VEON reports Q2 2022 results
VEON reports Q2 2022 results
Strong operational results, improved
profitability
Amsterdam, 4 August 2022 – VEON
Ltd. (VEON) announces its results for the second quarter and half
year ended 30 June 2022:
In 2Q22, VEON recorded USD 2,008 million in
total revenues, representing +5.6% YoY growth in reported currency
(+6.0% YoY in local currency). EBITDA was USD 913 million,
increasing by +13.0% YoY in reported currency (+14.1% YoY in local
currency). Capex of USD 382 million was 21.5% lower than in 2Q21,
with a 3.5 p.p. decrease in capex intensity (21.5%). Total cash and
cash equivalents were USD 2.3 billion, with USD 1.9 billion at the
HQ level.
Commenting on results, Kaan Terzioğlu
said:
“Our second quarter results demonstrate the
resilience and the success of VEON Group companies, as our 4G focus
and digital operator strategy continued to deliver growth despite
unprecedented geopolitical challenges. This quarter, our 4G users
reached 50% of our customer base, moving closer to our target of
70% 4G penetration. More subscribers, higher 4G penetration and
more digital services together with inflationary pricing and good
cost management are driving solid revenue and EBITDA performance
across our countries.
We continue to focus on our core priorities of
protecting our people and delivering the essential humanitarian
services of communication and connectivity. Our liquidity position
is strong, with USD 2.3 billion in cash at the end of 2Q22, of
which USD 1.9 billion was held at HQ level. “
2Q 2022 highlights:
- Revenue of USD 2,008 million, +5.6% YoY (+6.0% YoY in local
currency)
- Service revenue of 1,889 million, +7.1% YoY (+7.5% YoY in local
currency)
- EBITDA of USD 913 million, +13.0% YoY (+14.1% YoY in local
currency)
- Capex of USD 382 million, -21.5% YoY
- Net income of USD 183 million, +43.5% YoY
- Total cash and cash equivalents of USD 2.3 billion, with USD
1.9 billion at Headquarters
- 204 million mobile subscribers, up 2.7% YoY
- 102 million 4G users, up 19.2% YoY, with 50.0% penetration of
customer base
For 2Q22, VEON reported growth in both reported
and local currency revenue and EBITDA, with a 3 p.p.
increase in EBITDA margin and Group cash and cash equivalents
balance of USD 2.3 billion as of 30 June 2022.
Group revenues increased by 5.6%
YoY in reported currency terms (+6.0% in local currency).
Growth in mobile data revenue, up 11.6% in reported currency terms
(+15.5% in local currency), was a key driver of the strong Group
revenue performance. Non telecom related revenues in Russia,
constituted 8.0% of total Group reported revenue.
We delivered balanced growth in the quarter as
we expanded our customer base while increasing ARPU. We also
continued to implement our policy of inflationary pricing to
respond to higher inflation, which was observed across most of our
markets, impacted in particular by both the availability and cost
of utilities.
In Ukraine, Kyivstar’s revenues
decreased 2.0% YoY in reported currency (+3.9% in local
currency) as the team continued to deliver on keeping the country
connected, with our radio network operating at 90% availability.
Kyivstar’s 4G customer base grew 11.9% YoY, and our customers
consumed more data, with a growth in usage of 26.9% YoY.
Russia reported a 2Q22 revenues increase
of 12.2% YoY in reported currency (-0.8% YoY in local
currency). The strengthening of the Russian ruble against USD in
2Q22 supported the growth in reported financial performance. 2Q22
mobile service revenue was up 2.7% YoY in local currency, as demand
for data was 20.9% higher YoY, driving mobile data revenue growth
of 6.2% YoY in local currency.
Pakistan revenues decreased 12.1%
YoY in reported currency (+11.1% YoY in local currency),
driven by strong growth in data revenue, despite the negative
impact of the increase in withholding tax from 10% to 15% on 16
January 2022 and the reduction in mobile termination rates.
