the launch of this app. So it's gone from 8 minutes a day to 15 minutes a day. Now let me take you to a guest story that we have, the one that excites me a lot, but before we do that, let's watch a small video. [Presentation]

A world of financial opportunities awaits you. As I mentioned in my first slide, Pakistan, a huge population, 220 million people. 80% of the adults do not have any formal relationship with the banking institution. This is where JazzCash comes in. Our job is and our goal is to not only include people over there, it is for the unbanked and the massively underbanked. Over the last 4 years, we have scaled up this business. We are now the leading mobile wallets player, 14.4 million, and it's growing at a very fast double-digit growth of 30%. The missing piece in the Pakistani fintech ecosystem has that while some of the telco have been successful in creating a mobile wallet environment, what has been lacking has been the development of the merchants That is where the payments are actually accepted. And payments is actually a habit, and we need to develop that habit so that we can start migrating customers from a cash-based environment to a digital cash environment. And that is where JazzCash steps in. More than 95% of all the transactions in Pakistan actually happen in cash, and JazzCash not only fulfills its own ambition in terms of digital fintech, but also helps the country in documenting the economy. I'll share a couple of other numbers over here. Now just look at this, more than 5 million transactions a day happen on JazzCash. And while there's PKR 293 billion number may not mean anything in its -- in isolation, that effectively means PKR 3.1 trillion has and will go from the JazzCash platform in the year 2021. That represents a whopping 6.5% of our GDP. So please note, 6.5% of the Pakistani GDP will actually be flowing in and out of the JazzCash platform. So many opportunities over here, and we are on our path to not only succeed on our own but also to help develop the fast-evolving fintech evolution system. We have been a player in the ecosystem. We will partner and we will lead as and where required. We have a bank of our own, the Mobilink Microfinance Bank that allows us to transact and to play this game. So we are working very closely with the State Bank of Pakistan, where we are really at the cusp of a new regulation coming in, which is the digital banking regulation, and we will take a part over there. There are a number of players which are attracting a lot of attention from around the world. Pakistan fintech environment is extremely hot, and there's a lot of fomo from the rest of the world. So there's a huge amount of interest that has gone into some of the new evolving entrants. So again, JazzCash, a huge opportunity, and I envisage this particular area to be as big as the telco environment is today, which is one of the leading sectors in Pakistan. I envisage that the fintech environment will be as big in the next 2, 3 years. Wrapping up, I'd just like to say that our strategy has been very clear. We have infrastructure as a connectivity layer; more than 10,200 towers that are ready to be sold; add to that, another 2,500 towers that we build in the next 2 years. The process has been initiated, and we will conclude it next year. The thing in the middle, that's our core strategy, which is around digital operator, 3 big things we talked about today. These are assets that are ready to have an identity of their own. Looking forward, I'm very confident that Mobilink now Jazz will continue to succeed as it has, and I can promise you a solid double-digit growth as well as 40% increase in revenues when it comes to our digital services. Right. With that, I'll pass on to my colleague in Russia, Alexander, over to you.

Thank you, Aamir, and good evening, everyone. I -- next, please. I will not spend much of your time presenting, russia. Just pay attention to a couple of points. First is that with all respect to Russian digital development, still we've got some room to go further in 4G penetration. And this is good news for operators including Beeline. And the second point is that, is that due to this development, digital development of Russia, new opportunities are coming because many firms, many companies, including government, including municipal authorities, they require and demand more and more digital services. And the level of this demand is quite advanced, which is also good because not every company can provide and can fulfill this demand. And this gives us a good opportunity to be successful in this area. Next. But, before we're talking about wonderful opportunities in non-telco business, definitely, we had to come back to telecom play. And here is the facts. The results of our latest quarter, third quarter. And you see that from these figures and from comparison with the figures of our competitors that we are back in the game. You are well aware of the fact that in 2019, 2020, Beeline was lagging behind the market and was losing the market and was losing even absolute numbers of revenue and EBITDA. And you see that we spent some time. We made efforts. And now since the third quarter of this year, we're back. And our figures are slightly better or on par with those of our competitors both in revenue and in the client-based dynamics. And next, please. And client-based dynamics is actually is very important because as we mentioned before, the financial results of previous years sometimes achieved at the cost of losing client base and at the cost of losing NPS by just increasing prices and being competitive with the market. This is no longer our strategy. Our clients are the ultimate priority of ours. We're not going to lose our clients to the competition. And again, good news is that, starting from this year, we started to grow in a number of clients. And what is even more promising is that the relationship with our clients are better and better. And NPS is growing in practically every region of Russia and especially in those regions where we started our investment first. And as an example here, the dynamics of NPS in Moscow where investments started in 2019. Next. And George, next -- and this is definitely was supported by quite significant CapEx. And you always ask us why this CapEx is so -- is relatively high in comparison with the competition and in comparison with the industry standard, and we always said that it's not forever. And it's due to a kind of -- due to the fact that in kind of 4, 5 years ago, Beeline didn't invest sufficiently into the network, and we lost the market and we lost the relationship with the clients. Now we are catching up with the market requirements. And as you can see from the graphs here, we are not going to maintain this level of CapEx to revenue, and we will steadily decrease it. But now is the time when we invest and you see that the -- this results into a positive traction from the clients. And as the consequences in our financial results. And I'm very happy to announce that it's not only extensive investments, also a lot of optimization work has been done. And for example, today, one of the respected journalists in Russia announced that from his perspective, the best reform in Russia -- in Russian telecom this year, 2021, is actually reforming -- Beeline's reforming Moscow. We totally transferred the whole frequency of MTS 2100 from 3G to 4G, and we are the first in Russia who did this. And this is just one small example of reforms in every direction in Russia in the likes. Next. And this gives an opportunity. And actually, we always said that this crazy game in Russian telecom who will give to the client the more and more cheaper and cheaper Internet or even limitless internet. That was the crazy game. And we are not about this game, and we want to repair this market, and we clearly send messages to the market that we want to have just a normal market. And you see that the market reacts. The limited offer is not only -- is no longer on the shelf. And the prices started to grow steadily, and we will definitely maintain this trend next year. Next. Not only connectivity, it's definitely our priority and you know our partnership was, for example, Alpha Bank is developing quite good and also Beeline TV is growing in its numbers and what is even more important, the number of multiplay clients are growing -- is growing quite steadily. And you're well aware of the fact that we brought a very good team from different digital companies in the country, and probably from the digital perspective, we are very well-equipped team and the digital channels and digital opportunities is a high priority for us, and we will definitely execute on this. Next. Beeline was the first one who make, let's say, Western-type rebranding 15 years ago. And that was time -- at that time, it was a revolution. But since then, our -- for this 15 years past, the brand was a bit dusty, let's put it this way, a bit old fashioned. And this year, we made a refreshment of the brand. We didn't want to do it last year because from my perspective, rebranding can be a lot. It should just signal the market that there are many changes in the company underneath the surface, and these changes are made and happening right now, and this refreshment is now topping this reform. And I'm glad to say that it's very well received by our clients and by wide audience. And it's supported by the changes our clients see in us, and this is a balanced approach. Next. And as I mentioned in the beginning, Russia is quite developed. And -- but at the same time, it gives us opportunity to offer some developed services to our sophisticated clients. As you know, Beeline is quite advanced in terms of B2B business in B2B segment. We've got relationship with many, many clients, many companies in the country. And now we are developing our services towards non-telco areas. And based on Big Data solutions, based on cloud solutions, we acquired, as you are well aware of, we acquired large edtech company, and our ambitions are quite high in this area and more to come soon. Next. And as we mentioned before, we are not about to build ecosystem, meaning we will do everything ourselves, and we will be kind of a supermarket of every product in this world. We're not about that strategy. We're about partnerships. And we're about to build relationship with professionals whom we respect. And there are many examples. I meant already Alpha. And there are many other examples on this slide. And another step in our partnership with Yandex soon be announced. And I'm glad to say that we are playing with very strong partners, and we will definitely continue this trend next year. Next. Kaan and my colleagues mentioned several times our ambitions in building infrastructural partnerships. Russia was a pioneer in VEON Group doing this. And also, I'm glad to say that today was news in Russia that other 2 infrastructural players are about to merge, and everyone admits that Beeline opened a new era in Russian telecom doing this deal, and definitely, we grab the opportunity as first mover. And definitely, we had quite good reception from you. And the price it was sold was very good. And we are now working on with our partner to transfer smoothly the whole process and the whole -- the asset and not to disrupt our operations. This is the ultimate priority for us. Next. And wrapping up, I'm also glad to announce that just several hours ago, we've closed our books for November. And I see the continuing trend. As we announced for the third quarter, we were better and better from 1 month to another in the quarter. The same continues in the fourth quarter, and the results of November are very promising. They already almost double digit, they're double-digit in revenue growth year-on-year, and they are almost -- they are quite close to the double-digit in service revenue. And I'm sure that the next year will be the year of success in Beeline Russia and not only client base will grow, revenue will grow, NPS will grow and EBITDA will follow. Because I'm thankful to you that you are patient, given us opportunity not to grow fast our EBITDA this year, but next year will be the growth of EBITDA up to double digits as well. Thank you very much. And I'm now passing the word to my colleague, Serkan, Group CFO.

