Veon has announced new financial targets at an analyst meeting, of a 10-14 percent CAGR in revenues measured in local currencies and EBITDA growth over the next three years. The operator said it expects its recent investments in 4G networks to pay off in accelerated revenue growth in the period 2022-24. At the same time, it will explore more sales of tower assets, after recently completing a deal in Russia.
Along with double-digital growth in organic revenue, the group targets a 3 percentage point improvement in its EBITDA margin over the same period. This is supported by its group-wide cost efficiency program, which is anticipated to generate annual savings of USD 250 million by the end of 2024.
Furthermore, Veon targets a reduction in its USD-denominated debt, to below 40 percent of total net debt. The company will resort to more local currency funding and extend the average tenor of its debt to four years.
Lower capex, same dividend policy
In the company's reported currency USD, Veon expects a mid single-digit CAGR for both revenue and EBITDA over the forecast period. Capital expenditure is expected to drop to less than 20 percent of revenues by 2024, from the current elevated levels of 22-24 percent, helping grow equity free cash flow (EFCF) over the period.
The dividend policy remains the same: to pay out at least 50 percent of EFCF after licence payments to shareholders, while keeping leverage at or below its previously stated comfort level of 2.4x on an IFRS basis.
More tower sales
Alongside the group’s new medium-term financial ambition, the analyst meeting will provide updates from Veon’s operating markets. In its main market Russia, Beeline targets local currency revenue growth for 2022-2024, accelerating towards double-digit growth alongside a decline in capex intensity. Kyivstar is expected to reach a double-digit CAGR in local currency revenues over the forecast period, while also working on the sale of its tower assets by 2023.
In Pakistan, Veon expects growth to be led by its expansion in digital and financial services, supporting double-digit local currency revenue growth in 2022-2024. Pakistan expects to complete the sale of its portfolio of tower assets by the end of 2022. Bangladesh's Banglalink should reach double-digit local currency revenue growth by 2024 as it completes its 4G network roll-out and increases data services penetration. It will also explore a sale of its portfolio of tower assets during 2022-2023.
Finally in Kazakhstan, Beeline continues to gain market share in subscribers and revenue as it expands its digital services offering. This is expected to support strong double-digit local currency growth in revenue and EBITDA between 2022-2024.
