VEON achieves cost efficiency improvements in operations

VEON has reported drop in revenue during the first quarter of 2019, while achieving cost efficiency in its operations.
VEON revenue Q1 2019The 5.6 percent dip in revenue to $2.1 billion was driven by currency headwinds of $291 million – despite good operational performance.

Organic revenue increased 7.4 percent as a result of revenue growth in Pakistan, Ukraine, Bangladesh and Russia.

VEON has reported revenue of $1,048 million in Russia, $362 million in Pakistan, $192 million in Algeria, $134 million in Bangladesh, $188 million in Ukraine and $64 million in Uzbekistan.

Mobile customers slightly increased to 211 million with customer growth in Pakistan, Algeria and Bangladesh. VEON lost customers in Russia and Uzbekistan.

Mobile data revenue of VEON increased 26.4 percent — with Ukraine (+83 percent), Pakistan (+94 percent) and Bangladesh (+36 percent) delivering large increases year on year following investment in 4G/LTE networks.

VEON’s EBITDA increased 37.3 percent to $1,172 million, primarily due to the exceptional income of $350 million related to the revised arrangement with Ericsson.

Cost intensity improved 1.9 percentage points due to lower service costs in Russia and Ukraine and the early impact of other cost reduction initiatives across the Group’s operating companies.

VEON aims to reduce cost intensity ratio by at least 1 percentage point organically per annum between 2019 and 2021, from 61.8 percent in FY 2018.

Efficiency initiatives are focused on service costs and technology, commercial, general and administrative expenses and were expected to be visible starting from the second half of 2019.

The main contributor to cost intensity improvement for 2019 is expected to be reduction in VEON’s corporate costs. Cost intensity is defined as service costs plus selling, general and administrative costs less other revenue divided by total service revenue.

Capex of VEON reached $444 million in Q1 2019 as compared with $355 million in Q1 2018.

VEON Russia’s Capex excluding licenses increased by 66.1 percent, as a result of increased network investments and investments related to the Yarovaya law.

Beeline made investment in network development to ensure best quality infrastructure that can integrate new technologies.

Jazz Pakistan’s Capex slightly decreased to PKR 7.1 billion. 3G coverage reached more than 368 cities while 4G coverage reached 184 cities in Pakistan. Population coverage of Jazz’s 3G and 4G/LTE networks was 52 percent and 39 percent respectively.

VEON Algeria’s 4G / LTE services covered 28 wilayas and close to 27 percent of Algeria’s population, while its 3G network covered all 48 wilayas and approximately 74 percent of Algeria’s population.

Capex of VEON Algeria was DZD 2.1 billion, representing 30.8 percent increase due to an acceleration of 4G/LTE roll-out activity.

VEON Bangladesh’s Capex decreased 74.4 percent to BDT 1.2 billion aimed at improving network resilience and by a temporary slowdown of sites rollout in Q1 2019 triggered by the new telecommunication infrastructure regulation.

3G network population coverage in Bangladesh was approximately 72 percent. The roll-out of 4G/LTE is in progress and the service, which was launched in February 2018, covered a population of over 18 percent.

Ukraine Kyivstar’s Capex increased 15.7 percent to UAH 795 million. Kyivstar continued to focus on 3G network improvement and further 4G/LTE roll-out.

Uzbekistan Unitel’s Capex raised to UZS 207 billion, due to better phasing of Capex, with a larger part of network investments during Q1 2019 and accelerated network roll out. The company invested in its data networks, improving 4G/LTE coverage to 24.5 percent and increasing the number of nationwide 3G sites by 11 percent.