VEON (NASDAQ:VEON) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.

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Summary

VEON Ltd reported a strong Q1 2026 with a 17% increase in revenues and a 17.7% rise in EBITDA. Margins expanded by 20 basis points.

Digital revenues surged 57.7% year-on-year, now representing over 25% of group revenues, with notable contributions from financial services, entertainment, ride-hailing, and healthcare.

The company raised its 2026 revenue growth outlook to 11%-14%, while maintaining EBITDA growth guidance at 7%-10%.

Operational highlights include securing the largest spectrum allocation in Pakistan, expanding financial services, and targeted acquisitions like OLX and Tabletki.

VEON continues its buyback program, emphasizing shareholder value, and reduced leverage with a net debt-to-EBITDA ratio at 1.07 times.

Management remains confident in maintaining margin stability despite geopolitical and market uncertainties, with a focus on pricing control and disciplined execution.

Full Transcript

OPERATOR

Hello and welcome to VEON's Q1 2026 results presentation. For those of you who have joined the Zoom webinar, if you would like to ask a question, you can use the Raise Hand button which can be found on the black bar at the bottom of your screen at any time to join the queue to ask a question and you will be called upon during the Q and A session. For those of you watching on the webcast, if you would like to submit a written question, you can please use the Ask A Question tab at the top right of your screen.

These questions can also be sent in anytime during the presentation. As a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Anand Ramachandran, you may begin.

Anand Ramachandran, Chief Corporate Development Officer

Thank you. Good morning and good afternoon to everyone joining us for VEON's first quarter results. My name is Anand Ramachandran, Chief Corporate Development Officer at VEON. Joining me today are our group CEO Mr. Kantar Ziolu and next to him our group CFO Mr. Burak Uzar. As usual, Kaan will begin with strategic and operational highlights followed by Burak with a review of our financial performance and we'll then open up the call for Q and A. Before we begin, please note that today's presentation contains forward-looking statements which involve risks and uncertainties.

Further details are available in all our SEC filings including our Form 20-F. Our earnings release and presentation are available on our investor relations website. With that, let me hand it over to Kaan.

Kaan Terzioglu, Group CEO

Thank you, Anand. VEON has entered 2026 with clear momentum, double-digit growth, accelerating digital revenues, stronger cash generation, and continued capital returns. Revenues in US dollars grew 17% year on year, EBITDA increased 17.7%, and margins expanded by 20 basis points. Importantly, this growth translated into strong cash generation with equity free cash flow up 73.4% year on year to $246 million. This performance reflects the strength of our digital operators strategy, combining resilient connectivity, fast-scaling digital platforms, and disciplined capital allocation.

As a result, we are raising our 2026 revenue outlook which I will return to later. Second, we are seeing strong acceleration across our digital portfolio. Digital revenues grew 57.7% year on year and now represent over 25% of our group revenues. Importantly, this growth is increasingly profitable with MTA margins of 34.6% this quarter. We also refined our reporting by including enterprise identity and credentials management within digital enterprise.

These are mature services that are increasingly shifting from traditional A2P messaging towards API-based platforms. On a comparable basis, excluding this reclassification, our digital revenues actually grew over 75%. Third, we continue to execute multiple growth levers within a disciplined asset-light framework. In Pakistan, we secured the largest spectrum allocation in the March Spectrum auction, strengthening capacity and supporting future growth.

We are expanding our financial services footprint and our acquisitions of TPL Insurance and APNA Bank are on the right course. We are deepening our ecosystem through targeted acquisitions such as OLX and Tabletki. These initiatives enhance engagement, expand monetization opportunities, and reinforce our long-term growth platforms. Finally, we remain firmly focused on shareholder value. We continue to believe our shares do not reflect the value and cash generation of the business and we are acting on that conviction through our buyback program.

At the same time, we are reducing leverage and maintaining financial flexibility. Management ownership remains a key signal of alignment, reinforcing our confidence in the value we are building. Let us review our Q1 financial performance. Let's move to the next slide. Our strategy is translating into strong high-quality financial performance. Both telecom and digital segments are contributing meaningfully to profitability and cash flow, demonstrating the strength of our integrated model.

Telecom revenues grew steadily while digital revenues increased significantly and now account for a quarter of total revenues. As highlighted earlier, we are encouraged by the strength of our cash generation this quarter and continued reduction in leverage. Next slide please. Our growth continues to outpace inflation across our markets, reflecting the strength of our operating model on a like-for-like basis which adjusts for the divestment of Pakistan Towers, Kyrgyzstan business, and the acquisition of Utlan and Tabletki.

