Protecting stakeholder value delivering
continued local currency growth across our operations
AMSTERDAM, April 28,
2022 /PRNewswire/ -- VEON Ltd. (VEON) announces
a trading update for the first quarter ended 31 March 2022, including selected financial and
operating results:
VEON ended 1Q22 with revenue of USD 1,823
million, +9.8% YoY in local currency (-0.4% YoY in reported
currency) and EBITDA of USD 775
million, +5.7% YoY in local currency (-4.0% YoY in reported
currency). Group capex was USD 367
million (-6.2% YoY), with capex intensity of 23.2%, -2.2
p.p. YoY. Group net debt/EBITDA was 2.4x.
Commenting on results, Kaan Terzioğlu said:
"I am proud of how our teams are tackling the current challenges
and ensuring service and business continuity, keeping our 220
million customers across nine countries connected. Our commitment
to provide access to information and other vital digital services
is intact in these character-building times. The solid results we
are reporting today illustrate our operational and financial
discipline. We continue to enjoy high-single-digit growth and we
have improved our capital structure."
1Q 2022 highlights:
- Revenue of USD 1,823 million,
+9.8% YoY in local currency (-0.4% YoY reported currency)
- EBITDA of USD 775 million, +5.7%
YoY in local currency (-4.0% YoY reported currency)
- Capex of USD 367 million, -6.2%
YoY, capex intensity of 23.2%
- Total cash USD 1.904 million,
with USD 1,304 million at
Headquarters (additional USD 692
million in committed undrawn credit lines)
- 206 million mobile subscribers, up 3.9% YoY
- 100.8 million 4G users, up 24.3% YoY
- Net debt/EBITDA ratio of 2.4x
- Current ratio (Current assets/Current liabilities) of
1.11x
Group revenue increased by 9.8% in local currency terms (-0.4%
in reported currency). All our operating companies delivered YoY
revenue growth in local currency terms. Strong growth in data
revenue, up 17.1% in local currency terms (+7.1% in reported
currency), was a key driver of strong Group revenue
performance.
Ukraine revenues increased
15.1% YoY in local currency (+12.7% in reported currency)
a good result given the ongoing conflict in the country. For
March 2022, Ukraine reported revenue of UAH 2.8 billion
(+16.7% YoY), with service revenue of UAH 2.7 billion (+16.7% YoY).
This performance was driven once again by continued growth in
Kyivstar's 4G customer base, which increased 30.7% YoY. Mobile
revenue growth was also supported by higher roaming revenues, which
increased 3.0x YoY.
Russia reported 1Q22 revenue
growth of 5.6% YoY in local currency (-6.9% YoY in
reported currency). The average March exchange rate used for
consolidation was 104.1 ruble per dollar, impacting reported
numbers. 1Q22 mobile service revenue was up 3.3% YoY and fixed-line
service revenue was up 8.2% YoY in local currency. For March 2022, Russia reported revenue of RUB 24.9 billion (+3.6% YoY), with service
revenue of RUB 22.2 billion
(+3.7%).
Pakistan revenue increased
9.1% YoY in local currency (-2.6% YoY in reported
currency) driven by strong growth in data revenue, notwithstanding
the increase in withholding tax from 10% to 15% on 16 January 2022 and the reduction in mobile
termination rates.
In Kazakhstan revenues
increased 20% YoY in local currency (+10.6% in reported
currency), another excellent performance especially taking into
account the unrest in January 2022.
For January 2022, Kazakhstan reported revenue of KZT 20.4 billion (+15.6% YoY), with service
revenue of KZT 19.7 billion (+15.0%
YoY).
Group 1Q22 EBITDA rose by 5.7% in local currency terms (-4.0% in
reported currency) and we reported positive local currency
EBITDA performance across all markets. In Russia, EBITDA increased 2.8% YoY in local
currency (-9.3% in reported currency), marking the fourth
consecutive quarter of growth. Excluding the impact of charitable
donations and employee support, in Ukraine Kyivstar's EBITDA grew 9.3% YoY in
local currency and in Kazakhstan,
Beeline's EBITDA grew 16.5% in local currency. Excluding these
extraordinary costs, Group EBITDA increased 7.3% YoY in local
currency. We remain focused on implementing planned cost
efficiency measures across the business.
We reported healthy growth of 3.9% YoY in our 1Q22 subscriber
base. The Group continued to focus on the overall customer
experience on our 4G networks. This supported the growth in our
4G subscriber base, which reached 100.8 million, adding an
additional 19.7 million users over the past 12 months. 4G
subscribers now account for 48.8% of our total subscriber base, up
8.0 p.p. from a year ago.
Our financial service business in Pakistan, JazzCash, ended the quarter with
15.7 million MAUs, a rise of 12.2% YoY. In Bangladesh, Toffee TV reached 6.3 million MAU
(+86.9% YoY) in 1Q22. Our digital operator in Kazakhstan, 'izi', ended the quarter with
101,000 subscribers, an increase of 87% YoY.
