VEON .(VEON) - 2024 Q3 - Quarterly Report

Third Quarter 2024 Trading Update VEON's Q3 2024 revenue grew 9.8% YoY, driven by digital services, while EBITDA declined 1.5% due to operational pressures 3Q 2024 Highlights VEON's Q3 2024 revenue grew 9.8% YoY, driven by digital services, while EBITDA declined 1.5% due to operational pressures 3Q 2024 Key Financial and Operational Metrics | Metric | Value | YoY Change (Reported) | YoY Change (Local Currency) | | :--- | :--- | :--- | :--- | | Total Revenue | USD 1,038 million | +9.8% | +14.1% | | Telecom and Infra Revenue | USD 916 million | +7.2% | +12.2% | | Direct Digital Revenue | USD 121 million | +35.1% | +32.6% | | EBITDA | USD 438 million | -1.5% | +3.5% | | Capex | USD 198 million | +51.2% | - | | LTM Equity Free Cashflow | USD 421 million | +22.2% | - | | Gross Debt | USD 3.991 billion | -USD 335 million | - | | Net Debt (excl. leases) | USD 2.100 billion | - | - | | 4G Users | 99.9 million | +7.7% | - | | Total Digital MAUs | 103 million | +9.7% | - | - EBITDA for Q3 2024 was USD 438 million, a 1.5% YoY decrease in reported currency, primarily impacted by operational pressures in Bangladesh and restructuring costs[7] - Capex significantly increased to USD 198 million, up 51.2% YoY, with LTM capex intensity at 19.2%[8] Revised Full Year 2024 Guidance | Metric | Guidance (USD Terms) | Guidance (Local Currency) | | :--- | :--- | :--- | | Total Revenue Growth | 8% - 10% YoY | 12% - 14% YoY | | EBITDA Growth | 4% - 6% YoY | 9% - 11% YoY | Group Performance VEON's Q3 2024 group revenue grew 9.8% YoY, led by digital services and 4G user growth, despite a 1.5% EBITDA decline Overall Performance Analysis VEON's Q3 2024 group revenue grew 9.8% YoY, led by digital services and 4G user growth, despite a 1.5% EBITDA decline 3Q24 YoY Revenue Growth by Country | Country | Reported Growth | Local Currency Growth | | :--- | :--- | :--- | | Total | 9.8% | 14.1% | | Ukraine | 4.8% | 17.9% | | Pakistan | 28.5% | 22.6% | | Kazakhstan | 9.3% | 14.8% | | Bangladesh | (15.7%) | (8.4%) | | Uzbekistan | 8.3% | 15.2% | - Direct digital revenues reached USD 121 million, growing 35% YoY in reported currency and accounting for 12% of total revenue[20] - The Group's 4G user base grew by 7.7% YoY to 99.9 million, with 4G penetration reaching 64.8% of the total subscriber base[22] - Multiplay B2C customers (using at least one digital service) increased by 16% YoY to 34.7 million These customers have 4.1x higher ARPU and 2.1x lower churn than voice-only customers[27] - The company revised its FY 2024 guidance downwards, now expecting 12%-14% revenue growth and 9%-11% EBITDA growth in local currency, citing decelerating inflation, civil unrest in Bangladesh, and an asset sale in Kazakhstan[32] Key Recent Developments VEON regained Nasdaq compliance, initiated Euronext delisting, plans HQ relocation, and completed a strategic asset sale Corporate and Strategic Initiatives VEON regained Nasdaq compliance, initiated Euronext delisting, plans HQ relocation, and completed a strategic asset sale - VEON filed its 2023 Form 20-F, regained full compliance with Nasdaq listing requirements, and re-appointed UHY LLP as its auditor for 2024[35] - The company commenced the delisting of its shares from Euronext Amsterdam, effective November 25, 2024, to consolidate trading of its ADSs on the Nasdaq Capital Market[35] - The Board of Directors approved a plan to move the Group headquarters from Amsterdam to the Dubai International Financial Centre[37] - Completed the sale of its 49% stake in TNS Plus LLP in Kazakhstan for a deferred consideration of USD 137.5 million, aligning with its asset-light strategy[37] - VEON Holdings B.V. notes were included in the J.P. Morgan EM Corporate Indices (CEMBI, JACI and JSEG) at the end of September 2024[37] Liquidity and Capital