Shah Capital, a long-term investor in the operator group with a 7% stake says it is “very disappointed” and outlines radical action to get to $160 share price in 2026
Shah Capital has issued an open letter to the VEON’s board of directors complaining that the company has underachieved for a decade and that radical change is needed. Last week VEON announced it would move its HQ from Amsterdam to Dubai to be closer to its key markets.
Himanshu H Shah, founder of Shah Capital, doesn’t hold back in telling the board where it’s going wrong. His contention is that share price has been 80% lower than it could and should have been over the last 10 years. Listed on Nasdaq, the current share price is $29.50 whereas Shah Capital reckons it could reach $160 per share by 2026 by taking its prescribed course of action.
The letter states, “Veon’s share price continues to languish at ~2.5X EV/EBITDA valuation even with a deleveraged pristine balance sheet, strong recent operating growth metrics and impressive operating outlook as was presented by management on Veon Investor Day in June ’24.”
It continued, “With an unlevered balance sheet and asset rich portfolio of around 30,000 towers and meaningful other assets that can be monetised, Veon should trade at [a] substantially higher valuation compared to its emerging market telecom peers like Airtel Africa, Millicom, and America Movil which are trading at [a] median valuation of about five times their earnings before interest, taxes, depreciation, and amortisation (EBITDA).”
In Shah Capital’s view, VEON does not attract enough coverage from analysts and the coverage is not sufficiently positive. Nor is it perceived as a target for fintech or cloud data centres by investors. It has failed to deliver capital returns to shareholders in the form of equity buybacks and/or dividends since 2021. The management is also seen as flawed: “Perceived lack of Veon HQ deep management bench when one analyzes its earnings transcripts and presentation”.
7 ways to release value
Shah Capital’s recommendations include implementing a $100 million share buy-back scheme without delay. It also urges VEON to list subsidiaries Jazz and/or JazzCash on the Karachi and Dubai stock exchanges and list Ukrainian operator Kyivstar on the Nasdaq to unlock around $3 billion and attract US private investors.
CEO, Kaan Terzioglu, VEON Group CEO said in a statement, “We have consistently maintained transparent communication with our investors and have diligently fulfilled our obligations. With this filing, VEON is now fully compliant with its listing requirements, and we look forward to taking the next steps in unlocking further value for our shareholders.”
The statement was issued on 21 October, when VEON received confirmation that it was compliant with the Nasdaq listing requirements following its 2023 20-F filing.