VEON's Bold Move: USD 35 Million Share Buyback

VEON Ltd., a global digital operator, has announced a significant strategic move: a USD 35 million share buyback program. This initiative comes at a pivotal moment for the company, as it transitions from a dual listing on NASDAQ and Euronext Amsterdam to a sole listing on NASDAQ. The buyback program is not just a financial maneuver; it's a statement of confidence in VEON's future prospects and a testament to its robust financial health.



The Strategic Rationale

VEON's decision to proceed with a share buyback is multifaceted. Firstly, it signals to investors that the company believes its stock is undervalued. With a Price-to-Earnings (P/E) ratio of 6.23 and a Price-to-Book (P/B) ratio of 0.58, VEON's stock appears to be trading at a discount, making it an attractive target for a buyback. By reducing the number of outstanding shares, VEON can potentially increase its earnings per share (EPS), which could drive up the stock price.

Secondly, the buyback program aligns with VEON's broader strategy to optimize its capital structure. The company has been proactive in managing its debt, as evidenced by its recent debt refinancing activities. For instance, VEON issued USD 500 million senior secured notes in October 2023, reducing its average borrowing costs by 0.45% and extending its debt repayment timeline by 3-5 years. This financial maneuvering has positioned VEON to undertake the share buyback program without compromising its financial stability.

Thirdly, the buyback program is timed to coincide with VEON's delisting from Euronext Amsterdam and its transition to a sole listing on NASDAQ. This strategic move simplifies and streamlines the company's reporting requirements, allowing it to focus more on operational efficiency and growth. As stated in the announcement, "VEON anticipates that the Delisting will be in the best interests of the Company as a whole, including both its current and potential investors."

Market Dynamics and Historical Performance

The current market dynamics, with the NASDAQ index showing a 4.45% increase on March 1, 2025, suggest a positive market environment. This could amplify the impact of the buyback program, as investors may be more inclined to buy into a company that is actively managing its share capital. Additionally, VEON's decision to delist from Euronext Amsterdam and focus solely on NASDAQ could streamline reporting requirements and potentially attract more U.S.-based investors, further boosting stock price and investor sentiment.

VEON's stock has shown strong performance in recent months, with a 46.43% increase over the past three months and a 69.73% increase over the past six months. This upward trend suggests that investors are already optimistic about the company's prospects, and a share buyback could reinforce this optimism, leading to further price appreciation.



Comparative Analysis

VEON's decision to proceed with a share buyback program can be compared to similar initiatives in the telecommunications sector to draw several insights. For instance, Bharti Airtel Limited, a major player in the telecommunications sector, has shown a positive trend in its stock performance, with a 1-year change of +52.44% and a 3-year change of +129.39%. This indicates that share buybacks, when executed in a favorable market environment, can enhance shareholder value and boost stock performance.

Secondly, VEON's decision to delist from Euronext Amsterdam and focus on Nasdaq aligns with its strategic move to simplify and streamline reporting requirements. This move is similar to other companies in the sector that have delisted from one exchange to focus on another, often to attract a different investor base or to comply with regulatory requirements. For example, Rogers Communications Inc. has shown a 1-year change of -28.36% and a 3-year change of -26.88%, which might indicate that delisting and relisting strategies can have varying impacts on stock performance depending on market conditions and investor sentiment.

Conclusion

In conclusion, VEON's decision to proceed with a USD 35 million share buyback program following its delisting from Euronext Amsterdam and transition to Nasdaq is a strategic move that aligns with similar initiatives in the telecommunications sector. The positive stock performance of companies like Bharti Airtel Limited and the varying impacts of delisting and relisting strategies on stock performance provide valuable insights into the potential outcomes of VEON's share buyback program. The timing of the buyback, coupled with the positive market response to VEON's strategic moves, suggests that the program could further enhance shareholder value and signal confidence in the company's future prospects.