VEON

Strategic Transformation and the VEON Flywheel

• VEON is transitioning from a pure telecommunications provider to a digital ecosystems operator for emerging markets, with core connectivity as the foundational competitive advantage that provides scale, distribution, customer trust, and daily engagement.
• The company's three digital growth engines (Financial Services, Digital Life, Digital Enterprise) reinforce each other in a self-reinforcing flywheel: more services strengthen customer relationships, increasing retention, spend, and data, which improves AI products, generates more cash, and enables further investment.
• Digital platforms now reach over 227 million total customers across VEON's five markets (Pakistan, Ukraine, Kazakhstan, Uzbekistan, Bangladesh), up from a small share just a few years ago. Digital EBITDA already exceeds the cash generation of the core telecom business.

Capital Allocation Update

• Since August 24, VEON has completed $183 million in share repurchases, meeting its prior commitment to shareholders.
• Starting in 2026, the company has institutionalized a sustainable annual share cancellation policy, committing to retire at least $100 million of shares every year as part of its long-term capital framework.
• The company completed a $1.4 billion bond offering in 2Q26, substantially addressing all 2027 debt maturities ahead of schedule and extending average headquarters debt maturity to over four years.
• Ending 2Q26 net debt (excluding leases) was $1.8 billion, with a lease-adjusted leverage ratio of 1.1x, and $2.2 billion in total cash ($468 million at headquarters).

Operational Milestones by Segment and Market

• Financial Services: The flywheel model is fully demonstrated at scale in Pakistan via Jazz Cash, which has evolved from a payments app to a full financial ecosystem with 60 million monthly bank accounts, 27 million active users, 1.6 million merchants, processing ~16% of Pakistan's total GDP, and issuing 225,000 nano loans per day. The recent acquisition of TPL Insurance and partnership with MasterCard will accelerate AI-enabled financial product rollout across all markets.
• Starlink Partnership: VEON has integrated Starlink satellite connectivity as a complement to its terrestrial networks, not a replacement, to provide ubiquitous connectivity in challenging scenarios (e.g., war-damaged infrastructure in Ukraine, low-population remote regions in large markets like Kazakhstan). As of 2Q26, over 6 million customers in Ukraine have used direct satellite connectivity for messaging and light data services, and the company is expanding this capability to Kazakhstan and Bangladesh.
• Country Performance: Pakistan delivered outstanding consistent results; Ukraine grew despite ongoing extraordinary wartime conditions; Kazakhstan, Uzbekistan, and Bangladesh all delivered positive performance, with Bangladesh stabilizing despite severe temporary energy outages that reduced overall national data consumption by 15% in 2Q26.

• Management raised full-year 2026 guidance due to better-than-expected underlying business momentum, stronger digital growth and margins, and clearer macro visibility after assessing potential impacts from Middle East macro developments.
• Full-year 2026 revenue growth guidance was raised to 15-18% (up from prior guidance of 9% low end to prior 18% top end that was maintained at the upper bound).
• Full-year 2026 EBITDA growth guidance was raised to 9-12% (up from prior guidance of 5% low end to prior 12% top end that was maintained at the upper bound).
• The full-year capital expenditure outlook remains unchanged from prior guidance.
• Digital segment capex-to-revenue ratio is expected to stay at or below 7% even as revenue scales, and management expects the ratio may actually decline over time as the business matures.

Total Company: 2Q26 revenue grew 17% year-over-year to $1.27 billion, first half 2026 revenue grew 17% to $2.47 billion. 2Q26 EBITDA reached $552 million, up 6.2% year-over-year, with a 43.4% margin; first half 2026 EBITDA grew 11.5% to $1.07 billion.

Telecom and Infrastructure Segment: 2Q26 EBITDA was $428 million, down 3.8% year-over-year, with a 46.1% margin. The year-over-year decline is primarily driven by a large provision release in Bangladesh in the prior year quarter that does not repeat. Revenue contribution is ~73% of total company revenue.

Digital Segment: 2Q26 revenue grew 53.6% year-over-year to $342 million, equal to ~27% of total company revenue. 2Q26 EBITDA grew 66.2% year-over-year to $123 million, with a 36% EBITDA margin. All three sub-segments (Financial Services, Digital Life, Digital Enterprise) are profitable, and the segment is far less capital-intensive than core telecom, with a capex-to-revenue ratio of only 7%.

