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TABLE OF CONTENTS

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F


o

 

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o

 

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-34694

VEON LTD.



(Exact name of Registrant as specified in its charter)

Bermuda



(Jurisdiction of incorporation or organization)

Claude Debussylaan 88, 1082 MD, Amsterdam, the Netherlands



(Address of principal executive offices)

Scott Dresser
Group General Counsel
Claude Debussylaan 88, 1082 MD, Amsterdam, the Netherlands
Tel: +31 20 797 7200



(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class   Name of each exchange on which registered
American Depositary Shares, or ADSs,
each representing one common share
  NASDAQ Global Select Market
Common shares, US$0.001 nominal value   NASDAQ Global Select Market*

*
Listed, not for trading or quotation purposes, but only in connection with the registration of ADSs pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None.

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 1,756,731,135 common shares, US$0.001 nominal value.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes o    No ý

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o    No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o   Emerging growth company o

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 
   
   
U.S. GAAP o   International Financial Reporting Standards as issued by the
International Accounting Standards Board ý
  Other o

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o    Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No ý


Table of Contents


TABLE OF CONTENTS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

    9  

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

   
9
 

ITEM 3. KEY INFORMATION

   
9
 

ITEM 4. INFORMATION ON THE COMPANY

   
49
 

ITEM 4A. UNRESOLVED STAFF COMMENTS

   
91
 

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

   
91
 

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

   
129
 

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

   
139
 

ITEM 8. FINANCIAL INFORMATION

   
143
 

ITEM 9. THE OFFER AND LISTING

   
145
 

ITEM 10. ADDITIONAL INFORMATION

   
146
 

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   
162
 

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

   
163
 

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

   
165
 

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

   
165
 

ITEM 15. CONTROLS AND PROCEDURES

   
165
 

ITEM 15T. CONTROLS AND PROCEDURES

   
166
 

ITEM 16. [RESERVED]

   
166
 

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

   
166
 

ITEM 16B. CODE OF ETHICS

   
166
 

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

   
166
 

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

   
167
 

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

   
168
 

ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

   
168
 

ITEM 16G. CORPORATE GOVERNANCE

   
168
 

ITEM 16H MINE SAFETY DISCLOSURE

   
169
 

ITEM 17. FINANCIAL STATEMENTS

   
170
 

ITEM 18. FINANCIAL STATEMENTS

   
170
 

ITEM 19. EXHIBITS

   
171
 

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EXPLANATORY NOTE

        This Annual Report on Form 20-F includes audited consolidated financial statements as of and for the years ended December 31, 2017, 2016 and 2015 prepared in accordance with International Financial Reporting Standards, or "IFRS," as issued by the International Accounting Standards Board, or "IASB," and presented in U.S. dollars. VEON Ltd. adopted IFRS as of January 1, 2009. All references to our audited consolidated financial statements appearing in this Annual Report on Form 20-F are to the audited consolidated financial statements included in this Annual Report on Form 20-F.

        Effective March 30, 2017, we changed our name from VimpelCom Ltd. to VEON Ltd. References in this Annual Report on Form 20-F to "VEON" as well as references to "our company," "the company," "our group," "the group," "we," "us," "our" and similar pronouns, are references to VEON Ltd. as of March 30, 2017 and to VimpelCom Ltd. prior to March 30, 2017, an exempted company limited by shares registered in Bermuda, and its consolidated subsidiaries. References to VEON Ltd. are to VEON Ltd. alone as of March 30, 2017 and to VimpelCom Ltd. alone prior to March 30, 2017.

        All section references appearing in this Annual Report on Form 20-F are to sections of this Annual Report on Form 20-F, unless otherwise indicated.

Presentation of Financial Information of the Italy Joint Venture

        We and CK Hutchison Holdings Limited ("Hutchison") jointly own and operate a joint venture holding company, VIP-CKH Luxembourg S.à.r.l, comprised of our former business, WIND Telecomunicazioni S.p.A. ("Historical WIND Business"), and Hutchison's former businesses in Italy ("H3G S.p.A."). We refer to this operation, which operates in Italy under the "3," "Wind," "Wind Tre Business" and "Infostrada" brands, as the "Italy Joint Venture" in this Annual Report on Form 20-F.

        We account for the Italy Joint Venture using the equity method of accounting. On November 5, 2016, we contributed our entire shareholding in our Historical WIND Business for a 50% interest in the Italy Joint Venture and thus do not control the Italy Joint Venture's operations. However, we include operational and certain limited financial information for the Italy Joint Venture in this Annual Report on Form 20-F, because the Italy Joint Venture is a significant part of our business.

        The consolidated financial data presented in this Annual Report on Form 20-F presents the Italy Joint Venture as an investment in associates and joint ventures, and accounts for the Italy Joint Venture in "Shares of (loss)/profit of associates and joint ventures." On November 5, 2016, the balance sheet of the Historical WIND Business was deconsolidated and an investment in a joint venture, in which we have joint control, was recorded. Prior to November 5, 2016 we classified the Historical WIND Business as an asset held for sale and a discontinued operation. Since January 1, 2017, management has included the Italy Joint Venture as a reportable segment due to its increased contribution to our overall financial results and position.

        In addition, we are filing the financial statements of the Italy Joint Venture as Exhibit 99.3 to this Annual Report on Form 20-F. Rule 3-09 of Regulation S-X provides that if a 50%-or-less-owned person accounted for by the equity method meets the first or third condition of the significant subsidiary tests set forth in Rule 1-02(w) of Regulation S-X, substituting 20% for 10%, separate financial statements for such 50%-or-less-owned person shall be filed. These financial statements shall be prepared in accordance with accounting principles generally accepted in the United States of America or IFRS as issued by IASB. The Italy Joint Venture met the significant subsidiary test described above for the year ending December 31, 2017 and, accordingly, we have included in this Annual Report on Form 20-F the required financial statements for the years ended December 31, 2017 and 2016, and the accompanying Notes to the financial statements, of VIP-CKH Luxembourg S.à.r.l, the holding company of the Italy Joint Venture, prepared in accordance with IFRS as issued by IASB. See "Exhibit 99.3—Consolidated

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financial statements of VIP-CKH Luxembourg S.à.r.l for the years ended December 31, 2017 and 2016." These statements and accompanying notes were required to be audited only for those fiscal years in which either the first or third condition of the significant subsidiary tests set forth in Rule 1-02(w) is met. The significance test is calculated as of the end of the fiscal year and for the fiscal year.

        All financial information related to the Italy Joint Venture is the responsibility of the Italy Joint Venture's management and has not been prepared or approved by our management.

Non-IFRS Financial Measures

Adjusted EBITDA

        Adjusted EBITDA is a non-IFRS financial measure. Adjusted EBITDA should not be considered in isolation or as a substitute for analyses of the results as reported under IFRS. We calculate Adjusted EBITDA as (loss)/profit before tax before depreciation, amortization, loss from disposal of non-current assets and impairment loss, financial expenses and costs, net foreign exchange gain/(loss) and share of associates and joint ventures. The measure includes certain non-operating losses and gains mainly represented by litigation provisions for all of its segments except for Russia. Our total Adjusted EBITDA includes certain reconciliation adjustments necessary because our Russia segment excludes certain expenses from its Adjusted EBITDA. As a result of the reconciliations, the total Adjusted EBITDA we present, which represents the Adjusted EBITDA of each of our reportable segments with the exception of the Italy Joint Venture, differs from the aggregation of Adjusted EBITDA of such reportable segments.

        For a reconciliation of Adjusted EBITDA to (loss)/profit before tax, the most directly comparable IFRS financial measure, for the years ended December 31, 2017, 2016 and 2015, see "Item 5—Operating and Financial Review and Prospects—Certain Performance Indicators—Adjusted EBITDA" and Note 7 to our audited consolidated financial statements.

        Our management uses Adjusted EBITDA as a supplemental performance measure and believes that Adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, our ability to fund discretionary spending and our ability to incur and service debt. In addition, the components of Adjusted EBITDA include the key revenue and expense items for which our operating managers are responsible and upon which their performance is evaluated. However, a limitation of Adjusted EBITDA's use as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue or the need to replace capital equipment over time.

        Adjusted EBITDA also assists management and investors by increasing the comparability of our performance against the performance of other telecommunications companies that provide EBITDA (earnings before interest, taxes, depreciation and amortization) or OIBDA (operating income before depreciation and amortization) information. This increased comparability is achieved by excluding the potentially inconsistent effects between periods or companies of depreciation, amortization and impairment losses, which items may significantly affect operating profit between periods. However, our Adjusted EBITDA results may not be directly comparable to other companies' reported EBITDA or OIBDA results due to variances and adjustments in the components of EBITDA (including our calculation of Adjusted EBITDA) or calculation measures.

Adjusted EBITDA Margin

        Adjusted EBITDA Margin is a non-IFRS financial measure. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total operating revenue, expressed as a percentage. For a description of how we calculate Adjusted EBITDA and a discussion of its limitations in evaluating our performance, see "—Adjusted EBITDA."

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Functional currency financial measures

        In the discussion and analysis of our results of operations, we present certain financial measures in functional currency terms. These non-IFRS financial measures present our results of operations in local currency amounts and thus exclude the impact of translating such local currency amounts to U.S. dollars, our reporting currency. We analyze the performance of our reportable segments on a functional currency basis to increase the comparability of results between periods. Our management believes that evaluating their performance on a functional currency basis provides an additional and meaningful assessment of performance to our management and to investors. For information regarding our translation of foreign currency-denominated amounts into U.S. dollars, see "Item 5—Operating and Financial Review and Prospects—Factors Affecting Comparability of Financial Position and Results of Operations—Foreign Currency Translation" and Notes 2 and 4 to our audited consolidated financial statements.

Capital Expenditures

        In this Annual Report on Form 20-F, we present capital expenditures, which include purchases of new licenses, equipment, new construction, upgrades, software, other long-lived assets and related reasonable costs incurred prior to intended use of the non-current assets, accounted for at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures. For more information on our capital expenditures, see "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Future Liquidity and Capital Requirements" and Note 7 to our audited consolidated financial statements.

Certain Performance Indicators

        In this Annual Report on Form 20-F, we present certain operating data, including number of mobile customers, mobile ARPU, number of mobile data customers and number of fixed-line broadband customers, which our management believes is useful in evaluating our performance from period to period and in assessing the usage and acceptance of our mobile and broadband products and services. These operating metrics are not included in our financial statements. For more information on each of these metrics, see "Item 5—Operating and Financial Review and Prospects—Certain Performance Indicators."

Market and Industry Data

        This Annual Report on Form 20-F contains industry, market and competitive position data that are based on the industry publications and studies conducted by third parties noted herein and therein, as well as our own internal estimates and research. These industry publications and third-party studies generally state that the information that they contain has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these publications and third-party studies is reliable, we have not independently verified the market and industry data obtained from these third-party sources. We also believe our internal research is reliable and the definition of our market and industry are appropriate, but neither such research nor these definitions have been verified by any independent source.

        Certain market and industry data in this Annual Report on Form 20-F is sourced from the report of Analysys Mason, dated March 14, 2018. Mobile penetration rate is defined as mobile connections divided by population. Population figures for the mobile penetration rates provided by Analysys Mason are sourced from the Economist Intelligence Unit. Mobile connections are on a three-month active basis such that any SIM card that has not been used for more than three months is excluded. Certain data for the year ended December 31, 2016 sourced by Analysys Mason in our 2016 Annual Report on

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Form 20-F filed on April 3, 2017 could only be provided by Analysys Mason as estimates and have therefore been restated in this Annual Report on Form 20-F.

Glossary of Telecommunications Terms

        The discussion of our business and the telecommunications industry in this Annual Report on Form 20-F contains references to certain terms specific to our business, including numerous technical and industry terms. Such terms are defined in "Exhibit 99.1—Glossary of Telecommunications Terms."

Trademarks

        We have proprietary rights to trademarks used in this Annual Report on Form 20-F which are important to our business, many of which are registered under applicable intellectual property laws. Solely for convenience, trademarks and trade names referred to in this Annual Report on Form 20-F may appear without the "®" or "TM" symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name or service mark of any other company appearing in this Annual Report on Form 20-F is the property of its respective holder.

Other Information

        In this Annual Report on Form 20-F, references to (i) "U.S. dollars" and "US$" are to the lawful currency of the United States of America, (ii) "Russian rubles" or "RUB" are to the lawful currency of the Russian Federation, (iii) "Pakistani rupees" or "PKR" are to the lawful currency of Pakistan, (iv) "Algerian dinar" or "DZD" are to the lawful currency of Algeria, (v) "Bangladeshi taka" or "BDT" are to the lawful currency of Bangladesh, (vi) "Ukrainian hryvnia" or "UAH" are to the lawful currency of Ukraine, (vii) "Uzbek som" or "UZS" are to the lawful currency of Uzbekistan, (viii) "Kazakh tenge" is to the lawful currency of the Republic of Kazakhstan and (viii) "€," "EUR" or "euro" are to the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. In addition, references to "EU" are to the European Union, references to "LIBOR" are to the London Interbank Offered Rate, references to "EURIBOR" are to the Euro Interbank Offered Rate and references to "KIBOR" are to the Karachi Interbank Offered Rate.

        This Annual Report on Form 20-F contains translations of certain non-U.S. currency amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the relevant non-U.S. currency amounts actually represent such U.S. dollar amounts or could be converted, were converted or will be converted into U.S. dollars at the rates indicated. Unless otherwise indicated, U.S. dollar amounts have been translated from euro, Pakistani rupee, Algerian dinar and Bangladeshi taka amounts at the exchange rates provided by Bloomberg Finance L.P. and from Russian ruble, Ukrainian hryvnia, Kazakh tenge and Uzbek som amounts at official exchange rates, as described in more detail in "Item 5—Operating and Financial Review and Prospects—Factors Affecting Comparability of Financial Position and Results of Operations—Foreign Currency Translation."

Rounding

        Certain amounts and percentages that appear in this Annual Report on Form 20-F have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including in tables, may not be exact arithmetic aggregations of the figures that precede or follow them.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This Annual Report on Form 20-F contains estimates and forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to numerous risks and uncertainties and are made in light of information currently available to us. Many important factors, in addition to the factors described in this Annual Report on Form 20-F, may adversely affect our results as indicated in forward-looking statements. You should read this Annual Report on Form 20-F completely and with the understanding that our actual future results may be materially different and worse from what we expect.

        All statements other than statements of historical fact are forward-looking statements. The words "may," "might," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "seek," "believe," "estimate," "predict," "potential," "continue," "contemplate," "possible" and similar words are intended to identify estimates and forward-looking statements.

        Our estimates and forward-looking statements may be influenced by various factors, including without limitation:

    our plans to implement our strategic priorities;

    our targets and strategic initiatives in the various countries in which we operate;

    our ability to develop new revenue streams and achieve portfolio and asset optimizations, digitalize our business model, improve customer experience and optimize our capital structure;

    our ability to generate sufficient cash flow to meet our debt service obligations, our expectations regarding working capital and the repayment of our debt and our projected capital requirements;

    our goals regarding value, experience and service for our customers, as well as our ability to retain and attract customers and to maintain and expand our market share positions;

    our expectations regarding our capital expenditures and operational expenditures in and after 2018 and our ability to meet our projected capital requirements;

    our plans to develop, provide and expand our products and services, including operational and network development, optimization and investment, such as expectations regarding the roll-out and benefits of 3G/4G/LTE/5G networks or other networks, broadband services and integrated products and services, such as FMC;

    our ability to execute our business strategy successfully and to complete, and achieve the expected synergies from, our existing and future transactions, such as the Italy Joint Venture and our merger with Warid Telecom Pakistan LLC (the "Pakistan Merger");

    our expectations as to pricing for our products and services in the future, improving our ARPU and our future costs and operating results;

    our ability to meet license requirements, to obtain, maintain, renew or extend licenses, frequency allocations and frequency channels and to obtain related regulatory approvals;

    our plans regarding marketing and distribution of our products and services, including customer loyalty programs;

    our plans regarding our dividend payments and policies, as well as our ability to receive dividends, distributions, loans, transfers or other payments or guarantees from our subsidiaries;

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    our expectations regarding our competitive strengths, customer demands, market trends and future developments in the industry and markets in which we operate;

    possible adverse consequences resulting from our agreements announced on February 18, 2016 with the U.S. Securities and Exchange Commission ("SEC"), the U.S. Department of Justice ("DOJ"), and the Dutch Public Prosecution Service (Openbaar Ministerie) ("OM"), as well as any litigation or additional investigations related to or resulting from the agreements, any changes in company policy or procedure resulting from the review by the independent compliance monitor, the duration of the independent compliance monitor's review, and VEON Ltd.'s compliance with the terms of the resolutions with the DOJ, SEC, and OM; and

    other statements regarding matters that are not historical facts.

        These statements are management's best assessment of our strategic and financial position and of future market conditions, trends and other potential developments. While they are based on sources believed to be reliable and on our management's current knowledge and best belief, they are merely estimates or predictions and cannot be relied upon. We cannot assure you that future results will be achieved. The risks and uncertainties that may cause our actual results to differ materially from the results indicated, expressed or implied in the forward-looking statements used in this Annual Report on Form 20-F include:

    risks relating to changes in political, economic and social conditions in each of the countries in which we operate (including as a result of armed conflict) such as any harm, reputational or otherwise, that may arise due to changing social norms, our business involvement in a particular jurisdiction or an otherwise unforeseen development in science or technology;

    in each of the countries in which we operate, risks relating to legislation, regulation, taxation and currency, including costs of compliance, currency and exchange controls, currency fluctuations and abrupt changes to laws, regulations, decrees and decisions governing the telecommunications industry and the taxation thereof, laws on foreign investment, anti-corruption and anti-terror laws, economic sanctions and their official interpretation by governmental and other regulatory bodies and courts;

    risks relating to a failure to meet expectations regarding various strategic initiatives, including, but not limited to, the performance transformation program;

    risks related to solvency and other cash flow issues, including our ability to raise the necessary additional capital and incur additional indebtedness, the ability of our subsidiaries to make dividend payments, our ability to develop additional sources of revenue and unforeseen disruptions in our revenue streams;

    risks that the various regulatory agencies or other parties with whom we are involved in legal challenges, tax disputes or appeals, may not find in our favor;

    risks relating to our company and its operations in each of the countries in which we operate, including demand for and market acceptance of our products and services, regulatory uncertainty regarding our licenses, frequency allocations and numbering capacity, constraints on our spectrum capacity, availability of line capacity, intellectual property rights protection, labor issues, interconnection agreements, equipment failures and competitive product and pricing pressures;

    risks related to developments from competition, unforeseen or otherwise, in each of the countries in which we operate, including our ability to keep pace with technological change and evolving industry standards;

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    risks associated with developments in the investigations by, and the agreements with, the DOJ, SEC and OM and any additional investigations or litigation that may be initiated relating to or arising out of any of the foregoing, and the costs associated therewith, including relating to remediation efforts and enhancements to our compliance programs, and the review by the independent compliance monitor;

    risks related to the activities of our strategic shareholders, lenders, employees, joint venture partners, representatives, agents, suppliers, customers and other third parties;

    risks associated with our existing and future transactions, including with respect to realizing the expected synergies of closed transactions, such as the Italy Joint Venture and/or the Pakistan Merger, satisfying closing conditions for new transactions, obtaining regulatory approvals and implementing remedies;

    risks associated with data protection, cyber-attacks or systems and network disruptions, or the perception of such attacks or failures, in each of the countries in which we operate, including the costs associated with such events and the reputational harm that could arise therefrom;

    risks related to the ownership of our American Depositary Receipts, including those associated with VEON Ltd.'s status as a Bermuda company and a foreign private issuer; and

    other risks and uncertainties as set forth in "Item 3—Key Information—D. Risk Factors."

        These factors and the other risk factors described in "Item 3—Key Information—D. Risk Factors" are not necessarily all of the factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our future results. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

        Under no circumstances should the inclusion of such forward-looking statements in this Annual Report on Form 20-F be regarded as a representation or warranty by us or any other person with respect to the achievement of results set out in such statements or that the underlying assumptions used will in fact be the case. Therefore, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this Annual Report on Form 20-F are made only as of the date of this Annual Report on Form 20-F. We cannot assure you that any projected results or events will be achieved. Except to the extent required by law, we disclaim any obligation to update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

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PART I

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

        Not required.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

        Not required.

ITEM 3.    KEY INFORMATION

A. Selected Financial Data

        The following selected consolidated financial data as of and for each of the five years ended December 31, 2017, has been derived from our historical consolidated financial statements, which as of and for the years ended December 31, 2017, 2016, 2015 and 2014 have been audited by PricewaterhouseCoopers Accountants N.V., an independent registered public accounting firm, and as of and for the year ended December 31, 2013, have been audited by Ernst & Young Accountants LLP, an independent registered public accounting firm, except as noted below. The data should be read in conjunction with our audited consolidated financial statements and related notes and the financial information in "Item 5—Operating and Financial Review and Prospects."

        The data for 2015, 2014 and 2013 reflects the classification of our Historical WIND Business as a discontinued operation. The data for 2016 reflects 10 months of our Historical WIND Business classified as a discontinued operation and two months of the Italy Joint Venture classified as an equity investment. For more information, see "Explanatory Note—Presentation of Financial Information of the Italy Joint Venture" and Note 6 to our audited consolidated financial statements. For a discussion of certain factors affecting comparability of our financial position and results of operations across periods, see "Item 5—Operating and Financial Review and Prospects—Factors Affecting Comparability of Financial Position and Results of Operations."

 
  Year ended December 31,  
 
  2017   2016   2015   2014   2013  
 
  (in millions of U.S. dollars, except per share
amounts and as indicated)

 

Consolidated income statements data:

                               

Service revenue

    9,105     8,553     9,313     13,200     15,472  

Sale of equipment and accessories

    244     184     190     218     391  

Other revenue

    125     148     103     68     103  

Total operating revenue

    9,474     8,885     9,606     13,486     15,966  

Operating expenses

                               

Service costs

    (1,879 )   (1,769 )   (1,937 )   (2,931 )   (3,595 )

Cost of equipment and accessories

    (260 )   (216 )   (231 )   (252 )   (438 )

Selling, general and administrative expenses          

    (3,748 )   (3,668 )   (4,563 )   (4,743 )   (6,256 )

Depreciation

    (1,454 )   (1,439 )   (1,550 )   (1,996 )   (2,245 )

Amortization

    (537 )   (497 )   (517 )   (647 )   (808 )

Impairment loss

    (66 )   (192 )   (245 )   (976 )   (2,963 )

Loss on disposals of non-current assets

    (24 )   (20 )   (39 )   (68 )   (93 )

Total operating expenses

    (7,968 )   (7,801 )   (9,082 )   (11,613 )   (16,398 )

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  Year ended December 31,  
 
  2017   2016   2015   2014   2013  
 
  (in millions of U.S. dollars, except per share
amounts and as indicated)

 

Operating profit

    1,506     1,084     524     1,873     (432 )

Finance costs

    (935 )   (830 )   (829 )   (1,077 )   (1,213 )

Finance income

    95     69     52     52     90  

Other non-operating (losses)/gains

    (97 )   (82 )   (42 )   121     84  

Share of (profit) / loss of associates and joint ventures

    (412 )   48     14     (38 )   (159 )

Impairment of associates and joint ventures accounted for using the equity method

    (110 )   (99 )            

Net foreign exchange (gain)/ loss

    (71 )   157     (314 )   (556 )   (12 )

(Loss)/profit before tax

    (24 )   347     (595 )   375     (1,642 )

Income tax expense

    (472 )   (635 )   (220 )   (598 )   (1,813 )

(Loss) for the year from continuing operations

    (496 )   (288 )   (815 )   (223 )   (3,455 )

Profit/(loss) after tax for the period from discontinued operations

        920     262     (680 )   (633 )

Profit on disposal of discontinued operations, net of tax

        1,788              

Profit/(loss) after tax for the period from discontinued operations

        2,708     262     (680 )   (633 )

(Loss)/profit for the year

    (496 )   2,420     (553 )   (903 )   (4,088 )

Attributable to:

                               

The owners of the parent (continuing operations)

    (483 )   (380 )   (917 )   33     (1,992 )

The owners of the parent (discontinued operations)

        2,708     262     (680 )   (633 )

Non-controlling interest

    (13 )   92     102     (256 )   (1,463 )

    (496 )   2,420     (553 )   (903 )   (4,088 )

(Loss)/earnings per share from continuing operations

                               

Basic, (loss)/profit for the year attributable to ordinary equity holders of the parent

    (0.28 )   (0.22 )   (0.52 )   0.02     (1.16 )

Diluted, (loss)/profit for the year attributable to ordinary equity holders of the parent          

    (0.28 )   (0.22 )   (0.52 )   0.02     (1.16 )

Earnings/(loss) per share from discontinued operations

                               

Basic, (loss)/profit for the year attributable to ordinary equity holders of the parent

        1.55     0.15     (0.39 )   (0.37 )

Diluted, (loss)/profit for the year attributable to ordinary equity holders of the parent          

        1.55     0.15     (0.39 )   (0.37 )

Weighted average number of common shares (millions)

    1,749     1,749     1,748     1,748     1,711  

Dividends declared per share

    0.28     0.23     0.035     0.035     1.24  

 

 
  As of December 31,  
 
  2017   2016   2015   2014   2013  
 
  (in millions of U.S. dollars)
 

Consolidated balance sheet data:

                               

Cash and cash equivalents

    1,304     2,942     3,614     6,342     4,454  

Working capital (deficit)(1)

    (732 )   (2,007 )   (156 )   (938 )   (2,815 )

Property and equipment, net

    6,097     6,719     6,239     11,849     15,493  

Intangible assets and goodwill

    6,562     6,953     6,447     18,002     24,546  

Total assets

    19,521     21,193     33,854     41,042     49,874  

Total liabilities

    15,594     15,150     29,960     37,066     40,796  

Total equity

    3,927     6,043     3,894     3,976     9,078  

(1)
Working capital (deficit) is calculated as current assets less current liabilities and is equivalent to net current assets.

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SELECTED OPERATING DATA

        The following selected operating data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 has been derived from internal company sources. The selected operating data set forth below should be read in conjunction with our audited consolidated financial statements and their related notes and "Item 5—Operating and Financial Review and Prospects."

 
  As of and for December 31,  
 
  2017   2016   2015   2014   2013  

Selected company operating data(1):

                               

Mobile customers in millions

                               

Russia

    58.2     58.3     59.8     57.2     56.5  

Pakistan

    53.6     51.6     36.2     38.5     37.6  

Algeria

    15.0     16.3     17.0     17.7     17.6  

Bangladesh

    31.3     30.4     32.3     30.8     28.8  

Ukraine

    26.5     26.1     25.4     26.2     25.8  

Uzbekistan

    9.7     9.5     9.9     10.6     10.5  

Others(2)

    16.2     15.3     15.7     16.1     15.3  

Total mobile customers(3)

    210.5     207.5     196.3     197.1     192.1  

Mobile ARPU (in U.S. dollars)(4)

                               

Russia

    5.5     4.6     5.1     8.6     10.6  

Pakistan

    2.2     2.3     2.1     2.1     2.3  

Algeria

    4.8     5.1     6.0     7.9     8.4  

Bangladesh

    1.5     1.6     1.6     1.6     1.5  

Ukraine

    1.8     1.7     1.8     3.1     4.7  

Uzbekistan

    4.4     5.6     5.7     5.6     5.3  

Mobile data customers in millions

                               

Russia

    38.4     36.6     34.3     31.9     29.4  

Pakistan

    28.5     25.1     16.8     14.4     10.9  

Algeria

    7.2     7.0     4.1     1.3     0.5  

Bangladesh

    16.9     14.9     14.0     12.2     9.8  

Ukraine

    12.5     11.2     12.0     11.1     11.3  

Uzbekistan

    5.0     4.6     4.7     5.4     5.4  

Others(2)

    9.1     7.9     7.8     8.4     8.1  

Total mobile data customers(3)

    117.6     107.3     93.7     84.7     75.4  

Fixed-line broadband customers in millions

                               

Russia

    2.2     2.2     2.2     2.3     2.3  

Ukraine

    0.8     0.8     0.8     0.8      

Others(2)

    0.3     0.3     0.4     0.2     0.3  

Total broadband customers(3)

    3.3     3.3     3.4     3.3     2.6  

(1)
For information on how we calculate mobile customers, mobile ARPU, mobile data customers and fixed-line broadband customers, see "Item 5—Operating and Financial Review and Prospects—Certain Performance Indicators."

(2)
Customer numbers for Kazakhstan, Kyrgyzstan, Armenia, Tajikistan, Georgia and Laos for all periods. For a discussion of the treatment of our "Others" category for each of the periods discussed in this Annual Report on Form 20-F, see "Item 5—Operating and Financial Review and Prospects—Reportable Segments."

(3)
The customer numbers for 2016, 2015, 2014 and 2013 have been adjusted to remove customers in operations that have been sold and exclude (i) the customers in our Historical WIND Business as of December 31, 2013, 2014 and 2015 and (ii) the customers in the new Italy Joint Venture as of December 31, 2016.

(4)
Data for "Others" is not presented because we do not collect data on mobile ARPU for the countries in our "Others" category. For a discussion of the treatment of our "Others" category for each of the periods discussed in this Annual Report on Form 20-F, see "Item 5—Operating and Financial Review and Prospects—Reportable Segments."

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B.
Capitalization and Indebtedness 

        Not required.

C.
Reasons for the Offer and Use of Proceeds 

        Not required.

D.
Risk Factors 

        The risks below relate to our company and our American Depositary Shares ("ADSs"). Before purchasing our ADSs, you should carefully consider all of the information set forth in this Annual Report on Form 20-F including, but not limited to, these risks.

        In addition to those risk factors, there may be additional risks and uncertainties of which management is not aware or focused on or that management deems immaterial. Our business, financial condition or results of operations or prospects could be materially adversely affected by any of these risks. The trading price of our securities could decline due to any of these risks, and you may lose all or part of your investment.


Risks Related to Our Business

Substantial amounts of indebtedness and debt service obligations could materially decrease our cash flow, adversely affect our business and financial condition and prevent us from raising additional capital.

        We have substantial amounts of indebtedness and debt service obligations. As of December 31, 2017, the outstanding principal amount of our external debt for bonds, bank loans, equipment financing, and other loans amounted to approximately US$11.1 billion. For more information regarding our outstanding indebtedness and debt agreements, see "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Consolidated Cash Flow Summary—Financing Activities."

        Agreements under which we borrow funds contain obligations, which include covenants that impose on us certain operating and financial restrictions. Some of these covenants relate to our financial performance or financial condition, such as levels or ratios of earnings, debt and assets and may prevent us or our subsidiaries from incurring additional debt. Failure to comply with these covenants may result in a default, which could increase the cost of securing additional capital, lead to the acceleration of our loans or result in the loss of any assets that secure the defaulted debts or to which our creditors otherwise have recourse. Such a default and acceleration of the obligations under one or more of these agreements (including as a result of cross-default or cross-acceleration) could have a material adverse effect on our business, financial condition, results of operations or prospects, and in particular on our liquidity and our shareholders' equity. In addition, covenants in our debt agreements could impair our liquidity and our ability to expand or finance our future operations. For a discussion of agreements under which we borrow funds, see Note 17 to our audited consolidated financial statements.

        Aside from the risk of default, given our substantial amounts of indebtedness and limits imposed by our debt obligations, our business could suffer significant negative consequences such as the need to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for paying dividends, working capital, capital expenditures, acquisitions, joint ventures and other purposes necessary for us to maintain our competitive position and to maintain flexibility and resiliency in the face of general adverse economic and industry conditions.

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Our strategic initiatives, including with respect to our digital agenda, may not be successfully implemented and the benefits we expect to achieve may not be realized.

        We continue to transform our business with the aim of reinventing our operations across all markets in which we operate. This transformation involves re-engineering fundamentals, working to revitalize the business and implementing a new digital model. There can be no assurance that our strategy will be successfully implemented in every respect and will not cause changes in our operational efficiencies or structure. In addition, the implementation of our strategic priorities could result in increased costs, conflicts with significant stakeholders, business interruptions and difficulty in recruiting and retaining key personnel. A failure to obtain the anticipated benefits of our performance transformation program, including revenue targets, cost optimization or a delay in the implementation of our transformation programs, could significantly affect our business, financial condition, results of operations, cash flows or prospects.

        As part of our initiative to implement a new digital model, we launched a new global personal internet platform in five markets in 2017 (the "VEON platform"). There can be no assurance that the VEON platform will generate the results we expect. Our success will depend on our ability to translate our experience and expertise with existing business models to these markets and overcoming any new or unforeseen obstacles, addressing legal and regulatory concerns previously not applicable to us, protecting our intellectual property rights, generating and sustaining user engagement and monetizing our new digital products. As a result of these challenges, there is a possibility that the VEON platform and our efforts to become a leading digital services provider will not be successful.

        We are also implementing various other initiatives to technologically and operationally modernize our core telecommunications business, including: developing new IT capabilities, self-care capacities, billing systems, customer relationship management systems, enterprise resource management systems, human capital management systems and enterprise performance management systems; implementing a "mobile first" operational model; and reducing and simplifying our IT cost base. There can be no assurance that this new strategy will generate the results we expect. We may experience implementation issues due to a lack of coordination or cooperation with our operating companies or third parties or otherwise encounter unforeseen issues, such as technological limitations, regulatory constraints or lack of customer engagement, that could frustrate our expectations regarding cost-optimization and process redesign or otherwise delay execution of these initiatives. As a result, our strategy to modernize our technological and digital business models may not be successful and our ambition to become an innovative telecommunications operator may not be achieved, which could adversely affect our business, financial condition, results of operations, cash flows or prospects.

