VEON Ltd. · NASDAQ:VEON
VEON — Q2 2023 Earnings Presentation
48 slides from VEON's earnings presentation, Aug 3, 2023
Slide 1: VEON 2Q23 Trading Update
1 1 VEON 2Q23 TRADING UPDATE Amsterdam, 3 August 2023 STRONG RESULTS FULL-YEAR REVENUE GUIDANCE RAISED
Slide 2: Agenda
2 2 AGENDA 1. OPENING 2. HIGHLIGHTS & BUSINESS UPDATE Nik Kershaw Kaan Terzioğlu 4. CLOSING REMARKS Kaan Terzioğlu 3. TRADING RESULTS Joop Brakenhoff 5. Q&A Kaan Terzioğlu, Joop Brakenhoff
Slide 3: Notice to Readers: Financial Information Presented
3 3 NOTICE TO READERS: FINANCIAL INFORMATION PRESENTED 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
Slide 4: Disclaimer
4 4 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
Slide 5: Agenda
5 5 AGENDA 1. OPENING 2. HIGHLIGHTS & BUSINESS UPDATE Nik Kershaw Kaan Terzioğlu 4. CLOSING REMARKS Kaan Terzioğlu 3. TRADING RESULTS Joop Brakenhoff 5. Q&A Kaan Terzioğlu, Joop Brakenhoff
Slide 6: 2Q23 Highlights
6 6 2Q23 HIGHLIGHTS 2Q23 Capex intensity at 18.7% CAPEX $171mn Excluding one-offs, normalised EBITDA is up 20.3% in local currency $415mn EBITDA -10.6% YoY Accelerating local currency growth +19.6% YoY local currency TOTAL REVENUE -4.3% YoY $916mn -16.6% YoY Supported by strong growth in Multiplay a
Slide 7: Accelerating Top Line, Growing Above Inflation
7 7 ACCELERATING TOP LINE, GROWING ABOVE INFLATION Note: Group revenue YoY performance is normalised for one-offs 9.4% 13.9% 13.1% 13.0% 15.4% 15.3% 19.6% 8.2% 13.5% 16.6% 16.0% 18.1% 19.0% 20.6% 12.5% 15.1% 3.9% 5.2% 8.7% 6.0% 16.8% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Group Group, excl. Ukraine Ukra
Slide 8: 2Q23 Group EBITDA (Normalised) +20.3% YoY in Local Currency
8 8 2Q23 GROUP EBITDA (NORMALISED) +20.3% YOY IN LOCAL CURRENCY Note: EBITDA in Kazakhstan, Uzbekistan and Kyrgyzstan was impacted by extraordinary non-recurring items in 2Q22 and 2Q23 as noted in the Country Performance section of the 2Q23 trading update. YoY growth in local currency for Group EBIT
Slide 9: 4G Growth Driving Revenues
9 9 4G GROWTH DRIVING REVENUES Note: 2Q21 and 2Q22 4G users and revenues on this slide exclude Georgia, which was sold in June 2022, and Russian operations, which were reclassified as ‘held for sale’ and ‘discontinued operations’ in 4Q22 Multiplay – Multiplay 4G segment, 2play 4G – Doubleplay 4G seg
Slide 10: Ukraine
10 10 UKRAINE Keeping Ukraine connected and investing in its future • Kyivstar and VEON announced their commitment to invest the equivalent of USD 600 million in the recovery of Ukraine over the next three years • Around 94% of the Kyivstar network remained operational at the end of 2Q23 as team rem
Slide 11: Helsi
11 11 HELSI The largest digital healthcare platform in Ukraine Users registered in the system 25 million Active healthcare institutions 2,200 Active doctors and specialists 34,000 Appointments in 2Q23 1.8 million
Slide 12: Pakistan
12 12 PAKISTAN Growth above 20% in both revenue and EBITDA, gaining market share • Revenue growth above 20%, despite challenging macroeconomic environment, as Jazz continues to execute on its Digital Operator strategy (“DO1440”) • Encouraging momentum in our fintech offering with accelerating growth
Slide 13: JazzCash
13 13 JAZZCASH The most popular mobile financial services app in Pakistan MAU 14.7 million -9.0% YoY Active merchants 192,000 +22.1% YoY LTM Gross Transaction Value PKR 4.9 trillion +33.2% YoY LTM # of transactions 2.0 billion +0.7% YoY Daily average # of issued loans 55,000
Slide 14: Kazakhstan
