425: Kyivstar Group to List on Nasdaq as First Pure-Play Ukrainian Investment Opportunity Through SPAC Merger

Kyivstar Group Ltd., Ukraine's leading digital operator, is set to become the first U.S.-listed pure-play Ukrainian investment opportunity through a business combination with Cohen Circle Acquisition Corp. I, highlighting resilient financial performance and strategic growth despite ongoing challenges.

Summary

• Cohen Circle Acquisition Corp. I (SPAC) has entered into a business combination agreement with Kyivstar Group Ltd. (PubCo), a subsidiary of VEON Ltd., to bring Kyivstar to the U.S. public market.
• Upon successful closing, Kyivstar Group is expected to be the only pure-play Ukrainian investment opportunity publicly listed in the U.S.
• The transaction is proposed at an attractive valuation of 3.7x Q125 EV / LTM Adjusted EBITDA, offering a significant discount compared to industry peers.
• Kyivstar maintains leading market positions as the #1 mobile operator in Ukraine with 23 million subscribers and the #1 broadband provider with over 1.1 million subscribers.
• The company reported resilient financial performance with Q125 LTM Revenue of $988 million, Adjusted EBITDA of $562 million (57% margin), and Adjusted EBITDA minus CAPEX of $315 million.
• Kyivstar boasts a strong balance sheet with $489 million in cash and cash equivalents as of Q125 and no external debt.
• Strategic expansion into digital services includes the acquisition of 97% of Uklon, Ukraine's leading ride-hailing and delivery platform, for $155 million, which generated $67 million in revenue in 2024 with a 29% CAGR (2021-2024).
• The company has experienced impacts from the ongoing war, including a loss of approximately 3.1 million subscribers from January 2022 to December 2024 due to migration, territorial loss, and technical clean-up.
• A December 2023 cybersecurity attack led to a customer appreciation program, resulting in an estimated negative impact of UAH 0.8 billion ($23 million) on 2023 revenue/Adj. EBITDA and UAH 1.7 billion ($46 million) on 2024 revenue/Adj. EBITDA.
• VEON and Kyivstar have a joint intention to invest US$1 billion in Ukraine from 2023 to 2027, demonstrating commitment to the country's digital ecosystem development.

Sentiment

Score: 8

Explanation: The document presents a highly positive outlook for Kyivstar, emphasizing its market leadership, resilient financial performance despite the war, strategic digital expansion, strong balance sheet, and attractive valuation. While acknowledging the significant risks associated with operating in a war-torn country, the overall tone and presented data strongly suggest a compelling investment opportunity.

Positives

• Expected to be the first U.S.-listed pure-play Ukrainian investment opportunity, offering scarcity value.
• Maintains strong market leadership as the #1 mobile operator (47% market share) and #1 broadband provider (14% market share) in Ukraine.
• Demonstrated resilient financial performance with double-digit revenue growth in local currency and strong profitability, achieving a 57% Adjusted EBITDA margin in Q125 LTM.
• Possesses a robust balance sheet with $489 million in cash and cash equivalents and no external debt, providing significant financial flexibility.
• Strategic acquisition of Uklon, Ukraine's leading ride-hailing and delivery platform, strengthens digital service offerings and is expected to enhance multiplay penetration and margin expansion.
• Consistent growth in monthly ARPU, with a 41% year-over-year increase in Q125, indicating effective pricing strategies and value offerings.
• Commitment from VEON and Kyivstar to invest US$1 billion in Ukraine from 2023-2027 for network development, resilience, and digital ecosystem growth.
• High employee engagement rate of 86% in 2024, surpassing pre-war levels, indicating a motivated and stable workforce.
• Operates with robust corporate governance practices, consistent with Sarbanes-Oxley Act standards, due to its history as a Nasdaq-listed VEON subsidiary.
• The proposed transaction valuation of 3.7x Q125 EV / LTM Adjusted EBITDA is significantly discounted compared to global peers (median 7.1x) and EMEA/APAC single country peers (median 6.5x), presenting an attractive investment entry point.

