VEON Ltd. (VEON) Q2 2023 Earnings Report, Transcript and Summary

Hi. Good afternoon, and good morning to everyone, and welcome to VEON's Second Quarter Results Presentation for the period ending 30 June 2023. I'm Nik Kershaw, I'm pleased to be joined in the room today by Kaan Terzioğlu, our Group CEO; along with Joop Brakenhoff, our Group CFO. Today's presentation will begin with the key highlights and business update from Carne. Following this, Joop will discuss the detailed financial results. We'll then hand it back to Kaan to discuss our outlook and priorities for 2023. As ever, we will ensure that there's time for your questions, but would ask that you save this for the end of the presentation. Before getting started, I would like to remind you that we may make forward-looking statements during today's presentation, which involve certain risks and uncertainties. These statements relate in part to the company's anticipated performance and guidance for 2023, future market developments and trends, operational and network development and network investments and the company's ability to rise its targets and commercial and strategic initiatives, including current and future transactions. Certain factors may cause the actual results to differ materially from those in the forward-looking statements including the risks detailed in the company's annual report on Form 20-F and other recent public filings made by the company with the SEC. The earnings release and the earnings presentation, each of which include reconciliations of non-IFRS measures presented today can be downloaded from our website. With that, let me hand it over to Kaan. Kaan Terzioğlu : Thank you, Nik. Good morning and good afternoon to everyone on the call. Thank you very much for joining us for presentation of our second quarter results for 2023. Our performance in the second quarter has again demonstrated the resilience and growth that our digital operator strategy enables us to deliver and gives us the confidence to raise our full year 2023 revenue guidance based on the results of the first half year. On the next slide, I will provide an overview of our results in the second quarter and then go into some more detail on progress on our digital operator strategy, and how this is powering the performance of our operating companies. Thanks to world-class connectivity and high-quality digital services, we maintain a high growth momentum. Before I get into the details, I also want to take a moment to thank the members of the Board and management team who have helped VEON navigate the exceptional challenges of the last 17 months. Today, with a smaller-sized board and restructured headquarters, we successfully transformed our cost base to our new business model with a 55% reduction or $85 million a year savings. I would like to again thank our colleagues at Kyivstar. Our team in Ukraine continues to do a tremendous job keeping Ukrainians connected and putting employee safety first. Now let's turn to our key performance highlights for the second quarter. VEON's revenue growth in local currency neared 20% year-on-year. Service revenues increased at the same pace as top line growth, rising 19.6% year-on-year on local currency terms. Local currency EBITDA expanded at a rate of 13.6% year-on-year, but excluding one-offs, our underlying local currency EBITDA growth in the second quarter of 2023 reached 20.3%. CapEx declined by 16.6% year-on-year to $171 million. And our CapEx intensity for the quarter is standing at 18.7% in line with our full year guidance. We have once again maintained VEON's strong liquidity position with group holding cash and cash equivalents totaling $2.4 billion, of which just under $2 billion is at headquarters as of June 30, 2023, all in U.S. and Western banking institutions. Looking into our revenue performance in greater detail on Slide 7. This marks our sixth consecutive quarter of double-digit local currency revenue growth with good acceleration in the second quarter to 19.6%. This was partly thanks to revenue performance at Kyivstar, which narrowed the gap with other VEON operating companies and delivered 16.8% year-on-year local currency revenue growth. This is a truly impressive result given the challenges that Kyivstar faces in Ukraine. Kyivstar's growth is also a testament to our success at keeping Ukrainians connected, and I have no doubt that the $600 million in investments into Kyivstar infrastructure that we announced in late June will enable us to further enhance this performance in the years ahead. If Kyivstar's results are excluded for illustrative purposes to demonstrate the underlying trends of our operations under normal modus operandi, VEON's local currency revenue growth exceeded 20% for the first time, even as rated annual inflation across our operations slot in the second quarter. We have seen a strong start to the third quarter in July with a positive