6-K 1 veon6-kq32020.htm 6-K Document

  
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
 
For the month of October 2020
 
Commission File Number 1-34694
 

VEON Ltd.
(formerly VimpelCom Ltd.)
(Translation of registrant’s name into English)
 

The Rock Building, Claude Debussylaan 88, 1082 MD, Amsterdam, the Netherlands
(Address of principal executive offices)
 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F  x        Form 40-F o
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1):  o.
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7):  o
 





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Information contained in this report
The registrant’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and Unaudited Interim Condensed Consolidated Financial Statements as at and for the nine and three-month periods ended September 30, 2020 set forth in this Form 6-K is hereby incorporated by reference into the registration statement filed with the Securities and Exchange Commission by the registrant on Form F-3 (Registration No. 333-196223).




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VEON LTD.
(Registrant)
Date: October 29, 2020

By:/s/ Scott Dresser
Name:Scott Dresser
Title:Group General Counsel



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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is based on, and should be read in conjunction with, our unaudited interim condensed consolidated financial statements as of and for the nine-month period ended September 30, 2020 and 2019, and the related notes, attached hereto.
References to “VEON” as well as references to “our company,” “the company,” “our group,” “the group,” “we,” “us,” “our” and similar pronouns, are references to VEON Ltd. an exempted company limited by shares registered in Bermuda, and its consolidated subsidiaries. References to VEON Ltd. are to VEON Ltd. alone. The unaudited interim condensed consolidated financial statements as of September 30, 2020 and for the nine-month period ended September 30, 2020 and 2019 attached hereto have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and are presented in U.S. dollars. VEON Ltd. adopted IFRS as of January 1, 2009.
The discussion of our business and the telecommunications industry included herein contains references to certain terms specific to our business, including numerous technical and industry terms. Such terms are defined in Exhibit 99.1 to our Annual Report on Form 20-F for the year ended December 31, 2019 (our “2019 Annual Report”). For a comprehensive discussion of our critical accounting estimates and assumptions, please refer to Note 24 to our audited consolidated financial statements included in our 2019 Annual Report.
Certain amounts and percentages that appear in this document have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including in tables, may not be exact arithmetic aggregations of the figures that precede or follow them.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains estimates and forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations. All statements other than statements of historical fact are forward-looking statements. The words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” and similar words are intended to identify estimates and forward-looking statements. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to numerous risks and uncertainties and are made in light of information currently available to us. Many important factors, in addition to the factors described in this document, may adversely affect our results as indicated in forward-looking statements. You should read this document completely and with the understanding that our actual future results may be materially different and worse from what we expect.
Our estimates and forward-looking statements may be influenced by various factors, including without limitation:
our ability to implement and execute our strategic priorities successfully and to achieve the expected benefits from our existing and future transactions;
our assessment of the impact of the COVID-19 pandemic on our operations and financial condition;
our targets and strategic initiatives in the various countries in which we operate;
our ability to develop new revenue streams and achieve portfolio and asset optimizations, improve customer experience and optimize our capital structure;
our ability to generate sufficient cash flow to meet our debt service obligations, our expectations regarding working capital and the repayment of our debt and our projected capital requirements;
our plans regarding our dividend payments and policies, as well as our ability to receive dividends, distributions, loans, transfers or other payments or guarantees from our subsidiaries;
our expectations regarding our capital and operational expenditures in and after 2020;


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our goals regarding value, experience and service for our customers, as well as our ability to retain and attract customers and to maintain and expand our market share positions;
our plans to develop, provide and expand our products and services, including operational and network development, optimization and investment, such as expectations regarding the expansion or roll-out and benefits of 3G, 4G/LTE and 5G networks or other networks, broadband services and integrated products and services, such as fixed-mobile convergence;
our expectations as to pricing for our products and services in the future, improving our ARPU and our future costs and operating results;
our ability to meet license requirements, to obtain, maintain, renew or extend licenses, frequency allocations and frequency channels and to obtain related regulatory approvals;
our plans regarding marketing and distribution of our products and services, including customer loyalty programs;
our expectations regarding our competitive strengths, customer demands, market trends and future developments in the industry and markets in which we operate;
our expectations regarding management changes; and
other statements regarding matters that are not historical facts.

