VEON Ltd. Q1 FY2026 earnings call

Overall Business Performance

• Vyond started 2026 with strong momentum: double-digit revenue growth, accelerating profitable digital revenue growth, stronger cash generation, and continued capital returns to shareholders. The performance validates the company's digital operator strategy, which combines resilient connectivity, fast-scaling digital platforms, and disciplined capital allocation.

Digital Portfolio Growth

• Digital growth is broad-based, led by financial services with strong contributions from entertainment, ride-hailing, and healthcare verticals. The company completed consolidation of the Tabletki healthcare acquisition in Ukraine from February 2026. Digital services have structurally lower capital intensity and lower customer acquisition costs, creating scalable competitive advantage across the company's operating markets.
• Multiplay customers deliver 3.9x higher ARPU than voice-only customers, lifting overall group ARPU to $2.3 in Q1 2026 from $2.0 year-over-year. The company now serves 229 million total digital customers across its ecosystem, including over 72 million digital-only users, with 12-month cumulative transaction value reaching almost $63 billion.
• Digital enterprise is scaling platforms for augmented intelligence (AI), cloud, and data analytics, supported by ~2,000 engineers and data scientists. The AppTech platform reaches over 100 million screens, enabling AI-driven targeting and monetization.
• AI is a core value creation pillar integrated across all business areas (networks, customer care, digital services, enterprise solutions), not a standalone initiative. The company is building sovereign local language AI capabilities, including the Ukrainian LLM SVAIO, with over 1,000 prioritized use cases and 1.4 million existing AI product customers across its footprint.

Market-Specific & Strategic Operational Updates

• In the Pakistan market, the company secured the largest spectrum allocation in the March 2026 spectrum auction, tripling total spectrum capacity to support future data growth. Pakistan's Jazz Cash financial services service serves over 29 million users and 600,000 merchants, with 12-month transaction value reaching $60 billion (15% of Pakistan's GDP). It issues over 200,000 loans daily with strong, well-controlled asset quality, and Mobiling Bank's loan portfolio has reached $289 million. The pending acquisitions of TPL Insurance and Aptna Bank are on track.
• Operational momentum is strong across all core markets: Pakistan and Ukraine lead growth, with steady growth from Kazakhstan and Uzbekistan, and second consecutive quarter of growth in Bangladesh. All markets see consistent digital momentum that supports diversification and overall growth.
• The company has completed targeted ecosystem acquisitions including OLX and Tabletki to enhance engagement, expand monetization, and reinforce long-term growth platforms, executed within a disciplined asset-light framework.

Shareholder Value & Capital Structure

• The company remains focused on delivering shareholder value, and is executing an ongoing share buyback program to address what management views as the current share price underreflecting business value and cash generation. The company is also reducing net leverage to maintain financial flexibility, with management ownership aligning leadership with shareholder interests. Ended Q1 with $1.75 billion in cash, stable gross debt of $4.9 billion, and net debt (excluding leases) of $1.76 billion, with leverage reduced to 1.07x.

Vyond operates two core reporting segments: Telecom and Digital. Total group revenue for Q1 2026 was $1.2 billion, growing 17% year-over-year in US dollar terms. The Telecom segment grew steadily year-over-year, contributing ~75% of total group revenue. The Digital segment revenue reached $303 million for the quarter, growing 57.7% year-over-year, representing over 25% of total group revenue. Excluding the Q1 2026 reclassification of enterprise identity and credentials management (which contributed $44 million to Digital revenue this quarter), Digital revenue grew over 75% year-over-year on a comparable basis. Digital segment MTA margins reached 34.6% in the quarter. Group EBITDA for Q1 2026 was $517 million, growing 17.7% year-over-year, with group EBITDA margins expanding 20 basis points to 43%. Equity free cash flow grew 73.4% year-over-year to $246 million. Multiplay (combined connectivity and digital services) revenue grew almost 18% year-over-year, and now represents 58% of total consumer revenues.