Negatives

• The ongoing war in Ukraine has led to a significant subscriber loss of approximately 3.1 million between January 2022 and December 2024.
• A major cybersecurity attack in December 2023 caused temporary full disruption of Kyivstar's network and services, leading to a customer appreciation program that negatively impacted 2023 revenue/Adj. EBITDA by an estimated UAH 0.8-0.9 billion and 2024 revenue/Adj. EBITDA by UAH 1.7-1.8 billion.
• Increased operating costs due to surging electricity prices, which rose by 28.1% in 2023 and 27.3% in 2024.
• The worsened macroeconomic landscape in Ukraine, characterized by UAH devaluation and inflation, creates an unpredictable operating environment.
• The independent auditors have included a going concern emphasis paragraph in their opinion due to the effects of the ongoing war, highlighting significant uncertainties.

Risks

• Network infrastructure, equipment, systems, and other assets are subject to disruption, damage, and failure as a result of the war in Ukraine.
• Operations may continue to experience disruptions due to the war, leading to substantial additional operating costs.
• There is a risk of nationalization or confiscation of operations and assets due to the war.
• The independent auditors have included a going concern emphasis paragraph in their opinion due to the effects of the ongoing war in Ukraine.
• The company has suffered and may continue to suffer reputational harm as a result of the ongoing war.
• Changes in customer demand due to migration and population shifts may adversely affect the business.
• Operating in a highly competitive market may make it difficult to expand the customer base or retain existing customers.
• Investing in frontier markets like Ukraine is subject to greater political, legal, and economic risks compared to more developed markets.
• The company may be unable to keep pace with technological changes and evolving industry standards, harming its competitive position.
• Inability to secure necessary spectrum or licenses, and high acquisition/deployment costs for 5G, could adversely affect service quality and increase operating expenses.
• The telecommunications industry is highly capital intensive, requiring substantial and ongoing expenditures.
• The company may not be able to raise additional capital, or may only be able to do so at significantly increased costs.
• Indebtedness and debt service obligations could decrease cash flow, adversely affecting business and financial condition.
• The international economic environment, inflationary pressures, geopolitical developments, and unexpected global events could cause business decline.
• Exposure to cyber-attacks, including the 2023 attack, may lead to compromised services, data leaks, and loss of customer confidence.
• The company may recognize substantial impairment charges from time to time.
• Equipment and systems are subject to disruption and failure for various reasons, including the war, potentially leading to customer loss or license violations.
• Exposure to foreign currency exchange loss, fluctuation, and translation risks, exacerbated by the 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 restrictions on 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 businesses depends on the ability to implement strategic initiatives and integrate acquired businesses; failure to do so may 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.
• Potential for tax claims and repeated tax audits.
• Changes in tax treaties, laws, rules, or interpretations, including deferred tax asset recognition, could harm the business.
• Changes in regulatory requirements in banking and financial systems and currency control restrict activities, particularly due to the war.
• 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, 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, or subject to, legal liability in connection with disputes and litigation with regulators, competitors, and third parties.
• Licenses are granted for specific periods and may be suspended, revoked, or not extended upon expiration; fines or penalties for alleged violations.
• It may not be possible to procure in a timely manner, or at all, 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 Group is poised for significant growth driven by the anticipated recovery of the Ukrainian economy and the expansion of its digital services. The company's medium-term strategy focuses on deepening its mobile market leadership, consistent ARPU growth through pricing leadership and multiplay penetration, and expanding its fixed broadband market share via organic growth and acquisitions. Kyivstar aims to grow digital revenues organically and through adjacent acquisitions, leveraging its loyal customer base to develop new and existing digital products. VEON and Kyivstar jointly intend to invest US$1 billion in Ukraine from 2023-2027 to support network development, resilience, and the broader digital ecosystem.

Management Comments

• Betsy Z. Cohen, President and Chief Executive Officer of Cohen Circle Acquisition Corp. I, signed the report on behalf of the registrant.

