VEON Ltd. ($VEON): Banking on Ukraine’s Digital Rebuild

Executive Summary

This report provides a comprehensive investment analysis of VEON Ltd. (NASDAQ: VEON), a global digital operator with a strategic focus on high-growth frontier markets. Following a fundamental corporate restructuring, including the complete divestiture of its Russian operations, VEON presents a complex and high-stakes investment proposition.

The final recommendation is a Speculative Buy, suitable exclusively for investors with a high tolerance for risk, a long-term investment horizon, and a specific appetite for exposure to the unique dynamics of frontier markets. This recommendation is predicated on a multi-faceted thesis that balances a compelling valuation against substantial, non-diversifiable risks.

The core pillars of the bull case are:

1. A Deep Value Proposition: VEON trades at a significant discount to its intrinsic value, evidenced by low forward earnings multiples, a depressed enterprise value-to-EBITDA ratio relative to peers, and a substantial gap between its market capitalization and a conservative sum-of-the-parts (SOTP) valuation. This discount appears to overly penalize the company for its associated risks [1].
2. Proven Strategic Execution: Under the current management team, VEON has successfully executed a dramatic corporate turnaround. This includes a profound deleveraging of the balance sheet to a conservative level, the implementation of an "asset-light" strategy that enhances capital efficiency, and a successful pivot towards high-margin digital services, which are now demonstrating explosive growth [2].
3. Clear Value-Unlocking Catalysts: The company has several near- to medium-term catalysts designed to narrow the valuation gap. The most significant is the planned 2025 Nasdaq initial public offering (IPO) of its Ukrainian subsidiary, Kyivstar, which is expected to crystallize the value of this crown-jewel asset. Ongoing share buybacks and the potential reinstatement of a dividend in 2026 provide additional avenues for direct shareholder returns [3].

Conversely, the investment is subject to severe and binary risks that cannot be understated:

1. Overwhelming Geopolitical Exposure: VEON's operations are concentrated in regions of extreme geopolitical volatility, most notably Ukraine. The ongoing war presents an existential threat to its most valuable asset. Significant political and macroeconomic instability in Pakistan and Bangladesh adds further layers of uncertainty [4].
2. Structural Headwinds: The company faces a persistent drag from foreign exchange (FX) volatility, as the currencies of its operating countries have historically depreciated against the US dollar, eroding reported earnings. Furthermore, a high-risk ESG rating from Sustainalytics may permanently deter a significant portion of institutional capital, placing a ceiling on the stock's potential valuation multiple [5].

In conclusion, VEON represents a high-beta investment where the potential for significant alpha is directly proportional to its exposure to geopolitical outcomes. The management team has effectively de-risked the company's financial profile, shifting the primary risk from solvency to geopolitics. For investors who can underwrite this specific risk and believe in the long-term growth trajectory of digital adoption in these frontier markets, VEON offers a deeply discounted entry point into a compelling, albeit precarious, growth story.

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Section I: Corporate Profile and Strategic Realignment: The "New" VEON

To properly assess VEON's current investment merits, it is imperative to understand its profound transformation. The company today is fundamentally different from its historical identity, having undergone a strategic, financial, and geographical realignment aimed at shedding legacy burdens and repositioning itself as a pure-play frontier market digital operator for a Western investor audience.

A Company Reborn: From VimpelCom to VEON

VEON's history traces back to its origins as PJSC VimpelCom in Russia, founded in 1992 [1]. For decades, its identity and valuation were inextricably linked to its Russian operations and its complex shareholder structure involving Russian and European interests. The company, which rebranded from VimpelCom Ltd. to VEON Ltd. in March 2017, carried a significant valuation overhang due to this association, a discount that became particularly acute after geopolitical tensions escalated in 2014 and again in 2022 [2].

The most critical event in the company's modern history was the complete divestment of its Russian business, PJSC VimpelCom, which was finalized in October 2023 [3]. This transaction was not merely a sale of an asset; it was a fundamental reset of the company's identity, risk profile, and growth trajectory. By exiting Russia, VEON severed its operational ties to the market that had long defined it, allowing it to present a new, clearer narrative to the investment community.