We may not be able to raise additional capital, or we may only be able to raise additional capital at significantly increased costs.

        We may need to raise additional capital in the future, including through debt financing. If we incur additional indebtedness, the risks that we now face related to our indebtedness and debt service obligations could increase. Specifically, we may not be able to generate enough cash to pay the principal, interest and other amounts due under our indebtedness or we may not be able to borrow money within local or international capital markets on acceptable terms, or at all. We may also be impacted by conditions in local or international markets that make it difficult to raise capital or refinance existing debt.

        Our ability to raise additional capital may also be restricted by covenants in our financing agreements and our ability to raise additional capital or the cost of raising additional capital may be affected by any downgrade of our credit ratings, including for reasons outside our control, which may materially harm our business, financial condition, results of operations and prospects. In addition, the sanctions imposed by the United States, the European Union, and other countries in connection with

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developments in Russia and Ukraine, and additional sanctions which may be imposed in the future, may also negatively affect our ability to raise external financing, particularly if the sanctions are broadened. For more information on the sanctions imposed against Russia and Ukraine, see "Exhibit 99.2—Regulation of Telecommunications."

        If we are unable to raise additional capital or if the cost of raising additional capital significantly increases, we may be unable to make necessary or desired capital expenditures, take advantage of investment opportunities, refinance existing indebtedness or meet unexpected financial requirements, and our growth strategy and liquidity may be negatively affected. This could cause us to be unable to repay indebtedness as it comes due, to delay or abandon anticipated expenditures and investments or otherwise limit operations, which could materially harm our business, financial condition, results of operations or prospects.

We are exposed to foreign currency exchange loss and currency fluctuation and translation risks.

        A significant amount of our costs, expenditures and liabilities are denominated in U.S. dollars, Russian rubles and euro, including capital expenditures and borrowings, while a proportion of our revenue is denominated in currencies other than the U.S. dollar, the Russian ruble and the euro. Thus, declining values of local currencies against the U.S. dollar, the Russian ruble or the euro could make it more difficult for us to repay or refinance our debt, purchase equipment or services denominated in U.S. dollar, Russian ruble or euro. For example, the values of the Russian, Algerian, Ukrainian, Uzbekistani, Pakistani and Kazakh currencies have experienced significant volatility in recent years in response to certain political and economic issues, and may continue to decline. While our total operating revenue in U.S. dollar terms was favorably impacted in 2017 from foreign currency transactions and translations, future currency fluctuations and volatility may result in losses or otherwise negatively impact our results of operations. In addition, changes in exchange rates could also impact our ability to comply with covenants under our debt agreements. For more information about foreign currency translation, see "Item 5—Operating and Financial Review and Prospects—Factors Affecting Comparability of Financial Position and Results of Operations—Foreign Currency Translation," "Item 11—Quantitative and Qualitative Disclosures About Market Risk" and Notes 4 and 17 to our audited consolidated financial statements.

        Exchange rates may fluctuate if a government takes legislative or regulatory action with respect to its currency. For example, in 2017, the government of Uzbekistan announced the liberalization of its currency exchange rules and the resetting of the official exchange rate at 8,100 Uzbek som per U.S. dollar, which represented nearly a halving of the value of the Uzbek som to the U.S. dollar. The new official exchange rate has directly impacted our results by negative US$16 million, recognized as a net foreign exchange loss, and a movement in foreign currency translation reserve of negative US$420 million, recognized in our statement of other comprehensive income. Such exchange rate risks could harm our business, financial condition, results of operations or prospects. We cannot ensure that our existing or future hedging strategies will sufficiently hedge against these risks.

        The countries in which we operate have experienced periods of high levels of inflation, including certain cases of hyperinflation. Our profit margins could be harmed if we are unable to sufficiently increase our prices to offset any significant future increase in the inflation rate, which may be difficult with our mass market customers and our price sensitive customer base. Inflationary pressure in the countries where we have operations could materially harm our business, financial condition, results of operations, cash flows or prospects. "Item 5—Operating and Financial Review and Prospects—Factors Affecting Comparability of Financial Position and Results of Operations—Inflation."

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As a holding company, VEON Ltd. depends on the performance of its subsidiaries and their ability to pay dividends, and may therefore be affected by changes in exchange controls and currency restrictions in the countries in which its subsidiaries operate.

        VEON Ltd. is a holding company and does not conduct any revenue-generating business operations of its own. Its principal assets are the direct and indirect equity interests it owns in its operating subsidiaries, and thus VEON Ltd. depends on cash dividends, distributions, loans or other transfers received from its subsidiaries to make dividend payments to its shareholders, including holders of ADSs, to repay debts, and to meet other obligations. The ability of its subsidiaries to pay dividends and make other transfers to VEON Ltd. depends on the success of their businesses and is not guaranteed.

        VEON Ltd.'s subsidiaries are separate and distinct legal entities. Any right that it has to receive any assets of, or distributions from, any subsidiary upon its bankruptcy, dissolution, liquidation or reorganization, or to realize proceeds from the sale of the assets of any subsidiary, will be junior to the claims of that subsidiary's creditors, including trade creditors. Furthermore, our ability to withdraw funds and dividends from our subsidiaries and operating companies may depend on the consent of our strategic partners where applicable.

        The ability of VEON Ltd.'s subsidiaries to pay dividends and make payments or loans to VEON Ltd., and to guarantee VEON Ltd.'s debt, will depend on their operating results and may be restricted by applicable covenants in debt agreements and corporate, tax and other laws and regulations, including restrictions on dividends, limitations on repatriation of cash and earnings and on the making of loans and repayment of debts, monetary transfer restrictions, and foreign currency exchange and related restrictions in certain agreements or certain jurisdictions in which VEON Ltd.'s subsidiaries operate or both. For more information on the legal and regulatory risks associated with our markets, see "—Legal and Regulatory Risks—We operate in uncertain judicial and regulatory environments."

        For more information on the restrictions on dividend payments, see "Item 5—Operating and Financial Review and Prospects—Factors Affecting Comparability of Financial Position and Results of Operations—Foreign Currency Controls and Currency Restrictions" and "—Risks Related to Our Markets—The banking systems in many countries in which we operate remain underdeveloped, there are a limited number of creditworthy banks in these countries with which we can conduct business and currency control requirements restrict activities in certain markets in which we have operations."

We have incurred and are continuing to incur costs and related management oversight obligations in connection with our obligations under the DPA, the SEC Judgment and the Dutch Settlement Agreement, which may be significant.

        VEON Ltd. is subject to a deferred prosecution agreement ("DPA") with the DOJ, a judgment entered by the United States District Court for the Southern District of New York related to an agreement with the SEC (the "SEC Judgment") and a settlement agreement with the OM (the "Dutch Settlement Agreement"). For more information, see Note 22 to our audited consolidated financial statements. In conjunction with the DPA and pursuant to the SEC Judgment, VEON Ltd. is required to retain, at its own expense, an independent compliance monitor. The independent compliance monitor was appointed in 2016. Pursuant to the DPA and the SEC Judgment, the term of the monitorship will continue until 2019, but may be terminated early or extended depending on certain circumstances, as ultimately determined and approved by the DOJ and the SEC. The monitor will assess and monitor our compliance with the terms of the DPA and the SEC Judgment by evaluating factors such as our corporate compliance program, internal accounting controls, recordkeeping and financial reporting policies and procedures. The monitor may recommend changes to our compliance program, policies, procedures, and internal accounting controls that we must adopt unless they are

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unduly burdensome or otherwise inadvisable, in which case we may propose alternatives, which the DOJ and the SEC may or may not accept.

        VEON Ltd. continues to incur costs in connection with compliance with the DPA, the SEC Judgment and the Dutch Settlement Agreement, including the ongoing obligations relating to the monitorship, costs of legal representation, our obligations to cooperate with the agencies regarding their investigations of other parties and the implementation of changes, if any, to its compliance program, internal controls, policies and procedures required by the monitor. We cannot fully predict the costs that we will incur associated with these matters. Such costs could be significant.

        Under the DPA and pursuant to the SEC Judgment, VEON Ltd. has obligations to implement and maintain, a compliance and ethics program designed to prevent and detect violations of the U.S. Foreign Corrupt Practices Act (the "FCPA") and other applicable anti-corruption laws throughout its operations. Further, VEON Ltd. must continue to review its existing internal accounting controls, policies, and procedures regarding compliance with the FCPA and other applicable anti-corruption laws. In connection with this review, we have adopted new or modified existing internal controls, policies, and procedures regarding compliance with the FCPA and other applicable anti-corruption laws. However, the implementation of such measures is ongoing, may continue to take significant management time and resources and remains subject to ongoing internal and external review.

We could be subject to criminal prosecution or civil sanction if we breach the DPA with the DOJ, the SEC Judgment or the Dutch Settlement Agreement, and we may face other potentially negative consequences relating to the investigations by, and agreements with, the DOJ, SEC and OM, including additional investigations and litigation.

        Failure to comply with the terms of the DPA, whether such failure relates to alleged further improper payments, internal controls failures, or other matters of non-compliance, could result in criminal prosecution by the DOJ, including, but not limited to, for the charged conspiracy to violate the anti-bribery and the books and records provisions of the FCPA and violation of the internal controls provisions of the FCPA that were included in the information that was filed in connection with the DPA. Under such circumstances, the DOJ would be permitted to rely upon the admissions we made in the DPA and would benefit from our waiver of certain procedural and evidentiary defenses.

        Pursuant to the SEC Judgment, VEON Ltd. is permanently enjoined from committing or aiding and abetting any future violations of the anti-fraud, corrupt payments, books and records, reporting and internal control provisions of the federal securities laws and related SEC rules. Failure to comply with this injunction could result in the imposition of civil or criminal penalties, a new SEC enforcement action or both.

        Any criminal prosecution by the DOJ as a result of a breach of the DPA or civil or criminal penalties imposed as a result of noncompliance with the SEC Judgment could subject us to penalties and other costs, as well as third party and shareholder actions, that could have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects.

        We may also face other potentially negative consequences relating to the investigations by and agreements with the DOJ, SEC and OM. The DPA, the SEC Judgment or the Dutch Settlement Agreement do not prevent these authorities from carrying out certain additional investigations with respect to the facts not covered in the agreements or in other jurisdictions, or do not prevent authorities in other jurisdictions from carrying out investigations into, or taking actions with respect to the issuance or renewal of our licenses or otherwise in relation to, these or other matters. Furthermore, the Norwegian Government has held parliamentary hearings concerning the investigations in the past, but further hearings are not scheduled or currently anticipated.

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        Similarly, the agreements do not foreclose potential third party or additional shareholder litigation related to these matters. For example, a consolidated class action lawsuit has been filed in a U.S. district court against VEON Ltd. in relation to our prior disclosure regarding our operations in Uzbekistan, and relies upon the investigations by the DOJ, SEC and OM. We may incur significant costs in connection with this or future lawsuits. Any collateral investigations, litigation or other government or third party actions resulting from these or other matters could have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects.

        In addition, any ongoing media and governmental interest in the prior investigations, the agreements and lawsuits, and any announced investigations and/or arrests of our former executive officers, could affect the perception of us and result in reputational harm to our company.

Efforts to merge with or acquire other companies or businesses, divest our companies, businesses or assets or to otherwise form strategic partnerships with third parties may divert management attention and resources away from our business operations and success with such efforts may subject us to additional liabilities or experience integration problems.

        We seek from time to time to merge with or acquire other companies or businesses, divest our companies or businesses or to form strategic partnerships through the formation of joint ventures or otherwise, for various strategic reasons, including to: outsource the management of our telecommunications tower sites; acquire more frequency spectrum, new technologies and service capabilities; network share; add new customers; increase market penetration; or expand into new markets. Our ability to successfully grow through acquisitions or strategic partnerships depends upon our ability to identify, negotiate, complete and integrate suitable companies and to obtain any necessary financing and the prior approval of any relevant regulatory bodies or courts. These efforts could divert the attention of our management and key personnel from our core business operations. As a result of any such merger, acquisition or strategic partnerships or failure of any anticipated merger, acquisition or strategic partnership to materialize (including any such failure caused by regulatory or third-party challenges), we may also experience:

    difficulties in realizing expected synergies or integrating acquired companies, joint ventures or other forms of strategic partnerships, personnel, products, property and technologies into our existing business;

    higher or unforeseen costs of integration or capital expenditure;

    difficulties relating to the acquired or formed companies' or our partnerships' compliance with telecommunications licenses and permissions, compliance with laws, regulations and contractual obligations, ability to obtain and maintain favorable interconnect terms, frequencies and numbering capacity and ability to protect our intellectual property;

    adverse market reactions stemming from competitive and other pressures;

    difficulties in retaining key employees of the merged or acquired business or strategic partnerships who are necessary to manage our businesses;

    difficulties in maintaining uniform standards, controls, procedures and policies throughout our businesses;

    risks that different geographic regions present, such as currency exchange risks, developments in competition and regulatory, political, economic and social developments, which may, among other things, restrict our ability to maintain such strategic partnerships;

    adverse customer reaction to the business combination; and

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    increased liability and exposure to contingencies that we did not contemplate at the time of the acquisition or strategic partnership.

        In addition, a merger, acquisition or strategic partnership could materially impair our operating results by causing us to incur debt or requiring us to amortize merger or acquisition expenses and merged or acquired assets. We may not be able to assess ongoing profitability and identify all actual or potential liabilities or issues of a business prior to an acquisition, merger or strategic partnership. If we merge with, acquire or form strategic partnerships with businesses or assets, which result in assuming unforeseen liabilities or which we have not obtained contractual protections or for which protection is not available, our business, financial condition, results of operations, cash flows or prospects could be adversely affected. As we investigate industry consolidation, our risks may increase. Our integration and consolidation of such businesses may also lead to changes in our operational efficiencies or structure. For more information about our acquisitions, see Note 5 to our audited consolidated financial statements.

        Further, we may seek to divest some of our businesses, including further divestitures of our tower businesses, but such divestitures may take longer than anticipated or may not happen at all. For example, we have agreed in principle to the sales of our Pakistan tower business and our Laos operations, but the closing of each of these transactions is subject to certain conditions. If these or other divestitures do not occur or closing takes longer than expected, this may result in less cash proceeds to the group and continued operations of non-core businesses that divert the attention of our management.

Integration of the Warid and Mobilink (now Jazz) brands is subject to significant uncertainties and risks.

        Although the Pakistan Merger was completed in 2016, there can be no assurance that we will not experience difficulties in further integrating the operations of Warid and Mobilink brands (now jointly operating under the Jazz brand), that we will fail to realize further synergies, that the integration process will not negatively affect our customer base, revenue or market share or that we will not incur higher than expected costs. In addition, the integration of the businesses in Pakistan continues to require substantial time and focus from management, which could adversely affect their ability to operate the businesses.

The Italy Joint Venture is subject to integration and performance risks.

        A portion of our operations is conducted through the Italy Joint Venture. Although the transaction closed on November 5, 2016, the Italy Joint Venture is subject to ongoing integration risks, which may affect its business or results of operations. In addition, a failure by the Italy Joint Venture to perform as anticipated or realize its business plans, due to intense competition, difficulties arising from its substantial indebtedness or any other factor, could in turn have a material adverse effect on our financial condition and results of operations. For example, as one of the structural remedies for the regulatory approval of the Italy Joint Venture, the European Commission required the entrance of a new competitor, Iliad, into the Italian market. The business plans and results of operations of the Italy Joint Venture could be adversely affected by the entrance of Iliad in the market, which is expected to occur within the first half of 2018.

Our strategic partnerships and relationships carry inherent business risks.

        We participate in strategic partnerships and joint ventures in a number of countries, including in Pakistan (PMCL), Kazakhstan (KaR-Tel LLP and TNS-Plus LLP), Algeria (OTA), Uzbekistan (Buzton), Kyrgyzstan (Sky Mobile LLC, Terra LLC), Georgia (Mobitel LLC), Tajikistan (Tacom LLC) and Laos (VimpelCom Lao Co., Ltd). We also own 50% of the Italy Joint Venture. In addition, in Algeria and

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Laos, our local partners are either government institutions or directly related to the local government, which could increase our exposure to the risks described in "—Risks Related to Our Markets."

        We do not always have a controlling stake in our affiliated companies and even when we do, our actions with respect to these affiliated companies may be restricted to some degree by shareholders' agreements entered into with our strategic partners. If disagreements develop with our partners, or any existing disagreements are exacerbated, our business, financial condition, results of operations, cash flows or prospects may be harmed. Our ability to withdraw funds and dividends from these entities may depend on the consent of partners. Agreements with some of these partners include change of control provisions, put and call options and similar provisions, which could give other participants in these investments the ability to purchase our interests, compel us to purchase their interests or enact other penalties.

        For example, in respect of the Italy Joint Venture, with effect from November 5, 2019, each of VEON and our joint venture partner can serve a notice on the other offering to buy the other's shares at a stated price. The price is determined by the party serving the notice, and if the offer is rejected the rejecting shareholder is deemed to have agreed to buy the shares of the shareholder issuing the notice at the stated price. In Algeria, our partner can acquire the shares held by GTH at fair market value in various circumstances (including, generally, change in VEON's indirect control of OTA, insolvency of GTH or VEON or material breach of the shareholders' agreement by GTH), as well as under call option arrangements exercisable solely at its discretion between October 1, 2021 and December 31, 2021. Concurrently, GTH has a right to require our partner in Algeria to acquire its shares in various circumstances (including, generally, change of control of the Algerian National Investment Fund, material breach of the shareholders' agreement by the Algerian National Investment Fund, loss of VEON's ability to consolidate OTA, the taking of certain actions in Algeria against GTH or OTA, failure by OTA to pay a minimum dividend or imposition of certain tax assessments), as well as under put option arrangements exercisable solely at its discretion between July 1, 2021 and September 30, 2021. In Pakistan, we can potentially acquire the shares held by our partner in PMCL at fair market value with effect from July 1, 2020 (our partner has no corresponding right to acquire our shares).

        In addition, if one of our strategic partners becomes subject to investigation, sanctions or liability, we might be adversely affected. Furthermore, strategic partnerships in emerging markets are accompanied by risks inherent to those markets, such as an increased possibility of a partner defaulting on obligations, or losing a partner with important insights in that region.

        If any of the above circumstances occur, or we otherwise determine that a partnership or joint venture is no longer yielding the benefits we expect to achieve, we may decide to unwind such initiative, which may result in significant transaction costs or an inferior outcome than was expected when we entered into such partnership or joint venture. For example, in July 2017, PJSC Vimpel-Communications ("PJSC VimpelCom"), a subsidiary of VEON Ltd., and PJSC MegaFon ("MegaFon") entered into an agreement to end their retail joint venture, Euroset Holding N.V. ("Euroset"). The transaction closed on February 22, 2018. Pursuant to the agreement, MegaFon acquired PJSC VimpelCom's 50% interest in Euroset and PJSC VimpelCom paid RUB 1.2 billion (US$21 million as of December 31, 2017) to acquire rights to 50% of Euroset's approximately 4,000 retail stores in Russia. For more information, see "Item 7—Major Shareholders and Related Party Transactions—B. Related Party Transactions—Joint Ventures and Associates—Euroset."

A disposition by our largest shareholder of its stake in VEON Ltd. or a change in control of VEON Ltd. could harm our business.

        We derive benefits and resources from the participation of our largest shareholder, L1T VIP Holdings S.à r.l. ("LetterOne"), in our company such as industry expertise, management oversight and business acumen. Historically, we derived the same benefits from Telenor ASA ("Telenor"), which, in

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September 2017, following completion of its share sale offering, indicated that the transaction would be the final divestment of Telenor's VEON Ltd. ADSs, as Telenor expects to use the balance of its remaining ADSs to exchange and/or redeem its exchangeable bond. See "Item 7—Major Shareholders and Related Party Transactions—A. Major Shareholders—Telenor Divestment." Should LetterOne undertake a divestment of its stake, we would be deprived of those benefits, which could harm our business, financial condition, results of operations, cash flows or prospects.

        In addition, our financing agreements generally have "change of control" provisions that may require us to make a prepayment if a person or group of persons (with limited exclusions) acquire beneficial or legal ownership of or control over more than 50.0% of our share capital. If such a change of control provision is triggered and we fail to agree with lenders on the necessary amendments to the loan documentation and then fail to make any required prepayment, it could trigger cross-default or cross-acceleration provisions of our other debt agreements, which could lead to our obligations being declared immediately due and payable. This could harm our business, financial condition, results of operations, cash flows or prospects.

Our strategic shareholder may pursue diverse development strategies, which may hinder our ability to expand or compete in certain regions.

        LetterOne is VEON Ltd.'s largest shareholder, beneficially owning approximately 47.9% of our issued and outstanding shares as of March 1, 2018. In addition, LetterOne is the holder of the depositary receipts issued by Stichting Administratiekantoor Mobile Telecommunications Investor ("Stichting"), which represents an additional 8.3% of VEON Ltd.'s issue and outstanding shares as of March 1, 2018, and is therefore entitled to the economic benefits (dividend payments, other distributions and sale proceeds) of such depositary receipts and, indirectly, of the common shares represented by the depositary receipts. Stichting, however, has the power to vote and direct the voting of, and the power to dispose and direct the disposition of, the ADSs, in its sole discretion, in accordance with the Conditions of Administration and Stichting's articles of association. For more information, see "Item 7—Major Shareholders and Related Party Transactions—A. Major Shareholders."

        As a result, LetterOne has some ability to influence the outcome of matters submitted to our shareholders for approval and, through our cumulative voting procedures, the election of members to our supervisory board or, alternatively, could enter into a shareholders' or similar agreement impacting the composition of our supervisory board. A new supervisory board could take corporate actions or block corporate decisions by VEON Ltd. with respect to capital structure, financings, dispositions, acquisitions and commercial transactions that might not be in the best interest of the minority shareholders or other security holders.

        At various times our strategic shareholders, including Telenor, have had different strategies from us and from one another and have engaged in litigation against one another and our company with respect to disagreements over strategy. We understand that LetterOne has an indirect minority interest in companies that compete with our subsidiaries in Ukraine, Kazakhstan and Georgia. It is possible that we will compete with LetterOne in other markets in the future.

We may not be able to detect and prevent fraud, other misconduct or unethical actions by our employees, joint venture partners, representatives, agents, suppliers, customers or other third parties.

        We may be exposed to fraud or other misconduct committed by our employees, joint venture partners, representatives, agents, suppliers, customers or other third parties that could subject us to litigation, financial losses and sanctions imposed by governmental authorities, as well as affect our reputation. Such misconduct could include misappropriating funds, conducting transactions that are outside of authorized limits, engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities, including in return for any type of benefits or gains or otherwise not complying with applicable laws or our internal policies and procedures. The risk of liability for fraud and other misconduct could increase as we expand certain areas of our business, such as MFS, which requires us to hold customer funds in e-accounts.

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        We regularly review and update our policies and procedures and internal controls which are primarily designed to provide reasonable assurance that we, our employees, representatives, agents, suppliers and other third parties comply with applicable law and our internal policies. In addition, we conduct, as appropriate, training of our employees and assessments of, and due diligence on, our representatives, agents, suppliers, customers and other third parties. However, there can be no assurance that such policies, procedures, internal controls, training and diligence will work effectively at all times or protect us against liability for actions of our employees, representatives, agents, suppliers, customers or other third parties.

        Furthermore, our reputation may be adversely impacted from any association, action or inaction which is perceived by stakeholders or customers to be inappropriate or unethical and not in keeping with the group's stated purpose and values. This reputational risk may arise in many different ways, including:

    failure to act in good faith and in accordance with the group's values, code of conduct other policies and internal standards;

    failure, real or perceived, to comply with the law or regulation, or association, real or implied, with illegal activity; Table of Contents

    failures in corporate governance, management or technical systems;

    association with controversial sectors, clients, transactions, projects, countries or governments;

    association with controversial business decisions, including but not limited to, those relating to existing or new products, delivery channels, promotions/advertising, acquisitions, branch representation, sourcing/supply chain relationships, staff locations, or treatment of financial transactions; and

    association with poor employment practices.

Our MFS and DFS offerings are complex and increase our exposure to fraud, money laundering and reputational risk.

        The provision of MFS and DFS is complex and involves regulatory and compliance requirements. It may involve cash handling, exposing us to risk that our customers engage in fraudulent activities, money laundering or terrorism financing, which in turn could result in potential liability and reputational damage. Any violation of anti-money laundering laws or regulations on our MFS or DFS networks could have a material adverse effect on our financial condition and results of operation. The regulations governing these services are new and evolving and, as they develop, regulations could become more onerous, impose additional reporting or controls or limit our flexibility to design new products, which may limit our ability to provide our services efficiently or at all.

        In addition, MFS and DFS each requires us to process sensitive personal consumer data (including, in certain instances, consumer names, addresses, credit and debit card numbers and bank account details) as part of our business, and therefore we must comply with strict data protection and privacy laws. For more information on risks associated with possible unauthorized disclosure of such personal data, see "—We are subject to an increasing amount of data privacy laws and regulations that may require us to incur substantial costs and implement certain changes to our business practices that may adversely affect our results of operations."

        Our MFS and DFS business requires us to maintain a certain level of systems availability, and failure to maintain agreed levels of service availability or to reliably process our customers' transactions due to performance, administrative or technical issues, system interruptions or other failures could result in a loss of revenues, violation of certain local banking regulations, payment of contractual or

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consequential damages, reputational harm, additional operating expenses in order to remediate any failures, and exposure to other losses and liabilities.

We may be adversely impacted by work stoppages and other labor matters.

        Although we consider our relations with our employees to be generally good, there can be no assurance that our operations will not be impacted by unionization efforts, strikes or other types of labor disputes or disruptions. For instance, the implementation of internal operational and team adjustments necessary to implement our continued strategy could result in employee dissatisfaction. We may also experience strikes or other labor disputes or disruptions in connection with social unrest or political events. See "—Risks Related to Our Markets." For a discussion of our employees represented by unions or collective bargaining agreements, see "Item 6—Directors, Senior Management and Employees—D. Employees." The ability to work can also be impacted due to natural disasters, civil unrest or security breaches/threats, making access to work places and management of systems difficult. Furthermore, work stoppages or slow-downs experienced by our customers or suppliers could result in lower demand for our services and products. In the event that we, or one or more of our customers or suppliers, experience a labor dispute or disruption, it could result in increased costs, negative media attention and political controversy, and harm our business, financial condition, results of operations, cash flows or prospects.

Our majority stake in an Egyptian public company and its mandatory tender offer for any and all outstanding shares which are not owned by VEON may expose us to legal and political risk and reputational harm.

        Our subsidiary in Egypt, Global Telecom Holding S.A.E. ("GTH"), is a public company listed on the Egyptian Stock Exchange and is therefore subject to corresponding laws and regulations, including laws and regulations for the protection of minority shareholder rights. In February 2017, GTH completed a share buy-back for 10% of the total issued share capital of GTH, and on March 20, 2017, cancelled its global depositary receipt listing on the Main Market for Listed Securities of the London Stock Exchange. Following ratification by the Egyptian Financial Supervisory Authority of the board minutes for the cancellation of the GDR program, our shareholding in GTH increased to 57.7% from 51.9%.

        On November 8, 2017, we submitted an application to the Egyptian Financial Regulatory Authority ("FRA") to approve a mandatory tender offer ("MTO") by VEON Holdings B.V. for any and all of the outstanding shares of GTH which are not owned by VEON (up to 1,997,639,608 shares, representing 42.31% of GTH's total shares). The MTO remains subject to approval by the Egyptian authorities. VEON has been in discussions with the authorities to resolve alleged, and disputed, technical disclosure breaches of the MTO rules by certain GTH shareholders (for which the failure to reach resolution could result in the initiation of criminal proceedings). Progress on this matter (including the potential for resolution) and the approval of the MTO have been held up by the authorities apparently in connection with unrelated historic GTH tax assessments. In addition, recently VEON has become aware that GTH has been named as a defendant in a case before the Cairo Economic Court filed in January 2018 by certain shareholders of GTH. This action seeks a court order against the FRA to suspend the MTO, to have the court appoint an expert to conduct an appraisal of the GTH share price proposed in the MTO, and directing the FRA to reject the MTO. The Cairo Economic Court dismissed the claim in February 2018 for lack of subject-matter jurisdiction. This decision is scheduled to be heard on appeal in April 2018 by the Summary Circuit Court of Appeals. We are considering all options and there can be no assurance that the MTO will proceed. See "Item 4—Information on the Company—Overview—Recent Developments—VEON Holdings B.V. submits cash tender offer in relation to GTH."

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        GTH is the holding company for our assets in Algeria, Bangladesh and Pakistan. GTH has experienced and expects to continue to experience the risk of unpredictable and adverse government action and severe delays in obtaining necessary government approvals stemming from the political and economic conditions in Egypt. Furthermore, GTH is, and may in the future be, subject to significant tax claims under existing or new Egyptian tax law and this could expose GTH to increased tax liability. For more information on tax claims of the Egyptian authorities, see Note 26 to our audited consolidated financial statements.

Adoption of new accounting standards could affect reported results and financial position.

        Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operation. Accounting standardization bodies and other authorities may change accounting regulations that govern the preparation and presentation of our financial statements. Those changes could have a significant impact on the way we account for certain operations and present our financial position and operating income. In some instances, a modified standard or a new requirement with retroactive nature may have to be implemented, which requires us to restate previous financial statements.

        In particular, we are required to adopt the new accounting standards IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, effective from January 1, 2018, and IFRS 16 Leases, effective for the financial years from January 1, 2019. The transitional impacts on total equity upon adoption of IFRS 9 and IFRS 15 as of January 1, 2018 are expected to result in a decrease of US$48 million and an increase of US$99 million, respectively. We have yet to assess the impact of IFRS 16, which may be material, to the consolidated income statement and consolidated financial position upon adoption in 2019. Such impact is under analysis as of the date of this Annual Report on Form 20-F. For more information on the implementation of new standards and interpretations issued, see Notes 2 and 3 to our audited consolidated financial statements.


Risks Related to the Industry

The telecommunications industry is highly capital intensive and requires substantial and ongoing expenditures of capital.

        The telecommunications industry is highly capital intensive, as our success depends to a significant degree on our ability to keep pace with new developments in technology, to develop and market innovative products and to update our facilities and process technology, which will require additional capital expenditures in the future. The amount and timing of our capital requirements will depend on many factors, including acceptance of and demand for our products and services, the extent to which we invest in new technology and research and development projects, and the status and timing of competitive developments.

        Although we regularly consider and take measures to improve our capital efficiency, including selling capital intensive segments of our business and entering into managed services and network sharing agreements with respect to towers and other assets, our levels of capital expenditure will remain significant. In addition, we may not be able to divest some of our businesses or assets as planned and the divestures we carry out could negatively impact our business. There could also be transitional or business continuity risks or both associated with these divestures that may impact our service levels and business targets. If we do not have sufficient resources from our operations to finance necessary capital expenditures, we may be required to raise additional debt or equity financing, which may not be available when needed or on terms favorable to us or at all. If we are unable to obtain adequate funds on acceptable terms, or at all, we may be unable to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures, which could harm our business, financial condition, results of operations, cash flows or prospects. For more information

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on our future liquidity needs, see "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Future Liquidity and Capital Requirements."

Our revenue is often unpredictable, and our revenue sources are short-term in nature.

        Our primary source of revenue is from prepaid mobile customers, who we do not require to enter into long-term contracts. Therefore, we cannot be certain these customers will continue to use our services in the future. Revenue from postpaid mobile customers represents a small percentage of our total operating revenue and the contracts that are required to be signed by such customers can be cancelled with limited advance notice and without significant penalty. Because we incur costs based on our expectations of future revenue, the sudden loss of a large number of customers or a failure to accurately predict revenue could harm our business, financial condition, results of operations, cash flows or prospects. For a description of the key trends and developments with respect to our business, see "Item 5—Operating and Financial Review and Prospects—Key Developments and Trends."

We operate in highly competitive markets, which we expect to only become more competitive, and as a result may have difficulty expanding our customer base or retaining existing customers.

        The markets in which we operate are highly competitive in nature, and we expect that competition will continue to increase. Our financial performance has been and will continue to be significantly determined by our success in adding, retaining and engaging our customers. As penetration rates increase in the markets in which we operate, we may have difficulty expanding our customer base. If customers find our products not to be useful, helpful, reliable or trustworthy or otherwise believe our competitors can offer better products, there are a number of other competitors in each of the markets in which we operate from which to buy such products. As new players enter our markets, such as Iliad in Italy, or existing competitors combine operations, which is being contemplated in Kazakhstan, maintaining our market positions will become more difficult. For more information on the competition in our markets, see "Item 4—Information on the Company."

