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Letter from VEON CEO to stakeholders

14/10/2022

Dear VEON Stakeholder,

I am writing to you to provide an update on our strategic progress and the latest achievements in several key areas of importance for VEON Group. In addition, you will likely have seen that today VEON Ltd. invited holders of VEON Holdings B.V.'s 2023 Notes to contact VEON Ltd. with a view to shortly commencing discussions in relation to the 2023 Notes.

Our primary aim is to achieve a liquidity and capital structure that ensures the Group's long-term financial stability and puts VEON in the best position to deliver growth in the years ahead.

Since my last letter, we have seen a continued increase in 4G users, and we reported double-digit local currency revenue growth across five of our seven markets for 8M 2022. VEON is well positioned to continue its strategy of developing our digital operator business in our high-growth markets (Pakistan, Bangladesh, Kazakhstan, Uzbekistan and Kyrgyzstan), and we plan to advance these investments in the coming years.

Liquidity update

Over the past seven months VEON Group has successfully strengthened its HQ liquidity position, and this will remain a key priority going forward. In addition, our operating companies continue to be self-sufficient in their financing needs. Most recently, in August, we announced the completion of the sale of our Algerian operator Djezzy to our regional partner FNI, delivering proceeds of USD 682 million. Following the sale of Djezzy, our total cash position stands at USD 3.2 billion, including USD 2.5 billion held at the HQ level as of 7 October 2022.

We have also made good progress on our strategy to optimize the Group capital structure for the longer-term, taking into consideration the challenges that we face in the current environment. Today we invited our 2023 noteholders to contact VEON Ltd. in order to engage in discussions with these noteholders, with the aim to maintain a stable capital structure in the longer-term, which we consider in the interest of all stakeholders. In this context, I would like to underscore that VEON Group continues to meet all its interest and capital payments and is not in default on any of its bonds or bank debt.

Growth markets and sectors

As we look to achieve growth in the years ahead, I want to highlight the five of our seven markets that have demonstrated exceptional growth this year, specifically Bangladesh, Pakistan, Kazakhstan, Uzbekistan and Kyrgyzstan. With our strategic focus on expanding our digital operator business, these geographies represent significant opportunities for growth beyond what can be achieved in more mature markets. Pakistan and Bangladesh, for example, have the largest populations in Asia outside of China and India, but are forecast to grow significantly faster between now and 2035, according to the World Bank:

Source: World Bank

These rising populations represent potential growth in our customer base in markets where VEON Operating Companies (OpCos) have established themselves as leading providers of converged connectivity services and digital offerings in adjacent sectors. In addition to population increases, International Monetary Fund forecasts show continued GDP growth across all the Asian economies where VEON OpCos are present.

These geographies represent potential growth hotspots for digital services. In Central Asia and Southern Asia, internet adoption stands at 66% and 46% of the population, respectively, compared to 98%, 94% and 92%, respectively, for Northern Europe, Western Europe and North America[i].

Only 44% of the population in Southern Asia is connected to a mobile broadband package, with 4G accounts making up only 62% of these[ii]. This 4G connectivity is a core enabler of essential digital services ranging from education and healthcare to banking, e-commerce and entertainment.

We see a clear opportunity to improve digital inclusion in these underserved regions, making a positive change to local economies where mobile connectivity is often the only way to obtain these key services. Pakistan, for example, is home to 2.8% of the world's population, but 8% of the world's unbanked adults[iii]. This underlines the significant growth potential for our JazzCash and Mobilink Microfinance Banks digital financial service offerings, aimed at empowering millions of users through greater financial inclusion. We are also broadening our digital education offerings to reach 36 million unconnected school-age children in Eastern Europe and Central Asia.

VEON's recent 8M trading update supports our belief in the growth potential of our OpCos in Bangladesh, Pakistan, Kazakhstan, Uzbekistan and Kyrgyzstan, all of which reported continued double-digit increases in local currency revenue. This was driven by a 16.5% Group-wide YoY increase in 4G users to 105.8 million, which now represents 52% of the Group's customer base. We remain committed to expanding 4G coverage across our operations, and this will drive increased engagement across the digital businesses we operate in adjacent sectors, such as financial services, media, education, and healthcare.

Digital operator strategy

Our digital operator strategy continues to demonstrate solid results across our markets. This strategy rests on the goal of providing VEON's growing number of 4G customers with the data-enabled digital services that they may need during any of the 1,440 minutes in a day. This drives both data usage and engagement, supported by the digital offerings of VEON's OpCos. In Pakistan, the digital financial services platform JazzCash recorded an increase in monthly active users of 17.6% YoY for 8M 2022, bringing the total up to 16.1 million MAUs.

The recent round A investment by VEON Ventures in the SME lending platform Dastgyr in Pakistan is delivering synergistic results for JazzCash, with over 250,000 new merchants in the process of
LINK: https://www.veon.com/media/media-releases/2022/letter-from-veon-ceo-to...
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