Protecting stakeholder value delivering continued local currency growth across our operations

AMSTERDAM, April 28, 2022 /PRNewswire/ -- VEON Ltd. (VEON) announces a trading update for the first quarter ended 31 March 2022, including selected financial and operating results:

VEON ended 1Q22 with revenue of USD 1,823 million, +9.8% YoY in local currency (-0.4% YoY in reported currency) and EBITDA of USD 775 million, +5.7% YoY in local currency (-4.0% YoY in reported currency). Group capex was USD 367 million (-6.2% YoY), with capex intensity of 23.2%, -2.2 p.p. YoY. Group net debt/EBITDA was 2.4x.

Commenting on results, Kaan Terzioğlu said:

"I am proud of how our teams are tackling the current challenges and ensuring service and business continuity, keeping our 220 million customers across nine countries connected. Our commitment to provide access to information and other vital digital services is intact in these character-building times. The solid results we are reporting today illustrate our operational and financial discipline. We continue to enjoy high-single-digit growth and we have improved our capital structure."

1Q 2022 highlights:

Revenue of USD 1,823 million, +9.8% YoY in local currency (-0.4% YoY reported currency)
EBITDA of USD 775 million, +5.7% YoY in local currency (-4.0% YoY reported currency)
Capex of USD 367 million, -6.2% YoY, capex intensity of 23.2%
Total cash USD 1.904 million, with USD 1,304 million at Headquarters (additional USD 692 million in committed undrawn credit lines)
206 million mobile subscribers, up 3.9% YoY
100.8 million 4G users, up 24.3% YoY
Net debt/EBITDA ratio of 2.4x
Current ratio (Current assets/Current liabilities) of 1.11x

Group revenue increased by 9.8% in local currency terms (-0.4% in reported currency). All our operating companies delivered YoY revenue growth in local currency terms. Strong growth in data revenue, up 17.1% in local currency terms (+7.1% in reported currency), was a key driver of strong Group revenue performance.

Ukraine revenues increased 15.1% YoY in local currency (+12.7% in reported currency) a good result given the ongoing conflict in the country. For March 2022, Ukraine reported revenue of UAH 2.8 billion (+16.7% YoY), with service revenue of UAH 2.7 billion (+16.7% YoY). This performance was driven once again by continued growth in Kyivstar's 4G customer base, which increased 30.7% YoY. Mobile revenue growth was also supported by higher roaming revenues, which increased 3.0x YoY.

Russia reported 1Q22 revenue growth of 5.6% YoY in local currency (-6.9% YoY in reported currency). The average March exchange rate used for consolidation was 104.1 ruble per dollar, impacting reported numbers. 1Q22 mobile service revenue was up 3.3% YoY and fixed-line service revenue was up 8.2% YoY in local currency. For March 2022, Russia reported revenue of RUB 24.9 billion (+3.6% YoY), with service revenue of RUB 22.2 billion (+3.7%).

Pakistan revenue increased 9.1% YoY in local currency (-2.6% YoY in reported currency) driven by strong growth in data revenue, notwithstanding the increase in withholding tax from 10% to 15% on 16 January 2022 and the reduction in mobile termination rates.

In Kazakhstan revenues increased 20% YoY in local currency (+10.6% in reported currency), another excellent performance especially taking into account the unrest in January 2022. For January 2022, Kazakhstan reported revenue of KZT 20.4 billion (+15.6% YoY), with service revenue of KZT 19.7 billion (+15.0% YoY).

Group 1Q22 EBITDA rose by 5.7% in local currency terms (-4.0% in reported currency) and we reported positive local currency EBITDA performance across all markets. In Russia, EBITDA increased 2.8% YoY in local currency (-9.3% in reported currency), marking the fourth consecutive quarter of growth. Excluding the impact of charitable donations and employee support, in Ukraine Kyivstar's EBITDA grew 9.3% YoY in local currency and in Kazakhstan, Beeline's EBITDA grew 16.5% in local currency. Excluding these extraordinary costs, Group EBITDA increased 7.3% YoY in local currency. We remain focused on implementing planned cost efficiency measures across the business.

We reported healthy growth of 3.9% YoY in our 1Q22 subscriber base. The Group continued to focus on the overall customer experience on our 4G networks. This supported the growth in our 4G subscriber base, which reached 100.8 million, adding an additional 19.7 million users over the past 12 months. 4G subscribers now account for 48.8% of our total subscriber base, up 8.0 p.p. from a year ago.

