Page 17 - bne_Tech_02_2020

Telecom
February 2020 www.intellinews.com I Page 17
Russia's VEON to sell business in Armenia
Major Russian mobile operator Veon (former Vimpelcom) confirmed to UCom its intention to sell 100% in its Armenian business, without providing any further details. Veon has both fixed and mobile line operations in Armenia.
Veon, controlled by Alfa Group of billionaire Mikhail Fridman, is a multi-national operator with branches in Russia, Ukraine, Algeria, Pakistan, Bangladesh, and other territories. However, as
of the end of 2019 the company has been making high profile appointments to boost its digital development profile.
"Looking to sell smaller units is in line with Veon’s strategy," BCS Global Markets commented on January 16, adding that the deal would not change the forecast for the dividend per share decline in 2020, but "would somewhat help the cash flow situation".
BCS GM estimates the price of the Armenian unit at $50mn-60mn price, or about 1% of Veon's market capitalisation, while seeing the possible deal as positive for the company.
"Veon stopped disclosing the unit’s results several years ago, but we estimate the business could have generated $20mn-25mn EBITDA in 2019," the analysts wrote, while assuming the Armenian unit has no debt Any cash flow generated from
the deal would be welcome as Veon is expected to see a decline in cash flow in 2020, as well as other spending as possible $300mn buyout of minorities and $300mn-450mn payment for license renewal (both in Pakistan).
Veon posted revenue decline of 4% year-on-year under IFRS to $2.2bn in 3Q19, with Ebitda up by 1% to $0.9bn. The company missed analysts’ expectations by 2%-3%, with the main negative effect coming from tax restoration in Pakistan operations.
Veon revenue performance in Russia was weak with mobile services down 2% in ruble terms (accelerating decline from 1% in 2Q19). But EBITDA still grew 3.5% y/y supported by low comparison base of 3Q18. Strong performance continued in Ukraine where Veon upped revenue and EBITDA grew respective 18% and 28% in hryvnia terms – strong performance continued.