VEON Q3 Earnings Call Highlights

Key Points

• VEON reported Q3 revenue of $1.31 billion, up 17.2%, and EBITDA of $577 million, up 10.1%; net profit was $225 million versus a loss a year earlier. The company raised the lower end of its 2026 outlook to revenue growth of 16%–18% and EBITDA growth of 10%–12%.
• Digital services revenue jumped 46% to $355 million and made up 27% of group revenue, while the group EBITDA margin declined to 44.1% from 47% as digital services carry lower margins and Kazakhstan faced a tax increase. CEO Kaan Terzioğlu expects margins to improve over time.
• VEON generated $1.3 billion in operating cash flow in the first nine months and doubled its annual buyback commitment to at least $200 million. It also closed its OLX acquisition in Kazakhstan and agreed to take a controlling interest in Jungo TV and All Women’s Sports Network.

VEON NASDAQ: VEON raised the lower end of its 2026 revenue and earnings growth outlook after reporting double-digit gains in third-quarter sales and EBITDA, driven in part by its expanding digital services businesses.

The telecommunications and digital services company reported revenue of $1.31 billion, up 17.2% from a year earlier, and EBITDA of $577 million, up 10.1%. Net profit was $225 million, compared with a $127 million loss a year earlier.

VEON now expects full-year revenue growth of 16% to 18% and EBITDA growth of 10% to 12%. Its capital expenditure intensity target, excluding Ukraine, remains at 15% to 17% of revenue.

Group CEO Kaan Terzioğlu said connectivity provides the foundation for the company’s digital businesses, which include financial services, digital life and digital enterprise. Digital services accounted for 27% of group revenue in the quarter, he said.

Digital Growth and Margin Pressure

Digital services revenue rose 46% to $355 million, while digital EBITDA increased approximately 55% to $128 million, producing a 36% margin. By comparison, telecom and infrastructure revenue grew 9.2%, with an EBITDA margin of 47.2%.

VEON disclosed margins for its three digital businesses for the first time: 32.7% for financial services, 39.6% for digital life and 37.5% for digital enterprise.

Group EBITDA margin fell to 44.1% from 47% a year earlier. Group CFO Burak Özer attributed the decline partly to the growing contribution of digital services, which carry a lower margin than telecom and infrastructure, and to a value-added tax increase in Kazakhstan.

Terzioğlu said he expects group margins to improve from the current level, despite the growing contribution from digital services. He said Kazakhstan’s performance should benefit over time from price increases and the normalization of the effects of prior-year tax rebates. Özer said the country’s margin improved between the second and third quarters.

Pakistan led the company’s markets, with revenue up nearly 29% and EBITDA up 26%, according to Terzioğlu. Bangladesh revenue was broadly flat amid a soft economy and persistent energy outages, although he said it marked the fourth consecutive quarter of year-over-year growth.

Financial Services Expansion

VEON has brought its financial services assets together under VEON Digital Financial Group, which Terzioğlu said serves 60 million customers. In Pakistan, the business generated more than $400 million in revenue and nearly $50 million in profit during the first nine months of the year.

The Pakistan operation had more than 65 million registered accounts and 1 million active merchants. Its loan book totaled $486 million, including $166 million in nano-loans. Terzioğlu said the company issued more than 230,000 of the short-term loans per day, with disbursements exceeding $400 million during the quarter.

Nano-loan recoveries, measured to final outcome, reached 93.2%, up 1.7 percentage points, while the nonperforming loan ratio for term loans fell 2.3 points to 8.1%. Terzioğlu said he was comfortable with the recovery rate.

In Bangladesh, VEON recently launched the Mukto Pay digital payment service and received central bank approval for a digital banking license. Terzioğlu said the company aims to apply its Pakistan model there, including merchant acquisition, digital wallets and banking services.

Asked about funding for Bangladesh’s digital bank, Özer said the required capital would not be a three-digit million amount. Group Chief Corporate Development Officer Anand Ramachandran added that the investment could probably be staggered over time.

Cash Flow, Buybacks and Acquisitions

Operating cash flow rose 39.4% to $450 million in the third quarter and 46.9% to $1.3 billion for the first nine months. Quarterly free cash flow fell to $201 million from $303 million, though Özer said the prior-year figure included $230 million in asset disposal proceeds, compared with $61 million this year. Excluding those proceeds, free cash flow grew 91.8%, he said.

VEON ended September with $2.03 billion in cash, including $532 million in Pakistan banking deposits. Net debt excluding leases was $1.78 billion, and leverage stood at 1.05 times. Özer said the company was not considering refinancing at present and aims to keep average debt maturity above four years.

VEON has doubled its annual share buyback commitment to at least $200 million. Terzioğlu said the company had executed $200 million in buybacks year to date and canceled 1.5% of outstanding American depositary shares. Its current program covers 2.9 million ADSs, of which 1.5 million had been repurchased.

The company also announced the closing of its acquisition of OLX, a classified marketplace in Kazakhstan, and an agreement to take a controlling interest in Jungo TV and All Women’s Sports Network. Terzioğlu said part of the consideration for the latter deal would be settled in existing Kyivstar shares.

In Uzbekistan, Terzioğlu said the acquisition of Perfectum provides spectrum and a standalone 5G network that can support fixed wireless services. Özer said half the acquisition would be funded from headquarters cash and half through debt funded by operations. VEON did not provide an expected EBITDA contribution, saying it would be included in guidance for the following year.

VEON plans to discuss its longer-term strategy at a capital markets day in New York, which executives said would take place 10 days after the earnings call.

About VEON (NASDAQ:VEON)

VEON Ltd. is a global digital communications and services company that provides mobile connectivity, fixed broadband, and digital products to consumers and businesses. The company operates through a portfolio of local telecommunications brands, offering voice and messaging services, mobile data, broadband access, and related enterprise solutions.

VEON's principal operating brands include Kyivstar in Ukraine, Jazz in Pakistan, Banglalink in Bangladesh, and Beeline-branded businesses in Kazakhstan, Uzbekistan, and Kyrgyzstan.

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