Revenues grew 15.4% and EBITDA grew 15% year on year. This reflects our ability to execute fair value pricing supported by strong demand, high engagement, and increasing customer reliance on both connectivity and digital services. Let us move to our digital performance which continues to scale in size and quality. Let's go to the next page. Digital revenues reached $303 million for the quarter, now representing over a quarter of group revenues. The reclassification of enterprise identity and credentials management within digital enterprise, which I highlighted earlier, contributed $44 million for the quarter.

With prior periods reclassified for comparability, growth remains broad-based with financial services leading and strong contributions from entertainment, ride-hailing, and healthcare. We also began consolidating Tabletki from February, further strengthening our healthcare vertical in Ukraine. Our digital platforms continue to benefit from structurally low customer acquisition costs and highly efficient distribution, creating a scalable competitive advantage across our markets.

Importantly, digital services are structurally lower in capital intensity, supporting strong cash generation capacity. Let's go to the next page. Multiplayer customers remain a key growth driver. These customers use connectivity with digital services and they deliver significantly higher value with up to now 3.9 times that of voice-only customers. This fact also helped us raise overall output to 2.3 US dollars for the quarter from $2 a year ago. Multiplay revenues grew almost 18% year on year and now represent 58% of consumer revenues.

Let me now update you on the operational performance across our markets in the next page. We are seeing strong operational momentum across the board. Pakistan and Ukraine continue to lead while Kazakhstan and Uzbekistan deliver steady growth. Bangladesh is continuing its growth for a second consecutive quarter in a row. Digital momentum is consistent across all markets supporting both growth and diversification. Our focus is clear to sustain this momentum through disciplined execution and balancing revenue growth with profitability over the course of the year.

Next slide please. Our financial services business in Pakistan continues to grow from strength to strength. JazzCash served over 29 million users during the quarter while our merchant base expanded to over 600,000 merchants. This is driving a powerful network effect. Transaction volumes remain robust with last 12-month transaction value reaching 60 billion US dollars or 15% of Pakistan's GDP reflecting sustained growth in usage and engagement. We are also scaling lending at pace with over 200,000 loans issued daily while maintaining disciplined risk management.

Asset quality remains strong and non-performing loans and PL ratios remain well controlled. Mobilink Bank's loan portfolio has reached $289 million and is supporting the continued expansion of our digital financial services ecosystem. Together these capabilities position us well to support financial inclusion and capture long-term growth. Next slide please. We have refined our definition of digital customers to reflect active users in quarter one, providing a more comprehensive view of engagement across the quarter.

Across our ecosystem, we now serve 229 million digital customers including over 72 million digital-only users. Our platforms are becoming go-to super apps in our markets. Transaction value reached almost $63 billion over the last 12 months reflecting both scale and deepening engagement. This creates increasing opportunities in cross-sell, advertising, and monetization. Next slide. Our consumer digital platforms continue to scale across multiple networks.

Financial services, entertainment, healthcare, ride-hailing, and super apps now serve millions of users across our markets. Our premium digital brands are delivering a differentiated customer experience by seamlessly integrating connectivity with everyday lifestyle services such as healthcare, e-commerce, and mobility. Together these platforms deepen engagement and unlock multiple opportunities providing people that are underserved with service quality they deserve.

Next slide please. We are also building strong momentum in digital enterprise. Our platforms in augmented intelligence, cloud, and data analytics are scaling across our markets supported by almost 2,000 engineers and data scientists. Our ad tech platform reaches over 100 million screens enabling increasingly sophisticated AI-driven targeting and monetization across our ecosystem. Within our identity and credentials management services, the focus is rapidly shifting towards secure real-time authentication as a primary defense against fraud and scams and protection of children.

Let's go to the next slide please. Augmented intelligence or AI is a core pillar of our value creation. For us, AI is not a standalone initiative. It's a productivity engine. Across networks, customer care, digital services, and enterprise solutions, we are building sovereign local language AI capabilities. Our Ukrainian LLM svyo, which means globe, was named by Ukrainian citizens showing its national importance and strategic value. Our ambition is to put AI to work in the real-time economy, helping doctors deliver better outcomes, teachers reach further, and farmers produce more.

This is practical augmented intelligence delivering measurable impact in everyday life. We have over 1,000 prioritized use cases across the group. Over 1.4 million customers are using our AI products across our footprint, we are focused on turning AI from potential into performance. With that, Burak, I hand over to you.

