Following the sale of its local operations on October 9 2023 Amsterdam-based multinational telecom group VEON has completed its exit from Russia.
The unit was sold to a group of senior members of the Russian business PJSC VimpelCom (Beeline Russia) management team by PJSC VimpelCom CEO Alexander Torbakhov.
VEON Group CEO Kaan Terzioglu comment: “The closing of the sale and the completion of our exit from Russia allow us to fully focus our energy on the way forwar meeting the growing demand in our markets—Pakistan Ukraine Bangladesh Kazakhstan Uzbekistan and Kyrgyzstan—with our digital operator strategy. I am pleas to note that we are now in a much stronger position to deliver our strategic priorities.”
As previously announc the transaction doesn’t provide for any buy-back arrangements and signifies a complete exit from the Russian market for VEON.
The transaction signifies a complete exit from the Russian market for VEON
According to the operator the move will enable it to deliver higher growth and operate with a lower leverage and ample liquidity as it concentrates on six high-potential emerging markets.
Sale Details
VEON first announced its intention to exit Russia on November 24 2022 when it enter into an agreement to sell PJSC VimpelCom—which represent more than half of group revenues. To senior members of the Russian management team via a special purpose acquisition vehicle Kopernik-Invest 3.
Under the agreement initially targeting a sale completion date of June 1 2023 VEON would receive a total consideration of RUB130 billion ($2.15 billion). This sum was expected to be paid primarily by PJSC VimpelCom taking on and discharging certain VEON Holdings (Netherlands) debt thus significantly deleveraging VEON’s balance sheet.
VEON could also benefit from a potential subsequent sale
Beeline Russia at a higher valuation for a period of 30 months following closing.
The transaction was subject to customary closing conditions including receipt of requisite regulatory approvals licenses from relevant government authorities and consent from VEON creditors.
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Results exclu VEON’s Russian operations from Q4-22 onwar. Source: Tele Geography’s Global Comms Database
On February 8 2023 VEON announced the Russian Government Commission for Control over Foreign Investments’ conditional approval for the sale also confirming that the Federal Antimonopoly Service had authorized the transaction.
Earlier the head of Russia’s Ministry of Digital Development Communications & Mass Media Maksut Shadayev stated that government permission was conditional on PJSC VimpelCom buying back at least 90% of VEON bonds previously acquired by Russian investors.
On April 15 2023 VEON received a license from the U.S. Office of Foreign Assets Control to sell PJSC VimpelCom while VEON also received permissions from authorities in the UK and Bermuda to complete the transaction. EU approval was not required.
On May 30 2023 VEON stated that it had enter
the final stage of sale completion by submitting all requisite documentation for the cancellation of its Eurobonds held by PJSC VimpelCom—a non-cash transaction necessary for the Russian exit.
On September 13 2023 VEON disclosed final amendments to the sale agreement. It was not that the entire consideration for the sale would be satisfi by transferring the VEON Holdings Bonds acquir by PJSC VimpelCom to a wholly owned subsidiary of VEON Holdings which will hold such notes until their cancellation or maturity while U.S. and other regulatory approvals had been obtain for the transfer of approximately 95% of the bonds.
VEON finally clos the sale on October 9 2023.
Six Remaining Markets
Russia was VEON’s largest single operation. Nevertheless the group which is list on the U.S. NASDAQ and Euronext Amsterdam stock exchanges still has nearly 156 million mobile and fixed broadband subscriptions across its six subsidiaries.
156 Million Mobile Subscriptions
VEON Continuing Operations June 2023
Source: TeleGeography’s GlobalComms Database
The largest of its remaining markets is Pakistan where its subsidiary Jazz claim more than 71.3 million mobile subscriptions as of mid-2023. Next largest are Banglalink in Bangladesh and Ukraine’s Kyivstar with 39.1 million and 24.1 million mobile subscriptions respectively at the same date.
The group is 47.85%-own by Luxembourg-bas investment group
LetterOne via its wholly owned unit Letterone Core Investments. A total of 43.84% is in free float and the remaining 8.31% is hel by. Netherland sbas Mobile Telecommunications Investor.
For FY 2022 VEON’s total revenues amounted to $3.755 billion down 2.4% in reported currency terms but up 14.0% in local currency with annual service revenues of $3.60 billion (down 2.4% reported/up 13.9% local currency). FY22 EBITDA reached $1.743 billion (down 5.3% reported/up 12.6% local currency).
Full-year CAPEX of $832 million was 2.9% higher than in 2021 with CAPEX intensity up 1.1 percentage points as the company continued to invest in 4G network expansion.
Following Russia’s invasion of Ukraine in February
2022 and the subsequent imposition of international pakistan phone number material sanctions on certain Russian companies and individuals VEON moved to distance itself from two indirect shareholders Mikhail Fridman and Petr Aven who were the subject of sanctions. It stressed that VEON itself was not the subject of any sanctions.
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