VEON Overview: new company on the Moscow Exchange

Обзор VEON: новая компания на Московской бирже

VEON (MOEX: VEON) — international telecommunications holding. At the end of November 2021, the Moscow Exchange allowed the company to trade, providing a third level of listing.

About company

VEON operates in eight countries - Russia, Pakistan, Ukraine, Kazakhstan, Uzbekistan, Bangladesh, Georgia and Kyrgyzstan - with a total subscriber base of about 200 million people. Previously, Algeria was also on this list., but 1 July 2021 VEON sold its stake in local telecom operator Djezzy.

Russia. VEON's core business, which brings about half of the income. In Russia, the holding provides telecommunications services under the Beeline brand.

The crisis year 2020 was difficult for the company - financial results decreased by 5-15% due to the outflow of the client base in the first half of the year and the devaluation of the ruble. In 2021, the situation is the opposite: VEON Demonstrates Partial Performance Recovery, although the level of 2019 is still far away.

Обзор VEON: новая компания на Московской бирже

Pakistan. VEON's main growth point. The main brand - Jazz - the largest mobile operator in the country, which owns the financial business JazzCash, JazzTV entertainment platforms, Bajao, Jazz Cricket, Deikho, mobile application in the field of health care BIMA Health.

Most interesting - JazzCash - digital financial services platform, providing mobile access to banking and payment systems for residents of the fifth country in the world in terms of population. This year the business is growing by more than 50%.

Обзор VEON: новая компания на Московской бирже

Bangladesh. The business is at an early stage of development of its mobile and digital services.. Even with an audience of 35 million people, the financial results of the holding here are very modest and amount to only 8% of the total.

There are two main brands: Banglalink is the third largest telecom provider in Bangladesh and Toffee is one of the most popular free video platforms in the country.

Обзор VEON: новая компания на Московской бирже

Ukraine, Kazakhstan and Uzbekistan. Ukraine is the third largest segment with an audience of 26 million people, bringing order to the holding 13% income. Main brand - Kyivstar, mobile operator number one in Ukraine, which along the way develops digital services, for example Doctor Online, mobile payments, Kyivstar TV and a number of other businesses.

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In 2020, the Ukrainian direction was the only one, which has shown significant growth in its financial results. The revenue of the Ukrainian segment in national currency increased by 12,4% against the background of the expansion of the 4G network and the growth of the mobile audience. Growth accelerated in 2021 to 15%.

Kazakhstan and Uzbekistan are two small VEON businesses, which operate under the same Beeline brand and bring about 10% income. In addition to the main activity, the company is still developing digital services, such as the mobile operator Izi and Beeline TV.

Обзор VEON: новая компания на Московской бирже

Other regions. This segment includes two countries: Georgia and Kyrgyzstan. In total, both countries bring VEON about 1% revenues with a total audience of 3 million subscribers.

Обзор VEON: новая компания на Московской бирже

Geographic structure of income for 3 quarter of 2021, billion dollars

Revenue EBITDA
Russia 1,025 0,384
Pakistan 0,349 0,173
Ukraine 0,270 0,183
Kazakhstan 0,150 0,086
Bangladesh 0,145 0,062
Uzbekistan 0,051 0,026
Rest 0,022 0,010


VEON's dividend policy assumes distribution 50% free cash flow provided, that the Net Debt / EBITDA ratio will be below 2.4 ×. Payment is made once a year, at the end of the fourth quarter. In 2020, the holding decided to abandon dividends due to uncertainty due to the coronavirus pandemic.

Return of dividend payments for 2021 is the main short-term driver of growth in the value of VEON shares, which could happen as early as spring next year, if management decides to return part of the profit to shareholders.

Обзор VEON: новая компания на Московской бирже

Current results

International holding, like the main Russian competitor - MTS, is working on restructuring the company from a telecommunication to a technological one. Following this goal, VEON sells its stakes in non-core regions, to invest in the most promising digital services. For this reason, the financial results of the holding are not always stable..

Financial results of the company, billion dollars

Revenue EBITDA Net profit FCF Net debt
2016 8,885 3,232 2,414 0,588 7,162
2017 9,474 3,587 −0,483 1,067 8,741
2018 9,086 3,273 0,362 1,032 5,469
2019 8,863 4,215 0,683 1,362 8,342
2020 7,980 3,453 −0,349 0,357 6,108
9м2021 5,736 2,505 0,375 0,320 8,154
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Comparison with competitors

EV / EBITDA P / E Net debt / EBITDA
VEON 3,23 7,74 2,50×
MTS 4,37 9,41 1,80×
Rostelecom 3,74 10,21 2,35×
MGTS 7,24 13,10 −0,09×
Tattelecom 2,50 6,49 −0,37×
Bashinformsvyaz 8,22 −142,08 3,96×

Arguments for

Low multipliers. VEON's business is rated quite modestly: excluding debt, it is worth less than 1 year EBITDA. The main reason is weak results in the Russian market, which cannot yet be compensated.

Sale of Russian business. VEON tried to sell its Russian segment for several years, but no one dared to buy the entire business. In this regard, the company decided to start selling its tower infrastructure for $ 970 million.. This deal was closed in the fourth quarter of 2021.

Return of dividend payments in 2022. Management has promised investors to consider the return of dividends for the fourth quarter, as VEON will receive a large sum from the sale in 2021 of the Algerian telecom operator Djezzy and the Russian tower infrastructure.

Arguments against

Debt load. At the moment, the company's net debt is $ 8.154 billion., and the "Net debt / EBITDA" multiplier is 2.5 × with its own medium-term target of 2.4 ×.

Strong competitors. VEON ranks third in the Russian market in terms of the number of subscribers and shows weak results in comparison with competitors: yielding leadership to MTS and Megafon and losing to the closest pursuer - Tele-2 - in growth rates.

What is the bottom line

yielding leadership to MTS and Megafon and losing to the closest pursuer - Tele-2 - in growth rates, which has a number of promising business projects in its portfolio: Pakistani Jazz and JazzCash, Bangladeshi Banglalink and Toffee, Kazakh Izi, Ukrainian Kyivstar and others.

The current drawdown in share prices is largely attributable to weak results and zero dividend payments for 2020. But after 3-4 months the market should completely forget about it., if management decides to return to profit sharing, if management decides to return to profit sharing.

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