Thank you, Alexander. Good morning, and good afternoon to all of you. While we have listened to Kaan and 5 countries CEOs, which represent more than 90% of our business. And this is last presentation which will take around 20 minutes. So please bear with us for 20 more minutes. But before starting to my presentation, I would like to reemphasize 1 slide, which Kaan presented, which is this slide. This slide summarizes our 3-year ambition. As Kaan mentioned, we are ambitious to deliver 10% to 14% revenue and EBITDA growth in the next couple of years. We are ambitious to increase our EBITDA margin by 3 percentage points in the coming 3 years. And by effective hedging and correct risk management processes, we want to convert this double-digit revenue and EBITDA growth in local currencies to mid-single-digit U.S. dollar growth in both revenue and EBITDA. And by 2024, we want to normalize our CapEx to revenue ratio to below 20% -- to 20% levels. And as a result of this, we want to return back to dividends to our shareholders in line with our dividend policy. Having said that, I would like to start my presentation. In the coming slides, I will focus on 4 key financial messages. The first one is risk management and financing. I will have more sense on the financing side with the liability side of the balance sheet, but focusing on the asset side of the balance sheet, we have listen from the country CEOs, we are very keen to deliver double-digit growth in revenues and EBITDA. And this effect in hedging strategies and being on time in delivering the results and upstreaming dividends from countries to the group level and keeping our cash more than 90% in hard currency, mainly in U.S. dollar, we are very keen to deliver effective results in U.S. dollar. And I will have a couple of slides in the liability side of the balance sheet in the coming slides. The second key message is the group-wide cost efficiency plan that we have launched this year, which we named Project Optimum. As a result of this program, we want to deliver 3 percentage point incremental EBITDA margin in the next couple of weeks. The third pillar is capital allocation. And of course, CapEx is one of the key components of this capital allocation policy. And lastly, our forward-looking ambition for the next 3 years. Starting with the risk management and financing. On the liability side. Currently, we have USD 7.7 billion debt, excluding leases. And on top of that, we have $1.9 billion leases in our balance sheet. If you look at the last year, we were very active in optimizing and improving our capital structure. What we have done this year, we almost increased our debt in local currencies. Say in ruble, Pakistan rupee, Kazakh tenge by almost 50-plus percent. We increased our debt in local currencies from $572 million to almost $900 million. While doing this, we also increased our average tenor from 2.8 to 3.2 years. And as you know, debt in local currencies are more expensive than U.S. dollar debt financing. However, while increasing our percentage of local debt in local currencies, we keep an eye on our interest cost of debt -- average cost of debt, which increased slightly from 6.1% to 6.3% on average. What are our ambitions in the next couple of years? First of all, we will continue to reduce our U.S. dollar-denominated debts in overall net debt portfolio to less than 40%. Currently, we are around 45% after incorporating proceeds from the sale of towers in Russia. Secondly, we want to further optimize our cost of debt and restructure. We will keep increasing our local currency debt while keeping an eye on our cost of debt as well in this inflationary environment globally. And lastly, we want to further increase our average tenor towards 4 years. Those will be our key focus areas in the coming couple of years. Tower transactions. Alexander and Kaan talked about operational and strategic importance for these tower transactions. And I will say a couple of words about this, financial importance of this tower transactions. First of all, by doing this transaction, for example, the Russia transaction, we have around $850 million proceeds in our balance sheet. As you know, we have closed the transaction last week. How we see this? As we discussed before, we are going to use this proceeds to deleverage our balance sheet. So effective after implementing this deleverage, we are going to shift U.S. dollar debt to ruble debt, which is local currency, and this will help us to hedge against any kind of FX devaluation. And secondly, we are replacing on average, 3.2 years tenor of debts with 8 years liabilities. So it is brilliant from capital structure perspective to do this kind of transaction. And even after including lease liabilities in our balance sheet, we believe that based on pro forma financials, we can reduce our net debt around $340 million after this transaction. And the good thing is that, as we discussed, more this kind of transactions will come in the coming years because we are working on 4 other countries to replicate this transaction. Namely, Kazakhstan, Pakistan, Bangladesh and Ukraine. So this will come in '22 or '23. Moving to next. The second pillar that I want to talk about is cost. If you look at our cost structure, based on '21 numbers, we have roughly $4 billion cost. Out to which roughly 50% indirect and 50% direct cost. And if we eliminate the costs that we cannot influence, so if you cannot optimize, we still have around $2.5 billion addressable cost, which is good news because this is a quite significant amount that we can focus on. And with the Project Optimum, which we have launched mid this year, we will focus on this $2.5 billion addressable cost. And we believe that by focusing short-term quick wins and long-term structural changes optimization, we believe that we can deliver significant upside to our EBITDA margin. And on average, 1 percentage point every year, we want to target -- we want to have ambition to improve our EBITDA margin by 3 percentage points by the year 2024. We are confident to deliver this because we also limit these targets to our local management centric plans. So each and every people in the local companies are incentivized to deliver these cost-saving targets. And on top of that, these numbers are already incorporated in our business channels. So as a result -- lastly, as a result of this 3 percentage point improvement in EBITDA margin, we believe that when we reach 2024, we can have a run rate of $250 million cost saving in our 2024 -- can you go back -- so after delivering the 3 years ambition levels, by the year 2024, we are optimistic that we can reduce our run rate cost structure by $250 million in that year. Moving to next slide. The third pillar, as I mentioned, is capital allocation policy, and CapEx is one of the key important aspects of this capital allocation policy. Because, as you know, telecom companies are highly capital-intensive companies. We plan to continue the current level of CapEx investments 2 more years in '22 and '23 until we reach around 70% LTE penetration in our subscriber base. This will enable us to build on this network capabilities, our digital operator strategy. However, by the year 2024, we are planning to reduce our CapEx to revenue ratio below 20%, which is more normalized levels in international benchmarks. Moving to my last slide, which is our 3-year ambitions. As we have mentioned during the day, during a couple of different presentations, we are ambitious to deliver 10% to 14% local currency growth in both revenue and EBITDA. With the help of Project Optimum, we are ambitious to increase our EBITDA margin 3 percentage points by the year 2024. And with effective risk management policies, we are ambitious to convert this double-digit growth in both revenue and EBITDA in local currencies to mid-single-digit U.S. dollar growth in both revenues and EBITDA. And as I mentioned, our CapEx intensive ratio will decline below 20% levels by the year 2024. As a result of this, it's a very simple formula actually, our EBITDA less CapEx which is in a way our cash generation capabilities will gradually increase in the next couple of years. These are the operational improvements that we are targeting. And on the other side, we have some structural changes. First of all, we talk about tower transactions. And the first one, we just closed last week. We get $850 million cash proceeds from Russia tower sales. And as I mentioned, 4 to come in the pipeline in '22 and '23. The second structural change that we are focusing is Algeria production. As we know, we have exercised the put option in July this year, and we are hopeful that we can close this transaction in 2020. And we talk about multiple digital assets that we are building in multiple jurisdictions, say, Kazakhstan, Ukraine, Pakistan, Russia. We have lots of digital assets, which we will focus to grow. And hopefully, we can be able to monetize at least some of them in the next couple of years. While monetizing all these assets in the next couple of years, we will keep an eye on the spectrum's -- available spectrums in our countries because we want to invest spectrum whenever needed to protect and keep our core businesses competitive in their respective markets. So as a combination of both right and left, we are building increased dividend capacity for our shareholders. So keeping our digital policy as is, we want to and we are keen to give back the value that we will create in the coming years back to our shareholders in line with our dividend policy. This concludes my presentation. I will hand over to Kaan for his closing remarks. Thank you very.