These statements are management’s best assessment of our strategic and financial position and of future market conditions, trends and other potential developments. While they are based on sources believed to be reliable and on our management’s current knowledge and best belief, they are merely estimates or predictions and cannot be relied upon. We cannot assure you that future results will be achieved. The risks and uncertainties that may cause our actual results to differ materially from the results indicated, expressed or implied in the forward-looking statements used in this document include, without limitation:
risks relating to changes in political, economic and social conditions in each of the countries in which we operate and where laws are applicable to us (including as a result of armed conflict) such as any harm, reputational or otherwise, that may arise due to changing social norms, our business involvement in a particular jurisdiction or an otherwise unforeseen development in science or technology;
risks associated with further unanticipated developments related to the COVID-19 pandemic that negatively affect our operations and financial condition, including adverse macroeconomic developments caused by recent volatility in oil prices in the wake of the COVID-19 outbreak;
in each of the countries in which we operate and where laws are applicable to us, risks relating to legislation, regulation, taxation and currency, including costs of compliance, currency and exchange controls, currency fluctuations, and abrupt changes to laws, regulations, decrees and decisions governing the telecommunications industry and the taxation thereof, laws on foreign investment, anti-corruption and anti-terror laws, economic sanctions and their official interpretation by governmental and other regulatory bodies and courts;
risks related to the impact of export controls on our and important third-party suppliers' ability to procure goods, software or technology necessary for the services we provide to our customers, particularly on the production and delivery of supplies, support services, software, and equipment that we source from these suppliers - for example, in April 2018, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) issued an Export Administration Regulation (“EAR”) Denial Order to ZTE Corporation (“ZTE”) which prohibited, among other things, exports, re-exports and in-country transfers of goods, software and technology (collectively, “Items”), each of which could have led to service degradation and disruptions in certain markets, and in May and August 2019, and August 2020, BIS added Huawei Technologies Company Ltd. and 152 of its affiliates (collectively, “Huawei”) to its “Entity List”, prohibiting companies globally from directly or indirectly exporting, re-exporting or in-country transferring all Items subject to the EAR to Huawei and procuring Items from Huawei when they have reason to know that the Items were originally procured by Huawei in violation of U.S. law;


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risks relating to a failure to meet expectations regarding various strategic initiatives, including, but not limited to, changes to our portfolio;
risks related to solvency and other cash flow issues, including our ability to raise the necessary additional capital and incur additional indebtedness, the ability of our subsidiaries to make dividend payments, our ability to develop additional sources of revenue and unforeseen disruptions in our revenue streams;
risks that the adjudications by the various regulatory agencies or other parties with whom we are involved in legal challenges, tax disputes or appeals may not result in a final resolution in our favor or that we are unsuccessful in our defense of material litigation claims or are unable to settle such claims;
risks relating to our company and its operations in each of the countries in which we operate and where laws are applicable to us, including demand for and market acceptance of our products and services, regulatory uncertainty regarding our licenses, frequency allocations and numbering capacity, constraints on our spectrum capacity, availability of line capacity, intellectual property rights protection, labor issues, interconnection agreements, equipment failures and competitive product and pricing pressures;
risks related to developments from competition, unforeseen or otherwise, in each of the countries in which we operate and where laws are applicable to us including our ability to keep pace with technological change and evolving industry standards;
risks related to the activities of our strategic shareholders, lenders, employees, joint venture partners, representatives, agents, suppliers, customers and other third parties;
risks associated with our existing and future transactions, including with respect to realizing the expected synergies of closed transactions, satisfying closing conditions for new transactions, obtaining regulatory approvals and implementing remedies;
risks associated with data protection, cyber-attacks or systems and network disruptions, or the perception of such attacks or failures in each of the countries in which we operate, including the costs associated with such events and the reputational harm that could arise therefrom;
risks related to the ownership of our American Depositary Receipts, including those associated with VEON Ltd.’s status as a Bermuda company and a foreign private issuer; and
other risks and uncertainties, including those set forth in Item 3 - Key Information — D. Risk Factors in our 2019 Annual Report.

