VEON Ltd. Q3 FY2024 earnings call

Key Points

• Revenue grew 9.8% y-o-y in USD and 14.1% in local currency, underlying growth 16% in local currency. Weighted average blended inflation rate decelerated from 16.5% in Q3 2023 to 8.2% in Q3 2024.
• Group EBITDA decreased 1.5% y-o-y in USD but increased 3.5% in local currency; excluding identified items, underlying EBITDA growth was 9.8% in local currency.
• Added 8 million 4G customers, multiplay customers grew 31% y-o-y, over half of revenues from multiplay customers.
• Direct digital revenues strong, reaching $334 million in first nine months of 2024, 11% of total revenues, growing 40% y-o-y in local currency.
• Markets performance: Ukraine's revenues up 17.9%, Pakistan's revenue up 22.6%, Kazakhstan's total revenues up 14.8%, Bangladesh's revenues down 8.4%, Uzbekistan's top-line up 15%.
• Digital services: mobile financial services, entertainment platforms, super apps, healthcare services growing, with digital subscribers expected to exceed traditional telecom customer base.

In Q3 2024, VEON's total revenue grew 9.8% year-over-year in US dollars and 14.1% in local currency. Telecom and infrastructure revenues combined grew 7.2% y-o-y, while direct digital revenues grew 35.1% y-o-y in USD. Ukraine saw revenues grow 17.9% y-o-y and EBITDA increase 6.9%. Pakistan had revenue growth of 22.6% y-o-y and EBITDA growth of 14.7%. Kazakhstan's total revenues were up 14.8%, with telecom revenues at 14.1% and digital direct revenues at 25.4% y-o-y. Bangladesh's revenues decreased 8.4% y-o-y, with EBITDA down 4%. Uzbekistan achieved 15% local currency top-line growth and 15% EBITDA growth. Direct digital revenues reached $334 million in the first nine months of 2024, making up 11% of total revenues, up from 10% in the first six months, growing 40% y-o-y in local currency.

Guidance

• Full year 2024 revenue growth expected 8%-10% y-o-y in USD, EBITDA growth 46% in USD.
• Revising local currency guidance to 12%-14% revenue growth and 9%-11% EBITDA growth.
• Underlying growth in local currency: 15.7% revenue growth and 11.2% EBITDA growth.

Risks

• Factors causing actual results to differ from forward-looking statements, including risks in annual report and SEC filings.
• Impact of revolutions, economic conditions, operational network developments, and ability to realize strategic initiatives.

Q: About servicing 2025 maturities and TNS+ sale A: We feel comfortable servicing 2025 maturities through operational cash proceeds and TNS+ sale proceeds; portion of sale proceeds already collected, rest over next few weeks Q: Implications of headquarters move to Dubai A: Will explore alternatives for bond issuance, new bonds likely from new entity Q: Feasibility of Shaw Capital's targets A: Shaw's points are part of our game plan, executing strategies to create value as part of our game plans Q: Tax savings from headquarters move to Dubai A: No tax savings expected from move, focus on local operations to improve effective tax rate