Serkan, thank you very much. And what I want to do is to kind of summarize the key 10 takeaways that I took from today, before we move into the Q&A session and give maybe a 5-minute break to prepare for the Q&A session. But I hope as you listen to me, our general managers from the countries and Serkan, you felt our strong commitment to associate VEON with double-digit growth and shareholder value creation. I think the 10 important takeaways of today that our ambition to grow the business over the next 3 years, 10% to 14% on revenue and EBITDA, improving our EBITDA margin by 3 percentage points. I think it's also important to understand that we are looking into our financial discipline from inflationary pricing to balance sheet management, to derisking for the tail risks on foreign currencies and converting that local currency growth of double-digit 10% to 14% into hard currency growth, with mid-single-digit growth over the next 3 years. I'm sure you heard from Alexander Torbakhov, Russia is back in the game. We are at minimum growing in parallel with our competitors, if not better. And we are not only seeing more subscribers, more 4G subscribers, more B2B business, enhanced Net Promoter Scores, but we are starting to see market share gains in Russia. The digital operator strategy, every country has a playbook of its own, but we have one destiny to make sure that we are relevant to our subscribers beyond just calling or sending SMSs. We are serving 100% of our days who are hungry for mobile Internet with entertainment solution, financial services solutions, health care, education. Tower monetization is going to be a continuous theme over the next 8 quarters. All our operations are seeing the benefits of focusing on their core business, which is the digital operator, an asset-light company, a digital asset-heavy company, and the relationship with the subscribers, which is second to none. We have seen some brilliant examples of digital assets emerging in countries like Pakistan and Bangladesh. These markets, as I mentioned before, are blue ocean opportunities. And we are interested in 100% of the market, not the lucky 3%, who is may be exposed to Netflix' 45s of this world, who might have a credit card today. We are there to serve all our customers, and our focus on financial inclusion as well as focus on creating local content and respect for data sovereignty for the country's data protection is differentiators. Serkan talked about financial discipline. Cost savings, inflationary pricing, making sure that we have a maturity matching in between the investments we make and our debt portfolio. And all these things will bring together our capacity to create cash and also return to shareholders. Yes, we are going to be back to dividends. Our dividend policy is in place. We need to respect the dividend policies metrics. 2.4x EBITDA leverage is our red line in terms of starting giving back to our shareholders, minimum 50% of free cash flow after spectrum returns. Naturally, it's our Board of Directors' decision to approve those, but I believe our aspirations for the next 3 years is a clear indication that this is an environment where the shareholder return also is in line with our management compensation. And the leadership team and the shareholder value creation is at the heart of every one of us as the team. I hope beyond the opportunities we talk today, beyond the physical asset monetization, the digital assets and digital operator strategy that we are executing country by country, we were also able to demonstrate to you that as a leadership team, we have one common vision and objectives in VEON associated with double-digit growth and value creation. I will stop here now to give a 5-minute break, and we will be back with our leadership team open for your questions. Thank you very much. [Break]

Hi. Good afternoon, everyone. We're back for the Q&A now. [Operator Instructions] I can see Henrik, if we can move over to you. [Operator Instructions].

Yes. I wanted to take the opportunity to ask Mr. Gazin, a question, if possible, please. I think while you're relatively new as Chairman of the Board, you've been a member of the Board for quite a long time. I think this has been pretty eventful year. So I was wondering, if you could please give us some insights to what your main sort of learnings have been during this time and how you can sort of apply the health care view in right direction for the future. In particularly, interested in your thinking around allocation of capital and how you think about returns from the group and the different markets that you're operating in?

Thank you for that question. Am I seen and heard?

Yes, Gennady.

Yes. Clear and loud.

