VEON Ltd. — FY2023 Form 20-F
Reporting period: Year ended December 31, 2023; filed October 17, 2024. This is an audited annual report, not a quarterly filing. Financial statements are prepared under IFRS in U.S. dollars. VEON provides connectivity and digital services across Pakistan, Ukraine, Kazakhstan, Bangladesh, Uzbekistan and Kyrgyzstan; Russia is reported as a discontinued operation following its sale.
Financial and operating performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Total operating revenue | US$3.698bn | US$3.755bn | Down 1.5%; management attributed the decline primarily to local-currency depreciation. Service revenue was US$3.576bn versus US$3.600bn. |
| Operating profit | US$929m | US$1.163bn | Down 20.1%, reflecting lower revenue and higher HQ one-off expenses. |
| Profit before tax, continuing operations | US$559m | US$802m | Down 30.3%. |
| Profit, continuing operations | US$380m | US$733m | Income tax expense increased to US$179m from US$69m. |
| Adjusted EBITDA | US$1.612bn | US$1.747bn | Down 7.7%; non-IFRS measure. The company cited currency depreciation, energy costs, technical support, consulting and tax provision costs. |
| Adjusted EBITDA margin | 43.6% | 46.5% | Calculated as Adjusted EBITDA divided by total operating revenue. |
| Net loss for the period | US$2.450bn | US$9m | Driven mainly by the US$3.746bn loss on disposal of Russian operations, including US$3.414bn of accumulated currency translation losses recycled to profit or loss. |
| Operating cash flow, continuing operations | US$1.160bn | US$933m | Increase attributed to lower taxes paid, higher interest received and improved working capital. |
| Investing cash outflow, continuing operations | US$1.020bn | US$1.057bn | Includes US$766m of cash purchases of property, equipment and intangibles. Capex excluding licenses and right-of-use assets was US$649m. |
| Financing cash flow, continuing operations | US$(919)m | US$456m | Outflow reflected significant debt repayments and limited financing inflows. |
| Cash and cash equivalents | US$1.902bn | US$3.107bn | At year-end 2023; approximately US$1.3bn was held at HQ and US$0.6bn at operating companies. |
| Working capital | US$(426)m | US$(664)m | Negative, but improved year over year. |
| External bank loans and bonds | US$3.708bn | US$6.670bn | Principal outstanding at year-end; excludes lease liabilities, which were US$977m on the financial statements’ carrying-value basis. |
Segments and operating trends
- Revenue in reported U.S. dollars declined in Pakistan (13%), Ukraine (5%) and Bangladesh (1%); it grew in Kazakhstan (22%) and Uzbekistan (15%). Local-currency revenue increased across these markets, with translation effects weighing on reported results.
- Segment Adjusted EBITDA was US$502m in Pakistan, US$541m in Ukraine, US$421m in Kazakhstan, US$214m in Bangladesh and US$112m in Uzbekistan. The reported margins were 44.9%, 58.9%, 54.4%, 37.5% and 41.8%, respectively.
- Customer trends were mixed: Pakistan and Ukraine customers declined 4.2% and 3.6%; Kazakhstan and Bangladesh grew 4.7% and 7.4%; Uzbekistan was flat. Data usage and 4G adoption supported growth in several markets.
Material changes, unusual items and outlook
- Russia exit: The sale closed October 9, 2023 for stated consideration of RUB130bn, approximately US$1.294bn at closing. Consideration was settled largely through debt securities rather than cash. The sale significantly reduced reported debt but produced the large discontinued-operations loss noted above.
- Bangladesh towers: Banglalink sold 2,012 towers for approximately US$97m and entered into a 12-year leaseback, recognizing a US$34m gain and additional lease liabilities. Cash proceeds were received in January 2024.
- Ukraine cyberattack: A December 2023 attack temporarily disrupted Kyivstar services, which were restored by December 19. VEON reported no material consolidated impact for FY2023; customer-retention offers reduced first-half 2024 revenue by US$46m. The company said the retention program ended in that half and expected no further impact from those offers.
- Outlook: No specific consolidated revenue or earnings guidance is provided in the supplied filing text. Management described continued investment in high-speed data networks and 4G, while prioritizing liquidity and maintenance spending. It aspired to keep 2024 capex intensity at 18–19% and said more discretionary investments could be deferred.
- Going concern and Ukraine: The financial statements use a going-concern basis, but the auditor included an emphasis paragraph stating that material uncertainty creates substantial doubt about VEON’s ability to continue as a going concern for at least 12 months after issuance. Risks include war-related damage, sanctions, restricted cash transfers, possible nationalization or loss of control, financing access and covenant or equity pressures. Ukraine accounted for about 25% of FY2023 revenue.
- Bangladesh impairment risk: After political unrest and network outages in July–August 2024, management said a material impairment charge to the Bangladesh cash-generating unit was likely, but had not finalized an estimate. This is a subsequent-period risk, not a FY2023 impairment recognized in the statements.
- Other risks and contingencies: Bangladesh’s telecom regulator issued an audit claim of about US$76m, including interest; the company reported paying principal amounts and continuing discussions over remaining elements, including interest. The filing also describes tax, regulatory and legal proceedings whose outcomes are uncertain.
- Controls and audit: Management and the auditor concluded internal control over financial reporting was effective at December 31, 2023. A prior material weakness concerning accounting for business disposals was reported as remediated. The auditor issued an unqualified opinion on the financial statements.
Important facts for investors to verify
- Review the going-concern disclosure, liquidity forecasts, debt maturities and the assumptions behind management’s mitigation plans, particularly given restricted upstreaming of cash from Ukraine.
- Track developments affecting Kyivstar’s frozen corporate rights, Ukraine-related sanctions and nationalization risks, and whether VEON continues to consolidate the business.
- Check the finalized Bangladesh impairment assessment and any effects on deferred tax assets in the subsequent interim filing.
- Reconcile the Russia disposal accounting and translation-reserve recycling, and distinguish the non-cash sale consideration from cash available to service debt.
- Monitor reported results alongside local-currency growth, foreign-exchange movements and the definition and reconciliation of non-IFRS Adjusted EBITDA and capex measures.
- Verify the status and potential cash impact of the Bangladesh regulatory audit and other material tax or legal claims.
- Consider subsequent events disclosed in this annual report, including debt exchanges and repayment, proposed Euronext Amsterdam delisting and share buyback, share issuance and dilution, and the planned headquarters move to Dubai.