VEON Q2 Earnings Call Highlights

VEON raised its full-year outlook to 15%–18% revenue growth and 9%–12% EBITDA growth after second-quarter revenue increased 17% year over year to $1.27 billion across all five markets. Digital services remained the main growth engine, with revenue up 53.6% to $342 million and digital EBITDA up 66.2% to $123 million; digital services now represent nearly 27% of group revenue. Financial flexibility improved as operating cash flow rose 238% to $463 million, leverage remained low at 1.1 times on a lease-adjusted basis, and VEON committed to cancel at least $100 million of shares annually beginning this year. VEON NASDAQ: VEON raised its full-year outlook after reporting second-quarter revenue growth across all five of its markets, supported by continued expansion in digital services and stronger cash generation. Group CEO Kaan Terzioglu said the company is positioning itself as a digital ecosystem built on its telecommunications networks, with financial services, consumer digital platforms and enterprise offerings serving as its three growth engines. VEON’s networks connect more than 150 million customers, while its digital platforms reach more than 227 million customers, according to management. “Connectivity is not the destination. It is our foundation,” Terzioglu said, describing the company’s strategy as a “flywheel” in which connectivity drives customer engagement, digital services deepen those relationships, and resulting cash flow supports further investment. Chief Financial Officer Burak Ozer said second-quarter revenue rose 17% year over year to $1.27 billion, while first-half revenue increased 17% to $2.47 billion. The company said growth was recorded in each of its five operating markets. Digital revenue rose 53.6% to $342 million in the second quarter, reflecting broader adoption across VEON’s platforms and products as well as recent acquisitions. Digital services accounted for almost 27% of total revenue, according to Terzioglu. Digital EBITDA increased 66.2% to $123 million. Ozer said the segment’s lower capital intensity is supporting cash conversion as it expands. During the call, management said digital services had a 36% margin and a capital-expenditure-to-revenue ratio of about 7%, compared with telecom operations that have a roughly 45% margin but require about 20% of revenue for capital expenditures. Total EBITDA was $552 million, up 6.2% from a year earlier, representing a 43.4% margin. First-half EBITDA grew 11.5% to $1.07 billion. Telecom and infrastructure EBITDA totaled $428 million, down 3.8% year over year, a comparison affected by a Bangladesh provision release in the prior-year period, management said. Terzioglu said reported EBITDA and profit comparisons were also affected by the prior-year gain from the Pakistan tower transaction and a non-cash fair-value adjustment on Kyivstar Group warrants in the current quarter. On an adjusted basis, he said revenue increased 18%, EBITDA grew more than 15%, and like-for-like earnings per share rose 88% year over year. Operating cash flow increased 238% in the quarter to $463 million, Ozer said, and rose 51% for the first half to $860 million. Equity free cash flow after leases and licenses increased 47.5% in the first half to $320 million. Second-quarter equity free cash flow was affected by tax prepayments in Pakistan that management said would not recur. VEON ended the quarter with $2.2 billion in cash, including $468 million held at headquarters. Net debt excluding leases was $1.8 billion, while lease-adjusted leverage stood at 1.1 times. The company completed a $1.4 billion bond offering during the quarter, which management said substantially addressed its 2027 maturiti...