These factors and the other risk factors described in our 2019 Annual Report are not necessarily all of the factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our future results. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Under no circumstances should the inclusion of such forward-looking statements in this document be regarded as a representation or warranty by us or any other person with respect to the achievement of results set out in such statements or that the underlying assumptions used will in fact be the case. Therefore, you are cautioned not to place undue reliance on these forward-looking statements.
The forward-looking statements included in this document are made only as of the date of the filing of this document. We cannot assure you that any projected results or events will be achieved. Except to the extent required by law, we disclaim any obligation to update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should refer to our periodic and current reports filed or furnished, as applicable, with the SEC for specific risks which could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.



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OVERVIEW
VEON is a leading global provider of connectivity and internet services. Present in some of the world’s most dynamic markets, VEON provides more than 210 million customers with voice, fixed broadband, data and digital services. VEON currently offers services to customers in 10 countries: Russia, Pakistan, Algeria, Bangladesh, Ukraine, Uzbekistan, Kazakhstan, Kyrgyzstan, Armenia and Georgia. We provide services under the “Beeline,” “Kyivstar,” “banglalink,” “Jazz” and “Djezzy” brands.

BASIS OF PRESENTATION OF FINANCIAL RESULTS
Our unaudited interim condensed consolidated financial statements attached hereto have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group’s audited annual consolidated financial statements as of and for the year ended December 31, 2019.

REPORTABLE SEGMENTS
We present our reportable segments based on economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies.
As of September 30, 2020, our reportable segments consist of the following seven segments: Russia, representing our “cornerstone” market; Pakistan, Ukraine, Kazakhstan and Uzbekistan, representing our “growth engines”; and Algeria and Bangladesh, representing our “frontier markets”.
We also present our results of operations for our “Other frontier markets" and “HQ and eliminations” although these are not reportable segments. “Other frontier markets” represents our results of operations in Kyrgyzstan, Georgia and, prior to its disposal in October 2020, Armenia. “HQ and eliminations” represents transactions related to management activities within the group in Amsterdam, London and Luxembourg and costs relating to centrally managed operations, as well as intercompany eliminations to reconcile with our total revenue and Adjusted EBITDA.
For further details, please refer to Note 2 to our unaudited interim condensed consolidated financial statements attached hereto.


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KEY DEVELOPMENTS DURING THE THIRD QUARTER OF 2020
COVID-19
Although VEON’s operations remained impacted by lockdown measures throughout third quarter, a gradual lifting of restrictions enabled the start of economic activity normalization and a sequential recovery in the performance of our operating markets.
Revenue trends remained divergent. Demand for our data services remains strong, enabling us to continue to grow our data revenues at a double-digit pace. We also experienced a continued shift in data traffic from mobile to fixed networks as lockdowns encouraged home working and schooling alongside a greater use of devices through our domestic broadband services.
An increase in demand for hard currencies has resulted in the devaluation of exchange rates in the countries in which VEON operates. As such, during the three-month period ended September 30, 2020, the book value of assets and liabilities of our foreign operations, in U.S. dollar terms, has decreased significantly, with a corresponding loss of USD 219 million recorded against the foreign currency translation reserve in the Statement of Comprehensive Income.
Recent financing transactions
On July 9, 2020, VEON refinanced its existing RUB 30 billion (approximately USD 422 million) bilateral term loan agreement with VTB Bank. This refinancing extends the maturity and reduces the cost of the existing loan between VTB Bank and VEON.
On April 16, 2020, VEON established a Global Medium-Term Note program for the issuance of bonds (the “MTN Program”), with a program limit of a USD 6.5 billion, or the equivalent thereof in other currencies. On September 11, 2020, VEON issued senior unsecured notes of RUB 10 billion 6.5% due 2025 in 144A / Reg S format (the “Notes”) under the MTN Program. The proceeds were used to repay debt.
Exercise of put option for 15% stake in Pakistan Operations
On September 24, 2020 the Dhabi Group exercised its put option to sell VEON its 15% shareholding in Pakistan Mobile Communications Limited ("PMCL"), the operating company of Pakistan’s leading mobile operator, Jazz.
The transaction, which requires independent valuation to determine the fair value of the shareholding, is expected to close in the fourth quarter of 2020. Once completed, VEON will own 100% of PMCL and achieve full beneficial ownership of Jazz, allowing it to simplify and streamline governance over its Pakistani assets, as well as capture the full value of dividends paid by PMCL.
New Governance Model adopted
During the third quarter, in connection with our new operating model, the VEON Board of Directors (the “VEON Board”) approved a new governance model, or Group Authority Matrix, under which the VEON Board and the co-CEOs have delegated to each VEON operating company considerable authority to operate their businesses. Specifically, each operating company is accountable for operating its own business subject to oversight by their respective operating company boards and the VEON Board; and they are also obligated to operate in accordance with Group policy and controls framework. The new governance model forms the cornerstone of governance and delegation of authority across the Group.
In October 2020, Joop Brakenhoff has been appointed to the position of Chief Internal Audit & Compliance Officer. He reports to co-CEOs and also has a reporting line to the Chairman of the Audit & Risk Committee.


