Executive Summary / Key Takeaways

• Digital Operator Transformation: VEON is rapidly evolving beyond traditional telecom into a "services company with a telco license," with direct digital revenues surging 50.2% year-on-year in Q1 2025, now comprising 14.3% of total revenue. This shift is driven by a robust portfolio of financial services, entertainment, healthcare, and AI-powered solutions.
• Robust Financial Performance & Efficiency: The company delivered strong Q1 2025 results, with revenues up 8.9% (USD) and EBITDA up 13.7% (USD), outpacing inflation and nominal GDP growth in local currency terms. EBITDA margins expanded to 42.8%, reflecting disciplined cost management and operating leverage.
• Kyivstar Nasdaq Listing Catalyst: The planned Nasdaq listing of Kyivstar, expected in Q3 2025, represents a significant value crystallization event, positioning it as the first pure-play Ukrainian investment opportunity in the U.S. and enhancing VEON's overall visibility.
• Asset-Light Strategy & Deleveraging: VEON's commitment to an asset-light model, exemplified by the recent Engro Corporation tower deal in Pakistan (valued over $550 million), is strengthening its balance sheet and improving liquidity, with net debt-to-EBITDA (ex-leases) improving to 1.2x in Q1 2025.
• Underserved Market Opportunity: Operating in high-growth frontier markets with large, underserved populations provides VEON a unique advantage in acquiring customers at low cost and efficiently distributing digital services, driving sustained growth and wallet share gains.

The Frontier of Digital Transformation

VEON Ltd. is not merely a telecommunications provider; it is a digital operator strategically positioned in high-growth frontier markets across Pakistan, Ukraine, Kazakhstan, Uzbekistan, and Bangladesh. This transformation from its origins as VimpelCom Ltd. in 1992 has culminated in a "leaner, faster, and stronger" entity, particularly following its decisive exit from the Russia business. This strategic pivot has fundamentally reshaped its financial profile, significantly reducing its net debt-to-EBITDA ratio from over 3 times to a healthy 1.2 times as of Q1 2025, demonstrating a remarkable deleveraging.

The company's overarching strategy, dubbed "Digital Operator 1440" (DO1440), aims to integrate seamlessly into customers' daily lives across 1,440 minutes of the day. This involves leveraging its core telecom infrastructure to deliver a burgeoning ecosystem of digital services. In these underserved markets, where traditional financial and entertainment services are often limited, VEON's approach addresses unmet demand, allowing it to capture a larger share of consumer spending. This strategy is further bolstered by a focus on "Augmented Intelligence 1440" (AI1440), aiming to be the premier AI partner for its customers by developing localized, native-language AI solutions.

Technological Edge and Innovation

VEON's competitive advantage is deeply rooted in its technological differentiation and relentless innovation. While competitors like Vodafone (VOD) and Telefónica (TEF) focus on mature markets or 5G rollouts, VEON has strategically invested in enhancing its 4G/4.9G networks. In Kazakhstan, for instance, Beeline's 4.9G rollout, incorporating virtualization of the core, massive MIMO, and carrier aggregation, has enabled it to effectively compete with and even gain market share against operators deploying 5G services. This approach ensures robust service quality without the higher capital intensity often associated with full 5G deployments in these markets.

The company's commitment to Augmented Intelligence (AI) is a significant differentiator. Its 900-person technology company, QazCode in Kazakhstan, is at the forefront of this effort. QazCode developed KazLLM, an open-source Kazakh-language large language model, in collaboration with the GSMA and Barcelona Supercomputing Center. This foundational work has already led to practical applications like the "AI Tutor" for Kazakh students and an MoU with Seekr to develop AI-powered B2B solutions. In Ukraine, the Helsi healthcare platform leverages an AI engine to help users analyze lab test results and inform on potential health risks, serving 33,000 subscribers to its AI-based service. Beeline Uzbekistan is also deploying predictive AI for enhanced customer experience. These initiatives are designed to create "augmented intelligent-based language-specific models in Panjabi, Urdu, Bengali, Hasak, Uzbek, and Ukrainian," offering unmatched, locally relevant solutions that deepen customer engagement and drive higher ARPU.

