VEON Q1 2025 slides: Digital revenues surge 50%, driving return to billion-dollar quarter

Introduction & Market Context

VEON Ltd (AS:VON) . (NASDAQ:VEON) reported strong first-quarter 2025 results on May 15, highlighting the success of its digital transformation strategy. The telecommunications company, which operates across several emerging markets, has returned to "billion-dollar-a-quarter" status, with total revenue reaching $1,026 million, representing an 8.9% year-over-year increase in reported currency.

As shown in the following slide summarizing VEON’s strong start to 2025, the company delivered robust growth across key metrics while advancing its strategic initiatives:

Quarterly Performance Highlights

VEON’s first quarter was marked by significant growth in both revenue and profitability. Total (EPA:TTEF) revenue increased by 8.9% year-over-year to $1,026 million, while EBITDA grew by 13.7% to $439 million. The EBITDA margin expanded by 1.8 percentage points to reach 42.8%.

The company’s performance was particularly strong in underlying local currency terms, with revenue growing by 12.9% and EBITDA by 10.4% when adjusting for one-time factors including a cyber attack impact in Ukraine and deconsolidation effects.

The following slide provides a comprehensive overview of VEON’s Q1 2025 financial highlights:

VEON’s revenue and EBITDA growth have shown consistent improvement over recent quarters, outpacing inflation across its markets. This trend is clearly illustrated in the company’s year-over-year performance metrics:

Digital Transformation Success

The standout story in VEON’s Q1 results was the remarkable growth in its digital services segment. Direct digital revenues surged by 50.2% year-over-year to reach $147 million, now representing 14.3% of total revenues, up from 10.4% in Q1 2024. This growth demonstrates the success of VEON’s strategic pivot toward digital services.

The following chart illustrates VEON’s impressive journey in growing direct digital revenues as a percentage of total revenues:

VEON’s digital ecosystem has expanded significantly, with cumulative monthly active users (MAU) across all services reaching 125.1 million, a 25.5% increase year-over-year. Digital-only users grew even faster, up 58.3% to 32.4 million. The transaction value across these platforms reached $40.7 billion on a last-twelve-months basis, representing a 59.4% increase in local currency terms.

The company’s digital ecosystem spans multiple categories, including financial services, health, learning, communication, entertainment, and enterprise services:

Mobile financial services have been a particularly strong performer within VEON’s digital portfolio. JazzCash in Pakistan leads the way with 20.6 million monthly active users (1.2x year-over-year growth) and 10,756 billion PKR in transaction value (62.8% year-over-year growth). Other financial services like Simply in Kazakhstan and Beepul in Uzbekistan have also shown strong user growth:

Entertainment platforms represent another important component of VEON’s digital strategy, with Tamasha in Pakistan reaching 16.5 million monthly active users (37.6% year-over-year growth) and other platforms showing varied performance across markets:

Regional Performance Analysis

VEON’s performance varied across its operating markets, with Pakistan and Ukraine showing particularly strong results, while Bangladesh faced more challenging conditions.

In Pakistan, total revenue grew by 20.4% in USD terms and 20.3% in local currency. Direct digital revenue surged by 49.5%, now comprising 27.7% of total revenues in the market. EBITDA increased by 13.2%, while CAPEX rose by 78.4%:

Ukraine’s operations demonstrated remarkable resilience and growth despite ongoing challenges. Total revenue increased by 36.9% in USD terms and 20.2% in underlying local currency when adjusting for cyber attack impacts. Direct digital revenue grew by an impressive 140.7%, though it still represents just 3.1% of total revenues in the market:

Kazakhstan showed solid underlying performance with 11.5% revenue growth in local currency terms when adjusting for the deconsolidation of TNS+. Direct digital revenue increased by 29.4%, now comprising 12.1% of total revenues in the market:

Uzbekistan delivered strong results with 13.1% revenue growth in local currency and 16.5% EBITDA growth. Direct digital revenue surged by 224.5%, now representing 10.5% of total revenues in the market:

Strategic Initiatives & Outlook

VEON continues to execute on its asset-light strategy, with plans to monetize infrastructure assets and progress on the strategic partnership with Engro Corporation in Pakistan. The company has also commenced the second phase of its share buyback program and is making progress on Kyivstar’s Nasdaq listing.

On the financial front, VEON repaid the April 2025 VEON Holdings notes ($472 million) and preserved liquidity with a $210 million syndicated term loan. The company’s net debt to LTM EBITDA ratio improved to 1.2x in Q1 2025 from 1.3x in Q4 2024.

Looking ahead, VEON maintained its 2025 guidance, projecting 12-14% underlying revenue growth and 13-15% underlying EBITDA growth, with capital expenditure intensity expected to be in the range of 17-19%.

The company’s multiplay strategy continues to drive revenue growth, with 4G users increasing by 3.3% year-over-year to 101 million, representing 67% penetration (up 4.3 percentage points). Multiplay ARPU reached $3.4, significantly higher than voice-only ARPU of $0.9, highlighting the value of VEON’s digital service bundling approach.

VEON’s Q1 2025 results demonstrate the company’s successful execution of its digital transformation strategy, with strong growth in digital revenues and continued expansion of its digital ecosystem across markets. While performance varies by region, the overall trajectory remains positive, with the company well-positioned to achieve its full-year guidance.

Full presentation:

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