VEON Progresses with Asset-Light Strategy, Reaches Agreement to Sell Stake in TNS+ in Kazakhstan

Rhea-AI Summary

VEON (NASDAQ: VEON, Euronext Amsterdam: VEON) has agreed to sell its 49% stake in Kazakh wholesale telecommunications infrastructure provider TNS Plus LLP (TNS+) to its JV partner, the DAR group. The sale is valued at USD 137.5 million and awaits regulatory approval in Kazakhstan. The divestment aligns with VEON's asset-light strategy, allowing the company to focus on its core digital services in Kazakhstan, such as its financial app Simply, entertainment platform BeeTV, and AI-driven software development via QazCode. DAR will continue to invest in telecommunications infrastructure and digital innovations in Kazakhstan.

Positive

• VEON will receive USD 137.5 million from the sale of its 49% stake in TNS+.
• The divestment aligns with VEON's asset-light strategy, optimizing resource allocation.
• The sale allows VEON to concentrate on its core digital services in Kazakhstan, enhancing focus and potential growth.
• VEON’s digital services in Kazakhstan, including Simply, BeeTV, and QazCode, are positioned for further innovation.
• DAR's continued investment in telecommunications infrastructure and digital innovations in Kazakhstan indicates strong market confidence.

Negative

• The transaction is subject to regulatory approvals, adding a layer of uncertainty.
• VEON is losing a 49% stake in a company with extensive fiber network infrastructure, potentially reducing its direct influence in the telecommunications sector in Kazakhstan.

Insights

Financial Analyst

The decision by VEON to sell its 49% stake in TNS Plus LLP for USD 137.5 million is a strategic move that highlights the company's dedication to its asset-light strategy. By offloading infrastructure assets, VEON aims to streamline its operations and focus more on its digital services and software development initiatives in Kazakhstan. This divestment will free up capital that can be reinvested into higher-margin areas, potentially boosting profitability in the long term. However, investors should be aware that such a strategy may also involve increased dependency on third-party providers for infrastructure services, which might introduce new risks.

The valuation of USD 137.5 million for a 49% stake indicates the perceived value and potential of TNS+ in the current market. It also reflects positively on the long-term view of the Kazakh economy and the growth prospects of its telecommunication sector. However, regulatory approvals remain a hurdle and any delays could affect the closing of this transaction and subsequent financial planning.

Overall, from a financial perspective, this move aligns with VEON's strategic objectives and can be considered a rational decision to enhance focus on core competencies and improve financial health.

Market Research Analyst

The sale of VEON's stake in TNS Plus LLP to DAR group underscores a broader trend in the telecommunications industry where companies are shifting towards an asset-light model to enhance operational flexibility and focus on digital services. This transition allows VEON to reduce capital expenditure on infrastructure while potentially increasing investments in customer-facing services and innovation. For retail investors, this move signals VEON's commitment to evolving market demands and focusing on high-growth areas such as AI and digital services.

Moreover, the growth of Beeline Kazakhstan's products, like the Simply financial services application and entertainment platform BeeTV, indicates a strategic pivot towards a more consumer-driven focus. This could lead to a diversified revenue stream and potentially higher customer loyalty and engagement. However, the execution of this transition will be crucial. Investors should monitor how effectively VEON can leverage the capital from the sale to enhance its digital offerings and whether it can maintain service quality without the ownership of key infrastructure assets.

The deal's completion is subject to regulatory approvals, which introduces an element of uncertainty. Any delays or complications in gaining these approvals could impact investor sentiment and the stock's short-term performance.

Amsterdam and Astana, 28 May 2024: VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a global digital operator that provides converged connectivity and online services, announces that it has signed an agreement for the sale of its 49% stake in Kazakh wholesale telecommunications infrastructure services provider TNS Plus LLP (TNS+) to its JV partner, the DAR group of companies.

TNS+ is an international operator providing a wide range of telecommunication services in voice, internet access, data transmission, transparent digital channels, IP VPN, IPLS and long-distance communication services to commercial telecommunications operators, as well as large corporate clients on the enterprise segment.

The total consideration for the sale is USD 137.5 million. The closing of the transaction is subject to customary regulatory approvals in Kazakhstan.

“This agreement marks further progress on the execution of our asset-light strategy. Beeline Kazakhstan is Kazakhstan’s digital powerhouse, with products ranging from its financial services application Simply, to its entertainment platform BeeTV, and its innovative second brand Izi. Beeline Kazakhstan’s software development company QazCode spearheads an AI-first approach in the country. This divestment will allow us to focus more deeply in these areas while optimizing the management of infrastructure services in the capable hands of our partners,” said Kaan Terzioglu, Group CEO of VEON.

“This deal represents our positive long-term view of the Kazakhstan economy and its robust performance. During the last 17 years, TNS+ heavily invested in building extensive fiber network of more than 14000 km throughout Kazakhstan, connecting all major cities and neighbouring countries. We are continuing to invest in growing telecommunications infrastructure assets and digital innovations,” said Alidar Utemuratov, Group CEO and founder of DAR.

About DAR

DAR is an international group that has many years of extensive expertise in telecom, fintech, media and technology industries. DAR was founded by Alidar Utemuratov, investor and technology entrepreneur, who also launched theinvestment firm, GreenApple known internationally for successful cases of Cellwize and 2Day Telecom.

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: www.veon.com

Disclaimer

This release 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. Forward-looking statements are not historical facts, and include statements relating to, among other things, VEON’s strategy and divestment plans. Forward-looking statements are inherently subject to risks and uncertainties, many of which VEON cannot predict with accuracy and some of which VEON might not anticipate. The forward-looking statements contained in this release speak only as of the date of this release. VEON does not undertake to publicly update, except as required by U.S. federal securities laws, any forward-looking statement to reflect events or circumstances after such dates or to reflect the occurrence of unanticipated events. Furthermore, elements of this release contain or may contain, “inside information” as defined under the Market Abuse Regulation (EU) No. 596/2014.

Contact

VEON
Hande Asik
Group Director of Communications
pr@veon.com

FAQ

What is the value of VEON's sale of its stake in TNS+?

The total consideration for the sale of VEON's 49% stake in TNS+ is USD 137.5 million.

Who is buying VEON's stake in TNS+?

VEON's 49% stake in TNS+ is being sold to its JV partner, the DAR group of companies.

What strategy is VEON pursuing with the sale of its stake in TNS+?

VEON is pursuing an asset-light strategy, focusing more deeply on digital services in Kazakhstan.

What regulatory requirements are needed for VEON's sale of its stake in TNS+?

The closing of the transaction is subject to customary regulatory approvals in Kazakhstan.

How does the sale of TNS+ stake impact VEON’s business focus?

The sale allows VEON to concentrate on core digital services like its financial app Simply, entertainment platform BeeTV, and AI-driven development via QazCode.

What are DAR's plans following the acquisition of VEON's stake in TNS+?

DAR plans to continue investing in telecommunications infrastructure and digital innovations in Kazakhstan.