VEON Ltd. Q3 FY2025 earnings call

• Milestone: In September, monthly digital service users surpassed monthly telecom SIM card users for the first time.
• Financial performance: Revenues grew 7.5% YoY in USD, EBITDA up 19.7% YoY. Raised FY2025 EBITDA outlook to 16%-18% local currency growth (up from 14%-16%).
• Digital services: Direct digital revenues up 63%, 17.8% of total group revenues. AI 1440 strategy central, with localized multilingual features in super apps.
• Asset-light strategy: Completed sale of Kyrgyzstan operations, global framework agreement with Starlink for satellite connectivity.
• Pakistan's JazzCash: Monthly active users 22 million, daily average digital loans 153,000, achieved PKR 1.1 billion single-day lending.
• Digital ecosystem: Total monthly active users 143.3 million (up 39% YoY), digital-only user base over 50 million.
• Enterprise platforms: QazCode, Kyivstar Tech, etc., winning contracts, over 2,000 engineers working on next-gen products.
• AI1440: Kaz-LLM in Kazakhstan (4 languages), co-developing Ukrainian language model in Ukraine, AI in entertainment, customer care, and enterprise.

In the third quarter, VEON's revenues grew 7.5% year-on-year in U.S. dollar terms, and U.S. dollar EBITDA increased by 19.7% year-on-year. Direct digital revenues grew 63% in U.S. dollar terms and contribute 17.8% of total group revenues. The telecom and infrastructure segment saw revenues grow 3.5% on a like-for-like basis (adjusting for TNS+ divestment). Financial services are the largest component of digital revenues, accounting for 54% and growing 33% year-on-year. Multiplay customers generated 55.4% of total customer revenues, growing 23% year-on-year.

• Revised FY2025 EBITDA outlook: 16%-18% local currency growth (up from 14%-16%).
• Revenue guidance: 13%-15% local currency growth, translating to 7%-8% USD revenue growth and 10%-11% EBITDA growth in USD assuming no significant exchange rate fluctuations.
• Capital intensity: Excluding Ukraine, 17%-19% range.

• Macro and geopolitical challenges.
• Limitations on upstreaming cash due to martial law in Ukraine.
• Noncash charges in Q3 (e.g., $162M for Kyivstar listing, $97M for Kyrgyzstan sale) had no impact on underlying operational performance, cash generation, or financial guidance.

Q: Jesse Sobelson on Kyivstar SPAC and future ownership stake A: Muhterem Terzioglu stated they chose SPAC for fast track listing of Kyivstar, open to diluting ownership to allow more investors, championing 'Invest in Ukraine Now' initiative Q: Nicholas Paton on headquarters cash and repatriation A: Muhterem Terzioglu said $653M is at headquarters, but limitations on upstreaming due to martial law in Ukraine, with plans to invest in Ukraine Q: Adrian Cundy on tower divestment in Ukraine and fintech in Pakistan A: Muhterem Terzioglu on tower asset-light strategy, JazzCash having 700,000 merchant base, daily 153,000 nano loans Q: Ahmed Mostafa on EBITDA margin trade-off and drivers A: Muhterem Terzioglu and Burak Ozer on cost discipline and price actions aligning with market conditions to boost margins Q: Vincent Fernando on fintech expansion and MMBL license A: Muhterem Terzioglu on fintech expansion plans, working towards full digital bank license in Pakistan Q: Ali Zaidi on ride-hailing expansion A: Muhterem Terzioglu on ride-hailing city-by-city expansion strategy Q: Matthew Harrigan on market leader dynamics A: Muhterem Terzioglu on organic growth opportunity with 40 million potential new customers getting first smartphones Q: Vincent Fernando on fintech EBITDA run rate A: Muhterem Terzioglu on steady 40%-30% QoQ growth in financial services in Pakistan