VEON 3Q24 Trading Update: Another Billion Dollar Revenue Quarter, Digital Drives Growth

Amsterdam and Dubai, 14 November 2024 07:00AM CET

VEON Q3 2024 Highlights

Q3 Total revenue of USD 1,038 million, +9.8% YoY; revenue growth in local currency +14.1% YoY (+16.0% YoY underlying revenue growth in local currency)
Q3 Direct digital revenue of USD 121 million, +35.1% YoY (+32.6% YoY in local currency)
Q3 Telecom and infrastructure revenue USD 916 million, +7.2% YoY (+12.2% YoY in local currency)
Q3 EBITDA of USD 438 million, -1.5% YoY, +3.5% YoY growth in local currency (+9.8% YoY underlying growth in local currency)
Total cash and cash equivalents of USD 1,019 million, with USD 453 million at headquarters (“HQ”); and gross debt at USD 4.0 billion (decreased by USD 335 million YoY), with net debt excluding lease liabilities at USD 2.1 billion
LTM Equity Free Cash Flow of USD 421million, +22.2% YoY; LTM Capex increased 16.3% YoY

VEON Ltd. (Nasdaq: VEON, Euronext Amsterdam: VEON), a global digital operator that provides converged connectivity and online services, announces selected financial and operating results for the third quarter ended 30 September 2024.

In 3Q24 VEON demonstrated robust growth, reporting an increase in revenues both in reported and local currencies. Total revenues reached USD 1,038 million, an increase of 9.8% YoY in reported currency (+14.1% YoY in local currency). EBITDA reached USD 438 million and represented a 1.5% YoY decrease in reported currency terms (+3.5% YoY in local currency). This quarter's EBITDA was primarily impacted by identified items, including operational pressures in Bangladesh and restructuring costs.

Capex in 3Q24 was USD 198 million, an increase of 51.2% YoY. LTM capex increased 16.3% YoY, with LTM capex intensity of 19.2% (+1.5p.p. YoY). Total cash and cash equivalents as of 30 September 2024 amounted to USD 1,019 million (including USD 143 million related to banking operations in Pakistan and excluding USD 211 million in Ukrainian sovereign bonds that are classified as investments) with USD 453 million held at the HQ level.

Blended weighted average inflation rates in the countries we operate in declined from 16.5% in Q3 2023, to 8.2% in Q3 2024, a reduction of 830 basis points. We are encouraged to see revenue growth exceeding average inflation levels in our markets.

For the full year we expect total revenue growth of 8%-10% YoY and EBITDA growth of 4%-6% YoY in USD terms, assuming current FX rates. We are revising our prior local currency guidance, given the above considerations, to 12%-14% YoY growth for total revenue, and 9%-11% YoY growth for EBITDA, each in local currency terms.

Underlying growth in local currency, excluding identified items, is expected to be 15%-16% YoY growth in revenue, and 10-11% YoY growth in EBITDA. This marks a change from our previous guidance of 16-18% growth for revenue, and 18-20% growth in EBITDA for 2024 in local currency terms which was normalised for the Ukrainian cyberattack. In addition to deceleration in blended inflation rates across VEON’s operating markets, our new local currency guidance also reflects the business impact of civil unrest in Bangladesh and the sale of the TNS+ infrastructure asset in Kazakhstan.

Commenting on the results, Kaan Terzioğlu said:

“I am pleased to report a 14% YoY increase in revenue in local currency terms, exceeding the 8%
blended inflation across our markets. Despite the impact of the civil unrest in Bangladesh, the sale of the TNS+ infrastructure asset in Kazakhstan, and with current currency levels in mind, we expect to finish the year with solid revenue growth of 8 to 10% in USD terms.

This achievement highlights our rapid expansion and innovation, supported by 8 million new 4G subscribers and 103 million digital service users. Direct digital revenues, now comprising 12% of our total revenue for the quarter, grew by 35% year-over-year. These gains, stemming from digital financial services, entertainment, healthcare, advertising, and super-apps, are not only enhancing user engagement and retention but also significantly boosting our ARPU and contributing directly to our top-line growth through diverse streams like interest income, advertising revenues, subscription services, platform commissions, and pay-per-view revenues.