• Ongoing war in Ukraine creates operational uncertainty and risks to terrestrial telecom infrastructure, partially mitigated by the Starlink satellite integration.
• Macroeconomic volatility including inflation and currency devaluation in emerging markets requires disciplined price adjustments aligned with nominal GDP growth; 2026 weighted average inflation across VEON's markets is now tracking at 9.5%, up from the prior expectation of 8%.
• Regulatory approval timelines for new fintech licenses and Starlink integration vary across markets, which can delay product launches in early stage markets like Bangladesh and Ukraine.
• Energy supply disruptions in Bangladesh and Pakistan can temporarily reduce customer data consumption and increase operational costs, though VEON is testing site-based solar generation to mitigate this risk.
• Low smartphone penetration, particularly among female populations in large markets like Pakistan and Bangladesh, limits the growth of multi-service (multiplay) digital customer penetration.

Q: What are the key drivers of the guidance upgrade from prior full-year forecasts, and what are the long-term capex and return expectations for the fast-growing digital segment versus core telecom?

A: The guidance upgrade comes from the VEON flywheel performing better than expected on both revenue growth and margins. Digital revenue is growing 50-60% year-over-year, and digital EBITDA margins have reached 36% (far exceeding the original 20-25% expectation). Digital's capex-to-revenue ratio is only 7%, compared to 20% for core telecom, giving it stronger net cash generation even with a lower gross margin. Management expects the digital capex ratio will not rise above 7% as revenue grows, and may even decline over time. Core telecom connectivity remains the competitive foundation, and the company will continue targeted investment in 4G/5G upgrades where needed, with the balance of growth shifting to higher-margin, lower-capital digital services faster than originally planned. Macro uncertainty from Middle East developments has also cleared, with results coming in better than expected, supporting the upward revision.

Q: What is the status of regulatory progress for financial services expansion in Bangladesh, Pakistan, and Ukraine, and when can we expect full launches in new markets?

A: Pakistan's fintech business is already mature and scale, with management confident ongoing regulatory collaboration with central bank and government authorities will support further expansion of lending capacity. In Bangladesh, management expects to launch payment services in Q3 2026, working with the new government to build the regulatory framework for a full financial ecosystem over time. In Uzbekistan, VEON already has payment solutions and digital wallets, and is pursuing a full digital banking license to accelerate growth. In Ukraine, the company is waiting for regulatory clarity to proceed with fintech expansion following the same model.

Q: How do you plan to use headquarters liquidity after completing debt restructuring, and what is the profitability and strategic balance between Starlink satellite connectivity and terrestrial 5G investment?

A: Priority uses for headquarters liquidity are: 1) sustained annual shareholder returns via share buybacks and cancellations, 2) small accretive in-market consolidation opportunities, 3) fintech-focused acquisitions, and 4) refinancing higher-cost existing debt on the balance sheet to reduce interest expenses. Large broad-based M&A is not a priority while VEON's stock trades at 3.5x EBITDA, so management will maintain discipline on inorganic growth. Starlink is a complement, not a substitute, for terrestrial 5G: it provides connectivity in areas where terrestrial infrastructure is unavailable (e.g., war zones in Ukraine, remote low-density regions of Kazakhstan), and the utility of ubiquitous connectivity for customers far exceeds the incremental cost. The company will continue to focus 5G investment on high-density urban areas where it delivers strong margins, extending 4G coverage more broadly, and use Starlink to fill coverage gaps.

Q: What explains the recent margin weakness in Kazakhstan, and can we expect margin recovery in coming quarters?

A: Two temporary factors drove the margin decline: a 6% VAT rate increase that the company could not immediately pass through to pricing, and accounting treatment for bundled smartphone and service packages. For bundles, lower-margin equipment revenue is recognized upfront, while higher-margin service revenue is recognized over the contract term, so near-term margins look depressed as bundle adoption grows. This is a cyclical accounting impact, not a structural profitability issue, and Kazakhstan remains the most digitally advanced market in VEON's portfolio with strong customer satisfaction. Management expects margin pressures to ease as these temporary dynamics work through over time.