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In 1Q23, Group EBITDA decreased by 13.5% YoY in reported currency terms (+11.2% in local currency), with Group EBITDA margin of 43.6% (-2.5 p.p. YoY). Local currency EBITDA growth was achieved even as energy costs increased across the Group by c.41% YoY, which negatively impacted Group EBITDA margin by approximately 1.3 p.p.

The Group’s YoY EBITDA performance was also affected by an extraordinary non-recurring item in Kazakhstan in 1Q22, as noted in greater detail in the Country Performance section. Excluding this one-off item, Group EBITDA increased by 10.1% YoY in local currency terms.

In 1Q23, we reported 157.7 million mobile subscribers, growth of 0.7% YoY. Our 4G user base grew by 18.2% YoY, reaching 88.1 million, with 13.6 million 4G users added over the past 12 months. 4G users now account for 55.9% of our total subscriber base, up 8.3 p.p. from a year earlier, supporting the execution of VEON’s Digital Operator strategy.

Our operating companies continued to focus on the execution of VEON’s Digital Operator strategy (“DO1440”). We aim to deliver digital experiences for every minute of the day through services powered by our 4G network.

Our multiplay customers are customers that consume a digital product on top of our voice and data services. Our multiplay customer base increased by 34.1% YoY to 27.6 million multiplay customers, representing 21.7% of the user base and accounting for 39.3% of VEON’s B2C revenues. Multiplay customer ARPU is 3.5 times higher, and churn is 2.0 times lower than for single play voice-only customers.

With a higher share of multiplay customers, ARPU levels in each of our operating companies also increased, in the range of 7.6% to 18.3% YoY.

Our media streaming services, Toffee in Bangladesh and Tamasha in Pakistan, remain important drivers of the growth in our multiplay customers. Toffee reached 11.7 million monthly active users (“MAUs”), an 84.3% YoY increase, while Tamasha in Pakistan reached 5.6 million MAUs, with a 5.6-fold YoY growth.

Our digital financial services business in Pakistan, JazzCash, reported 14.6 million monthly active users and increased its 12-month total transaction volume by 30.4% YoY.

In 1Q23, Group capex was USD 90.3 million. Capex intensity was stable YoY at 20.3%.

We closed the first quarter with total cash and cash equivalents of USD 3.0 billion, including USD 2.5 billion at the HQ level. Our local operations remain largely self-funding.

In Ukraine, the team continued to work to keep the country connected while also delivering growth in both revenue and EBITDA. Around 90% of our radio network remained operational at the end of the quarter. Kyivstar’s revenues were up 6.0% YoY in local currency (-17.2% YoY in reported currency). In April, revenues increased by 13.2% YoY in local currency. Kyivstar’s 4G customer base grew 4.2% YoY, with data usage rising 23.4% YoY. EBITDA increased by 1.0% YoY in local currency (-21.2% YoY in reported currency) in 1Q23. The EBITDA performance was impacted by ongoing operational cost pressures, including electricity and fuel costs, and continued charitable donations, as well as staff and customer support program.

Pakistan revenues rose 16.0% YoY in local currency (-20.4% YoY in reported currency), a strong result given the challenging macroeconomic environment. A further devaluation of the Pakistani Rupee in the quarter resulting in 47% YoY depreciation negatively impacted the financial performance in reported currency. Jazz grew its 4G users (+17.4% YoY) and ARPU (+16.9% YoY) in 1Q23. EBITDA rose by 12.0% YoY in local currency (-23.2% YoY in reported currency). Higher energy and fuel prices in Pakistan negatively impacted the EBITDA margin of 45.2% by c.3 p.p.

In Kazakhstan, revenues increased 23.3% YoY in local currency (+23.4% YoY in reported currency), marking the eighth consecutive quarter of revenue growth above 20%. This was driven by the further expansion of our mobile customer base (+4.6% YoY), higher data usage (+25.1% YoY) and inflationary pricing. Beeline Kazakhstan reached 68.7% 4G penetration (+2.3 p.p. YoY). EBITDA rose by 37.9% YoY in local currency terms (+39.3% YoY in reported currency). In 1Q22, EBITDA was impacted by a KZT 2.0 billion one-off extraordinary charitable donation. Adjusting for this, Beeline Kazakhstan’s EBITDA grew by 29.4% YoY in local currency.