top line year-on-year performance in U.S. dollar terms. On Slide 8, we have an overview of key performance numbers for VEON's operating companies. In Ukraine, Kyivstar's local currency accelerated significantly despite the ongoing challenges. Across our Central and South Asian markets, they saw 3 of 5 operating companies delivering year-on-year local currency revenue growth in excess of 20%. And the other 2 were not far behind, 17.4 and 19.2 percentage points. EBITDA performance was also solid in most markets with all but one of our operating companies reporting double-digit local currency underlying EBITDA growth and we provide greater details on the nonrecurring items that impacted Kazakhstan, Uzbekistan and Kyrgyzstan in the country performance section of the trading update later. Before we move on to country performance section, I want to stop on Slide 9 to highlight how 4G penetration increase and multi-play subscribers who are consumers of our digital services continued to drive our operational and financial performance. LEON's subscriber base was $156 million at the end of quarter two. 4G users increased 16% to reach $88.5 million. 4G users now account for 57% of our subscriber base. Our focus on 4G for all has yielded an increase of 27 million new 4G users over the last 2 years. Our 4G penetration has risen from 41% in to 57%, and we remain on a path to reach our group-wide target of 70% 4G penetration. We expanded our 4G network, adding more than 8,000 4G sites, an increase of 15.6% year-on-year, providing robust 4G connectivity facilitates our users accessing the mobile digital services that VEON's operating companies offer. Every single day, we make progress towards being a consumer business with a telecom license. Multiplay subscribers who use both 4G connectivity and digital products, spend more time with us, churn less and drive multiple revenue streams and higher revenue generation with 45.7% year-on-year increase. This trend helped to drive mobile ARPU growth which ranged from 9% to 27% year-on-year in local currency across all countries. Let's look to Kyivstar. Kyivstar's is Ukraine's largest operator and remains a symbol of the resilience. VEON and Kyivstar recently announced our long-term commitment to rebuilding Ukraine's telecom infrastructure with a pledge to invest more than $600 million over the next 3 years. Kyivstar's team have once again succeeded at providing millions of users with high-quality connectivity services in and outside of Ukraine. The company also managed to keep around 94% of radio area network operational throughout the second quarter. CapEx in quarter two, increased by 35% year-on-year as we invested in connecting new settlements to our 4G network and install and upgrade base stations and continue to provide base stations with state-of-the-art power solutions for storage and power generation to sustain energy availability for our network. These investments have helped increase the number of 4G users to 13.1 million, which represents 55% of Kyivstar's user base. Kyivstar delivered impressive local currency revenue and EBITDA growth in the second quarter supported by rising 4G penetration and an increase in multiplay customers, which now represents 17% of monthly active users accounting for 24% of B2C revenue. Kyivstar also continues to - its support for charitable causes, employee and customer support and allocated a further 92 million [ph] in quarter two. We recently signed a memorandum of understanding with Rakuten Symphony, a subsidiary of the leading consumer businesses and technology conglomerate Rakuten Group of Japan. The two companies will start cooperating in Ukraine with the goal of accelerating the reconstruction of the country's infrastructure through open radio access networks, which is called open run in the industry and digital services. We have earmarked $600 million to rebuild credit infrastructure over the next 3 years. Rakuten Symphony is a leading provider of open run solutions and has vast experience derived from successfully building the world's first end-to-end fully virtualized cloud-native mobile network with its parent company, Rakuten Mobile. We are excited to partner with Rakuten and deploy a secure, robust 6G capable infrastructure based on Rakuten Symphony's open run solution. Helsi is a gem in Kyivstar's digital operator portfolio. In the context of the ongoing war, Helsi is especially relevant, and it enables Ukrainians to maintain access to vital health care services in their local languages wherever they are. It is the country's largest digital health care health care platform, leading digitalization of health care services. In Ukraine, we have 25.4 million registered patients on Helsi. Helsi application downloads increased by $0.4 million in the second quarter and reached $5.4 million. Our customers booked over 1.8 million of appointments through the Helsi platform in