Industry Context

Kyivstar operates as the leading digital operator in Ukraine, a frontier market significantly impacted by ongoing geopolitical conflict. Despite these challenges, the company demonstrates remarkable resilience and growth, outperforming the broader economic downturn. Its strategy to expand into digital services like ride-hailing (Uklon) and e-health (Helsi) aligns with global telecom industry trends where operators diversify beyond traditional connectivity to create digital ecosystems, enhancing ARPU and customer stickiness. The Ukrainian fixed broadband market remains highly fragmented, presenting significant consolidation opportunities for Kyivstar to further strengthen its market position. The company's commitment to substantial investment in network infrastructure and digital development positions it as a key player in the restoration and development of Ukraine's digital economy.

Comparison to Industry Standards

• The proposed transaction valuation of 3.7x Q125 EV / LTM Adjusted EBITDA for Kyivstar is significantly lower than the median EV/EBITDA multiples of global peers (7.1x) and EMEA/APAC single country peers with leading market positions (6.5x), suggesting an attractive valuation relative to industry standards.
• Kyivstar's Q125 LTM Adjusted EBITDA margin of 57% is notably higher than the average 2025E EBITDA margins of comparable listed telecom operators in various regions, such as Indonesia (38.4%), Greece (40.9%), Malaysia (47.2%), Thailand (48.2%), Kenya (39.6%), GB (40.5%), NL (36.7%), Hungary (50.5%), ANZ (47.3%), Slovenia (54.0%), Slovakia (51.4%), Bulgaria (38.1%), Lithuania (38.2%), and Poland (38.8%).
• Kyivstar's monthly ARPU of US$3.4 in Q125 is substantially lower than the average monthly ARPU of Central and Eastern European countries (US$10.7 in 2024), indicating significant potential for ARPU growth as the Ukrainian economy recovers and mobile market matures.

Corporate Governance

Legal Proceedings

• The document mentions 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'.
• It also states, 'We are, 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, which when concluded, could harm our business.'

Related Party Transactions

• The combined financial statements include 'Loan receivable from VEON Amsterdam' and 'Receivable from VEON Amsterdam B.V.'.
• Debt includes 'Loans received from subsidiaries of the Parent'.
• The 'Sources & Uses' table mentions 'VEON rollover equity' and 'VEON loan note' as part of the transaction structure.

Stakeholder Impact

• **Shareholders**: The business combination offers a unique investment opportunity in a U.S.-listed pure-play Ukrainian company with strong market positions and growth potential, potentially leading to capital appreciation.
• **Employees**: High employee engagement and internal procedures to manage mobilization risks indicate a focus on employee well-being and retention despite the challenging environment.
• **Customers**: Customers benefited from a loyalty program following the cyberattack and continue to receive roaming offers, indicating efforts to maintain customer satisfaction and retention.
• **Ukraine (Society)**: Kyivstar is positioned as a 'National Champion' and 'major social sponsor, investor and top-rated employer', with a commitment to invest US$1 billion in Ukraine, contributing to the country's digital infrastructure and economic recovery.
• **Creditors**: The company's strong balance sheet with $489 million cash and no external debt (at Kyivstar level) suggests a low credit risk profile, although VEON Holdings has notes expected to be settled before closing.

Next Steps

• Obtain necessary shareholder approvals for the Business Combination.
• Secure the decision by the SEC to deem effective the Registration Statement on Form F-4.
• Meet Nasdaq listing standards upon closing of the Business Combination.
• Achieve admission of PubCo for trading on Nasdaq.
• Continue with the joint investment of US$1 billion in Ukraine from 2023-2027 by VEON and Kyivstar.
• Pursue organic growth in digital revenues and expand through adjacent acquisitions.
• Continue fixed broadband market share growth via organic expansion and acquisitions.
• Maintain consistent growth in ARPU by continuing price leadership in the market.

Key Dates

Recommendation

Keywords

Kyivstar, Ukraine, Telecom, Digital Operator, SPAC, Business Combination, Nasdaq Listing, Mobile Communications, Fixed Broadband, Uklon, Helsi, VEON, Emerging Markets, Investment Opportunity, SEC Filing, Financial Performance, Risk Management