In Bangladesh, Banglalink’s revenues increased 17.7% YoY in local currency (-4.2% YoY in reported currency) supported by strong growth in data revenue, which was up 35.0% YoY. This was the fourth consecutive quarter of double-digit local currency revenue growth. Banglalink’s nation-wide network expansion supported robust 39.1% YoY growth in 4G users. Banglalink delivered balanced growth with its subscriber base, which was up +7.7% YoY, and ARPU, which grew +9.9% YoY. EBITDA increased 11.7% YoY in local currency (-9.0% YoY in reported currency).

In Uzbekistan, revenues increased 24.0% YoY in local currency (+19.9% YoY in reported currency), a fifth consecutive quarter of revenue growth above 20%. This was driven by a 21.6% YoY expansion of the 4G subscriber base and a robust increase in data revenues, which were 25.5% higher YoY in local currency. EBITDA rose 9.7% YoY in local currency (+6.1% YoY in reported currency).

We have seen a strong start to the second quarter and in April local currency revenues are up 20.1% YoY with EBITDA up 25.8% YoY. As we executed on our strategy across the Group, our 2023 local currency guidance for both revenue and EBITDA growth remains at 10%-14%. VEON’s 2023 outlook for the Group’s capex intensity is in the range of 18%-20%.

Key recent developments

• OFAC licence. With regard to the sale of PJSC VimpelCom (“VimpelCom”), the U.S. Office of Foreign Assets Control (“OFAC”) issued a license on 15 April 2023 authorizing U.S. persons to engage in all transactions ordinarily incident and necessary to the divestment of VimpelCom.  In addition to this OFAC license, VEON has also determined that it has the requisite authorizations required by the UK and Bermudan authorities to proceed with the divestment of VimpelCom.  VEON does not believe that a license is required from the EU to execute the sale.

• Scheme of arrangement to extend 2023 notes maturities. Further to the announcement issued on 31 January 2023, on 3 April 2023, VEON announced that VEON Ltd. and VEON Holdings B.V. received the remaining licenses and regulatory confirmations required to implement the amendments to VEON Holdings B.V.’s notes due 2023 (“2023 Notes”) (as set out in the scheme of arrangement proposed by VEON Holdings B.V.) from UK, Dutch and Bermuda authorities (in addition to the OFAC license received on 18 January 2023) and, therefore, the conditions to implementing the amendments had been satisfied.
  On 4 April 2023, VEON announced the amendment of its 2023 Notes were effective followed by the distribution of the 2023 Put Option Event Notice on 5 April 2023.
  Pursuant to the amendments, the maturity dates of the February 2023 Notes and April 2023 Notes have been extended to October 2023 and December 2023, respectively. Noteholders will also be entitled to payment of an amendment fee of 200bps payable on the 2023 Notes outstanding on their respective amended maturity dates. Further, the 2023 Put Option Event Notice, entitling holders of the 2023 Notes to require VEON Holdings B.V. to repurchase their 2023 Notes at a purchase price of 102 per cent. of the principal amount was distributed in accordance with the terms of the amendments. The 2023 Put Option closed on 19 April with holders of USD 165 million of the October 2023 Notes, and holders of USD 294 million of the December 2023 Notes exercised the put option.
  On 28 April 2023, VEON announced, that The Notes accepted for repurchase pursuant to the 2023 Put Option were repurchased by the Issuer on 26 April 2023 and cancelled on 27 April 2023.

• VEON appoints PwC as auditors for VEON Group. On 11 April 2023, VEON announced that, further to its announcement on 11 January 2023 regarding the appointment of PricewaterhouseCoopers Accountants N.V. (“PwC”) as the Dutch statutory financial statement auditors for the year ended 31 December 2022, VEON has now also appointed PwC as the independent registered public accounting firm for the audit of the Group’s consolidated financial statements for the year ended 31 December 2022 in accordance with the standards established by the Public Company Accounting Oversight Board (United States).

• VEON management to increase share ownership. On 14 April 2023, VEON announced an increase in management’s ownership of company shares. This follows the completion of management share awards as a part of the Group’s incentive programs that were announced in February 2022. With this share award, five members of VEON’s Group Executive Committee were granted a total of 154,876 shares within the scope of STI plans and 643,286 shares as a part of LTI plans.

• VEON appoints Group Head of Internal Audit. On 24 April 2023, VEON announced the appointment of Jagan Mohan, current Group Director of Internal Audit, as the Group Head of Internal Audit, effective from 1 May 2023. This complements the Group Chief Financial Officer transition, where Joop Brakenhoff, currently VEON’s current Chief Internal Audit and Ethics & Compliance Officer, assumed the role of Group Chief Financial Officer on 1 May 2023.
  In this new role, Jagan Mohan will report functionally to Michiel Soeting, the Chairman of VEON’s Audit and Risk Committee, and operationally to Kaan Terzioglu, our Group CEO.

