Veon has updated its strategy and targets at an investors day with analysts. The company increased its EBITDA growth target for this year and said it aims to grow in future from more new services and assets, beyond its core connectivity business. In addition, the group set a new policy to pay out at least 50 percent of cash flow as dividends.
The revised dividend policy will be introduced from financial year 2020. It's based on equity free cash flow (operating cash flow minus cash capex) after licence payments. Any dividend remains subject to board considerations of investment opportunities and the overall capital structure. The target for net debt is to remain at around 2.0x EBITDA (2.4x after IFRS 16).
For the current year, Veon said it expects mid single-digit organic growth in EBITDA, compared to its previous guidance of low to mid single-digit growth. This follows growth of 10 percent in the first half of the year. Guidance for revenue and equity free cash flow are unchanged.
Looking ahead, Veon outlined how it plans to drive value from three business pillars: its main mobile and fixed line Connectivity services; a portfolio of New Services built around digital technologies and the active use of big data and artificial intelligence; and Future Assets, which seeks to identify, acquire and develop ''know-how" and technologies that open up adjacent growth opportunities.
Some of the growth opportunities mentioned by the company include near-term network investment in its biggest market Russia to drive medium-term service revenue growth; increasing its stake in Pakistan operator Jazz, and developing mobile financial services in Pakistan. The group also recently bought out Global Telecom and started the Veon Ventures unit.