second quarter. Let's move to Pakistan. Just our operating company in Pakistan further accelerated its growth, gaining market share despite the challenging economic environment. Jazz's successful execution of our digital operator strategy, combined with disciplined cost control, supported local currency revenue and EBITDA expansion in excess of 20% year-on-year. 4G penetration in the second quarter of 2023 notched up to 59% of user base, which, combined with Jazz's digital operator offerings drove almost 16% year-on-year rise in multiplay users. One out of four customers consume at least one of our digital services in Pakistan and these customers account for half of our revenues. Jazz's fintech offerings continue to gain momentum with Mobilink Microfinance Bank and JazzCash service revenues, both almost doubling year-on-year in quarter two. JazzCash's rapid growth is a key driver of financial inclusion in Pakistan. I want to share a few highlights of the company's performance on this slide, something many of you have asked for the past periods. JazzCash has 14.7 million monthly active users and the network of 192,000 active merchants. Consumer and micro lending are a key part of just JazzCash's offering. The platform had 1.3 million monthly active borrowers during the second quarter, which is 22% higher year-on-year. JazzCash is also a leader in cash-free transactions. In the last 12 months, we processed 2 billion transactions with a total value of 4.9 trillion Pakistani rupees an increase of 33% year-on-year. The elite financial inclusion in the country with more than 5.6 million financial transactions processed every single day and more than 55,000 digital loans issued daily. Now Kazakhstan. Beeline Kazakhstan continues to gain market share and lead in terms of customer satisfaction as measured by Net Promoter Score. In the second quarter of 2023, local currency revenues were up 19.4%. Normalized for one-offs, underlying growth in revenues was up 20.8% year-on-year. This continues the operator's track record of delivering top line growth in excess of 20% for the ninth consecutive quarter. Local currency EBITDA performance was also up by an impressive 19.8% year-on-year. Adjusted for one-off items, underlying EBITDA growth was 26.2% and year-on-year. Beeline Kazakhstan continues to benefit from execution of NEON's digital operator strategy, with multiple users representing 39% of monthly active users. These are the customers that consume both 4G connectivity and digital services such as BTV, Simply, IZI, Heater [ph] and these customers accounted for 56% of subscriber revenues in second quarter. Beeline Kazakhstan has the highest 4G penetration level with 71% of users accessing high-speed mobile Internet, and it is the first operating company in VEON, reaching our 70% 4G penetration targets. Let's talk about IZI, which is now more than just Kazakhstan's first digital-only operator. And it is on the path to become a consumer super app. In the second quarter of 2023, IZI reached 415,000 active users, which is 4.4 times higher year-on-year. IZI is an all-access SIM card agnostic service. We welcome all consumers and yet 191,000 of the monthly active customers of IZI has chosen SIM card of IZI to become also their telecom service providers. While IZI SIM card users can access mobile voice and data services, the application is a leading entertainment platform that lets users listen to radio, play games, watch movies, even if they don't have an IZI SIM yet. This is another case that highlights the success of our digital operator 1,440 strategy with our local operating company offerings, relevant digital services to its customers to drive growth. IZI users who enjoy the digital experience of the entertainment super app have an ARPU of nearly 4.5 times higher than the IZI users of conventional telecom services. Banglalink revenue was up 17% in the second quarter. This is the company's fifth consecutive quarter of double-digit revenue growth. EBITDA rose at a double-digit pace for the second consecutive quarter, increasing at 18% year-on-year. As a result, market share gains continued with the investments continuing in bundling network. The strong result was achieved despite increases in electricity and fuel costs. Banglalink's total subscriber base surpassed $39 million, rising 7.9% year-on-year. Multiplay users rose by almost 80% year-on-year, to reach $4.8 million and multiplay revenues were up by 83% year-on-year. Banglalink 4G penetration continue to rise as a result of investment into expanding its network with the share of 4G users up by 9 percentage points surpassed $18 million. This represents 46% of our customers in Banglalink. 