        Each of the items discussed immediately below regarding increased competition could materially harm our business, financial condition, results of operations, cash flows or prospects:

    we cannot assure you that our revenue will grow in the future, as competition puts pressure on our prices;

    with the increasing pace of technological developments, including new digital technologies and regulatory changes impacting our industry, we cannot predict with certainty future business drivers and we cannot assure you that we will adapt to these changes at a competitive pace;

    we may be forced to utilize more aggressive marketing schemes to retain existing customers and attract new ones that may include lower tariffs, handset subsidies or increased dealer commissions;

    in more mature or saturated markets, such as Russia, there are limits on the extent to which we can continue to grow our customer base, and the continued growth in our business and results of operations will depend, in part, on our ability to extract greater revenue from our existing customers, including through the expansion of data services and the introduction of next generation technologies, which may prove difficult to accomplish;

    we may be unable to deliver superior customer experience relative to our competitors or our competitors may reach customers more effectively through a better use of digital and physical distribution channels, which may negatively impact our revenue and market share;

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    as we expand the scope of our services, such as new networks and fixed-line residential and commercial broadband services, we may encounter a greater number of competitors that provide similar services;

    the liberalization of the regulations in certain markets in which we operate could greatly increase competition;

    competitors may operate more cost effectively or have other competitive advantages such as greater financial resources, market presence and network coverage, stronger brand name recognition, higher customer loyalty and goodwill, and more control over domestic transmission lines;

    competitors, particularly current and former state-controlled telecommunications service providers, may receive preferential treatment from the regulatory authorities and benefit from the resources of their shareholders;

    current or future relationships among our competitors and third parties may restrict our access to critical systems and resources;

    new competitors or alliances among competitors could rapidly acquire significant market share, and we cannot assure you that we will be able to forge similar relationships;

    reduced demand for our core services of voice, messaging and data and the development of services by application developers (commonly referred to as OTT players) could significantly impact our future profitability;

    competitors may partner with OTT players to provide integrated customer experiences, and we may be unable to implement offers, products and technology to support our commercial partnerships; and

    in markets where we do not have bundled offerings, our existing service offerings could become disadvantaged as compared to those offered by competitors who can offer bundled combinations of fixed-line, broadband, public Wi-Fi, TV and mobile.

We may be unable to develop additional sources of revenue in markets where the potential for additional growth of our customer base is limited.

        The mobile markets in Russia, Algeria, Ukraine, Kazakhstan, Kyrgyzstan, Armenia, Georgia and Italy have each reached mobile penetration rates exceeding 100%, according to Analysys Mason. Increasing competition, market saturation and technological development lead to the increased importance of data services in the Russian market and, to a lesser extent, the markets of other Commonwealth of Independent States ("CIS") countries. As a result, we will focus less on customer market share growth and more on revenue market share growth in each of these markets. The key components of our growth strategy in these markets will be to increase our share of the high-value customer market, increase usage of data and improve customer loyalty. If we fail to develop these additional sources of revenue, it could harm our business, financial condition, results of operations, cash flows or prospects.

Our failure to keep pace with technological changes and evolving industry standards could harm our competitive position and, in turn, materially harm our business.

        The telecommunications industry is characterized by rapidly evolving technology, industry standards and service demands, which may vary by country or geographic region. Accordingly, our future success will depend on our ability to adapt to the changing technological landscape and the regulation of standards utilizing these technologies. It is possible that the technologies or equipment we utilize today will become obsolete or subject to competition from new technologies in the future for which we may

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be unable to obtain the appropriate license in a timely manner or at all. We may not be able to meet all of these challenges in a timely and cost-effective manner.

        Further, we operate or are developing 3G, 4G/LTE networks and networks beyond 4G/LTE in some markets in which we operate. New network development requires significant capital expenditures and there can be no assurance that we will be able to develop 3G, 4G/LTE or other networks on commercially reasonable terms, that we will not experience delays in developing our networks or that we will be able to meet all of the license terms and conditions imposed by the countries in which we operate or that we will be granted such licenses at all. In addition, mobile penetration rates for 4G/LTE compatible devices may not currently support the cost of 4G/LTE development in certain markets, and such rates will need to increase to be commercially viable. If we experience substantial problems with our 3G or 4G/LTE services, or if we fail to introduce new services on a timely basis relative to our competitors, it may impair the success of such services, or delay or decrease revenue and profits and therefore may hinder recovery of our significant capital investments in 3G or 4G/LTE services as well as our growth.

Our brand, business, financial condition, results of operations and prospects may be harmed in the event of cyber-attacks or severe systems and network failures, or the perception of such attacks or failures, leading to the loss of integrity and availability of our telecommunications, digital and financial services and/or leaks of confidential information, including customer information.

        Our operations and business continuity depend on how well we protect and maintain our network equipment, information technology ("IT") systems and other assets. Due to the nature of the services we offer across our geographical footprint, we are exposed to cybersecurity threats that could negatively impact our business activities through service degradation, alteration or disruption. Cybersecurity threats could also lead to the compromise of our physical assets dedicated to processing or storing customer information, financial data and strategic business information, exposing this information to possible leakage, unauthorized dissemination and loss of confidentiality. These events could result in reputational harm, lawsuits against us by customers or other third parties, violations of data protection and telecommunications laws, adverse actions by telecommunications regulators and other authorities, loss of revenue from business interruption, loss of market share and significant additional costs. In addition, the potential liabilities associated with these events could exceed the cyber insurance coverage we maintain.

        Although we devote significant resources to the development and improvement of our IT and security systems, we remain vulnerable to cyber-attacks and IT and network failures and outages, due to factors including:

    unauthorized access to customer and business information;

    accidental alteration or destruction of information during processing due to human errors;

    the spread of malicious software that compromises the confidentiality, integrity or availability of technology assets;

    alteration of technology assets caused, accidentally or voluntarily, by employees or third parties;

    accidental misuse of assets by users with possible degradation of both network services and available computing resources, such as denial-of-service;

    malfunction of technology assets or services caused by obsolescence, wear or defects in design or manufacturing;

    faults during standard or extraordinary maintenance procedures; and

    unforeseen absence of key personnel.

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        Although we have a structured vulnerability scanning process in place, there is also a possibility that we are not currently aware of certain key undisclosed vulnerabilities in our IT systems and other assets. In such an event, hackers or other cybercrime groups may exploit such vulnerabilities or may be able to cause harm more quickly than we are able to mitigate (zero-day exploits).

        From time to time we have experienced cyber-attacks of varying degrees to gain access to our computer systems and networks. As of the date of this Annual Report on Form 20-F, we have suffered minor cybersecurity incidents targeting our internal infrastructure that have been contained by the response teams, generating limited or negligible impacts, including WannaCry and NotPetya. In addition, we have suffered service disruption affecting some of our fixed-line DSL services, caused by botnets that compromised vulnerable customer equipment. Such attacks may be more successful in the future or may be persistent over long periods of time during which damage can remain undetected.

        If our services are affected by such attacks and this degrades our services, our products and services may be perceived as being vulnerable to cyber risk and the integrity of our data protection systems may be questioned. As a result, users and customers may curtail or stop using our products and services, and we may incur legal and financial exposure.

        In general, mobile operators are directly liable for actions of third parties to whom they forward personal data for processing. If severe customer data security breaches are detected, regulatory authorities could sanction our company, including suspending our operations for some time and levying fines and penalties. In some jurisdictions in which we operate, such as Russia, legislation is being implemented to establish a legal framework for preventing cyber-attacks. Our failure to comply with data protection and telecommunications laws and regulations, and our inability to operate the VEON platform, our fixed-line or wireless networks, as a result of cybersecurity threats may result in significant expense or loss of market shares. In addition, certain violations of data protection and telecommunications laws are criminal offenses in some countries, and can result in imprisonment or fines. These events, individually or in the aggregate, could harm our brand, business, financial condition, results of operations or prospects.

Our ability to profitably provide telecommunications services depends in part on the commercial terms of our interconnection agreements.

        Our ability to secure and maintain interconnection agreements with other wireless and local, domestic and international fixed-line operators on cost-effective terms is critical to the economic viability of our operations. Interconnection is required to complete calls that originate on our respective networks but terminate outside our respective networks, or that originate from outside our respective networks and terminate on our respective networks. A significant increase in our interconnection costs, or decrease in our interconnection rates, as a result of new regulations, commercial decisions by other fixed-line operators, increased inflation rates in the countries in which we operate or a lack of available line capacity for interconnection could harm our ability to provide services, which could in turn harm our business, financial condition, results of operations, cash flows or prospects. For more information, see "Item 4—Information on the Company—Interconnection Agreements."

Our existing equipment and systems may be subject to disruption and failure for various reasons, including the threat of terrorism, which could cause us to lose customers, limit our growth or violate our licenses.

        Our business depends on providing customers with reliability, capacity and security. Our technological infrastructure is vulnerable to damage or disruptions from other events, including natural disasters, military conflicts, power outages, terrorist acts, government shutdown orders, changes in government regulation, equipment or system failures, human error or intentional wrongdoings, such as breaches of our network or information technology security. For example, due to a severe monsoon

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season, our operations in Bangladesh in late 2017 experienced substantial network availability issues. In addition, we operate in countries which may have an increased threat of terrorism. An attack on or near our premises, equipment or points of sale could result in causalities, property damage, business interruption, legal liability and damage to our brand or reputation.

        Our business may also be disrupted by computer viruses or other technical or operational issues. We cannot be sure that our network and information technology systems will not be subject to such issues, or, if they are, that we will be able to maintain the integrity of our customers' data or that a virus or other technical or operational issues will not disrupt our network or systems and cause significant harm to our operations. For example, in recent years, we have experienced network service interruptions during installations of new software. In some regions, our equipment for provision of mobile services resides in a limited number of locations or buildings. Disruption to the security or operation of these locations or buildings could result in disruption of our mobile services in those regions. Moreover, the implementation of our transformation strategies may result in under-investments or failures in internal business processes, which may in turn result in greater vulnerability to technical or operational issues, including harm from failure to detect a virus.

        Interruptions of services could harm our business reputation and reduce the confidence of our customers and consequently impair our ability to obtain and retain customers and could lead to a violation of the terms of our licenses, each of which could materially harm our business. In addition, the potential liabilities associated with these events could exceed the business interruption insurance we maintain.

We depend on third parties for certain services and products important to our business.

        We rely on third parties for services and products important for our operations. We currently purchase the majority of our network-related equipment from a core number of suppliers, principally Ericsson, Huawei, Nokia Solutions and Networks, Cisco Systems and ZTE Corporation ("ZTE") although some of the equipment that we use is available from other suppliers. The successful build-out and operation of our networks depends heavily on obtaining adequate supplies of switching equipment, radio access network solutions, base stations and other equipment on a timely basis. From time to time, we have experienced delays in receiving equipment. In addition, our business could be materially harmed if export and re-export restrictions impact our suppliers' ability to procure products, technology, or software that is necessary for the production and satisfactory delivery of the supplies and equipment that we source from third-party suppliers.

        Also, we may outsource all or a portion of construction, maintenance services, IT infrastructure hosting and network capabilities in certain markets in which we operate, such as Russia and Kazakhstan. The Italy Joint Venture also outsources a portion of its networks. For more information, see "Item 4—Information on the Company—Property, Plant and Equipment." As a result, the implementation of such initiatives, including our digital stack and data management platform, is dependent on third parties.

        Our business could be materially harmed if our agreements with third parties were to terminate or if negative developments (financial, legal, regulatory or otherwise) regarding such parties, or a dispute between us and such parties, causes the parties to no longer be able to deliver the required services on a timely basis or at all or otherwise fulfill their obligations under our agreements with them. If such events occur, we may attempt to renegotiate the terms of such agreements with the third parties, but there can be no assurance that the terms of such amended agreements will be more favorable to us than those of the original agreements.

        In addition, we rely on roaming partners to provide services to our customers while they are outside the countries in which we operate and on interconnect providers to complete calls that originate on our networks but terminate outside our networks, or that originate outside our networks

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and terminate on our networks. We also rely on handset providers to provide the equipment used on our networks. In addition, many of our mobile products and services are sold to customers through third party channels. The third party retailers, agents and dealers that we use to distribute and sell products are not under our control and may stop distributing or selling our products at any time or may more actively promote the products and services of our competitors. Should this occur with particularly important retailers, agents or dealers, we may face difficulty in finding new retailers, sales agents or dealers that can generate the same level of revenue. Any negative developments regarding the third parties on which we depend could materially harm our business, financial condition, results of operations, cash flows or prospects.

Allegations of health risks related to the use of mobile telecommunications devices and base stations could harm our business.

        There have been allegations that the use of certain mobile telecommunications devices and equipment may cause serious health risks. The actual or perceived health risks of mobile devices or equipment could diminish customer growth, reduce network usage per customer, spark product liability lawsuits or limit available financing. In addition, the actual or perceived health risks may result in increased regulation of network equipment and restrictions on the construction of towers or other infrastructure. Each of these possibilities has the potential to seriously harm our business.

Our intellectual property rights are costly and difficult to protect, and we cannot guarantee that the steps we have taken to protect our intellectual property rights will be adequate.

        We regard our copyrights, service marks, trademarks, trade dress, trade secrets and similar intellectual property, including our rights to certain domain names, as important to our continued success. For example, our widely recognized logos, such as "Beeline" (Russia, Kazakhstan, Uzbekistan, Armenia, Tajikistan, Georgia, Laos and Kyrgyzstan), "Kyivstar" (Ukraine), "Jazz" (Pakistan), "Djezzy" (Algeria) and "banglalink" (Bangladesh), have played an important role in building brand awareness for our services and products. We rely upon trademark and copyright law, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our proprietary rights. However, intellectual property rights are especially difficult to protect in many of the markets in which we operate. In these markets, the regulatory agencies charged to protect intellectual property rights are inadequately funded, legislation is underdeveloped, piracy is commonplace and enforcement of court decisions is difficult.

        We are in the process of registering the VEON name, logo and certain taglines as trademarks in the jurisdictions in which we operate and other key territories. As of the date of this Annual Report on Form 20-F, we have achieved registration of the VEON name and logo in eight of the seventeen jurisdictions sought, with the remainder pending, and the taglines still pending grant in fifteen jurisdictions (and granted in two jurisdictions). The timeline and process required to obtain trademark registration can vary widely between jurisdictions. We have received third party objections to two of our applications and we are currently working to resolve these, but there can be no assurance that we will resolve them in a timely or satisfactory manner, or at all, which could affect our ability to roll out our VEON platform as anticipated.

        As we continue our digital transformation, we will need to ensure that we have adequate legal rights to the ownership or use of necessary source code and other intellectual property rights associated with our systems, products and services. For example, our VEON platform was developed initially using source code created in conjunction with third parties. We rely on a combination of contractual provisions and intellectual property law to protect our proprietary technology and software, access to and use of source code and other necessary intellectual property. There can be no assurance that our efforts to protect our intellectual property rights will be successful. Our failure to protect our ownership and use rights to our source code and other intellectual property, including as the result of disputes with our contractual counterparties, could have a material adverse effect on our results of operations and financial condition.

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        In addition, litigation may be necessary to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement. As the number of convergent product offerings and overlapping product functions increase, the possibility of intellectual property infringement claims against us may increase. Any such litigation may result in substantial costs and diversion of resources, and adverse litigation outcomes could harm our business, financial condition, results of operations, cash flows or prospects. See "—Legal and Regulatory Risks—New intellectual property laws or regulations may require us to invest substantial resources in compliance or may be unclear."

We depend on our senior management and highly skilled personnel, and, if we are unable to retain or motivate key personnel, hire qualified personnel, or implement our strategic goals or corporate culture through our personnel, we may not be able to maintain our competitive position or to implement our business strategy.

        Our performance and ability to maintain our competitive position and to implement our business strategy is dependent in certain important respects on our global senior management team, highly skilled personnel and the level of continuity. In the markets in which we operate, competition for qualified personnel with relevant expertise is intense. There is sometimes limited availability of individuals with the requisite knowledge of the telecommunications industry, the relevant experience and, in the case of expatriates, the ability or willingness to accept work assignments in certain of these jurisdictions. We have experienced certain changes in key management positions in recent years.

        In addition, our compensation schemes may not always be successful in attracting new qualified employees and retaining and motivating our existing employees. The loss of any key personnel or an inability to attract, train, retain and motivate qualified members of senior management or highly skilled personnel could have an adverse impact on our ability to compete and to implement new business models and could harm our business, financial condition, results of operations, cash flows or prospects. In addition, we might not succeed in instilling our corporate culture and values in new or existing employees, which could delay or hamper the implementation of our strategic priorities.

        Our continued success is also dependent on our personnel's ability to adapt to rapidly changing environments and to perform in pace with our continuous innovations and industry developments. Although we devote significant attention to recruiting and training, there can be no assurance that our existing personnel will successfully be able to adapt to and support our strategic priorities. There is also a possibility that we are unable to attract qualified individuals with the requisite skills to implement our digital initiatives or other business strategies.


Legal and Regulatory Risks

We operate in a highly regulated industry and are subject to a large variety of laws and extensive regulatory requirements.

        As a global telecommunications company that operates in a number of markets, we are subject to different laws and regulations in each of the jurisdictions in which we provide services. Mobile, internet, fixed-line, voice and data markets are all generally subject to extensive regulatory requirements, including strict licensing regimes, as well as anti-monopoly and consumer protection regulations. The applicable rules are generally subject to different interpretations and the relevant authorities may challenge the positions that we take. As we expand certain areas of our business and provide new services, such as MFS and the VEON platform, we may be subject to additional laws and regulations. See "—Risks Related to Our Business—Our MFS and DFS offerings are complex and increase our exposure to fraud, money laundering and reputational risk." Regulatory compliance may be costly and involve a significant expenditure of resources, thus negatively affecting our financial condition and results of operations.

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        Regulations may be especially strict in the markets of those countries in which we are considered to hold a significant market position (Ukraine and Uzbekistan), a dominant market position (Russia and Kazakhstan) or are considered a dominant company (Kyrgyzstan). Our operations in Pakistan and Algeria previously held significant market player positions. In addition, certain of our practices may become subject to regulatory scrutiny from competition or data protection authorities, which may result in fines or other administrative penalties.

        Certain regulations may require us to reduce roaming prices and mobile and/or fixed-line termination rates, require us to offer access to our network to other operators, and result in the imposition of fines if we fail to fulfill our service commitments. For example, a regulation in the European Union has decreased end-user roaming charges in the European Union, and other jurisdictions in which we operate (including Russia, Kyrgyzstan and Armenia) are considering the regulation of roaming prices, which could negatively impact our roaming margins.

        In some countries, we are required to obtain approval for offers and advertising campaigns, which can delay our marketing campaigns and require restructuring of business initiatives. We may also be required to obtain approvals for certain acquisitions, reorganizations or other transactions, and failure to obtain such approvals may impede or harm our business and our ability to expand our operations. Laws and regulations in certain of the jurisdictions in which we operate oblige us to install surveillance, interception and data retention equipment to ensure that our networks are capable of allowing the government to monitor data and voice traffic on our networks.

        The nature of our business also subjects us to certain regulations regarding open internet access, or net neutrality. For example, on March 22, 2017, the Italian competition authority (Autorità Garante della Concorrenza e del Mercato, "AGCOM"), issued a notice to the Italy Joint Venture in relation to compliance with the EU Regulation 2015/2120 (the "open internet access regulation"), which regulates, among other things, traffic management practices in the European Union, including Italy. The Italy Joint Venture fully complied with AGCOM's notice on November 20, 2017. The Italy Joint Venture also appealed AGCOM's notice and subsequent clarifications issued by AGCOM. This appeal is currently pending before the Regional Administrative Court of Lazio. As we continue to expand our selection of digital offerings, net neutrality regulations will become more applicable to our operations, and thus we may have to incur significant costs in order to comply, or prove our compliance with, such regulations.

        We face risks and costs in each of the markets in which we operate and may be subject to additional regulations. Any failure on our part to comply with these laws and regulations can result in negative publicity, diversion of management time and effort, increased competitive and pricing pressure on our operations, significant liabilities, third party civil claims and other penalties or otherwise harm our business, financial condition, results of operations, cash flows or prospects.

        For more information on the regulatory environment in which we operate, see "Exhibit 99.2—Regulation of Telecommunications."

We face uncertainty regarding our frequency allocations and may experience limited spectrum capacity for providing wireless services.

        To establish and commercially launch mobile and fixed wireless telecommunications networks, we need to receive frequency allocations for bandwidths within the frequency spectrums in the regions in which we operate. There are a limited number of frequencies available for mobile operators in each of the regions in which we operate or hold licenses to operate. We are dependent on access to adequate frequency allocation in each such market in order to maintain and expand our customer base. In addition, frequency allocations may be issued for periods that are shorter than the terms of our licenses, and such allocations may not be renewed in a timely manner, or at all. For instance, in Russia, we have previously been unable to obtain frequency allocations in an assigned frequency band for LTE

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network development and, in Bangladesh, currently are one of the largest operators, but until recently held a small amount of the frequency spectrum. In Italy, in 2018 there may be an auction of spectrums in the 700 MHz, 3600-3800 MHz, 26.5-27.5 GHz ranges related to, among others, the prospective offering of 5G services. In Pakistan, in 2019 the following spectrum will be up for renewal: 7.8MHz (paired) in 1800MHz band and 4.8MHz (paired) in the 900MHz band.

        We are also subject to the risk that government action impairs our frequency allocations or spectrum capacity. For example, in 2017, the government of Uzbekistan published a decision ordering the equitable reallocation amongst all telecommunications providers in the market, which will affect approximately half of the 900 MHz and 1800 MHz radio frequencies of our Uzbek subsidiary, Unitel LLC. The decision is expected to come into force on March 31, 2018, and, currently, we do not expect the reallocation to have a material impact on our business. In addition, in 2017, the Ministry of Information and Communications in Russia published for public consultation a draft order to increase annual spectrum fees by approximately 25% for the period between 2018-2021. The draft order has yet to be adopted.

        If our frequencies are revoked or we are unable to renew our frequency allocations or obtain new frequencies to allow us to provide mobile services on a commercially feasible basis, our network capacity and our ability to provide mobile services would be constrained and our ability to expand would be limited, which could harm our business, financial condition, results of operations, cash flows or prospects.

We may be subject to increases in payments for frequency allocations under the terms of some of our licenses.

        Legislation in many countries in which we operate, including Russia, requires that we make payments for frequency spectrum usage. As a whole, the fees for all available frequency assignments, as well as allotted frequency bands for different mobile communications technologies, have been significant. Any significant increase in the fees payable for the frequencies that we use or for additional frequencies that we need could have a negative effect on our financial results. We expect that the fees we pay for radio-frequency spectrum could substantially increase in some or all of the countries in which we operate, and any such increase could harm our business, financial condition, results of operations, cash flows or prospects.

We are subject to anti-corruption laws in multiple jurisdictions.

        We are subject to a number of anti-corruption laws, including the FCPA in the United States, the Bribery Act in the United Kingdom and the anti-corruption provisions of the Dutch Criminal Code in the Netherlands. Our failure to comply with anti-corruption laws applicable to us could result in penalties, which could harm our reputation and harm our business, financial condition, results of operations, cash flows or prospects. The FCPA generally prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. The FCPA also requires public companies to maintain accurate books and records and devise a system of sufficient internal accounting controls. We regularly review and update our policies and procedures and internal controls designed to provide reasonable assurance that we, our employees, distributors and other intermediaries comply with the anti-corruption laws to which we are subject. However, there are inherent limitations to the effectiveness of any policies, procedures and internal controls, including the possibility of human error and the circumvention or overriding of the policies, procedures and internal controls. There can be no assurance that such policies or procedures or internal controls will work effectively at all times or protect us against liability under these or other laws for actions taken by our employees, distributors and other intermediaries with respect to our business or any businesses that we may acquire.

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        We operate in countries which pose elevated risks of corruption violations. If we are not in compliance with anti-corruption laws and other laws governing the conduct of business with government entities and/or officials (including local laws), we may be subject to criminal and civil penalties and other remedial measures, which could harm our business, financial condition, results of operations, cash flows or prospects. Investigations of any actual or alleged violations of such laws or policies related to us could harm our business, financial condition, results of operations, cash flows or prospects.

New or proposed changes to laws or new interpretations of existing laws in the markets in which we operate may harm our business.

        We are subject to a variety of national and local laws and regulations in the countries in which we do business. These laws and regulations apply to many aspects of our business. Violations of applicable laws or regulations could damage our reputation or result in regulatory or private actions with substantial penalties or damages. In addition, any significant changes in such laws or regulations or their interpretation, or the introduction of higher standards or more stringent laws or regulations, including revision in regulations for license/frequency allocation, could have an adverse impact on our business, financial condition, results of operations and prospects.

        For example, in some of the markets in which we operate SIM verification and re-verification initiatives have been implemented. In Pakistan, our subsidiary had to re-verify more than 38 million SIM cards in 2016, with operators blocking all SIM cards that could not be verified, and which resulted in a loss of customers representing approximately 13% of its customer base. In Bangladesh, the regulator initiated similar SIM re-verification requirements in 2016, which resulted in 3.8 million SIM cards being blocked by Banglalink, for which we may incur additional fees, and which may require additional time and/or resources from management at VEON and/or Banglalink. Similar actions have been introduced, or are being contemplated, in other markets in which we operate. In addition to customer losses, such requirements can result in claims from legitimate customers that are incorrectly blocked, fines, license suspensions and other liabilities for failure to comply with the requirements. To the extent re-verification and/or new verification requirements are imposed in the jurisdictions in which we operate, it could have an adverse impact on our business, financial condition, results of operations and prospects.

        In addition, many jurisdictions in which we operate have adopted data processing laws, which prohibit the collection and storage of personal data on servers located outside of the respective jurisdictions. Violation of these laws by an operator may lead to a seizure of the operator's database and equipment, impose administrative sanctions or implement a ban on the processing of personal data by such operator, which, in turn, could lead to the inability to provide services to customers. See "—We are subject to an increasing amount of data privacy laws and regulations that may require us to incur substantial costs and implement certain changes to our business practices that may adversely affect our results of operations."

        In certain jurisdictions in which we operate, the relevant regulator sets MTRs. If any such regulator sets MTRs that are lower for us than the MTRs of our competitors, our interconnection costs may be higher and our interconnection revenues may be lower, relative to our competitors. In Algeria, for example, the MTRs set by the regulator in 2017 are lower for Optimum Telecom Algeria S.p.A. ("Optimum") than for one of its competitors.

        In addition, we are subject to certain sanctions and embargo laws and regulations of the United States, the United Nations, the European Union, and certain other jurisdictions in connection with our activities and such laws and regulations may be expanded or amended from time to time in a manner that could materially adversely affect our business, financial condition, results of operations, cash flows or prospects. There can be no assurance that, notwithstanding our compliance safeguards, we will not

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be found in the future to have been in violation of applicable sanctions and embargo laws, particularly as the scope of such laws may be unclear and subject to discretionary interpretations by regulators, which may change over time. Moreover, certain of our financing arrangements include representations and covenants requiring compliance with or limitation of activities under sanctions laws of additional jurisdictions enumerated in the financing arrangements, as well as mandatory prepayment requirements in the event of a breach thereof.

        For a discussion of certain regulatory developments and trends and the impact on our business, see "Exhibit 99.2—Regulation of Telecommunications."

New intellectual property laws or regulations may require us to invest substantial resources in compliance or may be unclear.

        Current and new intellectual property laws may affect the ability of companies, including us, to protect their innovations and defend against claims of patent infringement. The costs of compliance with these laws and regulations are high and are likely to increase in the future. Claims have been, or may be threatened and/or filed against us for intellectual property infringement based on the nature and content in our products and services, or content generated by our users.

We may be subject to legal liability associated with providing new online services or content as part of our strategic priorities.

        We currently, and as part of our VEON platform and other strategic priorities will continue to, host and provide a wide variety of services and products that enable users to engage in various online activities. The law relating to the liability of providers of these online services and products for the activities of their users is still unsettled in some jurisdictions. Claims may be threatened or brought against us for defamation, negligence, breaches of contract, copyright or trademark infringement, unfair competition, tort, including personal injury, fraud, or other grounds based on the nature and content of information that we use and store. In addition, we may be subject to domestic or international actions alleging that certain content we have generated, user generated content or third-party content that we have made available within our services violates applicable law.

        We also offer third-party products, services and content. We may be subject to claims concerning these products, services or content by virtue of our involvement in marketing, branding, broadcasting, or providing access to them, even if we do not ourselves host, operate, provide, or provide access to these products, services or content. Defense of any such actions could be costly and involve significant time and attention of our management and other resources, may result in monetary liabilities or penalties, and may require us to change our business in an adverse manner.

Anti-terror legislation passed in Russia and other jurisdictions could result in additional operating costs and capital expenditures and may harm our business.

        Russian Federal Law No 374-FZ, dated July 6, 2016, amending anti-terrorism legislation imposed certain obligations on communication providers and organizers of information distribution (for example, OTT messengers), including, among others, the obligation to store information confirming the fact of receipt, transmission, delivery and/or processing of voice data, text messages, pictures, sounds, video or other communications (i.e., meta-data reflecting these communications) for a period of three years, as well as to store the contents of communications, including voice data, text messages, pictures, sounds, video or other communications for a period of up to six months (the latter requirement will come into force starting from July 1, 2018). In addition, in accordance with Federal Law No 374-FZ, communication providers and organizers of information distribution are obliged to supply to the investigation and prosecution authorities the information about the users and any other information "which is necessary for these authorities to achieve their statutory goals," and to provide to the

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investigation and prosecution authorities any information and codes necessary to decode the information. In addition, under local law, at the request of authorities, operators and OTT messengers will be required to block services for users whose personal data does not correspond to the data registered and stored by the relevant domestic operator. Failure to comply with these requirements may lead to administrative fines, impair our ability to operate and could impact the effectiveness of our licenses. In addition, Governmental Resolution No 743 dated July 31, 2014 was amended by Resolution No 21 dated January 18, 2018, which extends certain security obligations currently applicable to communication providers to organizers of information distribution (for example, OTT messengers), if required by the federal security services, such as implementing technical measures to communicate with the security services.

        Federal Law No 374-FZ entered into force on July 20, 2016. However, the most cost-intensive elements, particularly the requirement to store the content of voice and data communications for up to six months, are scheduled to enter into force from July 1, 2018. The practical effects of Federal Law No 374-FZ are still unclear, since implementing legislation is yet to be adopted. The implementation and support of measures to comply with the legislation could result in substantial costs for the design and production of specialized equipment and tools, as no currently commercially available products satisfy the requirements imposed by the new law. These costs are currently expected to be borne by telecommunications companies and organizers of information distribution and, together with diversion of management's attention and resources, could materially adversely affect our business and operations. We expect operators to compensate for losses through increased retail tariffs, which may, in turn, have a negative effect on demand for telecommunications services.

        Similar legislation has been implemented, or is being contemplated, in other markets in which we operate. Compliance with such measures may require substantial costs and management resources and conflict with our legal obligations in other countries. Failure to comply may lead to administrative fines, impair our ability to operate or cause reputational damage. In addition, compliance with any such obligations may prompt allegations related to data privacy or human rights concerns, which could in turn result in reputational harm or otherwise impact our ability to operate or our results of operations.

We operate in uncertain judicial and regulatory environments.

        In many of the emerging market countries where we operate, the application of the laws of any particular country is frequently unclear and may result in unpredictable outcomes or an otherwise uncertain judicial and regulatory environments in which to operate, which could result in:

    restrictions or delays in obtaining additional numbering capacity, receiving new licenses and frequencies, receiving regulatory approvals for rolling out our networks in the regions for which we have licenses, receiving regulatory approvals for changing our frequency plans and importing and certifying our equipment;

    difficulty in complying with new or existing legislation and the terms of any notices or warnings received from the regulatory authorities in a timely manner;

    adverse rulings by courts or government authorities resulting from a change in interpretation or inconsistent application of existing law;

    significant additional costs and operational burdens that we are ordered to comply with on short notice;

    delays in implementing our global strategies and business plans; and

    a more challenging operating environment.

        If we are found to be involved in practices that do not comply with applicable laws or regulations, we may be exposed to significant fines, the risk of prosecution or the suspension or loss of our licenses,

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frequency allocations, authorizations or various permissions, any of which could harm our business, financial condition, results of operations, cash flows or prospects.

Laws restricting foreign investment could materially harm our business.

        We could be materially harmed by existing laws restricting foreign investment or the adoption of new laws or regulations restricting foreign investment, including foreign investment in the telecommunications industry in Russia, Kazakhstan or other markets in which we operate.

        In Russia, there are a number of laws regulating foreign investment. For example, the Federal Law "On the Procedure for Foreign Investments in Business Entities of Strategic Importance for National Defense and State Security" (the "Russian Foreign Investment Law"), limits foreign investment in companies that are deemed to be strategic. Our subsidiary PJSC VimpelCom is deemed to be a strategic enterprise under the Russian Foreign Investment Law. As a result, any acquisition by a foreign investor of direct or indirect control over more than 50% of its voting shares, or 25% in the case of a company controlled by a foreign government, requires the prior approval of the Government Commission on Control of Foreign Investment in the Russian Federation pursuant to the Russian Foreign Investment Law. In addition, the restrictions stipulated by the Federal Law dated July 27, 2006 No 149-FZ "On the Information, Information Technology and Protection of Information" affect the provision of audio-visual services by foreign entities and local companies with more than 20% of foreign investments or shares. Although these restrictions do not impact local companies operating as a strategic enterprise, such as PJSC VimpelCom, the implementation of this law could affect our VEON platform by imposing additional costs or jeopardizing revenue projections. Additionally, under Russian law, companies controlled by foreign governments are prohibited absolutely from acquiring control over strategic enterprises, and the Government Commission on Control of Foreign Investment in the Russian Federation, or the Federal Antimonopoly Service of the Russian Federation, the "FAS", which administers application of the Russian Foreign Investment Law, has challenged acquisitions of our shares in the past. Finally, while the latest draft of the implementing regulation for Federal Law 187-FZ "On the security of Russia's critical information infrastructure" does not contain provisions limiting the use of foreign contractors, initial drafts did include such provisions and it is possible that the regulation, once implemented, will include such provisions.

