Vimpelcom has announced a change in name to Veon, coinciding with the launch of an OTT services platform under the same name across its footprint this year. The Veon platform was first launched in Italy late last year and offers an app for messaging, VoIP and a range of often zero-rated offers from the company and partners. The operator said it plans to introduce other services over the platform from partners such as Deezer, Studio+ (Vivendi) and Mastercard.
The company presented the plans alongside its quarterly results and a new dividend policy that will see it increase returns to shareholders from next year. Veon will pay a 2016 dividend of USD 0.23 per share, including the 3.5 cents paid in December 2016 as an interim dividend and a final dividend of 19.5 cents expected to be paid in April 2017. The company said going forward it will pay a "sustainable and progressive" dividend based on equity free cash flow, defined as net operating cash flow minus cash capex. This is projected to grow substantially in the coming two years.
The Amsterdam-headquartered group also announced plans to take a second stock market listing, alongside New York, on Euronext Amsterdam from Q2 in order to increase its free float. The listing remains subject to shareholder approval. Around 20 percent of the company's shares are currently available for public trading.
In the fourth quarter, Veon fell back to negative organic revenue growth of 0.2 percent, and underlying EBITDA was down 2.5 percent on an organic basis. Better exchange rates led to a 2.5 percent increase in reported service revenue to USD 2.244 billion, supported by data growth in Ukraine and the merger with Warid Telecom in Pakistan. This offset lower revenues in Russia, Algeria and Bangladesh.
EBITDA fell 3.5 percent on a reported basis to USD 783 million, hurt by one-time costs of USD 172 million for restructuring and litigation. Net profit jumped to USD 1.643 billion from USD 58 million a year ago, thanks to a one-time gain of USD 1.905 billion on the spin-off of Italian operator Wind into a joint venture with 3 Italia. The loss from continuing operations widened to USD 273 million from USD 153 million a year ago, hit by impairment charges of USD 177 million on the operations in Georgia, Tajikistan and Kyrgyzstan.
The operator reduced capital expenditure by 14.4 percent in 2016 to USD 1.741 billion. Operating cash flow declined to USD 1.875 billion from USD 2.033 billion in 2016. Net debt totaled USD 7.162 billion at year-end, up 5.3 percent from Q3 and equal to 2.0x annual underlying EBITDA.
For 2017, Veon said it expects organic service revenue growth to improve to low single digits and the underlying EBITDA margin should also show a low single-digit organic improvement. That compares to 0.5 percent organic service revenue growth last year and a 0.2 percent point increase in the margin to 40.3 percent. Underlying free cash flow is estimated at USD 700-800 million in 2017, rising to over USD 1 billion in 2018. That compares to a reported USD 588 million in 2016.
