Divesting Russia operations and financial discipline remain Veon’s top goals plus tower sales
Telecoms group Veon, which owns Ukraine’s largest mobile operator Kyivstar has posted higher second quarter sales of $916m, up 19.6% YoY in local currency terms.
The company excluded financials from its Russian operations, which it is in the process of selling – in May it announced it had completed all the paperwork to sell this subsidiary to the local management team of PJCS VimpelCom for $1.6bn.
While Veon recorded a 6.5% decline in dollar revenue in Ukraine, in the local currency this translated to a 16.8% boost in revenue, largely from a 13.5% YoY increase in Kyivstar’s 4G customer base plus a 25.6% increase in data usage in the period.
This week Veon signed an MoU with Rakuten Symphony to start exploring cooperation in Ukraine, with the goal of accelerating the reconstruction of the country’s infrastructure, through collaboration on Open RAN and digital services.
The move follows its June commitment of $600m, through its subsidiary Kyivstar over the next three years, to expand mobile and fibre services with the aim of offering 4G LTE services to cover 98% of the country’s population.
CEO Kaan Terzioğlu pointed to Kyivstar’s digital health service Helsi, enables Ukrainians to maintain access to vital health care services in their local languages wherever they are – a lifeline to many given Russia’s invasion.
“We have 25.4 million registered patients on Helsi,” he said. “Helsi application downloads increased by $0.4 million in the second quarter and reached $5.4 million. Our customers booked over 1.8 million appointments through the Helsi platform in second quarter.”
Group results
“Our performance in the second quarter has again demonstrated the resilience and growth that our digital operator strategy enables us to deliver and gives us the confidence to raise our full year 2023 revenue guidance based on the results of the first half year,” said Terzioğlu.
Veon’s revenue growth in local currency neared 20% YoY. Service revenues increased at the same pace as top line growth, rising 19.6% YoY in local currency terms. Local currency EBITDA expanded at a rate of 13.6% YoY, but excluding one-offs, its underlying local currency EBITDA growth in the second quarter of 2023 reached 20.3%. Capex declined by 16.6% YoY to $171 million but remains in line with full year guidance.
“Across our Central and South Asian markets, they saw three of five operating companies delivering year-on-year local currency revenue growth in excess of 20%. And the other two were not far behind, [at] 17.4% and 19.2%,” said Terzioğlu. Veon has operations in Pakistan, Kazakhstan, Bangladesh, Uzbekistan and Ukraine.
4G growing across Veon
Although Veon’s mobile subscriber base was flat at 155.8m users, 4G users now account for 57% of its subscriber base. “Our focus on 4G for all has yielded an increase of 27m new 4G users over the last two years…we remain on a path to reach our group-wide target of 70% 4G penetration,” he said. “We expanded our 4G network, adding more than 8,000 4G sites, an increase of 15.6% year-on-year, providing robust 4G connectivity.”
“Multiplay subscribers who use both 4G connectivity and digital products, spend more time with us, churn less and drive multiple revenue streams and higher revenue generation with 45.7% YoY increase,” he said. “This trend helped to drive mobile ARPU growth which ranged from 9% to 27% YoY in local currency across all countries.”
Towers can be sold off
Terzioğlu emphasised Veon will continue to strengthen its balance sheet by selling infrastructure as well as exploring the potential for local listings of its operating companies.
“We are committed to monetize our towers in all the markets that we operate in,” he said. “And please don’t get me wrong. It’s not because we need cash, it’s actually what our strategy is.”
“We are a consumer business with telecom licences. We would like to invest in areas where we leverage our low-cost customer acquisition capabilities and excellent distribution capabilities for consumer business expansion in verticals such as financial services, entertainment, education and health care,” he said.
“We believe towers as a passive part of our network is better utilised, managed and serviced by independent tower companies,” he said. “That’s why our commitment to monetise our towers continues. We are progressing in every single country on this aspect. We do not hurry unless we see the right value for our stakeholders.”
Pictured: Kyivstar donated UAH10 million to the National Rehabilitation Centre’s “Unbroken” children’s burns unit in Lviv. The medical equipment, including surgical instruments, has started arriving at the Lviv hospital – helping children recover closer to their families.