3 years ago, we started this journey with 12% of our customers enjoying 4G. Banglalink's growth was further supported by the success of its digital products. On the next slide, I will elaborate on Toffee, the country's leading entertainment platform. The largest mobile entertainment platform in Bangladesh, we are encouraged to see that after the World Cup, Toffee continues to maintain a healthy user base with monthly active users reaching 9 million, up 32% year-on-year. And while Toffee is a Banglalink digital service, currently, 68% of users are not Banglalink customers. Again, we are open business for all consumers is regardless of which SIM card they carry. Toffee customers continue to make the most of the platform's wide variety streaming content with the total number of sessions watched by users, up 41% year-on-year to $128 million in the second quarter. Banglalink customers who use Toffee generate 2.8 times the ARPU of a single-play voice customer, which is yet another testament to the value of our strategy of offering high-quality connected digital services to our customers. Let's look to Beeline Uzbekistan. Beeline Uzbekistan grew 20% year-on-year in local currency, driven by double-digit increases in total subscribers and 4G users and data consumption increases. 4G users rose 23.6% year-on-year to $6 million. They represent 69% of the total subscriber base almost reaching our target 70%. Multplay customers rose 28% year-on-year, accounting for 37% of the subscriber base, creating 57% of revenues. You have often previously asked for more details on our digital platforms. And on this slide, you have an overview of some of our strategic digital platforms which we will now be providing on a regular basis. Let me focus on some examples. Tamasha is Pakistan's leading entertainment platform. Following the launch of original content, only available on its platform Tamasha is delivering impressive growth. Tamasha got Pakistan's best online streaming platform award at the Pakistan Digital Awards in July this year. Simply, the neobank in Kazakhstan was launched in June 2021 and surpassed 250,000 monthly active users, an increase of 2.2 times year-on-year. In Kazakhstan, again, our entertainment platform, BTV, is another successful pillar of our digital offerings. The streaming service, which has both mobile and IPTV offerings, has now 750,000 monthly active users, up 25% year-on-year. MyBL, Banglalink Super App in addition to the essential self-care services it provides also offers streaming music, e-health and e-learning services, in addition to gaming and online shopping for Banglalink customers. Monthly active users of MyBL increased by 63% year-on-year, reaching 6.9 million users. Launched in December 2022, by just in partnership with Turkcell. The free communication and lifestyle platform BIP surpassed 850,000 monthly active users at the end of the quarter. On August 1, Banglalink launched big service to its customers as well. That marks the end of our country performance review. And now before I ask Joop to come in, I will update you on the latest developments around the sale of our Russian operations. On November 24, we announced that following a competitive process, VEON had entered into a agreement to sell its Russian operations to certain members of the Beeline Russia management team. The enterprise value at that time was $5 billion. On February 7, the Russian regulator issued its approval of the proposed sale. With the first quarter results in May 4, we noted that PJSC VimpelCom, had independently acquired approximately $1.6 billion in VEON Holdings bonds. This has had a material impact on our balance sheet, reducing our leverage ratio to 1.68 as of June 30, 2023. On May 30, we announced the submission of all necessary documentation to Euroclear, Clearstream and register for cancellation of VEON’s bond held by the subsidiary PJSC VimpelCom. With this submission, VEON entered the final stages in the closing of the sale of its Russia operations. We work to finalize the sale of our Russian assets continues as a top priority. And we continue to engage with the relevant European authorities for clarity on the ability of the registrars and Euroclear Clearstream to cancel and write down the relevant amount of bonds without need for a separate license. We have full commitment from both parties, the buyer and the seller to conclude the transaction as soon as possible. We are also aware of the importance of concluding the transaction ahead of October 2023 bond maturities. It remains, however, very important that we comply with all legal and regulatory requirements, so please bear with us as we move to conclude the transaction. As a clear side of prompting ownership change, I have personally resigned from the Board of PJSC VimpelCom as of August 1. As always, our stakeholders' interest remain paramount. While cancellation of the bonds via the clearing systems remains the optimal solution, we are continuing to explore all options to protect our interests. Let me pause here and hand the call over to Joop to discuss our second quarter financial performance in more detail.

