AMSTERDAM, Feb. 14, 2020 /PRNewswire/ -- VEON Ltd. (NASDAQ:
VEON) (Euronext Amsterdam: VEON), a leading global provider of
connectivity and digital services, today announces results for the
quarter and year ended 31 December
2019.
KEY POINTS
- Full-year 2019 guidance for revenue, EBITDA and equity free
cash flow (excluding licenses) achieved
- New VEON Group co-CEO appointment
- Vasyl Latsanych to step down as Beeline Russia CEO
- Corporate cost reduction and cost intensity targets
achieved
- Operational weakness in Russia
was offset by strong performances from our Growth Engines
(Pakistan, Ukraine, Uzbekistan and Kazakhstan), while our Frontier Markets
delivered solid results
- Strong data usage continued to lead service revenue growth,
underpinned by continued network investment
- Final dividend of US 15 cents per
share declared, bringing total dividend for FY 2019 to US
28 cents per share
URSULA BURNS, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, COMMENTS:
"2019 was another year of solid growth for the Group, which we
achieved alongside important milestones in compliance, governance
and social responsibility. I am pleased to report our financial
targets have each been either met or exceeded on all fronts, giving
us confidence to set similar growth ambitions for the financial
year ahead.
The end of our monitorship in 4Q19 in connection with the
conclusion of our 2016 Deferred Prosecution Agreement was a major
milestone for our business and is testament to the dedication of
our employees in embodying the highest standards of ethics and
compliance in everything we do. It also underscored the importance
of building and nurturing sustainable businesses built around
customer loyalty, dependability and trust. We enter 2020 a stronger
business as a consequence and are fully committed to empowering our
customers through the technology and services we provide.
Our profitability has continued to improve, driven by the strong
organic revenue performance of our Growth Engines of Pakistan, Ukraine and Uzbekistan which, coupled with successful cost
control across our business, has enabled the Group to deliver 9.6%
EBITDA organic growth for the year.
Our business performance in Russia remains challenging and reversing the
revenue trend of recent quarters remains our key priority in the
year ahead. Here, I believe that the measures we have taken to
improve the quality of our networks, optimise our distribution
footprint and reconfigure our customer offers will yield results
towards the latter part of 2020
We continue to pursue growth opportunities in 3G and 4G services
both through our traditional connectivity business and our growing
ecosystem of new services. At the same time, we continue to
evaluate future assets through our new Ventures division, which is
already helping to accelerate the performance of our digital
financial services business in Pakistan, JazzCash.
Despite the underperformance of our Russian operation and the
macroeconomic and regulatory challenges we face elsewhere, we
remain excited on the medium to long-term opportunities our
portfolio presents, as we execute on our turnaround plan in
Russia and realise the revenue
potential of our Growth Engines and Frontier Markets. I am also
confident that with the appointment of Kaan
Terzioglu and Sergi Herrero
to the roles of co-CEO, we have two outstanding leaders who will
define the next growth phase for VEON.
4Q19 RESULTS1
- Reported revenue: USD 2,254 million, +0.2% YoY
- Reported EBITDA: USD 935
million, +30.9% YoY, adjusted for IFRS16 +13.1%
- Group subscriber base: 212 million total mobile
subscribers, +1.2% YoY
- Reported Group capital expenditure (excl. licenses):
USD 682 million
- Organic2 revenue performance: total
revenue decreased by 0.2% organically2 year on year
(YoY), with service revenue decreasing 0.6%
organically2, reflecting the impact of the regulatory
changes3 in Pakistan.
Excluding such impact, total revenue would have increased by 1.5%
organically2 in 4Q19
- Organic2 data revenue growth remains
robust: the momentum in mobile data revenue continued in
the period, growing organically2 by 17.7% YoY, with
Ukraine (+26.7%), Pakistan (+26.6%) and Bangladesh (+18.6%) delivering strong
performances on the back of ongoing 4G investments
- Strong organic2 growth in EBITDA:
+12.5% organically YoY to USD 808
million, resulting in an EBITDA margin of 35.8%. Excluding
the impact of regulatory changes in Pakistan, EBITDA would have increased 14.4%
organically YoY
- Cost intensity ratio4 continued to improve
organically2: we recorded a 5.1 percentage-point YoY
organic2 improvement in our cost intensity
ratio4, helped in particular by Russia, Uzbekistan and Ukraine, with the latter enjoying the benefit
of revenue growth well above inflation
- Corporate costs7 trending lower: corporate
costs were USD 108 million in 4Q19,
which included USD 51.5 million of
severance related costs in 4Q19. FY 2019 corporate costs were
USD 277 million, down 23% YoY and
broadly in line with VEON's ambition to reduce corporate costs by
25% YoY in FY 2019
- Strong equity free cash flow (excluding
licenses)5: adjusting for IFRS 16, the company
generated USD 102 million of equity
free cash flow (excluding licenses)5 during 4Q19, with
FY2019 equity free cash flow (excluding licenses)5 of
USD 1,004 million
KEY DEVELOPMENTS
- FY 2019 targets6 achieved: VEON met FY 2019
guidance on all key metrics
-
- Revenue for FY 2019 increased organically 3.4% YoY, delivering
on target of low single-digit organic growth
- EBITDA (pre-IFRS 16) increased organically 9.6% YoY, exceeding
the target of at least mid-single-digit organic growth
- Equity free cash flow excluding licenses5 (pre-IFRS 16) of
USD 1 billion, delivering on target
of approximately USD 1 billion
- Further strengthened corporate governance, with appointment of
Sergi Herrero and Kaan Terzioğlu as
co-Chief Executive Officers of VEON. Ursula
Burns will remain as VEON's Chairman
- Vasyl Latsanych is stepping down as CEO of VEON's operations in
Russia at the end of June 2020
- Final dividend of US 15 cents
declared FY 2019, bringing total FY 2019 dividend to US
28 cents, in line with new dividend
policy announced in September
2019
- VEON recognised as among the top 10% of the most transparent
companies in the Netherlands by
the Dutch Transparency Benchmark
- VEON's free float increased to 43.8% from 34.9% following the
disposal by Telenor of its remaining shareholding
- Deferred Prosecution Agreement concluded with independent
compliance monitor certifying VEON's compliance program as
effective
OUTLOOK
FY 2020 guidance: Low single-digit local currency growth
for total revenue, mid-single-digit local currency growth for
EBITDA and operational capex/total revenue of 21%-22%.