Burak Uzar, Group CFO

Thank you, Kaan. We continue to deliver strong financial results. In the first quarter, group revenue reached $1.2 billion, growing 17% year over year in US dollar terms with broad-based contributions. Across our markets, digital services grew 57.7%, reaching $303 million and representing over 25% of total revenue. This reflects strong execution across both telecom and digital businesses. EBITDA reached $517 million in Q1 2026, growing 17.7% year on year.

Margins expanded by 20 basis points to 43% reflecting operating leverage and continued cost discipline. This demonstrates our ability to grow profitability while maintaining a disciplined cost base. Now turning to the balance sheet, we ended the quarter with $1.75 billion in cash, including $457 million at headquarters level. Gross debt remains stable at $4.9 billion. Net debt excluding leases stood at $1.76 billion with leverage reduced further to 1.07 times.

This provides us with financial flexibility and a resilient capital structure. We are also proactively exploring strategies to manage our upcoming debt maturities. With that, I'll hand the call back to Frances.

Frances, Investor Relations

Thank you, Burak. And returning capital to shareholders remains a key priority. Our current $100 million buyback is underway with ADS buybacks continuing. We are committed to a minimum of $100 million in annual share repurchases subject to market conditions and liquidity following completion of the current program. Shares repurchased under future programs will be cancelled, supporting long-term shareholder value. Next slide please. We have a long track record of navigating frontier markets.

Volatility is not new to us. We are proactively executing targeted actions to mitigate the impact of recent energy price movements, reflecting our strong first quarter performance and continued commercial momentum. We are raising our 2026 revenue growth outlook to 11% to 14% while maintaining EBITDA growth guidance at 7 to 10%. We are making further investments in Pakistan following the recent Spectrum acquisition to support future growth. Capex intensity excluding Ukraine is expected to be in the range of 15 to 17%.

To conclude, VEON has made a strong start to 2026. We are delivering double-digit growth, scaling digital revenues profitably, strengthening our credit profile, and returning capital to shareholders. At the same time, we remain disciplined and mindful of external volatility. Our model is increasingly diversified, resilient, and cash generative and we are confident in the opportunities ahead. Thank you for your continued support. We will now open the line for questions.

OPERATOR

Thank you. At this time if you would like to ask a question, please click on the Raise Hand button which can be found on the black bar at the bottom of your screen. When it is your turn to ask a question, you will receive a prompt to be promoted as a panelist. Please accept, wait a moment, and once you have been introduced you may unmute yourself, turn your video on, and ask your question. Written questions can be submitted on the webcast by using the Ask a Question tab at the top right of your screen.

As a reminder, we are allowing analysts one question and one related follow-up today. If you wish to ask more questions, please raise your hand again to rejoin the queue. We will pause a moment to allow the questioners to enter the queue. Our first question comes from Max Findlay with Rothschild & Co Redburn. Please unmute your line, turn your video on, and ask your question.

Max Findlay, Rothschild & Co Redburn

Hi all, thank you for taking the time to speak to us today. The EBITDA guidance implies a downgrade for the business ex-KIF, a margin contraction of about 1% following Kivstar's EBITDA upgrade earlier today. Are you able to walk us through what's changed since we last spoke? Secondly, and linked to my first question, I was wondering if you could provide some color about what you're seeing in your markets now as a result of the Iran conflict and what risk there is to further EBITDA margin compression.

I obviously appreciate the high uncertainty around the situation and finally, I asked at full year results whether your CAPEX guidance was a bit conservative following the Pakistan auction. And I guess I'd like to know what has changed regarding your network build plans. Is this CAPEX being brought forward that was perhaps targeted for next year or is this new CAPEX? Thank you very much.

Kaan Terzioglu, Group CEO

Thank you, Max, for the question. I think, you know, the second part of the question is kind of the answer to the first. We have reiterated our guidance as it is on the EBITDA side and I would like to see the next three months to give a more clear picture about how the EBITDA growth will curtail. If you would ask me, you know, I do not think any margin compression will happen because we have strong control over our pricing, our services are differentiated, and the tolerance towards price elasticity is quite healthy in the markets that we operate in.

Having said that, you know, today President Trump is in China. I would like to see a little bit more clarity on the geopolitical landscape before making a change in our guidance on the EBITDA side. Now looking into, you know, the impact we see in our markets, especially about the oil prices. Today in South Asia a barrel of oil goes in between $160, $180, not like in line with the Brent, and it is not about the pricing but it is also the availability of fuel which is important and I am very glad to see that.

Actually, Pakistan over time has been diversifying its energy production capacity towards wind, solar, and hydro. And the hydrocarbons have been steadily declining in the needs. But in markets like Bangladesh, we have seen some availability issues over the last couple of weeks and I hope that, you know, the pricing liberal pricing of oil will adjust this availability issue over time. But I think it's important to understand that the impact from the current weighted average inflation rate of 8.1% across our markets, we do expect to see double-digit inflation moving onwards and that's of course something that we are watching very carefully.

