VEON responds to shareholder criticism, restating commitment to value creation

In an open letter, the operator group pledges “to maintain an open dialogue with all our shareholders as we look to unlock Veon’s full potential”

VEON’s has published an open letter in a response to Shah Capital’s complaints about the telco group’s failure to deliver shareholder value over the last decade. The response welcomes the letter, thanking Shah Capital for its continued support and feedback.

It points out that VEON’s share price has more than doubled in the last two years but agrees with Shah Capital that there is room for further improvement, “as VEON positions itself as a leading opportunity for investors seeking growth in frontier markets”.

In its reponse to Shah Capital it implicitly refutes claims that it does not communicate well enough with shareholders saying its “engagement with investors, particularly across Europe and the US. remains strong”.

Looking to digital revenues

The response letter stressed that its digital operator strategy is evolving, to provide services across a range of verticals, adding that the operator group constantly reviews options “to crystallise the value of our business and assets we own”.

At its Q2 earning report in August, CEO Kaan Terzioğlu (pictured above) said, “With 12.1% growth in topline and 10.9% growth in EBITDA in US dollars, I am delighted to be back with a billion dollar quarter…I am also happy to report for the first time the direct digital revenues generated through our digital financial services, entertainment services, healthcare services, advertising services and Super apps. This quarter, our direct digital revenues exceeded 10% of our total revenues growing 77% year on year. 

“Our digital services are not only driving more consumption, helping with retention, improving ARPU of our digital operators but they now also directly contribute to our topline growth through interest income, advertising revenues, subscription services, platform commissions, and pay-per-view revenues.”

Better governance

Regarding Shah Capital’s call for a better governance model, Veon said it refines its structure frequently, pointing to its plan to strategy to shift its HQ from Amsterdam to Dubai to be closer to its key markets. VEON also intends to consolidate trading on the Nasdaq and delist from Euronext Amsterdam.

“As always, VEON appreciates the constructive engagement from its shareholders. Our Board and Management will continue to maintain an open dialogue with all our shareholders as we look to unlock Veon’s full potential,” the company added.

As my first editor used to say, “Only results count”. So it will be interesting to see how VEON’s planned changes play out.