Excluding the impact of the SIM tax reversal last year, revenue in
Pakistan grew 13.7% YoY in local currency. The weakness in the
Pakistani rupee negatively impacted reported growth rates.
In Kazakhstan, revenues increased 16.3%
YoY in reported currency (+20.2% in local currency),
another quarter of strong growth as Beeline Kazakhstan continues to
execute its digital operator strategy. This was the fifth
consecutive quarter of local-currency revenue growth above 20%.
In Uzbekistan, revenues increased 18.7%
YoY in reported currency (+25.2% in local currency), a
second consecutive quarter of local-currency revenue growth above
20%, supported by new digital operator offerings introduced in the
previous quarter.
Group EBITDA grew by 13.0% YoY
in 2Q22 in reported currency terms (+14.1% in local currency). In
Russia, EBITDA increased 26.7% YoY in reported currency (+11.6% in
local currency), marking the fifth consecutive quarter of growth.
EBITDA in Pakistan declined 5.4% YoY in reported currency (+19.8%
YoY in local currency) and in Kazakhstan, EBITDA grew 23.0% in
reported currency terms (+26.9% in local currency). In Ukraine,
EBITDA was down 10.2% in reported currency (-4.8% YoY in local
currency) in 2Q22.
Group EBITDA was impacted by a number of
extraordinary non-recurring items in 2Q22 and in 2Q21 as noted in
the Country Performance section. Excluding all these extraordinary
one-off items, Group EBITDA increased 10.7% YoY in local
currency.
Group EBITDA margin increased by 3.0
percentage points YoY and reached 45.4% in 2Q22 as we
remain focused on implementing planned cost-efficiency measures
across the business.
In 2Q22, we reported healthy growth of 2.7% YoY
in our subscriber base. The Group continued to focus on the overall
customer experience in our 4G networks. This supported the
19.2% YoY increase in our 4G
users, which reached 101.9 million, adding 16.4 million
users over the previous 12 months. 4G subscribers now account for
50.0% of our total subscriber base, up 6.9 p.p. from a year
ago.
On the back of our growing 4G penetration, we
have been able to expand our digital operator offerings in our
operations. This has driven the growth of our multiplay customer
base (+25.0% YoY) which reached 30.7 million during 2Q22, with ARPU
4 times higher and having 3 times lower churn than single play
voice-only customers.
Our financial services business in Pakistan,
JazzCash, ended the quarter with 16.2 million
MAUs, a rise of 36.8% YoY. In Bangladesh, our streaming
business, Toffee, reached 6.8 million MAUs (+36.8% YoY) in
2Q22.
Group capex was USD 382
million, with capex intensity of 21.5%, driven in
particular by increased network investments in Bangladesh and
Uzbekistan, in line with our growth strategy.
We closed the quarter with total cash of USD 2.3
billion, including USD 1.9 billion at the HQ level. All our
operations are primarily self-funding without any funding
requirement from the HQ.
Key recent developments:
- Liquidity update. On 25 May
2022, VEON announced that its total cash and cash equivalents had
increased to approximately USD 2.4 billion (USD 2.3 billion as of
30 June 2022), including the equivalent of USD 1.8 billion (USD 1.9
billion as of 30 June 2022) USD- and EUR-denominated cash and cash
equivalents held by its headquarters in Amsterdam.
- Algeria put option. On 28 June 2022, VEON
signed the deal and definitive documents related to the execution
of its Algeria put option. The final closing of the transaction
will be on receipt of the cash settlement, USD 682 million, by
VEON.
- Sale of Georgian operations. On 8 June 2022,
VEON announced that it had completed the sale of VEON Georgia LLC,
VEON’s operating subsidiary in Georgia, to VEON’s former local
partner. The sale of our Georgian operations is in line with VEON’s
long-held ambition to simplify the Group’s structure. The
transaction value of USD 45 million is equal to a 2021 EBITDA
multiple (pre–IFRS 16) of 3.5x.