- Growth will continue to be data-led and enabled through the
expansion of our 3G and 4G networks where our goal is to raise 4G
ARPU through continued deployment of new services
- EBITDA local currency growth for FY 2020 excludes the one-time
cash of USD 350 million received in
FY 2019 in connection with a revised arrangement from Ericsson
- The operational capex/total revenue target assumes additional
investments in 4G rollout and Yarovaya expenses in Russia. Operational capex is defined as capex,
which excludes licenses and leases, divided by total revenue. See
reconciliation table in the appendix
1 Results compare to prior year results unless
stated otherwise
2 Organic change is a non-IFRS measure and
reflects changes in revenue, EBITDA and cost intensity ratio, that
excludes the effect of foreign currency movements, the impact of
the introduction of IFRS 16, exceptional income of USD 350 million in respect of revised partnership
with Ericsson and other factors, such as businesses under
liquidation, disposals, mergers and acquisitions. See Attachment E
for reconciliations
3 In June 2018's, Supreme Court ordered ("suo
moto") an interim suspension of the deduction of taxes and
service/maintenance charges on prepaid and postpaid connections on
each recharge/top-up/load levied by mobile phone service providers.
On 24 April 2019, the Supreme Court
disposed of the proceedings and restored the impugned tax
deductions, deciding that it would not interfere in the matter of
the collection of public revenue (the "suo moto" order). On
3 July 2019, the Supreme Court issued
its Judgement dated 10th May 2019
and, in addition to confirming its ruling on tax deductions,
further clarified that mobile phone service providers cannot charge
customers for service and maintenance charges, which were 10% of
customer recharges. As a result of the Judgement by the Supreme
Court, the Pakistan Telecommunication Authority ("PTA") issued two
letters to Jazz, dated 30 August 2019
and 19 September 2019, requesting
Jazz to refund the service and maintenance charges (the
"administration fees") collected by Jazz between April 2019 and July
2019. Further to the PTA's directions, on 29 September 2019, Jazz proceeded with crediting
these administration fees to the balances of the affected
customers. On 6 December 2019, the
PTA issued a show cause notice alleging that the credits were made
with conditions attached to them and, therefore, PTA required Jazz
to credit the affected customers again within fifteen (15) days.
Jazz disputes the PTA's allegation and on 3
January 2020 provided the PTA with a complete factual
explanation of the credits that were made and requested the
withdrawal of the show cause notice. Jazz is currently awaiting the
PTA's response
4 Cost intensity ratio is defined as service
costs plus selling, general and administrative costs, less other
revenue, divided by total service revenue. Based on FY 2018, in USD
million (3,697+1,701-133)/8,526
5 Equity free cash flow (excluding licenses) is
a non-IFRS measure and is defined as free cash flow from operating
activities less cash flow used in investing activities, excluding
the impact of IFRS 16, M&A transactions, capex for licenses,
inflow/outflow of deposits, financial assets and other one-off
items. EFCF (excluding licenses) target for FY 2019 is based on
currency rates of 20 February 2019,
excludes USD 136 million payment of
the GTH Tax Settlement, includes the one-time cash received in
connection with a revised arrangement from Ericsson of USD 350 million. See attachment E for
reconciliations
6 FY 2019 targets exclude the impact of the
introduction of IFRS 16
7 Corporate costs in a non-IFRS financial
measure and represents costs incurred by the holding entities in
the Netherlands, Luxembourg, UK and Egypt, primarily comprised of salary costs and
consulting costs. We also present in this release 'run-rate
corporate costs" in order to represent what our corporate cost
performance would be if results for a given period were annualized
or extrapolated into future periods
8 Local currency for FY 2020 excludes the
effect of foreign currency movements
Contents
MAIN
EVENTS.........................................................................................................
7
GROUP
PERFORMANCE.............................................................................................
9
COUNTRY
PERFORMANCE........................................................................................
12
CONFERENCE CALL
INFORMATION.............................................................................
21
ATTACHMENTS......................................................................................................
23
PRESENTATION OF FINANCIAL RESULTS
VEON's results presented in this earnings release are based on
IFRS unless otherwise stated and have not been audited.
Certain amounts and percentages that appear in this earnings
release have been subject to rounding adjustments.
As a result, certain numerical figures shown as totals,
including those in tables, may not be an exact arithmetic
aggregation of the figures that precede or follow them.
The following non-IFRS measures disclosed in the document, i.e.
EBITDA, EBITDA margin, EBIT, net debt, equity free cash flow
(excluding licenses), organic growth, capital expenditures
excluding licenses, are reconciled to the comparable IFRS measures
in Attachment E.
IMPACT OF IFRS 16 - LEASES ON FINANCIAL INFORMATION
From 1 January 2019, VEON has
adopted International Financial Reporting Standards (IFRS) 16
(Leases). VEON is presenting Q4 2019 results excluding the impact
of IFRS 16 for comparability purposes with prior periods, as well
as presenting reported results which will reflect the new baseline
for future period over period comparisons.
All forward-looking FY 2020 targets include the impact of the
introduction of IFRS 16 in FY 2020.
All comparisons are on a year on year (YoY) basis unless
otherwise stated.
MAIN EVENTS
REVENUE AND EBITDA
Reported revenue (+0.2% YoY) and EBITDA (+30.9% YoY) were
positively impacted by currency movements, which reversing the
trend of the past 8 quarters made a positive contribution of
USD 10 million to reported revenue
and USD 4 million to reported EBITDA
in 4Q19. EBITDA was positively impacted by IFRS 16 implementation
this year. On an organic1 basis revenue decreased by
0.2% YoY with EBITDA up 12.5% YoY.
During Q4 2019, both reported revenue and EBITDA were
negatively impacted by regulatory changes2 in
Pakistan. Adjusted for these
impacts, organic revenue would have increased by 1.5% YoY and
organic EBITDA would have increased by 14.4% YoY.
1 Organic change is a non-IFRS measure and
reflects changes in revenue, EBITDA and cost intensity ratio.
Organic change excludes the effect of foreign currency movements,
the impact of the introduction of IFRS 16, exceptional income of
USD 350 million in respect of revised
partnership with and other factors, such as businesses under
liquidation, disposals, mergers and acquisitions. See Attachment E
for reconciliations.
2 In June 2018's, Supreme Court ordered ("suo
moto") an interim suspension of the deduction of taxes and
service/maintenance charges on prepaid and postpaid connections on
each recharge/top-up/load levied by mobile phone service providers.
On 24 April 2019, the Supreme Court
disposed of the proceedings and restored the impugned tax
deductions, deciding that it would not interfere in the matter of
the collection of public revenue (the "suo moto" order). On
3 July 2019, the Supreme Court issued
its Judgement dated 10th May 2019
and, in addition to confirming its ruling on tax deductions,
further clarified that mobile phone service providers cannot charge
customers for service and maintenance charges, which were 10% of
customer recharges. As a result of the Judgement by the Supreme
Court, the Pakistan Telecommunication Authority ("PTA") issued two
letters to Jazz, dated 30 August 2019
and 19 September 2019, requesting
Jazz to refund the service and maintenance charges (the
"administration fees") collected by Jazz between April 2019 and July
2019. Further to the PTA's directions, on 29 September 2019, Jazz proceeded with crediting
these administration fees to the balances of the affected
customers. On 6 December 2019, the
PTA issued a show cause notice alleging that the credits were made
with conditions attached to them and, therefore, PTA required Jazz
to credit the affected customers again within fifteen (15) days.