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Beeline Kazakhstan signs Network Sharing Partnership
On October 6, 2020, VEON announced that its operating company in Kazakhstan, which provides services under the Beeline brand, entered into a network sharing partnership that unites the nation’s three mobile telecom providers in the delivery of high-speed internet to rural communities. The agreement brings Beeline together with Kcell and Tele2 in support of the nation’s 250+ project, which aims to extend high-speed internet to all villages with a population of 250 or more. Once complete, the project will see almost 1,000 rural settlements with a combined population of 600,000 offered 3G and 4G connections by all three operators.
The 250+ initiative, the infrastructure deployment for which started immediately, enables rural residents to receive mobile services on competitive terms and select a service provider of their choice. In turn, each mobile operator will enjoy equal access to the shared network.
VEON acquires strategic stake in ShopUp in Bangladesh
On October 20, 2020 VEON joined Sequoia Capital India and Flourish Ventures as investors in ShopUp, Bangladesh’s leading full-stack B2B commerce platform for small businesses, becoming ShopUp’s first strategic corporate investor.
The investment of approximately USD 8 million, in exchange for a 13.5% stake, enables VEON to support ShopUp’s fast-growing digital ecosystem for micro, small and medium-sized enterprises, which form a vital backbone of Bangladesh’s economy, as well as providing significant opportunities for developing mobile financial services for ShopUp’s users.
Yaroslav Glazunov appointed to the Board of Directors as an alternate director for Alexander Pertsovsky
On October 28, 2020 VEON appointed Yaroslav Glazunov to the Company’s Board of Directors as an alternate director for Alexander Pertsovsky. Mr. Pertsovsky has been a member of the VEON Board since January 2018.
Agreement concluded for the sale of Armenian operations
On October 29, 2020, VEON announced that it had concluded an agreement for the sale of CJSC “VEON Armenia”, VEON’s operating subsidiary in Armenia, to Team LLC for a consideration of USD 51 million. It is anticipated that the transaction will close shortly.
The sale of the Armenian operations is in line with VEON’s ambition to simplify the Group’s structure and enhance its operational focus on markets with attractive long-term growth opportunities.
Shareholders trading on Nasdaq no longer subject to annual depository fee
From January 1, 2021 holders of VEON American Depositary Shares (“ADSs”) trading on Nasdaq will no longer be subject any cash dividend fee or depository service fee of any kind. ADS holders will continue to be subject to the normal issuance and cancellation fees.


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RESULTS OF OPERATIONS

FINANCIAL PERFORMANCE FOR NINE MONTHS ENDED SEPTEMBER 30, 2020
Nine-month period
(In millions of U.S. dollars)20202019
Service revenues5,629 6,161 
Sale of equipment and accessories269 322 
Other revenue83 125 
Total operating revenues5,981 6,608 
Other operating income350 
Service costs(1,130)(1,154)
Cost of equipment and accessories(263)(323)
Selling, general and administrative expenses(1,965)(2,201)
Depreciation(1,193)(1,218)
Amortization(260)(299)
Impairment (loss) / reversal(790)(100)
Gain / (loss) on disposal of non-current assets(16)(28)
Gain / (loss) on disposal of subsidiaries— 
Operating profit / (loss)368 1,636 
Finance costs(568)(670)
Finance income20 44 
Other non-operating gain / (loss)100 14 
Net foreign exchange gain / (loss)(15)(29)
Profit / (loss) before tax(95)995 
Income tax expense(255)(360)
Profit / (loss) for the period(350)635 
Attributable to:
The owners of the parent(356)599 
Non-controlling interest36 
(350)635 