A New Center of Gravity: Dubai Headquarters

Coinciding with its operational pivot, VEON has undertaken a series of corporate actions designed to reinforce its new identity. In December 2024, the company relocated its headquarters from Amsterdam to Dubai, United Arab Emirates [1]. This move is strategically significant, representing a deliberate shift away from its legacy European and Russian entanglements and physically placing its leadership closer to its core growth markets in Central and South Asia.

Furthermore, VEON consolidated its public listing exclusively on the Nasdaq stock exchange, ceasing trading on Euronext Amsterdam [2]. This action simplifies its corporate structure, enhances trading liquidity, and focuses its investor relations efforts on the US market. Taken together, the sale of the Russian asset, the relocation to a neutral financial hub, and the consolidation of its listing constitute a coordinated communications strategy. The implicit goal is to compel the market to re-evaluate the company based on its new, post-Russia fundamentals and shed the "Russian-linked" discount that has long suppressed its stock price. The success of this investment hinges, in part, on the market's acceptance of this "new VEON" narrative.

The "Digital Operator" Doctrine: VEON's Three-Pillar Strategy

Under the leadership of Group CEO Kaan Terzioğlu, VEON has articulated a clear, three-pillar strategy to drive growth and value creation [3]. This "Digital Operator" doctrine moves beyond traditional telecommunications to build a comprehensive digital ecosystem.

Pillar 1: High-Quality Connectivity ("4G for All")

The foundation of VEON's strategy remains its core mission: providing reliable and widespread mobile and fixed-line connectivity. The company is focused on driving the adoption of 4G services across its markets, which are home to a combined population of over 510 million people [6]. In 2024 alone, VEON added 3,981 new 4G sites to its network, recognizing that robust connectivity is the essential enabler for its digital ambitions [7]. Management anticipates adding approximately 100 million new 4G subscribers across its markets within the next three years, representing a substantial runway for growth in its core business [3].

Pillar 2: A Portfolio of Digital Services

This pillar represents the primary growth engine for the company. VEON is aggressively leveraging its connectivity infrastructure and customer relationships to build a diverse portfolio of digital services that capture a greater share of the consumer's daily life and wallet. This strategy is particularly potent in its frontier markets, where lighter regulation and lower penetration of traditional services (like banking) create unique opportunities. The portfolio includes [1]:

• FinTech: Mobile financial services are a cornerstone, led by the highly successful JazzCash platform in Pakistan. The company also operates smaller but growing platforms like Simply in Kazakhstan and Beepul in Uzbekistan.
• Entertainment: VEON offers a suite of video and music streaming platforms, including Kyivstar TV in Ukraine, Toffee in Bangladesh, and BeeTV and Beeline TV in other markets.
• Other Ventures: The company is expanding into adjacent sectors, notably with its acquisition of a controlling stake in Helsi, Ukraine's largest digital healthcare platform. It also provides enterprise cloud solutions, gaming platforms like Game Now, and messaging apps like BiP.

Pillar 3: The "Asset-Light" Infrastructure Model

The third pillar is a disciplined financial strategy focused on improving capital efficiency. VEON is actively pursuing an "asset-light" model by divesting non-core, capital-intensive infrastructure while retaining the high-margin customer relationship and digital service layers. This involves selling assets like mobile towers and entering into strategic partnerships for infrastructure management, such as the agreement with Engro Corporation in Pakistan [3]. This strategy is designed to reduce capital expenditure (capex), improve return on invested capital (ROIC), and drive strong growth in free cash flow.

Corporate Governance and Shareholder Structure

VEON's shareholder base is a mix of strategic and institutional investors. As of early 2024, the largest shareholder is LetterOne Investment Holdings S.A. with 45.5% of shares. Other significant holders include The Stichting (a Dutch foundation) with 7.9%, Lingotto Investment Management with 7.2%, and Shah Capital Management with 6.8% [2].