Good. I'm joining from Kyiv. Look -- I'm thinking to the question. I'm just trying to approach it in a way that, that will not take us through a 6-, 7-year journey that I have seen this company evolve through. Let me just give you a slightly sort of birdseye view on how the company was 6, 7 years ago when I first joined the Board and where the company is right now. First is the governance model, entirely, entirely profoundly rethought and revamped. One of the side benefits of this, of course, is significantly reduced cost. We went, I believe, from over 800 to 900 individuals at the HQ to under 100. Cost is material, that's important. But what's more important, our governance approach and the way our operating companies are engaged and the way they execute their strategies become far, far more agile than ever been in this company. Most of the decisions are now localized overseeing governance and executed by the management teams with the oversight of, I believe, really, really excellent local Boards. With a management team, not just HQ management team, and that's something that Kaan covered, but also our operating company management teams very much aligned around value creation, both in their KPIs, but just as importantly, in their long-term incentive structures. And we have, as a result, tremendously increased the agility of execution, the efficiency of execution. But keeping in mind that we continue to execute on some of the key aspects that corporate -- that we, as a corporation believe we can execute better in a centralized way. And one of them is the series of clearly, on a risk management that goes without saying that essentially overseeing centrally managed, compliance risk management, that goes without saying. But capital allocation. The way we approach and when I say we, I talk for the Board, but that, of course, includes very close interaction with the management team. The way we approach our portfolio is that we look at this not from the -- how large of a company we can become or not from the perspective or what synergies we can capture among multiple and very spread-out diverse operations, but from the capital efficiency perspective. Where do we see opportunities to deliver most value for our shareholders. And capital efficiency, both at a local level -- operating company level, but also at a portfolio level, which assets we continue to maintain in our portfolio. And that goes, of course around on the geographic assets, but also Kaan and the team talked about our infrastructure assets, but also where do we -- not only will we divest, but also where do we invest, where do we see greatest opportunities. And you heard some of those opportunities being described by my colleagues in Russia, in multiple digital initiatives that we are currently pursuing. So that's the role we reserve for ourselves as a global holding. And that's the role that our Board is currently focused on, the best capital efficiency, best delivery of the returns to the shareholders.

Thank you, Cesar. Thank you Gennady. And let me take this opportunity to also introduce all the potential Board members and executives we have around the table so that you can broaden your questions. Gennady Gazin, our Chairman of VEON Supervisory Board. We also have, Hans-Holger Albrecht, who is the Chairman of our Digital and Innovation Committee and also a Board member of VEON. I also see Vasily Sidorov, a Board member of ours with us today as well. And Gunnar Holt as well, I see that he is also on the call. So please, if -- can you raise your questions, consider either to the management team or also to the Board. We will be more than happy to answer. On the panel here, I'm joined by Matthieu Galvani, our General Manager in Algeria. And you have not also seen Lasha Tabidze, our General Manager in Georgia as well. The rest of the group you have already heard from.

Great. Thanks very much. Our next question that will come from Ivan Kim.

May I ask 2 questions, please. One is fairly straightforward on the dividend policy, which is a little broad. So if you stay below 2.4x net leverage, is there any reason why you wouldn't pay out 100% of your free cash flow? That's the first one. And the second one if I may direct it to Hans-Holger and Aamir on JazzCash on broader mobile payments within the group. So where do you see JazzCash within the next 3 to 5 years? Do you think it has a shot in becoming the backbone of the Pakistan economy because, as you pointed out, 6.5% of GDP transacted through the platform is quite impressive. But to be honest, I'd expect more like 20% to 30% by now. And potentially, it can be a lot more. And then broader for the group, do you think this success can be replicated in other geographies on mobile payments? And what are, if any, green shoots on fintech outside of Pakistan.

Ivan, thank you. Maybe I start with the question that you had on dividend, and I will ask Serkan to comment as well. But as our dividend policy states, we have a lower limit, but we don't have an upper limit on how we would be treating the free cash flow after spectrum. So the -- basically, the other policy sales minimum 50%, but there is no upward limit. So I don't think there is limitation on that front. But anything Serkan, you would like to add on that.

Maybe just I add a couple of things. The dividend post that we put on the presentation is the mechanical part of the dividend policy, which is basically a financial form, and which is also retrospective because free cash flow generation is retrospective are not progressive. So you can ask whether there's another thing, which may be considered . We have to look at together with our Board, the progressive trends of the company as well, apart from the retrospective financial problem, which is the dividend policy before making a decision to pay out some dividends.

On the second part of your question, I understand that the JazzCash, of course, is very exciting opportunity. And I will ask our Chairman of Digital Innovation Committee, Hans-Holger, maybe to give this perspective and then we'll have Aamir to comment as well.

Thanks, Kaan, and good afternoon, everyone. I'm calling not from Ukraine or [indiscernible] calling from Mecca because to show the new agility of VEON. This was a very vast Capital Markets Day. So you call me not in the office. So coming to the question, yes, I think the ambition is it will be one of the leading fintech part in Pakistan. And you have to remember that it's a pretty new business as well. We have launched just recently our apps, which will allow us to introduce new services. So there's a lot to come in terms of product innovation, in terms of growth, in terms of new opportunities. The underlying trend when you look at the kind of MOUs we have in that business is very strong and made us a leading one in terms of mobile financial services anyhow. So the ambition is high. And Aamir, you can talk a bit about this later on. If this is replicable, yes, we have to rethink so. And just to underline as well what [ Genaria ] Chairman said, there is a very strong focus from the Board as well when it comes to digital innovation and digital services. We have a dedicated committee in the Board, which covers these kind of aspects and those kind of topics and monitor them and make sure we follow them. And we want to use how on the experience we have, for example, in Pakistan when it comes to JazzCash or which we created in Bangladesh with Toffee, want to use this and roll it out in the other markets wherever applicable. Maybe we have to adjust a bit, maybe we have to change our go-to-market strategy. But the fundamental understanding is the same. On financial services, we are working mainly unbanked populations. So there's a huge opportunity when it comes to more financial services. And we all know there's a natural link between telecom companies and the more financial services. And on the video side as well, as we have seen this Toffee in other kind of places, if you go for kind of super local approach like Toffee is doing, like Tamasha is doing their opportunities maybe in other places as well. And we not stopped there, obviously, and the team as in locally and the venture team we have in London is looking for further expansion because the beauty we have using the customer knowledge we have in those markets using the kind of power base we have with VEON and losing the payment solution as well opens a lot of opportunities. So we are pretty confident and focused to replicate those opportunities. Aamir, you want to add something to JazzCash and your view?

Sure. I'll take it from here. Certainly, when the opportunity is much bigger and the 6.5% of GDP will increase to 20%. It's going to take a while, not a long while ago. So there are -- as I mentioned in my presentation, also payment is a habit, and we have tried to develop that habit over the last 4 or 5 years where we have struggled both at JazzCash and other competitors is we haven't aggressively grown the ecosystem. And I think that's one of the things that we have realized that while the top use cases were on mobile top-ups, peer-to-peer transfers and [indiscernible] And that's the area of focus. So if I were to give you a couple of numbers, again, it was mentioned in my slide deck, 10,000 point payment got acceptance. Now that compares with close to our 70,000 electronic cost machines. So already compared to the rest of the development that's taking -- that's happened in Pakistan of the last 5 decades, we are already a bigger number within JazzCash. Our goal and ambition is to equip more than 50% of the 1.1 million micro-medium, small enterprises. So unless payments becomes universally accepted that critical mass was not happened. So we're going to go through that inflection point by the end of next year where there's a complete ecosystem of payments. So the opportunity is certainly there. We are on the right track. We had some road blocks, but we're also working with the government and we have a really good relationship where there's a common vision in terms of digitalizing payments. And as I mentioned in my presentation also, it's a very good way and a national ambition for our leadership to document the economy. So I think all the forces, both the regulatory forces as well as from our own side that converge towards accelerating this digitization of the economy. And with 15 million customers already and with 70 million of our overall subscriber base, there's a huge opportunity in Jazz and JazzCash, and the best positioned entity in Pakistan to take -- in Pakistan to take us forward with digital inclusion.

