VEON backs off from giving 2020 guidance due to COVID-19

VEON is the latest operator to concede that it is not immune from the effects of the COVID-19 pandemic, despite huge increases in demand for broadband and digital services.

The Amsterdam-based operator, whose main market is Russia but which also serves countries as diverse as Algeria, Pakistan and Ukraine, emerged relatively unscathed from the first quarter to March 31, 2020, saying that operational weakness in Russia was offset by good underlying performances from Ukraine, Pakistan and Kazakhstan.

However, VEON is clearly preparing itself for a bumpy ride ahead. It said the ongoing uncertainty related to the pandemic means it is "no longer prudent to give financial guidance for 2020." The operator has already reported that it saw a high single-digit year-on-year decline in revenue and a mid-teens decline in EBITDA in local currency terms in April.

The operator is also embarking on a new phase with a refreshed management team. Former CEO Ursula Burns is now relinquishing her role as chairman with effect from June 1, while Serkan Okandan has been appointed as the group's new CFO, and Alexander Torbakhov is the new Beeline Russia CEO. Kaan Terzioğlu and Sergi Herrero have already been appointed as co-CEOs to replace Burns.

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In the first quarter of 2020, VEON said COVID-19 caused divergent trends across its business, with greater demand for broadband and digital services offset by "an inevitable decline" in roaming revenues. Total revenue increased by 0.3% to $2.1 billion in local currency, although it was down 1.3% year-on-year on a reported basis. EBITDA reached $920 million, which was 1.8% lower in local currency but over 29% down on a reported basis.

Looking ahead, VEON said efforts to mitigate the impact of COVID-19 would include the extension of payment terms with key vendors, "while at the same time optimizing costs and capex as appropriate across our operations." The operator stressed that it intended to keep a focus on planned operational improvements during 2020, "which will stand us in good stead for the medium term."

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— Anne Morris, contributing editor, special to Light Reading

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