VEON Ltd’s Earnings Call Highlights Growth and Challenges

VEON Ltd ((VEON)) has held its Q2 earnings call. Read on for the main highlights of the call.

VEON Ltd’s recent earnings call showcased a robust financial performance, with significant growth in digital services and the successful execution of an asset-light strategy. The company reported enhanced shareholder returns through a completed buyback program and debt repayments. However, challenges such as regulatory and inflationary pressures persist, and certain markets, like Bangladesh, are experiencing slow recovery. Additionally, anticipated noncash charges could impact future quarters.

Strong Financial Performance

VEON reported a commendable increase in revenues, with a 5.9% year-on-year rise in U.S. dollars and an 11.2% increase in local currency. The company’s EBITDA also saw substantial growth, climbing 13.2% in U.S. dollars and 19.6% in local currency. This reflects VEON’s focus on profitable growth and its ability to navigate challenging market conditions.

Digital Services Expansion

The company highlighted a remarkable 57% year-on-year growth in direct digital revenues in dollar terms, now making up 16.5% of total group revenues. A strategic milestone in this expansion was the acquisition of Uklon, underscoring VEON’s commitment to enhancing its digital services portfolio.

Asset-Light Strategy Progress

VEON’s asset-light strategy made significant strides with the closure of a strategic infrastructure pooling partnership with Engro in Pakistan. This move is expected to unlock considerable value. Additionally, Kyivstar in Ukraine is advancing towards launching satellite communications with Starlink, furthering the company’s digital transformation.

Shareholder Returns

The completion of a $100 million share buyback program, which repurchased nearly 3% of shares, marked a significant achievement for VEON. The company also repaid bonds due in April and June and issued $200 million in private bonds, bolstering its financial flexibility.

Improved Forecasts

VEON revised its outlook for 2025, projecting local currency growth for total revenue between 13% to 15% and EBITDA growth between 14% to 16%. This optimistic forecast reflects the company’s strategic initiatives and market positioning.

Tax and Regulatory Impacts

Tax and regulatory changes have impacted headline numbers for Beeline Kazakhstan and Banglalink, affecting organic trends despite adjustments. These challenges continue to pose hurdles for VEON’s operations in these regions.

Inflationary Pressures

VEON noted a slight increase in weighted average inflation across its markets, reaching 8.7% in the second quarter. This trend is being closely monitored as it could influence future financial performance.

Expected Noncash Charges

The upcoming Kyivstar listing and the sale of Kyrgyzstan operations are anticipated to result in a noncash charge of $150 million to $200 million in Q3, potentially impacting VEON’s financial results.

Bangladesh Market Challenges

In Bangladesh, VEON experienced limited growth, with total revenues rising only 5.1% quarter-on-quarter. This indicates a gradual recovery in consumer sentiment, highlighting the challenges in this market.

Forward-Looking Guidance

VEON’s updated guidance for 2025 reflects a positive outlook, with anticipated local currency revenue growth of 13% to 15% year-on-year and EBITDA growth between 14% to 16%. The company’s ongoing transformation into a digital operator, focusing on asset-light strategies and expanding its digital services portfolio, has shown substantial progress.

In conclusion, VEON’s earnings call painted a picture of strong financial performance and strategic growth, particularly in digital services. While regulatory and inflationary challenges remain, the company’s forward-looking guidance suggests optimism for continued growth. Investors will be keenly watching how VEON navigates these challenges and capitalizes on its strategic initiatives.