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Technical terms

4G/LTE

is the fourth generation of mobile phone technology, evolving from 2G and 3G. 4G is able to support download speeds of up to 100mbps and upload speeds of up to 50mbps. In practice users will never see these speeds, but in general 4G/LTE is faster than 3G technologies. 4G services allow for much faster internet on mobile devices, tablets and laptops, with speeds resembling what consumers currently experience with home broadband.   

Backbone network

is a part of computer network infrastructure that interconnects various pieces of the network, providing a path for the exchange of information between different local area networks  (LANs) or sub networks. A backbone can tie together diverse networks in the same building, in different buildings in a campus environment, or over wide areas. Normally, the backbone's capacity is greater than the networks connected to it.

Backhaul network

comprises the intermediate links between the core network, or backbone, of the network and the small subnetworks at the "edge" of the entire hierarchical network. For example, while cell phones communicating with a single cell tower constitute a local subnetwork, the connection between the cell tower and the rest of the world begins with a backhaul link to the core of the telephone company's network. 

Branchless banking

is a distribution channel strategy used for delivering financial services without relying on bank branches. This technology provides financial inclusion to those people who are unable to use formal banking services due to various reasons, such as lack of education, hesitant behavior towards visiting a bank branch, fear of long procedures and paper work involved in formal banking, etc.

CAMEL

Application Part (CAP)-CAMEL application part is a set of call processing messages, originally defined for use with GSM, for the customization of setup and control of wireless calls in a GSM or WCDMA network.

Cloud computing

Refers to a technology based on providing users with the resources of multiple computers. Those resources include an entire set of hardware and software that facilitate the processing and execution of client requests. By storing these resources “in the cloud,” users can access a variety of applications using an ordinary Internet browser, requiring a minimum of equipment (e.g., netbooks, equipment for accessing the Internet) to remain in offices/apartments.

Digital subscriber line (DSL)

Digital subscriber line is the transmission of digital information, usually on a copper wire pair.

Ethernet

Is a packet based transmission protocol that is primarily used in LANs. 

Fiber to the home/Fiber to the building (FTTH/FTTB)

A distribution system that uses fiber optic cable to connect telephone networks to nodes that are located in homes or businesses. The fiber optic transmission is used to provide broadband services beyond the central office, all the way through the drop wire to the optical node that is located in the customer’s home.

High bit rate digital subscriber line (HDSL)

An all-digital transmission technology that is used on 2 or 3 pairs of copper wires that can deliver T1 or E1 data transmission speeds. HDSL is a symmetrical service. 

High-speed downlink packet access (HSDPA)

is an enhanced 3G mobile telephony communications protocol in the High-Speed Packet Access (HSPA) family, also dubbed 3.5G, 3G+ or turbo 3G, which allows networks based on Universal Mobile Telecommunications System (UMTS) to have higher data transfer speeds and capacity.

High speed packet access (HSPA)

is a mobile telephony protocol which supports increased peak data rates of up to 14 Mbit/s in the downlink and 5.8 Mbit/s in the uplink. It also reduces latency and provides up to five times more system capacity in the downlink and up to twice as much system capacity in the uplink, reducing the production cost per bit compared to original CDMA/GSM protocols. By July 2010, HSPA had been commercially deployed by over 200 operators in more than 80 countries.

Integrated digital loop carrier (IDLC)

is the integration of the integrated digital terminal (IDT) and remote digital terminal (RDT). The IDT is part of the local digital switch (LDS) and it acts like a concentrator to put more channels on a digital communications line. The IDLC system moves some of the switching services from the local switches into RDTs to increase the efficiency of communication lines between customers and the central office.

Internet protocol telephony (IP Telephony)

provides voice or multimedia communication services through the use Internet protocol (IP) networks. These IP networks initiate, process, and receive voice or multimedia communications using IP protocol. These IP systems may be public IP systems (e.g. the Internet), private data systems (e.g. LAN based), or a hybrid of public and private systems.

Internet protocol television (IPTV)

is the process of providing television (video and/or audio) services through the use of Internet protocol (IP) networks. These IP networks initiate, process, and receive voice or multimedia communications using IP protocol. These IP systems may be public IP systems (e.g. the Internet), private data systems (e.g. LAN based), or a hybrid of public and private systems.

Internet telephone (IP Telephone)

Is a telephone device that is specifically designed to communicate through the Internet without the need for a voice gateway. Internet telephones contain embedded software that allows them to initiate and receive calls through the Internet using standard protocols such as H.323 or SIP.