14 14 KAZAKHSTAN DO1440 momentum delivers strong revenue and EBITDA growth • Strong execution of Digital Operator strategy results in market share gains, continued NPS leadership • Revenue growth of 19.4% driven by higher ARPU, growing customer base and strong consumption of data and digital service
Slide 15: IZI
15 15 IZI First digital-only mobile operator in Kazakhstan MAU of IZI app 415,000 4.4x YoY non-Beeline Kazakhstan users of IZI app 50.2% Monthly active mobile customers 191,000 +57% YoY ARPU of IZI customers with digital experience KZT 1,682 4.5 times higher than non-app IZI customers
Slide 16: Bangladesh
16 16 BANGLADESH High double-digit growth gaining further market share • Successful network rollout and execution of Digital Operator strategy saw the fifth consecutive quarter of double-digit revenue growth with further gains in revenue and subs market share • Following one year of strong revenue p
Slide 17: Toffee
17 17 TOFFEE The largest mobile entertainment platform in Bangladesh MAU 9.0 million +31.9% YoY non-Banglalink users of Toffee 67.9% Total # of sessions 128.3 million +41.2% YoY ARPU of Banglalink customers watching Toffee BDT 310 2.8 times higher than single play voice customers
Slide 18: Uzbekistan
18 18 UZBEKISTAN Sixth consecutive quarter of topline growth above 20% • Beeline Uzbekistan delivered its sixth consecutive quarter of topline growth above 20%, gaining further market share and improving its NPS position • Revenue growth of 20.9% driven by double-digit growth in the customer base, 2
Slide 19: Our Strategic Digital Platforms
19 19 OUR STRATEGIC DIGITAL PLATFORMS Offer new experiences to our customers by adding adjacent services Tamasha Toffee BeeTV Helsi JazzCash Simply MyBL IZI BIP Pakistan Bangladesh Kazakhstan Ukraine Pakistan Kazakhstan Bangladesh Kazakhstan Pakistan 2Q23 ACT YoY ACT YoY ACT YoY ACT YoY ACT YoY ACT
Slide 20: Sale of Russian Operations Announced on November 22
20 20 SALE OF RUSSIAN OPERATIONS ANNOUNCED ON 24 NOVEMBER 2022 Represents the optimal solution for all stakeholders 1 Capital structure and deleveraging Transaction details Timeline • In 2Q23, leverage of the Group reduced to 1.68x (post-IFR16) - a material deleveraging • As at Dec’22, expected EV c
Slide 21: Agenda
21 21 AGENDA 1. OPENING 2. HIGHLIGHTS & BUSINESS UPDATE Nik Kershaw Kaan Terzioğlu 4. CLOSING REMARKS Kaan Terzioğlu 3. TRADING RESULTS Joop Brakenhoff 5. Q&A Kaan Terzioğlu, Joop Brakenhoff
Slide 22: 2022 Delivers Strong Growth in Continuing Operations
22 22 2022 DELIVERS STRONG GROWTH IN CONTINUING OPERATIONS Note: for more information, please refer to form 20-F for financial year 2022 published on 24 July 2023 on VEON web site: https://www.veon.com VEON Ltd., audited (USD millions, except per share amounts) 2021 2022 Total operating revenues 3,8
Slide 23: 1H23 Highlights
23 23 1H23 HIGHLIGHTS EBITDA margin at 44.5% with continued focus on cost control EBITDA $800mn +12.5% YoY local currency 1H23 Capex intensity trending lower YoY to 14.5% $262mn CAPEX -31.6% YoY Revised FY2023 local currency guidance to 16%-19% +17.5% YoY local currency TOTAL REVENUE -6.5% YoY $1,80
Slide 24: 2Q23 Revenues
24 24 2Q23 REVENUES Accelerating local currency revenue growth • Reported revenue growth for the Group was impacted by significant YoY depreciation of local currencies particularly in Pakistan, Ukraine and Bangladesh • Revenue growth in Kazakhstan was impacted by prior period adjustment of c.USD 2.0
Slide 25: 2Q23 EBITDA and EBITDA Margin