The Board of Directors features a blend of industry and governance expertise. It is chaired by company founder Augie K. Fabela II, and notably includes former U.S. Secretary of State Mike Pompeo as a board member [2]. This composition suggests a focus on navigating the complex geopolitical landscapes in which the company operates, alongside driving its core business strategy.

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Section II: Operational Deep Dive: A Portfolio of High-Growth, High-Risk Markets

VEON should not be analyzed as a monolithic entity. It is, in effect, a holding company for a portfolio of distinct, high-beta telecommunications assets, each with its own unique market dynamics, growth drivers, and risk profile. The investment case is therefore a bet on management's ability to navigate this volatile portfolio and extract value from the sum of its disparate parts. An assessment of each key market is essential.

Ukraine (Kyivstar): The Resilient Crown Jewel

Kyivstar is the undisputed #1 telecommunications brand in Ukraine and represents VEON's most valuable asset [3]. The operation has demonstrated remarkable resilience, continuing to provide essential services while operating under the extreme duress of the ongoing war. The conflict has inevitably led to significant challenges, including damage to infrastructure, population displacement, and elevated operating costs due to power disruptions [3].

Despite these conditions, VEON is doubling down on the market's future. The company has made a landmark commitment to invest USD 1 billion in Ukraine between 2023 and 2027 to rebuild and upgrade the country's digital infrastructure [9]. Strategically, Kyivstar is expanding well beyond core connectivity. It is pushing into digital health with the acquisition of Helsi, a leading health-tech platform, and into media with Kyivstar TV [1]. Recent innovative initiatives include a collaboration with the Ukrainian Ministry of Digital Transformation to develop a national Large Language Model and regulatory approval to test Starlink's satellite technology for direct-to-cell services, highlighting a focus on future-proofing its network [6].

This market is central to the company's value-unlocking strategy via the planned 2025 Nasdaq listing of Kyivstar, which aims to provide a public market valuation for the asset and attract international capital to Ukraine's recovery [3].

Pakistan (Jazz): The Scale Play with FinTech Dominance

In Pakistan, VEON operates under the Jazz brand, the country's #1 telecom operator [3]. The operation is a tale of two powerful components: the massive core mobile business serving a nation of over 240 million people, and the dominant mobile financial services platform, JazzCash [1].

JazzCash is a critical pillar of VEON's group-wide digital strategy and a significant asset in its own right. With 19.2 million monthly active users (MAUs) as of late 2024, it is a leading player in a market with low formal banking penetration, offering services from payments to money transfers [3]. This provides a substantial growth vector independent of traditional telecom services. However, the Pakistan operation faces severe headwinds from the country's persistent political and economic instability, which has led to high inflation and significant currency depreciation, compressing USD-denominated margins and earnings [3].

Bangladesh (Banglalink): The Competitive Challenger

VEON's Banglalink is the #3 operator in the densely populated and highly competitive Bangladeshi market [3]. The operating environment here is also challenging, marked by periods of political unrest and a volatile regulatory landscape. The business has been negatively impacted by sudden, adverse tax changes, such as unexpected increases in supplementary duty on mobile services and value-added tax (VAT) on SIM cards, which directly pressure profitability and EBITDA margins [3]. To counter these challenges and drive growth, Banglalink is focused on its digital offerings, particularly its entertainment platform Toffee, which serves as a key differentiator and a source of incremental revenue [1].

Central Asia Cluster (Beeline - Kazakhstan, Uzbekistan, Kyrgyzstan)

VEON operates under the Beeline brand in its Central Asian markets, holding the #1 market position in Kazakhstan and the #2 position in Uzbekistan [3]. As part of its portfolio optimization, VEON announced its intention to sell its operation in Kyrgyzstan in March 2024 [3].

These markets are generally more stable than their South Asian counterparts and serve as a testbed for some of VEON's most innovative digital and AI-driven initiatives. In Kazakhstan, Beeline is a key partner in the development of a native Kazakh-language Large Language Model (LLM) [9]. In Uzbekistan, VEON has launched Hambi, an AI-powered super-app, and KINOM, a digital entertainment platform featuring local Uzbek-language content [3]. The company's asset-light strategy is also clearly visible in this region, highlighted by the successful sale of its 49% stake in the Kazakh wholesale telecommunications infrastructure provider, TNS+ [9].

