VEON CEO Kaan Terzioglu provided some insights into how his group's operation in Ukraine has been coping since Russia began its war of aggression in February.

Speaking during a conference call on Thursday, Terzioglu said the team at Kyivstar has been doing a "great job" at maintaining both service and business continuity.

He said availability of the Ukraine operator's basestations has ranged from from 800 to 1,200 sites as the team fixes equipment, provides gasoline for generators and builds new sites.

Figure 1: VEON is not the subject of any sanctions imposed by the European Union, the United States or the United Kingdom.
(Source: Pavel Kapish/Alamy Stock Photo)

"I expect these efforts to continue. Currently, we are at 92% availability on our radio area network and 100% availability on our core services," he said.

Terzioglu also hailed the support that Kyivstar has received from its local rivals, and praised operators across Europe for reducing network interconnection and roaming costs.

"I think it was a historical moment when the three operators decided to do national roaming," he said, noting that this provided the necessary redundancy to keep the network functioning.

On the other hand

In Russia, meanwhile, Vimpelcom has been affected by the volatility of the local currency, while international sanctions mean that caution has to be applied in terms of investments and exports.

"Clearly we have all the means to continue our investments as far as the compliances require," he said.

"But I'm thankful that we have completed most of our infrastructure investments in the past and that will give us the quality of the service that we provide from a humanitarian perspective in Russia."

VEON also pointed out that the group itself is not the subject of any sanctions imposed by the European Union, the United States or the United Kingdom.

VEON said capex will be lower in 2022 compared to 2021, although it is unable to provide any capex or earnings guidance at this stage.

The group also warned that it expects to report "material impairment charges" with respect to assets in Ukraine and/or Russia during 2022, "unless there is a significant improvement in the current underlying conditions, including a lasting resolution of the ongoing conflict."

Going up

In a trading update for the first quarter of 2022, VEON reported growth in all markets when calculated in local currencies, including in Russia and Ukraine. However, in the reported currency of US dollars, group revenue was broadly flat at $1.82 billion while EBITDA dropped by 4% to $775 million.

The operator increased the number of mobile subscribers by 3.9% to 206 million mobile subscribers, and exceeded 100 million 4G users for the first time.

In Russia, VEON's largest market, the group was able to report a 5.6% revenue increase in local currency, although in reported currency revenue was 6.9% lower at $857 million. In Ukraine, revenue increased 12.7% in reported currency to $276 million.

Concerns have been raised about liquidity levels at VEON amid the ongoing conflict and EU sanctions imposed on Russian oligarchs Mikhail Fridman and Petr Aven.

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Terzioglu pointed to the fact that VEON has now completed the decentralization program it began three years ago "to the level that all our operating companies can stand on their feet."

"They do not necessarily require cash injections from us. And even when we do major renewals of licenses or spectrum acquisitions, we have a mechanism in place and availability of the credits from local facilities so that we can fund them locally," he said.

"That has been our ultimate objective. I'm glad to see that over the next 12 months we will not see any need for injecting cash to any of our operations," he said.

The CEO noted that VEON holds about $1.3 billion in cash at its headquarters in Amsterdam. A further $0.6 billion is available to its local operations.

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— Anne Morris, contributing editor, special to Light Reading