25 25 523 415 188 174 106 66 28 6 (43) (108) Pakistan Ukraine Kazakhstan Bangladesh Uzbekistan Kyrgyzstan HQ and eliminations Group in constant currency FX impact Group 2Q23 EBITDA AND EBITDA MARGIN Acceleration in local currency EBITDA 2Q23 results YoY trends EBITDA $415mn +13.6% local currency -10
Slide 26: 2Q23 Debt and Liquidity Update
26 26 2Q23 DEBT AND LIQUIDITY UPDATE 30 Jun 2023 vs. 31 Mar 2023 GROSS DEBT -9.7% QoQ $5.2bn NET DEBT $2.8bn LEVERAGE INCL. LEASES 1.68x LEVERAGE EXCL. LEASES 1.34x +1.7% QoQ 1.61x in 1Q23 1.29x in 1Q23 CASH • Total cash USD 2.4 billion, excluding banking operations in Pakistan, with USD 2.0 billion
Slide 27: Group Debt and Liquidity as of 30 June 2023
27 27 Note: PKR and Total cash amounts exclude c.USD 53 million relating to banking operations in Pakistan; PJSC VimpelCom data reflects operations based within Russia alone and excludes intercompany debt; Lease liabilities in Russia are related to towers, shops and other “right-of-use” assets • Tot
Slide 28: Debt Maturity
28 28 DEBT MATURITY 1. As of 30 June 2023 Note: Cash amount excludes c.USD 53 million relating to banking operations in Pakistan DEBT MATURITY SCHEDULE AS OF 31 JUNE 2023 (USD billion) • USD 494 million of debt maturing in next 12 months, excluding RCF • USD 1,055 million outstanding under the RCF,
Slide 29: Debt Management Update
29 29 DEBT MANAGEMENT UPDATE • The higher cost of debt vs.1Q23 was impacted by the increased interest rates on floating USD and PKR debt • Debt cost reflects blended rate of borrowings, mainly USD, RUB and PKR (average USD cost 5.0%). Average debt maturity excluding RCF is 2.7 • Amendments to the 20
Slide 30: Agenda
30 30 AGENDA 1. OPENING 2. HIGHLIGHTS & BUSINESS UPDATE Nik Kershaw Kaan Terzioğlu 4. CLOSING REMARKS Kaan Terzioğlu 3. TRADING RESULTS Joop Brakenhoff 5. Q&A Kaan Terzioğlu, Joop Brakenhoff
Slide 31: 2023 Outlook
31 31 2023 OUTLOOK We have raised our full-year revenue guidance • Following the strong YTD local currency performance in revenue, we have raised our guidance for 2023 local currency revenue growth to 16-19%, and EBITDA growth remains at 10-14% • EBITDA growth was impacted by a number of one-off ite
Slide 32: 2023 Ambitions
32 32 2023 AMBITIONS We are progressing towards our full-year ambitions 1 Driving growth and expanding margin Focus on capital structure Russia sale • Execution on “4G for all” and “Digital Operator” • Disciplined inflationary pricing • Leaner HQ Management Team, smaller Board of Directors • Scheme
Slide 33: Q&A
33 33 Q&A VEON 2Q23 EARNINGS RELEASE
Slide 34: Thank You!
34 34 THANK YOU! ir@veon.com Tel: +31 (0)20 79 77 200 VEON 2Q23 EARNINGS RELEASE
Slide 35: Appendix
35 35 APPENDIX VEON 2Q23 EARNINGS RELEASE
Slide 36: Digital Operator Strategy Delivering Results
36 36 DIGITAL OPERATOR STRATEGY DELIVERING RESULTS R E A D P A Y ARPU Multiple Churn Impact 1. Revenue share and subscriber numbers based on the mobile B2C segment Note: Voice only – customers using only voice services, 2play 4G – Doubleplay 4G customers, Multiplay – Multiplay customers Multiplay cu
Slide 37: 2Q23 Revenues
37 37 REVENUE IN 2Q23 (USD million) 2Q23 REVENUES 2Q23 results YoY trends Note: Countries’ revenues are in constant currency 916 271 235 188 144 66 14 (2) Pakistan Ukraine Kazakhstan Bangladesh Uzbekistan Kyrgyzstan HQ and eliminations Group Total revenue Service revenue Local currency YoY growth •
Slide 38: 2Q23 EBITDA and EBITDA Margin
