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.
Revenue and Digital Growth
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.
Cash Flow, Debt and Share Repurchases
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 maturities ahead of schedule and extended average headquarters debt maturity beyond four years.
VEON also said it would establish an ongoing share-cancellation commitment. The company has repurchased $183 million of shares since August 2024 and now plans to cancel at least $100 million of shares annually beginning this year.
“Returning capital to shareholders is now part of our long-term financial framework,” Terzioglu said.
Higher Outlook and Market Developments
Management raised its full-year guidance, now forecasting revenue growth of 15% to 18% and EBITDA growth of 9% to 12%. Its capital expenditure outlook was unchanged.
Terzioglu said the upgraded outlook reflects digital growth and margins that have exceeded the company’s prior expectations, along with continued operating momentum. Ozer added that management had previously been monitoring the potential macroeconomic effects of developments in the Middle East and oil prices, but said conditions had developed more favorably than anticipated.
In Pakistan, Terzioglu said JazzCash had grown into a financial ecosystem with 60 million monthly bank accounts, 27 million active users, 225,000 nano loans issued daily, and 1.6 million merchants. He said the platform transacts close to 16% of Pakistan’s GDP. The company is working with authorities in Bangladesh to launch payment services and eventually a broader financial-services ecosystem, with an expected start in the third quarter.
Management said it is also pursuing digital banking licenses across its markets and has existing payment solutions and digital wallets in Uzbekistan and Kazakhstan. In Ukraine, VEON is assessing regulatory and partnership options for financial services.
Satellite Connectivity and Country Performance
Terzioglu said VEON views satellite connectivity through its relationship with SpaceX’s Starlink as complementary to terrestrial networks, particularly in areas affected by war, landmines or energy disruptions. More than 6 million people in Ukraine used direct-to-device satellite messaging and light-data capabilities during the last quarter, he said.
The company is expanding those capabilities to Kazakhstan and Bangladesh and could consider other markets, including Pakistan and Uzbekistan, subject to regulatory approval. VEON does not have exclusivity with Starlink, management said.
In Bangladesh, Terzioglu said energy outages in April and May contributed to a 15% reduction in nationwide data consumption, but VEON continued to grow. He said digital revenue benefited from the company’s World Cup broadcasting offering through its Toffee platform, alongside pricing adjustments.
In Kazakhstan, management cited a six-percentage-point increase in value-added tax that was not fully reflected in pricing, as well as accounting effects related to bundled handset and service packages, as factors affecting margins. Terzioglu characterized the margin pressure as temporary and said Kazakhstan remains VEON’s most digitally advanced market.
VEON plans to provide a longer-term strategy update at its Capital Markets Day in New York on Nov. 16.
About VEON (NASDAQ:VEON)
VEON Ltd NASDAQ: VEON is a global telecommunications and digital services provider headquartered in Amsterdam, the Netherlands. Originally founded as VimpelCom in Russia in 1992, the company rebranded to VEON in 2017 to reflect its transformation into a technology-driven operator. VEON operates as a holding company with direct investments in mobile and internet service providers across multiple emerging markets, delivering voice, data and digital services to individual and enterprise customers.
Through its operating subsidiaries, VEON offers a broad portfolio that includes 2G/3G/4G mobile access, fixed broadband, digital lifestyle applications and mobile financial services.
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