The portfolio nature of VEON's operations means that an investor is exposed to a basket of distinct risk/reward propositions. A crisis in one market may not directly impact another, providing some diversification, but a major failure in a large market like Pakistan could significantly impair the group's overall performance. This structure makes a Sum-of-the-Parts valuation approach particularly relevant.

Table 1: Segment Breakdown by Country (FY 2024)

Note: Data synthesized from company financial reports for FY2024 [7]. Subscriber counts as of year-end. Revenue and EBITDA figures approximate and adjusted for inter-segment eliminations. "Other/HQ" includes ventures and headquarters-level activities/costs.

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Section III: Financial Performance and Health Analysis

VEON's financial narrative is a compelling story of transformation, defined by a successful strategic pivot that is now yielding strong operational growth. This growth, however, is in a constant battle with significant external headwinds, primarily foreign exchange depreciation. The most profound and under-appreciated aspect of this transformation is the dramatic improvement in the company's balance sheet health, which has fundamentally de-risked the investment from a financial solvency perspective.

Income Statement Analysis: Strong Growth Battling Headwinds

VEON's top-line performance demonstrates the success of its operational strategy:

• Revenue Growth: For the full year 2024, the company reported revenue of $4.0 billion, an increase of 8.3% year-over-year in reported US dollars [7]. This momentum continued into the first quarter of 2025, with revenues of $1.026 billion, up 8.9% YoY [15]. Critically, the underlying growth story is even stronger. In Q1 2025, revenue growth in local currency terms was 12.9%, significantly outpacing the blended weighted average inflation rate of 7.6% across its markets [15].
• Digital Revenue Surge: The "Digital Operator" strategy is proving to be a powerful growth engine. Direct revenues from digital services surged by an impressive 63% in FY2024 [9]. In Q1 2025, this growth accelerated further, with digital revenues rising 50.2% YoY in USD terms to $147 million. As a result, digital services now account for 14.3% of total group revenues, a substantial increase from 10.4% just one year prior [15].
• Profitability: Group EBITDA grew by 4.9% in FY2024 to $1.69 billion and by a strong 13.7% in Q1 2025 to $439 million [7]. The company reported a profit for the period (net income) of $118 million for Q1 2025 [16]. Earnings per share (EPS) have been volatile due to restructuring and FX impacts, but the most recent quarter showed a strong result, with a reported EPS of $1.36, handily beating consensus estimates [17].

Balance Sheet Deconstruction: A Story of Deleveraging

The most significant achievement of the current management team has been the comprehensive overhaul of the balance sheet:

• Debt Profile: A few years ago, VEON was a highly leveraged company, with net debt standing at over $8.4 billion at the end of FY2021 [3]. Through a series of strategic asset sales, debt tenders, and capital structure optimizations, this has been dramatically reduced. As of March 31, 2025, gross debt stood at $4.38 billion, with net debt (excluding lease liabilities) at just $1.81 billion [15].
• Liquidity: The company maintains a solid liquidity position. Total cash and cash equivalents amounted to $1.78 billion at the end of Q1 2025. Crucially, $662 million of this cash was held at the headquarters level, providing significant financial flexibility for corporate actions like buybacks or debt service [15]. While liquidity ratios such as the Current Ratio (0.79) and Quick Ratio (0.72) are below the traditional threshold of 1.0, the strong cash generation and reduced debt load mitigate much of this concern, though it remains a metric to monitor [19].
• Leverage Ratios: The key metric reflecting this transformation is the Net Debt to LTM EBITDA ratio. This figure has declined to a very conservative 1.23x as of Q1 2025, down from 1.34x in the previous quarter [15]. This level of leverage is low for any industry and exceptionally so for the capital-intensive telecommunications sector. This financial strength fundamentally changes the risk profile of the stock, shifting the primary concern from financial solvency to operational and geopolitical execution.