38 38 2Q23 EBITDA AND EBITDA MARGIN 2Q23 results YoY trends EBITDA IN 2Q23 (USD million) Note: Countries’ EBITDA are in constant currency 415 128 139 104 54 27 5 (43) Pakistan Ukraine Kazakhstan Bangladesh Uzbekistan Kyrgyzstan HQ and eliminations Group Local currency YoY growth • Inflation rose acr
Slide 39: Debt by Entity
39 39 DEBT BY ENTITY1 1. Excluding lease liabilities 30 JUNE 2023 (USD MILLION EQUIVALENT) Outstanding debt Type of debt Entity Bonds Loans Cash-pool overdrafts and other Total VEON Holdings B.V. 2,575 1,055 - 3,630 Pakistan Mobile Communications Limited - 533 12 545 Banglalink Digital Communication
Slide 40: Debt Maturity
40 40 DEBT MATURITY Debt maturity schedule 2023-2024 as of 30 June 2023 1. Assuming RCF rollover till maturity in March 2024 DEBT MATURITY SCHEDULE 2023-2024 (Millions) • USD 1,055 million outstanding under the RCF, can be rolled over until the final maturity of the RCF in 2024 (USD 250 million) and
Slide 41: Lease Liabilities (Principal)
41 41 LEASE LIABILITIES (PRINCIPAL) USD, million Local currency, million 30 June 2023 31 March 2023 30 June 2023 31 March 2023 Pakistan 215 197 61,809 55,735 Ukraine 172 161 6,274 5,872 Bangladesh 323 325 34,906 34,506 Kazakhstan 79 76 36,055 34,104 Uzbekistan 35 32 397,867 360,876 Kyrgyzstan 5 5 40
Slide 42: Ukraine
42 42 UKRAINE REVENUE (UAH Billion) EBITDA1 (UAH Billion) 4G USERS AND PENETRATION (3 months active, million) +16.8% YoY +11.6% YoY 7.9 7.4 7.7 8.2 8.3 8.6 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 4.9 4.6 4.4 4.5 4.9 5.1 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 12.7 11.6 12.1 13.1 13.3 13.1 49% 47% 50% 53% 55% 54% 1Q22 2
Slide 43: Pakistan
43 43 EBITDA1 (PKR Billion) PAKISTAN 1. One-off reversal positively impacting revenue (PKR 6.6 billion) and EBITDA (PKR 20.2 billion) in 4Q22 2. Includes users who are active in more than one application +22.2% YoY REVENUE1 (PKR Billion) 4G USERS AND PENETRATION (3 months active, million) VENTURES J
Slide 44: Kazakhstan
44 44 EBITDA2 (KZT Billion) KAZAKHSTAN 1. One-offs negatively impacting revenue: accounting adjustment for revenue recognition of bundles (KZT 3.0 billion) in 4Q22; prior period adjustments (KZT 0.9 billion in 2Q23) 2. One-offs impacting EBITDA: tax incentive for radio frequencies positively in 4Q21
Slide 45: Bangladesh
45 45 BANGLADESH +17.1% YoY +17.9% YoY REVENUE (BDT Billion) EBITDA (BDT Billion) 4G USERS AND PENETRATION (3 months active, million) VENTURES Toffee TV MAU 9.0mn (+31.9% YoY) 12.4 13.2 13.8 14.4 14.6 15.4 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 4.7 4.9 5.1 4.7 5.3 5.8 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 12.5 13.5
Slide 46: Uzbekistan
46 46 EBITDA2 (UZS Billion) UZBEKISTAN 1. One-off positively impacting total revenue: reversal of excise tax provision in 3Q22 (UZS 6.6 billion) 2. One-offs impacting EBITDA: tax provision reversals in 2Q22 (UZS 222 billion), in 3Q22 (UZS 6.6 billion), in 3Q22 (UZS 25.6 billion); an extraordinary re
Slide 47: Reconciliation Tables
47 47 RECONCILIATION TABLES Extract from VEON Ltd.’s 2Q23 earnings release RECONCILIATION OF LOCAL CURRENCY AND REPORTED GROWTH RATES - 2Q23 COMPARED TO 2Q22 - 1H23 COMPARED TO 1H22 Local currency Forex and Other Reported Local currency Forex and Other Reported Ukraine 16.8% (23.4%) (6.5%) 11.6% (22
Slide 48: Definitions
48 48 DEFINITIONS 4G users are mobile customers who have engaged in revenue-generating activity during the three months prior to the measurement date as a result of activities over fourth-generation (4G or LTE – long term evolution) network technologies. ARPU (average revenue per user) measures the