Jazz disputes the PTA's allegation and on 3
January 2020 provided the PTA with a complete factual
explanation of the credits that were made and requested the
withdrawal of the show cause notice. Jazz is currently awaiting the
PTA's response
CORPORATE COSTS AND COST INTENSITY
In 4Q19, our cost intensity ratio1 improved
organically by 5.1 percentage points YoY to 60.5% on a pre-IFRS 16
basis, mainly due to lower costs in Russia, Ukraine, Uzbekistan and corporate cost improvement. We
are seeing continued progress on cost control across a number of
our smaller markets and expect the contribution from other markets
to become more meaningful over the coming year.
4Q19 corporate costs2 amounted to USD 108 million, including USD 51.5 million in severance related costs. FY
2019 corporate costs of USD 277
million were down 23%, in line with VEON's target to reduce
corporate costs by 25% YoY in FY 2019.
1 Cost intensity ratio is defined as service
costs plus selling, general and administrative costs, less other
revenue, divided by total service revenue. Based on FY 2018, in USD
million (3,697+1,701-133)/8,526
2 Corporate costs is a non-IFRS financial
measure and represents costs incurred by the holding entities in
the Netherlands, Luxembourg, UK and Egypt, primarily comprised of salary costs and
consulting costs. We also present in this release 'run-rate
corporate costs" in order to represent what our corporate cost
performance would be if results for a given period were annualized
or extrapolated into future periods
US 15 CENTS PER SHARE DIVIDEND
DECLARED
In September 2019, VEON announced
a new dividend policy, which targets paying at least 50% of prior
year equity free cash flow after licenses in dividends to
shareholders. Dividend payments will always remain subject to
review by VEON's Board of Directors, taking into account
medium-term investment opportunities and the Group's capital
structure. The Group's internal target is to keep Net Debt/EBITDA
at around 2.0x (2.4x post-IFRS 16).
In line with this dividend policy, VEON's Board of Directors has
approved the distribution of a final gross dividend of US
15 cents per share for FY 2019. In
calendar year 2020, VEON plans to make this single dividend payment
(US 15 cents) with a record date of
27 February 2020. For ordinary
shareholders at Euronext Amsterdam, the final dividend of
USD 15 cents will be paid in
Euros.
This final dividend of USD 15
cents per share, together with the USD 13 cents per share declared at the interim
period brings the total dividend payment for FY 2019 to
USD 28 cents per share, which
represents approximately 70% of 2019 equity free cash flow after
licenses. We believe this demonstrates the commitment of the
company to return cash to shareholders while managing an
appropriate level of Net Debt/EBITDA at the Group level.
USD 300 MILLION TAP ISSUANCE OF
EXISTING SENIOR NOTES
On 14 January 2020, VEON Holdings
B.V. issued USD 300 million in
senior unsecured notes due in 2025, to be consolidated and form a
single series with the USD 700
million 4.00% senior notes due in 2025 issued by VEON
Holdings on 9 October 2019. VEON
Holdings intends to use the net proceeds of the tap issuance to
refinance certain existing outstanding debt and address upcoming
debt maturities and for general corporate purposes.
MANAGEMENT CHANGES
On 13 February VEON announced the appointment of Sergi Herrero and Kaan Terzioğlu as co-Chief
Executive Officers, effective from 1 March,
2020. Ursula Burns, who was
appointed as Executive Chairman in July
2017 and CEO in December 2018,
will remain as VEON's Chairman.
Kaan and Sergi will jointly drive performance in the Group, with
complementary focus areas. Kaan will lead on VEON's core
telecommunication services and oversee operations in Russia, Kazakhstan, Uzbekistan, Kyrgyzstan and Georgia. Sergi will lead on building new
ventures, digital products, partnerships and oversee operations in
Pakistan, Ukraine, Algeria, Bangladesh and Armenia.
Today VEON Group announced that Vasyl Latsanych is stepping down
as CEO of VEON's operations in Russia. Vasyl joined VEON as CEO of Beeline
Russia in January 2018 and will step
down at the end of June this year. We will announce his successor
in due course.
FY 2020 TARGETS
The Company has formulated targets for FY 2020. Guidance for
total revenue is low single-digit local currency growth and EBITDA
is mid-single-digit local currency growth. Local currency growth
reflects changes in revenue and EBITDA, excluding foreign currency
movements. EBITDA local currency growth for FY2020 excludes
exceptional income of USD 350 million
in respect of revised partnership with Ericsson received in
2019.
Forward looking targets for EBITDA include the impact of the
introduction of IFRS 16 in FY 2019 and FY 2020.
The target for operational capex/total revenue , which is
defined as capex excluding license expenditures and capitalized
leases divided by total revenue, is 21-22%. Our operational
capex/total revenue target for 2020 considers additional
investments in network rollout and Yarovaya investments in
Russia.
Reported total revenue increased by 0.2% YoY in 4Q19 to
USD 2.3 billion, with good
operational performance being offset by the negative impact of
regulatory changes in Pakistan.
Organic total revenue decreased by 0.2% mainly as a result revenue
underperformance in Russia,
Algeria and Uzbekistan.
The total revenue organic trend was supported by strong organic
growth in mobile data revenue, which increased by 17.7% for the
quarter. Reported mobile data revenue (+18.2%) was positively
impacted by currency tailwinds of approximately USD 8 million. Mobile customers increased YoY to
212 million at the end of Q4 2019, with customer growth in
Pakistan and Bangladesh, which was partially offset by a
decrease in our customer base in Russia, Uzbekistan and Algeria.
EBITDA increased organically by 12.5% to USD 808 million pre-IFRS 16, primarily due to
good performance in Ukraine,
Kazakhstan and Uzbekistan, as well as a further reduction in
corporate costs. Reported EBITDA increased by 30.9% YoY, positively
impacted by IFRS 16 and currency improvements, which offset the
negative impact of Pakistan
regulatory regime changes, in the absence of which organic EBITDA
would have increased by 14.4% YoY.
Adjusting for the positive effect of IFRS 16, the Company
generated USD 102 million in equity
free cash flow (excluding licenses) during Q4 2019.
VEON's HQ segment consists largely of the costs of VEON's
headquarters in Amsterdam. Here,
corporate costs were USD 108 million
in Q4 2019, down 20% YoY. FY 2019 corporate costs of USD 277 million were in line with VEON's ambition
to reduce corporate costs by approximately 25% in FY 2019 (from
USD 359 million in FY 2018) and in
line with our mid-term ambition to halve the run-rate of our
corporate costs between FY 2017 (USD 431
million) and year-end 2019.