Cash Flow Vitals: The Ultimate Test

VEON's ability to generate cash underscores the health of its underlying operations:

• Operating and Free Cash Flow: In Q1 2025, the company generated a robust $433 million in net cash from operating activities [16]. For the full year 2024, VEON produced $403 million in equity free cash flow (EFCF) before licenses and leases [7]. This EFCF is the cash available to remunerate equity holders and is the ultimate source of value creation through future dividends and share buybacks.

Management Guidance and Outlook

VEON's management has expressed confidence in its continued performance, reaffirming its guidance for the full year 2025. The company expects underlying local currency growth for total revenue to be between 12% and 14% year-on-year, and underlying local currency EBITDA growth to be between 13% and 15% [15]. The outlook for capex intensity is in the range of 17-19%, reflecting continued investment in 4G networks while benefiting from the asset-light strategy [15].

Table 2: Key Financial & Operational Metrics (FY2022-Q1 2025)

Note: Data synthesized from company financial reports [7]. Net Debt and Net Debt/EBITDA exclude leases. FY2022-2023 Net Income and EPS reflect significant charges related to Russia exit and impairments. LCY = Local Currency.

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Section IV: Unlocking Shareholder Value: Key Investment Catalysts

VEON's management is not merely focused on operational execution; it is actively pursuing a series of strategic and financial maneuvers designed to unlock the value embedded in its portfolio and close the significant discount at which its shares trade. These catalysts represent a deliberate shift from being a traditional operator of assets to becoming a more sophisticated manager and monetizer of a portfolio.

The Kyivstar IPO: The Great Value Crystallizer

The planned initial public offering of Kyivstar is the single most important catalyst on the horizon for VEON shareholders. The company intends to list up to 20% of its Ukrainian subsidiary on the Nasdaq in 2025 through a business combination with a special purpose acquisition company (SPAC), Cohen Circle Acquisition Corp [3].

The strategic rationale for this complex transaction is threefold:

1. Value Crystallization: The IPO is designed to establish a clear, public market valuation for VEON's crown-jewel asset. Currently, the value of Kyivstar is arguably obscured within the VEON conglomerate structure and discounted heavily due to the war. A separate listing would force the market to assign a standalone value to the business, which could, in turn, highlight the undervaluation of the remaining VEON assets [3].
2. Creation of a Pure-Play Investment: The transaction will create the first purely Ukrainian company to be publicly listed on a major U.S. exchange [6]. This could attract a new class of investors—including development funds, impact investors, and those specifically looking to invest in the country's reconstruction—who might not invest in the broader VEON holding company.
3. Strategic Funding: A public listing provides Kyivstar with direct access to capital markets, creating a new and independent funding source to support its committed $1 billion investment program for rebuilding Ukraine's digital infrastructure [3].

The Asset-Light Model in Action

VEON's commitment to an "asset-light" strategy is a key component of its plan to enhance shareholder returns. By systematically divesting capital-intensive infrastructure, the company is improving its financial profile and focusing on higher-margin services. Concrete examples of this strategy in action include the sale of its 49% stake in TNS+, a wholesale telecommunications infrastructure provider in Kazakhstan, and the establishment of a strategic partnership with Engro Corporation for the pooling and management of infrastructure assets in Pakistan [9].

The financial impact of this strategy is direct and powerful. It reduces the need for heavy capital expenditures, which is expected to lower VEON's long-term capex intensity to the 15-16% range, thereby boosting free cash flow generation and improving the return on invested capital (ROIC) [3].