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TOTAL OPERATING REVENUE
Our consolidated total operating revenue decreased by 9% year-on-year, primarily due to the devaluation of currencies across all the countries in which we operate. In local currency terms, revenue fell slightly, on the back of significant disruption of retail operations faced by our operating companies, following store closures, which resulted in lower gross connections, device sales and airtime sales and a decline in roaming revenues due to travel bans. In particular, Russia revenues decreased compared to prior year, due to lower subscriber numbers and closure of stores due to travel bans. Pakistan revenues also decreased due to lower ARPU driven by the negative impacts of lockdown measures. These were partially offset by strong performance, in local currency terms, in Ukraine and Kazakhstan and the impact of tax regime changes that negatively impacted 2019 revenues in Pakistan.
Nine months ended September 30,
(In millions of U.S. dollars)20202019
Our cornerstone
Russia2,874 3,329 
Our growth engines
Pakistan908 996 
Ukraine696 630 
Kazakhstan350 370 
Uzbekistan150 196 
Our frontier markets
Algeria519 576 
Bangladesh403 406 
Other frontier markets106 130 
Other
HQ and eliminations(25)(25)
Total segments5,981 6,608 


OPERATING PROFIT
Our consolidated operating profit fell during the quarter, to a loss of USD 368 million in the nine-month period ended September 30, 2020 compared to a profit of USD 1,636 million in the nine-month period ended September 30, 2019. This was primarily due to a combined impairment loss of USD 790 million in respect of our operations in Russia and Kyrgyzstan (refer to Note 6 of our unaudited interim condensed consolidated financial statements for further details), as well as lower revenues as discussed. In addition, operating profit in 2019 was positively impacted by a one-off gain of USD 350 million, relating to a revised arrangement with Ericsson to upgrade core IT systems of VEON’s operating companies. The decrease in operating profits was partially offset by lower general and administrative costs.


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NON-OPERATING PROFITS AND LOSSES
Finance costs
Our finance costs decreased to USD 568 million in the nine-month period ended September 30, 2020 compared to USD 670 million in the nine-month period ended September 30, 2019 due to lower interest charges on loans, driven by a combination of lower average cost of debt across most currencies and by depreciation of Russian ruble.
Finance income
Our consolidated finance income decreased to USD 20 million in the nine-month period ended September 30, 2020 compared to USD 44 million in the nine-month period ended September 30, 2019. This was primarily due to lower cash and deposit balances, and partially due to currency devaluation on cash and deposits in local currency of our operating companies.
Other non-operating gain / loss
Other non-operating gain in the nine-month period ended September 30, 2020 was USD 100 million compared to a non-operating gain of USD 14 million in the nine-month period ended September 30, 2019. The increase was driven by the revaluation of our contingent consideration liability, as well as the recognition of a gain upon reaching a settlement in connection with the dispute concerning the sale of Telecel Globe Limited in June 2020. For more information over these items, please refer to, respectively, Note 7 and Note 12 of our unaudited interim condensed consolidated financial statements attached hereto.
Net foreign exchange gain / loss
During the nine-month period ended September 30, 2020, we recognized a net foreign exchange loss of USD 15 million compared to a loss of USD 29 million during the nine-month period ended September 30, 2019. This was mainly due to the depreciation of currencies of the countries in which VEON operates, particularly the Russian ruble.

INCOME TAX EXPENSE
Our consolidated income tax expense decreased by 29% to USD 255 million in the nine-month period ended September 30, 2020 compared to USD 360 million in the nine-month period ended September 30, 2019, mainly due to lower operating profit and the impact of foreign currency devaluation of the local currencies of our operating companies.
For more information regarding income tax expenses, please refer to Note 3 of our unaudited interim condensed consolidated financial statements attached hereto.