Thanks, Kaan. Good morning, good afternoon to everyone on the call today. I will provide some financial highlights for the first half of the year and elaborate on the financials for our second quarter results in more detail. But before I start with our most recent results, let me recap the recent developments with regards to the filing of our 2022 audited financial statements. Our 2022 audit was finalized, and we submitted the audited final to the AFM and SEC and NASDAQ compliance was confirmed in terms of 2002 annual reporting. On July 24, Vion announced that it filed its annual report on Form 20-F for the year ended December 31, 2022, to the SEC. The Form 20-F is also available on the Investor Relations section of the company's website. As a result, of Form 20-F filing, the listing qualification department of the NASDAQ stock market confirmed that VEON has regained compliance with the NASDAQ listing rules through the exception granted by NASDAQ for its delayed filing. Our auto financial statements underline the importance of a more compact VEON, growing remarkably faster and highlighting the profitability improvement of our continuing operations from USD 0.04 in 2021 to USD 0.37 in 2022. The Form 20F filed on July 24 also contains a correction to VEON Limited's financial statements for the year ended December 31, 2022, impacting other comprehensive income is no impact to total consolidated equity. There is related to the sale of the Celgene [ph] operations. and has no impact on the results on the sale of Celgen operations as presented on the consolidated income statement and no impact on the consolidated income statement as a whole. Although the error has no impact also on the consolidated statement of financial position, the consolidated stables of cash flows, adjusted EBITDA not on beyond financial covenants for its financing arrangements, we determined the error in reporting as a material weakness and management is taking and will continue to take steps to remediate this to weakness and to strengthen the company's control environment. Now moving on to the first half year highlights. VEON recorded another set of positive local currency financial performance in the first half of 2023. The year-on-year revenue and EBITDA rising by double-digit status n local currency terms, up 30.5% and 12.5%, respectively. This growth is the result of inflationary pricing measures and the continued execution of our digital operator strategy, which has driven increases in the number of 4G and multiplay users and seeing us increase our market share in all markets. Local currency fluctuations against the dollar in some countries have once again led to a lower revenue and EBITDA performance in our reporting currency in U.S. dollars. As Kaan already mentioned, we have seen a strong start to the third quarter. In July, we see positive year-on-year growth in our reported currency. As we move towards completion of the sale of the Russian business, the purchase of $1.6 billion of VEON Holdings B.V. bonds by PTSEVimbocom [ph] and significantly deleveraged our balance sheet, bringing gross debt down by 58% compared to a year ago, with net debt decreasing 72% over the same period. Its true net debt is now down to $1.7 billion as of June 30, 2023. Elaborating on our financial highlights for our second quarter results. I'll start with some details on revenues on Slide 24. We continue to deliver balanced growth across our countries as we execute on inflationary pricing while growing our base of 4G and multiplay customers. All our operating companies delivered double-digit year-on-year local currency revenue growth as they continue to execute on their digital operating strategies. As I touched upon in the previous slide, revenue growth in U.S. dollar terms was impacted by a significant depreciation of logo currencies across multiple markets and particularly in Pakistan by 41% and Ukraine by 25% and Bangladesh by 16%. Revenue growth in Kazakhstan was also affected by a one-off prior period adjustment of $2 million. Adjusting for this Kazakhstan year-on-year revenue growth was 20.8%. Moving on to Slide 25, where we take a closer look at our EBITDA and EBITDA margin. VEON's local currency EBITDA rose 13.6% [ph] year-on-year in the second quarter. This result was achieved despite a group-wide 54% year-on-year increase in energy costs and extra or one-offs in our Kazakhstan, Uzbekistan and Kyrgyzstan markets. Adjusting for these one-offs, normalized group EBITDA increased by 20.3% year-on-year in local currency terms. On Slide 26, we can look at some important balance sheet metrics. The group's liquidity position remains strong with a total cash position of $2.4 billion, excluding banking operations in Pakistan. The $2 billion held at HQ level. At the local company level, VEON's operations remained self-sufficient. As of June 30, 2023, DGSE VimpelCom has independently acquired $1.6 billion of VilHoldings BV notes, largely in line with what was reported in the Q1 2023 trading update. HQ external debt declined to $1.7 billion. Moving to the next slide, I'll talk about our debt and liquidity positions in more detail. Our gross debt, excluding leases stands at $4.3 billion with a total cash position of $2.4 billion, as mentioned earlier. Of this $2.4 billion, $2 billion is held at headquarter level. Net debt currently totals $1.9 billion, excluding leases, was $800 million in capitalized lease. Now a step shot over deputy schedule. First, let's again note our total cash position on the far left of the slide, totaling $2.4 billion. As mentioned earlier in April 23, this position has been affected by the exercise of the put option by holders of $459 million of 2023 notes, resulting in a total CASK [ph] outflow of $450 million. As the chart illustrates, we have taken steps to create a more favorable debt maturity schedule, including through the scheme of arrangement and ongoing sale of our resin business, which we have discussed on previous slides. VEON has a little under $500 million debt maturing in the next 12 months. In addition to this, there's $1.1 billion outstanding under RCF this can be rolled over into final maturity dates in 2024 and 2025. I would also note that we continue to meet all our legal obligations for all interest and principal payments due on our debt in a timely minute. On this slide, I will outline some of the changes to our cost of debt and average debt maturity. The cost of borrowing versus the first quarter of 2023 has been impacted by higher interest rates floating U.S. dollar at Pakistan rupee debt. Average debt maturity, excluding RCF, stands at 2.7 years. With the completion of the scheme of arrangement, maturity dates for February and April 23 notes have been moved to October and December 2023, respectively I will now hand back over to Kaan for 2023 guidance and closing remarks. Kaan Terzioğlu: Thank you, Joop. After delivering another strong quarter of local currency revenue and EBITDA performance, we are raising our full year guidance for 2023. We are increasing our local currency guidance for the revenue growth from 10% to 14%, up to 16% to 19%. We are maintaining our local currency guidance for EBITDA growth at 10% to 14%. Normalizing the impact of one-offs we discussed today and material one-off in Pakistan in quarter 4 of 2022 and underlying local currency EBITDA growth for the full year is expected in the range of 15% to 17% and for revenues for 17% to 20%. 2023 guidance for group CapEx intensity stands at between 18% to 20%. And to conclude our presentation, let me provide an overview of our key ambitions for 2023. First, although it is taking longer than we hoped, I will reiterate that finalizing the sale of our Russian assets remains priority number one. I recently stepped down from the Board of Directors indicating the change of the ownership process has started. The scheme of arrangement has been completed, and we will continue to focus on optimizing our capital structure, effective cash management and regaining access to the debt capital markets over time. Three, you have seen the progress we have made on all our digital operator strategy, and we remain focused on this as we execute on 4G for roll, further expand our 4G network and portfolio of digital services and providing a best-in-class customer experience. Recently, we announced changes to our HQ management team, creating a leaner group management in line with its portfolio size, while strengthening operating company board. VEON is developing its distributed decision-making model further with a lean headquarters and increasingly self-sufficient operating companies, each with a local Board of Directors. The linear group management will increase VEON's agility in decision-making at the headquarters and support the group's evolution into a more compact and faster-growing entity as the group's portfolio evolves. This also follows the decision taken during VEON's recent Annual General Meeting, where the company's shareholders supported a smaller VEON Board of Directors, reducing the board size from 11 to 7 members and including myself as a Board member as well. The changes we are implementing across our headquarters are expected to deliver more than USD 8 to USD 5 million in annual savings to the group. Four, the work on monetizing our existing infrastructure assets, specifically our tower assets continues. This will allow us to further strengthen our balance sheet and unlock potential. Finally, we are committed to unlocking shareholder value. This includes what was already noted about optimizing our capital structure, concluding the sale of our Russian assets monetizing our infrastructure assets as well as exploring the potential for local listings of our operating companies and to engage strategic investors for our digital services. Let me once more express my gratitude to all VEON employees for their hard work in driving VEON forwards. With that, I would like to thank you for your attention, and I will hand over to Nick, so we can move into Q&A.