Group capex was USD 367 million
with capex intensity of 23.2%, driven in particular by
increased network investments in Bangladesh and Pakistan in line with our growth strategy.
On 12 April 2022, Jazz signed a
core 4G license renewal with the Pakistan Telecommunication
Authority, for a fee of USD 486.2
million for a duration of 15 years, with 50% paid upfront
and the balance over five years. Fifty percent of the fees
(PKR 44.54 billion, equivalent to
USD 243.1 million) was settled before
signing in April 2022. On
31 March 2022, Banglalink acquired
new spectrum in the 2300 MHz band for USD 205 million, payable in installments over 11
years, doubling the company's spectrum holding. We believe this
investment will continue to support Banglalink's ambitious
nation-wide 4G growth strategy.
We closed the quarter with total cash of USD 1.9 billion, with a further USD 0.7 billion in undrawn revolving credit
facilities. All our operations are in general self-funding.
Following the exercise of the put option for our stake in
Algeria on 1 July 2021, the Algerian business became, in
line with the requirements of IFRS 5, a discontinued operation, and
is accounted for as an "asset held for sale". The result is that
the Algerian operations do not contribute to VEON's comparison base
or actual reported numbers, without any change in the net economic
value of this business. The final valuation for the put option was
concluded at USD 682 million for
VEON's stake in Djezzy.
We further strengthened the management team with the appointment
of Atyab Tahir as the CEO of JazzCash effective 1 May 2022. Michiel
Soeting, former global lead partner at KPMG, joined the VEON
Board as a non-executive director and Chairman of the Audit and
Risk Committee effective 16 March
2022.
VEON is not the subject of any sanctions imposed by the European
Union, the United States or the
United Kingdom. We remain
confident that the international community understands our
industry's unique position as an essential service provider,
with regulators outlining their support for sectors essential to
humanitarian activities, including the flow of information and
access to the internet.
VEON has suspended all activities related to the previously
proposed re-domiciliation of VEON Ltd. to the United Kingdom and will continue to consider
the optimal corporate structure for the group.
Key recent developments:
- Changes to the VEON Board. On 1
March 2022, VEON announced that Mikhail Fridman had resigned as a director of
the VEON Board (the "Board") with effect from 28 February 2022. On 8
March 2022, VEON announced that Mr. Robert Jan van de Kraats had stepped down as a
director from the VEON Board with effect from 7 March 2022. On 16 March
2022, VEON announced that Michiel
Soeting, former global lead partner at KPMG, had joined the
VEON Board as a non-executive director and Chairman of the Audit
& Risk Committee.
- Bond repayment. On 28 February VEON utilized
USD 430 million under its RCF and
used these funds to repay its USD 417
million notes which matured on 1
March 2022, and to pay the accrued interest on these
notes.
- VEON concludes repayment of VTB Bank loan. On
11 March 2022, VEON announced that
its subsidiary had prepaid a RUB 30
billion (approximately USD 259
million, based on a USD-RUB exchange rate of 115.7)
interest-bearing loan with VTB Bank (PJSC) ("VTB") in accordance
with its terms, and the facility has been cancelled. Following this
payment to VTB, the VEON Group had no further loans outstanding
with VTB.
- VEON credit rating update. On 14
March 2022, VEON announced that Fitch and S&P had
downgraded the Company's credit ratings following the announcement
of new country ceilings for Ukraine and the Russian Federation.
- VEON Holdings B.V. reiterates currency election on its
Ruble-denominated notes. On 18 March
2022, VEON reiterated the currency election terms for the
holders of the ruble denominated notes issued under VEON Holdings
B.V.'s Global Medium Term Note Programme.
- Novation of loans. In April
2022, two group-level loans, with Sberbank and Alfa Bank
respectively, and totaling RUB 90
billion (c.USD 1.070 billion,
based on a USD-RUB exchange rate of 84.09), were novated to PJSC
VimpelCom, which resulted in the release of the former borrower
(VEON Finance Ireland) and the former guarantor (VEON Holdings
BV).
- Key increases in VEON shareholding in 1Q22. On
14 March 2022, Exor Capital
(London, UK) filed a stock market
notification that their VEON shareholding had increased to above
5%. On 31 March 2022, Shah Capital
Management (Raleigh, NC, US) filed
a stock market notification stating that their VEON shareholding
had increased to 2.87%, or 50.1 million shares.
- Algeria put option.
Following the exercise of the put option for our stake in
Algeria on 1 July 2021, the Algerian business became, in
line with the requirements of IFRS 5, a discontinued operation, and
is accounted for as an "asset held for sale". The final valuation
for the put option was concluded at USD 682
million for VEON's stake in Djezzy and the process is on
track.
