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Veon oligarch Fridman comes out against war as sanctions threaten

Mikhail Fridman with logos.jpg

Veon’s owner has opposed the war, as CEO Kaan Terzioğlu said this morning it would be “irresponsible” to provide guidance on the effect of Russia’s attack on Ukraine on the company’s performance.

He did this hours after Mikhail Fridman (pictured), the Ukrainian-born Russian oligarch who controls the company, sent an email to staff of his investment company LetterOne opposing the war.

Around 52% of Veon’s business comes from Russia, and another 13% comes from Ukraine, according to annual results publsihed this morning.

Among the businesses controlled by Fridman and partners are Alfa Bank, which is one of those facing sanctions from the international community, and LetterOne, which has a number of investments in the telecoms industry including Veon itself.

Alfa Bank, the largest private bank in Russia, was named by the US Treasury in the first round of sanctions on Friday. The European Commission is also expected to apply sanctions to Fridman’s bank.

UK prime minister Boris Johnson specifically said on Thursday that it would be subject to action. Opposition MP Rushanara Ali asked him: “Can he update the House [of Commons] on whether he plans to sanction the major state-owned Russian banks such as Sberbank and Gazprombank and the non-state Alfa bank?” Johnson said simply: “Yes.”

Capacity asked Veon on Friday for guidance on the implications of these actions, but has not yet had a reply.

Veon published its 2021 annual results this morning, and a reporter from the Reuters news agency was able to ask Terzioğlu, at Mobile World Congress in Barcelona, about the effects of the war. That’s when he said: “It would be irresponsible to give guidance to the market at this particular time.” He pointed to rising interest rates, currency fluctuations, and an “inflationary period” that will impact consumer spending.

Veon has operations across the front in Russia’s war on Ukraine, with Beeline operating in Russia with 49.4 million subscribers, providing income of US$1.07 in the last quarter of 2021. This is 52% of all Veon’s global income in the quarter.

By comparison, its Kyivstar in Ukraine produced an income of $282 million in the quarter from 28.2 million subscribers.

Veon’s shares are listed on the Nasdaq exchange in New York and on Euronext Amsterdam. The company’s headquarters are in the Netherlands, but earlier in February it announced it was moving its official residence from Bermuda to London, saying it wants to be in “a jurisdiction with high standards of corporate governance”.

According to an email seen by the Financial Times, Fridman told LetterOne staff: “I was born in western Ukraine and lived there until I was 17. My parents are Ukrainian citizens and live in Lviv, my favourite city.”

He said: “I have also spent much of my life as a citizen of Russia, building and growing businesses. I am deeply attached to Ukrainian and Russian peoples and see the current conflict as a tragedy for them both.”

LetterOne is an investment company registered in Luxembourg, a member state of the European Union.

Its interests include a 19.8% stake in Turkcell and a 47.85% voting stake in Veon, as well as Upp, a UK-based broadband company that is building a fibre-to-the-home (FTTH) network in towns in eastern England. LetterOne says it plans to invest £1 billion to build FTTH to a million premises in the area by 2025.

LetterOne is chaired by Mervyn Davies, Lord Davies of Abersoch, a banker and former politician.

The company also invests in telecoms software company Qvantel and five years ago spent £1.77 billion on 100% of UK health food retailer Holland & Barrett.

Note: Veon's UK PR company insists in an email to Capacity on 1 March that LetterOne holds only 47.9% of the company, and therefore it is not technically a “controlling shareholder”.

 

 

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