Toffee hits the sweet spot for Veon’s ventures
Big Interview

Toffee hits the sweet spot for Veon’s ventures

Sergi Herrero Veon.jpg

Veon is putting its services and apps business under new management, with a focus on financial services, entertainment and big data. Alan Burkitt-Gray interviews Sergi Herrero about his plans

Shareholders in mobile operator Veon have agreed to appoint Sergi Herrero, formerly co-CEO of the group, as a main board director. This move is linked to his role with what is a new unit that will become the independent home for the group’s services division.

The unit will also be able to invest in services developed outside Veon and might seek separate, external investment in the future.

In an exclusive interview with Capacity, a few days before the AGM, Herrero gives his vision for the unit, Veon Ventures. This unit has existed for some time, but Herrero’s elevation is being flagged by colleagues at Veon as showing a wide-ranging commitment to the idea that apps and services should exist in a separate operation.


Share flotation

“In the next two years we will focus on two or three big markets, with Veon as a holding company,” he tells me. But later the company might consider a share flotation of some of the units, which have developed applications such as financial services, entertainment and big data, he says.

He particularly has experience of the financial sector, having spent four years – after graduating in electrical engineering and telecoms – in banking, with BNP Paribas. He was later recruited by Facebook to lead its payments and commerce operation. “We wanted to challenge PayPal, and I launched payments on [Facebook’s] WhatsApp in India and Brazil.”

Veon announced in April that Barcelona-born Herrero will be stepping down as co-CEO at the end of June. Veon said then: “Sergi is expected to continue advising the company, in particular with respect to the Veon Ventures businesses which focus on generating value in high growth areas.”

That role means Kaan Terzioğlu is now the sole CEO, heading the telecoms operations, after a year sharing the CEO role.

Herrero tells Capacity that the new unit will concentrate on assets that have been developed internally, in operating companies including Bangladesh, Pakistan, Russia and Ukraine, and seek to adapt them for the company’s other markets.

“But we will also get a budget for acquiring companies,” he adds. Meanwhile, Veon has announced that its operating company in Kazakhstan, Beeline, has launched the country’s first digital payment card integrated with its mobile financial services offering.

Marketed under the “Simply” brand, the Beeline Kazakhstan digital payment card is a mobile financial service application linked to a customer’s phone number, an electronic wallet and a premium digital Visa Platinum card. The card is also integrated with digital wallets, Apple Pay, Samsung Pay and Garmin Pay.


Key strategy

“Mobile financial services are a key strategy for the future growth of Veon and one that is highly suited to the markets we serve where financial inclusion remains low,” said Terzioğlu in the June announcement.

“We have successfully grown financial services and e-commerce businesses off the back of mobile operations in Pakistan, and we are now announcing a similar initiative by Beeline in Kazakhstan.”

Evgeny Nastradin, CEO of Beeline Kazakhstan, added: “We continue to invest in our 4G high-speed data networks, which currently cover 77% of the population. Promoting digital adoption in the country is a key focus

and one in two Beeline customers are using our 4G services and the numbers

are growing.”

He said the mobile digital bank would serve a market “where currently 40% of the country’s population is unbanked”.

Veon already runs JazzCash in its Pakistan operation, where it has achieved 14 million users. “Only 20% of the 200 million people in Pakistan have bank accounts,” says Herrero, speaking to Capacity.

And the company runs a video streaming service, called Toffee, in Bangladesh. This is likely to be customised so that it can be offered in Pakistan, says Herrero.



The changes agreed by the AGM were in many ways a culmination of a repositioning of Veon over the past few years, a move led by Ursula Burns – a former Xerox chief – when she became chairman and CEO in 2018.

Previous CEO Jean-Yves Charlier, who had become CEO in 2015, when the company was called VimpelCom, had centralised operations and development in London, in a swish office outfitted in yellow and grey close to the Old Street roundabout, the nearest thing London has to a high-technology quarter.

Burns would have none of that centralisation, and gave the role back to the operating companies. “We had 1,200 people in London,” recalls Herrero. He spent the first six months in Veon “going from operating company to operating company looking at what they had”. He found “three buckets of applications”, distributed around the different units.

There were mobile financial services in places such as Pakistan, Russia and Ukraine. There were big-data projects, also in Russia and Ukraine. “We have engineers there who know how to deal with structured data.”

And Bangladesh has a great entertain- ment service, developed in-house. “There are 180 million people in Bangladesh, but the big brands have failed miserably.” They didn’t recognise how much they needed a local office in Dhaka and needed to follow local laws and culture. “Their mistake is our success.”


Sweet spot

The service is called Toffee: the word, says Herrero, has a similar meaning but wider to that in English, covering all sweet stuffs. Toffee avoids the blockbuster movies: “People will get them from pirate sites,” he shrugs. But it focuses on content that will appeal to Bangladeshi viewers, such as Turkish-origin content translated into Bengali, and cricket.

And there’s user-generated content (UGC). “Legislation is strict,” notes Herrero. You need to be able to take down inappropriate material. This is effectively a local version of social media such as Instagram or TikTok, modified to suit the bandwidth on Veon’s network Banglalink: 4G still has limited availability.

Just 14 months after its launch, Toffee has “23 million active users a day on the platform”, he says. Not all of them are Banglalink customers: it’s available to subscribers to the other operators in Bangladesh, the first sign that Veon is separating content and services from its mobile operations.

Toffee, largely build by two employees in Bangladesh, according to Herrero, is transportable. “It’s completely reusable in Pakistan, where our operator is Jazz,” he says. “We plan to bring it to Pakistan. And what we build in Pakistan we can copy to Bangladesh. And what we build in Pakistan and Bangladesh we can offer in Algeria, Ukraine and – though it’s more complicated – Uzbekistan and Georgia. Algeria is part of the roadmap.”

Pakistan’s Jazzcash, its mobile financial service, has been a success: it has helped Veon achieve a 57% market share for its local mobile business.

Mobile money has not been launched “in places where the market is mature”, such as Russia – and there are issues there. The biggest shareholder in Veon is LetterOne, the investment vehicle of Ukrainian-born businessman Mikhail Fridman, who made much of his fortune in Russian oil. Thirty years ago he co-founded Alfa Bank – the “letter one” of the Greek alphabet – and that is now “the biggest private bank in Russia”, says Herrero.

Beeline, Veon’s mobile brand in Russia, works with Alfa Bank to issue payment cards. “I prefer to do business with my cousin,” he smiles, though adds quickly that he would be open to do a deal with Alfa’s rival, Sberbank.

He’s also open to working with other investors in projects, he says, pointing to last year’s acquisition, with Sequoia Capital India and Flourish Ventures, of ShopUp, an e-commerce platform in Bangladesh aimed at small businesses.

Veon’s position is as a holding company, virtually a private-equity company, for all these ventures, but Herrero looks to the future when “three, four or five assets can be floated through an IPO [initial public offer of shares]”.

The overall aim is that each project “has to be agnostic, not a sub-project of the telco”. Telcos’ culture “is the biggest obstacle to developing services”, he says, pointing to AT&T’s unhappy experience with the video services it is now handing over at a loss to Discovery.

For a telco, “there’s nothing wrong in being a dumb pipe”, he says. “But you need to be dumb and efficient.”

Where won’t Veon Ventures go? Messaging, he says: WhatsApp, Signal and Telegram. “They know more about encryption than we will, even after 10 years,” he says.



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