Our financial service business in Pakistan, JazzCash, ended the quarter with 15.7 million MAUs, a rise of 12.2% YoY. In Bangladesh, Toffee TV reached 6.3 million MAU (+86.9% YoY) in 1Q22. Our digital operator in Kazakhstan, 'izi', ended the quarter with 101,000 subscribers, an increase of 87% YoY.

Group capex was USD 367 million with capex intensity of 23.2%, driven in particular by increased network investments in Bangladesh and Pakistan in line with our growth strategy.

On 12 April 2022, Jazz signed a core 4G license renewal with the Pakistan Telecommunication Authority, for a fee of USD 486.2 million for a duration of 15 years, with 50% paid upfront and the balance over five years. Fifty percent of the fees (PKR 44.54 billion, equivalent to USD 243.1 million) was settled before signing in April 2022. On 31 March 2022, Banglalink acquired new spectrum in the 2300 MHz band for USD 205 million, payable in installments over 11 years, doubling the company's spectrum holding. We believe this investment will continue to support Banglalink's ambitious nation-wide 4G growth strategy.

We closed the quarter with total cash of USD 1.9 billion, with a further USD 0.7 billion in undrawn revolving credit facilities. All our operations are in general self-funding.

Following the exercise of the put option for our stake in Algeria on 1 July 2021, the Algerian business became, in line with the requirements of IFRS 5, a discontinued operation, and is accounted for as an "asset held for sale". The result is that the Algerian operations do not contribute to VEON's comparison base or actual reported numbers, without any change in the net economic value of this business. The final valuation for the put option was concluded at USD 682 million for VEON's stake in Djezzy.

We further strengthened the management team with the appointment of Atyab Tahir as the CEO of JazzCash effective 1 May 2022. Michiel Soeting, former global lead partner at KPMG, joined the VEON Board as a non-executive director and Chairman of the Audit and Risk Committee effective 16 March 2022.

VEON is not the subject of any sanctions imposed by the European Union, the United States or the United Kingdom. We remain confident that the international community understands our industry's unique position as an essential service provider, with regulators outlining their support for sectors essential to humanitarian activities, including the flow of information and access to the internet.

VEON has suspended all activities related to the previously proposed re-domiciliation of VEON Ltd. to the United Kingdom and will continue to consider the optimal corporate structure for the group.

Key recent developments:

Changes to the VEON Board. On 1 March 2022, VEON announced that Mikhail Fridman had resigned as a director of the VEON Board (the "Board") with effect from 28 February 2022. On 8 March 2022, VEON announced that Mr. Robert Jan van de Kraats had stepped down as a director from the VEON Board with effect from 7 March 2022. On 16 March 2022, VEON announced that Michiel Soeting, former global lead partner at KPMG, had joined the VEON Board as a non-executive director and Chairman of the Audit & Risk Committee.
Bond repayment. On 28 February VEON utilized USD 430 million under its RCF and used these funds to repay its USD 417 million notes which matured on 1 March 2022, and to pay the accrued interest on these notes.
VEON concludes repayment of VTB Bank loan. On 11 March 2022, VEON announced that its subsidiary had prepaid a RUB 30 billion (approximately USD 259 million, based on a USD-RUB exchange rate of 115.7) interest-bearing loan with VTB Bank (PJSC) ("VTB") in accordance with its terms, and the facility has been cancelled. Following this payment to VTB, the VEON Group had no further loans outstanding with VTB.
VEON credit rating update. On 14 March 2022, VEON announced that Fitch and S&P had downgraded the Company's credit ratings following the announcement of new country ceilings for Ukraine and the Russian Federation.
VEON Holdings B.V. reiterates currency election on its Ruble-denominated notes. On 18 March 2022, VEON reiterated the currency election terms for the holders of the ruble denominated notes issued under VEON Holdings B.V.'s Global Medium Term Note Programme.
Novation of loans. In April 2022, two group-level loans, with Sberbank and Alfa Bank respectively, and totaling RUB 90 billion (c.USD 1.070 billion, based on a USD-RUB exchange rate of 84.09), were novated to PJSC VimpelCom, which resulted in the release of the former borrower (VEON Finance Ireland) and the former guarantor (VEON Holdings BV).
Key increases in VEON shareholding in 1Q22. On 14 March 2022, Exor Capital (London, UK) filed a stock market notification that their VEON shareholding had increased to above 5%. On 31 March 2022, Shah Capital Management (Raleigh, NC, US) filed a stock market notification stating that their VEON shareholding had increased to 2.87%, or 50.1 million shares.
Algeria put option. Following the exercise of the put option for our stake in Algeria on 1 July 2021, the Algerian business became, in line with the requirements of IFRS 5, a discontinued operation, and is accounted for as an "asset held for sale". The final valuation for the put option was concluded at USD 682 million for VEON's stake in Djezzy and the process is on track.
Spectrum acquisition in Bangladesh and license renewal in Pakistan. On 1 April 2022, VEON announced that Banglalink has acquired new spectrum, doubling the company's spectrum holding. Banglalink acquired 40 MHz of spectrum from the 2300 GHz band, ensuring that Banglalink retains its position as the top private operator in Bangladesh in terms of spectrum per customer. On 12 April 2022, Jazz signed a 4G license renewal with the Pakistan Telecommunication Authority for a fee of USD 486.2 million for 15 years, 50% of which (PKR 44.54 billion, equivalent to USD 243.1 million) was settled, before signing in April 2022, and the remaining amount will be paid in five equal annual instalments. Both transactions were funded in local currency facilities secured through domestic banking partners.
Increased local currency debt funding. On 16 April 2022, Jazz in Pakistan signed a PKR 40 billion (c. USD 222 million) syndicated loan with a 10 year maturity. On 26 April 2022, Banglalink signed a BDT 12 billion (c. USD 135 million) syndicated loan with a 5 year maturity.
Atyab Tahir appointed as CEO of JazzCash. On 14 March 2022, VEON announced the appointment of Atyab Tahir as Chief Executive Officer of JazzCash, the number one digital financial services provider in Pakistan and a division of Jazz, effective 1 May 2022.
VEON not subject to sanctions. On 4 March 2022, VEON confirmed its conclusion that it is not the subject of sanctions, following the introduction of EU sanctions on LetterOne shareholders, Mr. Fridman and Mr. Aven on 28 February 2022.
Group senior management shareholding. On 28 February 2022, VEON announced the details of management share awards following the finalization of the management incentive plan.
VEON confirms notification from NASDAQ on minimum share price requirement. On 12 April 2022, VEON confirmed that it had received notification on 7 April 2022 VEON from the Listing Qualifications Department of the Nasdaq Stock Market ("Nasdaq") stating that VEON is not in compliance with the minimum bid price requirement set forth in Nasdaq's Listing Rule 5550(a)(2). This does not impact current Nasdaq listing and trading, and VEON confirmed that it would evaluate options to return to compliance.

Additional information

View the full 1Q22 trading update

View 1Q22 trading update presentation

About VEON

VEON is a NASDAQ and Euronext Amsterdam-listed global provider of connectivity and digital services, headquartered in Amsterdam. Our vision is to empower customer ambitions through technology, acting as a digital concierge to guide their choices and connect them with resources that match their needs.

For more information visit: https://www.veon.com.

Notice to reader: impact of conflict

VEON's results presented in this trading update are, unless otherwise stated, based on IFRS and have not been externally reviewed and audited. The financial information included in this trading update is preliminary and is based on a number of assumptions that are subject to inherent uncertainties and subject to change. The financial information presented herein is based on internal management accounts, is the responsibility of management and is subject to financial closing procedures which have not yet been completed and has not been audited, reviewed or verified. Although we believe the information to be reasonable, actual results may vary from the information contained above and such variations could be material. As such, you should not place undue reliance on this information. This information may not be indicative of the actual results for the quarter or any future period.

The ongoing conflict between Russia and Ukraine and the sanctions imposed by the United States, member states of the European Union, the European Union itself, the United Kingdom, Ukraine and certain other nations, countermeasure sanctions by Russia and other legal and regulatory responses, as well as responses by our service providers, partners, suppliers and other counterparties, and the consequences of all of the foregoing have significantly impacted and will continue to significantly impact our results and operations in Russia and Ukraine, and may significantly affect our results and operations in the other countries in which we operate. We are closely monitoring events in Russia and Ukraine, as well as the possibility of the imposition of further sanctions in connection with the ongoing conflict between Russia and Ukraine and any resulting further rise in tensions between Russia, and the United States, the United Kingdom and/or the European Union. We hope that there will be a peaceful and amicable resolution and are doing everything we can to protect the safety of our employees, while continuing to ensure the uninterrupted operation of our communications, financial and digital services.