• VEON enhances digital marketing offering with AdTech business. On 26 April 2023, VEON announced that it has incorporated a dedicated AdTech company, wholly owned by the VEON Group, to offer digital marketing services supporting VEON Group companies in addressing the growing digital advertising opportunity in VEON markets.
  With its headquarters in Tashkent, Uzbekistan, VEON AdTech will work with VEON’s digital operators and support the VEON Group in providing highly targeted digital marketing services based on machine-learning algorithms, building on VEON companies’ proximity to their customers. The advertising spend on digital advertising in the countries where VEON operates is estimated to exceed USD 1.3 billion in 2023¹.

• VEON appoints Joop Brakenhoff as Group Chief Financial Officer. On 15 March 2023, VEON announced the appointment of Joop Brakenhoff as Group Chief Financial Officer (CFO), effective from 1 May 2023. Joop took over from Serkan Okandan whose three-year contract as Group CFO expired at the end of April 2023. Serkan continues to serve VEON as a special advisor to the Group CEO and CFO.

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¹ Source: Statista

Additional information

View the full 1Q23 trading update

View 1Q23 trading update presentation

View 1Q23 factbook

About VEON

VEON is a global digital operator that currently provides converged connectivity and online services to over 200 million customers in seven dynamic markets. We are transforming people’s lives, empowering individuals, creating opportunities for greater digital inclusion and driving economic growth across countries that are home to more than 8% of the world’s population. Headquartered in Amsterdam, VEON is listed on NASDAQ and Euronext. For more information visit: https://www.veon.com.

Notice to reader: impact of conflict

VEON's results and other financial information presented in these financial statements 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.

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, 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 consequences of all of the foregoing have impacted and, if the conflict, sanctions and such responses continue or escalate, may significantly impact our results and aspects of our operations in Russia and 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 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. Although our Russian operations are now classified as ‘held for sale’ and ‘discontinued operations’ and do not contribute to our comparison base or actual reported numbers in this release (except as specifically stated), our operations in Ukraine continue to be affected by the conflict. 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 comprehensive sanctions on investment and vendors in Russia and the ongoing conflict between Russia and Ukraine have had a significant impact on the Company’s operations and business plans in Russia and Ukraine and may continue to have a significant impact on the Company’s operations and business plans in Ukraine. During the three months ended 31 March 2023, we have not recorded any impairment charges related to the Russian operations and have not recorded significant impairment charges related to the Ukrainian operations. However, we may need to record future impairment charges, which could be significant if the conflict continues or escalates and as more information becomes available to management. It is possible further impairment charges may rise to such a level on an accounting basis as to require additional analysis of true asset values in order to determine the true value of assets to be compared to liabilities as outlined in the provisions of our debt agreements.

Due to the ongoing conflict between Russia and Ukraine and the consequences as mentioned above, the Company requires additional time to complete all necessary disclosures in its Annual Report on Form 20-F to be filed with the U.S. Securities and Exchange Commission (“U.S. SEC”) as well as its Dutch financial statements to be filed with the Autoriteit Financiële Markten (“AFM”), including completing its preparation of VEON’s consolidated financial statements and subsequently receiving the related audit report on the financial statements and internal control over financial reporting from its independent registered public accounting firm. As a result, VEON was not be able to file its Dutch financial statements with the AFM by April 30, 2023, nor its Annual Report on Form 20-F by May 1, 2023, the respective deadlines for filing. As VEON was not able to complete these filings by the prescribed deadlines (or the May 16, 2023 date for extension of the Form 20-F filing deadline provided by U.S. Securities Exchange Act Rule 12b-25), it cannot be ruled out that the AFM, Euronext, U.S. SEC or Nasdaq may, following the missed deadlines, take action against VEON, as previously reported.

Disclaimer

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. Certain amounts and percentages that appear in this trading update 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 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; completion of VEON’s sale of its Russian operations; 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 31 December 2021 filed with the U.S. Securities and Exchange Commission (the “SEC”) on 29 April 2022 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 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.

The sale of VEON’s Russian operations is subject to customary closing conditions, including receipt of requisite regulatory approvals and licenses from relevant government authorities. There can be no assurance that the requisite approvals will be received or that such sale will complete.

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

Contact Information

VEON
Investor Relations
Nik Kershaw
ir@veon.com

Attachments

• 1Q23 TRADING UPDATE

• 1Q23 PRESENTATION

• Factbook1Q2023