VEON Ltd (VEON) Q2 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
VEON Ltd (NASDAQ:VEON) reported a 5.9% year-on-year increase in revenues in US dollars, with a 13.2% growth in EBITDA.
The company revised its 2025 outlook, expecting local currency revenue growth between 13% to 15% and EBITDA growth between 14% to 16%.
Direct digital revenues grew by 57% year-on-year in dollar terms, now contributing 16.5% of total group revenues.
VEON Ltd (NASDAQ:VEON) completed the third phase of its $100 million share buyback program, repurchasing close to 3% of its shares.
The company enhanced its financial flexibility with a $200 million private bond issuance and successfully repaid bond maturities in April and June 2025.
Negative Points
VEON Ltd (NASDAQ:VEON) expects a non-cash charge of $150 to $200 million in the third quarter due to transactions like the sale of Kyrgyzstan operations.
The company faces challenges in increasing 4G adoption in certain markets, such as Ukraine, where penetration remains stable.
Weighted average inflation across VEON Ltd (NASDAQ:VEON)'s markets increased to 8.7% in the second quarter, posing a potential risk to cost management.
The company continues to carry a 'going concern' language in its financial statements, although it expects to address this by the end of the year.
VEON Ltd (NASDAQ:VEON) faces geopolitical and macroeconomic volatility, which could impact its operations and financial performance.
Q & A Highlights
Warning! GuruFocus has detected 8 Warning Signs with VEON.
Q: Can you explain the technical process of how the proceeds from the sale of Jazz will be fed up to the holding company? Also, what should we expect in the third quarter numbers regarding the SPAC for the listing of Kiev Star? A: (Burak Ozer, CFO) The proceeds will be upstreamed to the holding company in 20 months through dividends, enabling us to release reserves and equity. Regarding the SPAC, the impact will be calculated based on the closing price of the stock on the first trading day, affecting the valuation of the assets and shares used for the purchase.
Q: What are your strategies to drive 4G adoption in markets like Ukraine, where it remains stable, and how does 4G adoption impact your digital revenues? A: (Kan Tarviolu, CEO) We focus on 4G for all, not 5G for a few, with 68% of our customer base on 4G. In markets like Pakistan and Bangladesh, there are still many feature phone users, presenting growth opportunities. Our strategy includes increasing 4G coverage and quality, and offering smartphones preloaded with our digital services, as seen in Kazakhstan.
Q: How do you plan to unlock the valuation of your telecom and digital businesses, given their growth potential? A: (Kan Tarviolu, CEO) We aim to surpass 20% of total revenues from direct digital revenues before considering financial engineering options like tracking stocks. We plan to consolidate financial services, entertainment, and other digital businesses under umbrellas for clearer communication of revenue values.
Q: How do you see AI impacting markets with lower labor costs and digital service penetration compared to developed countries? A: (Kan Tarviolu, CEO) In emerging markets, advanced technologies like AI are adapted creatively. We focus on augmented intelligence to enhance skills, such as making doctors better. Our value proposition will shift from selling gigabytes to offering services that improve customers' lives, supported by local language AI models and super apps.
Q: What is your strategy for monetizing VEON's fintech assets, particularly Jazz Cash, given the market's undervaluation of these assets? A: (Kan Tarviolu, CEO) Jazz Cash, along with Mobilink Microfinance Bank, handles significant transactions and mobile payments in Pakistan. We are patient in developing the business's value before crystallizing it. We have interested parties but aim to ensure the business's growth is well-placed before moving forward with monetization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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