Good afternoon, everyone. Thanks very much for dialing in. Kaan actually, the first question for you, unsurprised me there anything additional you can say around the timing of the closing of the Russian sale? Kaan Terzioğlu: Thanks, Nick. It's a very fashionable question, and I would like to be as clear as possible on this. We are committed as the buyer and seller to close this transaction as soon as possible. We are equally committed to complying with the regulations, which happen to increase over time and change and have different interpretations. Irregardless of that, we expect conclusion of this transaction as soon as possible, and we think we have ample time until the maturities of October bonds arrive. As I mentioned earlier, I think we are moving on, and my resignation from the Board of PJSC is another step articulating the change of the ownership status starting.

And, you've reported some very strong operational results. Can you maybe comment on some of the key drivers of this? Kaan Terzioğlu: First of all, I'm particularly happy the way our digital operators strategy is delivering results. And the level our operating companies are embracing and executing on this. Without any exception, all our operating companies are gaining market share, but more importantly, thanks to our digital operator strategy, they are also gaining wallet share. It is clear that as we engage further with entertainment, financial services, education and health services through applications, the engagement levels increased, data consumption increases, ARPU levels, triples and the churn outs. This is the key results. Why we are able to increase our prices as an inflationary manner and do not suffer from loss of customers. Our customers actually welcome to have more services from us and also pay for it. I'm very glad that we are executing on this on exceptionally well in all the fronts.

