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Veon pulls the plug as it starts ‘sales process’ for VimpelCom

Kaan Terzioğlu Veon Jazz.jpg

Veon is packing up and moving out of Russia, where it owns the VimpelCom network that operates under the Beeline brand.

The company, in a surprise statement this morning just one day before it announces its third quarter results, said it was starting a “competitive sales process” for its operations in Russia.

It the group’s last results before Russia mounted its war on Ukraine, Russia accounted for 52% of total revenue. Ukraine’s Kyivstar, its second biggest operation, accounts for another 13% of Veon’s revenue.

Veon said its “management is currently exploring options in an effort to ensure that an optimal outcome is achieved for all relevant stakeholders, including Veon, its Russian operations, its shareholders, its creditors, its customers and its employees working both in and outside of Russia.”

Capacity asked to speak to group CEO Kaan Terzioğlu (pictured) about the announcement. But Veon said he and other staff are in a quiet period because of tomorrows results for the period ended 30 September 2022, due to be released around 07:00 CET (06:00 GMT). However, Capacity will be interviewing Terzioğlu on Tuesday.

That begs the question of why the company decided to release information about the Russian disposal. The statement admitted it contained “inside information” as defined under the EU’s market abuse regulation.

Russia is a market with four major mobile operators, MegaFon, MTS, Rostelecom and Veon’s VimpelCom, all of which are 25% shareholders in New Digital Solutions, a joint venture to develop 5G in Russia.

It’s unclear who would be able to buy VimpelCom in Russia, given that international sanctions make it difficult if not impossible to transfer funds. A local purchaser seems likely, or a Chinese operator.

In an interview with Capacity two months ago Terzioğlu carefully avoided using the term “war”, because that can get someone in Russia sentenced to up to 15 years in jail. But he paid tribute to Kyivstar’s staff, of whom between 10% to 11% are “already outside of the country” while the rest are “working and continuing to deliver the jobs that they do from the locations they are in”.

He said: “All our offices [in Ukraine] are turned into shelters for humanitarian needs. Not only for our employees, also for the public as well.

When asked if Veon’s operations in Russia are facing problems, Terzioğlu reply was philosophical and diplomatic. “The difficulties that we face – our team faces – in Russia are nowhere near the difficulties and the challenges and the tragedy that our team faces [in Ukraine]. So, we need to keep that in mind.”