Last mile or "last kilometer"

is the final leg of delivering connectivity from a communications provider to a customer. The actual distance of this leg may be considerably more than a mile, especially in rural areas. Because the last mile of a network to the user is also the first mile from the user to the world, the term "first mile" is sometimes used.

Leased line

Leased lines are telecommunication lines or links that have part or all of their transmission capacity dedicated (reserved) for the exclusive use of a single customer or company. Leased lines often come with a guaranteed level of performance for connections between two points.

Local area network (LAN)

Local area networks (LANs) are private data communication networks that use high-speed digital communications channels for the interconnection of computers and related equipment in a limited geographic area. LAN's are networks of computers, normally personal computers, connected together in close proximity (office setting) to each other in order to share information and resources.

Local loop

The local loop is the connection (wireless or wired) between a customer's telephone or data equipment and a local exchange company (LEC) or other telephone service provider. Traditionally, the local loop (also called "outside plant") has been composed of copper wires that extend from the end office (EO) switch. The EO is the last switching office in the telephone network that connects customers to the telephone network.

Long term evolution (LTE)

Also known as 4G, is the next generation of mobile broadband technology designed to support roaming Internet access via cell phones and handheld devices.  LTE is intended to provide an extremely high performance radio-access technology that offers full vehicular speed mobility and that can readily coexist with HSPA and previous networks. Because of scalable bandwidth, operators will be able to easily transfer their networks and users from HSPA to LTE over time.  

Machine to machine (M2M)

refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability. The rapid development of information technology made possible the resolution of many issues associated with the control of machines to the machines themselves. This is what M2M, or “machine to machine,” systems are for. M2M technologies are everywhere. Utilities and other services companies use M2M capabilities to take readings from energy meters and to automate the billing process. Transportation companies are able to track the location of vehicles  and the loading of cargo. And M2M communications systems are actively used in such areas as retail trade and ATM networks. M2M technologies are not just the realm of B2B environments. M2M technology is becoming an ever more attractive for consumers whether it is to manage consumer electronics or remote control household appliances..

Mobile financial services (MFS)

mobile commerce or m-commerce, encapsulates a variety of innovative services that use a mobile phone as the primary payment user interface. With this technology mobile customers can conduct money transfers to pay for goods at an online store, make utility payments, pay fines and state fees, loan repayments, domestic and international remittances, pay mobile insurance and purchase tickets for air and rail travel, all via their mobile phone.

Multiplexing (also known as muxing)

is the use of multiple antennas at both the transmitter and receiver to improve communication performance. It is one of several forms of smart antenna technology. MIMO technology has attracted attention in wireless communications, because it offers significant increases in data throughput and link range without additional bandwidth or transmit power. It achieves this by higher spectral efficiency (more bits per second per hertz of bandwidth) and link reliability or diversity (reduced fading). Because of these properties, MIMO is an important part of modern wireless communication standards.

Multiple-input and multiple-output, or MIMO

is the use of multiple antennas at both the transmitter and receiver to improve communication performance. It is one of several forms of smart antenna technology. MIMO technology has attracted attention in wireless communications, because it offers significant increases in data throughput and link range without additional bandwidth or transmit power. It achieves this by higher spectral efficiency (more bits per second per hertz of bandwidth) and link reliability or diversity (reduced fading). Because of these properties, MIMO is an important part of modern wireless communication standards.

Near field communication (NFC)

refers to a technology for wireless frequency communication, which allows for the secure exchange of data between devices at a distance of no more than a few centimeters. With NFC, the mobile device can be enabled as a vehicle for making direct payments. For example, swiping a mobile phone over a digital reading device at a bus or train terminal turnstile is possible to have the cost of the fare withdrawn from your account balance.

Over-the-top (OTT)

refers to the delivery of content or services over an infrastructure that is not under the administrative control as the content or service provider. Originally it referred to the delivery of audio and video content, but more recently the definition has been extended to include any service or content available on the Internet. Consumers can access OTT content through Internet-Connected Devices such as smartphones.

Plain old telephone service (POTS)

Plain old telephone service is the provision of basic telephone service without any enhanced features. It is the common term for ordinary residential telephone service. The POTS system uses in-band signaling tones and currents to determine call status (e.g. call request). Because POTS allow for the transfer of audio signals below 3.3 kHz, POTS systems are also used for modems that allow data transmission (called dial up connection). Whenever a new service or feature is described, the author may refer to the previous available package of features and services as POTS, even when the previous package included several very sophisticated capabilities.