So given the recent news stay from Russia, do you see any risk in obtaining the final approvals? Kaan Terzioğlu: In the today's world, not to assume any risks would be not, I think, intelligent. But we have completed all the work that we can do. We have taken care of all our people in the best way we have served our customers in the highest quality possible, and I do not expect any negative surprises. But of course, we are diligent in terms of monitoring a step.

Then maybe a question for you, Joop. Why has there not been more bonds repurchased during the quarter?

We have to clarify. [indiscernible] not party to this repurchase agreement. During the first quarter, VEON informed that PDSPcom [ph] independently concluded the purchase of $1.6 billion of unholding notes in order to satisfy certain recent regulatory obligations. The ongoing process for purchasing bonds is being handled independently by PSE. So we are not in a position to be able to comment on this.

Thanks. And also still with you, can you maybe just comment on how the Russia sale is and will be impacting VEON's financials?

Yes. As we have previously disclosed, the transaction being concluded at an enterprise value of approximately $5 million as of December 31, 2022. As of June 30, we already saw a significant reduction in consolidated gross debt from $7.5 billion as of December '22 to use $5.2 billion at the end of Q2 2023. We also reported group gearing of 1.68, down from 2.61 times at year-end. As PDC Vibegron [ph] the balance of the transaction, this will have a further positive impact on both debt and gearing levels as well as including our total balance sheet.