"Other" in Q4 2019 includes the results of Kyrgyzstan, Armenia, Georgia, other global operations, services and
intercompany eliminations.
Q4 2019 ANALYSIS
Reported EBITDA increased by 30.9% YoY. EBITDA pre-IFRS 16
increased by 13.1% YoY due to strong operational performances from
Ukraine, Uzbekistan and Kazakhstan, and local currency strength versus
the US dollar in Russia and
Ukraine. Operating profit pre-IFRS
16 was USD 369 million, compared to
an operating profit in 4Q18 of USD 208
million. The depreciation (excluding pre-IFRS 16) impact was
flat YoY whereas in 4Q18 the Group recorded higher impairments.
In Q4 2019, net financial income and expenses increased mainly
due to interest income generated in 4Q18 on a deposit made in
relation to the mandatory tender offer for GTH, which was released
in summer 2019. Financial expenses slightly decreased YoY (on a
pre-IFRS 16 basis), primarily due to lower debt levels and a lower
cost of debt but have not compensated for the last year interest
income leading up to slightly higher net financial expenses
YoY.
Pre-IFRS 16 income tax expense was USD
143 million, representing an increase YoY due to additional
tax liabilities of USD 78 million,
while in Q4 2018 the Group reversed a USD 33
million tax provision on future dividends in Pakistan. In Q4 2019, the Company recorded a
net profit of USD 48 million for the
period, of which USD 22 million is
attributable to VEON's shareholders.
Capex (excluding licenses, pre-IFRS 16) increased to
USD 579 million in Q4 2019 from
USD 347 million in Q4 2018, mainly
due to additional network investments, especially in Russia. The ratio of FY19 capex (excluding
licenses, pre-IFRS 16) to revenue for the last twelve months is
19.6%.
Gross debt was broadly stable from Q3 2019 to Q4 2019. Last
year, in Q4 2018 VEON significantly modified its currency mix of
debt as it repaid its euro-denominated debt, repurchased and
cancelled USD-denominated bonds and combined with currency swaps in
Q3 and Q4 2018 increased its relative share of Russian ruble debt
exposure.
In October 2019, VEON Holdings
issued USD 700 million 4.00% senior
unsecured notes due in 2025. VEON used the net proceeds primarily
to refinance drawings on the revolving credit facility used to fund
its mandatory tender offer for GTH. In January 2020, VEON Holdings issued USD 300 million in senior unsecured notes due in
2025 at an issue price of 103.75%, to be consolidated and form a
single series with the USD 700
million 4.00% senior notes issued by VEON in October 2019, with the intention to use the net
proceeds to refinance certain existing outstanding debt and address
upcoming debt maturities and for general corporate purposes.
Net cash from operating activities decreased YoY, mainly due to
the higher one-off tax payments.
Net cash flow used in investing activities in Q4 2019 increased
YoY due to higher network investments.
Net cash used in financing activities pre-IFRS 16 amounted to
USD 76 million in 4Q19 compared to
USD 1,462 million in 4Q18, which was
impacted by HQ Amsterdam debt repayments.
Net debt pre-IFRS 16 in Q4 2019 was USD
6.3 billion and the net debt/ LTM EBITDA ratio was 1.7x.
Reported net debt/LTM EBITDA ratio at the end of Q4 2019 was
2.0x.
COUNTRY PERFORMANCE
- Russia
- Ukraine
- Pakistan
- Uzbekistan
- Kazakhstan
- Algeria
- Bangladesh
In Russia, we made significant
investments in our network and expect to continue these investments
in 2020. Beeline continued to make steady progress on network
performance by increasing its number of 4G base stations by 38% YoY
as at December 2019. While network
quality is improving, customer perception is still lower versus
competitors. At the same time, our business faced challenges
related to pricing and the efficiency of our distribution.
Together, these resulted in a decline in our customer base YoY of
1.1%. Distribution optimization continued during the quarter
through the closure of more than 200 stores in 2019. Beeline also
improved its pricing proposition in the market by offering
segmented tariff structures with a focus on family offers and by
repricing unlimited tariff plans in early 2020.
Beeline's efforts to improve customer satisfaction and the
revenue trend of recent quarters include further improving its
network coverage, capacity and customer perception and boosting its
digital channels and enhancing retail efficiency with the closure
of approximately 600 stores in total through 2019 and 2020. In
addition, Beeline expects to grow customer engagement via new
digital and financial services.
Total revenue in 4Q19 was RUB 73.4
billion, representing a YoY decrease of 3.3%, reflecting a
more balanced approach to tariffs focused on reducing customer
churn. However, pressure on our customer base continued and the
increased predominance of unlimited tariff plans led to a
mobile service revenue decline of 5.9% to RUB 55.3 billion, mainly reflecting the negative
impact of unlimited tariff plans and the decline in our customer
base. The strong growth in VAS (excl.messaging) and revenue from
mobile financial services were insufficient to offset the decline
in voice and messaging revenue. Data volumes continue to grow
strongly by 55.6% YoY, supported by 4G population coverage increase
to 86% from 74% in December 2018.
Revenue from equipment and accessory sales increased by 6.6% YoY
due to higher shipments to dealerships.
Fixed-line revenues increased by 4.2% YoY, due to
increases in broadband revenue and increases in transit service
revenue. Beeline's Fixed Mobile Convergence ("FMC") proposition
continues to play an important role in the turnaround of the
fixed-line business for Beeline. The FMC customer base grew by 20%
YoY in Q4 2019 to more than 1.3 million, which represents a 50% FMC
penetration of our broadband customer base.
Beeline continues to focus on the B2B segment, improving its
proposition with new digital offers and solutions to both small and
large enterprises. In 4Q19, B2B service mobile revenue increased by
5.1% YoY.
EBITDA pre-IFRS 16 for FY 2019 continued to grow for the second
year in a row. The decrease in 4Q19 EBITDA by 1.6% was related to
underperformance of revenue and RUB 1.4
billion of provision related to bad debt and to inventory,
slightly offset by lower commercial costs mainly related to closing
more than 100 own stores in Q4 2019.
Capex excluding licenses (pre-IFRS 16) increased by 82.2% as a
result of Beeline's commitment to improving its network quality.
During 4Q19, we increased 4G base stations by 38%. Beeline
continues to invest in network development with a strong separate
focus on Moscow and Saint-Petersburg to ensure these cities have
high quality infrastructure that is ready to integrate new
technologies. As a result, Beeline improved significantly the
download speed in Moscow and
Saint-Petersburg during the year.
The LTM capex (excluding licenses) to revenue ratio (pre-IFRS 16)
was 21.7% in Q4 2019. Reported capex excluding licenses increased
by 112.3% YoY during the quarter. Our investment plans related to
national regulations on data storage are progressing in alignment
with legal requirements, and our estimates of the total investment
requirement for these remains unchanged.
