Dutch telecoms group Veon to sell Russian business Beeline

Telecoms group Veon is selling its Russian Beeline arm as it seeks to extricate itself from a business that has depressed its valuation since the outbreak of the war in Ukraine.

The Dutch-based company said it was conducting a “competitive sales process” to achieve an “optimal outcome” for stakeholders, including shareholders, creditors and employees working in and outside Russia.

Veon’s biggest shareholder is LetterOne, the investment vehicle set up by sanctioned billionaire Mikhail Fridman, which has a 48 per cent holding. Fridman stepped down as director of LetterOne and had his assets frozen following the EU’s imposition of sanctions this year.

The proposed sale of Beeline lifted Veon’s share price, which plummeted more than 80 per cent after the Russians invaded. By early morning on Wednesday, they had risen 9 per cent, although they are still trading near historic lows of $0.35.

The Beeline business accounted for 52 per cent of Veon’s $5.2bn revenues in the first three quarters of 2022, and just under half of its $1.1bn in earnings before interest, tax, depreciation and amortisation.

Veon has been in an uncomfortable situation since Russia launched its offensive in Ukraine, as the two countries represent some of its most important markets.

Kyivstar, the group’s business in Ukraine, its third-largest market after Russia and Pakistan, has suffered numerous targeted attacks since the outbreak of the war.

Separately, in Russian occupied territories, some Ukrainian telecoms infrastructure has been usurped, with data rerouted to Kremlin-backed telecoms providers.

Scores of companies have sought to reduce their exposure to Russian companies and sanctioned individuals since the war began in February, sparking a humanitarian crisis.

In March, the Financial Times reported that lenders, including Citigroup, ING and JPMorgan were reviewing their relationship with Veon in light of the sanctions.

Speaking to shareholders last month, Veon’s chief executive Kaan Terzioglu said the group had made good progress towards optimising the company’s capital structure as it seeks to stabilise it in the longer term.

He stressed the company was not in default on any of its bonds or bank debt.

Terzioglu also highlighted Bangladesh, Kazakhstan, Uzbekistan and Kyrgyzstan as key growth markets, more so than the company’s “mature” geographies.

On Ukraine, he noted that “Kyivstar continues its exceptional work to protect its network from both physical and cyber threats” and had managed to ensure that 93 per cent of its infrastructure remains operational.