If we can ask the Maria Sukhanova, BCS on the line. Maria, If you can ask your question.

I have 2. So first of -- If we try to look what's your EBITDA guidance for free cash flow, would it be fair to say that you expect at least mid-single-digit growth for free cash flow considering CapEx its supposed to be flat year-on-year? Or there are some other components that would have said? So that's one. And second, about one of your small units that we didn't talk much today Georgia. So if you could update us on continued situation there, but less for the business and so on, that would be very helpful.

Thank you, Maria. Let me start with the second question, and I will give the word to Lasha to conclude, but I'm really proud of the operation we have in Georgia. It might be a small population. But with the innovation that we drive there, I think our operators, Beeline Georgia is really making all sorts of records in the innovative nature of it. in terms of 4G penetration, in terms of multiplay penetration. So we see actually a very strong base and growth. Lasha, anything you would like to add?

I'll take of that. Thank you for the question. We also had a very strong double-digit growth this year. And as Kaan mentioned, we are very much developed in terms of 4G coverage 4G users as well as together with the application users, which is the core of our articulate growth. And this growth, of course, is goes beyond the market. So we are strong #3. And at the same time, we are even stronger on the data users market share and overall the data presence within our subscriber base overall in the market. And at the same time, all the services we deliver, whether it's music, whether it's gaming, whether it's other services, it's bringing us to a very good position to being a digital operator and making first steps towards execution of the strategy there.

Thank you, Lasha. And of course, the top line growth, EBITDA growth, how does it go to the free cash flow? The question is yours Serkan.

Maria, if I understood your question correctly, you are asking whether we can convert mid-single-digit U.S. dollar growth in EBITDA with the same growth rate in free cash flow. Yes, keeping in mind that our CapEx levels will be similar to 2021. You can assume that. Having said that, these are not official guidance that we are giving to the market. We will give official guidance for the next year in our full [ 21 ] year -- full year results announcement. These are our ambition levels for the next 3 years.

I see Alexander Vengranovich. Can you please ask your question.

Yes. Two questions from my side. So first one. So thank you, Kaan, and the team. You've talked a lot about your plans across the core markets. I also wanted to ask about Algeria. So obviously, that's a question probably to mention probably mainly . Can you please update us on your -- on the macro and business environment in the country and how this impacts JV operations currently and it's still a part of the business and whether it has any impact on your -- on the timing and probably the price or the execution of the put option in Algeria? That's my second question -- sorry, the first question. And the second question is on CapEx. So historically, we've seen that several times, VEON and Beeline previously deliberately were cutting CapEx in order -- at some point of time of the development of the company in order to prioritize dividend payments and basically cash to the shareholders. And I think, obviously, that has a pretty dramatic negative impact on the company's performance historically. And I get that the lessons -- these lessons were learned. So my question is obviously, in your current strategy, you expect that your CapEx intensity will go down at some point of time. And obviously, 20% level is not that low, to be honest. But in case you see that your competitors are really aggressive in terms of further deployments of the 5G networks, for example, across the markets. Do you feel that there is some sort of upside risk to your CapEx guidance in case the competitive environment really requires you to be more active than it's envisaged in your current strategy?

Alex, let me start with the second question, then I will pass to Matthieu. In terms of our CapEx spending, as I mentioned, we are in a process to increase our 4G penetration levels within our subscriber base. We improved this almost 1 percentage points every month as we invest in our 4G network deployment, both from coverage and capacity perspective. We believe that this is a revenue-generating investment for us, and this process will continue probably for another 18 to 24 months as we reach 70% of our subscriber base will be on 4G. Now these elevated levels, which is around 22%, 24%, you can go to the extreme in Russia around 25%, 26% CapEx to sales ratio will eventually come down. Now the reason I'm not concerned about the 5G additional hike in the CapEx because in the last 3 years, we have always been investing in 5G ready technologies. We utilize exactly the same technological components that is essential for a 5G network, except for 5G spec. And we are -- while we are not excited about the value nature of 5G. Of course, when there is a real business case, a financially feasible environment where we would letup a private network or letup a logistics center with 5G, we will do that. But I do not see in our markets a viable commercial valuing proposition for a commercially launched 5G over the next 3 years. And when that will be come into play. Still our networks will be able to be upgraded to the 5G levels with the necessary licenses coming. But we have to be careful the countries and every single government executive that I'm talking with is now getting the message that 5G is not something that needs to be taxed upfront. We need 4G for all not 5G for a few. And if there will be 5G necessary for certain type of deployments from an industry for that 0 perspective, the spectrum has to come free. And this is our red lines when we look into our investment plans. And so far, we have kept our discipline and we are committed to doing that. Now from this meeting on, Matthieu and myself will be heading to Algeria. And so it is a hot topic that you ask. I will pass the over to Matthieu.

Yes, Alex, thank you for the question on Algeria. Look, we are facing economic and regulatory challenges in Algeria, I think it's very well known. And I think the pandemic has not improved the economic situation at all. And the regulatory roadblocks are still there. However, this is not affecting the way at the moment that the company is performing companies performing really well. It overperforms compared to competitors. By the way, at the moment, we are -- we've recently still widened the gap with our competitors in terms of revenue share. We are still maintaining leadership in terms of NPS. And so this is what we are extremely focused on. We are truly focused on 4G network development efficiency of investment as well. And if we look at the recent trend of our core business, which is, let's say, prepaid B2C, whether it's data or Internet or voice. The trend at the moment is that we are growing -- compared to 2020, we are growing. But more importantly, compared to the second half of 2019, we are growing as well. And this is coming from more 4G customers. We now cover 72% of the population in 4G. So we've added up 12% of coverage this year. We've got a similar base to the health care and better based, more engaged on 4G as well. We've reviewed our pricing. We have a better and more efficient pricing, especially for mid and low segments. So we do have traction there on the mid and low. We have a very good share of customers on the high-value segments that we are protecting. So all this overall is helping us to keep on performing well and have a very good company result despite these environment challenges that we have. From a regulatory standpoint, we've seen a recent change of tone yet to be confirmed but we had more than 2,000 kilometers of fiber optics that we are blocked for the past 2 years, and they've been recently cleared. We finally got the authorization. So that's a very good signal from the regulatory standpoint, and this is going to help us roll out further what was planned and trying to accelerate the conversion of more 4G customers. And also the regulator is contemplating at the moment and had an official statement about the fact that the pricing that is being managed by the operators should really reflect the cost and be oriented in order to make the CapEx of the operators more efficient. So there is going to be a policy from the regulator in terms of framing retail pricing. And this is also good news for the preservation of value when it comes to silly pricing policies coming from the market sometimes. So despite all these challenges, a little bit of change of tone of voice and some actually good news.