In Ukraine, Kyivstar continued
to deliver solid results during the quarter in a competitive
market, supported by our marketing activities and strong growth in
data consumption enabled by ongoing investment in Kyivstar's
network.
Total revenue grew by 16.1% YoY to UAH 5.8 billion and mobile
service revenue increased by 16.0% YoY to UAH 5.4 billion. Revenue
growth was supported by strong data revenue performance, CVM
(Customer Value Management) activities, FTTB and FMC subscriber
base growth. Growth in data customers and data usage supported an
ARPU increase of 17.4% YoY to UAH 68. Overall, Kyivstar's mobile
customer base decreased slightly by 0.6% to 26.2 million,
reflecting the reduction in multi-SIM users in the market and
demographic trends. Still, data penetration continued to increase,
with data customers growing by 14.6% YoY and total 4G customers
reaching 7.1 million; an increase of approximately 121% YoY. In
4Q19, Kyivstar recorded a quarterly churn of 4.7%, the lowest churn
in the market.
Fixed-line service revenue grew by 14.0% YoY to UAH 355 million,
driven by an increase in our fixed broadband customer base of 10.8%
YoY, while fixed broadband ARPU increased by 6.2% YoY to UAH
75.
EBITDA (pre-IFRS 16) increased by 38.4% YoY, driving an EBITDA
margin of 66.5%. The strong EBITDA growth was supported by revenue
growth and reversal of certain provisions, while good cost control
in the period further supported margin expansion. Reported EBITDA
increased by 44.3% YoY to UAH 4.0 billion.
Capex excluding licenses (pre-IFRS 16) increased by 32.6% YoY as
a result of a strategic focus on further 4G roll-out during the
quarter, which achieved 4G population coverage of 74%. According to
recognised speed tests, Kyivstar was a market leader in coverage
and speed at the end of 4Q19. Reported capex excluding licenses
increased by 114% to UAH 1.6 billion.
In July 2019, the National Bank of
Ukraine abolished limits on the
repatriation of dividends. In 4Q19 Kyivstar continued to positively
support Group cash flow.
Following the President's decree setting measures aimed at
elimination of the digital divide between cities and rural areas,
in October 2019 the National
Commission on Regulation of Communication and Informatization
(NCRCI) adopted a joint action plan with four major MNOs for the
refarming of the 900 MHz spectrum. This refarming will allow
Kyivstar and the other MNOs to receive technologically neutral
spectrum in 900 MHz band. In addition, the four MNOs also
signed a memorandum of understanding (MoU) with the Cabinet of
Ministers of Ukraine and the NCRCI
aimed at providing maximum mobile coverage and broadband internet
access over Ukraine's territory.
In line with the aforementioned regulatory developments, in
December 2019 the Cabinet of
Ministers of Ukraine adopted a
resolution to set up an action plan for the government to create
conditions for the development of the mobile broadband access (in
the 700MHz, 800MHz, and 900MHz bands).
Jazz continued to perform well despite the ongoing competitive
nature of the Pakistan market,
particularly in data and social network offers, and remained
focused on expanding its digital services to drive further
growth.
Reported revenues were impacted by June 2018's, Supreme Court
ordered ("suo moto") an interim suspension of the deduction of
taxes and service/maintenance charges on prepaid and postpaid
connections on each recharge/top-up/load levied by mobile phone
service providers. On 24 April 2019,
the Supreme Court disposed of the proceedings and restored the
impugned tax deductions, deciding that it would not interfere in
the matter of the collection of public revenue (the "suo moto"
order). On 3 July 2019, the Supreme
Court issued its Judgement dated 10th May 2019 and, in addition to confirming its
ruling on tax deductions, further clarified that mobile phone
service providers cannot charge customers for service and
maintenance charges, which were 10% of customer recharges. As a
result of the Judgement by the Supreme Court, the Pakistan
Telecommunication Authority ("PTA") issued two letters to Jazz,
dated 30 August 2019 and 19 September 2019, requesting Jazz to refund the
service and maintenance charges (the "administration fees")
collected by Jazz between April 2019
and July 2019. Further to the PTA's
directions, on 29 September 2019,
Jazz proceeded with crediting these administration fees to the
balances of the affected customers. On 6
December 2019, the PTA issued a show cause notice alleging
that the credits were made with conditions attached to them and,
therefore, PTA required Jazz to credit the affected customers again
within fifteen (15) days. Jazz disputes the PTA's allegation and on
3 January 2020 provided the PTA with
a complete factual explanation of the credits that were made and
requested the withdrawal of the show cause notice. Jazz is
currently awaiting the PTA's response
In 4Q19, total revenue increased by 1.9% YoY, driven by a strong
increase in data revenue of 26.6% YoY. Excluding the impact of tax
regime change, the revenue growth would have been 14.1%. Reported
service revenue increased by 1.5%. The data revenue growth was
driven by an increase in data customers and 4G customer conversion,
doubling of data usage through higher bundle penetration and
continued data network expansion. Financial services revenue grew
as well during the quarter by 24.6% YoY as Jazz Cash increased its 30-day active wallet
subscriber base to 7.3 million.
Jazz's customer base increased by 7.6% YoY, supported by
increased subscriber engagement and higher data customers on the
back of the continued expansion of the data network, which resulted
in 4G subscriber penetration of the total data customer base of
40%. The YoY customer trend reflects our commercial strategy to
focus on high value customers in order to further improve the
customer mix of new sales, leveraging on network quality of
service. The growth in the customer base was negatively impacted by
the regulatory requirement of handset blocking system of
unregistered handsets (DIRBS- Device Identification Registration
and Blocking System).
EBITDA (pre-IFRS 16) decreased YoY by 1.0%, primarily as a
result of the reversal of the "suo moto" order on
24 April 2019, in an EBITDA margin
(pre-IFRS 16) of 45.6%. Excluding these impacts, the YoY EBITDA
growth pre-IFRS 16 would have been ~5.3%. Reported EBITDA in Q4
2019 increased by 7.1% YoY to PKR 24.9
billion.
In 4Q19, capex excluding licenses pre-IFRS16 increased to
PKR 9.9 billion, mainly due to the
adverse impact of FX and timing differences. Reported capex
excluding licenses increased YoY to PKR 10.9
billion. At the end of Q4 2019, the population coverage of
Jazz's data network was more than 60%.
