VEON 2Q24 Trading Update: Double-Digit USD Growth, Robust Operational Execution, Confirming Full Year Guidance

Rhea-AI Summary

VEON reports strong Q2 2024 results with double-digit growth in USD terms. Key highlights include:

- Q2 revenue of USD 1,026 million, up 12.1% YoY (15.1% in local currency)
- EBITDA of USD 459 million, up 10.6% YoY (13.9% in local currency)
- Direct digital revenue of USD 108 million, up 83.3% YoY
- Capex of USD 181 million, up 5.8% YoY
- Total cash and cash equivalents of USD 722 million

VEON maintains its FY 2024 guidance for revenue growth of 16-18% and EBITDA growth of 18-20% in local currency terms, with capex intensity of 18-19%. The company's growth is driven by increased 4G customers and digital service users across financial, entertainment, healthcare, education, and enterprise services.

Positive

• Q2 revenue increased by 12.1% YoY to USD 1,026 million
• EBITDA grew by 10.6% YoY to USD 459 million
• Direct digital revenue surged by 83.3% YoY to USD 108 million
• Added 10 million 4G customers and reached 111 million digital service users
• Maintained strong FY 2024 guidance with 16-18% revenue growth and 18-20% EBITDA growth
• Reduced gross debt by USD 1.2 billion YoY
• Repaid Revolving Credit Facility

Negative

• Capex intensity remains high at 18.0% for the last twelve months

Financial Analyst

VEON's Q2 2024 results demonstrate robust growth across key financial metrics. The $1,026 million revenue, up 12.1% YoY and $459 million EBITDA, increasing 10.6% YoY, showcase strong operational execution. Notably, the 83.3% YoY surge in direct digital revenue to $108 million highlights VEON's successful digital transformation strategy.

The company's improved financial position is evident from the $1.2 billion YoY reduction in gross debt to $4.0 billion. With $722 million in total cash and cash equivalents, VEON maintains a solid liquidity position. The LTM capex intensity of 18.0% aligns with the company's full-year guidance, indicating disciplined capital allocation.

VEON's maintained FY 2024 guidance suggests management's confidence in sustaining this growth trajectory. The focus on digital services and 4G customer expansion presents significant upside potential for future revenue streams.

Tech Expert

VEON's Q2 results underscore its successful transition to a digital operator model. The addition of 10 million 4G customers and 111 million digital service users demonstrates strong network expansion and digital adoption. This shift is important for future-proofing the business in an increasingly digital telecom landscape.

The impressive 83.3% YoY growth in direct digital revenue, now exceeding 10% of total revenues, validates VEON's digital strategy. The diversification into financial, entertainment, healthcare and enterprise services creates multiple revenue streams and enhances customer stickiness.

VEON's mention of leveraging artificial intelligence for enhanced customer experiences signals a forward-thinking approach. This tech-driven strategy could further differentiate VEON in competitive markets and drive operational efficiencies, potentially boosting margins in the long term.

Market Research Analyst

VEON's Q2 performance reflects strong market positioning across its operating regions. The 15.1% YoY local currency revenue growth outpaces many peers in emerging markets, indicating market share gains. The company's focus on digital services aligns with evolving consumer behaviors, particularly in developing economies where mobile-first strategies are crucial.

The Super app approach mentioned by CEO Kaan Terzioğlu is particularly noteworthy. This strategy can significantly enhance customer engagement and create a robust ecosystem, potentially leading to higher ARPU and reduced churn. The diversification into various digital services also mitigates risks associated with traditional telecom revenue streams.

However, investors should monitor potential regulatory challenges and currency fluctuations in VEON's markets, as these factors can impact reported results. Overall, VEON's strategy positions it well to capitalize on the digital transformation trend in emerging markets.

