425: VEON CEO Highlights Growth Strategy, Kyivstar Listing, and Frontier Market Opportunities

VEON's CEO, Kaan Terzioglu, discusses the company's focus on growth in frontier markets, the upcoming Kyivstar listing, and the potential of digital services and AI.

Summary

• VEON operates in Ukraine, Pakistan, Bangladesh, Uzbekistan, and Kazakhstan, serving approximately 520 million people.
• The company focuses on providing digital services like banking, entertainment, education, and healthcare, leveraging its telecom licenses for customer acquisition.
• VEON aims to be a 'digital operator,' relevant to customers every minute of the day through its 'DO 1440' strategy.
• The company sees significant growth potential in these underserved markets, particularly in financial services and entertainment.
• VEON's financial services business in Pakistan, JazzCash, serves nearly 49 million people.
• Digital revenues accounted for 12% of VEON's top line in 2024 and are growing at around 50% year-on-year.
• The company is listing Kyivstar on NASDAQ under the ticker KYIV to provide investors with an opportunity to invest in Ukraine's future.
• VEON will retain a significant shareholding in Kyivstar after the IPO.
• VEON is also focusing on AI, particularly 'agentic AI,' to enhance its services and empower its customers.
• The company has launched KazLLM, a Kazakh language large language model.
• VEON has an agreement with Starlink for direct-to-cell services in Ukraine, providing 100% coverage, especially in warzone areas.
• VEON intends to become an asset-light company, potentially separating its services and infrastructure businesses in the future.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for VEON, highlighting its growth strategy, digital services, and the upcoming Kyivstar listing. The CEO's confident tone and the focus on opportunities in frontier markets contribute to the positive sentiment.

Positives

• VEON operates in high-growth frontier markets with large, underserved populations.
• The company's focus on digital services provides significant growth opportunities beyond traditional telecom services.
• VEON's digital revenues are growing rapidly.
• The listing of Kyivstar provides investors with a unique opportunity to invest in Ukraine's future.
• VEON's commitment to corporate governance and transparency enhances investor confidence.
• The company's AI initiatives aim to improve the quality of life for its customers.
• The agreement with Starlink provides reliable connectivity in challenging environments.

Negatives

• Operating in frontier markets carries inherent risks, including geopolitical instability and economic volatility.
• The company faces competition from traditional banks and other digital service providers.
• The success of VEON's digital services depends on consumer adoption and usage.
• The company's reliance on telecom licenses could be a limiting factor in some markets.
• The ongoing war in Ukraine poses significant challenges to Kyivstar's operations.

Risks

• Geopolitical instability in the regions where VEON operates.
• Economic volatility and currency fluctuations in frontier markets.
• Competition from established players and new entrants in the digital services space.
• Regulatory changes and government policies that could impact VEON's operations.
• The ongoing war in Ukraine and its impact on Kyivstar's business.
• Potential delays in the Kyivstar listing process.

Future Outlook

VEON expects digital services to reach 25% of revenues in the next two years and ultimately reach 50%, driving strong growth.

Management Comments

• Kaan Terzioglu: 'My priorities, there are three of them, its growth, growth and growth and thats why actually we serve in the frontier markets.'
• Kaan Terzioglu: 'I would like to see VEON in the minds of the investors as a bellwether of frontier markets and an investment tool vehicle that is uniquely available for these growth markets for in United States and NASDAQ.'
• Kaan Terzioglu: 'We are going to make a teacher in Dhaka the best teacher in the world.'

Industry Context

VEON is positioning itself as a digital operator in frontier markets, competing with traditional telecom companies and digital service providers. The company's focus on local content and services differentiates it from global players like Netflix.

Comparison to Industry Standards

• VEON's strategy of offering digital services in addition to traditional telecom services is similar to that of other telecom operators in emerging markets.
• The company's focus on local content and services is a key differentiator from global players like Netflix, which may not resonate as well with local audiences.
• VEON's financial services business in Pakistan, JazzCash, competes with other mobile money platforms like Easypaisa and Telenor Microfinance Bank.
• The Kyivstar listing is similar to other telecom IPOs in emerging markets, such as Airtel Africa and MTN Nigeria.

Stakeholder Impact

• Shareholders: Opportunity to invest in a high-growth company in frontier markets.
• Customers: Access to a wider range of digital services and improved connectivity.
• Employees: Potential for career growth and development in a dynamic company.
• Ukrainian people: Opportunity to invest in the future of Ukraine.
• Investors: Opportunity to invest in the future of Ukraine.

Next Steps

• Finalization of the Kyivstar listing on NASDAQ.
• Continued investment in digital platforms and AI capabilities.
• Expansion of digital services into new markets.
• Potential separation of services and infrastructure businesses in the future.

Key Dates

Keywords

VEON, Kyivstar, Frontier Markets, Digital Services, Telecom, Growth, Ukraine, Pakistan, AI, NASDAQ, Investment