- VEON makes USD 15 million investment in
Dastgyr. On 14 June 2022, VEON announced that the Group’s
VEON Ventures division had completed a USD 15 million investment as
part of the USD 37 million Series A round for Dastgyr (acquisition
of 14.96% stake), a Pakistan-based B2B e-commerce marketplace
platform. This investment is the largest ever Series A round in
Pakistan and will contribute to boosting Pakistan’s e-commerce
market while also creating potential synergies with our JazzCash
financial services platform.
- VEON shareholders elect new board members. On
29 June 2022, VEON announced the results of the elections conducted
at its Annual General Meeting. Shareholders elected three new
members to the Company’s Board of Directors: Augie Fabela, Morten
Lundal and Stan Miller. Shareholders also re-elected eight
directors: Hans-Holger Albrecht, Yaroslav Glazunov, Andrei Gusev,
Gunnar Holt, Karen Linehan, Irene Shvakman, Vasily Sidorov and
Michiel Soeting. On 4 July 2022, the Company’s Board of Directors
appointed Gunnar Holt as the new Chairman of the Board.
- VEON management increases ownership. On 11
July 2022, VEON announced the completion of management share
transfers as part of the Group’s incentive program announced in
February 2022. The shares were awarded as part of VEON’s Deferred
Share Plan. This award represents a further step in aligning the
executive team’s remuneration with the successful implementation of
our digital operator strategy and long-term value creation for our
shareholders. Following this transaction, Kaan Terzioglu holds
1,674,900; Serkan Okandan, 222,172; Michael Schulz, 145,715; Joop
Brakenhoff, 92,572; and Alex Bolis, 64,286 ADR/ORDs.
- VEON’S Banglalink signs tower sharing agreement in
Bangladesh. On 03 August 2022, VEON announced that its
subsidiary Banglalink has reached an agreement with Bangladesh
Telecommunications Company Limited (BTCL) for a tower sharing
initiative. Under the agreement, BTCL will share its tower
infrastructures with Banglalink. The initiative will enhance
Banglalink’s quality of services further by supporting its 4G
expansion drive, ensuring energy-efficient operations and
optimizing the use of Bangladesh’s national resources.
Additional information
View the full 2Q22 earnings release
View 2Q22 earnings presentation
About VEON
VEON is a digital operator that provides
converged connectivity and digital services to over 200 million
customers. Operating across eight countries that are home to
more than 8% of the world’s population, VEON is transforming lives
through technology-driven services that empower individuals and
drive economic growth. Headquartered in Amsterdam, VEON is
listed on NASDAQ and Euronext. For more information visit:
https://www.veon.com.
Notice to reader
VEON's results and other financial information
presented in these financial statements are, unless otherwise
stated, prepared in accordance with International Financial
Reporting Standards ("IFRS") based on internal management
reporting, are the responsibility of management, and have not been
externally audited, reviewed, or verified. As such, you should not
place undue reliance on this information. This information may not
be indicative of the actual results for any future period.
The ongoing conflict between Russia and Ukraine
and the sanctions imposed by the United States, member states of
the European Union, the European Union itself, the United Kingdom,
Ukraine and certain other nations, counter-sanctions by Russia and
other legal and regulatory responses, as well as responses by our
service providers, partners, suppliers and other counterparties,
and the consequences of all of the foregoing have impacted and, if
the conflict, sanctions and such responses continue or escalate,
may significantly impact our results and aspects of our operations
in Russia and Ukraine, and may significantly affect our results and
aspects of our operations in the other countries in which we
operate. We are closely monitoring events in Russia and Ukraine, as
well as the possibility of the imposition of further sanctions in
connection with the ongoing conflict between Russia and Ukraine and
any resulting further rise in tensions between Russia and the
United States, the United Kingdom and/or the European Union. We
hope that there will be a peaceful and amicable resolution and are
doing everything we can to protect the safety of our employees,
while continuing to ensure the uninterrupted operation of our
communications, financial and digital services.