 

VEON 2Q24 Trading Update: Double-Digit USD Growth, Robust Operational Execution, Confirming Full Year Guidance

Amsterdam, 8 August 2024 07:00AM CEST

VEON Q2 2024 Highlights

• Q2 revenue of USD 1,026 million, +12.1% YoY (+15.1% YoY in local currency) and EBITDA of USD 459 million, +10.6% YoY (+13.9% YoY in local currency)
• Q2 direct digital revenue of USD 108 million, +83.3% YoY (+81.4% YoY in local currency)
• Q2 capex of USD 181 million, +5.8% YoY, with LTM capex intensity of 18.0%
• Total cash and cash equivalents of USD 722 million, with USD 375 million at HQ; and gross debt at USD 4.0 billion (decreased by USD 1.2 billion YoY), with net debt excluding lease liabilities at USD 2.2 billion; VEON repaid its Revolving Credit Facility
• Maintaining FY 2024 revenue growth guidance in local currency of 16-18%, EBITDA growth guidance in local currency of 18-20%, and capex intensity of 18-19%

VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a global digital operator that provides converged connectivity and online services, announces selected financial and operating results for the second quarter and six months ended 30 June 2024.

In 2Q24, VEON continued to report growth in revenues in reported currency terms with double-digit local and reported currency top-line growth. Total revenues reached USD 1,026 million, an increase of 12.1% YoY in reported currency (+15.1% YoY in local currency). Service revenues amounted to USD 987 million, an increase of 11.3% YoY in reported currency (+14.5% YoY in local currency), and EBITDA of USD 459 million represented a 10.6% YoY increase in reported currency terms (+13.9% YoY in local currency). Capex in 2Q24 was USD 181 million, an increase of 5.8% YoY, and reported capex intensity for the last twelve months was 18.0% (-1.6p.p. YoY). Total cash and cash equivalents as of 30 June 2024 amounted to USD 722 million (excluding USD 140 million in cash related to banking operations in Pakistan) with USD 375 million held at the headquarters (“HQ”) level.

VEON maintains its FY 2024 guidance for revenue growth of 16%-18%, EBITDA growth of 18%-20%, both in local currency terms, and group capex intensity of 18-19%, supported by execution of its digital operator strategy.

Commenting on the results, Kaan Terzioğlu said:

“With 12.1% growth in topline and 10.9% growth in EBITDA in US dollars, I am delighted to be back with a billion-dollar quarter. Robust organic performance across our markets is driven by 10 million additional 4G customers, 111 million digital service users, showcasing our capability to build new businesses in financial, entertainment, healthcare, education, and enterprise services.

I am also happy to report for the first time the direct digital revenues generated through our digital financial services, entertainment services, healthcare services, advertising services and Super apps. This quarter, our direct digital revenues exceeded 10% of our total revenues growing 77% year on year.

Our digital services are not only driving more consumption, helping with retention, improving ARPU of our digital operators but they now also directly contribute to our topline growth through interest income, advertising revenues, subscription services, platform commissions, and pay-per-view revenues.

Looking ahead, I am thrilled about our continued growth trajectory as we enhance customer engagement with superior digital experiences, further bolstered by cutting-edge technologies such as artificial intelligence.”

Additional information

View the full 2Q24 trading update
View 2Q24 trading update presentation
View 2Q24 factbook

2Q24 results conference call

VEON will also host a results conference call with senior management at 14:00 CEST (13:00 BST, 8:00 EST) today.

To register and access the event, please click here or copy and paste this link to the address bar of your browser: https://veon-q2-2024-trading-update.open-exchange.net/.

Once registered, you will receive registration confirmation on the email address mentioned during registration with the link to access the webcast and dial-in details to listen to the conference call over the phone. 

We strongly encourage you to watch the event through the webcast link, but if you prefer to dial in, then please use the dial-in details. 

Q&A 
If you want to participate in the Q&A session, we ask that you select the ‘Yes' option on the ‘Will you be asking questions live on the call?’ dropdown. That will bring you to a page where you can join the Q&A room by clicking 'Connect to meeting’.