The ex-Warid license renewal was due in May 2019. Pursuant to directions from the
Islamabad High Court, the Pakistan Telecommunication Authority
("PTA") issued a license renewal decision on 22 July 2019 requiring payment of USD 39.5 million per MHz for 900 MHz spectrum and
USD 29.5 million per MHz for 1800 MHz
spectrum, equating to an aggregate price of approximately
USD 450 million (excluding advance
tax of 10%). On 17 August 2019,
Jazz appealed the PTA's order to the Islamabad High Court. On
21 August 2019, the Islamabad High
Court suspended the PTA's order pending the outcome of the
appeal and subject to Jazz making payment in the form of
security (under protest) as per the options given in the PTA's
order. In September 2019, Jazz
deposited approximately USD 225
million in order to maintain its appeal in the Islamabad
High Court regarding the PTA's underlying decision on the license
renewal. There were no specific terms and conditions attached to
the deposit. The deposit is recorded as a non-current
financial asset in the statement of financial position. The
Islamabad High Court has not yet scheduled a hearing date.
Increasing mobile data penetration remains the key growth driver
for us in the Uzbekistan market.
Beeline Uzbekistan continued to
focus on attracting data customers and benefited from its position
as a market leader. Going forward, Beeline Uzbekistan will focus on
reducing churn and maintaining its leadership position.
Total revenue declined by 8.8% YoY to UZS 579 billion, primarily
driven by the negative impact of introduction of 20% excise tax
(UZS 106 million), partially offset by data monetization
activities. Adjusted for these negative effects, the growth would
have been approximately 7.8% YoY. Mobile data traffic increased,
supported by the continued roll-out of high-speed data networks,
increased smartphone penetration and the increased penetration of
bundled offerings in the customer base. Customer base
declined to 8.1 million, down 10.7% YoY because of higher churn
among those customers who have irregular mobile spending.
EBITDA pre-IFRS 16 increased by 22.1% to UZS 310 billion, driven
by good operational performance, notwithstanding a slightly
negative impact from changes in the tax regime. EBITDA in 4Q18 was
negatively impacted by non-recurring costs and certain
provisions of UZS 22 billion. Reported EBITDA increased by 24.8% to
UZS 317 billion.
Capex excluding licenses pre-IFRS 16 more than doubled to UZS
105 billion, mainly as a result of heavy 4G investments, which
enabled our 4G network to achieve a population coverage of 26%. Our
LTM 4Q19 capex to revenue ratio was 20%. Beeline Uzbekistan continued to invest in high-speed
data networks, increasing the number of nationwide 3G and 4G sites
YoY and further improvements to our high-speed data networks will
continue to be a priority in 2020.
From January 2019, new tax reforms
were introduced, which aim to simplify taxation in Uzbekistan. The tax authorities introduced a
flat 20% corporate tax rate for mobile operators (previously the
corporate tax rate depended on the profitability of mobile
operators), cancelled the revenue tax of 3.2% and introduced an
excise tax of 15% over customer charges. Furthermore, the customer
tax was reduced to UZS 2,000 in FY 2019 from UZS 4,000 in FY 2018.
Tax reforms introduced from January
2019 had an approximately 15% negative impact on revenue in
FY 2019, while the free cash flow impact was slightly negative due
to utilization of deferred tax assets during the year. Going
forward, we expect a positive impact on equity free cash flow
(excluding licenses). From 1 October
2019, the excise tax has been increased from 15% to 20% to
cover VAT reduction from 20% to 15%.
In Kazakhstan, Beeline
delivered double-digit YoY growth as result of its strong value
proposition and customer base value management and digital services
development, supported by infrastructure modernization. Digital
services are in the primary focus in an ecosystem built around
customers that include mobile finance services (bus-pay, payment
card, QR-code payment, money transfer), TV entertainment
(online-streaming platforms, popular channels and shows) and
self-service applications.
Total revenue grew by 12.8% YoY to KZT
45.5 billion. Growth was supported by data revenue growth
and fixed line service revenue. Mobile service revenue grew by
14.2% to KZT 38.3 billion, driven by
a solid increase in ARPU of 11.8% and a customer base increase of
2.5% to 10.2 million. Strong data revenue growth (+55.6%) was
driven by continuous 4G network development and modernisation,
supported by new value proposition. Data customers grew by 9.5% YoY
to 6.9 million, and penetration has reached 68%. 4G data customers
grew significantly by 1.4 million with 49% YoY growth.
Fixed-line service revenue grew by 5.8% YoY to KZT 6.9 billion, driven by an increase in the
fixed broadband customer base of 8.1% YoY. This includes YoY growth
of our convergent products customer base by 23,000 (+75% YoY).
Approximately 12% of fixed-line customers use convergent
products.
EBITDA (pre-IFRS 16) increased by 9.9% YoY, driving an EBITDA
margin of 46.3%. The strong EBITDA growth was supported by revenue
growth and slightly offset by higher operating expense during the
quarter. Reported EBITDA increased by 18.5% YoY to KZT 22.7 billion.
Capex excluding licenses (pre-IFRS 16) increased by 120.8% YoY
as a result of additional investment after the termination of a
network sharing agreement in Kazakhstan between our subsidiary KaR-Tel LLP
and Kcell Joint Stock Company ("Kcell") due to Kazakh telecom JSC's
acquisition of 75% of Kcell's shares. Reported capex excluding
licenses increased by 127.1% to KZT 14.7
billion.
In Algeria, macroeconomic
challenges persisted during the quarter, and political uncertainty
remains following a presidential election in December. The market
remains challenging with high levels of competition and regulatory
changes. Against this backdrop, Djezzy continued its segmented
approach, improving its share in its high value segment, while at
the same time preserving its share in the mass market segment,
resulting in an improvement in its relative performance in an
overall declining market.
Djezzy's 4Q19 service revenue was DZD
23.7 billion, a YoY decline of 1.6% and broadly flat quarter
on quarter. Effective from 31 October
2019, ARPCE (Algerian Telecommunication Regulatory
Authority) decided on the MTR rate changes at DZD 0.67 per minute (from 0.95 DZD/min), creating an asymmetry in the
market. This change of MTR negatively impacted revenue by
DZD 0.3 billion. Data revenue
increased by 41.3% YoY, due to higher usage and an increase in 4G
data penetration. Price competition in both voice and data drove a
continued reduction in customer base, which declined by 7.7% YoY.
During the second half of 2019, Djezzy introduced a modernised and
an updated tariff portfolio which supported YoY ARPU growth of 7.1%
for the first time since 1Q16.
EBITDA (pre-IFRS 16) decreased YoY by 9.6%, resulting in a
margin of 42.0%. The decline in revenue remains a challenge
for EBITDA performance, alongside an increase in MTR, HR costs and
higher interconnection costs. Reported EBITDA increased by 0.3% YoY
to DZD 11.1 billion.
At the end of 4Q19, Djezzy's 4G services covered 28 wilayas and
approximately 38% of Algeria's
population, while its 3G network covered all 48 wilayas and
approximately 75% of Algeria's
population. In Q4 2019, capex excluding licenses pre-IFRS 16 was
DZD 4.6 billion, representing a 20.5%
decrease YoY.
Banglalink reported good results in Q4 and continued to deliver
year on year service revenue growth for the fifth consecutive
quarter in a growing market. This was achieved despite intense
competition in the market and a challenging regulatory
environment.
