VEON Ltd. (VEON) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong revenue growth, strategic partnerships, and a robust digital expansion plan. The Q&A session revealed positive analyst sentiment towards 4G and AI strategies, despite some uncertainties in valuation strategies. The company's solid financial metrics, optimistic guidance, and shareholder return plans, along with strategic partnerships, are likely to positively influence the stock price. Given the market cap, a positive reaction is expected within the 2% to 8% range over the next two weeks.
Key Financial Performance
Revenue $1.09 billion for Q2 2025, up 5.9% year-on-year in U.S. dollar terms and 11.2% in local currency terms. Growth attributed to strong performance across operating markets and digital services.
EBITDA $520 million for Q2 2025, up 13.2% year-on-year in U.S. dollar terms and 19.6% in local currency terms. Growth driven by operating leverage, disciplined cost control, and digital services expansion.
Digital Revenue $180 million for Q2 2025, up 56.6% year-on-year in U.S. dollar terms and 62.4% in local currency terms. Growth driven by financial services, entertainment, super apps, and ride-hailing services.
EBITDA Margin 47.8% for Q2 2025, up year-on-year and quarter-on-quarter. Growth reflects operating leverage and cost control.
Net Debt (excluding leases) $1.96 billion as of June 2025. Reflects bond repayments and Uklon acquisition.
Cash Balance $1.28 billion as of June 2025, including $206 million at headquarters. Reflects bond repayments and Uklon acquisition.
Equity Free Cash Flow $611 million for the last 12 months, up 33.7% year-on-year. Growth driven by operational and financial discipline and asset-light strategy.
4G Penetration 68% of the customer base, up 4.6 percentage points year-on-year. Growth driven by increased adoption of digital services.
Multiplay Revenue Contribution 54.4% of total revenues for Q2 2025, up 26.8% year-on-year in local currency terms. Growth driven by higher customer engagement and ARPU expansion.
JazzCash Transaction Value 43% year-on-year growth in gross transaction value for Q2 2025. Represents 12% of Pakistan's GDP.
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Operating Highlights
Digital Services Portfolio Expansion: Direct digital revenues grew by 57% year-on-year in dollar terms, now contributing 16.5% of total group revenues. Uklon acquisition in April 2025 marked a key milestone in digital expansion strategy.
4G and Multiplay Growth: 4G penetration increased to 68%, driving Multiplay adoption. Multiplay customers now generate 54.4% of total revenues, growing 26.8% year-on-year in local currency.
Geographic Revenue Growth: Double-digit revenue growth in all markets except Bangladesh. Ukraine's Kyivstar revenues grew 25.9% year-on-year.
Kyivstar NASDAQ Listing: Progress on Kyivstar's proposed NASDAQ listing through a business combination with Cohen Circle Acquisition Corp. I, expected to close post shareholder approval.
Asset-Light Strategy: Closed strategic infrastructure pooling partnership with Engro in Pakistan. Progress in launching direct-to-cell satellite communications in Ukraine with Starlink.
Financial Flexibility: Completed $100 million share buyback program, repaid April and June bond maturities, and issued $200 million private bond.
Digital Operator Strategy: Focus on asset-light model, underserved markets, and expanding digital services. Transactions like Uklon acquisition and Deodar tower sales align with this strategy.
Financial Services Growth: JazzCash transaction value rose 43% year-on-year, representing 12% of Pakistan's GDP. Financial services now account for 57% of total digital revenue.
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Risk or Challenges
Macroeconomic and Geopolitical Volatility: The company acknowledges the challenges posed by global macroeconomic and geopolitical volatility, which could impact operations and financial performance.
Inflationary Pressures: Weighted average inflation across markets increased to 8.7% in Q2, up from previous quarters. This could affect cost structures and pricing strategies.
Regulatory and Tax Changes: Tax and regulatory changes in markets like Kazakhstan and Bangladesh have impacted profitability trends, posing ongoing challenges.
Noncash Accounting Charges: Upcoming transactions, such as the Kyivstar listing and Kyrgyzstan operations sale, are expected to result in noncash charges of $150 million to $200 million in Q3, potentially affecting financial results.