You will be brought into a zoom webinar where you can listen to the presentation and once Q&A begins, if you have a question, please use the ‘raise hand button’ on the bottom of your zoom screen. When it is your turn to speak, the moderator will announce your name as well as sending a message to your screen asking you to confirm you want to talk. Once accepted, please unmute your mic and ask your question.

You can also submit your questions prior the webcast event to VEON Investor Relations at ir@veon.com. 

About VEON

VEON is a digital operator that provides converged connectivity and digital services to nearly 160 million customers. Operating across six countries that are home to more than 7% of the world’s population, VEON is transforming lives through technology-driven services that empower individuals and drive economic growth. Headquartered in Amsterdam, VEON is listed on NASDAQ and Euronext. For more information, visit: https://www.veon.com.

Notice to readers: financial information presented

VEON's results and other financial information presented in this document are, unless otherwise stated, prepared in accordance with International Financial Reporting Standards ("IFRS") based on internal management reporting, are the responsibility of management, and have not been externally audited, reviewed, or verified. As such, you should not place undue reliance on this information. This information may not be indicative of the actual results for any future period.

Notice to readers: impact of the war in Ukraine

The ongoing war in Ukraine, and the resulting sanctions adopted by the United States, member states of the European Union, the European Union itself, the United Kingdom, Ukraine and certain other nations, countersanctions and other legal and regulatory responses, as well as responses by our service providers, partners, suppliers and other counterparties, and the other indirect and direct consequences of the war have impacted and, if the war, such responses and other consequences continue or escalate, may significantly impact our results and aspects of our operations in Ukraine, and may significantly affect our results and aspects of our operations in the other countries in which we operate. We are closely monitoring events in Ukraine, as well as the possibility of the imposition of further legal and regulatory restrictions in connection with the ongoing war in Ukraine and any potential impact the war may have on our results, whether directly or indirectly.

Our operations in Ukraine continue to be affected by the war. We 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.

Disclaimer

VEON's results and other financial information presented in this document are, unless otherwise stated, prepared in accordance with International Financial Reporting Standards ("IFRS") and have not been externally reviewed and audited. The financial information included in this document 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. Certain amounts and percentages that appear in this document have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including those in the tables, may not be an exact arithmetic aggregation of the figures that precede or follow them. 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 current period or any future period.

This document 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 growth trajectory and ability to generate sufficient cash flow; VEON’s intended expansion of its digital experience including through technologies such as artificial intelligence; VEON’s assessment of the impact of the war in 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; its 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 document 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 war in Ukraine, including further sanctions and counter-sanctions and any related involuntary deconsolidation of our Ukrainian operations; 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 our material weakness in internal control over financial reporting; 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 31 December 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on 24 July 2023 and other public filings made from time to time by VEON with the SEC. 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 document 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.

Furthermore, elements of this document contain or may contain, “inside information” as defined under the Market Abuse Regulation (EU) No. 596/2014.

Contact Information

VEON
Investor Relations
Faisal Ghori
ir@veon.com

 

FAQ

What was VEON's revenue in Q2 2024?

VEON's revenue in Q2 2024 was USD 1,026 million, representing a 12.1% year-over-year increase in reported currency and a 15.1% increase in local currency.

How much did VEON's direct digital revenue grow in Q2 2024?

VEON's direct digital revenue grew by 83.3% year-over-year to USD 108 million in Q2 2024.

What is VEON's full-year 2024 revenue growth guidance?

VEON maintains its full-year 2024 revenue growth guidance of 16-18% in local currency terms.

How many 4G customers did VEON add in Q2 2024?

VEON added 10 million additional 4G customers in Q2 2024.

What was VEON's EBITDA in Q2 2024?

VEON's EBITDA in Q2 2024 was USD 459 million, representing a 10.6% year-over-year increase in reported currency and a 13.9% increase in local currency.