The broad nature of the financial sanctions
targeted at the Russian financial system, including several banks
that have historically provided funding to the Company, the
comprehensive sanctions on investment and vendors in Russia and the
ongoing conflict between Russia and Ukraine may have a material
impact on the Company’s operations and business plans in Russia and
Ukraine. We will continue to assess the need for potential
impairment charges.
Disclaimer
This release contains “forward-looking
statements”, as the phrase is defined in Section 27A of the U.S.
Securities Act of 1933, as amended, and Section 21E of the U.S.
Securities Exchange Act of 1934, as amended. These forward-looking
statements may be identified by words such as “may,” “might,”
“will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,”
“intend,” “seek,” “believe,” “estimate,” “predict,” “potential,”
“continue,” “contemplate,” “possible” and other similar words.
Forward-looking statements include statements relating to, among
other things, VEON’s plans to implement its strategic priorities,
including operating model and development plans; anticipated
performance, including VEON’s ability to generate sufficient cash
flow; VEON’s assessment of the impact of the COVID-19 pandemic on
its current and future operations and financial condition; VEON’s
assessment of the impact of the conflict surrounding Russia and
Ukraine, including related sanctions and counter-sanctions, on its
current and future operations and financial condition; future
market developments and trends; operational and network development
and network investment, including expectations regarding the
roll-out and benefits of 3G/4G/LTE networks, as applicable;
spectrum acquisitions and renewals; the effect of the acquisition
of additional spectrum on customer experience; VEON’s ability to
realize the acquisition and disposition of any of its businesses
and assets and to execute its strategic transactions in the
timeframes anticipated, or at all; VEON’s ability to realize
financial improvements, including an expected reduction of net
pro-forma leverage ratio following the successful completion of
certain dispositions and acquisitions; our dividends; and VEON’s
ability to realize its targets and commercial initiatives in its
various countries of operation.
The forward-looking statements included in this
earnings release are based on management’s best assessment of
VEON’s strategic and financial position and of future market
conditions, trends and other potential developments. These
discussions involve risks and uncertainties. The actual outcome may
differ materially from these statements as a result of, among other
things: further escalation in the conflict surrounding Russia and
Ukraine, including further sanctions and counter-sanctions and any
related involuntary deconsolidation of our Russian and/or Ukrainian
operations; further unanticipated developments related to the
COVID-19 pandemic, such as the effect on consumer spending, that
has negatively affected VEON’s operations and financial condition
in the past; demand for and market acceptance of VEON’s products
and services; 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; continued volatility in the economies in
VEON’s markets; governmental regulation of the telecommunications
industries; general political uncertainties in VEON’s markets;
government investigations or other regulatory actions; litigation
or disputes with third parties or regulatory authorities or other
negative developments regarding such parties; the impact of export
controls and laws affecting trade and investment on our and
important third-party suppliers' ability to procure goods, software
or technology necessary for the services we provide to our
customers; risks associated with data protection or cyber security,
other risks beyond the parties’ control or a failure to meet
expectations regarding various strategic priorities, the effect of
foreign currency fluctuations, increased competition in the markets
in which VEON operates and the effect of consumer taxes on the
purchasing activities of consumers of VEON’s services.
Certain other factors that could cause actual
results to differ materially from those discussed in any
forward-looking statements include the risk factors described in
VEON’s Annual Report on Form 20-F for the year ended 31 December
2021 filed with the U.S. Securities and Exchange Commission (the
“SEC”) on 29 April 2022 and other public filings made from time to
time by VEON with the SEC. 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 press release
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
speak only as of the date hereof. 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. Furthermore, elements of this release contain
or may contain, “inside information” as defined under the Market
Abuse Regulation (EU) No. 596/2014.
Contact Information
Investor RelationsNik Kershaw ir@veon.com
- 2Q22 ER MD&A AND FS
- 2Q22 RESULTS PRESENTATION
- Factbook 2Q22
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