The broad nature of the financial sanctions targeted at the Russian financial system, including several banks that have historically provided funding to the Company, the comprehensive sanctions on investment and vendors in Russia and the ongoing conflict between Russia and Ukraine may have a material impact on the Company's operations and business plans in Russia and Ukraine. Over the next few months, we will be undertaking an assessment of the need for and amount of potential impairment charges, which is not as of yet determinable due to a number of factors, including the fluidity of the current situation and our ability to obtain relevant data required to build a business plan given the ongoing conflict and associated uncertainties. We anticipate that we will 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. However, we are still gathering the necessary data and we are not able at this time to estimate the amount or range of this potential impairment charge to the profit and loss statement. Such an impairment charge, if any, would have no impact on the Company's cash flow.

Disclaimer

This trading update contains "forward-looking statements", as the phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by words such as "may," "might," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "seek," "believe," "estimate," "predict," "potential," "continue," "contemplate," "possible" and other similar words. Forward-looking statements include statements relating to, among other things, VEON's plans to implement its strategic priorities, including operating model and development plans; anticipated performance, including VEON's ability to generate sufficient cash flow; VEON's assessment of the impact of the COVID-19 pandemic on its current and future operations and financial condition; VEON's assessment of the impact of the conflict surrounding Russia and Ukraine, including related sanctions and counter-sanctions, on its current and future operations and financial condition; future market developments and trends; operational and network development and network investment, including expectations regarding the roll-out and benefits of 3G/4G/LTE networks, as applicable; spectrum acquisitions and renewals; the effect of the acquisition of additional spectrum on customer experience; VEON's ability to realize the acquisition and disposition of any of its businesses and assets and to execute its strategic transactions in the timeframes anticipated, or at all; VEON's ability to realize financial improvements, including an expected reduction of net pro-forma leverage ratio following the successful completion of certain dispositions and acquisitions; our dividends; and VEON's ability to realize its targets and commercial initiatives in its various countries of operation.

The forward-looking statements included in this trading update are based on management's best assessment of VEON's strategic and financial position and of future market conditions, trends and other potential developments. These discussions involve risks and uncertainties. The actual outcome may differ materially from these statements as a result of, among other things: further escalation in the conflict surrounding Russia and Ukraine, including further sanctions and counter-sanctions and any related involuntary deconsolidation of our Russian and/or Ukrainian operations; further unanticipated developments related to the COVID-19 pandemic, such as the effect on consumer spending, that has negatively affected VEON's operations and financial condition in the past; demand for and market acceptance of VEON's products and services; our plans regarding our dividend payments and policies, as well as our ability to receive dividends, distributions, loans, transfers or other payments or guarantees from our subsidiaries; continued volatility in the economies in VEON's markets; governmental regulation of the telecommunications industries; general political uncertainties in VEON's markets; government investigations or other regulatory actions; litigation or disputes with third parties or regulatory authorities or other negative developments regarding such parties; the impact of export controls and laws affecting trade and investment on our and important third-party suppliers' ability to procure goods, software or technology necessary for the services we provide to our customers; risks associated with data protection or cyber security, other risks beyond the parties' control or a failure to meet expectations regarding various strategic priorities, the effect of foreign currency fluctuations, increased competition in the markets in which VEON operates and the effect of consumer taxes on the purchasing activities of consumers of VEON's services.

Certain other factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risk factors described in VEON's Annual Report on Form 20-F for the year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (the "SEC") on 15 March 2021 and other public filings made from time to time by VEON with the SEC, including VEON's Annual Report on Form 20-F for the year ended December 31, 2021 to be filed with the SEC on 29 April 2022. Other unknown or unpredictable factors also could harm our future results. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Under no circumstances should the inclusion of such forward-looking statements in this press release be regarded as a representation or warranty by us or any other person with respect to the achievement of results set out in such statements or that the underlying assumptions used will in fact be the case. Therefore, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date hereof. We cannot assure you that any projected results or events will be achieved. Except to the extent required by law, we disclaim any obligation to update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made, or to reflect the occurrence of unanticipated events.

In addition, we present certain information on a forward-looking basis. We are not able to, without unreasonable efforts, provide a full reconciliation to IFRS due to potentially high variability, complexity and low visibility as to the items that would be excluded from the comparable IFRS measure in the relevant future period, including, but not limited to, depreciation and amortization, impairment loss, loss on disposal of non-current assets, financial income and expenses, foreign currency exchange losses and gains, income tax expense and performance transformation costs, cash and cash equivalents, long-term and short-term deposits, interest accrued related to financial liabilities, other unamortized adjustments to financial liabilities, derivatives, and other financial liabilities.

Contact Information

Investor Relations

Nik Kershaw

ir@veon.com

+31 20 79 77 200

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SOURCE VEON Ltd