Strategic Pillars and Operational Excellence

VEON's DO1440 strategy is manifesting through several key operational achievements:

• Multiplay Customer Growth: A cornerstone of the strategy, multiplay customers (those using at least one digital service in addition to voice and data) generate 3.7 times the ARPU of voice-only subscribers. In Q1 2025, 54% of consumer revenues came from multiplay customers, a 15% year-on-year increase, demonstrating the compounding effect of this engagement model.
• Surging Direct Digital Revenues: These revenues, derived from financial services, entertainment, healthcare, and enterprise solutions, are a primary growth engine. In Q1 2025, direct digital revenues soared 50.2% year-on-year to $147 million, now representing 14.3% of total revenues, up from 10.4% a year ago. Management anticipates a consistent 1 percentage point increase in this penetration every quarter.
• Financial Services Leadership: JazzCash in Pakistan is a standout, with 20.6 million users and issuing 141,000 digital loans daily, a 74% year-on-year increase. Its Gross Transaction Value (GTV) surged 60% year-on-year in Q1 2025, representing an impressive 10.7% of Pakistan's GDP. Similarly, Simply in Kazakhstan saw its user base jump 140% to 3.3 million, and BeePul in Uzbekistan grew 150% to 2.3 million users. VEON is actively exploring introducing these services in Bangladesh and Ukraine.
• Expanding Digital Ecosystem: The company's entertainment platforms like Kyivstar TV (2 million users, up 35% YoY), Tamasha in Pakistan, and Toffee in Bangladesh capitalize on demand for local content, often coexisting complementarily with global players like Netflix (NFLX) by offering local relevance and accessible payment methods. Healthcare platforms like Ukraine's Helsi (28 million registered patients, 74% penetration) and Pakistan's FikrFree (1.4 million users, 1.2 million active insurance policies) address critical market needs.
• Super Apps and Premium Brands: VEON's super apps, such as Hambi in Uzbekistan and Janymda in Kazakhstan, are becoming integrated digital hubs. Newer "premium digital brands" like ROX in Pakistan and IZI in Kazakhstan act as digital-first operators, attracting non-Beeline customers and generating significantly higher ARPU (e.g., IZI's ARPU is 1.9x higher than Beeline's average).
• Strategic Acquisitions: The acquisition of Uklon, Ukraine's leading ride-hailing and delivery platform, for $160 million (97% stake) closed in April 2025. Uklon is a rare EBITDA-positive, cash-generative ride-hailing business with a 49% CAGR over the last four years, and VEON plans to replicate its success in other markets.
• Asset-Light Strategy: The successful closure of the Engro Corporation partnership in Pakistan in June 2025, involving a $188 million cash payment and a $375 million debt guarantee, underscores VEON's commitment to unlocking infrastructure value. The Ukraine Tower Corporation, owning nearly 8,000 towers, operates separately and is not part of the Kyivstar listing, further emphasizing this strategic direction.

Financial Performance and Liquidity Strength

VEON's financial performance reflects its strategic execution. In Q1 2025, total revenues surpassed $1 billion, growing 8.9% year-on-year in reported U.S. dollar terms. On an underlying local currency basis, revenue growth was an even more impressive 12.9%, outpacing the weighted average inflation rate of 7.6% across its markets. EBITDA rose 13.7% in U.S. dollar terms, with underlying local currency growth of 10.4%, leading to an EBITDA margin expansion of 1.8 percentage points to 42.8%. This strong profitability is a testament to effective pricing strategies and disciplined cost management.

For the full year 2024, VEON reported $4 billion in revenue (up 8.3% YoY USD) and $1.7 billion in EBITDA (up 4.9% YoY USD). Underlying local currency growth rates were 14.6% for revenue and 12% for EBITDA, surpassing both inflation and nominal GDP growth. While CapEx intensity was 20.6% in 2024, primarily due to essential network resilience investments in Ukraine amidst the conflict (e.g., thousands of generators and batteries), it would have been within the 18-19% guidance excluding Ukraine.

