8-K: Cohen Circle Acquisition Corp. I to Merge with Kyivstar, Bringing First Pure-Play Ukrainian Investment Opportunity to Nasdaq

Cohen Circle Acquisition Corp. I has filed an updated investor presentation in connection with its previously announced business combination with Kyivstar Group, aiming to list the leading Ukrainian digital operator on Nasdaq as the first pure-play Ukrainian investment opportunity in the U.S.

Summary

• Cohen Circle Acquisition Corp. I (the SPAC) has entered into a business combination agreement with Kyivstar Group, a subsidiary of VEON Ltd., with the intent to list Kyivstar as a publicly traded entity (PubCo) on Nasdaq.
• Kyivstar is positioned as the leading digital operator in Ukraine, holding the #1 market share in mobile communication with 23 million subscribers (47% market share in 2024) and #1 in fixed broadband with over 1.1 million subscribers (14% market share in 2024).
• The company reported robust financial performance with LTM Q1 2025 Adjusted EBITDA of $562 million and an Adjusted EBITDA margin of 57%, on total operating revenues of $988 million.
• Kyivstar maintains a strong balance sheet with $489 million in cash and cash equivalents as of Q1 2025, with no external debt at the Kyivstar entity itself.
• A key strategic move includes the acquisition of a 97% stake in Uklon, Ukraine's leading ride-hailing and delivery platform, for $155 million, which generated $67 million in revenue in 2024 and grew at a 29% CAGR from 2021-2024.
• The proposed transaction values Kyivstar at 3.7x Q125 LTM Adjusted EBITDA, which represents a significant discount compared to the median EV/EBITDA of 7.1x for global peers and 6.5x for EMEA/APAC single-country peers.
• Post-closing, VEON Ltd. is expected to retain an 87.2% ownership interest in the equity of PubCo, with public shareholders holding 10.5% and the sponsor 2.3%.
• Kyivstar and VEON have a joint intention to invest US$1 billion in Ukraine from 2023-2027, focusing on network development, roaming, and M&A.
• The company's financials for 2023 and 2024 were impacted by a December 2023 cybersecurity attack and subsequent customer appreciation program, resulting in an estimated negative impact of UAH 0.8 billion ($23 million) on 2023 revenue and UAH 1.7 billion ($46 million) on 2024 revenue.

Sentiment

Score: 8

Explanation: The document presents a strong financial profile for Kyivstar, a leading market position, and a clear growth strategy, particularly in digital services. The proposed valuation is significantly discounted compared to peers, suggesting an attractive investment opportunity. While significant risks related to the war in Ukraine are acknowledged, the company's resilience, strong management, and commitment to future investment in Ukraine are highlighted.

Positives

• Kyivstar holds leading market positions as the #1 mobile operator and #1 fixed broadband provider in Ukraine, demonstrating strong market dominance.
• The company exhibits a resilient financial profile with high profitability, evidenced by a 57% Adjusted EBITDA margin and $562 million in Adjusted EBITDA for LTM Q1 2025.
• Kyivstar maintains a strong balance sheet with $489 million in cash and cash equivalents as of Q1 2025 and no external debt, providing significant financial flexibility.
• The strategic acquisition of Uklon, Ukraine's leading ride-hailing and delivery platform, for $155 million expands Kyivstar's digital services portfolio and offers significant cross-selling opportunities.
• The transaction is proposed at an attractive valuation of 3.7x Q125 LTM Adjusted EBITDA, representing a substantial discount compared to the median of 7.1x for global peers and 6.5x for EMEA/APAC single-country peers.
• Kyivstar is expected to be the only pure-play Ukrainian investment opportunity publicly listed in the U.S., offering unique scarcity value to investors.
• There is a joint commitment from Kyivstar and VEON to invest US$1 billion in Ukraine from 2023-2027, signaling confidence in future growth and national recovery.
• The company has a world-class management team with a proven track record of resilience and robust governance, operating under Sarbanes-Oxley Act standards as a VEON subsidiary.
• Employee engagement remains high at 86% in 2024, even amidst the ongoing war, indicating a strong and motivated workforce.

Negatives

• The ongoing war in Ukraine has led to a significant loss of subscribers, with up to 3.1 million subscribers lost by December 2024 compared to January 2022, primarily due to migration and loss of territories.
• Operating costs have increased due to the war, notably surging electricity prices by 28.1% in 2023 and 27.3% in 2024.
• The December 2023 cyberattack and subsequent customer appreciation program had a material negative financial impact, estimated at UAH 0.8 billion ($23 million) on 2023 revenue and UAH 1.7 billion ($46 million) on 2024 revenue.
• Ukraine's average monthly ARPU of $3.0 in 2024 is considerably lower than the Central and Eastern European average of $10.7, reflecting a challenging economic environment and lower purchasing power.
• The company's independent auditors included a going concern emphasis paragraph in their opinion due to the effects of the ongoing war in Ukraine.