Bangladesh Market Recovery: Revenue growth in Bangladesh remains weak, with only a 5.1% quarter-on-quarter increase, indicating slow recovery in consumer sentiment.
Digital Services Margins: While digital services are growing, their structurally lower margins compared to telecom services could impact overall profitability.
Debt and Financial Flexibility: The company has $1.96 billion in net debt (excluding leases) and is managing bond repayments and new issuances, which could strain financial flexibility.
Seasonality in Digital Engagement: Digital engagement in markets like Pakistan is affected by seasonality, such as cricket tournament schedules, which could impact user metrics and revenue.
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Guidance & Outlook
Revenue Growth Outlook: The company has revised its 2025 outlook, expecting local currency growth for total revenue between 13% to 15% year-on-year.
EBITDA Growth Outlook: The company anticipates EBITDA growth between 14% to 16% for 2025.
Capital Intensity Guidance: Capital intensity, excluding Ukraine, is expected to remain in the 17% to 19% range for 2025.
Inflation Monitoring: The company is monitoring inflation closely, which has inched up in some markets, with a blended weighted average inflation rate of 8.2% used for guidance.
Digital Revenue Growth: Direct digital revenues grew by 57% year-on-year in dollar terms and now contribute 16.5% of total group revenues. The company is accelerating the integration of AI-powered features across platforms.
Market-Specific Trends: In Bangladesh, a gradual recovery in consumer sentiment is underway, with total revenues growing 5.1% quarter-on-quarter. Ukraine's Kyivstar revenues grew 25.9% year-on-year, with EBITDA up 23.6%.
Strategic Transactions Impact: Upcoming transactions, including the Kyivstar NASDAQ listing and Kyrgyzstan operations sale, are expected to result in a noncash charge of $150 million to $200 million in Q3, with a positive net equity impact.
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Shareholder Return Plan
Share Buyback Program: We completed the third and final phase of our $100 million share buyback program that we have announced in August last year. We have bought back close to 3% of our shares in less than a year since we announced the buyback program.
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Key Q&A
Q:How will the proceeds from the Engro sale be fed up to the holding company?
A:The proceeds of $188 million have already been received by Jazz, with another $375 million to follow. These will be upstreamed to the holding company in 20 months in equal installments through dividends. However, if there are uses for the cash in the country, such as debt repayments or M&A opportunities, the allocation will be adjusted accordingly.
Q:What are the expected impacts of the SPAC listing of Kyivstar on the third quarter financials?
A:The impact will be calculated based on the closing price of the stock on the first day of trading. The difference between the valuation of the SPAC assets (cash balance of around $200 million) and the shares used to purchase the SPAC will determine the impact. The expected P&L impact is between $150 million to $200 million, noncash, with a positive impact on equity.
Q:What are the strategies to drive 4G adoption in markets like Pakistan and Ukraine?
A:The company focuses on increasing 4G coverage and quality, entering the smartphone business with devices preloaded with digital services, and targeting feature phone users for migration to 4G. In Kazakhstan, they sell 1,500 smartphones daily preloaded with apps like IZI and Janymda.
Q:What is the role of 4.9G and MIMO-based 4G networks in customer acquisition and user experience?
A:Technologies like Massive MIMO, virtualization of the core, and carrier aggregation enhance service quality and reduce costs. These technologies, combined with 2,300 MHz, provide a service quality that competes with 5G. In Kazakhstan, the operator IZI has the highest Net Promoter Score of 26, outperforming competitors.
Q:What are the expected costs and impacts of the SPAC transaction at the VEON level?
A:Direct SPAC costs will be booked at the Kyivstar level, while the balance of costs on share price translation will be treated at the VEON level. The total impact is expected to be between $50 million to $100 million, with transaction costs mostly booked into equity, amounting to $30 million to $50 million.
Q:What is the company's strategy for unlocking the valuation of its telecom and digital businesses?
A:The company plans to surpass 20% of total revenues from direct digital revenues before providing more clarity on marginality. They aim to consolidate financial services, entertainment, healthcare, and ride-hailing businesses under specific umbrellas for better communication of revenue values. This strategy will unfold over the next few quarters.
Q:How does the company view the impact of AI on frontier markets?