So let's not make any mistake. I mean Jazz is a beacon of success in Algeria. It's the best enterprise best well-run enterprise best employer in the country. But from an alignment perspective, our strategy, vision, value creation, we can monetize our towers, we can create digital assets. We don't have mobile payments license, and we are not giving one. And the cost of 4G is too high on the wholesale, and there is retail price control. So we have very clear guidelines in terms of how we want to create value. Unfortunately, we are not there with the Algerian regulatory environment, and that's why we have made the decision to execute our put option. But I'm actually very proud of what we have been able to create in Algeria. I think it's a crown jewel of that country.

And Kaan, is there any update on the timing of the option execution? And as far as I understand that the first step that should have been independent valuation already performed I mean, can you please provide any sort of indication of whether it was done and how these recent changes in the environment really impacts this valuation?

Alex, first of all, we do have a process to define our shareholders' agreement . And we are actually in good terms for operating with F&I, our partner in Algeria and executing on those steps step by step. There might be a couple of echo delays, but we are progressing as planned.

No. As you said, Kaan, the process is ongoing. We have a couple of weeks delay, but the process is still intact.

Cesar, can you go ahead with your question, please?

I have a couple if that's okay. The first one, would be really on pricing in Russia. Do you see any scope for price increases in Russia, countries running at north of 8% inflation, but in the past, it's been quite difficult to increase prices. Do you think that's possible in 2022?

Cesar, I will ask Alexander to respond to your question, Sasha.

So actually, I'm quite positive. Definitely, it not all depends on us, but I see that the market became smarter. And the first very good sign is that the unlimited is no longer offered to the market, and I see the step-by-step increasing from different operators and including us. And I'm positive. And yes, we're looking forward to the next year and the ARPU will grow.

Thanks a lot. Cesar, it's really critical for us to commit and execute on disciplined inflationary pricing. There are a couple of different techniques when it comes to price control. And one of the techniques actually Sasha mentioned that you take your roles over off the market, it's first level of improving the pricing in the country. The second level is, again, a traditional technique just increasing the unit prices and inflecting on the packages. And that's also something that we often utilize and execute. But the innovative way of pricing changes is really changing the product. And that has been the core of our digital operator strategy, no more off selling minutes, number of SMSs, number of gigabytes, no more selling raw data, but selling something which is unique, uncomparable and actually not playing only to the price increase, but to the valid share. And that's the core of our digital operator strategy, and you will see actually effects of that in our ARPU over the next couple of quarters. Thank you, Cesar.

I have a few more, if that's okay, probably a couple for Serkan. The first one is around the ruble debt -- local currency debt replacing U.S. dollar debt. Can you please talk about the impact on your average cost of debt and probably also linked to that, what is the net impact of the Russian tower deal on leverage. Is it fair to assume that most of the tower deals don't have any positive impact on IFRS 16 net debt? And then another question since we're talking about cash flows, another question which I had . Do you -- how long do you think it will take you to monetize some of the non-tower assets?

I can't 3 questions, Cesar. Thank you very much. Starting from the first one, actually, our average cost of debt in U.S. dollar is around 5%. And as we discussed before, we are keen to use the proceeds from towers to deleverage our balance sheet. We are working on that. We are working with our finance company to decide where to use the proceeds. And if and when we use those proceeds to repay debt, that will impact -- reduce our cost of debt in U.S. dollar. So on average, again, assuming that we will proceed with deleveraging the targeted leverage that we have in our balance sheet, it will reduce our cost of debt around 10 to 15 bps. That's based on pro forma numbers. Your second question is about what will be the net impact on the leverage after including IFRS 16 impact coming from these liabilities. Again, based on our Q3 pro forma numbers, the net impact would be around USD 340 million. This will be the net impact of reduction in our overall gross debt, including lease liabilities. And your third question was when we can monetize our non-tower assets, Nik you should hand over to Kaan.

So I assume that with regard to non-tower assets you are referring to still physical assets like fiber assets and data centers. Clearly, the...

Probably more financial assets like JazzCash if you intend to do so, right?

Yes. So first of all, we do have ambitions in terms of making sure that we have the right crystallization of value in assets that we are developing in Pakistan and also in Bangladesh. So those could take into different forms and shapes from partnerships to strategic investments, to partial sales even to IPOs. So I could give you that only our ambition about crystallizing these values. But from a timing perspective, probably you should consider the next midterm vision that we have 3 years is the time that you will see us acting consistently on these opportunities.

And very last question, I promise. I wanted to ask about the compensation structure. I mean, it's quite interesting that you that you changed it, but can you give a little bit more details? Is that mainly RSUs? Is that PSUs? Is it stock options? And also what is the percentage of the long-term management compensation, which will now be linked to the stock?

Cesar, so thanks a lot for asking this question. And I would like to actually invite Michael, our Chief People Officer. Please come over here. And I want basically the investment community to see you and get to know you as well. But I think you are most qualified to answer this question. Michael Schulz has joined us about 6 months ago. And he's actually arrival also accelerated the process of aligning our compensation packages. So I think he is the right person to answer. Michael?

Thanks, Kaan. Cesar, thanks for the question. straight answer to the first element of the question is not options. It's not RSUs, it's shares. So it's beyond stock as traded. And then in terms of what's the overall part of the compensation packages to in terms of shares. There's 2 elements which can mention. One is part of the STI, short-term incentive and there will be 50% of annual short-term incentive. And as far as the long-term incentive is concerned, it's a factor of 2 in terms of the base salary as a max. So in terms of overall percentage of pay, you would say, if you total the whole thing up, it's probably around about 60%, 40%-60% in stock, 40% fixed, 60% in stock.

So is it like restricted stock?

It is on the STI it is not restricted other than time. There's a 2-year time restriction after award and allocation in year, but no performance conditions other than achieving the performance conditioning here. And on the LTI side, it's restricted through performance conditions. Yes, 3 year vesting. [indiscernible] vesting and on top of that, I think it was also in the announcement, it's a -- and can mentioned it 2x annual base salary amounts before the individual is able to cash in and 6 times the CEO.

[ Sergey ] , can you go ahead.

A question on free cash flow and dividends. Basically, what are the largest uncertainties for you in terms of the stronger visibility or maybe even the medium-term guidance towards the free cash flow outlook that you can provide. Is there a point of time when you can be comfortable in giving a fairly precise guidance on dividends rather than just a framework in terms of the dividend allocation. So that's the first question, and I'll probably follow-up with a second.

