VEON ups earnings guidance yet again after strong Q3

Emerging-markets operator again upgrades its EBITDA outlook for full year 2021 following a better than anticipated performance.

Anne Morris, Contributing Editor, Light Reading

October 28, 2021

3 Min Read
VEON ups earnings guidance yet again after strong Q3

VEON, the emerging-markets operator that counts Russia as its biggest market, saw a further improvement in its financial performance in the third quarter (Q3) of 2021, maintaining both revenue and core earnings growth on a reported basis.

Indeed, double-digit revenue growth was achieved in both reported currency (+10.2%) and local currency (+11.2%), with total revenue amounting to just over US$2 billion in the quarter to the end of September.

In local currency, double-digit revenue growth was recorded in five countries: Kazakhstan (25.5%), Georgia (21.4%), Pakistan (13%), Ukraine (11.9%) and Uzbekistan (10.4%).

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Group EBITDA reached $889 million, up 8.6% on a reported basis and 9.1% in local currency. Net income for the period was $195 million compared to a loss of $645 million in the third quarter of 2020.

The service provider was once again confident enough to increase its full-year EBITDA guidance for 2021, "given this better than anticipated performance," said Kaan Terzioğlu, group CEO. VEON raised its EBITDA guidance from mid to high-single digit growth to a minimum of 8% local currency growth. Group revenue and capital intensity guidance remain unchanged.

4G, towers and spectrum

Terzioğlu outlined the operator’s main objectives for the remainder of the year, including increasing 4G subscriber penetration with a 10 percentage point increase year-on-year. "We have now reached 46%. Our target over the medium term is to reach 70% penetration," he said.

Other key focus areas are maintaining revenue growth in Russia and strengthening its market position there; continuing to drive the digital operator strategy with a focus on digital services such as JazzCash and Toffee TV; and maintaining discipline on portfolio management both at country level and at VEON group headquarters.

"Finally, we remain committed to realizing the value of our considerable infrastructure portfolio. We announced the sale of Russian towers and we have established separate tower entities in Ukraine and Pakistan. In Bangladesh, we are considering various options to crystallize the value of our infrastructure," Terzioğlu said, noting that regulations in Bangladesh do not allow the operator to own a tower company.

VEON recently reached a deal to sell off 14,500 mobile towers in Russia to longtime partner Service-Telecom.

Terzioğlu also addressed the thorny issue of buying spectrum licenses across its footprint, stressing that VEON is "disciplined" when it comes to making spectrum investment decisions although it is always on the lookout for additional opportunities in this area.

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"In Pakistan we actually decided not to bid," he said.

"We will never make the mistake of making money in rupees and takas and tenges and rubles and investing in dollars to spectrum, and basically that was the driving force."He added: "We feel very comfortable in Pakistan for the next two years with some refarming and shutting down 3G over time to meet our needs. But of course, if there are changes in regulatory environments, allowing local currency tenders, we will consider that."

VEON acquired additional spectrum in Bangladesh this year. "We now hold 25% of the spectrum in Bangladesh, and the 25% spectrum compared to our current, almost 18% market share, shows actually the upside that the country presents to us," Terzioğlu said.

Group capex stood at $381 million, supporting the continued expansion of the 4G customer base. Total group 4G users reached 93.8 million while total subscribers grew by 3.2 million in Q3 to reach 202.9 million.

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— Anne Morris, contributing editor, special to Light Reading

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About the Author

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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