VEON Welcomes Shareholder Shah Capital's Value Creation Roadmap
Monday, Oct 21, 2024 1:36 pm ET
1min read VEON Ltd., a global digital operator, has acknowledged receipt of a letter from Shah Capital, one of its valued long-term shareholders, outlining a strategic roadmap to enhance shareholder value. The letter, reviewed by VEON's Board of Directors and management team, highlights several initiatives aimed at unlocking the company's full potential.
Shah Capital, holding approximately 7% of VEON's shares, has proposed an equity buyback program of US$200 million, with a commitment to utilize 50% of annual free cash flow for equity buybacks until VEON trades at a comparable valuation multiple to its global peers. This strategy aims to reduce the share count, increase earnings per share, and improve VEON's liquidity.
Additionally, Shah Capital has suggested optimizing VEON's cash management by reducing the cash balance at the headquarters level to US$200 million. The excess cash would be used to judiciously pay off outstanding revolving credit facilities (RCF) and partially repurchase 2024 bonds. These steps would significantly reduce VEON's high interest costs and potentially improve its credit ratings, leading to lower future interest costs.
The proposed separation and listing of VEON's rapidly growing fintech/entertainment business (JazzCash, Mobilink, Tamasha, and Toffee) on the Dubai exchange by the end of 2023 is expected to unlock over US$1 billion in value. Similarly, listing Kyivstar on the NASDAQ or Warsaw exchange could realize its true potential as a pure Ukraine play, either through a partial stake sale or a full listing. These strategic moves would enable VEON to focus on its core telecom operations while allowing these businesses to flourish independently.
Shah Capital has also emphasized the importance of VEON's inclusion in emerging market indices and fintech/telecom ETFs to attract global investors and align with its global peers' group. This enhanced visibility would make VEON more accessible to a broader range of investors, fostering increased interest and respect from the investment community.
Shah Capital's target valuation multiple of 6X EV/EBITDA for VEON compares favorably to its historical and peer average multiples. VEON's current share price indicates a potential for further improvement, as the company positions itself as a leading opportunity for investors seeking growth in frontier markets. Factors such as VEON's strong operating outlook, optimized capital structure, and disciplined capital allocation could drive this valuation.
In conclusion, VEON welcomes Shah Capital's insights and recognizes the value in its proposed strategic roadmap. By implementing these initiatives, VEON aims to create long-term value for all shareholders, unlock its full potential, and attract more institutional investors.
Shah Capital, holding approximately 7% of VEON's shares, has proposed an equity buyback program of US$200 million, with a commitment to utilize 50% of annual free cash flow for equity buybacks until VEON trades at a comparable valuation multiple to its global peers. This strategy aims to reduce the share count, increase earnings per share, and improve VEON's liquidity.
Additionally, Shah Capital has suggested optimizing VEON's cash management by reducing the cash balance at the headquarters level to US$200 million. The excess cash would be used to judiciously pay off outstanding revolving credit facilities (RCF) and partially repurchase 2024 bonds. These steps would significantly reduce VEON's high interest costs and potentially improve its credit ratings, leading to lower future interest costs.
The proposed separation and listing of VEON's rapidly growing fintech/entertainment business (JazzCash, Mobilink, Tamasha, and Toffee) on the Dubai exchange by the end of 2023 is expected to unlock over US$1 billion in value. Similarly, listing Kyivstar on the NASDAQ or Warsaw exchange could realize its true potential as a pure Ukraine play, either through a partial stake sale or a full listing. These strategic moves would enable VEON to focus on its core telecom operations while allowing these businesses to flourish independently.
Shah Capital has also emphasized the importance of VEON's inclusion in emerging market indices and fintech/telecom ETFs to attract global investors and align with its global peers' group. This enhanced visibility would make VEON more accessible to a broader range of investors, fostering increased interest and respect from the investment community.
Shah Capital's target valuation multiple of 6X EV/EBITDA for VEON compares favorably to its historical and peer average multiples. VEON's current share price indicates a potential for further improvement, as the company positions itself as a leading opportunity for investors seeking growth in frontier markets. Factors such as VEON's strong operating outlook, optimized capital structure, and disciplined capital allocation could drive this valuation.
In conclusion, VEON welcomes Shah Capital's insights and recognizes the value in its proposed strategic roadmap. By implementing these initiatives, VEON aims to create long-term value for all shareholders, unlock its full potential, and attract more institutional investors.
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