Veon expects growth in digital services to soften Russia exit

By Olivier Sorgho and Vittorio Maresca di Serracapriola

(Reuters) -Telecoms company Veon, which operates Ukraine's largest mobile network Kyivstar, said on Thursday its digital portfolio which includes discount roaming services for Ukrainian refugees was partially making up for the loss of its Russia business.

Veon forecast local-currency revenue growth in line with or below last year's level, while it carries on with the sale of its Russian business, expected to close by June 1.

Including currency exchange effects, its total revenue declined by 2.4% to $3.76 billion in 2022. The numbers do not include the Russian operations which Veon labels as discontinued.

Asked by Reuters about Veon's strategy after leaving Russia, its top market, CEO Kaan Terzioğlu pointed to a plan initiated in 2020 to diversify digital services to include finance, entertainment, education and healthcare.

He provided the example of growth in its streaming services in Pakistan and Bangladesh.

Veon's Ukrainian subsidiary Kyivstar last year acquired Helsi, a digital healthcare provider, while its "roam like home" service allows Ukraine's refugees to call relatives and access health and education services online at a discount.

"The volume of this service is consumed maybe 50, 60 times higher," Terzioğlu said.

He added the partnership with satellites firm OneWeb will also boost responses in disaster-hit places like Pakistan, adding that when terrestrial networks are damaged, satellites can compensate.

Veon said the Ukraine war and sanctions "may significantly impact" its results and Russian and Ukrainian operations also this year, adding business in other countries could also be affected.

Kyivstar saw its fourth-quarter sales drop 20.7% in reported currency, as damage to Ukraine's power infrastructure hit network availability, Veon said. It added the network had had to perform 144,000 emergency and repair works since Russia's invasion.

Last year, the EU sanctioned one of Veon's board members, billionaire Mikhail Fridman, leading to his resignation, while business partner Petr Aven resigned from the board of LetterOne, Veon's largest shareholder.

(Reporting by Olivier Sorgho and Vittorio Maresca di Serracapriola in Gdansk; Editing by Milla Nissi and Kim Coghill)