VEON Ltd. (NASDAQ:VEON) Q3 2023 Earnings Call Transcript

Kaan Terzioğlu: Yes, I will also — Joop, you can add to what I will say. But clearly, we see our revenues growing actually much faster than our cost structure is growing. This is thanks to two things. One, of course, us having more wallet share from the adjacent markets and ability to increase our prices, while keeping the customers, which is very important. It’s not only about inflationary price increases. It’s actually increasing the value that we offer to the customers and them embracing this in a positive way. And of course, the second important thing, especially this year, while we have gone through our restructuring, we have lowered our headquarters cost by 55%. And this is basically a sign that as a company we are agile, we can adapt to new conditions.

As we exited from Russia, we reflected this also in our HQ run rate cost. And that of course will — has its impact for next year. I’m very happy currently with the margin expansion that we have demonstrated in Q3 with — or more than 4 percentage points. And I think, given our structure with higher growth expectations, I think, this trend will continue at least one or two more years. Joop, anything you would like to add?

Joop Brakenhoff : Yes, Kaan, I think it’s good to mention that, of course, in our challenging markets, Bangladesh and Kyrgyzstan, where we’re not the number one, our margins are a little bit lower. And also more difficult to increase compared to the markets where we are number one, like in Pakistan. So that also has an impact, of course, on how we can manage EBITDA.

Faisal Ghori: Our last question comes from [Anjali Doshi]. How do you view the optimal mix between HoldCo and OpCo debt in local currency. On a normalized basis, what is the cash level you’d like to keep at HoldCo?

Joop Brakenhoff: Yes, we — it’s very clear that we want to de-leverage the group as a total, whereby we also want to leverage operating companies in local currency to a normalized level. That means that we will have going forward more local currency debt than dollar debt at the center, right? That balance will shift. And what we also think about is that probably we need a cash level of several hundred, $300 million, $400 million at HQ.

Faisal Ghori: Thank you everybody for joining our call.

Kaan Terzioğlu: So maybe if I may add something. You know, naturally over the last two years, we — I named it as the fortress of balance sheet. We needed it, we did it well. But of course moving onwards, you should expect us reaching out effective use of cash balances. And we realized that over the last two years it was difficult to spot this. We had always ample liquidity and we needed it. I think that was the right thing to do. But moving onwards, you will see us much more lean when it comes to cash management. Thank you.

Faisal Ghori: Thank you everybody for joining our call. And with that, we’ll close.