A:AI is expected to be adopted creatively in frontier markets, enhancing local economies. The company focuses on augmented intelligence to improve skills in various professions. They are developing local language LLM models and agentic AI capabilities, such as online tutors, to integrate into their super apps.
Q:What is the strategy for monetizing VEON's fintech assets, including JazzCash?
A:The company is patient in developing the value of its fintech assets, such as JazzCash, which transacts 12% of Pakistan's GDP and concludes 60% of mobile payments. They aim to crystallize value after achieving significant growth and will present these assets to relevant investor circles in the future.
Q:What is the company's approach to increasing ARPU?
A:The company focuses on increasing Multiplay adoption, smartphone penetration, and fair value pricing. Multiplay ARPU is $3.4 compared to $1.9 for mobile ARPU. Strategies include selling services rather than tariffs and driving 4G adoption through smartphone initiatives.
Q:What is the company's strategy for deploying smartphones tailored to its digital apps?
A:The company has started deploying tailor-made smartphones in Kazakhstan, with plans to expand to other markets. These devices are designed to enhance the consumption of digital services.
Q:When does the company expect the going concern language to be removed?
A:The company expects the going concern language to be removed by the end of the year, possibly in Q3, as access to capital markets and bond payments have been addressed.
Q:What are the growth prospects for Uklon, and how does it fit into the company's strategy?
A:Uklon, with 70% market share in Ukraine, is EBITDA-positive and cash flow-generative. The company plans to expand Uklon's capabilities to other markets over the next four quarters, integrating it with their super apps for a comprehensive value proposition.
Q:What is the reason for the negative EBITDA growth in Kazakhstan, and what is the outlook?
A:The negative EBITDA growth was due to the expiration of a tax rebate for rural 4G deployment. The rebate has been reinstated retroactively, and the impact will be reflected in Q3, adding $16 million to the results.
Q:What is the company's stance on shareholder remuneration?
A:The company plans to announce a new shareholder remuneration strategy in Q3. They aim to balance growth opportunities with shareholder returns.
Q:What is the split between organic and inorganic growth in the digital segment?
A:The digital segment grew 57% year-on-year, with $21 million from Uklon as the only inorganic contribution. The rest of the growth is organic.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timing and exact strategies for unlocking the valuation of telecom and digital businesses, as well as the precise timeline for monetizing fintech assets like JazzCash. Additionally, they did not elaborate on the pipeline of potential acquisitions in the digital segment.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Beeline Kazakhstan
Chief
Corporate Development
Development Officer
Kyivstar NASDAQ
LLC
Multiplay adoption
NASDAQ combination
Officer Group
UTC
Uklon acquisition
Uklon milestone
Ukraine Kyivstar
accounting
approval
apps
basis revenue
bond issuance
bond repayment
change
charge
commitment
completion
component
cricket tournament
debt lease
dollar currency
dollar revenue
group
momentum market
noncash
page
product service
revenue dollar
ride
role
scale
seasonality
service Multiplay
tournament schedule
value month
VEON Transcript
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The earnings call highlights strong financial performance with raised EBITDA guidance, robust digital revenue growth, and a new share repurchase program. Despite some uncertainties, such as regulatory approvals and margin compression, the company's strategic initiatives in digital services, financial ecosystems, and market expansion are promising. The market cap suggests moderate sensitivity to these factors, leading to a positive outlook.
VEON Ltd. (VEON) Q3 2025 Earnings Call Transcript
Positive11-10
The earnings call summary presents a mixed but generally positive outlook. Despite a Q3 EPS loss due to noncash charges, the company shows strong revenue growth, improved leverage, and significant digital revenue expansion. The Q&A section highlights strategic asset management and growth plans, particularly in fintech and digital services. Positive market reaction is likely due to increased guidance, strong cash flow, and strategic expansions, offsetting the EPS loss. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction of 2% to 8%.
VEON Ltd. (VEON) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call highlights strong revenue growth, strategic partnerships, and a robust digital expansion plan. The Q&A session revealed positive analyst sentiment towards 4G and AI strategies, despite some uncertainties in valuation strategies. The company's solid financial metrics, optimistic guidance, and shareholder return plans, along with strategic partnerships, are likely to positively influence the stock price. Given the market cap, a positive reaction is expected within the 2% to 8% range over the next two weeks.
VEON Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
