Rapid growth in data usage across several markets and payment of a multi-million dollar settlement from Ericsson helped drive Veon into the black during Q1, though its earnings continued to be affected by foreign exchange issues.
The operator group booked a $350 million settlement with Ericsson during the quarter, relating to the termination of a contract for the vendor’s now defunct Full Stack Revenue Manager. The two signed a revised agreement in February.
Following a period of heavy investment in 4G, revenue from data services jumped 83 per cent year-on-year in the Ukraine, 94 per cent in Pakistan and 36 per cent in Bangladesh.
Veon’s profit for the quarter was $530 million, compared with an $88 million loss in the first quarter of 2018, on reported revenue of $2.1 billion, down 5.6 per cent. Unfavourable foreign exchange movements cost the operator group $291 million.
Stripping out currency movements, and other special factors, Veon said organic revenue was up 7.4 per cent year-on-year. The company’s results also reflect a change in accounting standards.
It added a “cost intensity” reduction programme was also paying off, cutting overheads across its business units. Its corporate costs reduced by 33 per cent year-on-year, it noted.
In a statement, Veon CFO Trond Westlie said: “Currency developments continue to impact our reported numbers and the evolution of our equity free cash flow, but we remain optimistic about the long-term opportunities presented by our emerging markets, many of which remain in an early stage of digital adoption.”Subscribe to our daily newsletter Back