VEON (VEON), a global telecom with a strong presence in six countries, is revolutionizing the world of connectivity and digital services by serving about 160 million customers. The company is witnessing significant growth from its ‘4G for All’ and digital operator strategies, converting single-player users into multiplay subscribers. This shift results in increased time spent, lower churn, and, ultimately, higher revenue generation. With the expansion of its digital services, VEON has diversified revenue streams, which hit $334 million in the first nine months of 2024.
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During Q3 2024, VEON reported a 9.8% year-over-year increase in total revenue, a testament to its successful digital transformation efforts and resilience in challenging markets. The stock is up over 85% year-to-date and shows ongoing positive price momentum, suggesting more to come. It is an intriguing option in the Telecommunications sector for investors looking to add international exposure to their portfolios.
VEON’s Moving On Up
VEON is a digital operator that provides converged connectivity and digital services to approximately 160 million customers worldwide. The company has seen significant growth in its multiplay segment because of its “4G for All” and digital operator strategies, which have increased customer retention and expanded service offerings. This shift has led to over half of VEON’s revenue being generated from multiplay customers, witnessing year-over-year growth of 31%.
Further growth comes from VEON’s diversification into digital services. The company’s investments in enterprise digital services like AdTech, cloud services, and software development have started to pay off, expanding its key verticals.
In recent news, VEON consolidated its share trading on Nasdaq and moved away from Euronext Amsterdam to enhance trading liquidity and improve its visibility among investors. It also launched the initial phase of its share buyback program worth up to $30 million as part of a larger $100 million initiative. This move reflects the company’s confidence in its growth potential and market position.
VEON Grows Revenue in Challenging Markets
The company has recently announced results for Q3, posting a total revenue of $1.04 billion, a 10.1% year-over-year increase. This growth has been primarily driven by a 35% boost in digital service revenues and steady performances in markets like Pakistan and Kazakhstan. The company’s focus on expanding digital offerings has succeeded, even amidst challenges such as political unrest in Bangladesh. However, Q3 EBITDA declined by 1.5% year-over-year to $438 million yet showed a 3.5% growth in local currency terms.
On the fiscal front, VEON’s total cash and equivalents stood at $1.02 billion, while gross debt was reported at $4 billion. The company also achieved a 22.2% year-over-year increase in LTM Equity Free Cash Flow, which reached $421 million.
Looking ahead, management has given guidance that it expects total revenue growth of 8%-10% and EBITDA growth of 4%-6% for the full year. Revised projections for local currency growth have been set at 12%-14% for total revenue and 9%-11% for EBITDA. These expectations mark a positive change in direction from the previous growth targets for 2024.
A Unique Opportunity
The stock has been on an upward trajectory, recently climbing over 27% in the past three months. It trades near the high end of its 52-week price range of $18.50 – $38.00 and shows ongoing positive price momentum as it trades above the major moving averages. Its P/S ratio of 0.65x suggests a relative discount to peers in the Communication Services sector, where the average P/S ratio is 1.31x.
The company is thinly followed by Wall Street. However, Benchmark analyst Matthew Harrigan recently initiated coverage on VEON with a Buy rating and $48 price target, noting that it offers “a unique opportunity” in mobile connectivity and digital services growth for telecom, entertainment, and financial services in five high-growth frontier markets, with ambitious double-digit growth targets for revenue through 2027.
Harrigan’s price target for VEON stock of $48 over the next 12 months represents a potential upside of 31.62% from current levels.
Vini, Vidi, VEON
VEON is showing substantial growth and diversification through its ‘4G for All’ and digital operator strategies. These strategies have resulted in increased customer retention and higher revenue generation. At the same time, VEON’s foray into digital services like AdTech, cloud services, and software development has also begun to reap the rewards, expanding its pivotal verticals. Its stock shows positive price momentum, with revised growth projections for total revenue likely to keep that trend going. VEON is undoubtedly an intriguing investment option worth a deeper look.
