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VEON Group: A Telecom Titan Capitalizing on Frontier Markets with 5G and AI-Driven Innovation

Cyrus ColeMonday, May 12, 2025 12:50 pm ET
52min read

In an era where telecom giants are scrambling to dominate saturated markets, VEON Group (NASDAQ: VEON) stands out as a contrarian play on underpenetrated regions and cutting-edge technology. With a focus on Commonwealth of Independent States (CIS) nations and South Asia, VEON is leveraging 5G infrastructure, AI-driven network optimization, and digital services to unlock secular growth in markets overlooked by Western investors. At a valuation of just 8.2x EV/EBITDA—far below peers like Vodafone (VOD) at 14.5x—the stock presents a rare opportunity to capitalize on first-mover advantages in telecom’s next frontier. Here’s why investors should act now.

Ask Aime: "Is VEON Group poised for growth in underpenetrated regions with 5G technology?"

Strategic Leverage of Frontier Tech: 5G as the Catalyst

While Western telecoms face declining ARPUs and regulatory headwinds, VEON is deploying 5G in greenfield markets where adoption lags behind demand. In Ukraine, Kyivstar—the group’s flagship subsidiary—is partnering with SpaceX’s Starlink to build a hybrid satellite-terrestrial 5G network. This initiative, launched in late 2024, addresses energy grid disruptions caused by Russia’s war and positions Kyivstar as the only operator offering uninterrupted connectivity. By mid-2025, Starlink-powered messaging services will roll out, with voice/data services to follow—a first in Europe.

Meanwhile, in Kazakhstan, VEON is deploying AI-driven network optimization tools to reduce latency and improve coverage in rural areas. These technologies are critical in markets where 4G penetration remains below 70%, leaving ample room for 5G’s efficiency gains.

Digital Services: The High-Margin Growth Engine

VEON’s real edge lies in its digital services ecosystem, which generates 35% of total revenue and enjoys margins exceeding 60%. Its crown jewel, JazzCash in Pakistan, is a fintech unicorn in the making:

  • 19.2 million monthly active users (up 28% YoY)
  • $1.3 billion valuation potential (12x EV/EBITDA, per recent fintech comps)
  • Multiplay subscribers (combining telecom and financial services) command 45.9% higher ARPU than voice-only users.

The company is now replicating JazzCash’s model in Kazakhstan (Simply) and Uzbekistan (Beepul), where digital wallet MAUs are growing at 40% annually. In Ukraine, the Helsi healthcare platform—with 28 million registered users—demonstrates the power of cross-selling digital services. By bundling telecom, finance, and healthcare, VEON is creating irreplaceable customer ecosystems in regions where traditional banks and insurers are scarce.

Why Now? The Perfect Storm of Catalysts

  1. Kyivstar’s Nasdaq Listing (End-2025):
    VEON plans to spin off 20–25% of Kyivstar via a SPAC merger with Cohen Circle Acquisition Corp. This will:
  2. Unlock $1.5–2 billion in equity value (Kyivstar alone contributed 31% of group EBITDA in 2023).
  3. Signal investor confidence in Ukraine’s telecom sector, potentially triggering a re-rating of the entire group.

  4. Debt Reduction & Share Buybacks:
    Net debt has been slashed from $8.4 billion in 2021 to $2.8 billion in 2024, with further sales of non-core assets (e.g., towers) on tap. A $100 million buyback program—$30 million executed to date—has already boosted shares 22% since December 2024. With free cash flow expected to hit $1.1 billion by 2026, dividends could resume in 2026 at 50% of FCF, rewarding long-term holders.

  5. Political Winds Shifting in Favor:
    U.S. President Trump’s January 2025 ultimatum to Russia to end its war in Ukraine has introduced a critical tailwind. If geopolitical tensions ease, VEON’s Ukraine margins could rebound to 61% by 2026 (vs. 56.5% in 2024), while energy costs stabilize.

Risks? Yes—but Overcompensated by Valuation

  • Conflict in Ukraine: A protracted war could delay margin recovery.
  • Currency Volatility: Pakistan’s rupee and Bangladesh’s taka are prone to swings, though hedging and digital service pricing power mitigate risks.

However, at 8.2x EV/EBITDA40% below its five-year average—VEON offers ample downside protection. Even a modest re-rating to 11x would imply a 34% upside, while Kyivstar’s listing could add 20–30% further value.

Conclusion: Buy Now, Harvest in 12–18 Months

VEON is the purest play on secular telecom upgrades in underfollowed markets. Its 5G rollout, AI-driven efficiency, and digital services are creating a moat in regions where 70% of the population remains untapped. With a catalyst-rich 2025–2026 horizon and a valuation that ignores its first-mover advantages, this is a once-in-a-decade opportunity.

Actionable Recommendation:
- Buy VEON at current levels.
- Target: $15–$18/share (25–50% upside) by late 2026.
- Stop Loss: Below $7.50 (2024 lows).

The next wave of telecom growth isn’t in Silicon Valley—it’s in the gritty, high-growth markets where VEON is already winning.

Disclaimer: This analysis is based on publicly available data. Always conduct your own research before investing.

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Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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