PROFIT / (LOSS) FOR THE PERIOD ATTRIBUTABLE TO THE OWNERS OF THE PARENT
Our profit / (loss) for the period attributable to the owners of the parent for the nine-month period ended September 30, 2020 decreased to a loss of USD 356 million as compared to a profit of USD 599 million for the same period last year. The decrease was mainly due to decreased operating profit as discussed above.

PROFIT / (LOSS) FOR THE PERIOD ATTRIBUTABLE TO NON-CONTROLLING INTEREST
Profit / (loss) for the period attributable to non-controlling interest for the nine-month period ended September 30, 2020 decreased to USD 6 million as compared to USD 36 million for the same period last year. The decrease was mainly driven by the acquisition of non-controlling interest in August 2019, which resulted in a lower level of non-controlling interest in our operations in Pakistan and Bangladesh, as well as lower profitability in our Algeria operations.


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ADJUSTED EBITDA
Nine months ended September 30,
In millions of U.S. dollars20202019
Our cornerstone
Russia1,161 1,491 
Our growth engines
Pakistan468 509 
Ukraine472 405 
Kazakhstan188 212 
Uzbekistan51 103 
Our frontier markets
Algeria224 262 
Bangladesh173 170 
Other frontier markets32 45 
Other
HQ and eliminations(142)83 
Total segments2,627 3,280 

Our consolidated Adjusted EBITDA decreased by 20% year-on-year, primarily due to lower revenues as discussed above, as well as the recognition of a one-off gain of USD 350 million during the nine-month period ended September 30, 2019, relating to a revised arrangement with Ericsson to upgrade core IT systems of VEON’s operating companies. This decrease was partially offset by lower general and administrative costs.
The following table provides the reconciliation of Profit / (loss) before tax to Total Adjusted EBITDA for the nine-month period ended September 30:
Nine months ended September 30,
In millions of U.S. dollars20202019
Profit / (loss) before tax(95)995 
Adjustments to reconcile Profit / (loss) before tax to Total Adjusted EBITDA
Depreciation1,193 1,218 
Amortization260 299 
Impairment loss / (reversal)790 100 
(Gain) / loss on disposal of non-current assets16 28 
(Gain) / loss on disposal of subsidiaries— (1)
Finance costs568 670 
Finance income(20)(44)
Other non-operating (gain) / loss(100)(14)
Net foreign exchange (gain) / loss15 29 
Total Adjusted EBITDA2,627 3,280 



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RESULT OF REPORTABLE SEGMENTS
RUSSIA
RESULTS OF OPERATIONS IN US$
Nine months ended September 30,
In millions of U.S. dollars (except as indicated)202020192020-2019 change %
Total operating revenue2,8743,329 -14 %
Mobile service revenue2,2202,617 -15 %
- of which mobile data696722 -4 %
Fixed-line service revenue395396 %
Sales of equipment, accessories and other259316 -18 %
Operating Expenses1,7161,838 -7 %
Adjusted EBITDA1,1611,491 -22 %
Adjusted EBITDA margin40.4 %44.8 %-4.4 pp
RESULTS OF OPERATIONS IN RUB
Nine months ended September 30,
In millions of RUB (except as indicated)202020192020-2019 change %
Total operating revenue202,551216,491-6 %
Mobile service revenue156,387170,246-8 %
- of which mobile data49,44646,676%
Fixed-line service revenue27,88425,734%
Sales of equipment, accessories and other18,28020,511-11 %
Operating Expenses121,186119,4981 %
Adjusted EBITDA81,60296,993-16 %
Adjusted EBITDA margin40.3 %44.8 %-4.5 pp
SELECTED PERFORMANCE INDICATORS
Nine months ended September 30,
202020192020-2019 change %
Mobile
Customers in millions49.7 54.8 -9 %
Mobile data customers in millions32.4 36.4 -11 %
ARPU in US$4.7 5.3 -11 %
ARPU in RUB332.0 343.0 -3 %
TOTAL OPERATING REVENUE
Our total operating revenue in Russia decreased by 14% (USD terms) and 6% (local currency terms) year-on-year. Lower revenues primarily arose from a lower customer base during the nine-month period ended September 30, 2020 compared to the same period in 2019, as well as reduced roaming revenue due to travel restrictions. This decline was partially offset by the increase in fixed line service revenue as customers continue to draw on the fixed line data at home, and mobile service revenue from our B2B customers who continue working from home.