        In Kazakhstan, according to the national security law, a foreign company cannot directly or indirectly own more than a 49% stake in an entity that carries out telecommunications activities as an operator of long-distance or international communications or owns fixed communication lines without the consent of the Kazakhstan government. As a result, our ability to obtain financing from foreign investors may be limited, should prior approval be refused, delayed or require foreign investors to comply with certain conditions, which could materially harm our business, financial condition, results of operations, cash flows or prospects. Such laws may also hinder potential business combinations or transactions resulting in a change of control.

Our licenses may be suspended or revoked and we may be fined or penalized for alleged violations of law, regulations or license terms.

        We are required to meet certain terms and conditions under our licenses (such as nationwide coverage, quality of service parameters and capital expenditure, including network build-out requirements), including meeting certain conditions established by the legislation regulating the communications industry. From time to time, we may be in breach of such terms and conditions. If we fail to comply with the conditions of our licenses or with the requirements established by the legislation regulating the communications industry, or if we do not obtain or comply with permits for the operation of our equipment, use of frequencies or additional licenses for broadcasting directly or through agreements with broadcasting companies, the applicable regulator could decide to levy fines,

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suspend, terminate or refuse to renew the license or permit. Such regulatory actions could adversely impact our ability to carry out divestitures in the relevant jurisdictions.

        The occurrence of any of these events could materially harm our ability to build out our networks in accordance with our plans, our ability to retain and attract customers, our reputation and our business, financial condition, results of operations, cash flows or prospects. For more information on our licenses and their related requirements, see "Item 4—Information on the Company—Licenses."

Our licenses are granted for specified periods and they may not be extended or replaced upon expiration.

        The success of our operations is dependent on the maintenance of our licenses to provide telecommunications services in the jurisdictions in which we operate. Most of our licenses are granted for specified terms, and there can be no assurance that any license will be renewed upon expiration. Some of our licenses will expire in the near term. For more information about our licenses, including their expiration dates, see "Item 4—Information on the Company—Licenses."

        These licenses and the frameworks governing their renewals are also subject to ongoing review by the relevant regulatory authorities. If renewed, our licenses may contain additional obligations, including payment obligations (which may involve a substantial renewal or extension fee), or may cover reduced service areas or scope of service. Furthermore, the governments in certain jurisdictions in which we operate may hold auctions (including auctions for the 4G/LTE spectrum or more advanced spectrums) in the future. If we are unable to maintain or obtain licenses for the provision of telecommunications services or if our licenses are not renewed or are renewed on less favorable terms, our business and results of operations could be materially harmed.

It may not be possible for us to procure in a timely manner, or at all, the permissions and registrations required for our base stations.

        The laws of the countries in which we operate generally prohibit the operation of telecommunications equipment without a relevant permit from the appropriate regulatory body. Due to complex regulatory procedures, it is frequently not possible for us to procure in a timely manner, or at all, the permissions and registrations required for our base stations, including construction permits and registration of our title to land plots underlying our base stations, or other aspects of our network before we put the base stations into operation, or to amend or maintain the permissions in a timely manner when it is necessary to change the location or technical specifications of our base stations. At times, there can be a number of base stations or other communications facilities and other aspects of our networks for which we are awaiting final permission to operate for indeterminate periods. This problem may be exacerbated if there are delays in issuing necessary permits.

        We also regularly receive notices from regulatory authorities in countries in which we operate warning us that we are not in compliance with aspects of our licenses and permits and requiring us to cure the violations within a certain time period. We have closed base stations on several occasions in order to comply with regulations and notices from regulatory authorities. Any failure by our company to cure such violations could result in the applicable license being suspended and subsequently revoked through court action. Although we generally take all necessary steps to comply with any license violations within the stated time periods, including by switching off base stations that do not have all necessary permits until such permits are obtained, we cannot assure you that our licenses or permits will not be suspended and not subsequently be revoked in the future. If we are found to operate telecommunications equipment without an applicable license or permit, we could experience a significant disruption in our service or network operation, which could harm our business, financial condition, results of operations, cash flows or prospects.

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We are subject to an increasing amount of data privacy laws and regulations that may require us to incur substantial costs and implement certain changes to our business practices that may adversely affect our results of operations.

        We are subject to various data privacy laws and regulations that apply to the collection, use, storage, disclosure and security of personal information that identifies or may be used to identify an individual, such as names and contact information. Many countries have additional laws that regulate the processing, retention and use of communications data (both content and meta-data). These laws and regulations are subject to frequent revisions and differing interpretations and have generally become more stringent over time. Most of the jurisdictions where we operate have laws that restrict data transfers overseas unless certain criteria are met and/or are developing or implementing laws on data localization requiring data to be stored locally. These laws may restrict our flexibility to leverage our data and build new, or consolidate existing, technologies, databases and IT systems, limit our ability to use and share personal data, cause us to incur costs or require us to change our business practices in a manner adverse to our business, or conflict with other laws we are subject to, exposing us to regulatory risk. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices or in conflict with laws applicable to us in other countries in which we operate. If so, in addition to the possibility of fines, this could result in an order requiring that we change our data practices, which could have an adverse effect on our business and results of operations.

        For example, in recent years, U.S. and European lawmakers and regulators have expressed heightened concern over the retention and interception of telecommunications data. As part of this initiative, the European Commission proposed a draft of the new ePrivacy Regulation on January 10, 2017. The current draft of the ePrivacy Regulation is going through the EU legislative process. When it comes into effect, it is expected to regulate the processing of electronic communications data carried out in connection with the provision and the use of publicly available electronic communications services to users in the European Union, regardless of whether the processing itself takes place in the European Union. Unlike the current ePrivacy Directive, the draft ePrivacy Regulation will likely apply to over-the-top service providers as well as traditional telecommunications service providers (including the requirements on data retention and interception and changes to restrictions on the use of traffic and location data). The Italy Joint Venture as well as VEON entities established in the European Union which process such electronic communications data are likely to be subject to this regime. The current draft of the ePrivacy Regulation also regulates the retention and interception of communications data as well as the use of location and traffic data for value added services, imposes stricter requirements on electronic marketing, and changes to the requirements for use of tracking technologies like cookies. This could broaden the exposure of our business lines based in the European Union to data protection liability, restrict our ability to leverage our data and increase the costs of running those businesses. The draft also extends the strict opt-in marketing rules with limited exceptions to business to business communications, and significantly increases penalties.

        In addition, the European Union will introduce a new data protection framework, the General Data Protection Regulation (GDPR), to replace the existing EU Data Protection Directive on May 25, 2018. The GDPR implements more stringent operational requirements for processors and controllers of personal data, including, for example, requiring expanded disclosures about how personal data is processed, certain mandatory contractual provisions, stronger rights for data subjects, mandatory data breach notification requirements, and higher standards for data controllers to demonstrate that they have obtained valid consent or have another legal basis in place to justify their data processing activities. The GDPR is applicable to companies that are established in the European Union, or companies that offer goods and services to, or monitor the behavior of, individuals within the European Union. While we believe that only our Italy Joint Venture, our VEON platform and a limited number of entities, including our Amsterdam and London-based headquarters and central operation entities

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that process data of individuals and entities within the European Union, will be subject to GDPR, our operations in other markets may also become subject to this law, under certain circumstances, if such operations involve the offering of goods or services to, or monitoring the behavior of, individuals in the European Union. There is also a possibility that the law will apply to a larger range of activities than we anticipate, impose more onerous compliance obligations or otherwise have a larger impact on our operations than we expect.

        Any failure or perceived failure by us to comply with privacy or security laws, policies, legal obligations or industry standards may result in governmental enforcement actions and investigations, blockage or limitation of our services in the European Union or offered to EU individuals, fines and penalties (for example, of up to 20,000,000 euros or up to 4% of the total worldwide annual turnover of the preceding financial year (whichever is higher) under the GDPR and draft ePrivacy Regulation) and litigation, including third party civil claims. If the third parties we work with violate applicable laws, contractual obligations or suffer a security breach, such violations may also put us in breach of our obligations under privacy laws and regulations and/or could in turn have a material adverse effect on our business. In addition, concerns regarding our practices with regard to the collection, use, disclosure or security of personal information or other privacy-related matters could result in negative publicity and have an adverse effect on our reputation and business. For more information on GDPR, see "Exhibit 99.2—Regulation of Telecommunications—EU General Data Protection Regulation."

        In addition, in Russia, we are subject to certain data protection and other laws and regulation that establish two categories of information with corresponding levels of registration, disclosure and safeguards—state secret and other data (personal data of customers, correspondence privacy and information on rendered telecommunications services), and operators must implement the required level of data protection and law enforcement disclosures. See "Exhibit 99.2—Regulation of Telecommunications—Regulation of Telecommunications in Russia—Data Protection."

        For a discussion of other data protection laws and regulations to which we are subject, see "Exhibit 99.2—Regulation of Telecommunications."

We are, and may in the future be, involved in or associated with disputes and litigation with regulators, competitors and third parties.

        We are party to lawsuits and other legal, regulatory or antitrust proceedings and commercial disputes, the final outcome of which is uncertain and there can be no assurance that we will not be a party to additional proceedings in the future. Litigation and regulatory proceedings are inherently unpredictable. An adverse outcome in, or any disposition of, these or other proceedings (including any that may be asserted in the future) could harm our reputation and harm our business, financial condition, results of operations, cash flows or prospects. For more information on these disputes, see Notes 26 to our audited consolidated financial statements.

We could be subject to tax claims that could harm our business.

        Tax audits in the countries in which we operate are conducted regularly, and the outcomes of which may not be fair or predictable. We have been subject to substantial claims by tax authorities in Russia, Algeria, Egypt, Pakistan, Bangladesh, Ukraine, Kazakhstan, Armenia, Georgia, Uzbekistan, Kyrgyzstan, Tajikistan and Italy. These claims have resulted, and future claims may result, in additional payments, including interest, fines and other penalties, to the tax authorities.

        Although we are permitted to challenge, in court, the decisions of tax inspectorates, there can be no assurance that we will prevail in our litigation with tax authorities. In addition, there can be no assurance that the tax authorities will not claim on the basis of the same asserted tax principles they have claimed against us for prior tax years, or on the basis of different tax principles, that additional taxes, interest, fines and other penalties are owed by us for prior or future tax years, or that the

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relevant governmental authorities will not decide to initiate a criminal investigation or prosecution, or expand existing criminal investigations or prosecutions, in connection with claims by tax inspectorates, including with respect to individual employees and for prior tax years.

        The adverse resolution of these or other tax matters that may arise could harm our business, financial condition and results of operations. For more information regarding tax claims, and their effects on our financial statements, see Notes 26 to our audited consolidated financial statements.

Unpredictable tax systems give rise to significant uncertainties and risks that could complicate our tax planning and business decisions.

        The tax systems in the markets in which we operate may be unpredictable and give rise to significant uncertainties, which could complicate our tax planning and business decisions, especially in emerging markets in which we operate, where there is significant uncertainty relating to the interpretation and enforcement of tax laws. Any additional tax liability imposed on us by tax authorities in this manner, as well as any unforeseen changes in applicable tax laws or changes in the tax authorities' interpretations of the respective double tax treaties in effect, could harm our future results of operations, cash flows or the amounts of dividends available for distribution to shareholders in a particular period. We may be required to accrue substantial amounts for contingent tax liabilities and the amounts accrued for tax contingencies may not be sufficient to meet any liability we may ultimately face. From time to time, we may also identify tax contingencies for which we have not recorded an accrual. Such unaccrued tax contingencies could materialize and require us to pay additional amounts of tax. For example, in Algeria, a new finance law in 2017 increased VAT from 7% to 19% on data services and from 17% to 19% on voice services, and also increased taxes on recharges from 5% to 7%. Such changes could have an adverse impact on our business, financial condition, results of operations or cash flows in these countries and on our group.

        Moreover, recently enacted U.S. tax legislation has significantly changed the U.S. federal income taxation of corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions, adopting elements of a territorial tax system and introducing new anti-base erosion provisions. Many of these changes are effective immediately, without any transition periods or grandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and Internal Revenue Service, any of which could lessen or increase certain adverse impacts of the legislation. Further, it is possible that non-U.S. taxing authorities will be reviewing current law for potential modifications in reaction to the implementation of the new U.S. tax legislation. While some of the changes made by the U.S. tax legislation may adversely affect us in one or more reporting periods and prospectively, other changes may be beneficial on a going forward basis. We continue to work with our tax advisors and auditors to determine the full impact that the recent U.S. tax legislation as a whole will have on us.

        The introduction of new tax laws or the amendment of existing tax laws, such as those relating to transfer pricing rules or the deduction of interest expenses in the markets in which we operate, may also increase the risk of adjustments being made by the tax authorities and, as a result, could have a material impact on our business, financial performance and results of operations.

Repeated tax audits and extension of liability beyond the limitation period may result in additional tax assessments.

        Tax declarations together with related documentation are subject to review and investigation by a number of authorities in many of the jurisdictions in which we operate, which are empowered to impose fines and penalties on taxpayers. Tax audits may result in additional costs to our group if the relevant tax authorities conclude that entities of the group did not satisfy their tax obligations in any

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given year. Such audits may also impose additional burdens on our group by diverting the attention of management resources. The outcome of these audits could harm our business, financial condition, results of operations, cash flows or prospects. Under such review, the relevant tax authorities may conclude that we had significantly underpaid taxes relating to earlier periods, which could harm our business, financial condition, results of operations, cash flows or prospects.

        In Russia, for example, tax returns remain open and subject to inspection by tax or customs authorities for three calendar years immediately preceding the year in which the decision to conduct an audit is taken. Laws enacted in Russia in recent years increase the likelihood that our tax returns that were reviewed by tax authorities could be subject to further review or audit during or beyond the eligible three-year limitation period by a superior tax authority. In addition, in recent years, the Russian tax authorities have aggressively brought tax evasion claims relating to Russian companies' use of tax-optimization schemes, and press reports have speculated that these enforcement actions have been selective and politically motivated.

        We have also been the subject of repeat complex and thematic tax audits in Kazakhstan, Tajikistan and Kyrgyzstan which, in some instances, have resulted in payments made under protest pending legal challenges and/or to avoid the initiation or continuation of associated criminal proceedings.

Adverse decisions of tax authorities or changes in tax treaties, laws, rules or interpretations could have a material adverse effect on our business, results of operations, financial conditions or cash flows.

        The tax laws and regulations in the Netherlands, our current resident state for tax purposes, may be subject to change and there may be changes in enforcement of tax law. Additionally, European and other tax laws and regulations are complex and subject to varying interpretations. We cannot be sure that our interpretations are accurate or that the responsible tax authority agrees with our views. If our tax positions are challenged by the tax authorities, we could incur additional tax liabilities, which could increase our costs of operations and have a material adverse effect on our business, financial condition or results of operations.

        Within the Organisation for Economic Co-operation and Development ("OECD") there is an initiative aimed at avoiding base erosion and profit shifting ("BEPS") for tax purposes. This OECD BEPS project has resulted in further developments in other countries and in particular in the European Union. One of the developments is the agreement on the EU Anti-Tax Avoidance Directive ("ATAD"). All EU Member States must implement the minimum standards as set out in the ATAD. The implementation of these measures against tax avoidance in the legislation of the jurisdictions in which we do business could have a material adverse effect on us. For example, the implementation of the general interest limitation rule (Article 4 ATAD) could result in an increase of our tax liabilities as certain interest costs could no longer be deductible. Another development is the recently published proposal for a Council Directive on a Common Corporate Tax Base ("CCTB") and the re-launch of the Common Consolidated Corporate Tax Base, first tabled in 2011. If enacted, these directives could also impact our tax position, either positively or negatively. For instance, under the proposed CCTB, our taxable result realized in each of the EU Member States will be calculated on the same basis in each of these EU Member States, irrespective of whether the national corporate income tax system differs from the CCTB (noting that Member States can opt to continue to have their own corporate income tax rate). Based on the draft wording of the CCTB, the CCTB participation exemption regime would be less favorable in comparison to the Dutch regime because a minimum of a 10% shareholding would be required, as compared to the current 5% under the Dutch regime. On the other hand, the CCTB potentially introduces a notional interest deduction on equity, which the current Dutch rules do not make available. As a result, it is difficult to assess the impact of the enactment of these directives on our business, but such impact could have a material adverse effect on our business, financial condition or results of operations.

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The Italy Joint Venture may be subject to a deferral or to a limitation of the deduction of interest expenses in Italy.

        For taxpayers like the Italy Joint Venture, Italian tax law permits the deduction of some interest expense up to a specified limit. A further deduction of interest expense is permitted up to an additional threshold. The amount of unused interest expense deduction may be carried forward to future years. Based on these rules, the Italy Joint Venture currently is able to carry forward accrued and unused deductions to future fiscal years. Any future changes in current Italian tax laws or in their interpretation may have an adverse impact on the deductibility of interest expenses for the Italy Joint Venture which, in turn, could harm our business, financial condition, results of operations or prospects.


Risks Related to Our Markets

The international economic environment could cause our business to decline.

        Our operations are subject to macro-economic and political risks that are outside of our control. The current macroeconomic environment is highly volatile, and continuing instability in global markets has contributed to a challenging global economic environment in which to operate. As future developments are dependent upon a number of political and economic factors, we cannot accurately predict how long challenging conditions will exist or the extent to which the markets in which we operate may deteriorate. Unfavorable economic conditions may impact a significant number of our customers, including their spending patterns, both in terms of the products they subscribe for and usage levels. As a result, it may be more difficult for us to attract new customers, more likely that customers will downgrade or disconnect their services and more difficult for us to maintain ARPUs at existing levels. The difficult economic environment and any future downturns in the economies of markets in which we operate or may operate in the future could also increase our costs, prevent us from executing our strategies, hurt our liquidity, impair our ability to take advantage of future opportunities or to respond to competitive pressures, to refinance existing indebtedness or to meet unexpected financial requirements, all of which could harm our business, financial condition, results of operations, cash flows or prospects.

        As a global telecommunications company with operations in multiple markets, we may be adversely affected by a broad range of international economic developments. For example, the economies in our markets were adversely affected by the international economic crisis that began in the late 2000s, and some economies in markets in which we operate continue to suffer. Among other things, the crisis led to a slowdown in gross domestic product growth, increase of inflation, devaluations of the currencies in Russia and other markets in which we operate and a decrease in commodity prices. In addition, because Russia, Kazakhstan and Algeria produce and export large amounts of oil, their economies are particularly vulnerable to fluctuations in the price of oil on the world market. Our operations may also be affected by the ongoing issues in Europe relating to risks of deflation, sovereign debt levels and the suitability and stability of the euro.

        Adverse economic developments specific to a particular market in which we operate may also affect our operations. For example, in Russia, low oil prices, together with the impact of economic sanctions and the significant devaluation of the Russian ruble, have negatively impacted the Russian economy and economic outlook and may also negatively impact our ability to raise external financing, particularly if the sanctions are broadened. For more on sanctions affecting Russia and how it affects our operations, see "—Our operations may be adversely affected by ongoing developments in Russia and Ukraine."

        Deterioration of macroeconomic conditions in the countries in which we operate may also have certain accounting ramifications. For example, a significant difference between the performance of an acquired company and the business case assumed at the time of acquisition could require us to write down the value of the goodwill. In addition, the possible developments as a result of a financial and

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economic crisis—related to, in particular, customer behavior, the reactions of our competitors in terms of offers, pricing or their response to new entrants, regulatory adjustments in relation to reductions in consumer prices and our ability to adjust costs and investments in keeping with possible changes in revenue—may adversely affect our forecasts and lead to a write-down in tangible and intangible assets. A write-down recorded for tangible and intangible assets lowering their book values could impact certain covenants under our debt agreements, which could result in a deterioration of our financial condition, results of operations or cash flows. For further information on the impairment of tangible and intangible assets and recoverable amounts (particularly key assumptions and sensitivities), see Note 10 to our audited consolidated financial statements.

Our operations may be adversely affected by ongoing developments in Russia and Ukraine.

        The current situation in Russia and Ukraine, and the related responses of the United States, member states of the European Union, the European Union itself and certain other nations, have the potential to materially adversely affect our business in Russia and Ukraine where we have significant operations, which in turn could materially harm our financial condition, results of operations, cash flows or prospects.

        In connection with the situation in Russia and Ukraine, the United States, the European Union, and a number of countries have imposed (i) sanctions that block the property of certain designated businesses, organizations and individuals, (ii) sectoral sanctions that prohibit certain types of transactions with specifically designated businesses operating in certain sectors of the Russian economy, currently including the financial services, energy, and defense sectors, and (iii) territorial sanctions restricting investment in and trade with Crimea. The U.S. and EU sanctions target entities owned and/or controlled by designated entities and individuals. Further, under the U.S. sanctions regime, even non-U.S. persons who engage in certain prohibited transactions may be exposed to secondary sanctions, such as the denial of certain privileges, including financing and contracting with U.S. persons or within the United States. In addition, the United States and the European Union have implemented certain export control restrictions related to Russia's energy sector and military capabilities. Ukraine has also enacted sanctions with respect to certain Russian entities and individuals. Russia has responded with countermeasures to such international and Ukrainian restrictions and sanctions, currently including limiting the import of certain goods from the United States, the European Union, Ukraine and other countries, imposing visa bans on certain persons, and imposing restrictions on the ability of Russian companies to comply with sanctions imposed by other countries.

        Such sanctions, export controls and/or other measures, including sanctions on additional persons or businesses (including vendors, joint venture and business partners, affiliates and financial institutions) imposed by the United States, the European Union, Ukraine, Russia, and/or other countries, could materially adversely affect our business, financial condition, results of operations, cash flows or prospects. We are not able to predict further developments on this issue, including when these measures will cease to be in effect. In addition, there may be additions to the designated persons or business lists or other expansions of the U.S., EU and/or other sanctions that target Russia and restrict dealings related to Crimea in the future. As the United States government indicated in late 2017 that Crimea-related sanctions will remain in place until Ukraine has full control of the Crimean peninsula, it is possible that these sanctions will be in effect for the foreseeable future.

        Ukraine has assigned a "temporary occupied territories" status to Crimea and an "anti-terrorist operation zone" status to certain Eastern Ukraine regions which are currently not under the Ukrainian government's control, and has imposed certain restrictions and prohibitions on trade in goods and services in such territories. Our Ukrainian subsidiary, Kyivstar JSC ("Kyivstar"), shut down its network in Crimea in 2014 as well as its network in certain parts of Eastern Ukraine in 2015 and, in each case, has written off the relevant assets. Under terms of its telecommunications licenses, Kyivstar is obliged to provide services throughout Ukraine. Kyivstar has notified the regulatory authorities that Kyivstar

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has stopped providing services in these areas and has requested clarification from such authorities regarding telecommunications operations in such areas. Since September 2014, legislation has been in effect in Ukraine that authorizes the cancellation of telecommunications licenses for sanctioned parties. There can be no assurance that the escalation of the current situation will not lead to the cancellation or suspension of, or other actions under, certain or all of our Ukrainian telecommunications licenses, or other sanctions. These outcomes or other sanctions, including prohibitions and restrictions possible under draft legislation that could be passed by the Ukrainian parliament in early 2018, could have a material adverse effect on our business in Ukraine, which in turn could harm our business, financial condition, results of operations, cash flows or prospects.

        The situation in Crimea and Eastern Ukraine has resulted, and may in the future result, in damage or loss of assets, disruption of services, and regulatory issues which has, and may in the future, adversely impact our group. In addition, if there were an extended continuation or further increase in conflict in Crimea, Eastern Ukraine or in the region, it could result in further instability and/or worsening of the overall political and economic situation in Ukraine, Russia, Europe and/or in the global capital markets generally, which could adversely impact our group. Moreover, the instability in Crimea and Eastern Ukraine specifically, and in the region more generally, economic sanctions and related measures, and other geopolitical developments (including with respect to the current conflict and international interventions in Syria) could harm our business, financial condition, results of operations, cash flows or prospects. In particular, we could be materially adversely impacted by a decline of the Russian ruble against the U.S. dollar or the euro and the general economic performance of Russia.

        In addition, our operations may be adversely affected by potential U.S. sanctions against the Russian government in response to alleged meddling in the 2016 presidential election. Though the nature of such measures, if enacted, is not yet clear, the United States government may be contemplating extending the number of Russian officials and companies on its current sanctions list and banning the purchase of Russian treasury bonds. As the United States government is reportedly revisiting whether sanctions imposed in response to the situation in Russia and Ukraine were effective, it is possible that the new measures, if enacted, would be significantly more harmful to the Russian economy than those previously enacted. For example, the Russian ruble could decline against the U.S. dollar and euro, investment in Russia or trade with Russian companies may decrease substantially and the Russian government may experience difficulty raising money through the issuance of debt in the global capital markets. As we derive a significant portion of our revenue from our Russian operations, such measures, if enacted, could have a material adverse impact on our group.

Investors in emerging markets, where most of our operations are located, are subject to greater risks than investors in more developed markets, including significant political, legal and economic risks and risks related to fluctuations in the global economy.

        Most of our operations are in emerging markets. Investors in emerging markets should be aware that these markets are subject to greater risks than more developed markets, including in some cases significant political, legal and economic risks. Emerging market governments and judiciaries often exercise broad, unchecked discretion and are susceptible to abuse and corruption and rapid reversal of political and economic policies on which we depend. Political and economic relations among the countries in which we operate are often complex and have resulted, and may in the future result, in conflicts, which could materially harm our business, financial condition, results of operations, cash flows or prospects. The economies of emerging markets are vulnerable to market downturns and economic slowdowns elsewhere in the world. As has happened in the past, financial problems or an increase in the perceived risks associated with investing in emerging economies could dampen foreign investment in these markets and materially adversely affect their economies. Turnover of political leaders or parties in emerging markets as a result of a scheduled election upon the end of a term of service or in other circumstances may also affect the legal and regulatory regime in those markets to a greater extent than turnover in established countries. These developments could severely limit our access to capital and could materially harm the purchasing power of our customers and, consequently, our business.

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        Further, the nature of much of the legislation in emerging markets, the lack of consensus about the scope, content and pace of economic and political reform and the rapid evolution of the legal systems in emerging markets, place the enforceability and, possibly, the constitutionality of, laws and regulations in doubt and result in ambiguities, inconsistencies and anomalies. The legislation often contemplates implementing regulations that have not yet been promulgated, leaving substantial gaps in the regulatory infrastructure. Any of these factors could affect our ability to enforce our rights under our licenses or our contracts, or to defend our company against claims by other parties.

        Many of the emerging markets in which we operate are susceptible to significant social unrest or military conflicts. Such events may create uncertain regulatory environments, which in turn could impact our compliance with license obligations and other regulatory approvals. In addition, in some of the countries in which we operate, the local authorities may order our subsidiaries to temporarily shut down their entire network or part or all of our networks may be shut down due to actions relating to military conflicts or nationwide strikes. For example, our subsidiary in Pakistan is ordered to shut down parts of its mobile network and services from time to time due to the security situation in the country. Governments or other factions, including those asserting authority over specific territories in areas of conflict, could make inappropriate use of the network, attempt to compel us to operate our network in conflict zones or disputed territories and/or force us to broadcast propaganda or illegal instructions to our customers or others (or face consequences for failure to do so). Forced shutdowns, inappropriate use of our network, compelling us to operate our network, or broadcast propaganda or illegal instructions could materially harm our business, financial condition, results of operations, cash flows or prospects.

        Investors should fully appreciate the significance of the risks involved in investing in an emerging markets company and are urged to consult with their own legal, financial and tax advisors.

Social instability in the countries in which we operate could lead to increased support for centralized authority and a rise in nationalism, which could harm our business.

        Social instability in the countries in which we operate, coupled with difficult economic conditions, could lead to increased support for centralized authority and a rise in nationalism. These sentiments could lead to restrictions on foreign ownership of companies in the telecommunications industry or nationalization, expropriation or other seizure of certain assets or businesses. In most of the countries in which we operate, there is relatively little experience in enforcing legislation enacted to protect private property against nationalization or expropriation. As a result, we may not be able to obtain proper redress in the courts, and we may not receive adequate compensation if in the future the governments decide to nationalize or expropriate some or all of our assets. If this occurs, our business could be harmed.

        In addition, ethnic, religious, historical and other divisions have, on occasion, given rise to tensions and, in certain cases, military conflict. The spread of violence, or its intensification, could have significant political consequences, including the imposition of a state of emergency, which could materially adversely affect the investment environment in the countries in which we operate.

The physical infrastructure in many countries in which we operate is in poor condition and further deterioration in the physical infrastructure could harm our business.

        In many countries in which we operate, the physical infrastructure, including transportation networks, power generation and transmission and communications systems, is in poor condition. In some of the countries in which we operate the physical infrastructure has been damaged by military conflict, such as Ukraine. In some of the countries in which we operate, the public switched telephone networks have reached capacity limits and need modernization, such as Russia, which may inconvenience our customers and will require us to make additional capital expenditures. Some of the

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markets in which we operate are vulnerable to extreme weather, the occurrence of which could result in disruptions or damage to our networks.

        In addition, continued growth in local, long distance and international traffic, including that generated by our customers, and development in the types of services provided may require substantial investment in public switched telephone networks. Any efforts to modernize infrastructure may result in increased charges and tariffs, potentially adding costs to our business. The deterioration of the physical infrastructure harms the economies of these countries, disrupts the transportation of goods and supplies, adds costs to doing business and can interrupt business operations. Further deterioration in the physical infrastructure in many of the countries in which we operate could harm our business, financial condition, results of operations, cash flows or prospects.

The banking systems in many countries in which we operate remain underdeveloped, there are a limited number of creditworthy banks in these countries with which we can conduct business and currency control requirements restrict activities in certain markets in which we have operations.

        The banking and other financial systems in many countries in which we operate are not well developed or regulated, and laws relating to banks and bank accounts are subject to varying interpretations and inconsistent applications. Such banking risk cannot be completely eliminated by diversified borrowing and conducting credit analyses. Uncertain banking laws may also limit our ability to attract future investment. A banking crisis in any of these countries affecting the capacity for financial institutions to lend or fulfill their existing obligations or the bankruptcy or insolvency of the banks from which we receive, or with which we hold, our funds could result in the loss of our deposits, the inability to borrow or refinance existing borrowings or otherwise negatively affect our ability to complete banking transactions in these countries, which could harm our business, financial condition and results of operations.

        In addition, central banks and governments in the markets in which we operate may restrict or prevent international transfers or impose foreign exchange controls or other currency restrictions, which could prevent us from making payments, including the repatriation of dividends and payments to third party suppliers, particularly in Uzbekistan, Ukraine, Bangladesh and Pakistan. For more information on currency restrictions, see "Item 5—Operating and Financial Review and Prospects—Factors Affecting Comparability of Financial Position and Results of Operations—Foreign Currency Controls and Currency Restrictions." Furthermore, local banks have limitations on the amounts of loans that they can provide to single borrowers, which could limit the availability of functional currency financing and refinancing of existing borrowings in these countries. There can be no assurance that we will be able to obtain approvals under the foregoing restrictions or limitations, each of which could harm our business, financial condition, cash flows, results of operations and prospects.


Risks Related to the Ownership of our ADSs

Our ADS price may be volatile, and purchasers of ADSs could incur substantial losses.

        Our ADS price may be volatile. The stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, holders of our ADSs may not be able to sell their ADSs at or above the price at which they purchase our ADSs. The market price for our ADSs may be influenced by many factors, including:

    the success of competitive products or technologies;

    the issuance of new shares (including by virtue of the redemption or exchange of the exchangeable bonds issued by Telenor East Holding II AS ("Telenor East")) or the perception that such issuances could occur;

    regulatory developments in the foreign countries where we operate;

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    developments or disputes concerning licenses or other proprietary rights;

    the recruitment or departure of key personnel;

    quarterly or annual variations in our financial results or those of companies that are perceived to be similar to us;

    market conditions in the industries in which we compete and issuance of new or changed securities analysts' reports or recommendations;

    the failure of securities analysts to cover our shares or changes in financial estimates by analysts;

    investor perception of our company and of the industry in which we compete; and

    general economic, political and market conditions.

        Telenor East's issuance of exchangeable bonds, and subsequent exchanges of these exchangeable bonds for VEON Ltd.'s ADSs, as well as our filing of a registration statement registering resale of VEON Ltd.'s ADSs deliverable upon exchange of the exchangeable bonds may negatively affect the market for VEON Ltd.'s ADSs. The sale of any of the VEON Ltd.'s shares on the public markets or the perception that such sales may occur, commonly called "market overhang," may adversely affect the market for, and the market price of, VEON Ltd.'s ADSs.

Various factors may hinder the declaration and payment of dividends.

        The payment of dividends is subject to the discretion of VEON Ltd.'s supervisory board and VEON Ltd.'s assets consist primarily of investments in its operating subsidiaries. For the financial year ended December 31, 2017, we paid a dividend in the aggregate amount of US$28 cents per share, with a record date of March 5, 2018, on March 13, 2018. Various factors may cause the supervisory board to determine not to pay dividends or not to increase dividends from current levels. Such factors include VEON Ltd.'s financial condition, its earnings and equity free cash flow, its leverage, its capital requirements, contractual restrictions, legal proceedings and such other factors as VEON Ltd.'s supervisory board may consider relevant. For more information on our policy regarding dividends, see "Item 8—Financial Information—A. Consolidated Statements and Other Financial Information—Policy on Dividend Distributions," "—Risks Related to Our Business—As a holding company, VEON Ltd. depends on the performance of its subsidiaries and their ability to pay dividends, and may therefore be affected by changes in exchange controls and currency restrictions in the countries in which its subsidiaries operate."