Banglalink continued to focus on acquiring customers in 4Q19.
Its customer base grew by 4.0% YoY while data customers increased
by 9.7% as a result of simplified product offers and improved
network availability.
Total revenue in 4Q19 grew by 1.2% YoY, supported by mobile
service revenue growth of 1.8% YoY to BDT
10.9 billion. The revenue increase was mainly driven by a
continued improvement in data revenue following enhanced network
availability, as well as the continued rationalisation of
Banglalink's distribution footprint. ARPU decreased by 1.5% YoY.
Data revenue increased by 18.6% YoY, driven by increased smartphone
penetration and data usage growth of 33.8% YoY to 1,370 MB per
user.
EBITDA (pre-IFRS16) decreased by 3.4% YoY, as higher revenue was
largely offset by the increase in the minimum tax rate. Excluding
the negative impact as a result of changes in the tax regime
(discussed below), EBITDA would have increased by an additional
6.0%. EBITDA margin (pre-IFRS 16) decreased to 32.7%. Reported
EBITDA in 4Q19 increased by 19.0% YoY to BDT
4.5 billion.
In 4Q19, capex excluding licenses pre-IFRS 16 increased YoY to
BDT 1.7 billion as a result of 4G
rollout. 3G network population coverage was approximately
72% at the end of the period.
In Q2 2019, the tax authority in Bangladesh introduced several changes to the
tax regime: supplementary duty increased from 5% to 10% on
subscription revenue; SIM tax increased from BDT 100 to 200; minimum tax rate increased from
0.75% to 2% of revenue and custom duties on smartphones increased
from 10% to 25%.
CONFERENCE CALL INFORMATION
On 14 February 2020, VEON will
host a live presentation with senior management at 13:00 CET (12:00
GMT) in London, which will
be made available through video webcast on its website and through
the following dial-in numbers. The call and slide presentation may
be accessed at http://www.veon.com.
13:00 CET investor and analyst conference call
US call-in number: +1-917-720-0178
Confirmation Code: 8690685
International call-in number: +44(0)203-009-5710
Confirmation Code: 8690685
The conference call replay and the slide presentation webcast
will be available until 21 February
2020.
The slide presentation will also be available for download from
VEON's website.
Investor and analyst call replay
US Replay Number: +1(917)677-7532
Confirmation Code: 8690685
UK Replay Number: +44(0)333-300-9785
Confirmation Code: 8690685
DISCLAIMER
This press release contains "forward-looking statements", as the
phrase is defined in Section 27A of the U.S. Securities Act of
1933, as amended, and Section 21E of the U.S. Securities Exchange
Act of 1934, as amended. These forward-looking statements may be
identified by words such as "may," "might," "will," "could,"
"would," "should," "expect," "plan," "anticipate," "intend,"
"seek," "believe," "estimate," "predict," "potential," "continue,"
"contemplate," "possible" and other similar words. Forward-looking
statements include statements relating to, among other things,
VEON's plans to implement its strategic priorities, including
operating model and development plans, among others; anticipated
performance and guidance for 2020, including VEON's ability to
generate sufficient cash flow; future market developments and
trends; operational and network development and network investment,
including expectations regarding the roll-out and benefits of
3G/4G/LTE networks, as applicable; spectrum acquisitions and
renewals; the effect of the acquisition of additional spectrum on
customer experience; VEON's ability to realize the acquisition and
disposition of any of its businesses and assets and to execute its
strategic transactions in the timeframes anticipated, or at all;
VEON's ability to realize financial improvements, including an
expected reduction of net pro-forma leverage ratio following the
successful completion of certain dispositions and acquisitions; our
dividends; and VEON's ability to realize its targets and commercial
initiatives in its various countries of operation. The
forward-looking statements included in this press release are based
on management's best assessment of VEON's strategic and financial
position and of future market conditions, trends and other
potential developments. These discussions involve risks and
uncertainties. The actual outcome may differ materially from these
statements as a result of demand for and market acceptance of
VEON's products and services; our plans regarding our dividend
payments and policies, as well as our ability to receive dividends,
distributions, loans, transfers or other payments or guarantees
from our subsidiaries; continued volatility in the economies in
VEON's markets; unforeseen developments from competition;
governmental regulation of the telecommunications industries;
general political uncertainties in VEON's markets; government
investigations or other regulatory actions; litigation or disputes
with third parties or other negative developments regarding such
parties; the impact of export controls and laws affecting trade and
investments on our and important third-party suppliers' ability to
procure goods, software or technology necessary for the services we
provide to our customers; risks associated with data protection or
cyber security, other risks beyond the parties' control or a
failure to meet expectations regarding various strategic
priorities, the effect of foreign currency fluctuations, increased
competition in the markets in which VEON operates and the effect of
consumer taxes on the purchasing activities of consumers of VEON's
services. Certain other factors that could cause actual results to
differ materially from those discussed in any forward-looking
statements include the risk factors described in VEON's Annual
Report on Form 20-F for the year ended December 31, 2018 filed with the U.S. Securities
and Exchange Commission (the "SEC") and other public filings made
by VEON with the SEC. Other unknown or unpredictable factors also
could harm our future results. New risk factors and uncertainties
emerge from time to time and it is not possible for our management
to predict all risk factors and uncertainties, nor can we assess
the impact of all factors on our business or the extent to which
any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements. Under no circumstances should the inclusion of such
forward-looking statements in this press release be regarded as a
representation or warranty by us or any other person with respect
to the achievement of results set out in such statements or that
the underlying assumptions used will in fact be the case.
Therefore, you are cautioned not to place undue reliance on these
forward-looking statements. The forward-looking statements speak
only as of the date hereof. We cannot assure you that any projected
results or events will be achieved. Except to the extent required
by law, we disclaim any obligation to update or revise any of these
forward-looking statements, whether as a result of new information,
future events or otherwise, after the date on which the statements
are made, or to reflect the occurrence of unanticipated events.
Furthermore, elements of this press release contain or may contain,
"inside information" as defined under the Market Abuse Regulation
(EU) No. 596/2014.
All non-IFRS measures disclosed further in this press release
(including, without limitation, EBITDA, EBITDA margin, EBT, net
debt, equity free cash flow (excluding licenses), organic growth,
capital expenditures excluding licenses and LTM (last twelve
months) capex excluding licenses/revenue) are reconciled to
comparable IFRS measures in Attachment C to this earnings release.
In addition, we present certain information on a forward-looking
basis. We are not able to, without unreasonable efforts, provide a
full reconciliation to IFRS due to potentially high variability,
complexity and low visibility as to the items that would be
excluded from the comparable IFRS measure in the relevant future
period, including, but not limited to, depreciation and
amortization, impairment loss, loss on disposal of non-current
assets, financial income and expenses, foreign currency exchange
losses and gains, income tax expense and performance transformation
costs, cash and cash equivalents, long - term and short-term
deposits, interest accrued related to financial liabilities, other
unamortized adjustments to financial liabilities, derivatives, and
other financial liabilities.
