06 August 2020

VEON Q2 results - Lockdowns across operating markets put pressure on operational and financial performance

Amsterdam (6 August 2020) – VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a leading global provider of connectivity and digital services, today announces results for the quarter ended 30 June 2020.


  • Lockdowns across our operating markets put pressure on both our operational and financial performance during the quarter before gradual relaxations enabled a steady late-quarter improvement across a number of markets.
  • Our operations were impacted by, amongst others, store closures, the loss of roaming and migrant customer revenues, and lower equipment and accessory sales.
  • Lockdowns have accelerated digital adoption, driving additional growth in self-care and digital customers, demand from which we are meeting through our sustained program of 4G network investment.
  • Our ongoing focus on cost control allowed the Group to mitigate the impact of declining revenues on Group EBITDA margins and will remain a key priority for the remainder of the financial year.
  • Strong demand for digital services enabled us to continue to grow data revenues at a double-digit pace and contributed to positive underlying performances from Ukraine, Kazakhstan and Pakistan.
  • The Group has continued to enhance its capital structure during the COVID-19 pandemic through debt refinancing that supported a 100bp reduction in borrowing costs during the quarter and a further extension of debt maturities.
  • Russia’s operational performance was challenged by ARPU and margin pressures as the lockdown constrained revenue opportunities and continued network investment lifted costs.
  • Our commitment to a turnaround of our Russian business remains resolute and is underpinned by considerable network investment, the financial benefits of which we anticipate in the first half of FY 2021.
  • We are reintroducing financial guidance for FY 2020 and anticipate a steady recovery in Group revenue and EBITDA during the second half of the financial year, assuming the gradual lifting of lockdown measures continues.
  • The long-term growth opportunities offered by our markets remain highly attractive and lockdowns have drawn forward demand for digital services, which we are well-positioned to capture through current levels of network capex.
  • The impact of the COVID-19 pandemic on our performance is not at this time anticipated to have a significant impact on our capex plans for FY 2020.


“The second quarter of 2020 saw the full impact of the COVID-19 pandemic on activity across our operating markets. National and local lockdowns deepened the reliance of our customers on connectivity services as the challenges of physical isolation intensified. Safeguarding lives, sustaining livelihoods and enhancing lifestyles continued to define VEON’s commitment to our customers throughout as we help them adapt to the unprecedented challenges presented by this crisis.

Cost reduction remains a key priority for the Group as we seek to limit the financial impact of lockdown measures on our operating performance. Planned restructuring of our headquarters and reductions in our staff-related costs in the second quarter lessened the margin impact of lower revenues. This was achieved despite higher network opex, particularly in Russia where we continued to invest in our 4G infrastructure to ensure our customers can enjoy best-in-class experiences of our services. Growth in our B2B business, mobile data revenue and home connectivity services are encouraging signs of consumer confidence. Across our markets, we remain committed to expanding our 4G networks in order to meet the considerable demand from our customers for data, which continued to grow at a double-digit pace during the second quarter as lockdowns accelerated adoption of our expanding range of digital services.

The current pandemic continues to drive divergent revenue trends across our markets, with greater demand for data and digital services offset by lower in-store sales and roaming activity. These trends are likely to dominate the second half of the year and are reflected in our revised financial guidance for FY 2020, which forecasts a gradual recovery in Group revenue and EBITDA from second-quarter levels as lockdowns are eased but a decline in each on a year-over-year basis given the extent of the pandemic’s impact on our operating activities to date.

Longer term, we remain excited by the growth opportunities we enjoy as our 4G network deployment program drives greater levels of customer engagement and services adoption. We are committed to executing further on our planned operational improvements, particularly in Russia, where we continue to invest in network quality and a growing range of digital services. Elsewhere, the early-stage nature of our markets provides us with a structural growth opportunity in digital adoption which the current pandemic is accelerating. We remain committed to our current capex plans to ensure we are positioned strongly to capture this.”