Structure VEON's Q3 2024 cash increased to USD 1,019 million, with net debt decreasing to USD 3.1 billion, improving leverage ratios Debt and Cash Position VEON's Q3 2024 cash increased to USD 1,019 million, with net debt decreasing to USD 3.1 billion, improving leverage ratios Key Liquidity and Debt Data (USD million) | Metric | 30 Sep 2024 | 30 Jun 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 1,019 | 862 | (55%) | | Gross debt | 3,991 | 3,961 | (7.7%) | | Net debt | 3,114 | 3,237 | 45.9% | | Net debt excluding leases | 2,100 | 2,226 | 65.1% | | Net debt / LTM EBITDA | 1.89x | 1.95x | - | | Net debt excl. leases / LTM EBITDA | 1.52x | 1.59x | - | - Total cash and cash equivalents increased to USD 1,019 million in Q3 2024 from USD 862 million in Q2 2024 Of this, USD 453 million is held at the HQ level[41] - Net debt decreased to USD 3.1 billion at the end of Q3 2024 from USD 3.2 billion at the end of Q2 2024, leading to lower leverage ratios[44][47] - VEON HQ has no debt maturities until April 2025 Maturities in 2025 amount to USD 593 million[48] Country Performance This section details the financial and operational performance across VEON's key markets Pakistan and Kazakhstan were the primary growth drivers for the group, while Ukraine showed resilience with strong local currency growth Uzbekistan continued its consistent double-digit growth trajectory In contrast, Bangladesh faced significant headwinds from civil unrest and macroeconomic challenges, negatively impacting its results Key Figures by Country Q3 2024 group revenue reached USD 1,038 million (+9.8% YoY), with Pakistan leading growth, while EBITDA declined 1.5% 3Q24 Financials by Country (USD million) | Country | Total Revenue | YoY Reported (Rev) | YoY LCY (Rev) | EBITDA | YoY Reported (EBITDA) | YoY LCY (EBITDA) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total | 1,038 | 9.8% | 14.1% | 438 | (1.5%) | 3.5% | | Ukraine | 250 | 4.8% | 17.9% | 144 | (5.0%) | 6.9% | | Pakistan | 359 | 28.5% | 22.6% | 149 | 20.2% | 14.7% | | Kazakhstan | 224 | 9.3% | 14.8% | 106 | (10.2%) | (5.9%) | | Bangladesh | 123 | (15.7%) | (8.4%) | 50 | (11.6%) | (4.0%) | | Uzbekistan | 70 | 8.3% | 15.2% | 25 | 8.0% | 15.0% | Ukraine Kyivstar's revenue grew 17.9% YoY in local currency, with 6.9% EBITDA growth, driven by ARPU and 4G expansion Ukraine Key Metrics (3Q24) | Metric | Value | YoY Change (LCY) | | :--- | :--- | :--- | | Total Revenue | UAH 10,267 million | +17.9% | | EBITDA | UAH 5,924 million | +6.9% | | EBITDA Margin | 57.7% | -5.9 p.p. | | Mobile Customers | 23.3M | -3.3% | | 4G Users | 15.3M | +4.3% | | ARPU | UAH 134 | +20.2% | - Digital healthcare platform Helsi Ukraine reached over 28 million registered patients (+8.4% YoY), while media streaming service Kyivstar TV saw a 42.5% YoY increase in MAUs[53] Pakistan Jazz's revenue grew 22.6% YoY in local currency, fueled by 4G and JazzCash, with EBITDA increasing 14.7% Pakistan Key Metrics (3Q24) | Metric | Value | YoY Change (LCY) | | :--- | :--- | :--- | | Total Revenue | PKR 99,930 million | +22.6% | | EBITDA | PKR 41,380 million | +14.7% | | EBITDA Margin | 41.4% | -2.8 p.p. | | Mobile Customers | 71.6M | +1.6% | | 4G Users | 49.4M | +14.5% | | ARPU | PKR 302 | +6.9% | - JazzCash reported 19.2 million MAUs (+25% YoY) and its total revenue grew 85.5% YoY, driven by digital lending and an expanding retail network[54] - The SIM care app SIMOSA reached 15.4 million MAUs (+13.9% YoY), and the streaming platform Tamasha achieved 10.6 million MAUs[54] Kazakhstan Beeline Kazakhstan's revenue grew 14.8% YoY in local currency, driven by customer growth, despite a 5.9% EBITDA decline Kazakhstan Key Metrics (3Q24) | Metric | Value | YoY Change (LCY) | | :--- | :--- | :--- | | Total Revenue | KZT 106,830 million | +14.8% | | EBITDA | KZT 50,535 million | -5.9% | | EBITDA