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Veon sees underlying growth improve despite negative forex effects

Thursday 8 November 2018 | 08:00 CET | News

Veon raised its full-year outlook, forecasting stronger growth in underlying revenue and EBITDA after a good third quarter. Reported results were still down in Q3 due mainly to negative currency effects, and the forex impact will also make its free cash flow target of USD 1 billion for the year "slightly challenging", the company said. 

Quarterly revenue fell 5.7 percent year on year to USD 2.32 billion, as organic growth of 2.9 percent and the acquisition of Euroset stores in Russia were offset by the currency weakness. The underlying revenue trend was supported by good growth in mobile data revenue, which increased 28.5 percent. EBITDA declined 18.7 percent to USD 848 million, as growth in Pakistan and Ukraine was offset by lower results in other countries. The EBITDA margin fell 5.9 percent points to 36.6 percent.

Net profit improved to USD 561 million from USD 134 million a year ago, supported by the one-time gain of USD 1.28 billion from selling the rest of Wind Tre to Hutchison. The profit was offset by RUB 0.6 billion of integration costs for Euroset and impairment charges of USD 451 million for Bangladesh and USD 125 million for Algeria on a weaker growth outlook in those countries. 

Veon reduced capex 21.4 percent year-on-year to USD 319 million in Q3, which it said was due to a more equal quarterly distribution of expenditures compared to last year. On a rolling 12-month basis, capex was at 16.8 percent of revenue, down 1.6 percentage points from Q3 2017. 

The fall in EBITDA led to a drop in operating cash flow, to USD 578 million from USD 834 million a year ago. Net debt was also lower, down 33.7 percent from June to USD 5.74 billion thanks to the proceeds from the Wind Tre deal. Leverage was at 1.7x, below the company's target of 2.0x.

For the full year, Veon updated its outlook to low single-digit organic revenue growth (from flat to low single-digit organic growth) and EBITDA growth in the low to mid-single digits (from flat to low single-digit organic growth). The equity free cash flow target remains at around USD 1 billion for 2018, but is "slightly challenged" by currency headwinds, the company said. In the first nine months, the figure was up 1.6 percent to USD 804 million. 



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Categories: Mobile & Wireless
Companies: Veon
Countries: World
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