Veon reported a small increase in organic revenue in the first quarter of 0.3 percent, while EBITDA fell 1.8 percent on the same base. The company said organic revenues and EBITDA turned lower in April due to pressure on results from the Covid-19 pandemic, and Veon withdrew its previous guidance for 2020 results due to the uncertain outlook.
Reported revenue was down 1.3 percent to USD 2.1 billion in Q1 due to negative currency effects, and EBITDA dropped 29.1 percent to 920 million, hurt mainly by new taxes in Pakistan. Excluding the tax impact in Pakiston, Veon said organic revenues would have rose 2.7 percent in local currency and EBITDA would have been up 1.0 percent.
The Russian operations otherwise remained a drag on results, offsetting strong operational performance in Ukraine, Kazakhstan and Bangladesh, the company said. The mobile subscriber base was little changed year-on-year, at 211 million.
In recent weeks, the company said it saw some initial positive usage trends in both voice and data services, but a number of challenges across the business as well. These include disruption to distribution channels, migration of the customer base away from urban areas and a shift in data usage from mobile to fixed networks. These have had a direct financial impact on business, particularly on roaming revenues, device sales and prepaid top-up volumes.
As a consequence, in the month of April Veon saw a high single-digit annual decline in revenues and a mid-teens fall in EBITDA in local currency terms. The company said the uncertain economic climate meant it was prudent to withdraw its previous financial guidance for 2020. To mitigate the impact of Covid-19 on the business, it's looking to extend payment terms with key vendors, optimize costs and capex and focus on optimizing the balance sheet structure in the coming quarters. "It is, however, important that we do not lose focus on our planned operational improvements throughout the balance of the year, which will stand us in good stead for the medium term," the company said.
Net profit for the first quarter fell to USD 120 million from USD 530 million a year ago, when it received the one-off payment from Ericsson. Capital expenditure excluding licences fell 6.3 percent to USD 413 million, or 19.7 percent of revenue. This was mainly due to slower roll-out in Russia, offset by Pakistan, Kazakhstan and Bangladesh higher roll-out and additional network investments.
Operating cash flow was also lower, at USD 626 million versus USD 830 million in Q1 2019. Net debt fell 7.2 percent year-on-year to USD 7.7 billion, equal to 2.0x EBITDA. During the quarter, Veon said it drew USD 600 million under its revolving credit facility, increased the size of the loan with Alfa Bank to RUB 30.0 billion and raised an additional USD 300 million under its 2025 bond.
