VEON .(US:VEON)2021-10-28 16:33Financial Data and Key Metrics Changes - In Q3 2021, group revenues grew by 11.2% year-on-year in local currency, with a total revenue increase of 10.2% in reported currency [5][21] - Local currency EBITDA increased by 9.1%, while reported EBITDA rose by 8.6%, resulting in a reported EBITDA margin of 44.4% [5][21] - Net income for Q3 was reported at $195 million, compared to a net loss in the same quarter last year [22] Business Line Data and Key Metrics Changes - Revenue growth was observed across all markets, with double-digit growth in five countries, particularly in Kazakhstan with a 25.5% increase [7][12] - In Russia, Beeline's total revenues rose by 8.2% year-on-year, with mobile service revenue growth of 4.5% [8] - In Ukraine, Kyivstar achieved a 12% revenue growth, supported by a significant rise in 4G penetration [10] - Pakistan's revenue grew by 13%, with adjusted EBITDA growth of 24.6% after accounting for a one-off item [11] - Kazakhstan's data revenue grew by 40%, with ARPU increasing by 22.7% [12] Market Data and Key Metrics Changes - Strong performance was noted in core growth markets: Ukraine, Pakistan, and Kazakhstan, all showing double-digit growth in both revenue and EBITDA [7][33] - Bangladesh experienced a 7.2% revenue growth despite challenges, with a 61% increase in 4G subscribers [13] - The 4G subscriber base across various markets continues to grow, contributing to increased data usage and revenue [14][16] Company Strategy and Development Direction - The company is focused on increasing 4G subscriber penetration, aiming for a medium-term target of 70% [35] - There is a strategic emphasis on digital services, with significant growth in platforms like JazzCash and Toffee [35][36] - The company is actively managing its infrastructure portfolio, including the sale of tower assets in Russia and establishing separate tower entities in Ukraine and Pakistan [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a minimum of 8% local currency growth in EBITDA for the full year, reflecting better-than-expected performance [6][31] - The company is optimistic about revenue trends in Bangladesh, viewing it as a market with good structural growth opportunities [34] - Management highlighted the importance of cost efficiency initiatives under Project Optimum, aiming for a 1-2 percentage point improvement in cost intensity by FY2023 [25][35] Other Important Information - The company recorded a significant increase in operational cash flow, amounting to $509 million for the quarter [27] - The net debt level was reported at $8.15 billion, with a leverage ratio of 2.5 times, which is in line with internal comfort levels [28] Q&A Session Summary Question: Comments on Russian market turnaround and EBITDA growth - Management acknowledged the turnaround in Russia and noted that while EBITDA growth may be slower, the focus on network investments is critical for future growth [43][48] Question: ARPU growth in Russia - Management indicated that ARPU growth is currently slow but emphasized the potential for improvement as 4G penetration increases [44][49] Question: Efficiency improvements in Russian operations - Management confirmed ongoing optimization of the distribution network and store closures to enhance efficiency [51] Question: Monetization of tower assets in other countries - Management reiterated the commitment to unlocking value from tower assets across the portfolio, with established entities in Pakistan and Ukraine [53] Question: Free cash flow outlook and dividend considerations - Management expects strong free cash flow generation in Q4, with a commitment to maintaining a dividend policy of at least 50% of equity free cash flow after license payments [65][66] Question: Spectrum investment decisions - Management stated a disciplined approach to spectrum investments, with no current plans to bid in Pakistan due to unfavorable currency conditions [69][70]