Post, telephone and telegraph (PTT)

A term used for a government agency in many countries that supplies and maintains the infrastructure and provides basic telecommunication services.  In many cases, these grew out of national post or telegraph offices.

Roaming

denotes the use of a communication device or even the use of a customer identity in a different network rather than one's home network. This requires the operators of both these networks to have reached a roaming agreement and switched the necessary signaling and data connections between their networks. Roaming comes into play when mobile voice or data services are used across national boundaries.

Ultra broadband

is a term that is commonly associated with very high-speed data transfer connections. When applied to consumer access networks, ultra broadband often refers to data transmission rates of 10 Mbps or higher.

Voice over internet protocol (VoIP)

is a process of sending voice telephone signals over the Internet or other data network. If the telephone signal is in analog form (voice or fax) the signal is first converted to a digital form. Packet routing information is then added to the digital voice signal so it can be routed through the Internet or data network.

Wideband code division multiple access (W-CDMA)

UMTS-FDD, UTRA-FDD, or IMT-2000 CDMA Direct Spread is an air interface standard found in 3G mobile telecommunications networks. It is the basis of Japan's NTT DoCoMo's FOMA service and the most-commonly used member of the UMTS family and sometimes used as a synonym for UMTS.

Worldwide interoperability for microwave access (WiMAX)

is a telecommunications protocol that provides fixed and fully mobile Internet access. The current WiMAX revision provides up to 40 Mbit/s with the IEEE 802.16m update expected to offer up to 1 Gbit/s fixed speeds. WiMAX is a standards-based technology enabling the delivery of last mile wireless broadband access as an alternative to cable and DSL.

Financial and operational terms

ARPU (Average Revenue per User)

is calculated by dividing service revenue for the relevant period, including revenue from voice-, roaming-, interconnect, and value added services (including mobile data, SMS, MMS), but excluding revenue from inbound roaming, connection fees, sales of handsets and accessories and other non-service revenue, by the average number of customers during the period and dividing by the number of months in that period. For Italy Business Unit, visitor roaming revenue is included into service revenue for ARPU calculation.

Data customers

are the customer contracts that served as a basis for revenue generating activity in the three months prior to the measurement date, as a result of activities including monthly Internet access using FTTB and xDSL technologies as well as mobile Internet access via WiFi and USB modems using 2.5G/3G/4G/HSPA+ technologies. The Italy Business Unit measures fixed data customers based on the number of active contracts signed and mobile data includes customers that have performed at least one mobile Internet event in the previous month. The Russia Business Unit includes IPTV activities. For Kazakhstan and Eurasia subsidiaries, mobile data customers are those who have performed at least one mobile Internet event in the three-month period prior to the measurement date. For Algeria, data customers are 3G customers who have performed at least one mobile data event on 3G network in the previous four months.

Capital expenditures (Capex)

are purchases of new equipment, new construction, upgrades, software, other long lived assets and related reasonable costs incurred prior to intended use of the non-current asset, accounted at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures.

EBIT

is a non-GAAP (Generally Accepted Accounting Principles) measure and is calculated as EBITDA plus depreciation, amortization and impairment loss. Our management uses EBIT as a supplemental performance measure and believes that it provides useful information of earnings of the Company before making accruals for financial income and expenses and Net foreign exchange (loss)/gain and others. Reconciliation of EBIT to net income attributable to VimpelCom Ltd., the most directly comparable IFRS financial measure, is presented above.

EBITDA

is a non-GAAP financial measure. EBITDA is defined as earnings before interest, tax, depreciation and amortization. VimpelCom calculates EBITDA as operating income before depreciation, amortization, loss from disposal of non-current assets and impairment loss and includes certain non-operating losses and gains mainly represented by litigation provisions for all of its Business Units except for its Russia Business Unit. The Russia Business Unit’s EBITDA is calculated as operating income before depreciation, amortization, loss from disposal of non-current assets and impairment loss.

 

EBITDA should not be considered in isolation or as a substitute for analyses of the results as reported under IFRS. Our management uses EBITDA and EBITDA margin as supplemental performance measures and believes that EBITDA and EBITDA margin provide useful information to investors because they are indicators of the strength and performance of the Company’s business operations, including its ability to fund discretionary spending, such as capital expenditures, acquisitions and other investments, as well as indicating its ability to incur and service debt. In addition, the components of EBITDA include the key revenue and expense items for which the Company’s operating managers are responsible and upon which their performance is evaluated.

