VEON Ltd Earnings Call: Strong Growth Amid Challenges

VEON Ltd ((VEON)) has held its Q4 earnings call. Read on for the main highlights of the call.

VEON Ltd’s recent earnings call conveyed a generally positive sentiment, underscored by robust revenue and EBITDA growth that exceeded expectations. The company has made significant progress in expanding its digital services and strengthening its financial position. However, challenges such as political unrest in Bangladesh and increased capital expenditure in Ukraine present notable concerns.

Strong Revenue and EBITDA Growth

VEON reported an impressive 8.3% revenue growth in US dollars for 2024, surpassing the anticipated 8% to 10% growth range. EBITDA also exceeded expectations, growing by 4.9% in US dollars. In local currency terms, the growth was even more pronounced, with revenue increasing by 14.6% and EBITDA by 12%. This performance highlights VEON’s strong operational capabilities and market presence.

Digital Services Expansion

The company has successfully expanded its digital services, with direct digital revenues growing by 63% for the full year and by 42% year-on-year in Q4. Digital services now make up 12.6% of total revenues, showcasing VEON’s evolution into a services company with a telecommunications license.

Improved Financial Position

VEON’s financial position has strengthened significantly, with the net debt to EBITDA ratio improving to 1.3 from over 3 times before exiting Russia. Additionally, cash reserves increased by 65.6% quarter-on-quarter to $1.7 billion, positioning the company well to manage upcoming debt maturities in 2025.

Successful Asset-Light Strategy

The company’s asset-light strategy has unlocked substantial value, evidenced by the completion of Phase 1 of a $100 million share buyback program and the sale of assets such as TNS+. This strategy is central to VEON’s approach to maximizing shareholder value.

Strategic Acquisitions and Market Expansion

VEON’s acquisition of a 97% stake in Uklon, Ukraine’s leading ride-hailing business valued at $160 million, aligns with its strategy to expand digital services. This move is expected to bolster VEON’s market presence and service offerings in the region.

Challenges in Bangladesh

Political changes and macroeconomic challenges in Bangladesh have significantly impacted VEON’s performance, affecting customer sentiment and revenue stability. These challenges underscore the complexities of operating in volatile markets.

Impact of Cyberattack and Political Unrest

The company faced financial setbacks due to a cyberattack in Ukraine and political unrest in Bangladesh, leading to restructuring costs and operational challenges. These events highlight the risks associated with geopolitical instability.

Increased Capital Intensity

VEON’s capital intensity for the year was 20.6%, exceeding the guidance of 18% to 19%, primarily due to increased investments in Ukraine amidst ongoing conflict. This reflects the company’s commitment to maintaining and expanding its infrastructure in challenging environments.

Forward-Looking Guidance

Looking ahead to 2025, VEON expects revenue growth of 12% to 14% in local currency terms and EBITDA growth of 13% to 15%. The company anticipates a reduction in capital expenditure intensity to between 17% and 19%, down from 2024’s 20.6%. This guidance reflects VEON’s focus on leveraging digital services and asset-light strategies to sustain growth despite macroeconomic challenges.

In conclusion, VEON Ltd’s earnings call highlighted a positive trajectory with strong financial performance and strategic expansions. While challenges remain, particularly in Bangladesh and Ukraine, the company’s forward-looking guidance and strategic initiatives suggest a continued focus on growth and resilience.