Capital Allocation: Returning Cash to Shareholders

A clear sign of a company's financial health and management's confidence is its approach to capital allocation. VEON has become increasingly shareholder-friendly as its balance sheet has strengthened:

• Share Buybacks: The company has an active and ongoing share repurchase program. It initiated a $100 million program in August 2024 and has been executing it in tranches, including a recent $35 million phase announced in June 2025 [6]. These buybacks are a potent signal from management that it believes the company's shares are significantly undervalued and are directly accretive to long-term shareholders by reducing the share count.
• Dividend Policy: VEON has not paid a dividend to shareholders since Q1 2020, having suspended it to preserve capital during its period of high leverage and strategic transformation [22]. However, with the balance sheet now deleveraged and cash flows strengthening, management has signaled its intent to restart dividend payments, potentially as early as 2026 [3]. The prospect of a future dividend yield provides a powerful long-term catalyst that could attract a new class of income-oriented investors to the stock.

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Section V: Valuation: Pricing a Complex Opportunity

VEON's valuation presents a puzzle for investors. On one hand, the company operates in high-risk jurisdictions, warranting a steep discount. On the other, its current market price appears to reflect a level of pessimism that may not be fully justified by its strong operational performance, transformed balance sheet, and clear growth trajectory. The core of the valuation case rests on the idea that VEON is trading at a significant "conglomerate and geopolitical discount," and that the sum of its parts is worth considerably more than its current enterprise value.

Reconciling Valuation Metrics: The P/E Ratio Puzzle

A cursory look at valuation metrics reveals conflicting data, making a simple assessment difficult. Various financial data providers report trailing twelve-month (TTM) price-to-earnings (P/E) ratios ranging from negative to low double-digits (e.g., -1.05, 11.82, and 6.15) [19].

This wide variance is a direct result of the company's recent transformation. GAAP earnings have been heavily distorted by non-recurring events, including impairment charges, restructuring costs related to the Russia exit, and extreme foreign exchange volatility. Consequently, any valuation based on trailing GAAP P/E ratios is likely to be misleading. More reliable metrics for VEON are those that are forward-looking or based on cash flow. Analyst consensus estimates for FY2025 EPS suggest a forward P/E ratio of approximately 7.8x, which is modest for a company with double-digit growth prospects [26]. The Enterprise Value to EBITDA (EV/EBITDA) multiple is an even more stable metric, as it is independent of capital structure and certain accounting charges.

Analyst Price Targets and DCF Analysis

Wall Street analysts who cover the stock are generally bullish, reflecting a belief in the deep value thesis. The average one-year analyst price target for VEON is approximately $58.11, with some targets as high as $70.88 [27]. One firm, Benchmark, has maintained a "Buy" rating on the stock [14].

Independent research firms employing Discounted Cash Flow (DCF) models also see significant upside. Edison Group, for example, calculates a fair value of $56.50 per share [3]. Notably, their model uses a very high weighted average cost of capital (WACC) of 17.0% to properly account for the extreme country and currency risks associated with VEON's operations. That a valuation can show over 30% upside even with such a punitive discount rate is a testament to the company's strong cash flow generation forecasts. An even more optimistic DCF model from Alpha Spread suggests the stock is undervalued by as much as 84%, though the assumptions in such a model warrant careful scrutiny [28]. A proprietary DCF analysis would hinge on management's guidance for double-digit local currency growth, a gradual improvement in margins as digital services scale, capex intensity aligning with the asset-light model, and a discount rate that bakes in specific risk premia for Ukraine, Pakistan, and the other operating countries.

Sum-of-the-Parts (SOTP) Valuation

For a holding company like VEON, a Sum-of-the-Parts (SOTP) analysis is arguably the most intellectually honest valuation methodology. This approach values each of the company's major business units separately and then subtracts the net debt at the corporate level to arrive at an equity value.

A preliminary SOTP framework would involve:

1. Assigning a valuation to Kyivstar. Even in a conflict scenario, a #1 operator in a large European country poised for a massive reconstruction boom could command a significant EV/EBITDA multiple.
2. Valuing the Pakistan segment, which would require a dual approach: a telecom multiple for the core Jazz business and a much higher FinTech multiple for the fast-growing JazzCash platform.
3. Applying appropriate emerging market telecom multiples to the operations in Bangladesh, Kazakhstan, and Uzbekistan.
4. Summing these enterprise values and subtracting VEON's headquarters-level net debt.

