Consolidated revenues of Russian mobile major Veon (formerly VimpelCom) declined by 5% year on year in 1Q21 to $2bn, with Ebitda down 5% y/y to $0.9bn, making a 44% margin. Consolidated net income grew 21% y/y to $0.13bn, helped by a drop in interest costs.

As reported by bne InelliNews, in 4Q20 Veon saw an improvement in its results in Russia, but provided no clear guidance on the 2021 dividend and had high management turnover.

Despite the decline in the top line and earnings, BCS Global Markets note that the results of Veon suggest an improvement versus the previous quarter and an increase in revenue and EBITDA at constant currency (+4%), which in consolidated numbers were offset by weaker local currencies versus the US dollar.

When analysed in local currencies, there was sequential improvement in the largest country units, including in Russia. 

In Russia total revenue returned to growth (+1% y/y in ruble terms), mostly driven by an increase in handset sales (+24%) and fixed line revenue (+8%), while mobile service revenue still declined by 2%. However, this was still not enough yet to allow for an EBITDA increase (down 5%).

Performance in other markets was mixed, with Pakistan (+12% y/y), Ukraine (+15% y/y) and Kazakhstan (+17% y/y) delivering double-digit revenue growth denominated in local currencies, and slightly better-than-expected performances. At the same time, results in Bangladesh and Algeria, which were somewhat affected by the resurgence of coronavirus (COVID-19), underperformed the forecasts.

BCS GM suggests focusing on the performance of Veon by country, and signs of turnaround in Russia, adjusted for COVID-19 impact, as well as the update on its planned spend on spectrum in 2021, disputes in Pakistan, while affirming a Hold rating on the company's shares.

The company slightly increased its FY21 guidance, and it now expects a mid-single-digit growth in revenue and EBITDA denominated in local currencies (versus its previous guidance of low to mid-single-digit growth), although "this still looks a bit conservative to us given the easier comps for the rest of the year," Sova Capital commented, while affirming a Hold rating on VEON shares.

In addition, VEON now has separate legal entities to hold its tower assets. On the conference call, VEON also mentioned that the markets closest to the crystallisation of their value are Russia and Bangladesh.