Veon numbers hit by forex woes

08 NOV 2018

Veon’s quarterly numbers were impacted by currency fluctuations in its core markets during Q3, although a sale of its stake in Wind Tre provided some positives.

Trond Westlie, CFO, said: “We enter Q4 with a stronger balance sheet, a leaner operating model and a clear ambition to realise efficiencies across our business whilst benefitting from the growth opportunities of our emerging markets. Progress to date means we now expect full year 2018 results to come in towards the high end of the guidance for most of our targets we set out at the start of the year.”

Veon reported a Q3 profit of $561 million compared with $134 million in Q3 2017, on revenue of $2.3 billion, down 5.7 per cent.

Currency woes
The decline in revenue was attributed to currency issues related to its operations in Russia, Pakistan and Uzbekistan. Organically, revenue increased 2.9 per cent, driven by operating gains in Pakistan, Ukraine and Uzbekistan, partially offset by continued pressure in Algeria and Bangladesh.

Group EBITDA of $848 million was down 18.7 per cent due to currency issues, integration costs of a Russian retail operation, plus a gain recorded in the prior year period.

The bottom line was flattered by a book gain on the sale of its 50 per cent stake in Wind Tre, which more than offset the impairments. This deal completed on 7 September, with Veon receiving around $2.8 billion in cash: $800 million has been used to repay bank loans, with the rest to be used “to further reduce debt and for general corporate purposes”.

Group mobile data revenue was a high spot, up 13.7 per cent year-on-year to $548 million.

Revenue in its core operating market of Russia was down 4.7 per cent to $1.2 billion, although on an organic basis it was essentially flat. Its Beeline business gained from the integration of Euroset stores and “positive ARPU dynamics”, with a “modest” increase in mobile service revenue.

During the period Veon withdrew an offer to acquire GTH assets in Pakistan and Bangladesh, and a deal to sell its Pakistan towers business was terminated. It also reported accounting impairments of $781 million related to weakness in Bangladesh ($451 million) and Algeria ($125 million).

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