• Management raised the 2026 full-year revenue growth guidance range to 11% to 14%, up from the prior range, while maintaining FTA (equity free cash flow) growth guidance at 7% to 10%.
• CapEx intensity (excluding the Ukraine market) is now expected to be in the 15% to 17% range, an upward adjustment driven by accelerated 5G/4G network deployment in Pakistan following the recent spectrum acquisition. This accelerated deployment pulls forward some planned CapEx to support monetization of untapped data demand in Pakistan. Over the long term, the growing share of lower-capital-intensity digital revenue is expected to moderate CapEx intensity.
• Management maintains a target maximum net leverage (excluding leases) of 1.5x, well above the current 1.07x level, to retain financial flexibility. The company is actively working to address upcoming debt maturities by the end of Q4 2026, with all refinancing options still on the table.
• Management expects to reach over 50% of total group revenue from digital services by the end of 2029, with half of this growth coming from organic expansion and half from targeted acquisitions in existing operating markets.

• Ongoing geopolitical volatility, including the Iran conflict, has driven elevated and volatile global energy prices, creating fuel availability issues in some markets such as Bangladesh, and is expected to push average inflation across the company's operating markets into double-digit territory.
• Geopolitical uncertainty means management is waiting for additional clarity before adjusting EBITDA guidance, despite current strong pricing control across the business.
• Frontier market operating environments have inherent volatility, which the company has a long track record of navigating, but requires proactive mitigation of external macroeconomic shocks.

Q: Max Findley (Rothschild & Co Redburn) asked three linked questions: 1) Given that the revenue guidance upgrade paired with maintained EBITDA guidance implies ex-Kivstar margin contraction, what has changed since the last earnings call? 2) What impact and margin risk does the Iran conflict currently have on the business? 3) Is the higher Pakistan CapEx guidance pulling forward planned spending from next year, or is it new incremental spending? / A: Management stated that current pricing control and healthy price elasticity across markets mean no expected sustained margin contraction. Geopolitical uncertainty around the conflict and oil price volatility means management wants to wait for Q2 results before adjusting EBITDA guidance. Elevated oil prices have created fuel availability issues in Bangladesh, but Pakistan has reduced its reliance on hydrocarbon energy. The higher CapEx reflects accelerated 5G/4G deployment after tripling Pakistan spectrum capacity, to monetize unmet high data consumption demand; long-term digital growth will moderate overall CapEx intensity.

Q: Nicholas Payton (Edison Group) asked about potential value crystallization for the fast-growing Pakistan Jazz Cash financial services business, including whether a strategic stake sale, IPO, or cross-market merger is being planned. / A: Management is very happy with the current 30% EBITDA growth of the business and intends to let growth continue developing further in Pakistan before any value crystallization, with plans to eventually expand the model to the large 180 million population market of Bangladesh. Management remains open to future options, including a potential global consolidation of financial services businesses, as cross-border offerings like remittances and stablecoins could support a multi-market global strategy.

Q: Adrian Cundy (Emerging and Frontier Capital) asked: Digital growth is running ahead of prior plans to reach 30% digital revenue by end-2027 — will this target be met earlier? What is the optimal long-term capital structure, and how will upcoming 2027 debt maturities be addressed? / A: Management confirmed digital growth is running almost twice as fast as originally modeled, and updated the long-term target to 50% of revenue from digital by 2029. Management will not update near-term digital growth guidance at this time. The company is actively working to refinance upcoming debt maturities before Q4 2026, with all options open, and targets a maximum net leverage (ex leases) of 1.5x, well above the current 1.07x level.

Q: Ahmed Mustafa (Inam) asked how to interpret stable/declining total customers but rising ARPU in Uzbekistan, and what the growth strategy is for the market. / A: The stable customer base reflects a deliberate shift to a multi-play growth strategy, rather than chasing low-value single-play voice-only customers. As customers convert to bundled multi-play services that combine connectivity and digital offerings, ARPU rises significantly and churn falls, driving wallet share growth even with a stable total customer base.