While the precise multiples are debatable, this exercise almost invariably yields a total value significantly higher than VEON's current market capitalization. The difference between the SOTP value and the current stock price represents the market's steep discount for the holding company structure, the FX risk, and, most importantly, the overarching geopolitical risks. The investment thesis is a direct bet that the catalysts outlined in Section IV will force this discount to narrow over time.

Table 3: Valuation Peer Comparison

Note: Data as of mid-2025 [19]. VEON's Forward P/E based on FY2025 estimates. Peer metrics approximate and for comparative purposes.

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Section VI: Comprehensive Risk Assessment: Navigating the Frontier

An investment in VEON is inseparable from its significant and multifaceted risk profile. While the potential rewards are high, investors must conduct a sober and clear-eyed assessment of the numerous threats to the investment thesis. The risk profile can be characterized as binary and asymmetric; while there are many operational risks, they are dwarfed by the overriding geopolitical factors, where a negative outcome could render all other fundamental analysis moot.

Overarching Geopolitical and Macroeconomic Exposure

This is the most significant category of risk for VEON. The company's value is intrinsically tied to the stability and economic health of the frontier markets in which it operates:

• The War in Ukraine: This is the single largest and most acute risk. The ongoing conflict poses a direct threat to Kyivstar, VEON's most valuable asset. The risks include further destruction of physical network infrastructure, operational disruptions from power outages and cyberattacks, continued population displacement impacting the subscriber base, and the unquantifiable risk of a negative long-term outcome in the conflict that could permanently impair the asset's value [3]. A positive resolution would be a massive catalyst, but a negative turn could be catastrophic for the stock.
• Pakistan & Bangladesh Instability: These large markets are characterized by high degrees of political turmoil, which can lead to civil unrest and unpredictable regulatory environments. Both operations have been subjected to sudden and adverse tax changes that negatively impact profitability. Furthermore, they suffer from severe macroeconomic stress, including high inflation and sharp, sustained currency devaluations that directly erode the value of their earnings when reported in US dollars [3].
• General Frontier Market Volatility: Beyond the specific country issues, VEON is exposed to the inherent risks of operating in less mature economies. These can include weaker legal and institutional frameworks, a higher potential for corruption, and greater economic volatility compared to developed markets [3].

Foreign Exchange (FX) Headwinds: The Silent Killer

This is a structural, permanent risk for any US-dollar-based investor in VEON. The company earns its revenues in Ukrainian Hryvnia, Pakistani Rupees, Bangladeshi Taka, and other frontier currencies, but reports its results in US dollars. These currencies have a long history of depreciating against the dollar. One analyst estimates that this has created an average headwind of nearly 10% per year over the last decade [3]. This means the company's operations must generate local currency growth well in excess of 10% just for its USD-reported results to remain flat. This persistent FX drag is a powerful force that constantly works against shareholder returns and must be overcome by exceptional operational performance.

Operational and ESG Risks

• Network Integrity and Cybersecurity: As a digital operator providing essential services, the integrity of VEON's network is paramount. The risk of network outages from technical failures or physical damage is high. Cybersecurity is an even greater concern, particularly given the state-sponsored cyber warfare targeting Ukrainian infrastructure. A major breach could result in significant financial and reputational damage [7].
• Execution Risk: VEON's strategies—from the "Digital Operator" pivot to the "asset-light" model and the complex Kyivstar IPO—are ambitious. There is significant risk in the execution of these complex plans, and any failure to deliver could undermine investor confidence.
• ESG Concerns: VEON carries a high-risk ESG rating. As of February 2024, Morningstar Sustainalytics assigned it an ESG Risk Rating of 39.7, placing it in the "High Risk" category of experiencing material financial impacts from ESG factors [7]. This poor rating can be a major deterrent for a large and growing pool of institutional capital, as many funds have mandates that prevent them from investing in companies with such profiles. This can create a permanent ceiling on the stock's valuation multiple, regardless of its financial performance.

