Transformation of Telecom Business in the new World of Data Kyiv, 6 December 2016 Olga Prokopovych General Legal Counsel PJSC “Kyivstar”

VimpelCom: a global communications and technology company Amsterdam VimpelCom 200+ million subscribers $9.6 billion revenues

Imagine a digital life for everyone Free calls and messages Selling and buying goods or services globally Online birth registration, passport application Healthcare advice at your home 24x7 Realtime earthquake warnings to a mobile phone Local (or international) TV series at a convenient time

Mobile technologies are leading the way… Years to reach 1 billion users Source: The State of Broadband 2015, Broadband Commission

We continue investing in connectivity to support surging demand VimpelCom offers 4G in the majority of our markets – with planned impending launches in most of the remaining markets We see demand exists (as phase 1 of the ecosystem maturity at previous slide suggests). Data from quarterly report – not confidential 82% is 9 markets out of 11 (excluding Lao and Zimbabwe, including Algeria, Kazakhstan, Kyrgyzstan and Uzbekistan.

Transformation of global business models WhatsApp has 55 employees and reached 1 billion users in Q2 2016 See backup slide #33 for more data. CapEx is hard to compare as many of the disruptors (Snapchat, Uber etc) are private but a brief comparison of CapEx to Revenues: Facebook 14% Twitter 16% Telenor 17% Telefonica 18% VimpelCom 23% Vodafone 29% Include a slide on a difference between MNOs and OTT giants leading the valuations – global (customer base, data, operational model) v. local; infrastructure heavy v. infrastructure light; agile; integrated organization (no HQ/OpCo differentiation) IDEALLY – JUST A TEASER – SOME LOGOs and ask everyone to contribute The combined market valuation is less than half of Facebook alone, with a similar amount of users Sources: Bloomberg, Google Finance, Forbes, Reuters, Facebook

The volume of data is exploding… Used cross-border bandwidth 90% of the world’s data has been generated in the last two years 40 Zettabytes (40 trillion GB) will have been created by 2020, compared to 4.4 in 2015 More than 1/3 of all data produced will live in or pass through the cloud by 2020 Lines represent interregional bandwidth (e.g. between Europe and North America) but exclude intraregional cross-border bandwidth (e.g. connecting European nations with one another). Sources: IBM, CSC, McKinsey

Data flows have become a crucial economic driver… The economic model shows that global flows account for approximately 10 percent of global GDP output Source: TeleGeography, Global Internet Geography; McKinsey Global Institute analysis, 2015

…however Legal Frameworks are lagging behind “National and regional legal frameworks that protect data in the ever-expanding digital economy are often outdated, incompatible or missing” “Insufficient protection can create negative market effects by reducing consumer confidence, and overly stringent protection can unduly restrict businesses, with adverse economic effects as a result” - Data localization requirements can have a negative impact on GDP between 0.7% and 1.1% - Data localization requirements increase costs for local companies by 30-60 percent http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1237 http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=1468 If services trade and cross-border data flows are seriously disrupted (between the EU and U.S.), the negative impact on EU GDP could reach -0.8% to -1.3%. Data localization requirements would lead to a negative impact on GDP in countries where considered: Brazil -0.8% India -0.8% Korea -1.1% Indonesia -0.7% (implemented) Cost to local companies for their computing needs would increase 30-60 Source: UNCTAD, 2016

Traditional policy topics remain relevant Licenses and Spectrum Broadband for Development Interconnection + Sharing InternationalRoaming Taxation Numbering and identification too

Regulatory environment becomes increasingly complex New Policy Topics Digital Offerings Internet messaging Comms State-of-the-Art Operating Model Traffic management Mobile Finance Meeting Policy Objectives Privacy | Data transfers | Data management IoT Cybersecurity Enter- tainment Mobile ID Big Data Financial regulation While enabling digital development e-Commerce Content requirements Mobile Health Piracy

Ukrainian Telecom Policy Issues (to name the few) 4G Electronic Telecomm’s Access to Infrastructure Subscriber Data Transfer Mobile Number Portability Mobile ID Mobile Financial Systems