Looking forward, I am enthusiastic about the future as we continue to drive growth and enrich
customer experiences through advanced digital offerings and cutting-edge technologies like
augmented intelligence. This approach not only cements our position at the forefront of the digital revolution but also ensures sustained growth and success in rapidly evolving frontier markets.”

Additional information

View the full 3Q24 trading update
View 3Q24 trading update presentation
View 3Q24 factbook

3Q24 results conference call

VEON will also host a results conference call with senior management at 14:00 CET (13:00 GMT, 8:00 EST) today.

To register and access the event, please click here or copy and paste this link to the address bar of your browser: https://veon-Q3-2024-trading-update.open-exchange.net/.

Once registered, you will receive registration confirmation on the email address mentioned during registration with the link to access the webcast and dial-in details to listen to the conference call over the phone.

We strongly encourage you to watch the event through the webcast link, but if you prefer to dial in, then please use the dial-in details.

Q&A
If you want to participate in the Q&A session, we ask that you select the ‘Yes' option on the ‘Will you be asking questions live on the call?’ dropdown. That will bring you to a page where you can join the Q&A room by clicking 'Connect to meeting’.

You will be brought into a zoom webinar where you can listen to the presentation and once Q&A begins, if you have a question, please use the ‘raise hand button’ on the bottom of your zoom screen. When it is your turn to speak, the moderator will announce your name as well as sending a message to your screen asking you to confirm you want to talk. Once accepted, please unmute your mic and ask your question.

You can also submit your questions prior the webcast event to VEON Investor Relations at ir@veon.com.

About VEON

VEON is a digital operator that provides converged connectivity and digital services to nearly 160 million customers. Operating across six countries that are home to more than 7% of the world’s population, VEON is transforming lives through technology-driven services that empower individuals and drive economic growth. VEON is listed on NASDAQ and Euronext. For more information, visit: https://www.veon.com.

Notice to readers: financial information presented

VEON's results and other financial information presented in this document 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.

Notice to readers: impact of the war in Ukraine

The ongoing war in Ukraine, and the resulting sanctions adopted by the United States, member states of the European Union, the European Union itself, the United Kingdom, Ukraine and certain other nations, countersanctions and other legal and regulatory responses, as well as responses by our service providers, partners, suppliers and other counterparties, and the other indirect and direct consequences of the war have impacted and, if the war, such responses and other consequences continue or escalate, may significantly impact our results and aspects of our operations in 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 Ukraine, as well as the possibility of the imposition of further legal and regulatory restrictions in connection with the ongoing war in Ukraine and any potential impact the war may have on our results, whether directly or indirectly.

Our operations in Ukraine continue to be affected by the war. We 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.

Disclaimer

VEON's results and other financial information presented in this document are, unless otherwise stated, prepared in accordance with International Financial Reporting Standards ("IFRS") and have not been externally reviewed and audited. The financial information included in this document 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. Certain amounts and percentages that appear in this document have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including those in the tables, may not be an exact arithmetic aggregation of the figures that precede or follow them. 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 current period or any future period.

This document 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 growth trajectory and ability to generate sufficient cash flow; VEON’s intended expansion of its digital experience including through technologies such as artificial intelligence; VEON’s assessment of the impact of the war in Ukraine, including related sanctions and counter-sanctions, on its current and future operations and financial condition; VEON’s assessment of the impact of the political conflict in Bangladesh; 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 intended delisting from Euronext Amsterdam; VEON’s planned HQ relocation to the Dubai International Financial Centre in the United Arab Emirates; 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; its 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 document 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 war in Ukraine, including further sanctions and counter-sanctions and any related involuntary deconsolidation of our Ukrainian operations; 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 our material weakness in internal control over financial reporting; 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 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) on 17 October 2024 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 document 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 document contain or may contain, “inside information” as defined under the Market Abuse Regulation (EU) No. 596/2014.

Contact Information

VEON
Investor Relations
Faisal Ghori
ir@veon.com