VEON publishes Q3 2022 trading update

Amsterdam, 3 November 2022 - VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a global digital operator that provides converged connectivity and online services, announces a trading update for the third quarter and nine months ended 30 September 2022, including selected financial and operating results:

In 3Q22, VEON recorded USD 2,077 million in total revenues, representing 3.6% YoY growth in reported currency ( 3.4% YoY in local currency). Service revenues saw a 7.9% YoY increase in reported currency ( 7.8% YoY in local currency) and reached USD 1,968 million. EBITDA of USD 889 million was flat YoY both in reported currency (0.0% YoY) and local currency ( 0.7% YoY). Capex of USD 404 million was 6.0% higher than in 3Q21, whilst capex intensity was 3.6 p.p. lower than last year (21.6%). Total cash and cash equivalents were USD 3.3 billion, with USD 2.6 billion held at the HQ level.

Commenting on the results, Kaan Terzio lu said:

In the third quarter we demonstrated once again the resilience of VEON Group, as our focus on 4G penetration and the digital operator strategy continued to deliver growth despite unprecedented macroeconomic and geopolitical challenges. This quarter, 4G users saw a 15.1% year-over-year increase, reaching 52.7% of our customer base, moving closer to our target of 70% 4G penetration. Growth in subscribers, higher 4G penetration and an expanded portfolio of digital services are driving solid revenue performance across our countries, while inflationary pricing and good cost management have enabled us to withstand tough headwinds, such as rising energy costs, changing tax regimes, natural disasters in Pakistan and the humanitarian crisis in Ukraine.

We continue to focus on our core priorities of protecting our people and delivering the essential humanitarian services of communication and connectivity. In line with our commitment to ensuring the long-term stability of the business, we have also further strengthened our liquidity position, with USD 3.3 billion in cash at the end of 3Q22, of which USD 2.6 billion was held at HQ level.

3Q 2022 highlights:

Revenue of USD 2,077 million, 3.6% YoY ( 3.4% YoY in local currency)

Service revenue of 1,968 million, 7.9% YoY ( 7.8% YoY in local currency)

EBITDA of USD 889 million, 0.0% YoY ( 0.7% YoY in local currency)

Capex of USD 404 million, capex intensity -3.6p.p. YoY

Net debt / EBITDA of 2.41x versus 2.51x in 3Q21

Total cash and cash equivalents of USD 3.3 billion, with USD 2.6 billion at Headquarters

203 million mobile subscribers, up 0.8% YoY

107 million 4G users, up 15.1% YoY, with 52.7% penetration of customer base

For 3Q22, VEON reported revenue growth in both reported and local currency, as well as stronger liquidity, with Group cash and cash equivalents of USD 3.3 billion as of 30 September 2022.

Group revenues increased by 3.6% YoY in reported currency terms ( 3.4% in local currency). Growth in service revenues, up 7.9% in reported currency terms ( 7.8% in local currency), was a key driver of the Group's strong revenue performance. Non telecom related revenues in Russia continued to decline and constituted 7.9% of total Group reported revenue in 3Q22 versus 10.4% in 3Q21.

In 3Q22, Group EBITDA was flat YoY in reported currency terms ( 0.7% in local currency), with Group EBITDA margin of 42.8% (-1.5 p.p. YoY). To protect the profitability margins of the business, we remain focused on implementing planned cost-efficiency measures across the Group and on implementing inflationary pricing.

Group EBITDA YoY performance was impacted by a number of extraordinary non-recurring items in 3Q22 and in 3Q21, as noted in the Country Performance section. Excluding these one-off items, Group EBITDA increased 1.9% YoY in local currency.

In 3Q22, we reported growth of 0.8% YoY in our subscriber base. The Group continued to focus on the overall customer experience in our 4G networks.

This supported the 15.1% YoY increase in our 4G users, which reached 107.1 million, with 14.1 million users added over the previous 12 months. 4G subscribers now account for 52.7% of our total subscriber base, up 6.5 p.p. from a year ago.

On the back of our growing 4G penetration, we have been able to expand our digital operator offerings across our operations. This has driven the growth of our multiplay customer base ( 24.5% YoY), which reached 33.4 million during 3Q22. Multiplay customer ARPU is 4.3 times higher and churn is 2.4 times lower than single play voice-only customers.

Our financial services business in Pakistan, JazzCash, ended the quarter with 16.7 million MAUs, an increase of 20.0% YoY. In Bangladesh, our streaming business, Toffee, achieved the 7.0 million MAUs milestone ( 11.0% YoY) with 3.3 million average daily users ( 55.1% YoY) in 3Q22.

Group capex was USD 404 million, driven in particular by increased network investment in Ukraine, Kazakhstan, Bangladesh and Uzbekistan, in line with our growth strategy. At 21.6%, capex intensity continues to decrease (-3.6 p.p. YoY).

We closed the quarter with total cash of USD 3.3 billion, including USD 2.6 billion at the HQ level. Our operations are largely self-funding and do not require financing from the HQ to fund their operations, including capex.

In Ukraine, the team continued to keep the country connected, with around 90% of our radio network operational at quarter end. However, recent damage to Ukrainian power infrastructure has had an impact on network availability. Kyivstar's revenues were up 5.2% in local currency (-18.8% YoY in reported currency) as the weakness in the Ukrainian hryvnia negatively impacted reported growth rates. Kyivstar's 4G customer base grew 4.7% YoY, and our customers consumed more data, with usage rising 29.7% YoY. EBITDA was down 10.7% YoY in local currency (-31.1% in reported currency) in 3Q22. EBITDA performance was impact

LINK:	https://www.veon.com/media/media-releases/2022/veon-publishes-q3-2022-...
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