Margin | 47.3% | -10.5 p.p. | | Mobile Customers | 11.6M | +5.9% | | 4G Users | 8.9M | +11.8% | | ARPU | KZT 2,224 | +3.6% | - The neobank 'Simply' saw a 7.1x YoY increase in MAUs, reaching almost 2.3 million, driven by an ecosystem cashback program[55] Bangladesh Banglalink's revenue declined 8.4% YoY in local currency due to political unrest and taxes, with potential impairment charges Bangladesh Key Metrics (3Q24) | Metric | Value | YoY Change (LCY) | | :--- | :--- | :--- | | Total Revenue | BDT 14,546 million | -8.4% | | EBITDA | BDT 5,866 million | -4.0% | | EBITDA Margin | 40.3% | +1.9 p.p. | | Mobile Customers | 37.8M | -5.4% | | 4G Users | 19.3M | -1.4% | | ARPU | BDT 121 | -8.0% | - The decline in revenue was attributed to political unrest, civil disturbances, new taxes on telecom services, and network outages[57] - The company disclosed that a substantial impairment charge to the carrying value of the Bangladesh Cash Generating Unit is possible for the period ended September 30, 2024[57] Uzbekistan Beeline Uzbekistan achieved 15.2% YoY local currency revenue growth and 15.0% EBITDA growth, driven by data and digital services Uzbekistan Key Metrics (3Q24) | Metric | Value | YoY Change (LCY) | | :--- | :--- | :--- | | Total Revenue | UZS 881,813 million | +15.2% | | EBITDA | UZS 315,912 million | +15.0% | | EBITDA Margin | 35.7% | -0.1 p.p. | | Mobile Customers | 8.2M | -6.0% | | 4G Users | 6.1M | -1.2% | | ARPU | UZS 34,500 | +20.6% | - Multiplay users increased 14.6% YoY and now account for 46.9% of the monthly active B2C customer base, driving a 31.4% YoY increase in B2C revenues[58] - The Beepul mobile financial services platform grew 2.0x YoY, reaching 1.3 million MAUs[58] Additional Information Attachments provide definitions, customer data, financial reconciliations, and currency exchange rates for supplementary information Conference Call Information Details for the Q3 2024 results conference call, including registration and dial-in information, are provided - VEON hosted a conference call for its 3Q24 results on November 14, 2024, at 14:00 CET[61] - Details for registration, webcast access, and participation in the Q&A session were provided[62][64] Presentation of Financial Results Financial results are IFRS-based and unaudited, with non-IFRS measures defined and reconciled in attachments - The financial results presented are based on International Financial Reporting Standards (IFRS) and have not been externally audited or reviewed[68] - Non-IFRS measures such as EBITDA, net debt, and local currency trends are defined in Attachment A and reconciled to comparable IFRS information in Attachment C[69] Disclaimer and Notice to Readers The document contains forward-looking statements and preliminary, unaudited financial information, noting Ukraine war impacts - The document contains forward-looking statements that involve risks and uncertainties, and actual outcomes may differ materially[73] - The financial information is preliminary, based on internal management accounts, and has not been audited or reviewed[72][78] - A specific notice is provided regarding the impact of the ongoing war in Ukraine on the company's results and operations[79] Attachments Attachments provide definitions, customer data, financial reconciliations, and currency exchange rates for supplementary information - Attachment A provides definitions for key financial and operational terms like ARPU, Capex, EBITDA, and customer metrics[86][87][91] - Attachment B details mobile and fixed-line customer numbers by country[105] - Attachment C includes reconciliation tables for consolidated EBITDA to profit, Capex, Equity Free Cash Flow, and local currency growth rates[106][108][109] - Attachment D lists the average and closing exchange rates of functional currencies to the USD[119]