Thanks a lot. As you have seen from our ambitions, if you think about the 3% widening of the EBITDA margin, if you look to 4 to 5 percentage points from the CapEx, there's a systemic way of increasing cash flow generation capacity that we have built. And of course, then there are certain elements upside and downside risks, including tower projects that we're going to see. But on the other side, spectrum licenses that we might also -- I think this is the balance of factors. Did I miss anything, Serkan?

Actually, you asked about timing. In the short term, of course, you will have the -- not guidelines, guidance, the decision about the 2022 dividend payout, if there is any. It will be in the coming months when we close the year. for the 2022, as Kaan mentioned, we stay to our dividend policy. However, within the dividend policy, we have to focus on certain key transactions apart from the operational results, for example, the tower deals, for example, the Algeria option deal and how to use the proceeds from them. And lastly, we need to look at the long-term perspective and the investment plans of the company going forward. So a combination of all these variables, we will be in a better position to give a great guidance for the long-term dividend payout.

Yes. And secondly, on growth, so you basically give a growth outlook in constant currency terms, which is very helpful, but it's partly also a function of inflation in the respective countries. And generally, we see inflation accelerating across the globe. So what kind of real growth you're targeting to have in the medium term, i.e. growth adjusted for inflation? Is it like mid-single digit? Is it low single digits?

So Serkan, if you consider that we have set an ambition for 10% to 14% topline growth on cumulative average phases. And that we said, this would correspond to single mid-digit hard currency I would consider that single mid-digit hard currency as real growth ambition that we will be carrying, inflationary pricing, of course, is critical. But I don't see our pricing moves just to limit it to the inflationary pricing. Actually, I see the upside coming from multiplay transition of our customer base as well as increase of our customer base. We have a healthy still growth pattern on the subscriber base numbers as well.

If you look at one more thing. Apart from this, as we mentioned in the presentation, we want to convert revenue growth rates more in EBITDA, which is basically the cash generation of the company by improving the margin by 3 percentage points in the coming years. So the real growth in EBITDA will be higher than the growth in revenue in that in the sense.

Ivan, please go with your question.

I just wanted to ask about more granularity on Russia growth. So if you could decompose Russia growth into price increases. One, to rising LTE penetration and LTE consumption or general data consumption and maybe 3, which would probably be only relevant for '22 base effect, including roaming.

Kjell, please go ahead.

Yes. It's actually a combination of those factors mentioned by you. And mostly, it's due to -- it's actually half, half. It's half from price increase from, say, price increase and half from -- kind of moderate acquisition of new clients and clients moving from lower generations to fourth generation of computing.

It's actually accretive. There is no secretive ones among the ones that you mentioned. I think Henrik has a question. Henrik?

Sorry -- Yes. I wanted to follow-up on a couple of things, please. Firstly, in terms of your margins, so the 3%, I just want to clarify, is that the 3% you're expecting from cost savings? Or should we think about -- or is that sort of more of a target for the business as a whole? I guess if you're growing topline by 10%, a large part of that will come from service revenues, presumably, which, I guess, would be margin accretive as well. So if you could just clarify whether the 3% is total or just relating to the cost saving program? And then the second question is regarding the dividend, sorry to bring that up again. But I guess your dividend policy is on equity free cash flow after spectrum payments. And spectrum payments tend to be, I guess, quite volatile. So how do you think about sort of -- is it important for you to have a sustainable dividend or is it okay for the dividend to fluctuate depending on obviously how big the spectrum payments are in a certain year?

So the first question, 3 percentage points, including everything, total business. Having said that, we are increasing our revenues by introducing new revenue teams as well. So as you can get some of the new revenue streams, having lower EBITDA margins, so that's why they are having directive impact despite they are contributing to the top line higher than the normal core business. So we are going to compensate that diluting impact by introducing the benefits from Project optimum. So you can look at from both angles, but 3 percentage point improvement is from the total business including core business plus the new business lines. And on top of that, we are going to introduce around $250 million reduction in the run rate of the cost constructure in our cost structure by 2024. These are all combination of all 3. And the second question was about the volatility of spectrum payments and the impact in our cash flow. Of course, if we can manage to increase our EBITDA revenue and free cash flow, by mid-single digit in U.S. dollar currencies in the coming 3 years, as we discussed in the ambition levels. And on top of that, we are almost okay with our 4G spectrum licenses. The additional incremental big chunk of spectrum that can give some volatility is 5G. And I want to refer to the red lines and the principles that can't put in place regarding 5G licenses. So having said that, apart from a few one-off items that's coming in the next year or the year after, we don't expect big amounts of spectrum payments to continue in the year 2024.

Can I just follow-up very quickly on the first point around the cost savings. It sounds like most of the cost savings and the capital reduction capital intensity reduction is coming from the telco business basically. Can you talk a little bit about the returns on capital employed into the digital businesses and how they compare to the sort of telco business?

Yes, Henrik. And let me also use this opportunity to introduce one more of our executive leadership team member, Dima, if you can also join us so that I can probably present you to the investor community as well as head of our portfolio management activities. Dima [indiscernible] has joined us again about 6 months ago, I would say, 7 months ago from Texas-specific group. And he actually manages our portfolio and, of course, capital allocation decisions and return on investments, performance management, asset management, is part of our office responsibilities as well. So let me pass the question to him in terms of Henrik is asking how we are looking into the returns on the digital side? And how we are making those assessments? I think if you could give a couple of those, that would be a great team.

Sure, absolutely. And sort of if we look at digital, There's obviously 2 stories in digital. One is the whole story of digital operator. And this is much more sort of the telco story where we're looking at supplementing and making the returns on the main core telco business, higher and more sustainable, right? This is a much simpler story. As far as the separate digital investments, which we're also touching a part of ventures, right? So we're looking for like for investments, which would have relevance for our telco business where we, as telco operators have a certain angle or understanding of the business, we have a certain advantage in operating this business. And therefore, we have an advantage in growing and ultimately monetizing this business. But this would be the business which would not necessarily have only on telco customers system customers. This atlas an example of Toffee, there would be a big proportion of other customers, which would create conditions for future growth and potential monetization of this business, right? And that sort of sky the limit here. If you take fintechs or entertainment, sort of tech in the area of venture payment, we can talk about completely different valuations here than the core digital operator telco business.

And Henrik, we do have a different set of KPIs when we look to our businesses for, of course, our digital operator core business. We focus on EBITDA and the efficiency and cost management. But when it comes to digital businesses, it's more about cohort analysis, effectiveness of penetration speed, active users. And it's actually a combination of these different techniques that we apply when it comes to decision-making in both areas in terms of investments are in touch.

Madhve, if you can go ahead.

Yes. A couple of questions from my side. Firstly, on the -- your geographic presence given that you had a couple of big exits, I would to say, Algerian pipeline also Italy. So could you talk about -- are you happy with the current geographic presents now? Or do you think there is more adjustments need to be made. Any markets you think not odd to you or any markets you think you need to be in and you're not in? So that's the first question. And then second question is around the digital strategy, given your experiences with Turkcell where it was able to accelerate to a very high level of digital contribution to overall business. if you were to compare and contrast how Vivo is unision across fixed geographies, how long do you think it will take for VEON reach to the similar level of success in the digital strategy? And what are the major challenges or similarities in terms of opportunities.