Holders of our ADSs may not receive distributions on our common shares or any value for them if it is illegal or impractical to make them available to them.

        The depositary of our ADSs has agreed to pay holders of our ADSs the cash dividends or other distributions it or the custodian for our ADSs receives on our common shares or other deposited securities after deducting its fees and expenses. Holders of our ADSs will receive these distributions in proportion to the number of our common shares that their ADSs represent. However, the depositary is not responsible for making such payments or distributions if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if such distribution consists of securities that require registration under the Securities Act but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. We have no obligation to take any other action to permit the distribution of our ADSs, common shares, rights or anything else to holders of our ADSs. This means that holders of our ADSs may not receive the distributions we make on our common

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shares or any value for them if it is illegal or impractical for us to make them available. These restrictions may materially reduce the value of the ADSs.

VEON Ltd. is a Bermuda company governed by Bermuda law, which may affect your rights as a shareholder or holder of ADSs.

        VEON Ltd. is a Bermuda exempted company. As a result, the rights of VEON Ltd.'s shareholders are governed by Bermuda law and by VEON Ltd.'s bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. In addition, holders of ADSs do not have the same rights under Bermuda law and VEON Ltd.'s bye-laws as registered holders of VEON Ltd.'s common shares. Substantially all of our assets are located outside the United States. It may be difficult for investors to enforce in the United States judgments obtained in U.S. courts against VEON or its directors and executive officers based on civil liability provisions of the U.S. securities laws. Uncertainty exists as to whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States and the Netherlands, under the securities laws of those jurisdictions, or entertain actions in Bermuda under the securities laws of other jurisdictions.

As a foreign private issuer within the meaning of the Exchange Act and the rules of NASDAQ, we are subject to different U.S. securities laws and NASDAQ governance standards than domestic U.S. issuers. This may afford less protection to holders of our securities, and such holders may not receive corporate and company information and disclosure that they are accustomed to receiving or in a manner in which they are accustomed to receiving it.

        As a foreign private issuer, the rules governing the information that we disclose differ from those governing U.S. corporations pursuant to the Exchange Act. Although we currently report periodic financial results and certain material events, we are not required to file quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosing significant events within four business days of their occurrence. In addition, we are exempt from the SEC's proxy rules, and proxy statements that we distribute will not be subject to review by the SEC. Our exemption from Section 16 rules regarding sales of our shares by insiders means that holders of our securities will have less data in this regard than shareholders of U.S. companies that are subject to this part of the Exchange Act. As a result, holders of our securities may not have all the data that you are accustomed to having when making investment decisions with respect to domestic U.S. public companies.

        Our ADSs are listed on the NASDAQ Global Select Market; however, as a Bermuda company, we are permitted to follow "home country practice" in lieu of certain corporate governance provisions under the NASDAQ listing rules that are applicable to a U.S. company. The primary difference between our corporate governance practices and the NASDAQ rules relates to NASDAQ listing rule 5605(b)(1), which provides that each U.S. company listed on Nasdaq must have a majority of independent directors, as defined in the NASDAQ rules. Bermuda law does not require that we have a majority of independent directors. As a foreign private issuer, we are exempt from complying with this NASDAQ requirement. Accordingly, VEON's shareholders do not have the same protections as are afforded to shareholders of companies that are subject to all of NASDAQ corporate governance requirements. For more information on the significant differences between our corporate governance practices and those followed by U.S. companies under the NASDAQ listing rules, see "Item 16G—Corporate Governance."

Holders of ADSs may be restricted in their ability to exercise voting rights and the information provided with respect to shareholder meetings.

        Holders of ADSs generally have the right under the deposit agreement to instruct the depositary to exercise the voting rights for the equity shares represented by such holder's ADSs. At our request,

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the depositary will mail to holders any notice of shareholders' meeting received from us together with information explaining how to instruct the depositary to exercise the voting rights of the common shares represented by ADSs. If the depositary timely receives voting instructions from a holder of ADSs, it will endeavor to vote the securities represented by the holder's ADSs in accordance with such voting instructions. However, the ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the common shares on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the depositary in a timely manner.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

        We could cease to be a foreign private issuer if a majority of our outstanding voting securities are directly or indirectly held of record by U.S. residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Based on a review of our register of members maintained in Bermuda, as of March 1, 2018, 69.9% of our issued and outstanding common shares were held of record by BNY (Nominees) Limited in the United Kingdom as custodian of The Bank of New York Mellon and 29.1% of our issued and outstanding common shares were held of record by Nederlands Centraal Instituut Voor Giraal Effectenverkeer B.V. and where ING Bank N.V. is acting as custodian of The Bank of New York Mellon, for the purposes of our ADS program. As of March 1, 2018, 22 record holders of VEON Ltd.'s ADRs, holding an aggregate of 498,849,387 common shares (representing approximately 28.4% of VEON Ltd.'s issued and outstanding shares), were listed as having addresses in the United States. The regulatory and compliance costs to us under U.S. securities laws under such event may be significantly higher than costs we incur as a foreign private issuer, which could have a material adverse effect on our business and financial results.

ITEM 4.    INFORMATION ON THE COMPANY

Overview

        VEON is a leading global provider of connectivity and internet services. Present in some of the world's most dynamic markets, VEON provides more than 240 million customers (including the Italy Joint Venture) with voice, fixed broadband, data and digital services. VEON currently offers services to customers in 12 countries: Russia, Italy (through our Italy Joint Venture), Pakistan, Algeria, Uzbekistan, Ukraine, Bangladesh, Kazakhstan, Kyrgyzstan, Tajikistan, Armenia and Georgia. Our business in Laos is currently classified as an asset held for sale. VEON's reporting structure is divided into three business units—Major markets (Russia and the Italy Joint Venture), Emerging Markets (Pakistan, Algeria and Bangladesh) and Eurasia (Ukraine, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, Armenia and Georgia). We provide services under the "Beeline," "Kyivstar," "banglalink," "Jazz" and "Djezzy" brands. As of December 31, 2017, we had 39,938 employees. For a breakdown of total revenue by category of activity and geographic segments for each of the last three financial years, see "Item 5—Operating and Financial Review and Prospects." In addition, the Italy Joint Venture provides services to customers in Italy under the "WIND" and "3" brands and had 29.5 million customers and 7,090 employees as of December 31, 2017.

        In 2017, we rebranded from VimpelCom to VEON, and launched the VEON platform in Russia, Ukraine, Georgia and Pakistan, after launching in Italy in 2016, to reflect our strategy to move from being solely a telecommunications company to a company leveraging new technology platforms with an asset-light business model. Technology is continuing to revolutionize the way users communicate, travel, bank, shop, consume and are entertained. We are focused on digitalizing our core telecommunications business model to ensure that our customers can transact with us online on all dimensions, with the aim of ultimately leading to increased customer satisfaction and a potentially lower cost structure for our business. Furthermore, our new VEON platform leverages the re-engineering of our legacy systems

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and data architecture, and enables us to offer new, personalized and contextual services. In 2018, we are prioritizing two strategic objectives within the organization: developing new digital services, including what we believe to be an industry-first BSS transformation, an integrated messaging and marketplace platform, and digitalizing the customer experience in our core telecommunications business.

        As part of this initiative, we are working through all layers of our technology landscape to deploy a fully digital end-to-end solution to benefit our customers. The new digital IT stack and data management platform are becoming the core of our IT, while we believe our network is becoming increasingly more virtualized, software defined, intelligent and dynamic. We are continuously future proofing our networks to prepare them for data growth and for new technologies, such as 5G. In addition, we have launched a significant re-engineering of our internal administrative systems and back-office processes in order to make our operations more agile and transparent.

        The VEON platform is about bringing together messaging services, content and a marketplace to provide a new personal internet platform particularly in emerging markets. With zero-rating as a fundamental component, VEON users will be able to use the VEON platform to stay connected for free, even when their data plans are out of credit. We work with partners from the music, transport, banking, e-commerce and other businesses, all of which are integrated into a single personalized internet platform. We believe that these revenue-share relationships, particularly those with local businesses in each of the countries in which we operate, will help grow business in those regions.

        As part of our initiative to digitalize the core telecommunications business, we intend to continue focusing on increasing our capital investment efficiency, including with respect to our IT, network, and distribution costs. We have secured network sharing agreements and intend to maintain our focus on achieving an asset-light business model, where we own only the core assets needed to operate our business.

        We anticipate combined operational expenditure and capital expenditure of approximately US$100 million per annum over the next four years as part of the rollout of the VEON platform. For further information on our capital expenditures, see "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Future Liquidity and Capital Requirements." We anticipate that we will finance the investments (or the VEON platform) with operational cash flow, cash on our balance sheet and external financing that we currently have in place.

        VEON Ltd. is an exempted company limited by shares registered under the Companies Act 1981 of Bermuda, as amended (the "Companies Act"), on June 5, 2009, and our registered office is located at Victoria Place, 31 Victoria Street, Hamilton HM 10, Bermuda. Our headquarters are located at Claude Debussylaan 88, 1082 MD, Amsterdam, the Netherlands. Our telephone number is +31 20 797 7200. VEON Ltd. is registered with the Dutch Trade Register (registration number 34374835) as a company formally registered abroad (formeel buitenlandse kapitaalvennootschap), as this term is referred to in the Dutch Companies Formally Registered Abroad Act (Wet op de formeel buitenlandse vennootschappen), which means that we are deemed a Dutch resident company for tax purposes in accordance with applicable Dutch tax regulations.

        Our legal representative in the United States is Puglisi & Associates, 850 Library Ave, Suite 204, Newark, DE 19711 (+1 (30) 738 6680). Our agent for service of process in the United States is CT Corporation, 11 Eighth Avenue, New York, NY 10011 (+1 (212) 894 8400).

History

        Our predecessor PJSC VimpelCom (formerly OJSC "Vimpel-Communications") was founded in 1992. In November 1996, PJSC VimpelCom became the first Russian company since 1903 to list shares on the New York Stock Exchange, where we remained listed until 2013 when we switched our listing to

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the NASDAQ Global Select Market. In the early 2000s, we began our expansion into the CIS by acquiring local operators or entering into joint ventures with local partners in Kazakhstan (2004), Ukraine (2005), Tajikistan (2005), Uzbekistan (2006), Georgia (2006) and Armenia (2006). In 2009 and 2010, PJSC VimpelCom and Ukrainian mobile operator, Kyivstar, combined to create a new company, VimpelCom Ltd, and established its headquarters in Amsterdam.

        More recently, our expansion efforts have included transactions involving operations outside of CIS. In 2011, we completed the acquisition of Wind Telecom S.p.A., an international provider of mobile and fixed-line telecommunications and internet services with operations in a number of countries including Italy, Algeria, Bangladesh and Pakistan. On July 1, 2016, Pakistan Mobile Communications Limited ("PMCL") merged with Warid Telecom Pakistan LLC ("Warid"), which resulted in the merger of our telecommunications businesses in Pakistan (a transaction we refer to as the "Pakistan Merger" in this Annual Report on Form 20-F). On November 5, 2016, we formed the Italy Joint Venture with Hutchison, through which we jointly own and operate our Historical WIND Business and H3G S.p.A. in Italy. See "Explanatory Note—Presentation of Financial Information of the Italy Joint Venture" and Notes 5, 14 and 25 to our audited consolidated financial statements).

        On February 27, 2017, we announced our new name "VEON," which was approved by our shareholders on March 30, 2017. On April 4, 2017, VEON began trading on Euronext Amsterdam.

Recent Developments

VEON and MegaFon agree to end Euroset joint venture in Russia

        In July 2017, PJSC VimpelCom, a subsidiary of VEON Ltd., and MegaFon entered into an agreement ending their retail joint venture, Euroset. The transaction closed on February 22, 2018. Under the agreement, MegaFon acquired PJSC VimpelCom's 50% interest in Euroset and PJSC VimpelCom agreed to pay RUB 1.2 billion (US$21 million as of December 31, 2017), subject to certain adjustments, and has acquired rights to 50% of Euroset's approximately 4,000 retail stores in Russia. As a result of the transaction, PJSC VimpelCom has fully disposed of its interest in Euroset with all of its rights and obligations.

VEON Holdings B.V. submits cash tender offer in relation to GTH

        On November 8, 2017, VEON submitted an application to the Egyptian Financial Regulatory Authority ("FRA") to approve an MTO by VEON Holdings B.V. for any and all of the outstanding shares of GTH which are not owned by VEON (up to 1,997,639,608 shares, representing 42.31% of GTH's total shares). The MTO follows a share buyback in February 2017 that resulted in VEON's interest in GTH increasing from 51.92% to 57.69%. The MTO will be funded by cash on hand and/or the utilization of undrawn credit facilities. The proposed offer price under the MTO is EGP 7.90 per share. Any increase of VEON's interest in GTH will be accounted for directly in equity upon closing of the transaction. The MTO remains subject to approval by the FRA. VEON has been in discussions with the authorities to resolve alleged, and disputed, technical disclosure breaches of the MTO rules by certain GTH shareholders (for which the failure to reach resolution could result in the initiation of criminal proceedings). Progress on this matter (including the potential for resolution) and the approval of the MTO have been held up by the authorities apparently in connection with unrelated historic GTH tax assessments. In addition, recently VEON has become aware that GTH has been named as a defendant in a case before the Cairo Economic Court filed in January 2018 by certain shareholders of GTH. This action seeks a court order against the FRA to suspend the MTO, to have the court appoint an expert to conduct an appraisal of the GTH share price proposed in the MTO, and directing the FRA to reject the MTO. The Cairo Economic Court dismissed the claim in February 2018 for lack of subject-matter jurisdiction. This decision is scheduled to be heard on appeal in April 2018 by the

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Summary Circuit Court of Appeals. We are considering all options and there can be no assurance that the MTO will proceed.

VEON and GTH sell their Pakistan tower business for US$940 million

        On August 30, 2017, VEON and GTH announced that their subsidiary in Pakistan, Jazz, signed an agreement for the sale of its tower business, with a portfolio of approximately 13,000 telecommunications towers, for approximately US$940 million, subject to certain adjustments, to Tanzanite Tower Private Limited, a tower operating company owned by edotco Group Sdn. Bhd. and Dawood Hercules Corporation. The completion of the transaction is subject to the satisfaction or waiver of certain conditions including receipt of customary regulatory approvals.

Spectrum reallocation in Uzbekistan

        On March 31, 2017, the Republican Radiofrequencies Council in Uzbekistan published a decision ordering the equitable reallocation amongst all telecommunications providers in the market, which will affect approximately half of the 900 MHz and 1800 MHz radio frequencies of our Uzbek subsidiary, Unitel LLC. The decision is expected to come into force on March 31, 2018, and, currently, we do not expect the reallocation to have a material impact on our business. The decision also grants tech neutrality in the 900 and 1800 MHz bands.

Liberalization of currency exchange rules in Uzbekistan

        In September 2017, the government of Uzbekistan announced the liberalization of its currency exchange rules and the resetting of the official exchange rate at 8,100 Uzbek som per U.S. dollar, which represented nearly a halving of the value of the Uzbek som to the U.S. dollar. On December 22, 2017, VEON announced that its subsidiary, PJSC VimpelCom, had successfully repatriated a net amount of approximately US$200 million from Unitel. The currency conversion to US$200 million resulted in a foreign currency exchange loss of approximately US$49 million. In addition, the Uzbek som results of Unitel are now being translated into U.S. dollars at a higher exchange rate.

4G/LTE licenses secured in Ukraine and Bangladesh

        Kyivstar secured 4G/LTE licenses and spectrum in two separate transactions in 2018. Following the auction held on January 31, 2018, Kyivstar acquired 15 MHz (paired) of contiguous frequency in the 2600 MHz band for UAH 0.9 billion (US$32 million as of December 31, 2017). In addition, on March 6, 2018, Kyivstar secured the following spectrum through auction in the 1800MHz band: 25MHz (paired) for UAH 1.325 billion (US$47 million as of December 31, 2017) and two lots of 5MHz (paired) for UAH 1.512 billion (US$54 million as of December 31, 2017).

        On February 13, 2018, Banglalink acquired a 4G/LTE license, allowing the company to launch a high-speed data network. In parallel, Banglalink also acquired 5.6 MHz paired spectrum in the 1800 MHz band and 5 MHz paired spectrum in the 2100 MHz band. The spectrum is technology neutral and allows Banglalink to double its 3G network capacity. Banglalink purchased the spectrum for US$308.6 million, excluding VAT, with an upfront payment of 60% payable in 30 days and the remaining 40% payable over four years. In addition, the company paid US$35 million, excluding VAT, to convert its existing spectrum holding in 900 MHz and 1800 MHz into technology neutral spectrum and US$1.2 million, excluding VAT, to acquire the 4G/LTE license. The investment is expected to be funded through locally available cash and local banking facilities.

VEON to sell Laos operations

        On October 27, 2017, VimpelCom Holding Laos B.V. ("VimpelCom Laos"), a subsidiary of the company, entered into a sale and purchase agreement for the sale of its operations in Laos to the Lao

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People's Democratic Republic ("Government of Laos"). Under the agreement, VimpelCom Laos will transfer its 78% interest in VimpelCom Lao Co. Limited to the Government of Laos, the minority shareholder, in exchange for purchase consideration of US$22 million. The transaction is subject to customary closing conditions and is expected to be completed in the first half of 2018.

Leadership changes

        We have made changes in our management and board composition to focus on significant experience and expertise in compliance, transformation and digital. During 2017 and 2018, as of the date of this Annual Report on Form 20-F, new appointments have included Trond Westlie as Group Chief Financial Officer, Ursula Burns as Chairman of the Supervisory Board, Guy Laurence as director of the Supervisory Board, Jacky Simmonds as Group Chief People Officer and Alexander Pertsovsky as an alternate director for Alexey Reznikovich. The following people also transitioned to new roles from existing positions within VEON: Joshua Drew as Group Chief Compliance Officer; Jeffrey Hedberg as Chief Executive Officer of Italy; and Vasyl Latsanych as Chief Executive Officer of Russia. In addition, on February 15, 2018, Aamir Hafeez Ibrahim, Chief Executive Officer of Pakistan, and Peter Chernyshov, Chief Executive Officer of Ukraine, will now also serve as Head of Emerging Markets and Head of Eurasia, respectively. For more information on our directors and senior management, see "Item 6—Directors, Senior Management and Employees—A. Directors and Senior Management" below.

Business Units and Reportable Segments

        VEON Ltd. is the holding company for a number of operating subsidiaries and holding companies in various jurisdictions. In the third quarter of 2015, we adopted a new regional structure, consisting of the three following business units, all of which report to our headquarters in Amsterdam: Major Markets (which includes our operations in Russia and the Italy Joint Venture); Emerging Markets (which includes our operations in Pakistan, Algeria, Bangladesh and Laos); and Eurasia (which includes our operations in Ukraine, Kazakhstan, Uzbekistan, Kyrgyzstan, Armenia, Tajikistan and Georgia).

        Notwithstanding our new regional structure described above, we currently operate and manage VEON on a geographical basis. In accordance with IFRS rules, this results in eight reportable segments. These segments are based on the different economic environments and varied stages of development across the geographical markets we serve, each of which requires different investment and marketing strategies. Our reportable segments currently consist of the following eight segments: Russia; the Italy Joint Venture; Pakistan; Algeria; Bangladesh; Ukraine; Uzbekistan; and HQ (transactions related to management activities within the group in Amsterdam and London). As of January 1, 2017, management has included the Italy Joint Venture as a reportable segment due to its increased contribution to our overall financial results and position. "Others" represents our operations in Kazakhstan, Kyrgyzstan, Armenia, Tajikistan, Georgia and Laos as well as intercompany eliminations and costs relating to centrally managed operations monitored outside of VEON's headquarters. For more information on our reportable segments, see "Item 5—Operating and Financial Review and Prospects—Reportable Segments" and Notes 7 and 14 to our audited consolidated financial statements.

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Subsidiaries

        The table below sets forth our significant subsidiaries, and our percentage ownership interest, direct and indirect, in each subsidiary as of December 31, 2017. Unless otherwise indicated, our percentage ownership interest is identical to our voting power in each of the subsidiaries.

Subsidiary*
  Country of
Incorporation
  Percentage
Ownership
Interest
(Direct and
Indirect)
 

VEON Amsterdam B.V. 

  Netherlands     100 %

VEON Holdings B.V. 

  Netherlands     100 %(1)

VEON Digital Amsterdam B.V. 

  Netherlands     100 %(1)

PJSC "Vimpel-Communications"*

  Russia     100 %(2)

Golden Telecom, Inc. 

  USA     100 %(3)

"Kyivstar" JSC*

  Ukraine     100 %(4)

VEON Eurasia S.à r.l. 

  Luxembourg     100 %(5)

VIP Kazakhstan Holding AG

  Switzerland     75.0 %(6)

LLP "KaR-Tel"*

  Kazakhstan     75.0 %(7)

VimpelCom (BVI) AG

  Switzerland     100 %(8)

LLC "Tacom"*

  Tajikistan     98.0 %(9)

Freevale Enterprises Inc. 

  British Virgin Islands     100 %(10)

Silkway Holding B.V. 

  Netherlands     100 %(11)

LLC "Unitel"*

  Uzbekistan     100 %(12)

CJSC "VEON Armenia"*

  Armenia     100 %(13)

VEON Luxembourg Holdings S.à r.l. 

  Luxembourg     100 %(14)

VEON Luxembourg Finance Holdings S.à r.l. 

  Luxembourg     100 %(15)

VEON Luxembourg Finance S.A. 

  Luxembourg     100 %(16)

Global Telecom Holding S.A.E. 

  Egypt     57.7 %(17)

Oratel International Inc. Limited

  Malta     57.7 %(18)

Moga Holding Limited

  Malta     57.7 %(19)

Omnium Telecom Algérie S.p.A. 

  Algeria     26.3 %(20)

Optimum Telecom Algérie S.p.A.*

  Algeria     26.3 %(21)

International Wireless Communications Pakistan Limited

  Malta     57.7 %(22)

Telecom Management Group Limited

  Malta     57.7 %(23)

Pakistan Mobile Communications Limited*

  Pakistan     49.0 %(24)

Telecom Ventures Limited

  Malta     57.7 %(25)

Banglalink Digital Communications Limited*

  Bangladesh     57.7 %(26)

Wind Tre Italia S.p.A. 

  Italy     50.0 %(27)

Wind Tre S.p.A.*

  Italy     50.0 %(28)

*
Denotes operating company.
(1)
VEON Amsterdam B.V. holds 100% directly.
(2)
VEON Holdings B.V. holds 100% minus one share directly. VEON Ltd. holds one share directly.
(3)
PJSC VimpelCom holds 100% directly and indirectly through a wholly owned Cypriot holding company.
(4)
VEON Ltd. holds 0.01% directly and VEON Holdings B.V. holds 73.80% directly. "Kyivstar" JSC holds 26.19% of its own shares.
(5)
PJSC VimpelCom holds 100% directly.
(6)
VEON Eurasia S.à r.l. holds 75.0% directly.
(7)
VIP Kazakhstan Holding AG holds 100% directly.
(8)
VEON Holdings B.V. holds 100% directly.
(9)
VimpelCom (BVI) AG holds 98.0% directly.
(10)
PJSC VimpelCom holds 100% directly.
(11)
PJSC VimpelCom holds 100% directly.

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(12)
Freevale Enterprises Inc. holds 21% directly and Silkway Holding B.V. holds 79% directly.
(13)
PJSC VimpelCom owns 100% directly.
(14)
VEON Holdings B.V. owns 100% directly.
(15)
VEON Luxembourg Holdings S.à r.l. holds 100% directly.
(16)
VEON Luxembourg Finance Holdings S.à r.l. holds 100% directly.
(17)
VEON Luxembourg Finance Holdings S.à r.l. holds 2.13% directly and VEON Luxembourg Finance S.A. holds 55.56% directly.
(18)
Global Telecom Holding S.A.E. owns 100% directly and indirectly through three Maltese holding companies and a Luxembourg holding company.
(19)
Global Telecom Holding S.A.E. owns 100% directly and indirectly through three Maltese holding company and a Luxembourg holding company.
(20)
Global Telecom Holding S.A.E. holds a controlling interest of 45.57% directly and indirectly through Oratel International Inc. Limited and Moga Holding Limited. The Algerian National Investment Fund, Fonds National d'Investissement, holds 51% directly in Omnium Telecom Algérie S.p.A. and a local minority shareholder named Cevital S.p.A. holds directly the remaining 3.43%.
(21)
Omnium Telecom Algeria S.p.A. holds 99.99% directly.
(22)
Global Telecom Holding S.A.E. holds 100% directly and indirectly through three Maltese holding company and a Luxembourg holding company.
(23)
Global Telecom Holding S.A.E. holds 100% directly and indirectly through four Maltese holding company and a Luxembourg holding company.
(24)
Global Telecom Holding S.A.E. holds 85% of PMCL indirectly through two wholly owned Maltese subsidiaries and a nominee shareholder.
(25)
Global Telecom Holding S.A.E. holds 100% directly and indirectly through three Maltese holding company and a Luxembourg holding company.
(26)
Telecom Ventures Limited holds 99.99% directly.
(27)
VEON Holdings B.V. owns 50.0% indirectly through two Luxembourg holding companies.
(28)
Wind Tre Italia S.p.A. holds 100% directly.

Corporate Governance

        VEON Ltd. is governed by a supervisory board, which generally delegates management of the company to the management board. For more information, see "Item 6—Directors, Senior Management and Employees—C. Board Practices."

Description of Our Mobile Telecommunications Business

        VEON, through its operating companies, provides customers with mobile and fixed-line telecommunications services in certain markets, which are described more fully below.

        The table below presents the primary mobile telecommunications services we offer to our customers and a breakdown of prepaid and postpaid subscriptions as of December 31, 2017.

Mobile Service Description
  Russia   Pakistan   Algeria   Bangladesh   Ukraine   Uzbekistan   Others  

Value added and call completion services(1)

    Yes     Yes     Yes     Yes     Yes     Yes     Yes (3)

National and international roaming services(2)

    Yes     Yes     Yes     Yes     Yes     Yes     Yes (3)

Wireless Internet access

    Yes     Yes     Yes     Yes     Yes     Yes     Yes (3)

Mobile financial services

    Yes     Yes     Yes     Yes     Yes     Yes     No  

Mobile bundles

    Yes     Yes     No     Yes     Yes     Yes     Yes (3)

(1)
Value added services include messaging services, content/infotainment services, data access services, location based services, media, and content delivery channels.

(2)
Access to both national and international roaming services allows our customers and customers of other mobile operators to receive and make international, local and long distance calls while outside of their home network.

(3)
For a breakdown of prepaid and postpaid subscriptions and a description of the mobile services we offer in Kazakhstan, Kyrgyzstan, Armenia, Tajikistan, Laos and Georgia, see "—Mobile Business in Others."

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Mobile Business in Russia

        In Russia, through our operating company PJSC VimpelCom and our "Beeline" brand, we primarily offer mobile telecommunications services to our customers under two types of payment plans: postpaid plans and prepaid plans. As of December 31, 2017, approximately 88.6% of our customers in Russia were on prepaid plans, representing 79.4% of our revenue in Russia, and approximately 11.4% of our customers in Russia were on postpaid plans, representing 20.6% of our revenue in Russia.

        The table below presents the primary mobile telecommunications services we offer in Russia.

    Service       Description    
    Voice       Includes airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad.    
    Internet and data access       Access is offered through GPRS/EDGE, 3G/HSPA and 4G/LTE and special wireless "Plug&Play" USB modems.    
    Roaming       As of December 31, 2017, we had active roaming agreements with 612 GSM networks in 215 countries. Additionally, we provided GPRS roaming with 515 networks in 187 countries and 4G/LTE roaming with 198 networks in 103 countries.    

 

 

 

 

 

 

Roaming agreements generally state that the host operator bills PJSC VimpelCom, which PJSC VimpelCom pays, and then PJSC VimpelCom subsequently bills customers for the roaming services on the customer's monthly bill.

 

 
    VAS       Caller-ID, voicemail, call forwarding, conference calling, call blocking and call waiting.    
    Messaging       SMS (consumer and corporate), MMS and voice messaging (which allows customers to send pictures, audio and video to mobile phones and to e-mails), and mobile instant messaging.    
    Content/infotainment       Voice services (including referral services); content downloadable to telephone (including music, pictures, games and video); RBT; mobile cloud solutions; geo-positioning and compass service for fleet and assets management; and M2M control center solution for all M2M/IoT verticals.    
    Mobile financial services       Mobile payment, banking card, trusted payment, banks notification and mobile insurance.    

Mobile bundles

        Tiered data-plans provide smartphone customers with data, voice and SMS packages. In 2017, we focused on a new simplified tariff portfolio with competitive prices in combination with transparent services. We provide a Shared Everything Bundle Service, offering the option of multiple SIM cards for one account, and an "all in one" FMC proposal for B2C prepaid customers, combining FTTB internet, IPTV and mobile services into one bundle. Beeline Business offers FMC services to corporate clients providing use of their mobile phone as an extension of their PBX. We provide these services throughout Russia. In addition, in 2017, we launched a new line of bundle price plans, which combines voice, data and SMS services, and provided free inbound calls to customers of new line bundles (being

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those customers who migrated to the new bundle price plan) throughout PJSC VimpelCom's network, with outbound calls being charged in the same way as the home region.

VEON platform

        The VEON platform, launched in Russia in 2017, offers Beeline customers the ability to communicate for free, even when out of credit, and provides third party products, offers, services and content.

Distribution

        Our primary sales channels in Russia consist of monobrand, multibrand and national partners. Monobrand channels constituted 25.9% of the channel mix as of December 31, 2017. The number of owned retail monobrand stores was 1,605 as of December 31, 2017, as compared to 1,499 owned retail monobrand stores as of December 31, 2016. As of December 31, 2017, the number of franchise stores was 2,084, compared to 2,041 as of December 31, 2016. As of December 31, 2017, we had 142 "Know How" stores, compared to 144 "Know How" stores as of December 31, 2016.

        In 2017, we increased the number of regional dealers and alternative retail. We also continue to cooperate with Svyaznoy, a national mobile retailer, focused on the distribution of complex products, such as tariff packages and fixed and mobile convergence. Sales of bundle price plans increased for B2C sales by 23%, reaching 82% in the sales mix.

        In 2017, we significantly increased the availability of call center live agents to our clients. Several incentives were taken to transfer requests of our customers from traditional voice channels to digitalized text and self-service channels. Our mobile self-service application for iOS and Android has been downloaded over 9.6 million times in 2017, and the monthly active base reached over 3.9 million active customers per month, as of December 31, 2017. The launch in March 2017 of ChatBot, a software robot that converses in natural language, provides necessary information and answers clients' questions like a call center operator in our mobile application and website, and helped us to reduce overall text channel load by more than two times as of December 31, 2017. The Beeline brand continued to enhance customer service to improve its net promoter score and to reduce its contact rate, an indicator that correlates contact numbers and customer base size.

        In July 2017, PJSC VimpelCom, a subsidiary of VEON Ltd., and MegaFon entered into an agreement ending their retail joint venture, Euroset. The transaction closed on February 22, 2018. See "Item 7—Major Shareholders and Related Party Transactions—B. Related Party Transactions—Joint Ventures and Associates—Euroset."

Competition

        The following table shows our and our primary mobile competitors' respective customer numbers in Russia as of December 31, 2017:

Operator
  Customers
(in millions)
 

MTS

    77.7  

MegaFon

    75.8  

PJSC VimpelCom

    58.2  

Tele2

    40.6  

Source: Analysys Mason.

        According to Analysys Mason, there were approximately 254.3 million mobile customers in Russia as of December 31, 2017, compared to 255.6 million mobile customers as of December 31, 2016,

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representing a mobile penetration rate of approximately 173.8% as of December 31, 2017, compared to a mobile penetration rate of approximately 174.5% as of December 31, 2016.

Mobile Business in Pakistan

        Pakistan is mainly a 2G market; however, 3G is growing following its launch in 2014, as well as 4G following its launch in 2017. We operate in Pakistan through our operating company, PMCL and our brand, "Jazz," which is the historic Mobilink brand together with the merged Warid brand. In 2017, PMCL launched 3G services in over 300 towns and cities and 4G/LTE services in 40 cities.

        In Pakistan, we offer our customers mobile telecommunications services under postpaid and prepaid plans. As of December 31, 2017, approximately 96.9% of our customers in Pakistan were on prepaid plans and approximately 3.1% of our customers in Pakistan were on postpaid plans.

        The table below presents the primary mobile telecommunications services we offer in Pakistan.

    Service       Description    
    Voice       Includes airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad.    
    Internet and data access       On GPRS, EDGE, 3G and 4G/LTE.    
    Roaming       In Pakistan, as of December 31, 2017, we had active roaming agreements with 282 GSM networks in 155 countries. Additionally, we provided GPRS roaming with 221 networks in 131 countries and CAMEL roaming through 122 networks in 77 countries.    

 

 

 

 

 

 

Generally, each agreement with roaming partners provides that the operator hosting the roaming call sends us a bill for the roaming services used by our customer while on the host's network. We pay the host operator for the roaming services and bill the amount due for the provision of roaming services on our customer's monthly bill.

 

 
    VAS       Caller-ID, voicemail, call forwarding, conference calling, call blocking and call waiting.    
    Messaging       SMS, MMS (which allows customers to send pictures, audio and video to mobile phones and to e-mail), and mobile instant messaging.    
    Content/infotainment       Music; live audio streaming; infotainment services for religious, sports, comedy, quotes, news, weather and other content; RBT and IVR Chat.    
    Mobile financial services       Mobile payment, banking card, trusted payment, banks notification and mobile insurance.    