The company's liquidity position is robust. As of March 31, 2025, VEON held $1.8 billion in cash, with $662 million at the headquarters level. It successfully repaid $472 million of bonds in April 2025, with only scheduled June 2025 maturities remaining before 2027. A $210 million syndicated term loan was also secured and drawn down in early April 2025. This proactive debt management and asset-light strategy have significantly strengthened the balance sheet, with the net debt-to-EBITDA ratio (excluding leases) improving to 1.2x.

Competitive Positioning and Outlook

VEON operates in a dynamic competitive landscape, facing both traditional telecom operators and emerging digital service providers. Compared to global giants like Vodafone and Telefónica, VEON's focus on high-growth frontier markets provides a distinct advantage. While these larger players may have broader geographic reach or more mature 5G networks, VEON's strategy of deep localization and digital innovation allows it to capture significant wallet share. For instance, VEON's Q1 2025 digital revenue growth of 50.2% significantly outpaces the overall revenue growth rates of its peers, highlighting its agility and market relevance.

Financially, VEON's TTM EBITDA Margin of 47.25% is notably strong, often exceeding that of its larger, more diversified competitors like Vodafone (implied ~25% operating margin), Telefónica (18%), and MTN Group (MTN) (20%). Its TTM Net Profit Margin of 11.16% also stands out positively against Vodafone (-11%) and Telefónica (-0.12%).

While its Debt/Equity ratio of 3.39 is higher than Vodafone's 1.01, it is comparable to or better than MTN (4.21) and Telefónica (2.33), reflecting its improving financial health post-Russia exit. Furthermore, VEON's TTM P/E ratio of 8.31 and P/S ratio of 0.93 appear attractive when compared to MTN's P/E of 29.91 and P/S of 2.39, suggesting potential undervaluation given its growth trajectory.

The company's ability to leverage its telecom license for low customer acquisition costs and efficient digital service distribution is a powerful moat against pure-play digital competitors. Its 4.9G network performance, coupled with localized AI development, positions it strongly against 5G rivals in its markets. The planned Nasdaq listing of Kyivstar, valued at $2.3 billion, is a pivotal event. It will not only enhance Kyivstar's visibility as the "first pure-play Ukrainian company to be publicly listed in a U.S. stock exchange" but also provide a unique investment vehicle for those seeking exposure to Ukraine's recovery and growth potential. VEON will retain a minimum of 80% ownership post-listing, ensuring continued participation in Kyivstar's success.

Looking ahead, VEON has reaffirmed its full-year 2025 outlook, projecting 12% to 14% underlying local currency revenue growth and a higher 13% to 15% underlying EBITDA growth, assuming an 8.2% weighted average inflation rate. CapEx intensity is expected to be in the 17% to 19% range, with a potential reduction to 16% post-2025 as 4G penetration targets near completion. While geopolitical risks in Ukraine and Bangladesh remain, VEON's demonstrated resilience, strategic investments in network robustness, and agile operational adjustments mitigate these challenges.

Conclusion

VEON's journey from a traditional telecom giant to a dynamic digital operator in frontier markets presents a compelling investment narrative. The company's strategic focus on its DO1440 and AI1440 initiatives is yielding tangible results, evidenced by robust financial performance, surging digital revenues, and expanding customer engagement. Its asset-light strategy and disciplined debt management are strengthening its financial foundation, while the impending Nasdaq listing of Kyivstar offers a significant catalyst for value recognition.

Despite operating in markets with inherent geopolitical and macroeconomic complexities, VEON's ability to consistently outpace inflation and nominal GDP growth, coupled with its unique technological advantages in localized digital services and AI, positions it for sustained expansion. The company's attractive valuation multiples relative to its strong growth and profitability underscore the potential for a re-rating as its digital transformation gains further traction and its strategic initiatives, particularly the Kyivstar listing, come to fruition. Investors seeking exposure to high-growth emerging markets with a differentiated digital and AI-driven business model should take a closer look at VEON.