Table 4: Summary of Key Risks and Mitigation Strategies

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Section VII: Investment Thesis and Recommendation

Synthesizing the extensive analysis of VEON's strategic realignment, operational portfolio, financial health, valuation, and comprehensive risk profile leads to a nuanced and heavily qualified investment conclusion. The decision of whether VEON stock is a "worthy" purchase depends entirely on an investor's individual risk appetite and their conviction in a specific set of future outcomes.

The Bull Case: A Deep-Value Play on Digital Transformation and Geopolitical Recovery

The argument for investing in VEON is compelling for a certain type of investor. It is a classic deep-value and special situation play, centered on the following points:

• Deeply Discounted Valuation: The stock trades at a low single-digit forward EV/EBITDA multiple and a significant discount to a conservative sum-of-the-parts valuation. This suggests the market has overly punished the stock for its perceived risks, creating a wide margin of safety if the worst-case scenarios do not materialize.
• A Transformed and De-Risked Company: An investor today is not buying the old, highly leveraged VimpelCom. They are buying a "new" VEON with a fortress-like balance sheet (Net Debt/EBITDA of 1.23x), a clear strategic focus, and a management team with a proven track record of executing a complex turnaround.
• Tangible Growth and Clear Catalysts: The company is not a stagnant value trap. It is delivering double-digit local currency growth, driven by the explosive expansion of its high-margin digital services. There are clear, near-term catalysts—most notably the Kyivstar IPO and ongoing share buybacks—specifically designed to unlock the stock's underlying value.
• Leveraged Exposure to a Recovery: An investment in VEON is a highly leveraged bet on a post-war recovery and reconstruction boom in Ukraine, as well as the long-term, secular trend of digital adoption across the vast and young populations of Pakistan and Bangladesh.

The Bear Case: An Un-investable Morass of Risk

Conversely, a strong case can be made to avoid the stock entirely. This argument is rooted in the overwhelming and largely un-hedgeable nature of the risks involved:

• Unquantifiable Geopolitical Risk: The future of VEON's most valuable asset, Kyivstar, is entirely dependent on the outcome of the war in Ukraine—a factor completely outside of the company's control. The political and economic situations in Pakistan and Bangladesh are similarly volatile and unpredictable. For many investors, this level of uncertainty is simply un-investable.
• The Structural Drag of FX: The persistent depreciation of VEON's operating currencies against the US dollar acts as a permanent headwind, constantly eroding reported growth and shareholder returns.
• The ESG Ceiling: The company's high-risk ESG rating will likely keep it off-limits for a large and influential segment of the institutional investment world. This could permanently cap its valuation multiple, preventing it from ever achieving a valuation in line with its global peers, regardless of its performance.
• Complexity and Opacity: The holding company structure, the diverse portfolio of assets in frontier markets, and the noise in the financial statements make VEON a complex and opaque company for many investors to analyze and own comfortably.

Final Recommendation: Speculative Buy

After weighing the potent bull case against the severe risks, the final recommendation is a Speculative Buy.

This recommendation is issued with strong qualifications. VEON is a stock suitable only for investors with a very high-risk tolerance, a multi-year time horizon, and the ability to withstand extreme volatility. It should be considered for a smaller, high-conviction position within a well-diversified portfolio, not as a core holding.

The investment thesis is fundamentally a wager that management's successful operational execution and the stock's deep valuation discount provide sufficient compensation for underwriting the immense geopolitical risk. The thesis is validated if the company continues to deliver on its growth and deleveraging plans, and if the geopolitical situation in its key markets, particularly Ukraine, stabilizes or improves. The thesis would be invalidated by a significant negative turn in the Ukraine conflict, a systemic economic collapse in Pakistan, or a failure by management to execute its key strategic initiatives like the Kyivstar IPO. Investors should monitor these signposts closely. For those who can accept the binary nature of the risks involved, VEON offers a rare opportunity to invest in a compelling turnaround and growth story at a deeply discounted price.

Works Cited

1. VEON Ltd. (VEON) Company Profile & Description - Stock Analysis, accessed July 13, 2025, https://stockanalysis.com/stocks/veon/company/
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