Mobile bundles

        We offer bundled offers on 4G/LTE, 3G and 2G networks. We continue to focus on a technology agnostic mobile internet portfolio. Apart from pure internet bundles, we also provide hybrid bundles, which include voice and SMS and can be individually created according to customer needs.

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VEON platform

        The VEON platform, launched in Pakistan in 2017, offers Jazz customers the ability to communicate for free, even when out of credit, and provides third party products, offers, services and content.

Distribution

        In Pakistan, we offer a portfolio of tariffs and products designed to cater to the needs of specific market segments, including mass-market customers, youth customers, personal contract customers, SOHOs (with one to five employees), SMEs (with six to 50 employees) and enterprises (with more than 50 employees). We offer corporate customers several postpaid plan bundles, which include on-net minutes, variable discounts for closed user groups and follow-up minutes based on bundle commitment. As of December 31, 2017, our sales channels in Pakistan included one company store, 24 business centers, a direct sales force of 870 employees, 406 exclusive franchise stores, and over 220,000 non-exclusive third party retailers. For top-up, we offer prepaid scratch cards and electronic recharge options, which are distributed through the same channels. Jazz brand SIMs are sold through more than 36,000 retailers, supported by biometric verification devices.

Biometric verification

        Following various terrorist attacks, the Government of Pakistan introduced Standard Operating Procedures in 2015 requiring all mobile operators to re-verify their entire customer base through biometric verification, with the exception of SIM cards issued in the names of companies for use by employees. For PMCL, this involved the re-verification of more than 38 million SIM cards, and SIM cards that could not be verified had to be blocked by the operators. As a result of the re-verification, the Mobilink brand (now Jazz) lost customers, retaining 88% of its customer base.

Competition

        The following table shows our and our competitors' respective customer numbers in Pakistan as of December 31, 2017:

Operator
  Customers in
Pakistan
(in millions)
 

PMCL ("Jazz")

    53.6  

Telenor Pakistan

    41.7  

Zong

    30.2  

Ufone

    19.0  

Source: The Pakistan Telecommunications Authority for all companies except PMCL.

        According to the PTA, there were approximately 144.5 million mobile customers in Pakistan as of December 31, 2017, compared to 133.2 million mobile customers as of December 31, 2016, representing a mobile penetration rate of approximately 70.8% (Analysys Mason), an increase from 68.6% (Analysys Mason) as of December 31, 2016.

Mobile Business in Algeria

        The mobile industry in Algeria has grown rapidly over the past ten years as a result of increased demand by individuals and newly-created private businesses and the expansion of the Algerian economy. Innovative services and declining tariffs have made mobile services more appealing to the mass-market customer segment, while advertising, marketing and distribution activities, as well as

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improved service quality and coverage, have led to increased public awareness of, and access to, the mobile telecommunications market.

        We operate in Algeria through our operating company, Optimum, and our brand, "Djezzy." In October 2016, Optimum launched 4G/LTE services in Algeria and, by the end of 2017, had expanded these services to 28 provinces (out of 48 wilayas (provinces)) across the country, including Algiers, and the largest provinces in terms of population. In Algeria, we generally offer our customers mobile telecommunications services under prepaid and postpaid plans. As of December 31, 2017, prepaid, postpaid and hybrid (a monthly fee with recharge possibility) customers represented approximately 93%, 2% and 5%, respectively, of our customers in Algeria.

        Omnium Telecom Algérie S.p.A. ("OTA") is owned 45.57% by our subsidiary, GTH. The Algerian National Investment Fund holds 51% directly in OTA and a local minority shareholder, Cevital S.p.A., holds directly the remaining 3.43%. The establishment of this partnership in January 2015 strengthened OTA's position and prospects, with greater opportunities for our operations in Algeria. VEON Ltd. will continue to exercise operational control over OTA and, as a result, will continue to fully consolidate OTA, which holds 99.99% of Optimum. During the course of 2015, the operating company in Algeria changed from OTA to Optimum. Historical references to our operating company in Algeria have therefore been retained as OTA throughout this Annual Report on Form 20-F.

        The table below presents the primary mobile telecommunications services we offer in Algeria.

 
   
   
   
   
 
  Service
   
  Description
   
    Voice       Includes airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad.    
    Internet and data access       Provided through GPRS, EDGE, 3G and 4G/LTE technology. Customers can use data services both as pay-per-use and through a bundle.    
    Roaming       As of December 31, 2017, we had active roaming agreements with 454 GSM networks in 158 countries. Additionally, we provided GPRS roaming with 302 networks in 93 countries, 3G roaming with 236 networks in 147 countries and 4G/LTE roaming with 39 networks in 26 countries.    

 

 

 

 

 

 

Roaming agreements generally state that the host operator bills OTA, which OTA pays, and then OTA subsequently bills customers for the roaming services on the customer's bill.

 

 
    VAS       Caller-ID, call forwarding, conference calling, call blocking, and call waiting.    
    Messaging       SMS, MMS (which allows customers to send pictures, audio and video to mobile phones and to e-mail), and mobile instant messaging.    
    Content/infotainment       Sports related services, religious content, taxi applications, RBT and e-learning for customers.    
    Mobile financial services       Peer-to-peer credit transfer and credit loan.    

Distribution

        We sell our mobile telecommunications services through indirect channels (distributors) and through our Djezzy branded shops, totalling 71,735 own Djezzy shops and indirect points of sale as of December 31, 2017, of which 146 were monobrand own shops rented, equipped, staffed and managed

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by Optimum, including 146 shops equipped with IT material and sales applications. Our seven exclusive national distributors cover all 48 wilayas (provinces) of Algeria and are distributing our products through over 71,589 points of sale, of which 62,116 are authorized to sell airtime and 12,473 of which are authorized to sell SIMs. As of December 31, 2017, we also had a pool of more than 140 agents in call centers, who focus on customer care, including retention, troubleshooting and handling of complaints. This pool of agents combines a series of insourced and outsourced agents that are directly managed by Optimum in three languages (Arabic, French and Amazigh). We provide customer support for the Djezzy brand through our call centers, which are open 24 hours a day and seven days a week. During 2017, Optimum continued to enhance the quality of its customer service by auditing and addressing agent performance in several major cities, including Algiers, Oran, Constantine and Annaba.

Competition

        Growth in Algeria's mobile market is expected to slow, and attention is expected to shift to maintaining or improving ARPU, supported by data revenue growth after the commercial launch of 4G/LTE networks.

        The following table shows our and our competitors' respective customer numbers in Algeria as of December 31, 2017:

Operator
  Customers in
Algeria
(in millions)
 

Mobilis

    20.0  

Optimum ("Djezzy")

    15.0  

Ooredoo

    14.3  

Source: Analysys Mason.

        According to Analysys Mason, there were approximately 49.3 million mobile customers in Algeria as of December 31, 2017, compared to 47.4 million mobile customers as of December 31, 2016, representing a mobile penetration rate of approximately 116.9%, an increase from 114.8% as of December 31, 2016.

Mobile Business in Bangladesh

        We operate through our operating company, Banglalink Digital Communications Limited ("BDCL") and our brand "banglalink" in Bangladesh. Following the launch of 3G services in Bangladesh in October 2013, the number of 3G customers has grown rapidly and in 2017, it surpassed the 2G customer count. On February 13, 2018, BDCL acquired a 4G/LTE license for US$1.2 million in order to launch a high-speed data network. The rollout of the 4G/LTE network is expected to increase ARPU as the use of the internet grows, with improving data speed presenting a significant opportunity for mobile operators in Bangladesh to increase their market shares in significant urban centers.

        The telecommunications market in Bangladesh is largely comprised of prepaid customers. As of December 31, 2017, approximately 93% of our customers in Bangladesh were on prepaid plans and approximately 7% were on postpaid plans.

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        The table below presents the primary mobile telecommunications services we offer in Bangladesh.

 
   
   
   
   
 
  Service
   
  Description
   
    Voice       Includes airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad.    
    Internet and data access       Provided through GPRS, EDGE and 3G technology. Customers can use data services both as pay-per-use and through a bundle.    
    Roaming       As of December 31, 2017, BDCL had active roaming agreements with 455 GSM networks in 165 countries and provided GPRS roaming with 350 networks in 121 countries, in addition to maritime roaming and in-flight roaming with Emirates Airlines and Malaysian Airlines. Generally, each agreement with roaming partners provides that the operator hosting the roaming call sends us a bill for the roaming services used by our customer while on the host's network. We pay the host operator for the roaming services and bill the amount due for the provision of roaming services on our customer's monthly bill.    
    VAS       Call forwarding, conference calling, call blocking, call waiting, caller line identification presentation, call me back and voicemail missed call alert.    
    Messaging       SMS, MMS (which allows customers to send pictures, audio and video to mobile phones and to e-mail) and mobile instant messaging.    
    Content/infotainment       News alert service, sports related content, job alerts, music streaming, mobile TV, content download, religious content, RBT and agricultural helpline.    
    Mobile financial services       Provides convenient financial services like mobile-based utility bill payments, train ticketing, international remittance disbursements. Also, we partner with leading mobile financial service operators through providing Unstructured Supplementary Service Data, SMS and distribution network to Bangladesh Post Office for their mobile money order service.    

Distribution

        As of December 31, 2017, our sales and distribution channels in Bangladesh included 105 monobrand stores, a direct sales force of 61 enterprise sales managers and 121 zonal sales managers for mass market retail sales channels, 46,971 retail SIM outlets, 249,432 top-up selling outlets, online sales channels, and 1,915 banglalink brand service points. BDCL provides a top-up service through mobile financial services, ATMs, recharge kiosks, international top-up services, SMS top-up and Banglalink online recharge. The banglalink brand provides customer support through its contact center, which is open 24 hours a day and seven days a week. The contact center caters to a number of after-sales services to all customer segments with a special focus on a "self-care" app to empower customers and avoid customer reliance on call center agents. In order to stimulate mobile phones and smartphones penetration, we offer our customers a broad selection of handsets and internet-capable devices, which we source from a number of suppliers, in the case of purchase-sale models, and we offer banglalink branded internet through reverse-bundle model in device partners' channels.

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Competition

        The mobile telecommunications market in Bangladesh is highly competitive. The following table shows our and our competitors' respective customer numbers in Bangladesh as of December 31, 2017.

Operator
  Customers in
Bangladesh
(in millions)
 

Grameenphone

    65.3  

Robi

    42.9  

BDCL ("banglalink")

    31.3  

Teletalk

    4.5  

Source: BTRC for all companies except BDCL ("banglalink").

        The top three mobile operators, Grameenphone, banglalink and Robi, collectively held approximately 96.9% of the mobile market where the market consisted of approximately 145.1 million customers in Bangladesh as of December 31, 2017, compared to 126.4 million customers in 2016, according to the Bangladesh Telecommunication Regulatory Commission. According to Analysys Mason, as of December 31, 2017, a mobile penetration rate comprised approximately 86.8% compared to 76.7% in 2016.

Mobile Business in Ukraine

        We operate in Ukraine with our operating company "Kyivstar" JSC and our brand, "Kyivstar." The Ukrainian mobile market operates on a 2G and 3G basis. As of December 31, 2017, approximately 90% of our customers in Ukraine were on prepaid plans and approximately 10% of our customers in Ukraine were on postpaid plans. Kyivstar secured 4G/LTE licenses and spectrum in two separate transactions in 2018. Following the auction held on January 31, 2018, Kyivstar acquired 15 MHz (paired) of contiguous frequency in the 2600 MHz band for UAH 0.9 billion (US$32 million as of December 31, 2017). In addition, on March 6, 2018, Kyivstar secured the following spectrum through auction in the 1800MHz band: 25MHz (paired) for UAH 1.325 billion (US$47 million as of December 31, 2017) and two lots of 5MHz (paired) for UAH 1.512 billion (US$54 million as of December 31, 2017).

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        The table below presents the primary mobile telecommunications services we offer in Ukraine.

 
   
   
   
   
 
  Service
   
  Description
   
    Voice       Includes airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad.    
    Internet and data access       Access is offered through GPRS/EDGE and 3G.    
    Roaming       As of December 31, 2017, Kyivstar provided voice roaming on 463 networks in 188 countries, GPRS roaming on 400 networks in 164 countries and 3G roaming on 301 networks in 130 countries.    
    VAS       Caller-ID; voicemail; call forwarding; conference calling; call blocking and call waiting.    
    Messaging       SMS; MMS; voice messaging and SMS services (including information services such as news, weather, entertainment chats and friend finder).    
    Content/infotainment       Voice services (including referral services); content downloadable to telephone (including music, pictures, games and video); and RBT.    
    Mobile financial services       Mobile payment; banking card; trusted payment; banks notification and mobile insurance.    

Mobile bundles

        Kyivstar offers bundles including combinations of voice, SMS and MMS, mobile data and OTT services.

VEON platform

        The VEON platform, launched in Ukraine in 2017, offers Kyivstar customers the ability to communicate for free, even when out of credit, and provides third party products, offers, services and content.

Distribution

        Kyivstar's strategy is to maintain a leadership position by using the following distribution channels: distributors (41% of all connections), local chains (20%), national chains (11%), monobrand stores (17%), direct sales (7%) and active sales (5%). In order to avoid possible price pressure from core distributors, one of our strategic priorities is to invest in our own monobrand stores. As of December 31, 2017, the number of owned retail monobrand stores was 417 as compared to 393 stores as of December 31, 2016.

Competition

        The following table shows our and our primary mobile competitors' respective customer numbers in Ukraine as of December 31, 2017:

Operator
  Customers
(in millions)
 

Kyivstar

    26.5  

"VF Ukraine" JSC

    20.8  

"lifecell" LLC

    8.0  

Source: Analysys Mason.

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        Kyivstar competes primarily with "VF Ukraine" JSC, operating under the Vodafone brand, which is 100% owned by MTS and operates a GSM900/1800 network in Ukraine. Kyivstar also competes with "lifecell" LLC, as well as with Trimob LLC, a 100% affiliate company of Ukrtelecom to provide services under a 3G license, and with other small CDMA operators.

        According to Analysys Mason, as of December 31, 2017, there were approximately 58.2 million customers in Ukraine, representing a mobile penetration rate of approximately 137.4% compared to 59.0 million customers and a mobile penetration rate of 138.7% in 2016.

Mobile Business in Uzbekistan

        In Uzbekistan, we operate through our operating company, LLC "Unitel," and our brand, "Beeline." We offer our customers mobile telecommunications services under postpaid and prepaid plans. As of December 31, 2017, approximately 98.4% of our customers in Uzbekistan were on prepaid plans and approximately 1.6% of our customers in Uzbekistan were on postpaid plans.

        Our 3G/HSPA services were commercially launched in 2008, and the majority of the network was constructed in 2010. Our 4G/LTE services were commercially launched in 2014. Unitel was the first mobile operator to provide 4G/LTE services.

        The table below presents the primary mobile telecommunications services we offer in Uzbekistan.

 
   
   
   
   
 
  Service
   
  Description
   
    Voice       Includes airtime charges from mobile postpaid and prepaid customers, including monthly contract fees for a predefined amount of voice traffic and roaming fees for airtime charges when customers travel abroad. GSM service is provided by Unitel in 2G and 3G networks throughout Uzbekistan. Call duration for one session is limited for 40 minutes.    
    Internet and data access       Access is offered through GPRS/EDGE/3G/4G/LTE networks.    
    Roaming       As of December 31, 2017, we had active roaming agreements with 484 GSM networks in 185 countries and provided GPRS roaming with 387 networks in 164 countries and CAMEL roaming through 263 networks in 116 countries. Generally, each agreement with roaming partners provides that the operator hosting the roaming call sends us a bill for the roaming services used by our customer while on the host's network. We pay the host operator for the roaming services and bill the amount due for the provision of roaming services on our customer's monthly bill.    
    VAS       Caller-ID, voicemail, call forwarding, conference calling, call blocking and call waiting.    
    Messaging       SMS, MMS, voice messaging and SMS services (including information services such as news, weather, entertainment chats and friend finder).    
    Content/infotainment       Voice services (including referral services), content downloadable to telephone (including music, pictures, games and video), and RBT.    
    Mobile financial services       Card to card transfer, bank card payments, trusted payment, our own payment system "Beepul", mobile transfer, loyalty program.    

Mobile bundles

        We offer bundled tariff plans, which may differ by types or volume of traffic, duration (daily, weekly, and monthly), region or charge type. Currently, we provide data bundles consisting of different

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types of traffic volume, charge and duration and integrated bundles consisting of traditional voice with SMS and data traffic.

Distribution

        In Uzbekistan, we offer a portfolio of tariffs and products for the prepaid system designed to cater to the needs of specific market segments, including mass-market customers, youth customers and high value contract customers. Further, we have the following four segments in our postpaid system: Large Accounts, Business to Government, SME and SOHO. As of December 31, 2017, our sales channels in Uzbekistan include 672 offices and monobrand stores, 644 exclusive stores and 1,125 multibrand stores.

Competition

        The following table shows our and our primary mobile competitors' respective customers in Uzbekistan as of December 31, 2017:

Operator
  Customers
(in millions)
 

LLC "Unitel"

    9.7  

Ucell

    8.6  

UMS

    1.8  

UzMobile

    0.8  

Perfectum

    0.3  

Source: Analysys Mason.

        According to Analysys Mason, as of December 31, 2017, there were approximately 21.3 million mobile customers in Uzbekistan, representing a mobile penetration rate of approximately 65.5% compared to 20.6 million customers and a mobile penetration rate of 64.3% in 2016. The relatively low mobile penetration rate is primarily caused by the single-SIM profile of most Uzbek mobile customers.

Mobile Business in Others

        In the countries in our "Others" category, we generally offer our customers mobile telecommunications services under prepaid and postpaid plans.

        On October 27, 2017, we entered into an agreement to sell our operations in Laos. For more information, see "—Overview—Recent Developments—VEON to sell Laos operations."

        As of December 31, 2017, we had the following percentages of prepaid and postpaid customers:

Payment Plan
  Kazakhstan   Kyrgyzstan   Armenia   Tajikistan   Georgia   Laos  

Prepaid

    95.6 %   96 %   87.4 %   99.9 %   99.99 %   96.4 %

Postpaid

    4.4 %   4 %   12.6 %   0.1 %   0.01 %   3.6 %

Call completion and VAS

        In the countries in our "Others" category, we offer the same call completion and VAS as in Russia (except for location based services).

3G and 4G/LTE

        We have launched 3G services in each of the countries in our "Others" category, we hold 4G/LTE licenses in Tajikistan, we hold technology neutral licenses in Kazakhstan, Kyrgyzstan, Armenia, Georgia and Laos, and we have launched 4G/LTE services in Kazakhstan, Kyrgyzstan, Armenia and Georgia.

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Roaming

        In the countries in our "Others" category, we have roaming arrangements with a number of other networks, which vary by country of our operation. The table below presents the material roaming agreements in each of the countries included in our "Others" category.

Country
  Roaming Agreements (as of December 31, 2017)
Kazakhstan   Voice roaming on 612 networks in 196 countries
GPRS roaming on 487 networks in 171 countries
CAMEL roaming on 301 networks in 113 countries

Kyrgyzstan

 

Voice roaming on 424 networks in 132 countries
GPRS roaming on 250 networks in 99 countries
CAMEL roaming on 185 networks in 83 countries

Armenia

 

Voice roaming on 435 networks in 179 countries
GPRS roaming on 344 networks in 139 countries
CAMEL roaming on 239 networks in 105 countries
3G roaming on 295 networks in 126 countries
4G/LTE roaming on 52 networks in 40 countries

Tajikistan

 

3G roaming on 154 networks in 87 countries
Voice roaming on 193 networks in 93 countries
GPRS roaming on 171 networks in 92 countries
CAMEL roaming on 123 networks in 72 countries

Georgia

 

Voice roaming on 190 networks in 81 countries
GPRS roaming on 180 networks in 70 countries
CAMEL roaming on 123 networks in 59 countries

Laos

 

Voice roaming on 415 networks in 140 countries
GPRS roaming on 241 networks in 80 countries
CAMEL roaming on 60 networks in 35 countries

        Generally, each agreement with roaming partners provides that the operator hosting the roaming call sends us a bill for the roaming services used by our customer while on the host's network. We pay the host operator for the roaming services and bill the amount due for the provision of roaming services on our customer's monthly bill.

Wireless internet services

        We have promotional zero-zones for major local and international social networks in each of these countries (other than Laos) to lower the entry barrier for new data users and stimulate consumption for existing ones. We also focus on smartphone penetration growth in each of these countries as the major source of effective demand for our mobile internet services.

VEON platform

        The VEON platform was launched in Georgia in 2017, and is yet to be adopted in the other countries in the "Others" category. The VEON platform offers our customers in Georgia the ability to communicate for free, even when out of credit, and provides third party products, offers, services and content.

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Distribution

        We distribute our products in the countries in our "Others" category through owned monobranded stores, franchises and other distribution channels. As of December 31, 2017, we had 200 total stores in Kazakhstan (inlcuding 14,707 other points of sale), 6,487 stores in Kyrgyzstan, 77 stores in Armenia, 112 monobranded stores in Tajikistan (25 own shops and 87 franchises), 36 stores in Georgia and 16 stores in Laos (including approximately 3,200 other points of sale).

Competition

    Kazakhstan

        According to Analysys Mason, as of December 31, 2017, there were approximately 25.5 million customers in Kazakhstan, representing a mobile penetration rate of approximately 141.2%, compared to 25.4 million customers and a mobile penetration rate of approximately 142.5% in 2016. We held the second position in the market in 2017, according to Analysys Mason.

    Kyrgyzstan

        According to Analysys Mason, as of December 31, 2017, there were approximately 7.1 million customers in Kyrgyzstan, representing a mobile penetration rate of approximately 116.5%, compared to 7.1 million customers and a mobile penetration rate of approximately 117.6% in 2016. We held the first position in the market in 2017, according to Analysys Mason.

    Armenia

        According to Analysys Mason, as of December 31, 2017, there were approximately 3.6 million customers in Armenia, representing a mobile penetration rate of approximately 119.1%, compared to 3.6 million customers and a mobile penetration rate of approximately 117.5% in 2016. We held the second position in the market in 2017, according to Analysys Mason.

    Tajikistan

        According to Analysys Mason, as of December 31, 2017, there were approximately 8.6 million customers in Tajikistan, representing a mobile penetration rate of approximately 96.7%, compared to 9.3 million customers and a mobile penetration rate of approximately 106.7% in 2016. We held the fourth position in the market in 2017, according to Analysys Mason.

    Georgia

        According to Analysys Mason, as of December 31, 2017, there were approximately 5.6 million customers in Georgia, representing a mobile penetration rate of approximately 140.7%, compared to 5.4 million customers and a mobile penetration rate of approximately 135.9% in 2016. We held the third position in the market in 2017, according to Analysys Mason.

    Laos

        According to Analysys Mason, as of December 31, 2017, there were approximately 5.6 million customers in Laos, representing a mobile penetration rate of approximately 78.4%, compared to 5.2 million customers and a mobile penetration rate of approximately 74.7% in 2016. We held the third position in the market in 2017, according to Analysys Mason.

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Description of Our Fixed-line Telecommunications and Internet Businesses

        We also offer fixed-lined telecommunications and internet services in Russia, Pakistan, Ukraine, Uzbekistan, Armenia and Kazakhstan. We do not offer fixed-line services in Algeria, Bangladesh, Kyrgyzstan, Tajikistan, Laos or Georgia.

        In Russia, Ukraine and Uzbekistan, we offer voice, data and internet services to corporations, operators and consumers using a metropolitan overlay network in major cities. Our fixed-line telecommunications use inter-city fiber optic and satellite-based networks.

        In Pakistan, we offer internet and value added services over a wide range of access media, covering major cities of Pakistan. However, we do not report customer numbers and other data on our fixed-line business in Pakistan, as we do with Russia, Ukraine and Uzbekistan, because the fixed-line business in Pakistan is not material to our overall business.

        In Armenia and Kazakhstan, the fixed-line business offers range of services for B2O, B2B and B2C segments. In Armenia, our fixed-line business further offers a range of services, including PSTN-fixed and IP telephony, internet, data transmission and network access, domestic and international voice termination, IPLC and TCP/IP international transit, over our national networks.

Fixed-line Business in Russia

        In Russia, we provide a wide range of telecommunications and information technology and data center services, such as network access and hardware and software solutions, including configuration and maintenance, SaaS and an integrated managed service. Our services cover all major population centers in Russia. We operate a number of competitive local exchange carriers that own and operate fully digital overlay networks in a number of major Russian cities. Our customers range from large multinational corporate groups and government clients to SMEs and high-end residential buildings in major cities throughout Russia.

        We provide local access services by connecting the customers' premises to our own fiber network, international and domestic long distance services and VSAT services to customers located in remote areas. We provide internet access to both corporate and consumer customers through backbone networks and private line channels. We also provide corporate clients with IP address services, the ability to rent leased channels with different high-speed capacities and remote access to corporate information, databases and applications. We offer and deploy managed Wi-Fi networks based on IEEE 802.11b/g/n/ac wireless technology.

        We also provide an increasing range of other services, including virtual PSTN number, xDSL services, session initiation protocol (SIP) connection, financial information services, data center services, such as co-location, web hosting, audio conference and domain registration services. We offer to our corporate customers IPTV services, virtual PBX, certain Microsoft Office packages (including SaaS), web-videoconferencing services and sale, rental and technical support for telecommunications equipment.

        We also provide Pay TV (cable TV) and IPTV services. As of December 31, 2017, we have more than 34,700 Pay TV customers and 1.11 million IPTV customers. In 2016, we launched FMC product services in all branches in Russia and we focused on further developing this in 2017. As of December 31, 2017, we had more than 877,390 FMC customers.

        Our carrier and operator services division in Russia provides a range of carrier and operator services, including voice, internet and data transmission over our own networks and roaming services. Within the VEON group, we have interconnection agreements with international global data network operators who provide a one-stop shop concept for worldwide data network services for multinational companies. Under these interconnection agreements, we provide MPLS-based IP VPN, local, domestic

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and international private lines, equipment and equipment maintenance in Russia. We also provide high-speed domestic and international channels to international and Russian operators to sell excess backbone network capacity.

Distribution

        We utilize a direct sales force in Moscow, operating both with fixed-line and mobile corporate customers and supported by specialists in technical sales support, marketing, customer service and end-user training. In addition, we employ a team of regional sales managers and a dedicated sales force in each of our regional branch offices, as well as having sales incentive plans with our regional partners.

Competition

        Our fixed-line telecommunications business marketed as "Beeline Business" competes principally on the basis of convergent services and bundles, installation time, network quality, geographical network reach, customer service, range of services offered and price. We face significant competition from other service providers. For voice services, our main competitors are the long distance carriers Rostelecom, TransTelecom and OJSC "Multiregional TransitTelecom." For data services, our main competitors are the long distance carriers Rostelecom, TransTelecom and MegaFon. Our main competitors in the fixed-line broadband market in Russia are Rostelecom, MTS and its subsidiaries, Akado, ER-Telecom, NetbyNet and various local home network providers.

        In terms of end-user internet penetration, the consumer internet access business in Russia is saturated and end-user internet penetration is high. Competition for customers in Russia is intense and we expect it to increase in the future as a result of wider market penetration, consolidation of the industry, the growth of current operators and the appearance of new technologies, products and services. As a result of increasing competition, internet providers are utilizing new marketing efforts (for example, aggressive price promotions) in order to retain existing customers and attract new ones.

Fixed-line Business in Pakistan

        Our fixed-line business in Pakistan includes data, voice and VAS services over a wide range of access media, covering the major cities of Pakistan. The wired and wireless access services include FTTx, PMP (point to multipoint), point-to-point radios, VSAT, DSL & WiMax connecting more than 110 locations across Pakistan, providing data and voice connectivity to enterprise customers. The data services being provided to the enterprise customers include: dedicated internet access, VPN (virtual private networking), leased lines & fixed telephony.

        We also offer services to domestic and international carriers, which include domestic and international leased lines, domestic and international MPLS, and IP transit services through our access network. Our long-haul fiber optic network covers more than 9,000 kilometers and, supplemented by wired and wireless networks, is spread across the major cities of Pakistan.

        We provide the following services for corporate and individual business customers: high-speed internet access (including fiber optic lines and xDSL), telephony, and long distance and international long distance telephony on prepaid cards; telephone communication services, based on copper wires and the modern digital fiber optic network; dedicated lines of data transmission; and dedicated line access and fixed-line mobile convergence.

Distribution

        We utilize a direct sales force in Pakistan for enterprise customers. This dedicated sales force has three channels dedicated to SMEs, large/key accounts and business-to-government. These channels are led by individual channel heads who further employ a team of regional sales managers in different

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regions, which are further supported by a sales force, including team leads and key account managers. There is also a centralized telesales executive team led by a manager and a dedicated sales force for customers that are engaged in reselling our services.

Competition

        In Pakistan, our fixed-line business faces significant competition from other providers of fixed-line corporate services, carrier and operator services and consumer internet services. We believe that our main competitors for fixed-line corporate services are Pakistan Telecommunication Company Limited, or "PTCL," Multinet, Wateen, Supernet, Cybernet, Nexlinx and Nayatel. We believe that our main competitors for carrier and operator services are PTCL, Wateen, World Call, Wi-Tribe, and Telenor Pakistan. We believe that our main competitors for consumer internet services are PTCL, Wateen, World Call, Wi-Tribe and Qubee.

Fixed-line Business in Ukraine

        In Ukraine, we offer fixed-line and wireless internet services. We provide data and internet access services in almost all metropolitan cities in Ukraine. We began providing fixed-line broadband services in Ukraine in 2008 and, as of December 31, 2017, provided services in 116 cities in Ukraine (excluding cities in Crimea and the ATO zone). In connection with these services, we have been engaged in a project to install FTTB for fixed-line broadband services in approximately 41,000 residential buildings in 116 cities, providing over 55,600 access points.

        Our fixed-line services include corporate internet access, VPN services, data center, contact center, fixed-line telephony and a number of VAS. Internet access services include connection to the internet via ADSL, symmetrical and Ethernet interfaces at speeds ranging from 256 kilobytes per second to 10 gigabytes per second. Fixed-line voice services are available in many of Ukraine's major cities.

        In November 2016, we launched FMC for an increasing range of mobile users in our fixed-line broadband internet base. We also offer a range of FTTB services tariffs for fixed-line broadband internet access targeted at different customer segments. We currently have 11 unlimited tariff plans with monthly fees, which offer different speeds up to 100 Mbps for active internet users. In addition, in 2015, we launched OTT TV services in partnership with Viasat.

        Our joint carrier and operator services division in Ukraine provides local, international and intercity long distance voice traffic transmission services to Ukrainian fixed-line and mobile operators on the basis of our proprietary domestic long-distance/ILD network, as well as IP transit and data transmission services through our own domestic and international fiber optic backbone and IP/MPLS data transmission network. We derive most of our carrier and operator services revenue in Ukraine from voice call termination services to our own mobile network and voice transit to other local and international destinations.

Distribution

        Our company emphasizes high customer service quality and reliability for its corporate large accounts while at the same time focusing on the development of its SME offerings. We sell to corporate customers through a direct sales force and various alternative distribution channels such as IT servicing organizations and business center owners, and to SME customers through dealerships, direct sales, own retail and agent networks. We use a customized pricing model for large accounts which includes service or tariff discounts, volume discounts, progressive discount schemes and volume lock pricing. We use standardized and campaign-based pricing for SME customers. Our residential marketing strategy is focused on attracting new customers. We offer several tariff plans, each one targeted at a different type of customer.

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Competition

        In the voice services market for business customers, we compete with Ukrtelecom, Datagroup, Farlep-Invest (Vega), and a number of other small operators. We were the third largest B2B internet provider in the country as of December 31, 2017, according to management's estimates. There is a high level of competition with more than 400 internet service providers in Ukraine. Our main competitors in the corporate market for data services are also Ukrtelecom, Farlep-Invest (Vega) and Datagroup. Our competitors for both the carrier and operator services and the voice and data services market include Datagroup, Ukrtelecom, and Farlep-Invest (Vega). Our main competitors for the provision of consumer internet services in Ukraine are Volia and Ukrtelecom. From December 31, 2016 to December 31, 2017, we increased the number of our broadband customers in Ukraine (excluding customers in the ATO zone) by 1% from 811,910 to 823,840.

Fixed-line Business in Uzbekistan

        In Uzbekistan, we provide a wide range of fixed-line services, such as network access, internet and hardware and software solutions, including configuration and maintenance. We provide the following services for corporate and individual business customers: high-speed internet access (including fiber optic lines and xDSL), telephony, and long distance and international long distance telephony on prepaid cards; telephone communication services, through our copper cable network and our modern digital fiber optic network; dedicated lines of data transmission; and dedicated line access and fixed-line mobile convergence.

        In Uzbekistan, we offer similar fixed-line broadband and wireless internet services as in Russia. See "—Fixed-line Business in Russia."

Distribution

        One of our priorities in Uzbekistan is the development of information and communications technology, which supports economic development in Uzbekistan. Our strategy includes maintaining our current market position by retaining our large corporate client customer base.

Competition

        We operate large independent fixed-line services in Uzbekistan, where we compete with the state-owned provider, Uztelecom, as well as East Telecom, Sarkor Telecom, Sharq Telecom, TPS and EVO. There is a high level of competition in the capital city of Tashkent, but the fixed-line internet market in most of the other regions remains undeveloped.