Thanks, Joop. Can you maybe just update us on the status of the tau transactions, please? Kaan Terzioğlu: Thank you, Nik. We are committed to monetize our towers in all the markets that we operate in. And please don't get me wrong. It's not because we need cash, it's actually what our strategy is. We are a consumer business with telecom licenses. We would like to invest in areas where we leverage our low-cost customer acquisition capabilities and excellent distribution capabilities for consumer business expansion in verticals such as financial services, entertainment, education and health care. We believe towers as a passive part of our network is better utilized, managed and serviced by independent tower companies. That's why our commitment to monetize our towers continues. We are progressing in every single country on this aspect. We do not hurry unless we see the right value for our stakeholders. That's why it may take longer but I truly believe that monetization of the towers will be a key driver of our next stage of growth.

Thanks, Kaan. Could you update us on our capital structure plans? Kaan Terzioğlu: Yes, Nick. As it was discussed previously, one of our recent priorities has been to ensure the group has a strong liquidity position, which has seen our cash balance at headquarters at the amount of $2 billion at quarter end following the conclusion of the put option in April. We expect that on the conclusion of the sale, we will be a lower leverage company. The anticipated tower sales, in particular, are expected to support a reduction in group dollar debt as we move towards increased local currency debt in their country of operations. We are currently actively evaluating various additional options around the appropriate capital structure for the group post the conclusion of the Russia sale.

Thanks. Kaan, could you maybe just talk a little bit about the current operating environment in Pakistan? Kaan Terzioğlu: We are a long-term investor, and we are committed to Pakistan. In emerging markets, from time to time, turbulences can happen economically or politically. Irregardless of that, we see immense opportunities in Pakistan, where maybe others see problems. We are progressing with our digital operator strategy, growing our business about 20% year-on-year growth, continuing to be disciplined on financial management entering into adjacent markets like financial services, entertainment and in the future, also in education and health care. So yes, Pakistan has issues currently, especially when it comes to foreign currency fluctuations, but this does not change our commitment to the country.

Thank you. Could you just comment a little bit on the revised guidance and maybe the normalized performance that you've seen and expect/ Kaan Terzioğlu: Yes. As I mentioned, if we would normalize the one-offs of last year and also maybe this year, although much smaller, the underlying performance that we see is projecting revenues growth of 17% to 20% and an EBITDA growth of 15% to 17%. We have been working on the higher end of our performance expectations, especially in Q2. And I see no reason this to change. Actually, I already mentioned that July was in line with the Q2 performance and actually even delivering hard currency returns as well.

Great. Thank you. And that's another one that's come through from a few people is can you maybe comment on the impact of the Canadian sanctions? Kaan Terzioğlu: Well, to be clear, there is no impact of Canadian sections to be on. It is a pity that Canadian government unlike United States, which has considered telecommunications industry as a humanitarian service providers and excluded from sanctions, Canada decided to sanction our telecom company as well in Russia, but it has no practical impacts to our operations.

I think then we've got time for one last question also this come through from a few people. Could you maybe just comment on the risk of nationalization in Ukraine? Kaan Terzioğlu: Look, VEON is a public listed company in NASDAQ and Europe. And we have United American, European, U.K. investors, who count on us and who support us and who encourage us to continue investing in Ukraine. We have an international management team and independent Board of Directors. We have committed an additional $600 million to rebuild Ukraine's infrastructure. And our 4,000 people in Ukraine is working relentlessly day and night to connect Ukrainians and keep them safe. I believe we have to focus on the value Kyivstar and VEON provides to Ukraine .And clearly, we are always managing our risks in the most detailed way. We raised this in all the transparent way in reports that we issue, but I am confident that our value in Kyivstar is realized, recognized and our further commitment together with Rakuten to further utilize open run in the country is going to be also recognized very positively.

Great. Thanks very much, Kaan and Joop. We're out of time now, please, if there are any more questions. I know there were a couple more that came through that we don't have time, but now we will get back to you if anything additional, please feel free to reach out as always. Thank you very much, everyone, for your time and for dialing in. Kaan Terzioğlu: Thank you.