ABOUT VEON
VEON is a NASDAQ and Euronext Amsterdam-listed global provider
of connectivity and digital services, headquartered in Amsterdam. Our vision is to empower customer
ambitions through technology, acting as a digital concierge to
guide their choices and connect them with resources that match
their needs.
For more information visit: http://www.veon.com.
CONTENT OF THE ATTACHMENTS
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|
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Attachment
A
|
VEON financial
schedules
|
22
|
|
|
|
Attachment
B
|
Debt
overview
|
27
|
|
|
|
Attachment
C
|
Customers
|
28
|
|
|
|
Attachment
D
|
Definitions
|
28
|
Attachment
E
|
Reconciliation
tables
|
29
|
|
Average rates and
guidance rates of functional currencies to USD
|
|
For more information on financial and operating data for
specific countries, please refer to the supplementary file
Factbook4Q2019.xls on VEON's website at
http://veon.com/Investor-relations/Reports--results/Results/.
ATTACHMENT D: DEFINITIONS
ARPU (Average Revenue Per User) measures the monthly average
revenue per mobile user. We generally calculate mobile ARPU by
dividing our mobile service revenue during the relevant period,
including data revenue, roaming revenue, MFS and interconnect
revenue, but excluding revenue from connection fees, sales of
handsets and accessories and other non-service revenue, by the
average number of our mobile customers during the period and
dividing by the number of months in that period.
Mobile data customers are mobile customers who have engaged in
revenue generating activity during the three months prior to the
measurement date as a result of activities including USB modem
Internet access using 2.5G/3G/4G/HSPA+ technologies.
Capital expenditures (capex) are purchases of new
equipment, new construction, upgrades, licenses, software, other
long-lived assets and related reasonable costs incurred prior to
intended use of the non-current asset, accounted at the earliest
event of advance payment or delivery. Long-lived assets acquired in
business combinations, are not included in capital
expenditures.
Capital expenditures (capex) exc. licenses is calculated as
capex, excluding purchases of new spectrum licenses
EBIT or Operating Profit is calculated as EBITDA plus
depreciation, amortization and impairment loss. Our management uses
EBIT as a supplemental performance measure and believes that it
provides useful information of earnings of the Company before
making accruals for financial income and expenses and net foreign
exchange (loss)/gain and others. Reconciliation of EBIT to net
income attributable to VEON Ltd., the most directly comparable IFRS
financial measure, is presented in the reconciliation tables
section in Attachment E below.
Adjusted EBITDA (called EBITDA in this document) is a non-IFRS
financial measure. VEON calculates Adjusted EBITDA as (loss)/profit
before interest, tax, depreciation, amortization, impairment, gain
/ loss on disposals of non-current assets, other non-operating
gains / losses and share of profit / loss of joint ventures and
associates Our Adjusted EBITDA may be used to evaluate our
performance against other telecommunications companies that provide
EBITDA.
Additionally, a limitation of EBITDA's use as a performance
measure is that it does not reflect the periodic costs of certain
capitalized tangible and intangible assets used in generating
revenue or the need to replace capital equipment over time.
Reconciliation of EBITDA to net income attributable to VEON Ltd.,
the most directly comparable IFRS financial measure, is presented
in the reconciliation tables section in Attachment E below.
EBITDA margin is calculated as EBITDA divided by total revenue,
expressed as a percentage.
Gross Debt is calculated as the sum of long-term notional debt
and short-term notional debt.
Equity free cash flow (excluding licenses) is a non-IFRS measure
and is defined as free cash flow from operating activities less
cash flow used in investing activities, excluding M&A
transactions, capex for licenses, inflow/outflow of deposits,
financial assets and other one-off items. Reconciliation to the
most directly comparable IFRS financial measure, is presented in
the reconciliation tables section in Attachment E below.
An FMC customer is a customer on a 1 month Active Broadband
Connection subscribing to a converged bundle consisting of at least
fixed internet subscription and at least 1 mobile SIM.
MFS (mobile financial services) is a variety of innovative
services, such as mobile commerce or m-commerce, that use a mobile
phone as the primary payment user interface and allow mobile
customers to conduct money transfers to pay for items such as goods
at an online store, utility payments, fines and state fees, loan
repayments, domestic and international remittances, mobile
insurance and tickets for air and rail travel, all via their mobile
phone.
Mobile customers are generally customers in the registered
customer base as at a given measurement date who engaged in a
mobile revenue generating activity at any time during the three
months prior to such measurement date. Such activity includes any
outgoing calls, customer fee accruals, debits related to service,
outgoing SMS and MMS, data transmission and receipt sessions, but
does not include incoming calls, SMS and MMS or abandoned calls.
Our total number of mobile customers also includes customers using
mobile internet service via USB modems and fixed-mobile convergence
("FMC").
Net debt is a non-IFRS financial measure and is calculated as
the sum of interest bearing long-term notional debt and short-term
notional debt minus cash and cash equivalents, long-term and
short-term deposits. The Company believes that net debt provides
useful information to investors because it shows the amount of
notional debt outstanding to be paid after using available cash and
cash equivalents and long-term and short-term deposits. Net debt
should not be considered in isolation as an alternative to
long-term debt and short-term debt, or any other measure of the
Company financial position.
Net foreign exchange (loss)/gain and others represents the sum
of Net foreign exchange (loss)/gain, VEON's share in net
(loss)/gain of associates and Other (expense)/income (primarily
(losses)/gains from derivative instruments) and is adjusted for
certain non-operating losses and gains mainly represented by
litigation provisions.
NPS (Net Promoter Score) is the methodology VEON uses to measure
customer satisfaction.
Organic growth in revenue and EBITDA are non-IFRS financial
measures that reflect changes in Revenue and EBITDA, excluding
foreign currency movements and other factors, such as businesses
under liquidation, disposals, mergers and acquisitions.
VEON's reportable segments are the following, which are
principally based on business activities in different geographical
areas: Russia, Pakistan, Algeria, Bangladesh, Ukraine, Uzbekistan, Kazakhstan and HQ based on the business
activities in different geographical areas.
Total revenue in this section is fully comparable with Total
operating revenue in our Management's Discussion and Analysis of
Financial Condition and Results of Operations" provided separately
on Form 6-K.
Please see link below for VEON's full FY19 Financial
Results:
PDF:
https://mma.prnewswire.com/media/1090594/VEON_Financial_Results.pdf
CONTACT INFORMATION
INVESTOR RELATIONS
Nik Kershaw
ir@veon.com
CORPORATE COMMUNICATIONS
Kieran Toohey
pr@veon.com
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SOURCE VEON Ltd