Risks

• Network infrastructure, equipment, systems, and other assets are subject to disruption, damage, and failure as a result of the war in Ukraine.
• The company may incur substantial additional operating costs arising from the war.
• There is a risk of nationalization or confiscation of operations and assets.
• The company has suffered reputational harm as a result of the ongoing war in Ukraine.
• Changes in customer demand due to migration and population shifts may adversely affect the business.
• Operating in a highly competitive market may lead to difficulties in expanding the customer base or retaining existing customers.
• Investing in frontier markets like Ukraine is subject to greater political, legal, and economic risks.
• The company may be unable to keep pace with technological changes and evolving industry standards.
• Inability to secure necessary spectrum or licenses, and high acquisition/deployment costs for 5G, could adversely affect service quality and increase expenses.
• The telecommunications industry is highly capital intensive, requiring substantial and ongoing expenditures.
• The company may be unable to raise additional capital, or only at significantly increased costs.
• Indebtedness and debt service obligations could decrease cash flow.
• Exposure to cyber-attacks, including the 2023 cyber-attack, may lead to compromised services, data leaks, or loss of customer confidence.
• Foreign currency exchange loss, fluctuation, and translation risks are significant, especially due to the ongoing war.
• Revenue performance can be unpredictable as a large majority of customers do not have long-term fixed contracts.
• Strategic partnerships and relationships carry inherent business risks.
• Inability to contract with suppliers of telecommunications equipment due to sanctions or other restrictions on providing services to businesses operating in Ukraine.
• Dependence on senior management, board of directors, and highly skilled personnel, with risks if key personnel cannot be retained or motivated.
• Core growth strategies of expanding digital offerings and investing in 4G connectivity may not be successful.
• The success of the business depends on the ability to implement strategic initiatives and integrate acquired businesses; failure could prevent expected benefits.
• Dependence on third parties for certain services, equipment, infrastructure, and other products.
• Ability to profitably provide telecommunications services depends on interconnection agreements and access to third-party infrastructure, over which there is no direct control.
• Loss of important intellectual property rights, as well as third-party claims of infringement, could significantly harm the business.
• Insurance coverage, customer indemnifications, or other liability protections may be unavailable or inadequate.
• The telecommunications industry is highly regulated, and operating in an uncertain judicial and regulatory environment may result in unanticipated outcomes.
• Violations of and changes to applicable sanctions and embargo laws, including export control restrictions, may harm the business.
• Subject to tax claims and repeated tax audits.
• Changes in tax treaties, laws, rules, or interpretations could harm the business.
• Changes in regulatory requirements in banking and other financial systems and currency control restrict activities.
• Laws restricting foreign investment could materially harm the business.
• New or proposed changes to laws or new interpretations of existing laws may harm the business.
• Inability to detect and prevent fraud or other misconduct by employees, joint venture partners, or third parties.
• Subject to anti-corruption laws.
• Collection and processing of sensitive personal data subject to evolving data privacy laws and heightened regulatory obligations.
• Involvement in legal disputes and litigation with regulators, competitors, and third parties.
• Licenses are granted for specific periods and may be suspended, revoked, or not extended/replaced upon expiration.
• It may not be possible to procure in a timely manner, or at all, the permissions and registrations required for base stations.
• Business may be adversely impacted by work stoppages and other labor matters, including mobilization.
• Adoption of new accounting standards and regulatory reviews could affect reported results and financial position.

Future Outlook

Kyivstar aims to deepen mobile market leadership and significantly expand digital services through organic growth and strategic acquisitions, leveraging its loyal customer base. The company, along with VEON, intends to invest US$1 billion in Ukraine from 2023-2027, focusing on network development, roaming, and M&A, anticipating growth with Ukraine's economic recovery and increased digital services penetration.

Management Comments

• "Kyivstar Group will be the only pure-play Ukrainian investment opportunity to be publicly listed in the U.S."
• "Kyivstar has operated with strong governance as a subsidiary of Nasdaq-listed VEON since 1996."
• "Kyivstar and VEON joint intention to invest US$1bn in Ukraine from 2023-2027."
• "Q125 financial performance on the back of continuing war reflects Kyivstar's superior positioning."

Industry Context

The telecommunications industry in Ukraine is characterized by a highly fragmented fixed broadband market, presenting significant consolidation opportunities for dominant players like Kyivstar. Kyivstar's strategic expansion into digital services, including ride-hailing (Uklon) and e-health (Helsi), aligns with a broader global trend of telecom operators diversifying into adjacent digital ecosystems to enhance ARPU and customer stickiness. Operating in a frontier market heavily impacted by geopolitical conflict, Kyivstar demonstrates resilience and positions itself for growth tied to the country's anticipated economic recovery.