Fixed-line Business in Armenia

        Our subsidiary VEON Armenia provides a range of telecommunications services in Armenia, including PSTN-fixed and IP telephony, internet, data transmission and network access, domestic and international voice termination and TCP/IP international transit traffic services. We operate a nationwide network in Armenia and provide the following services for corporate and individual customers: local telephony services; international and domestic long distance services; broadband access services (including ADSL, VDSL, LTE 450 and fiber optic lines); and VoIP services.

        VEON Armenia is the Armenian incumbent operator offering countrywide wholesale services, such as leased line service and wholesale broadband services, as well as wholesale international voice termination and origination services for other local and international operators and service providers.

        We offer PSTN-fixed and IP telephony services, as well as fixed-line broadband internet access based on ADSL and FTTB technologies, dial-up services and wireless internet access based on CDMA technology. In 2015, we launched FMC bundles, offering fixed internet, fixed TV and mobile services.

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In 2017, we received permission from the Public Services Regulatory Commission of Armenia to include fixed voice services in our FMC bundles, which we plan to roll out in 2018.

Distribution

        Our strategy includes focusing on customer retention and ARPU growth by developing new services, including internet access through a fiber optic network with a guaranteed speed to corporate customers and government organizations.

Competition

        We offer a broad range of fixed-line services to government, corporate and private customers. We believe we compete primarily with U!Com and Rostelcom in Armenia, which are primarily provide fixed internet and cable TV services.

Fixed-line Business in Kazakhstan

        We focus on customer experience for large enterprises through offering high-quality services. Our main business clients are concentrated in the financial and oil and gas sectors, with a new focus on international companies. We provide the following services for corporate clients: high-speed internet access; local, long distance and international voice services over IP; local, intercity and international leased channels and IP VPN services; cloud services; and integrated corporate networks (including integrated network voice, data and other services). We use the following technologies: fiber optic lines (approximately 20,715 buildings are covered by our FTTB network), wireless technologies, satellite technologies, and the TV-Everywhere platform (which is provided through the vendor, Computer Telephony Integration).

        In Kazakhstan, we offer similar fixed-line broadband and wireless internet services as in Russia. See "—Fixed-line Business in Russia." In 2017, we continued to increase our coverage and completed FTTB roll-out for an additional 459 buildings. We also updated the FMC product, by adding additional mobile bundles and video content from Amediateka. In addition, in October 2017 we launched an additional parental control service, which enables location services, and can limit access to internet sites and browsing time.

Distribution

        We are focusing on customer base and revenue growth, which we aim to promote by expanding our transport infrastructure, developing unique products, strengthening our position in the market and enhancing our sales efforts and data services.

Competition

        We provide internet, data transmission and traffic termination services in Kazakhstan, where we believe we compete primarily with state-owned provider Kazakhtelecom, KazTransCom, TransTelecom (owned by Kazakhstan Temir Zholy, the national railway company), Astel (a leader in the provision of satellite services) and several other small local operators.

Interconnection Agreements

        Our mobile and fixed-line businesses are dependent on interconnection services, which are required to complete calls that originate on our respective networks but terminate outside our respective networks, or that originate from outside our respective networks and terminate on our respective networks. In order to provide a local, domestic and international network, we have interconnection agreements in the markets in which we operate.

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Russia

        We have several interconnection agreements with mobile and fixed-line operators in Russia under which we provide traffic termination services. During 2017, our MTRs in Russia were broadly stable as compared to the 2016 and 2015 historical periods.

Pakistan

        We have several interconnection agreements with mobile and fixed-line operators in Pakistan and in the territories of Azad Jammu and Kashmir ("AJK") and Gilgit-Baltistan, under which we provide traffic termination services. Our MTRs in 2017 in Pakistan were broadly stable as compared to the 2015 and 2016 historical periods.

Algeria

        We have several interconnection agreements with mobile, VoIP and fixed-line operators in Algeria under which we provide traffic termination services. The national incoming interconnect rate decreased for the year ended December 31, 2017 as compared to the year ended December 31, 2016, and the outgoing interconnect rate also decreased over the same period. The movements in the historical MTRs for 2017, 2016 and 2015 have been favorable to our business, however, asymmetry continues to exist between OTA and one other operator.

Bangladesh

        We have several interconnection agreements with ICX, IGW, mobile operators, IPTSP and fixed-line operators in Bangladesh under which we provide traffic termination services. For international incoming calls, MTR in 2017 was broadly stable as compared to the 2016 and 2015 historical periods.

Ukraine

        We have several interconnection agreements with mobile and fixed-line operators in Ukraine under which we provide traffic termination services. The rates in 2017 for termination of national traffic to a mobile network and a fixed network on an intercity level decreased compared to the 2016 and 2015 historical periods.

Uzbekistan

        We have several interconnection agreements with mobile and fixed-line operators in Uzbekistan under which we provide traffic termination services. During 2017, our MTRs in Uzbekistan were broadly stable as compared to the 2016 and 2015 historical periods.

        On September 5, 2017, the State Committee of Uzbekistan on Privatization, Demonopolization and Development of Competition ("State Committee of Uzbekistan") issued an injunction requiring Unitel LLC to implement equal mobile termination rates for all national operators. Unitel LLC appealed this injunction and on January 15, 2018, the appellate division of the Tashkent administrative court ruled in favor of the State Committee of Uzbekistan. Unitel LLC is currently engaged in discussions with the State Committee of Uzbekistan, other relevant regulators and national operators regarding the implementation of the injunction. Unitel LLC is also involved in litigation with UMS and Ucell in relation to unpaid mobile termination rates.

Others

        We have several agreements with mobile and fixed-line operators in each of the countries in our "Others" category under which we provide traffic termination services.

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Licenses

Mobile Telecommunications Licenses in Russia

    GSM

        PJSC VimpelCom holds super-regional GSM licenses (GSM900, GSM1800, GSM900/1800, UMTS 900 and 4G/LTE 1800 standards) for the following seven out of eight super-regions in Russia: Moscow, Central and Central Black Earth, North Caucasus, North-West, Siberia, Ural and Volga. These licenses will expire between April 2018 and November 2022, and we plan to file applications for renewal of all our licenses prior to their expiration. PJSC VimpelCom does not currently hold a GSM super-regional license for the Far East super-region of Russia, but it holds GSM licenses in a number of regions of the Far East super-region. These licenses expire on various dates between 2019 and 2022, and we plan to file applications for renewal of all of our licenses prior to their expiration.

        In addition to the seven super-regional GSM licenses, PJSC VimpelCom holds a GSM license for the Orenburg region, and in total, our GSM licenses cover approximately 97% of Russia's population.

    3G

        PJSC VimpelCom holds one of three 3G licenses in Russia. PJSC VimpelCom has extended its license until May 2022.

    4G/LTE

        In July 2012, PJSC VimpelCom was awarded a mobile license, a data transmission license, a voice transmission license and a telematic license for the provision of 4G/LTE services in Russia. These licenses allow PJSC VimpelCom to provide services using radio-electronic devices in Russia via networks that use 4G/LTE standard equipment within any of the following frequency bands: 735-742.5/776-783.5 MHz; 813.5-821/854.5-862 MHz; and 2550-2560/2670-2680 MHz. Certain channels allocated to us in accordance with the licenses have restrictions on their use. To remove restrictions, we have to perform organizational technical measure field tests. The rollout of the 4G/LTE network is using a phased approach based on a pre-defined schedule pursuant to the requirements of the license.

        PJSC VimpelCom holds the 4G/LTE 2600 licenses in 32 subjects of Russia. The licenses expire on April 15, 2026 and we plan to apply for renewal of these licenses prior to their expiration.

License fees

        PJSC VimpelCom must pay an annual fee for the use of radio frequency spectrum. This fees were RUB 4,288 million and RUB 4,210 million for the years ended December 31, 2017 and 2016, respectively. Under Federal Law No. 126 FZ "On Communication" and license terms, PJSC VimpelCom is required to make universal service fund contributions in the amount equal to 1.2% of corporate revenues from provided communications services. Universal service fund contributions were RUB 2,369 million and RUB 2,336 million for the years ended December 31, 2017 and 2016, respectively. PJSC VimpelCom is also subject to certain other license fees on a case-by-case basis.

Mobile Telecommunications Licenses in Pakistan

    2G

        PMCL was awarded a 15-year 2G license in 1992. In 2007, PMCL renewed its 2G license for a further term of 15 years. As of December 31, 2017, PMCL had a balance of US$43.5 million to be paid to the PTA for the renewal of its 2G license. Such amount is payable in yearly installments of US$14.5 million, payable in December of each year, until December 2019. PMCL has two 15-year licenses for provision of cellular mobile services in AJK and Gilgit-Baltistan.

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        Further, Warid acquired a 15-year technology neutral license in 2004 for US$291 million. US$145.5 million was paid upfront while the rest is expected to be paid in ten equal annual installments starting with a four year grace period, with the last payment being in May 2018. This license is up for renewal in 2019.

    3G

        In 2014, following a competitive bidding process, PMCL was awarded a 15-year license to operate a nationwide 3G telecommunications network in Pakistan for an aggregate initial spectrum fee of US$300.1 million, which was paid at the time PMCL acquired the license.

        In addition, PMCL and its subsidiaries have other licenses, including LDI, WLL, local loop licenses, licenses to provide non-voice communication services, and licenses to provide class VAS in Pakistan, AJK and Gilgit-Baltistan. The licensees must also pay annual fees to the PTA and make universal service fund contributions and/or research and development fund contributions, as applicable, in a total amount equal to a percentage of the licensees' annual gross revenues (less certain allowed deductions) for such services.

    4G/LTE

        In June 2017, PCML was awarded a 15-year license to operate 4G/LTE (NGMS) telecommunications network in Pakistan for an aggregate initial spectrum fee of US$295 million and withholding tax of 10%, which was paid at the time PMCL acquired the license.

        Warid (now merged with Jazz) acquired a 15-year technology neutral license in 2004 for US$291 million. US$145.5 million was paid upfront while the rest is being paid in ten equal annual installments starting with a four year grace period (the last payment is due in May 2018). This license is up for renewal in 2019. The same license was amended in December 2014 by PTA to allow Warid for providing 4G/LTE services in Pakistan.

License fees

        Under the terms of its 2G, 3G and 4G/LTE licenses, as well as its license for services in AJK and Gilgit-Baltistan, PMCL must pay annual fees to the PTA and make universal service fund contributions and/or research and development fund contributions, as applicable (not all of the foregoing are applicable to all licenses), in a total amount equal to 2.5% of PMCL's annual gross revenues (less certain allowed deductions) for such services, supplemental to spectrum administrative fees.

        PMCL's total license fees (annual license fees plus revenue sharing) in Pakistan (excluding the yearly installments noted above) were US$26.7 million, US$27.1 million and US$21.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. PMCL's total spectrum administrative fee payments in Pakistan were US$1.5 million, which includes Warid's spectrum, for the year ended December 31, 2017, and were US$1.0 million for each of the years ended December 31, 2016 and 2015, which excludes Warid's spectrum.

Mobile Telecommunications Licenses in Algeria

    2G

        In 2001, OTA was awarded a 15-year license to operate a 2G telecommunications network for an aggregate fee of approximately US$737 million. The license expired in 2016, but was renewed for a five-year period at no additional cost (Decree 17-195 of June 11, 2017).

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    VSAT

        In 2003, OTA acquired a VSAT data-voice license for an aggregate fee of US$2.05 million and renewed the license in 2014 for an additional period of five years, at no additional cost.

    3G

        In 2013, OTA was awarded a 15-year license to operate a 3G telecommunications network for an aggregate fee of approximately US$38 million, which was paid in full in 2013. Under the terms of its 3G license, OTA is required to pay an additional annual revenue sharing fee of 1% based on 3G revenues less interconnection costs.

    4G/LTE

        In 2016, Optimum was awarded a 15-year license to operate a 4G/LTE telecommunications network for an aggregate fee of US$36 million (based on then-current exchange rates), which was paid in full in 2016. Under the terms of its 4G/LTE license, Optimum is required to pay an additional annual revenue sharing fee of 1% based on 4G/LTE revenues less interconnection costs.

License fees

        Under the terms of its 2G, 3G, 4G/LTE and VSAT licenses, OTA is required to pay revenue sharing allocations to the Algerian government and contributions for the universal service fund (3% of revenues less interconnection costs); management of the numbering plan (0.2% of revenues less interconnection costs); and research, training and standardization (0.3% of revenues less interconnection costs).

        OTA's total license fees in Algeria were US$61.8 million, US$62.1 million and US$69.4 million for the years ended December 31, 2017, 2016 and 2015, respectively, of which US$28.1 million, US$25.9 million and US$25.7 million was related to spectrum charges, and US$33.7 million, US$36.2 million and US$43.7 million were related mainly to contributions made to the Universal Services of Telecommunications fund and to the number plan management over the same periods.

Mobile Telecommunications Licenses in Bangladesh

    2G

        In November 1996, BDCL was awarded a 15-year GSM license to establish, operate and maintain a digital mobile telephone network to provide 2G services throughout Bangladesh. The license was renewed in November 2011 for a further 15-year term.

    3G

        In September 19, 2013, following a competitive auction process, BDCL was awarded a 15-year license to use 5 MHz of technology neutral spectrum in 2100MHz band for 15 years and was also awarded a 3G license, for which it paid a total cost of BDT 8,677.4 million (inclusive of 5% VAT) (US$105 million as of December 31, 2017), including both a license acquisition fee and a spectrum assignment fee.

    4G/LTE

        On February 13, 2018, BDCL acquired a 4G/LTE license for US$1.2 million. BDCL also acquired the right to use 10.6MHz technology neutral of spectrum in 1800MHz (5.6) and 2100MHz (5) for US$324 million including VAT (33.34% of the fee has been considered as tariff value for 15% VAT).

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Banglalink also converted 15MHz of existing 2G spectrum for the remaining tenure of it for US$ 36.75 million.

License fees

        Under the terms of its 2G, 3G and 4G mobile licenses, BDCL is required to pay to the Bangladesh Telecommunication Regulatory Commission (i) an annual license fee of BDT 50.0 million (US$0.6 million as of December 31, 2017) for each mobile license; (ii) 5.5% of BDCL's annual audited gross revenue, as adjusted pursuant to the applicable guidelines; and (iii) 1% of its annual audited gross revenue (payable to Bangladesh's social obligation fund), as adjusted pursuant to the applicable guidelines. The annual license fees are payable in advance of each year, and the annual revenue sharing fees are each payable on a quarterly basis and reconciled at the end of each year.

        BDCL's total license fees (annual license fees plus revenue sharing) in Bangladesh were equivalent to US$34.7 million, US$41.7 million and US$40.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

        In addition to license fees, BDCL pays annual spectrum charges to the BTRC, calculated according to the size of BDCL's network, its frequencies, the number of its customers and its bandwidth. The annual spectrum charges are payable on a quarterly basis and reconciled at the end of each year. BDCL's annual spectrum charges were equivalent to US$9.0 million, US$9.8 million and US$9.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Mobile Telecommunications Licenses in Ukraine

    GSM

        In Ukraine, Kyivstar holds GSM900 and GSM1800 cellular licenses to provide telecommunications services throughout the territory of Ukraine. These licenses were received on October 5, 2011 for a term of 15 years each and will expire on October 5, 2026.

    3G

        On February 25, 2015, after an auction process, Kyivstar was awarded one of three licenses to provide nationwide 3G services in the 2100 MHz band. The license was issued on April 1, 2015 and is valid for a period of 15 years (until April 1, 2030).

        We have also obtained a range of national and regional radio frequency licenses for the use of radio frequency resources in the referred standards and in specified standards—radio-relay and WiMax.

        Our network coverage is (except the Anti-Terrorist Operation zone where Kyivstar is not able to use and control its network): 91.46% of the 2G network; 18.7% of the 3G network; 9,864 localities covered by 2G network; and 25,484 localities covered by 3G network.

    4G/LTE

        Kyivstar secured 4G/LTE licenses and spectrum in two separate transactions in 2018. Following the auction held on January 31, 2018, Kyivstar acquired 15 MHz (paired) of contiguous frequency in the 2600 MHz band for UAH 0.9 billion (US$32 million as of December 31, 2017). In addition, on March 6, 2018, Kyivstar secured the following spectrum through auction in the 1800MHz band: 25MHz (paired) for UAH 1.325 billion (US$47 million as of December 31, 2017) and two lots of 5MHz (paired) for UAH 1.512 billion (US$54 million as of December 31, 2017).

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Mobile Telecommunications Licenses in Uzbekistan

        We hold a national license for GSM900/1800, 3G and 4G/LTE covering the entire territory of Uzbekistan. The most recent license was an extension granted in May 2016 for 15 years, is effective until August 7, 2031 and requires annual license fee payments.

        Unitel LLC also has international communication services license valid until 2026 and for data transfer valid until 2019.

Mobile Telecommunications Licenses in Others

 
  Country
   
  Licenses (as of December 31, 2017)
   
  License Expiration
   
    Kazakhstan       Mobile services (GSM900/1800, UMTS/WCDMA2100, 4G/LTE800/1800)       Unlimited term    
    Kyrgyzstan       Radio spectrum of 800 MHz for the entire territory of Kyrgyzstan (technology neutral) 796-801MHz/837-842MHz       September 28, 2025    

 

 

 

 

 

 

Radio spectrum of 800 MHz for the entire territory of Kyrgyzstan (technology neutral) 791-796MHz/832-837MHz

 

 

 

December 27, 2026

 

 

 

 

 

 

 

 

Radio spectrum of 900 MHz, 1800 MHz and 2100 MHz for the entire territory of Kyrgyzstan (technology neutral)

 

 

 

October 30, 2019

 

 

 

 

 

 

 

 

National license for electric communication service activity

 

 

 

Unlimited term

 

 

 

 

 

 

 

 

National license for base station transmission

 

 

 

December 3, 2019

 

 

 

 

 

 

 

 

National license for services on data traffic

 

 

 

Unlimited term

 

 
    Armenia       Network operation for the entire territory of Armenia       March 3, 2028    

 

 

 

 

 

 

National licenses to use radio spectrum of 900 MHz, 1800 MHz and 2100 MHz for the entire territory of Armenia (technology neutral)

 

 

 

March 3, 2023

 

 
    Tajikistan       GSM900/1800       May 12, 2019    

 

 

 

 

 

 

3G

 

 

 

July 13, 2020

 

 

 

 

 

 

 

 

Data services (with permission to use of 800 MHz frequency for 4G/LTE services) for the entire territory of Tajikistan

 

 

 

December 9, 2020

 

 

 

 

 

 

 

 

International call services

 

 

 

August 11, 2021

 

 
    Georgia       GSM1800 10 MHz frequency       February 1, 2030    

 

 

 

 

 

 

GSM900 5.49 MHz frequency

 

 

 

February 1, 2030

 

 

 

 

 

 

 

 

LTE 800 10 MHz frequency

 

 

 

February 1, 2030

 

 

 

 

 

 

 

 

10 MHz 3G frequency

 

 

 

December 29, 2031

 

 
    Laos       2G, for the entire territory of Laos       January 23, 2022    

 

 

 

 

 

 

3G, for the entire territory of Laos

 

 

 

January 23, 2022

 

 

 

 

 

 

 

 

WLL, for the entire territory of Laos

 

 

 

January 23, 2022

 

 

 

 

 

 

 

 

ISP

 

 

 

Annual renewal

 

 

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Fixed-line Business Licenses in Russia

        We have fixed-line, data and long distance licenses which are important to our fixed business in Russia. These licenses will expire between April 17, 2018 and March 26, 2023.

        We have filed, or will file, applications for renewal for all of our licenses that expire in 2018, which include: local communications services in St. Petersburg (May 23, 2018) and Krasnodar (April 18, 2018); leased communications circuits services in Moscow (August 28, 2018), Ekaterinburg, Nizhny Novgorod, Novosibirsk, Rostov-on-Don (November 12, 2018) and Krasnodar (April 17, 2018; August 18, 2018; November 12, 2018); data transmission services in Ekaterinburg (July 05, 2018) and Krasnodar (April 17, 2018); voice communications services in data transmission networks in Ekaterinburg (July 05, 2018) and Krasnodar (April 18, 2018); and telematic services in Ekaterinburg (July 05, 2018).

        In addition, we have an International and National Communications Services license for the entire Russian Federation which will expire on December 13, 2019.

Fixed-line Business Licenses in Pakistan

        There are two main categories of licenses for provision of fixed line services in Pakistan. One type is Long Distance & International ("LDI") license and other is Local Loop ("LL") license. LDI License is meant for providing nationwide and international telecommunication services whereas LL license is for provision of services (fixed line and/or wireless local loop with limited mobility) within a telecom region for which license is awarded.

Fixed-line Business Licenses in Ukraine

        We have international, long-distance and local communication licenses in place in Ukraine. Our international communication license expires on August 18, 2019; our long-distance communication license expires on August 18, 2019 and our local communication license expires on August 29, 2020. Each of the foregoing licenses are valid throughout Ukraine.

Fixed-line Business Licenses in Uzbekistan

        We have a fixed-line license valid until 2021, a data license valid until 2021 and long distance licenses which are valid until 2029. These licenses require the payment of annual fees and cover services including local, long distance and international communications, data transmission and internet.

Fixed-line Business Licenses in Armenia

        We operate a nationwide fixed-line network in Armenia on the basis of a general (fixed and mobile) network operation license, expiring on March 3, 2028. We also have a license to use a 450MHz frequency band for the provision of fixed wireless voice telephony and broadband services in rural areas in Armenia, which expires on March 3, 2023.

Fixed-line Business Licenses in Kazakhstan

        We have a long distance license which is important to our fixed business in Kazakhstan. This license has an unlimited term, no license fee and covers services including long distance and international connection, traffic termination and transit.

Description of Operations of the Italy Joint Venture

        We do not control the Italy Joint Venture and therefore account for the Italy Joint Venture using the equity method and do not fully consolidate its results into our financial statements. We own a

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50.0% share of the Italy Joint Venture with our joint venture partner, Hutchison. We include the following operational information for the Italy Joint Venture in this Annual Report on Form 20-F because we consider the Italy Joint Venture to be a significant part of our business. For more information, see "Explanatory Note—Presentation of Financial Information of the Italy Joint Venture" and notes 5, 14 and 25 to our audited consolidated financial statements for further information.

Mobile Business in Italy

        The Italy Joint Venture markets its mobile, internet, fixed-line voice and data offerings by employing a multibrand strategy for the "WIND" and "3" brands in their respective consumer markets together with the "WIND TRE BUSINESS" brand dedicated to the business segment. The Italy Joint Venture provides a variety of mobile data services and VAS for telephone and computer to its consumer and corporate customers.

        WIND customers can choose between tied and untied portfolios. The tied offers are both prepaid and postpaid offers that bind customers for a specified period and include penalties if the customer leaves during the agreed period. The untied offers are only prepaid and do not bind customers for a specified period but allow them to use prepaid credit they have on their SIM card. "3" customers can choose between tied and untied prepaid portfolios and tied postpaid. For "3", the tied and untied offer portfolios include certain all-inclusive packages that include a smartphone purchase and certain other packages.

        The Italy Joint Venture offers a variety of content and infotainment services. For example, the Italy Joint Venture has renewed its partnerships with Google and Microsoft for carrier billing (purchase of apps, games, music and other digital contents paying with phone credit) delivering several co-marketing initiatives with Google to encourage usage. In 2017, the Italy Joint Venture signed a partnership with Apple allowing payments via phone credit on iTunes, App Store, iBooks and Apple Music for both WIND and "3" customers. In 2017, "3" signed a partnership with Netflix, enabling "3" postpaid customers to have access to Netflix's on-demand entertainment streaming service, which is offered for free for the first three months on internet plans such as "3Cube".

Mobile bundles

        The Italy Joint Venture offers bundle options, suited for both prepaid and postpaid customers, which include minutes of voice traffic, SMS, and mobile internet browsing for a fixed fee. Specific bundles targeting younger and senior consumers are available. WIND provides data-friendly users with the opportunity to manage their own account via digital channels such as the web, mobile apps and social networks. In order to integrate the offer, WIND provides a selection of smartphones, tablets and new technological and interactive devices that can be purchased through installment payments and taking advantage of discounts.

VEON platform

        In November 2016, WIND released the VEON platform on both the Android and IOS digital stores. In July 2017, the Italy Joint Venture launched VEON 2.0, which introduces new functionalities, such as the channels functionality, whereby users can follow certain brands and receive news, promotions and offers. The app is available to everyone, but WIND's customers have additional advantages in terms of free data traffic and other rewards.

Distribution

        For corporate customers in Italy, the Italy Joint Venture uses different marketing strategies depending on the nature and size of a customer's business. For large corporate customers and SMEs, the Italy Joint Venture's marketing efforts are more customized and institutional in nature, and include

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one-on-one meetings and presentations, local presentations and presentations at exhibitions. For the SOHO market, the Italy Joint Venture advertises in the professional and general press and uses airport billboards. The Italy Joint Venture sells consumer mobile products and services, including SIM cards, scratch cards and handsets through a series of exclusive outlets, which as of December 31, 2017 consisted of 1,635 total sales points (689 WIND brand sales points and 946 "3" brand sales points). The non-exclusive Italy Joint Venture sales network consists of 3,715 multi-brand dealers spread throughout the country. The Italy Joint Venture also sells a portion of its consumer services online through its websites.

Competition

        The mobile telecommunications market in Italy in which the Italy Joint Venture operates is characterized by high levels of competition among service providers. Competition intensified during 2017 and the Italy Joint Venture expects this market to remain competitive in the near term, and competition may be exacerbated by further consolidation and globalization of the telecommunications industry. Additionally, in the first half of 2018, the French operator Iliad is expected to launch in the Italian market as a new mobile operator as a beneficiary of the remedy package agreed with the European Commission for the completion of the Italy Joint Venture.

        The following table shows the Italy Joint Venture's and its principal competitors' respective mobile customer numbers in Italy as of December 31, 2017:

Operator
  Customers
(in millions)
 

Telecom Italia

    30.8  

Italy Joint Venture

    29.5  

Vodafone Italy

    22.4  

Source: Telecom Italia, Italy Joint Venture and Vodafone Italy

        According to Analysys Mason, the network operators in Italy offered mobile telecommunications services to approximately 72.9 million registered customers as of December 31, 2017, representing a mobile penetration rate of approximately 122.0% of the Italian population compared to 81.7 million customers and a mobile penetration rate of approximately 136.6% in 2016.

Licenses

    GSM1800 and GSM900

        The Italy Joint Venture has a license to provide mobile telephone services in Italy using digital GSM1800 and GSM900 technology. This license is due to expire on June 30, 2018. In the Italian Budget Law 2017, the Italian government sets out the conditions and formal procedure to be followed by operators holding GSM spectrum rights of use wishing to extend such rights until December 31, 2029 and also obtain freedom to use such spectrum under a technology neutrality regime. The Italy Joint Venture is awaiting the related interministerial decree that concludes the procedure referred to in the aforementioned law.

    3G

        Both WIND and "3" acquired 3G licenses in 2001, which were initially expected to expire in 2021, but were extended to December 2029. In light of the authorization received from the Italian Ministry of Economic Development ("MISE") regarding the transfer of spectrum rights of use (7 blocks of 2x5MHz in 900, 1800, 2100 and 2600MHz bands) from WIND and "3" to the French operator, Iliad, the Italy Joint Venture will have to submit a request for the extension to the MISE for the 2100MHz

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spectrum rights of use from December 2021 to December 2029. The extension to December 2029 is subject to compliance with the provisions of the Ministry of Economic Development issued in October 2016 and the payment of contributions, payable for the years 2022 to 2029.

    4G/LTE

        WIND and "3" have licenses for 4G/LTE spectrum rights of use in 800, 1800 and 2600 MHz bands. Such spectrum rights are due to expire in December 2029. The following is a list of mobile access spectrum blocks, on a band-by-band basis, which will be held by the Italy Joint Venture once the spectrum release to Iliad is completed: 800 Band—2 blocks of 2x5 MHz; 900 Band—2 blocks of 2x5 MHz; 1800 Band—4 blocks of 2x5 MHz; 2000 TDD Band 5+5 MHz; 2100 Band—4 blocks of 2x5 MHz; 2600 Band—4 blocks of 2x5 MHz; and 2600 TDD Band 15+15 MHz. All the frequency blocks indicated and held by Wind Tre S.p.A. will be contiguous in the respective bands according to the provision of the Ministry of January 9, 2018 which provides for the reallocation in 1800 MHz and 2100 MHz spectrum.

    5G

        On September 22, 2017, MISE formalised the award to Wind Tre S.p.A. and Open Fiber S. p. A. of a provisional authorization, for a four-year duration, to carry out the 5G pre-commercial trials in the spectrum portion 3.6 - 3.8 GHz in area 2—Prato and L'Aquila.

Equipment and operations

        The Italy Joint Venture has a tower services agreement with Galata (a subsidiary of Cellnex) for an initial term of 15 years for the provision of a broad range of services on the sites. On July 4, 2017, the Italy Joint Venture sold all of its shares in Galata, which had comprised 10% of the shares of Galata, following the sale in March 2015 of 90% of its shares in Galata. As of December 31, 2017, the Italy Joint Venture owned 287 radio centers (for all of which it owns the towers and equipment rooms, and for approximately 12 out of 287 it also owns the land where the radio centers are located), 586 towers, approximately 5,400 towers on rented locations, excluding roof top sites, on which antennas for radio coverage are installed (considering also the effect of the Galata towers transaction), and approximately 1,000 other minor towers.

Fixed-line Business in Italy

        In Italy, the Italy Joint Venture offers a wide range of fixed-line voice and internet broadband services. The Italy Joint Venture offers these services to both consumer and corporate customers under the Infostrada brand (our fixed-line voice, broadband and data services brand in Italy). The Italy Joint Venture's fixed-line voice customer base in Italy consisted of approximately 2.7 million customers as of December 31, 2017.

        The Italy Joint Venture offers both DSL and Fiber through bundled offerings. For LLU customers only, the Italy Joint Venture continues to offer the ADSL Vera concept that allows a variable maximum download speed up to 20 Mbps. Both WIND and "3" launched two different offers in September 2017 in order to reinforce convergent positioning and address different target customers. For SME customers, the Italy Joint Venture offers a new fixed portfolio "Office", which offers mono and multi-lines, in ADSL, FTTC and FTTH. "Smart Office" offers a virtual IP PBX solution.

        Throughout Italy, the Italy Joint Venture provides PSTN, ISDN and VoIP fixed-line voice services, data services, VAS and connectivity services to corporate customers, including large corporate customers, SMEs and SOHOs. The Italy Joint Venture also offers large corporate customers national toll free and shared toll. The Italy Joint Venture's offerings are tailored for SOHO customers and

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include tariff plans with unlimited internet access, voice calls on VoIP technology and a combined service for renting, running, and maintaining telephone switchboards.

Distribution

        The distribution strategy is based on the concept of omnichannel (shops, web or telephone), following the needs of the customer who independently chooses the most appropriate sales channel. In terms of performance, the most important sales channel is retail (mono-brand and multi-brand stores) which, through integrated and converging offers, continue to grow in productivity. The Italy Joint Venture utilize sales agencies, call centers and a direct sales force to target sales of fixed-line voice and internet services to corporate customers.

Competition

        In the Italian fixed-line voice market, the incumbent operator, Telecom Italia, maintains a dominant market position. Swisscom and Vodafone have entered the fixed-line internet, voice and data markets by buying Fastweb S.p.A. and Tele2 (successively rebranded TeleTu), respectively. We expect that the fixed-line telecommunications market will remain competitive as a result of the presence of international competitors, with the introduction and growth of new technologies, products and services.

Licenses

        Fixed-line services are provided pursuant to several 20-year licenses obtained from the Italian Ministry of Economic Development in 1998. Such licenses would have expired in 2018, but in December 2017, the Italy Joint Venture applied for the renewal of such licenses, and in January 2018 was granted a renewal until 2038.

Equipment and operations

        The Italy Joint Venture has an integrated network infrastructure providing high capacity transmission capabilities and extensive coverage throughout Italy. The Italy Joint Venture mobile and fixed-line networks are supported by over 35,926 kilometers of fiber optic cable backbone in Italy and 6,786 kilometers of fiber optic cable MANs, as of December 31, 2017. As of December 31, 2017, the Italy Joint Venture had 1,958 LLU sites for direct customer connections (approximately 70% of the population is covered).

        The Italy Joint Venture offers voice and broadband internet services to direct customers by renting from Telecom Italia the "last mile" of the access network. In the areas where the Italy Joint Venture does not have direct access to the network via LLU, customers can request wholesale services though the Italy Joint Venture. The Italy Joint Venture offers broadband mainly to direct customers, so long as the line is ADSL or ADSL 2+ capable. In April 2016, WIND signed a strategic and commercial partnership with Open Fiber ("OF") (formerly Enel Open Fiber) with the aim of re-enforcing its ability to offer ultra-broadband services in the fixed-line market. The Italy Joint Venture, during 2017, extended the original agreement, which was already active in 13 cities, to additional 258 Italian cities (for a total of 271). As of December 31, 2017, OF reached approximately 2.4 million of homes in Italy.

Regulatory

        For a description of certain laws and government regulations to which our main telecommunications businesses are subject, see "Exhibit 99.2—Regulation of Telecommunications."

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Litigation Developments

        For a discussion of developments regarding legal or arbitration proceedings which may have, or have had in the recent past, significant effects on our financial position or profitability, see Notes 22 (Provisions) and 26 (Risks, commitments, contingencies and uncertainties) to our audited consolidated financial statements included elsewhere in this Annual Report on Form 20-F.

