VEON reports 1Q21 Results

Amsterdam, 29 April 2021 – VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a leading global provider of connectivity and digital services, today announces results for the first quarter ended 31 March 2021:

1Q21 highlights:

• Acceleration of Group revenue and EBITDA growth on a local currency basis despite one less day in 1Q21 compared to 1Q20
• Beeline Russia reporting full quarter growth, with 1Q21 revenues up 1.4% YoY with one less trading day
• Ukraine, Kazakhstan and Pakistan in aggregate reporting +13.4% YoY revenue growth, beating their inflation rate
• Digital services continue to expand their reach, with more than 23 million monthly active users across our products
• Continued progress in optimizing our capital structure with a lower cost of debt and lengthened maturities for our funding
• FY2021 guidance increased to mid-single-digit revenue and EBITDA local currency growth, from previous guidance of low to mid-single-digit revenue and EBITDA local currency growth

- Q1 results at upper end of full-year guidance. The 4.3% YoY growth in Group total revenues in local currency in 1Q21 indicates an acceleration of growth, following 1.4% YoY growth that the Group recorded in 4Q20. Reported revenues declined 5.1% due to currency headwinds. In Russia we saw further improvement in revenue trends, with 1Q21 YoY local currency growth of 1.4% being the third successive quarter of improving revenue trends.
- Group EBITDA increased by 4.4% YoY in local currency terms, while reported Group EBITDA declined 4.9% YoY due to adverse currency movements. This solid local currency result was driven by Ukraine (+15.3%), Kazakhstan (+12.4%) and Pakistan (+8.1%). In Russia, the business reported a YoY decline in local currency EBITDA of 4.8%, a marked improvement over the -11.9% YoY EBITDA reported in 4Q20.
- We successfully implemented our investment plans, with total operational capex of USD 425 million, bringing our 12-month capex intensity to 24.7%, supporting the continued expansion of our 4G customer base during the period. The combined 4G population coverage of our operating companies reached 75.9%, an increase of 10.9pp YoY.
- The Group’s 4G user base increased by 21.4 million YoY and 6.3 million QoQ, driven by targeted network investments and other customer care measures, resulting in total 4G users of 86.8 million. 4G subscriber penetration was at 40.8% at quarter-end. The Group also recorded a QoQ increase in its total subscribers, which grew by 3.6 million in 1Q21 to 212.7 million.
- Mobile data revenues for the period increased by 13.6% YoY in local currency (3.8% reported), driven by the growth in 4G users with correspondingly higher ARPUs. This growth trend in 4G users is expected be a key tailwind for the Group over the next few years, driving further growth in data revenues.
- VEON’s digital businesses continued to expand customer reach. JazzCash closed the quarter with 14.0 million monthly active users (+78.8% YoY), Toffee TV in Bangladesh reached 3.3 million monthly active users from launch in November 2019 and Beeline TV had 2.9 million monthly active users (+28% YoY) in 1Q21.
- We closed 1Q21 with net debt of USD 8.3bn (including lease liabilities), corresponding to a net debt/EBITDA ratio of around 2.4x. These figures include the impact of the Pakistan put option as we settled the USD 272.5m payment and cash capex costs of approximately USD 572m. Over the past 12 months, the Group’s cost of debt (excluding leases) reduced to 5.9% from 6.8%, while debt maturity increased to 3.4 years, from 2.3 years.

