VEON 4Q23 trading update: Strong organic growth in revenue and EBITDA, solid execution of VEON 2.0 strategy
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Insights
VEON's reported revenue and EBITDA figures indicate a complex financial landscape. The organic growth in local currency is a positive sign, showing resilience and potential in VEON's core markets. However, the reported decline in EBITDA in USD terms is concerning and reflects the impact of currency fluctuations on the company's financials. The decrease in capex suggests a strategic reduction in spending, which could be a move to improve free cash flow and reduce debt, as indicated by the substantial YoY gross debt decrease.
Investors should consider the implications of the improved leverage ratio, from 2.4x to 1.4x, which is a significant reduction in debt relative to EBITDA. This improvement in financial health could enhance VEON's creditworthiness and potentially lead to lower borrowing costs in the future. The guidance for FY 2024 indicates confidence in the company's growth trajectory, although it is critical to monitor how the expected slowdown in inflation might impact consumer spending and, consequently, VEON's service revenues.
The emphasis on VEON's digital operator strategy and the growth in monthly active users of its digital products highlight the company's commitment to expanding its digital services. This strategic pivot is likely in response to the increasing demand for digital services like financial technology, entertainment, healthcare and education, especially in emerging markets where VEON operates.
The market should note VEON's positioning to capture wallet share in these areas, which could lead to sustained revenue growth if executed effectively. The digital transformation efforts, including AI-focused initiatives, are essential for staying competitive in the telecommunications industry, which is rapidly evolving with new technologies and consumer demands.
VEON's capex intensity of 17.6% aligns with industry norms for telecom operators investing in infrastructure and digital transformation. The projected capex intensity for 2024 of 18-19% indicates ongoing investment, which is critical for maintaining network quality and supporting the rollout of new services. However, it is essential to balance this with the need to manage debt levels and generate positive cash flow.
VEON's appointment of PwC as its auditor for 2023 is a standard practice that ensures financial transparency and compliance. The BB- credit ratings by S&P Global and Fitch are below investment grade, reflecting a degree of financial risk; however, the improved leverage ratio could positively influence future ratings. Investors should keep an eye on VEON's ability to maintain financial discipline while fostering growth in its digital verticals.
VEON 4Q23 trading update: Strong organic growth in revenue and EBITDA, solid execution of VEON 2.0 strategy
Amsterdam, 21 March 2024 07:00AM CET –
VEON Q4 and FY 2023 Highlights
- Q4 revenue of USD 953 million, +
1.4% YoY (+17.9% YoY in local currency normalised) and EBITDA of USD 364 million, -20.4% YoY (+24.9% YoY in local currency normalised) - FY revenue of USD 3,698 million, -
1.5% YoY (+17.9% YoY in local currency normalised) and EBITDA of USD 1,609 million, -7.9% (+24.9% YoY in local currency normalised) - Q4 capex of USD 258 million, -
1.8% YoY, with LTM capex intensity of17.6% and FY capex of USD 651 million, -21.8% YoY, with LTM capex intensity of17.6% - Total cash and cash equivalents of USD 1.7 billion, with USD 1.3 billion at HQ and gross debt at USD 4.7 billion (decreased by USD 2.8 billion YoY), with net debt excluding lease liabilities at USD 2.0 billion (decreased by USD 1.7 billion YoY)
- Appoints PwC as 2023 auditor
- Credit ratings of BB- assigned by S&P Global and Fitch
- 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 fourth quarter and full year ended 31 December 2023.
In 4Q23, VEON continued to report growth in revenues in reported currency terms with double digit local currency top-line growth. Total revenues reached USD 953 million, an increase of
For FY 2023, total revenues amounted USD 3,698 million, a decrease of
VEON has announced its full-year revenue guidance of 16
Commenting on the results, Kaan Terzioğlu said: “In 2023, we kept our promise to our investors: we delivered on our strategic priorities and operational goals, making VEON a faster growing company with a healthier balance sheet. Our growth has accelerated from mid-teens in FY22 to high-teens in FY23 with an increase of
I am excited for the growth potential in our markets, where we are well positioned to serve unmet demand in digital verticals: financial services, entertainment, healthcare, education. We start 2024 with nearly 100 million cumulative monthly active users of our digital products and a growing set of digital capabilities and services, including in AI-focused initiatives.
We are pleased to guide the market for continued strong and profitable growth in 2024, maintaining our focus on financial discipline and balance sheet management.”
Additional information
View the full 4Q23 trading update
View 4Q23 trading update presentation
View 4Q23 factbook
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
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 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, counter-sanctions by Russia 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, sanctions and 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 Russia and Ukraine, as well as the possibility of the imposition of further sanctions in connection with the ongoing war 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.
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 ability to generate sufficient cash flow; 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; 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 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.
This press release also contains ratings from credit agencies. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
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
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