With regard to investments in Pakistan, we have tripled our capacity on spectrum and specifically with 700 MHz spectrum getting into our fleet of spectrum we will accelerate our deployments. It will be our coverage layer for 5G and also 4G non-standard services as well. And that's why we decided to upgrade our guidance slightly. Having said that, if you look into our profile of our revenues now, a quarter comes from digital services, digital services, CAPEX to sales ratio is in higher single digits rather than higher twenties and that's why, you know, we believe over time there will be a moderation of CAPEX revenue percentage in terms of investments.

But still for the remaining of the year, we will accelerate our deployments in Pakistan because the average data consumption in Pakistan today is around 7.5 gigabytes per month, which is one third of what it should be. It's not that Pakistanis don't like to consume more, it's because the capacity is limited. So we believe that putting more capacity in place will give us the chance also to monetize that business.

Max Findlay, Rothschild & Co Redburn

Brilliant. Could I just follow up on the EBITDA margin point? I think from what I understood, you're suggesting there will be no margin contraction, but given the upgrade to revenues and EBITDA guidance staying the same, you know, if you take the midpoint of both, that obviously implies margin contraction. Are you suggesting that we should instead be thinking about you ending up at the full year at the top, higher end of the EBITDA range? If margins are going to stay stable.

Kaan Terzioglu, Group CEO

Max, I would suggest that, you know, we wait for Q2 to give more clarity on that. At this particular stage, we wanted to stick to the guidance that we have given on the EBITDA side. But I think, you know, our pricing control and inflationary pricing discipline will allow us to keep our margin levels the same.

Max Findlay, Rothschild & Co Redburn

Brilliant. Thank you very much.

OPERATOR

Thank you. Our next question comes from Nicholas Paton with Edison Group. Please unmute your line, turn your video on, and ask your question.

Nicholas Paton, Edison Group

Hello, everybody. Thank you very much for the additional information on the Pakistan financial services business, which I thought was very interesting. It reminded me of the work that we did in our initiation. And I think when I look back at that now, we were considering the transactions with MTN Fintech and Airtel Africa looking at potential valuations for that business. And it looks as though the business has grown something of the order of about 30% in EBITDA terms over the last, over the last year or so.

And at the time we were looking for a valuation around about a billion for that business. I'm also aware that investors have been discussing a potential strategic investor for that or maybe even an IPO. Have you any more thoughts about crystallizing value in that business?

Kaan Terzioglu, Group CEO

I'm extremely happy with the progress we have with our financial services business in Pakistan and specifically, you know, expanding our service lines into insurance and potentially to digital banking products that we do not cover today. I think there is a huge potential of serving 250 million population in Pakistan and in addition to that 12 million population outside of Pakistan as diaspora. There's a huge potential in this particular market and I would like that growth to show itself a little bit more.

What I'm even more excited about is applying the same business model in a market like Bangladesh where there is an additional 180 million population with also a strong diaspora footprint. And I think, you know, our intentions of at certain point opening up this as an investment opportunity stays, but we will not hurry. As we see the growth rates actually are still allowing us to develop the business.

Nicholas Paton, Edison Group

And should I infer from that that if you were to look for a crystallization of the value in those businesses, you might look to for instance, merge the JazzCash business with businesses from other countries or would you try to look at options on a country basis?

Kaan Terzioglu, Group CEO

We will keep an open mind in terms of how we see the consolidation. But clearly there are certain aspects of the business which later on actually turn into products such as digital assets, including stablecoins, remittances. These are global businesses. So some of these things actually could justify a global multi-brand strategy.

Nicholas Paton, Edison Group

Makes sense. Thank you.

OPERATOR

Thank you very much. Our next question comes from Adrian Cundi with Emerging and Frontier Capital. Please unmute your line, turn your video on, and ask your question.

Adrian Cundi, Emerging and Frontier Capital

Hi Kaan. Gentlemen, it's good to see you again. Congratulations first of all on beating our digital growth estimate this quarter. Last time we did the call you said that you sort of had a vision of getting to 30% of plus of turnover sort of by the end of next year. Half from organic, half from potential M&A and 1% a quarter. You seem to be running ahead of that right now. So do you think on an organic basis you might even get to 30% earlier than planned given what's going on and particularly in Pakistan?

Kaan Terzioglu, Group CEO

Well, I think, you know, as I mentioned, the momentum we see not only just in financial services, but entertainment or...

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