Key recent developments:

• The Group completed its acquisition of the 15% minority stake in its Pakistan operating business for USD 272.5 million
• Sergi Herrero is to step down as co-CEO, effective 30 June 2021
• Alex Bolis and Dmitry Shvets appointed to Group leadership team
• USD 1.25 billion multi-currency revolving credit facility agreement concluded
• Banglalink successfully acquired 9.4MHz frequency in spectrum auction
• VEON’s Mobilink Microfinance Bank won prestigious Diversity & Inclusion CSR Award

Kaan Terzioğlu and Sergi Herrero commented on 1Q21 results:

Kaan Terzioğlu: ”The momentum behind the good work done during 2020 has continued into this first quarter as the Group returned to year-over-year organic growth, continuing the positive monthly trend we saw in December 2020. A key driver of this was the strong growth of our 4G customers, now reaching 41% of our total base, a 10 percentage-point growth over the past year. I am encouraged to see the increase in users who consume our digital applications on our improving networks as they deepen their engagement with our brands. I am also particularly pleased that Beeline Russia reported positive revenue growth in local currency terms for the full quarter as we continue to execute on our turnaround strategy.

We will be executing on our growth strategy with a revised leadership structure in the coming period and I would like to thank Sergi Herrero for his contribution to the Group over the past 18 months, in particular the development of our digital businesses across our markets. I wish Sergi all the best in his future endeavors.“

Sergi Herrero: ”Our digital platforms have continued to perform strongly in the period, with some good milestones across our JazzCash business in particular. I remain excited about the longer-term prospects for our digital businesses across our various operations. In the quarter we have seen Kazakhstan, Ukraine and Pakistan return towards their historic trend growth levels, with double-digit growth in local currency terms. I expect see ongoing positive momentum from these markets in the coming quarter. Cost efficiency across the operations remains a key focus in our new decentralized model, which is positive for shareholder value going forward as we continue to optimize our operations.

It has been a pleasure working together with Kaan over the past 18 months as co-CEO of the company. Over this time with the support of the Board, we have made good strides in developing new growth areas for the business. I look forward to remaining actively engaged with VEON as it continues to build value across our businesses.”

Additional information

View the full 1Q21 results (PDF)
View 1Q21 results presentation (PDF)
View 1Q21 factbook (Excel)

About VEON

VEON is a NASDAQ and Euronext Amsterdam-listed global provider of connectivity and digital services, headquartered in Amsterdam.

For more information, visit: http://www.veon.com.

Disclaimer

This press 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. 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, among others; anticipated performance and guidance for 2021, including VEON’s ability to sufficient cash flow; VEON’s assessment of the impact of the COVID-19 pandemic 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; and VEON’s ability to realize its targets and commercial initiatives in its various countries of operation. The forward-looking statements included in this press release 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 further unanticipated developments related to the COVID-19 pandemic, such as the effect on consumer spending, that negatively affected VEON’s operations and financial condition; 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; including adverse macroeconomic developments caused by recent volatility in oil prices in the wake of COVID-19; unforeseen developments from competition; 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 other negative developments regarding such parties; the impact of export controls and laws affecting trade and investments 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 December 31, 2020 filed with the U.S. Securities and Exchange Commission (the “SEC”) and other public filings made 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. Furthermore, elements of this press release contain or may contain, “inside information” as defined under the Market Abuse Regulation (EU) No. 596/2014.All non-IFRS measures disclosed further in this press release (including, without limitation, EBITDA, EBITDA margin, EBT, net debt, equity free cash flow after licenses (excluding capitalized leases), local currency growth, capital expenditures excluding licenses and LTM (last twelve months) capex excluding licenses/revenue) are reconciled to comparable IFRS measures in Attachment C to this earnings release. In addition, we present certain information on a forward-looking basis. We are not able to, without unreasonable efforts, provide a full reconciliation to IFRS due to potentially high variability, complexity and low visibility as to the items that would be excluded from the comparable IFRS measure in the relevant future period, including, but not limited to, depreciation and amortization, impairment loss, loss on disposal of non-current assets, financial income and expenses, foreign currency exchange losses and gains, income tax expense and performance transformation costs, cash and cash equivalents, long - term and short-term deposits, interest accrued related to financial liabilities, other unamortized adjustments to financial liabilities, derivatives, and other financial liabilities.ril 2021 and Mr. Shvets on 15th April 2021. Both executives will report to VEON Group CEO Kaan Terzioğlu.

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