28 Feb 2022
VEON reports 4Q & FY 2021 results
Beating revenue & EBITDA guidance and posting USD 801 million net profit
Amsterdam (28 February 2022) - VEON Ltd. (VEON) announces results for the fourth quarter and full year ended 31 December 2021:
VEON reports FY 2021 results with full-year revenue of USD 7,788 million +10.1% YoY in local currency (+6.8% YoY reported currency) and EBITDA of USD 3,332 million +8.9% YoY in local currency (+5.7% YoY reported currency). Full-year capex of USD 1,826 million was in line with 2020, with lower capex intensity (23.4%) as revenues expanded. Group Net Debt/EBITDA was 2.44x.
Kaan Terzioğlu commented on 4Q & FY 2021 results:
“I am encouraged by the progress we made this past year in a number of important growth areas such as our digital operator metrics including 4G subscribers, penetration of digital services, data revenues as well as achieving balanced growth across all our geographies, including Russia.“
FY 2021 results highlights:
- Revenue USD 7,788 million, +10.1% YoY in local currency (+6.8% YoY reported currency)
- EBITDA USD 3,332 million, +8.9% YoY in local currency (+5.7% YoY reported currency)
- Net income of USD 801 million
- Capex of USD 1,826 million, +1.8% YoY, capex intensity of 23.4%
- Equity Free Cash Flow (after licenses) USD 334 million, up 41.9% YoY
- Total cash USD 2.3 billion (additional undrawn committed credit lines of USD 1.5 billion)
Beeline Russia closed 2021 strongly, showing healthy growth following increased 4G investment and we believe is now well positioned to deliver further improvement in revenue and EBITDA. In 4Q21, service revenue accelerated with growth of 6.6% YoY (local currency) and Beeline Russia reported 49.4 million mobile subscribers and 25.5 million 4G subscribers (+12.8% YoY).
Good financial discipline saw Group EBITDA in 4Q21 increase by 9.5% YoY in local currency and 10.6% YoY in reported currency. This solid result was driven by double digit local currency EBITDA performance across five countries with Russia posting a strong quarter with YoY EBITDA growth of 4.3% in local currency. While EBITDA grew YoY in absolute terms, a slight margin dilution of 0.4 p.p. was reported, as handset sales grew. Over the next three years, project Optimum is expected to deliver cumulative margin expansion of approximately 300 basis points.
Strong 2021 full year equity free cash flow (after licenses) of USD 334 million up 41.9% YoY. We reported Group net debt of USD 8.1 billion (of which lease liabilities were USD 2.7 billion) at the end of 4Q21 and closed the year with total cash and undrawn committed credit lines of USD 3.7 billion. At the end of 4Q21 our net debt/EBITDA ratio was 2.44x. While within our comfort zone, this ratio is above the limit of 2.4x set by our dividend policy. Moving forward we aim to further deleverage the company and build sustainable dividend capacity for the future. Given current circumstances we are not providing specific guidance for 2022.
We successfully closed the Russia tower transaction, with the sale of our Russian tower assets to ServiceTelecom for RUB 70.65 bn. We have established separate tower companies in both Ukraine and Pakistan and we expect to announce further tower transactions in the coming year.
Strong progress on expanding our digital assets. JazzCash closed the quarter with 15.2 million monthly active users (+24.9% YoY), Toffee TV in Bangladesh with 6.4 million monthly active users, up from 2.5 million a year ago; and Beeline TV in Russia with 3.1 million monthly active users (+11.8% YoY).
We further strengthened the management team with the appointment of Victor Biryukov as VEON Group General Counsel and Mohammad Khairil Abdullah as CEO for VEON Ventures who will both be members of the Group Executive Committee. Andrey Pyatakhin was appointed as CEO for Beeline Kyrgyzstan. With the appointment of Karen Linehan to the VEON Group board on 5th January 2022 as a non-executive director we expanded board diversity while bringing a wealth of experience and a valuable perspective to our Audit & Risk and Nominating & Corporate Governance Committees.
VEON announced its intention to move its group parent company to the United Kingdom. The change of the place of incorporation of the top holding company, would place the company in a jurisdiction with high standards of corporate governance and a strong and transparent legal framework and is expected to enable VEON and its operating subsidiaries to operate more effectively across its markets.
Key recent developments:
- On 1 December 2021, VEON announced the successful conclusion of the sale of its Russian tower assets to Service-Telecom for RUB 70.65 billion.
- On 18 December 2021, VEON announced the appointment of Andrey Pyatakhin as CEO of Beeline Kyrgyzstan.
- On 18 December 2021, VEON announced the appointment of Victor Biryukov as VEON Group General Counsel.
- On 24 December 2021, VEON announced the successful conclusion of two bilateral loan facilities of RUB 45 billion each with Sberbank and Alfa Bank.
- On 29 December 2021, VEON announced the appointment of Mohammad Khairil Abdullah as CEO of VEON Ventures, effective 1 March 2022.
- On 5 January 2022, VEON announced the appointment of Karen Linehan to the VEON Group board as a non-executive director.
- On 3 February 2022, VEON announced its intention to establish new parent holding company in the UK.
- In 4Q21, Kaan Terzioglu, our Group Chief Executive Officer and Erik Aas, the Chief Executive Officer of Banglalink, each purchased 200,000, and 50,000 of our ADR/ORDs, respectively.
- On 17 February 2022, VEON announced the successful conclusion of a seven years term facility of RUB 30 billion with VTB.
VEON is a NASDAQ and Euronext Amsterdam-listed global provider of connectivity and digital services, headquartered in Amsterdam. Our vision is to empower customer ambitions through technology, acting as a digital concierge to guide their choices and connect them with resources that match their needs. For more information visit: http://www.veon.com
This presentation 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; 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 presentation 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; 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 December 31, 2020 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 15, 2021 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. All non-IFRS measures disclosed further in this presentation (including, without limitation, EBITDA, EBITDA margin, net debt, equity free cash flow (after licenses), capex, capex intensity, local currency trends and ARPU) are being defined and reconciled to comparable IFRS measures in VEON Ltd.’s earnings release published on its website on the date hereof. 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.