- Spectrum acquisition in Bangladesh and license renewal in Pakistan. On 1
April 2022, VEON announced that Banglalink has acquired new
spectrum, doubling the company's spectrum holding. Banglalink
acquired 40 MHz of spectrum from the 2300 GHz band, ensuring that
Banglalink retains its position as the top private operator in
Bangladesh in terms of spectrum
per customer. On 12 April 2022, Jazz
signed a 4G license renewal with the Pakistan Telecommunication
Authority for a fee of USD 486.2
million for 15 years, 50% of which (PKR 44.54 billion, equivalent to USD 243.1 million) was settled, before signing in
April 2022, and the remaining amount
will be paid in five equal annual instalments. Both transactions
were funded in local currency facilities secured through domestic
banking partners.
- Increased local currency debt funding. On 16 April 2022, Jazz in Pakistan signed a PKR
40 billion (c. USD 222
million) syndicated loan with a 10 year maturity. On
26 April 2022, Banglalink signed a
BDT 12 billion (c. USD 135 million) syndicated loan with a 5 year
maturity.
- Atyab Tahir appointed as CEO of JazzCash. On
14 March 2022, VEON announced the
appointment of Atyab Tahir as Chief Executive Officer of JazzCash,
the number one digital financial services provider in Pakistan and a division of Jazz, effective
1 May 2022.
- VEON not subject to sanctions. On 4 March 2022, VEON confirmed its conclusion that
it is not the subject of sanctions, following the introduction of
EU sanctions on LetterOne shareholders, Mr. Fridman and Mr. Aven on
28 February 2022.
- Group senior management shareholding. On 28 February 2022, VEON announced the details of
management share awards following the finalization of the
management incentive plan.
- VEON confirms notification from NASDAQ on minimum share
price requirement. On 12 April
2022, VEON confirmed that it had received notification on
7 April 2022 VEON from the Listing
Qualifications Department of the Nasdaq Stock Market ("Nasdaq")
stating that VEON is not in compliance with the minimum bid price
requirement set forth in Nasdaq's Listing Rule 5550(a)(2). This
does not impact current Nasdaq listing and trading, and VEON
confirmed that it would evaluate options to return to
compliance.
Additional information
View the full 1Q22 trading update
View 1Q22 trading update presentation
About VEON
VEON is a NASDAQ and Euronext Amsterdam-listed global provider
of connectivity and digital services, headquartered in Amsterdam. Our vision is to empower customer
ambitions through technology, acting as a digital concierge to
guide their choices and connect them with resources that match
their needs.
For more information visit: https://www.veon.com.
Notice to reader: impact of conflict
VEON's results presented in this trading update are, unless
otherwise stated, based on IFRS and have not been externally
reviewed and audited. The financial information included in this
trading update is preliminary and is based on a number of
assumptions that are subject to inherent uncertainties and subject
to change. The financial information presented herein is
based on internal management accounts, is the responsibility of
management and is subject to financial closing procedures which
have not yet been completed and has not been audited, reviewed or
verified. Although we believe the information to be reasonable,
actual results may vary from the information contained above and
such variations could be material. As such, you should not place
undue reliance on this information. This information may not be
indicative of the actual results for the quarter or 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,
countermeasure 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
significantly impacted and will continue to significantly impact
our results and operations in Russia and Ukraine, and may significantly affect our
results and 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. Over the next few months, we will be
undertaking an assessment of the need for and amount of potential
impairment charges, which is not as of yet determinable due to a
number of factors, including the fluidity of the current situation
and our ability to obtain relevant data required to build a
business plan given the ongoing conflict and associated
uncertainties. We anticipate that we will report material
impairment charges with respect to assets in Ukraine and/or Russia during 2022, unless there is a
significant improvement in the current underlying conditions,
including a lasting resolution of the ongoing conflict. However, we
are still gathering the necessary data and we are not able at this
time to estimate the amount or range of this potential impairment
charge to the profit and loss statement. Such an impairment charge,
if any, would have no impact on the Company's cash flow.
Disclaimer
This trading update 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 trading update
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 December 31,
2020 filed with the U.S. Securities and Exchange Commission
(the "SEC") on 15 March 2021 and
other public filings made from time to time by VEON with the SEC,
including VEON's Annual Report on Form 20-F for the year ended
December 31, 2021 to be filed with
the SEC on 29 April 2022. 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.
In addition, we present certain information on a forward-looking
basis. We are not able to, without unreasonable efforts, provide a
full reconciliation to IFRS due to potentially high variability,
complexity and low visibility as to the items that would be
excluded from the comparable IFRS measure in the relevant future
period, including, but not limited to, depreciation and
amortization, impairment loss, loss on disposal of non-current
assets, financial income and expenses, foreign currency exchange
losses and gains, income tax expense and performance transformation
costs, cash and cash equivalents, long-term and short-term
deposits, interest accrued related to financial liabilities, other
unamortized adjustments to financial liabilities, derivatives, and
other financial liabilities.
Contact Information
Investor Relations
Nik Kershaw
ir@veon.com
+31 20 79 77 200
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SOURCE VEON Ltd