Comparison to Industry Standards

• Kyivstar's transaction valuation at 3.7x Q125 LTM Adjusted EBITDA is significantly lower than the median EV/EBITDA of 7.1x for global peers and 6.5x for EMEA/APAC single-country peers with leading market positions, indicating a substantial discount.
• Kyivstar's LTM Q1 2025 Adjusted EBITDA margin of 57% is robust and compares favorably to many European and APAC telecom operators, demonstrating strong operational efficiency despite challenging market conditions.
• Ukraine's average monthly ARPU of $3.0 (2024) is considerably lower than the Central and Eastern European average of $10.7, highlighting a significant potential for ARPU growth as the Ukrainian economy recovers and digital services penetration increases.
• The acquisition of Uklon, a leading local ride-hailing and delivery platform, mirrors strategies by global telecom players to build digital ecosystems, with Uklon's 29% revenue CAGR (2021-2024) demonstrating strong growth for a regional player.

Corporate Governance

Legal Proceedings

• The outcome of any legal proceedings that may be instituted against the Company, Kyivstar or VEON, any of its subsidiaries or others following the announcement of the Business Combination.
• The company is, and may in the future be, involved in, associated with, or otherwise subject to legal liability in connection with disputes and litigation with regulators, competitors and third parties.

Related Party Transactions

• Loan receivable from VEON Amsterdam and Receivable from VEON Amsterdam B.V. are disclosed in the financial statements.
• Loans received from subsidiaries of the Parent are listed under debt in the financial information.
• The Sources & Uses table details VEON rollover equity of $1,972 million and secondary proceeds to VEON of $198 million, indicating significant financial dealings with the parent company.
• Cash at VEON Holdings retained in accordance with the demerger proposal ($10 million) and cash at VEON Holdings to repay 2025 Notes ($213 million as of Q1 2025) are specified in the cash reconciliation.

Stakeholder Impact

• **Shareholders (Cohen Circle):** Presented with an opportunity to invest in a leading Ukrainian digital operator at a significantly discounted valuation, with potential for substantial returns if the business combination is successful and Ukraine's economy recovers, though subject to geopolitical risks.
• **Shareholders (VEON):** Will retain a substantial 87.2% ownership in PubCo, allowing continued participation in Kyivstar's growth while potentially de-risking its direct exposure to the Ukrainian market.
• **Employees:** High employee engagement (86% in 2024) despite war conditions suggests strong internal morale and support. Internal procedures are in place to manage the risk of personnel mobilization.
• **Customers:** Benefit from continued investment in network quality, expansion of digital services (e.g., Starlink integration, Uklon acquisition, Helsi), and customer loyalty programs. However, service availability may be impacted in certain areas due to subscriber loss from migration and war.
• **Suppliers:** May face challenges in contracting with Kyivstar due to sanctions or restrictions on providing services to businesses operating in Ukraine.
• **Ukrainian Economy/Society:** Kyivstar is a major social sponsor, investor, and top-rated employer. The joint intention with VEON to invest US$1 billion in Ukraine from 2023-2027 signifies a significant contribution to the nation's digital ecosystem restoration and development.

Next Steps

• PubCo's registration statement on Form F-4, including a preliminary prospectus/proxy statement, will be distributed to Cohen Circle Acquisition Corp. I's shareholders.
• Shareholders of Cohen Circle Acquisition Corp. I will vote on the Business Combination and other related matters.
• The SEC needs to deem the Registration Statement effective for the Business Combination to proceed.
• The combined company (PubCo) needs to meet Nasdaq listing standards upon closing of the Business Combination.
• Kyivstar aims for consistent growth in ARPU and continued price leadership in the market.
• Kyivstar plans to grow digital offerings organically and through adjacent acquisitions, focusing on increasing multiplay penetration.
• Kyivstar intends to grow fixed broadband market share via organic expansion and acquisitions.
• Kyivstar and VEON jointly intend to invest US$1 billion in Ukraine from 2023-2027, focusing on network development, roaming, and M&A.
• Kyivstar plans participation in spectrum auctions with an aim to provide better service.

Key Dates

Recommendation

Keywords

Kyivstar, Cohen Circle Acquisition Corp I, SPAC, Business Combination, Ukraine, Telecommunications, Mobile Operator, Fixed Broadband, Digital Services, VEON, Nasdaq Listing, Uklon, Ride-hailing, Delivery, E-Health, Helsi, AdTech, Cybersecurity, Emerging Markets, Frontier Markets, Investment Opportunity