EBITDA also assists management and investors by increasing the comparability of the Company’s performance against the performance of other telecommunications companies that provide EBITDA 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 income between periods. However, our EBITDA results may not be directly comparable to other companies’ reported EBITDA results due to variances and adjustments in the components of EBITDA (including our calculation of EBITDA) or calculation measures. Additionally, a limitation of 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. Reconciliation of EBITDA to net income attributable to VimpelCom Ltd., the most directly comparable IFRS financial measure, is presented above.

EBITDA margin

is calculated as EBITDA divided by total revenue, expressed as a percentage.

Households passed

are households located within buildings, in which indoor installation of all the FTTB equipment necessary to install terminal residential equipment has been completed.

MBOU (Megabyte of use)

is calculated by dividing the total data traffic by the average mobile data customers during the period.

MFS (Mobile financial services)

are a variety of services, such as mobile commerce or m-commerce, that use a mobile phone as the primary payment user interface and allow mobile customers to conduct money transfers to pay for items such as goods at an online store, utility payments, fines and state fees, loan repayments, domestic and international remittances, mobile insurance and tickets for air and rail travel, all via their mobile phone.

MNP (Mobile number portability)

Is a facility provided by telecommunications operators, often mandated by national regulation or legislation, which enables customers to keep their telephone numbers when they change mobile operators.

Mobile customers

are SIM-cards registered in the system as of a measurement date, users of which generated revenue at any time during the three months prior to the measurement date. This includes revenue coming from any incoming and outgoing calls, subscription fee accruals, debits related to service, outgoing SMS, Multimedia Messaging Service (referred to as MMS), data transmission and receipt sessions, but does not include incoming SMS and MMS sent by VimpelCom customers or abandoned calls. VimpelCom’s total number of mobile customers also includes SIM-cards for use of mobile Internet service via USB modems and customers for WiFi. The number for Italy is based on SIM-cards, users of which generated revenue at any time during the twelve months prior to the measurement date.  

MOU (Monthly Average Minutes of Use per User)

is generally calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile customers during the period and dividing by the number of months in that period. Algeria, Pakistan and Bangladesh units measure MOU based on billed minutes.

Net debt

is a non-GAAP financial measure and is calculated as the sum of interest bearing long-term debt and short-term debt minus cash and cash equivalents, long-term and short-term deposits and fair value hedges. The Company believes that net debt provides useful information to investors because it shows the amount of debt outstanding to be paid after using available cash and cash equivalent and long-term and short-term deposits. Net debt should not be considered in isolation as an alternative to long-term debt and short-term debt, or any other measure of the company financial position. Reconciliation of net debt to long-term debt and short-term debt, the most directly comparable IFRS financial measures, is presented above in the reconciliation tables section.

Net foreign exchange (loss)/gain and others

represents the sum of net foreign exchange (loss)/gain, Equity in net (loss)/gain of associates and Other (expense)/income, net (primarily losses from derivative instruments), and is adjusted for certain non-operating losses and gains mainly represented by litigation provisions. Our management uses Net foreign exchange (loss)/gain and others as a supplemental performance measure and believes that it provides useful information about the impact of our debt denominated in foreign currencies on our results of operations due to fluctuations in exchange rates, the performance of our equity investees and other losses and gains the Company needs to manage the business.

NPS (Net Promoter Score)

is the methodology VimpelCom uses to measure customer satisfaction. It is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company's products or services to others. It is used as a proxy for gauging the customer's overall satisfaction with a company's product or service and the customer's loyalty to the brand.

Operational expenses (Opex)

represents service costs and selling, general and administrative expenses.

Organic growth in revenue and EBITDA

are non-GAAP financial measures that reflect changes in Revenue and EBITDA excluding foreign currency movements and other factors, such as businesses under liquidation, disposals, mergers and acquisitions. 

Underlying growth Revenue and EBITDA

also excludes MTR reductions and one-offs. We believe investors should consider these measures as they are more indicative of our ongoing performance and management uses these measures to evaluate the Company’s operational results and trends.

Reportable segments:

the Company identified Russia, Italy, Algeria, Pakistan, Bangladesh, Ukraine and Eurasia based on the business activities in different geographical areas. Intersegment revenue is eliminated in consolidation.

Service costs

represent costs directly associated with revenue generating activity such as traffic related expenses, costs of content and sim-cards as well as costs of handsets, telephone equipment and accessories sold.

Selling, general and administrative expenses

represent expenses associated with customer acquisition and retention activities, network and IT maintenance, regular frequency payment, professional and consulting support, rent of premises, utilities, personnel and outsourcing as well as other general and administrative expenses. These expenses do not include personnel costs that have been capitalized as part of long-lived assets.