So first of all, thanks a lot for both of the questions. I think it's very visible that our area of focus is large population countries where the demographics is to the advantage of younger populations and the adoption of digital economy is at the earlier stages. So it's obviously -- that is our sweet spot in terms of doing business. We do not have any intentions to grow geographically. We would like to grow in adjacent markets in the markets that we exist today. There are a couple of operations in our portfolio which do not fit ideally to these definitions , Clearly,Kyrgyzstan, Georgia, Uzbekistan, they are slightly smaller countries in their formations. But we actually are not in a hurry to make any decisions. I do believe that the shareholder value maximization is our priority and we will be considering optimization of our portfolio over the time when we see the maximum value for our shareholders. And that will be continuously actually led by Dima and the team in terms of this analysis. In terms of comparing my digital operator experience experiences from the past and where we are today. The potential, first of all, and beyond, is obviously 5x bigger. And I would consider it it's like being in a time machine going back and doing things in a more effective way to bring it up to speed in a more accelerated. Having said that, while the overall volume is 5x bigger, country by country, we have to be very careful in selecting the road map and the game plan because the nature of the countries are very different. Pakistan and Bangladesh. It's almost blue ocean where you get to Russia, it's a little bit more ocean, red ocean, while players are much more clustered and dense. So we will have different game plans and road maps for every country. Our luck is the countries are big enough in scale that it can be effective in executing these strategies. Now it's going to be catching up in 12 months. I think you will see literally the impacts of the digital operator offers in place. That's exactly the type of time frame that it took in my past experiences, both in Turkcell and also in digital. So I'm quite actually bullish on that front. Anything you would like to add on portfolio side?

I think, Kaan, you mentioned some countries and in some of these countries, like for example, Uzbekistan, we think it's a fantastic macro environment. It's a country with young population. So we're looking at many of these opportunities. And I think the biggest issue for us is to prioritize them appropriately and focus on the ones with the current return on capital for our investors.

Cesar, back to you.

Yes. Thanks for taking one more question from me. I promise just one. I just wanted to check if the -- this improvement, this 300 basis points in EBITDA margin improvement, is it driven in part by the disposal of the towers? Or is it all organic?

It's just organic season. It is not including the impact positive or negative impact from towers.

Thanks. Andrew?

Can you hear me?

Yes, we can.

I have 2 questions, if I may. One on the fixed broadband fiber strategy. You mentioned potential monetization of those assets. Just -- How do you think about the kind of mobile-centric business strategy overall going forward? Because if -- I guess you do have some assets, obviously, but you don't have like [indiscernible] operations, regulated access to the incumbent networks, et cetera. So how do you think longer term about having to potentially invest more into fiber can we see with your previous company that this is something that they're struggling with today as a kind of mobile-focused operator. So that is one question. And then second question, just touching upon the spectrum as well. So we've seen in some of your growth markets, Ukraine, Pakistan and Bangladesh over the past couple of years that the spectrum builds were actually very high. So going forward, how are you kind of looking at this or trying to manage this? Is it kind of, for example, engaging with our authorities more? I think that's kind of what's going on in Pakistan currently, are you potentially going to be creating more headroom in your balance sheet? Or are you looking at, for example, more active spectrum sharing that would mitigate some of these shocks if and when they do come?

TThank you, Andrew. Especially in 2 of our operations, Russia, Ukraine and Kazakhstan, we do have a healthy, very healthy, growing fixed line businesses. And while you will see me extremely excited about multi-play on mobile in terms of bundling digital services and our core telecom services together and creating a new value proposition. I'm very sometimes concerned in terms of bundling 2 services together like mobile service and fixed service and selling it at the discount. If this is what the convergence is, I'm not at all excited about this type of services. And this is actually a fundamental mistake many telecom operators fall into. So I'd like to see our business in fixed actually, on a stand-alone basis, healthy as well and moving on its path of becoming a multiplay opportunity in every country that we operate. Having said that, I believe on -- just like on the digital operator strategy, sharing network is essential also for fixed businesses. Fixed businesses by themselves because of their nature of long-term environment and actually a higher ARPU environment has valuations for shareholder value perspective, much higher. So crystallizing this type of businesses on a stand-alone basis, I've always seen as a healthy sign. So that's why we would like to see as much as possible our businesses, especially in Russia, Ukraine and Kazakhstan as from a fixed perspective, crystallized by its own, of course, leveraging the advantages of becoming a convergent operator as well. So that's something that we will be watching over time. Now spectrum issue is very critical. We are very disciplined on this. And I'm sure you're recognized. This year, there was a spectrum option in Pakistan. We made it very visible that we are not going to be bidding on a market where we make our money in rupees, and we were not going to pay in spectrum for dollars. And we didn't participate. And last week, I was together with Aamir in Pakistan business with all key decision makers and the government. And I think we made our point across right here, Aamir. And how do you see the development of this spectrum issue in Pakistan.

So I think we've been engaging with the government and Kaan was in Pakistan with me. We Visited the Prime Minister and the Finance Minister and I think really belabored the point about having visibility and transparency in the entire processes around spectrum road maps and more importantly, having the Rupee-based pricing. Now the challenge with some of these frontier markets is that there is a significant government in value capture when it comes to generating revenue from these telcos. Most of them are booked as foreign companies investing in Pakistan. So while they appreciate the FDI, they also recognize that they are kind of captive in the market, so they try to maximize up hard. I think the penny is beginning to drop in terms of recognizing how important digital infrastructure is for the growth of the country. So it's sector across sectors as far as the telecom sector. And I think we've been able to successfully now educate the key decision makers that please, like tax success don't tax folks. So while we make money and we can contribute it's okay to have a share, but please don't take it upfront. We have predictability in the next few years when it comes to Pakistan, which is a key market for VEON. We have a renewal coming over here that's factored into our business plan numbers. And we are also optimizing our existing spectrum. So we are fast in a more speedy manner we are sunsetting up with 3G spectrum to be able to cope with the demand that I talked about in my own presentation on how fast we are growing with multi-play 4G customers and the increasing data demand. So I'm relatively confident, cautiously optimistic that I think we have a good dialogue and it will result in what we're trying to achieve.

Yes. I have a quick follow-up, please, on in terms of -- you mentioned in terms of the fiber assets, crystallize and Value sharing, are those 2 different options? Or do you somehow see them as one thing? Or how do we think about that going forward?

I think there are closable optionalities there. We can actually do both at the same time as well. I would be extremely for example, excited to give away my physical assets in return of sharing a platform where I can sell to my customers, right? Theoretically, these type of options are possible. and we will be exploring all alternatives. Well, I really want to thank you all. We still have 170 people online, which is great to see that we were able to keep you on the screens. I want to thank you very much for participating and for your questions. And I hope we were very clear in passing our ambitions to you for the next 3 years. and make sure that the name brand VEON is associated with double-digit growth and shareholder value creation. Thank you very much for being part of today.

Thank you.

Thank you.