  • Revenue: USD 1,892 million, -16.3% YoY on a reported basis; -6.9% YoY in local currency, excluding one-off item3
  • EBITDA: USD 809 million, -18.7% YoY on a reported basis; -7.7% YoY in local currency, excluding one-off item3
  • Mobile subscriber base: 205 million active subscribers, -3.4% YoY
  • Operational Capex4 : USD 492 million, with LTM capex intensity of 20.8%
  • Revenues impacted by lockdowns and currency headwinds: in addition, Russia revenues were challenged by ongoing pressure on subscriber numbers and lower ARPU during lockdown, and Pakistan year-on-year revenue trend remained positive excluding tax regime5 change
  • Encouraging Data revenue growth2 : the momentum in mobile data revenue continued in the period, growing in local currency2 terms by +14.4% YoY, supported by growth in Ukraine of +13.1% YoY, in Pakistan of +27.6%YoY and in Bangladesh of +30.3% YoY, as a result of ongoing 4G investments
  • Stable performance in EBITDA margin Adjusted3: strong focus on cost management allowed for a stable EBITDA margin Adjusted performance in 2Q20 despite the pressure on revenues
  • LTM Capex Intensity4 of 20.8% reflecting continued 4G investments in all operating companies
  • Strong capital structure: leverage level at 2.0x excluding lease liabilities; total cash and undrawn committed credit lines at USD 2.5 billion; 1H20 refinancing activities decreased average cost of debt to 6.4% and improved average debt maturity to 2.8 years6
  • Strong profit for the period: USD 156 million, up 124.8% YoY


  • FY 2020 financial guidance reintroduced, anticipating a steady recovery in operations in 2H20, subject to the gradual lifting of lockdown measures: expecting a low to mid-single-digit local currency7 YoY decline in both Group revenue and EBITDA, with capex intensity4 of 22-24%
  • New members elected to Group Board of Directors and Gennady Gazin elected as Chairman of the Board
  • VEON’s JazzCash announced a partnership with Mastercard that strengthens Pakistan’s payments ecosystem
  • Establishment of a USD 6.5 billion Global Medium-Term Note program, followed by the issuance of RUB 20 billion senior unsecured notes under the MTN program
  • New RUB 100 billion loan concluded with Sberbank, partially refinancing the Group’s existing loan agreement
  • Refinancing of our RUB 30 billion loan agreement with VTB

1 Results as compared to prior year results unless stated otherwise.

2 Local currency growth for FY 2020 excludes the impact of foreign currency movements.

3 Local currency revenue and EBITDA Adjusted growth in 2Q20 additionally excludes a one-off payment of USD 38 million received in 2Q19 in relation to the termination of a network sharing agreement in Kazakhstan between our subsidiary KaR-Tel LLP and Kcell Joint Stock Company ("Kcell”) following Kazakhtelecom JSC’s acquisition of 75 percent of Kcell's shares.

4 Operational Capex is used here and defined as capex excluding license expenditures and capitalized leases. Last twelve months (LTM) Capex Intensity (or Operational Capex ratio) is defined as last twelve months operational capex divided by last twelve months total revenue.

5 In June 2018, the Supreme Court ordered an interim suspension of the deduction of taxes and service/maintenance charges on prepaid and postpaid connections on each recharge/top-up/load levied by mobile phone service providers. On 24 April 2019, the Supreme Court disposed of the proceedings and restored the impugned tax deductions, deciding that it would not interfere in the matter of the collection of public revenue (the “suo moto order”). On 3 July 2019, the Supreme Court issued its judgment dated 10 May 2019 and, in addition to confirming its ruling on tax deductions, further clarified that mobile phone service providers cannot charge customers for service and maintenance charges, which were 10% of customer recharges. As a result of the judgment by the Supreme Court, the Pakistan Telecommunication Authority (“PTA”) issued two letters to Jazz, dated 30 August 2019 and 19 September 2019, requesting Jazz to refund the service and maintenance charges (the “administration fees”) collected by Jazz between April 2019 and July 2019. Further to the PTA’s directions, on 29 September 2019, Jazz proceeded with crediting these administration fees to the balances of the affected customers. On 6 December 2019, the PTA issued a show cause notice alleging that the credits were made with conditions attached to them and, therefore, the PTA required Jazz to credit the affected customers again within fifteen (15) days. Jazz disputes the PTA’s allegation and, on 3 January 2020, provided the PTA with a complete factual explanation of the credits that were made and requested the withdrawal of the show cause notice. At a hearing on 25 June 2020, Jazz presented its case before PTA. Jazz is currently awaiting PTA’s decision.

6 In Q2 2020 VEON Holdings B.V. had outstanding drawings under its RCF of USD 500 million. Because we have an enforceable right to roll them over until final maturity date of the facility in February 2022, maturity dates of those drawings have been assumed to match the facility maturity date.

7 Local currency growth for FY 2020 excludes the impact of foreign currency movements. Local currency revenue growth additionally excludes a one-off payment of USD 38 million received in 2Q19 in relation to the termination of a network sharing agreement in Kazakhstan between our subsidiary KaR-Tel LLP and Kcell Joint Stock Company ("Kcell”) following Kazakhtelecom JSC’s acquisition of 75 percent of Kcell's shares. Local currency growth for EBITDA, in addition to foreign currency movements, excludes both a one-off vendor payment of USD 350 million received in 1Q19 and the Kcell payment of USD 38 million in 2Q19

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