Seasonality

        Our mobile telecommunications business is subject to certain seasonal effects. Generally, revenue from our contract and prepaid tariff plans tends to increase during the December holiday season, and then decrease in January and February. Mobile revenue is also higher in the summer months, when roaming revenue increases significantly as customers tend to travel more during these months. Guest roaming revenue on our networks also tends to increase in the summer period.

        Our fixed-line telecommunications business is also subject to certain seasonal effects. Among the influencing factors is the number of working days in a given period, as well as periods of vacations. Generally, our revenue from our fixed-line telecommunications business is lower when there are fewer working days in a period or a greater number of customers are on vacation, such as during the December holiday season and in the summer months.

Property, Plants and Equipment

Information Technology

        We devote considerable resources to the development and improvement of our IT systems. As part of our continuous IT innovation process, we engage with third parties in order to develop and implement IT technologies across our infrastructure. In June 2016, we entered into a large-scale global software partnership with Ericsson. Under this partnership, Ericsson will develop, implement, and operate, over a seven-year period, new business support systems for the majority of our operating companies. Business support systems make up the core of our IT infrastructure and include billing, charging, care and provisioning systems.

        We have also implemented a threat and risk-based cyber security strategy, which we believe enables us to identify potential threats that may impact our business and, consequently, may aid us in the implementation of the requisite security measures to address such threats.

Intellectual Property

        We rely on a combination of trademarks, service marks and domain name registrations, copyright protection and contractual restrictions to establish and protect our technologies, brand name, logos, marketing designs and internet domain names. We have registered and applied to register certain trademarks and service marks in connection with our telecommunications and digital businesses in accordance with the laws of our operating companies. Our registered trademarks and service marks include our brand name, logos and certain advertising features. Our copyrights are principally in the area of computer software for service applications developed in connection with our mobile and fixed-line network platform, our VEON platform and for the language and designs we use in marketing and advertising our communication services. For a discussion of the risks associated with new technology, see "Item 3—Key Information—D. Risk Factors—Risks Related to the Industry—Our intellectual property rights are costly and difficult to protect, and we cannot guarantee that the steps we have taken to protect our intellectual property rights will be adequate" and "Item 3—Key Information—D. Risk Factors—Legal and Regulatory Risks—New intellectual property laws or regulations may require us to invest substantial resources in compliance or may be unclear."

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Buildings

        The primary elements of our material tangible fixed assets are our networks, as discussed in "—Mobile Telecommunications Equipment and Operations" and "—Fixed-line Telecommunications Equipment and Operations."

        The buildings housing our head offices in Amsterdam and London are leased. Our global headquarters activities are hosted in Amsterdam. Our London office covers strategic, commercial and digital activities.

        In Russia, we own a number of buildings in Moscow, including 26,517 square meters at 10, Ulitsa 8 Marta, 14,984 square meters on Lesnoryadsky Pereulok, a leased administrative building at 4, Krasnoproletarskaya Street and a portion of a building on Ulitsa 1st Tverskaya Yamskaya. We use these buildings for a variety of functions, including administrative officers, technical centers, warehouses, operating facilities, main switches for our networks and IT centers. We also own office buildings in some of our regional license areas and lease space on an as-needed basis.

        In Pakistan, our subsidiary PMCL owns a number of properties consisting of over 28,000 square meters in Karachi, Lahore, Faisalabad and Islamabad. These properties are used for PMCL's operations and include data centers, office buildings and switching stations. PMCL also owns bare land of 104,517 square meters and leases properties across Pakistan, AJK and Gilgit-Baltistan, including its headquarters and BTS sites. In addition, Warid owns a number of properties totaling 21,686 square meters that are mostly used for master switching centers, technical installations and data centers.

        In Ukraine, our subsidiary, "Kyivstar" JSC, owns a series of buildings consisting of 34,067 square meters at Degtyarivska, 53 in Kyiv. We use these buildings for offices, call centers, switching centers and a print center. In addition, we own a number of buildings throughout Ukraine consisting of over 62,258 square meters that we use as office space, switching centers, call centers, sales centers, data centers and storage units.

        In Uzbekistan, we own 13 buildings consisting of approximately 27,052 square meters, which are used as administrative offices, technical centers and switching centers. In addition, we lease properties across Uzbekistan that we use for offices, sales centers, warehouses, archive centers, switching centers and parking.

Telecommunications Equipment and Operations

Mobile network infrastructure

        GSM, 3G and 4G/LTE Advanced technologies are based on open 3GPP standards, which means that standard compliant equipment and software from any supplier can be added to expand the initial network. Our GSM/GPRS/EDGE/3G/HSPA/4G/LTE/LTE Advanced networks, which use mainly Ericsson, Huawei, ZTE, Nokia, Cisco Systems, are integrated wireless networks of radio base station equipment, circuit and packet core equipment and digital wireless switches connected by fixed microwave transmission links, fiber optic cable links and leased lines. We manage all major suppliers centrally to benefit from the group's purchasing scale and monitor the commercial terms across the group. We select suppliers based mainly on compliance with technical and functional requirements and total cost.

        We enter into agreements for the location of base stations in the form of either leases or cooperation agreements that provide us with the use of certain spaces for our base stations and equipment. Under these leases or cooperation agreements, we typically have the right to use such property to place our towers and equipment shelters. We are also party to certain network managed services agreements to maintain our networks and infrastructure. For example, in 2017, in Russia we entered into agreements with Huawei Technologies Co. Ltd. and Nokia Solutions and Networks LLC,

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covering managed services across Russia for optimized network planning, consolidation of outsourced managed services, network building, operations, support and maintenance.

        We also enter into agreements with other operators for radio network sharing, where we either share the passive equipment, physical site and towers or combine the operation of the radio equipment with other operators. Network sharing brings not only substantial savings on site rentals and maintenance costs but also on investments in equipment for the rollout of new base stations. In Russia, we have agreements with MTS and MegaFon in different regions and for different technology combinations, respectively. In Kazakhstan, we have a network sharing agreement with Kcell Joint Stock Company pursuant to which the two operators will undertake joint planning of a combined 4G/LTE network in order to generate greater cost efficiencies and a significantly accelerated roll-out of 4G/LTE across the country.

Fixed-lined infrastructure

        Our infrastructure in each of the countries in which we provide fixed-line services supports our mobile businesses as well as our fixed-line businesses.

        In Russia, our fixed infrastructure consists of two primary parts—our transport network and fixed core network. Our transport network is designed and is continually developed to carry voice, data and internet traffic of mobile network, FTTB and our fixed-line customers, of which the main technologies are fiber optics and microwave links. Our fiber optics network consists of international lines, domestic main lines, zonal and local. All of the networks are connected and share resources where required. Our primary vendors of active optical equipment are Cisco, Juniper, Huawei, Ciena and ECI. Microwave technology is mainly used to provide access to the final destination (base station or client). We use modern, high capacity (150+ Mbps) microwaves from leading telecommunications vendors such as Ericsson, Huawei, Nec and Aviat. We use a three tiered architecture for our fixed core network (voice) to ensure correct and efficient traffic management and answer business demands: local, zonal and federal. We are also rolling out FTTB networks. In Russia, where the local loop has not been unbundled and the quality of copper lines is generally poor, construction of fiber networks helps to create alternative high quality access to customers' residences. As of December 31, 2017, we had more than 2.2 million customers connected to our FTTB network in Russia, operating in 144 cities across Russia.

        In Ukraine, our transport network is designed to provide a full range of telecommunications services for corporate and enterprise customers, including private leasing channel, voice, IP voice, L2VPN, IP VPN, and internet access. Our transport network is based on our optical cable network utilizing DWDM, SDH and IP/MPLS equipment. The DWDM and SDH networks connect regional and mid-sized cities of Ukraine. All our DWDM and SDH optical networks are fully ring-protected (except for secondary towns) and can be self-healing. Our core IP/MPLS network is fully mesh-protected and connects all the main regional cities of Ukraine. As of December 31, 2017, the total length of our fiber optic cables is 44,415 kilometers, including 20,301 kilometers between cities, 15,194 kilometers inside cities, and 8,920 kilometers of local FOL for FTTB, which is connected to the local PSTN in Kyiv, to other major metropolitan areas in Ukraine, and to our gateway.

        In Uzbekistan, our joint venture's (Buzton) network provides international telephony and internet access through JSC Uzbektelecom. Buzton's network consists of 107 nodes situated throughout Uzbekistan. We have our own basic fiber optic digital network in the cities of Tashkent, Zarafshan, Samarqand, Bukhara, Navoiy and Uchkuduk, covering more than 426 kilometers with connection to 30,476 FTTB ports, and copper cables, providing services through 14,920 ADSL ports, that allow users to connect and to access services in nearly all regions of Uzbekistan. Our main line in Tashkent is based on fiber optic equipment.

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        In Armenia, our fixed-line infrastructure covers all districts of Armenia with a full set of equipment, including international gateway, digital-analog exchanges, remote access telephone nodes, MSANs, internet protocol digital customer line access multiplexers, fiber and copper wire access networks, fiber optic backbone network and data access network. Our network consists of 210,000 ADSL ports, 10,656 VDSL ports, 2,033 buildings provided with FTTB fiber access and 167 Central Offices (telephone exchanges, MSANs, remote nodes), of which 141 are digital. VEON Armenia also provides interconnection with international operators and national mobile and fixed-line operators in Armenia. VEON Armenia's CDMA Wireless Local Loop network is used to provide fixed-line telephone services to rural customers but it will be replaced by a 4G/LTE solution on a 450 MHz spectrum.

        In Kazakhstan, our subsidiaries TNS-Plus LLP and KaR-Tell LLP provide a wide range of fixed-line telecommunications services, including internet access, ADSL, FTTB, Wi-Fi, WiMax, VoIP, VPN and VSAT. TNS-Plus owns more than 13,671 kilometers of fiber optic main lines across Kazakhstan, which are based on Huawei SDH/DWDM equipment. As of December 31, 2017, we had approximately 660,854 customers connected via FTTB technology across 29 cities in Kazakhstan.

Corporate Social Responsibility

        We have a long-term corporate responsibility strategy, consisting of two main elements: maintaining the trust of our stakeholders by behaving in a responsible and sustainable way, which represents our "license to operate" initiatives; and creating shared value in our communities through our products and services, which represents our "license to grow" initiatives. We are committed to investing in the markets in which we operate and continue to seek opportunities to leverage our technology, commercial expertise, and the commitment of our employees for the betterment of our communities.

        Our approach to the identification, management and evaluation of corporate responsibility is guided by three main factors:

    Stakeholders: A range of stakeholders have legitimate concerns and expectations about how our company operates. By engaging with them, we understand and evaluate these issues and plan how best to improve our business. We follow a number of multi-stakeholder defined standards and guidelines. Our reporting meets Global Reporting Initiative standards at the "core" level, follows the guidance in the AA1000 Accountability Principles Standard and is influenced by the guidance issued by the International Integrated Reporting Council. Several of our markets have adopted International Organization for Standardization standards, and the social accountability standard;

    Materiality: We prioritize these issues globally as well as logically, by assessing the materiality of individual issues to our strategy and their importance to our stakeholders. Each material issue is scored against pre-defined criteria; and

    Responsiveness: Having identified the priorities, we form our strategy and governance approach, take appropriate action and report on our progress through our corporate strategy framework overview. This overview includes analysis of the strategy elements and business principles, relevance to the business strategy, relevance to stakeholders and finally, a status summary. Within our Corporate Citizenship, report, our corporate responsibility performance is disclosed periodically, which is used by the corporate responsibility team to determine the effectiveness of policy and design novel policy and management approaches.

        Our corporate responsibility program is overseen by our corporate responsibility team, which reports to our Group Chief Corporate & Public Affairs Officer who, in turn, reports to the Chief Executive Officer. The team has access to the top operational committee for issue-by-issue decisions.

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        We are accountable to our stakeholders and customers through the publication of our annual Corporate Responsibility report, which is published each year. We also share periodic updates with internal stakeholders, including members of management, to inform them about key corporate responsibility related developments.

Disclosure of Activities under Section 13(r) of the Exchange Act

        Under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Exchange Act, we are required to disclose whether we or any of our affiliates are knowingly engaged in certain activities, transactions or dealings relating to Iran or certain designated individuals or entities. Disclosure is required even when the activities were conducted outside the United States by non-U.S. entities—including non-U.S. entities that are not otherwise owned or controlled by U.S. entities or persons—and even when such activities were conducted in compliance with applicable law.

VEON

        The following information is disclosed pursuant to Section 13(r) of the Exchange Act. None of these activities involved our U.S. affiliates. VEON intends to continue these agreements.

    We have active roaming agreements with GSM mobile network operators in various countries throughout the world, including with Telecommunications Company of Iran ("TCI"), MTN Irancell, Taliya Mobile and Telecommunications Kish Company (also known as TKC KIFZO) and RighTel in Iran. TCI and MTN Irancell are owned or controlled by the Iranian Government, and our other roaming partners in Iran may be affiliated with the Iranian Government. Pursuant to our roaming agreements with these companies, our customers receive customary international roaming services on their networks, and their customers receive such services while roaming on our networks outside those countries. During 2017, our gross revenue received from roaming arrangements with TCI, MTN Irancell and RighTel was US$489,726, US$25,817 and US$2,325 respectively. We recorded a net profit from roaming arrangements with TCI of US$442,222, and net losses with MTN Irancell and RighTel of US$171,104 and US$8,136, respectively. During 2017, we received no gross revenue from roaming arrangements with Taliya Mobile and TKC KIFZO with no net profits.

    During 2003, our Armenian subsidiary, VEON Armenia, and TCI, an Iranian government-owned company, have an agreement for the provision of voice services. During 2017, VEON Armenia recorded gross revenue from these activities of US$326,110 and a net profit of US$242,476. During 2017, VEON Armenia also provided telecommunications services to the Embassy of Iran in Yerevan. The gross revenue for these services in 2017 was US$22,710 and net profits were US$22,710.

    During 2001, our Russian subsidiary, PJSC VimpelCom, began providing telecommunications services, including mobile and fixed-line services, to the Embassy of Iran in Moscow. The gross revenue for these services in 2017 was approximately US$10,704 and service margin was approximately US$9,188.

    During 2008, our Tajikistan subsidiary, LLC Tacom, began providing telecommunications services to the Embassy of Iran in Dushanbe. The gross revenue for these services in 2017 was approximately US$5,730 and net profits were US$5,157.

    During 2014, our Kyrgyzstan subsidiary, Sky Mobile LLC, began providing mobile telecommunications services to the Embassy of Iran in Bishkek. The gross revenue for these services in 2017 was US$1,426 and net profits were US$1,426.

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    Our Algerian subsidiary, OTA, and subsequently its wholly owned subsidiary, Optimum, provided telecommunications services to the Embassy of Iran in Algiers. The gross revenue for these services in 2017 was US$1,181 with net profits of US$1,181.

Telenor

        Telenor may be deemed an affiliate based on its indirect share ownership in us through Telenor East. Telenor has provided us with the information included below relevant to Section 13(r) of the Exchange Act. This information relates solely to activities conducted by the Telenor group subsidiaries and does not relate to any activities conducted by us. We are not representing the accuracy or completeness of such information and undertake no obligation to correct or update this information.

        Various Telenor subsidiaries have entered into roaming agreements and interconnection agreements with Iranian telecommunications companies. Pursuant to those roaming agreements, the Telenor subsidiaries' customers are able to roam in the particular Iranian network (outbound roaming) and customers of such Iranian operators are able to roam in the relevant subsidiaries' network (inbound roaming). For outbound roaming, Telenor subsidiaries pay the relevant Iranian operator roaming fees for use of its network by Telenor subsidiaries' customers, and for inbound roaming the Iranian operator pays the relevant Telenor subsidiaries' roaming fees for use of its network by its customers.

        Telenor subsidiaries were party to the following roaming agreements and interconnection agreements with Iranian telecommunications companies in 2017, which Telenor and its subsidiaries intend to continue:

    Telenor Global Services AS, a Norwegian subsidiary, has an interconnection agreement with Telecommunication Company of Iran, the parent company of Mobile Telecommunication Company of Iran ("MCI"). During 2017, Telenor Global Services recorded net expenses of US$922,297 related to this interconnection agreement.

    Telenor Norge AS, a Norwegian subsidiary, has roaming agreements with MCI, MTN Irancell and Rightel. During 2017, Telenor Norge AS recorded net revenue related to these roaming agreements of €244 to MCI, net expenses of €17,234 to MTN Irancell and net expenses of €3,685 to Rightel.

    Telenor Sverige AB, a Swedish subsidiary, has roaming agreements with MCI and MTN Irancell and Rightel. During 2017, Telenor Sverige AB recorded net expense related to its roaming agreement with MCI of €43,761, net expenses related to its roaming agreement with MTN Irancell of €13,952 and net expenses related to its roaming agreement with Rightel €6,820.

    Telenor Pakistan (Private) Ltd., a Pakistani subsidiary, has roaming agreements with MCI and MTN Irancell. During 2017, Telenor Pakistan (Private) Ltd. recorded net expenses of €631 related to the roaming agreement with MCI and net revenue of US$50,018 related to the roaming agreement with MTN Irancell.

    Telenor A/S, a Danish subsidiary, has roaming agreements with MCI, MTN Irancell and Rightel. During 2017, Telenor A/S recorded net revenue related to its roaming agreement with MCI of €4,963, net expenses related to its roaming agreement with MTN Irancell of €19,895 and net expenses related to Rightel of US$4,388.

    Telenor d.o.o. Beograd Omladinskih brigada 90, a Serbian subsidiary, has a roaming agreement with MCI. During 2017, Telenor d.o.o. Beograd Omladinskih brigada 90 recorded net revenues of €6,408 related to this roaming agreement.

    Telenor Hungary Plc, a Hungarian subsidiary, has a roaming agreement with MCI. During 2017, Telenor Hungary Plc, recorded net revenues of €15,713 related to this roaming agreement.

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    Telenor Bulgaria EAD, a Bulgarian subsidiary, has a roaming agreement with MCI. During 2017, Telenor Bulgaria EAD recorded net revenues of €4,541 related to this roaming agreement.

    DiGi.Com Bhd, a Malaysian subsidiary, has a roaming agreement with MCI, MTN Irancell and Rightel. During 2017, DiGi.Com Bhd recorded net revenues of €17,042 related to MCI, net expenses of US$2,285 related to MTN Irancell and net revenues of US$327 related to Rightel.

    Total Access Communications Plc, a Thai subsidiary, had no traffic with Iran operators during 2017.

ITEM 4A.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

        The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the related notes included in this Annual Report on Form 20-F. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of numerous factors, including the risks discussed in "Item 3—Key Information—D. Risk Factors."

Basis of Presentation of Financial Results

        Our audited consolidated financial statements set forth in this Annual Report on Form 20-F include the accounts of VEON Ltd. and its consolidated subsidiaries. All inter-company accounts and transactions have been eliminated. We have used the equity method of accounting for companies in which we have significant influence. Generally, this represents voting rights of at least 20.0% and not more than 50.0%.

        We and our subsidiaries paid taxes computed on income reported for local statutory tax purposes. We based this computation on local statutory tax rules, which differ substantially from IFRS. Certain items that are capitalized under IFRS are recognized under local statutory accounting principles as an expense in the year paid. In contrast, certain expenses reported in the financial statements prepared under IFRS are not tax deductible under local legislation. As a consequence, our effective tax rate was different under IFRS from the statutory rate.

Recent Accounting Pronouncements

        VEON Ltd. is required to adopt the new accounting standards IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, effective from January 1, 2018, and IFRS 16 Leases, effective for the financial years from January 1, 2019. The transitional impacts on total equity upon adoption of IFRS 9 and IFRS 15 as of January 1, 2018 are expected to result in a decrease of US$48 million and an increase of US$99 million, respectively. We have yet to assess the impact of IFRS 16, which may be material, to the consolidated income statement and consolidated financial position upon adoption in 2019. Such impact is under analysis as of the date of this Annual Report on Form 20-F. For discussion on the impact this could have on our operations, see "Item 3—Key Information—D. Risk Factors—Risks Related to Our Business—Adoption of new accounting standards could affect reported results and financial position." See Note 3 to our audited consolidated financial statements for a discussion of new accounting pronouncements not yet adopted by the company.

Reportable Segments

        We present our reportable segments based on economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies.

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        As of December 31, 2017, our reportable segments consist of the eight following segments: Russia, Pakistan, Algeria, Bangladesh, Ukraine, Uzbekistan, the Italy Joint Venture and HQ (transactions related to management activities within the group in Amsterdam and London). Since January 1, 2017, management has also included the Italy Joint Venture as a reportable segment due to its increased contribution to our overall financial results and position. We do not control the Italy Joint Venture and therefore account for the Italy Joint Venture using the equity method and do not fully consolidate its results into our financial statements. See "—Further Information Regarding the Results of Operations of the Italy Joint Venture" for certain limited financial information regarding the results of operations of the Italy Joint Venture, which we present because we consider the Italy Joint Venture to be a significant part of our business. For the financial statements of the Italy Joint Venture we have filed in this Annual Report on Form 20-F pursuant to Rule 3-09 of Regulation S-X, see "Exhibit 99.3—Consolidated financial statements of VIP-CKH Luxembourg S.à.r.l for the years ended December 31, 2017 and 2016." For more information on the financial presentation of the Italy Joint Venture, see "Explanatory Note—Presentation of Financial Information of the Italy Joint Venture" and notes 5, 14 and 25 to our audited consolidated financial statements.

        The "Others" category is not a reportable segment but only a reconciling between our eight reportable segments and our total revenue and Adjusted EBITDA. "Others" represents our operations in Kazakhstan, Kyrgyzstan, Armenia, Tajikistan, Georgia and Laos as well as intercompany eliminations and costs relating to centrally managed operations monitored outside of VEON's headquarters. In October 2017, VEON announced the sale of its operations in Laos to the Government of the Lao People's Democratic Republic. Transfer of ownership of VEON's operations in Laos is subject to the satisfaction of certain conditions, including receipt of necessary corporate and regulatory approvals, and is expected to complete in 2018.

Key Developments and Trends

        The following key developments and trends reflect management's assessment of factors which are anticipated to have a material effect on the company's financial condition and results of operations. For a list of most important recent events in the development of our business, see "Item 4—Information on the Company—Overview—Key Developments."

Customer and revenue growth

        In 2017, our total operating revenue excluding currency impact increased by 4% while our mobile customer base increased 1% to 210.5 million as of December 31, 2017, compared to 207.5 million as of December 31, 2016. In 2018, we expect to continue to face challenging macroeconomic environments, particularly in Algeria, and intense competition in our markets. Nonetheless, despite very high penetration rates throughout our markets, we continue to see opportunities for revenue growth and to expand our customer base from increasing usage of data, content and other value added services.

VEON and GTH sell their Pakistan tower business for US$940 million

        On August 30, 2017, VEON and GTH announced that their subsidiary in Pakistan, Jazz, signed an agreement for the sale of its tower business, with a portfolio of approximately 13,000 telecommunications towers, for approximately US$940 million, subject to certain adjustments, to Tanzanite Tower Private Limited, a tower operating company owned by edotco Group Sdn. Bhd. and Dawood Hercules Corporation. The completion of the transaction is subject to the satisfaction or waiver of certain conditions including receipt of customary regulatory approvals.

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Impact of currency regime developments in Uzbekistan

        In September 2017, the government of Uzbekistan announced the liberalization of its currency exchange rules and the resetting of the official exchange rate at 8,100 Uzbek som per U.S. dollar, which represented nearly a halving of the value of the Uzbek som to the U.S. dollar. On December 22, 2017, VEON announced that its subsidiary, PJSC VimpelCom, had successfully repatriated a net amount of approximately US$200 million from Unitel. The currency conversion to US$200 million resulted in a foreign currency exchange loss of approximately US$49 million. In addition, the Uzbek som results of Unitel are now being translated into U.S. dollars at a higher exchange rate.

New Group CFO and CEO of Russia

        During 2017 and 2018, we had changes to the composition of our board and to the group's key management roles.

        On September 15, 2017, the company announced that Trond Westlie would be joining VEON as Group Chief Financial Officer and that VEON's current Group CFO, Andrew Davies, decided to step down from his role after four successful years. Mr. Westlie is an experienced financial executive having been CFO of AP Moller-Maersk from 2010 to 2016 and CFO of Telenor ASA from 2005 to 2009. He previously served as a member of VEON's supervisory board and chairman of our audit and risk committee between July 2014 and August 2016. Mr. Westlie joined VEON on October 2, 2017 and assumed his duties as CFO on November 9, 2017. Mr. Davies will continue as a board member of the Italy Joint Venture.

        Vasyl Latsanych was appointed as Chief Executive Officer of our Russian operations, PJSC VimpelCom, effective January 10, 2018. Vasyl spent over 16 years in telecoms, most of which was with the MTS Group in a number of senior roles. His most recent role was as Group Vice President for Strategy and Marketing, where he was responsible for MTS's commercial and strategic initiatives and led a significant customer experience transformation, as well as digital development.

VEON to sell Laos operations

        On October 27, 2017, VimpelCom Laos, a subsidiary of the company, entered into a sale and purchase agreement for the sale of its operations in Laos to the Government of Laos. Under the agreement, VimpelCom Laos will transfer its 78% interest in VimpelCom Lao Co. Limited to the Government of Laos, the minority shareholder, in exchange for purchase consideration of US$22 million. The transaction is subject to customary closing conditions and is expected to be completed in the first half of 2018.

Factors Affecting Comparability of Financial Position and Results of Operations

        The comparability of our financial position and results among the periods presented below is affected by a number of factors. Our financial position and results of operations for the three years ended December 31, 2017 as reflected in our audited consolidated financial statements included in this Annual Report on Form 20-F have been influenced by various factors, including those listed below. For a discussion of the key developments and trends, commitments or events that are likely to have a material effect on our results of operation for the current financial year, see "—Key Developments and Trends." We may also be subject to certain fines or compliance costs that are paid and accounted for in a particular fiscal year in connection with certain legal or administrative proceedings. For more information on the regulatory environment in which we operate, see "Exhibit 99.2—Regulation of Telecommunications."

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Pakistan Merger and Other Acquisitions and Dispositions

        We do not provide comparable financial information for periods preceding the date on which we acquired, consolidated or commenced operations in a particular country or segment, or following the date of disposal unless required by IFRS. In general, our selected operating and financial data, audited consolidated financial statements and related notes and the following discussion and analysis reflect the contribution of the operators we acquired from their respective dates of acquisition or consolidation and therefore such acquisitions affect the comparability of data between periods.

        For example, the acquisition of 100% of Warid's voting shares by our subsidiary, GTH, and our subsequent consolidation of Warid's financials starting from July 1, 2016 has a particularly strong impact on comparability. For more information regarding our acquisitions and dispositions, see Note 5 to our audited consolidated financial statements incorporated herein.

Economic Trends

        As a global telecommunications company with operations in a number of markets, we are affected by a broad range of international economic developments. Unfavorable economic conditions may impact a significant number of our customers, including their spending patterns, both in terms of the products they subscribe for and usage levels. As a result, it may be more difficult for us to attract new customers, more likely that customers will downgrade or disconnect their services and more difficult for us to maintain ARPUs at existing levels. The current difficult economic environment and any future downturns in the economies of markets in which we operate or may operate in the future could also, among other things, increase our costs, prevent us from executing our strategies, hurt our liquidity or to meet unexpected financial requirements. For more information regarding economic trends and how they affect our operations, see "Item 3—Key Information—D. Risk Factors—Risks Related to Our Markets—The international economic environment could cause our business to decline."

Inflation

        Inflation affects the purchasing power of our mass market customers, as well as corporate clients. The Russian, Ukrainian, Kazakh, Uzbek and Algerian currencies, for example, have experienced significant inflation levels in recent years, which has caused the relative values of those currencies to decline. Although the inflation rates have broadly stabilized, economic and political developments may cause inflation rates to rise once again.

        The table below shows the inflation rates for the years ended December 31, 2017, 2016 and 2015, and the source of the inflation rates.

 
  December 31,    
Country
  2017   2016   2015   Source

Russia

    2.5 %   5.4 %   12.9 % The Russian Federal State Statistics Service

Pakistan

    4.6 %   3.7 %   3.2 % The Pakistan Bureau of Statistics

Algeria

    4.6 %   7.0 %   4.4 % The National Statistics Office of Algeria

Bangladesh

    5.8 %   5.0 %   6.1 % The Central Bank of Bangladesh

Ukraine

    13.7 %   12.4 %   43.3 % The State Statistics Committee of Ukraine

Uzbekistan

    12.7% (1)   8.0 %   9.1 % The International Monetary Fund

(1)
As of October 31, 2017

Foreign Currency Translation

        Our audited consolidated financial statements are presented in U.S. dollars. Amounts included in these financial statements were presented in accordance with IAS 21, using the current rate method of currency translation with the U.S. dollar as the reporting currency. The functional currencies of our

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group are the Russian ruble in Russia, the Pakistani rupee in Pakistan, the Algerian dinar in Algeria, the Bangladeshi taka in Bangladesh, the Ukrainian hryvnia in Ukraine, the Uzbek som in Uzbekistan.

        Our results of operations are affected by increases or decreases in the value of the U.S. dollar or our functional currencies. A higher average exchange rate correlates to a weaker functional currency. We have listed below the relevant exchange rates for each of our countries of operation for the years ended December 31, 2017, 2016 and 2015. These should not be construed as a representation that such currency will in the future be convertible into U.S. dollars or other foreign currency at the exchange rate shown, or at any other exchange rates.

        The table below shows functional currencies and official exchange rates as of December 31, 2017, 2016 and 2015 as well as comparison of average exchange rates for 2017 versus 2016 and 2016 versus 2015.

 
   
  Exchange rates as of
December 31, local
currency per one US$
   
   
 
 
   
  Average
rate
2017 vs.
2016
  Average
rate
2016 vs.
2015
 
Country
  Functional Currency   2017   2016   2015  

Russia

  Russian ruble—RUB     57.60     60.66     72.88     (13.0 )%   10.0 %

Pakistan

  Pakistani rupee—PKR     110.70     104.37     104.73     0.6 %   1.9 %

Algeria

  Algerian dinar—DZD     114.76     110.40     107.10     1.4 %   9.0 %

Bangladesh

  Bangladeshi taka—BDT     82.69     78.92     78.25     3.1 %   0.6 %

Ukraine

  Ukrainian hryvnia—UAH     28.07     27.19     24.00     4.1 %   17.0 %

Uzbekistan

  Uzbek som—UZS     8,120     3,231     2,809     72.7 %   15.5 %

Foreign Currency Controls and Currency Restrictions

        We are subject to certain currency restrictions and local regulations that impact our ability to extract cash from some of our operating companies. For example, in Uzbekistan, in September 2017, the government of Uzbekistan liberalized the country's currency exchange rules and reset the official exchange rate at 8,100 Uzbek som per U.S. dollar, which represented nearly a halving of the value of the Uzbek som to the U.S. dollar. On December 22, 2017, VEON successfully repatriated US$200 million from Uzbekistan. There are certain other restrictions in place to prevent currency outflow in Uzbekistan, but we do not expect that they will have a material impact on our operations. For more information on the Uzbek government's recent decision to liberalize its currency, see "—Key Developments and Trends—Impact of Currency Regime Developments in Uzbekistan."

        In Ukraine, Kyivstar can only partially expatriate dividends to VEON Ltd. because of restrictions imposed by the National Bank of Ukraine in 2014 to regulate money, credit and currency in Ukraine. Although several of these restrictions were substantially softened and partially abolished, certain restrictions remain in place in order to prevent any negative impact of currency outflow on the financial market. However, we do not expect that these restrictions will have a material impact on our operations. For more information on how our operations can be affected by certain currency risks, see "Item 3—Key Information—D. Risk Factors—Risks Related to Our Business—We are exposed to foreign currency exchange loss and currency fluctuation and translation risks."

        Our ability to extract cash from operating companies is also affected by certain regulatory hurdles and restrictions. For example, in some of our markets, strict foreign exchange regulations are in place and foreign currency financing agreements must be registered or approved by state authorities. In addition, some central banks closely control foreign exchange transactions and international transfers of funds. For more information on how our operations can be affected by certain regulatory controls and restrictions of foreign currencies, see "Item 3—Key Information—D. Risk Factors—Risks Related to our Markets—The banking systems in many countries in which we operate remain underdeveloped, there are a

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limited number of creditworthy banks in these countries with which we can conduct business and currency control requirements restrict activities in certain markets in which we have operations."

        For more information about risks related to currency exchange rate fluctuations, see "Item 11—Quantitative and Qualitative Disclosures About Market Risk" and Notes 4 and 17 to our audited consolidated financial statements.

Tax

        Our results of operations are also impacted by changes with respect to the tax regimes to which we are subject. For example, we expect our results of operations to be affected by: (i) a new finance law in Algeria that came into effect in 2017 that increased VAT from 7% to 19% on data services and from 17% to 19% on voice services, and increased taxes on recharges from 5% to 7%; (ii) an increase in the corporate income tax rate in Uzbekistan up to 48%; and (iii) revised interpretations of SIM tax regulations in Bangladesh and Pakistan.

Certain Performance Indicators

        The following discussion analyzes certain operating data, including Adjusted EBITDA, mobile customers, mobile ARPU, mobile data customers and fixed-line broadband customers that are not included in our financial statements. We provide this operating data because it is regularly reviewed by our management. Our management believes it is useful in evaluating our performance from period to period and in assessing the usage and acceptance of our mobile and broadband products and services. This operating data is unaudited.