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ADJUSTED EBITDA
Our Russia Adjusted EBITDA decreased by 22% (USD terms) and 16% (local currency terms) year-on-year. this was primarily due to lower revenues as stated above as well as increased structural operating expenses in relation to increased network investment and higher interconnection cost in the nine-month period ended September 30, 2020 compared to the same period last year.
SELECTED PERFORMANCE INDICATORS
As of September 30, 2020, we had 49.7 million mobile customers in Russia, representing a decrease of 9% year-on-year. The decrease was caused by customer perceptions on the network quality, as well as a reduction in sales through alternative distribution channels and the loss of migrant customers from our subscriber base due to travel restrictions.
Our mobile ARPU in Russia decreased by 11% (USD terms) and 3% (local currency terms) year-on-year, mainly due to lower revenue stemming from reduced activity.
PAKISTAN
RESULTS OF OPERATIONS IN US$
Nine months ended September 30,
In millions of U.S. dollars (except as indicated)202020192020-2019 change %
Total operating revenue908996-9 %
Mobile service revenue837926-10 %
- of which mobile data30727312 %
Sales of equipment, accessories and other7170%
Operating expenses440488-10 %
Adjusted EBITDA468509-8 %
Adjusted EBITDA margin51.6 %51.1 %0.5 pp
RESULTS OF OPERATIONS IN PKR
Nine months ended September 30,
In millions of PKR (except as indicated)202020192020-2019 change %
Total operating revenue147,014147,153-0.1 %
Mobile service revenue135,596136,816-1 %
- of which mobile data49,83840,42323 %
Sales of equipment, accessories and other11,41810,33810 %
Operating expenses71,02771,985-1 %
Adjusted EBITDA75,98775,1681 %
Adjusted EBITDA margin51.7 %51.1 %0.6 pp
SELECTED PERFORMANCE INDICATORS
Nine months ended September 30,
202020192020-2019 change %
Mobile
Customers in millions64.2 59.2 %
Mobile data customers in millions43.1 38.3 13 %
ARPU in US$1.5 1.8 -17 %
ARPU in PKR240 262 -8 %


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TOTAL OPERATING REVENUE
Our Pakistan total operating revenue decreased by 9% (USD terms) and by 0.1% (local currency terms) year-on-year. In local currency terms, revenue fell due to lower ARPU driven by lockdown measures which led to the temporary closure of Jazz stores, lower business activity and an overall economic slowdown in the nine-month period ended September 30, 2020. This impact was offset by an increase in our customer base, as well as tax regime changes which negatively impacted revenue in 2019.
ADJUSTED EBITDA
Our Pakistan Adjusted EBITDA decreased by 8% (USD terms) and increased by 1% (local currency terms) year-on-year. This was primarily due to the fall in revenue year-on-year as described above, as well as certain costs for the ex-Warid license paid in the form of security (under protest), which are classified within service costs in 2020, compared to prior year amortization below EBITDA. This impact was offset by the reversal of a provision, with an impact on Adjusted EBITDA of PKR 8.6 billion in the third quarter of 2020.
SELECTED PERFORMANCE INDICATORS
As of September 30, 2020, we had 64.2 million customers in Pakistan, representing an increase of 8% year-on-year, with growth primarily in mobile data customers, which increased by 13% year-on-year. This increase arose on the back of our continued expansion of the data network in Pakistan.
Our mobile ARPU in Pakistan decreased by 17% (USD terms) and 8% (local currency terms) year-on-year, driven mainly by reduced activity driven by lockdown measures as described above.
UKRAINE
RESULTS OF OPERATIONS IN US$
Nine months ended September 30,
In millions of U.S. dollars (except as indicated)202020192020-2019 change %
Total operating revenue69663010 %
Mobile service revenue64858910 %
- of which mobile data36130618 %
Fixed-line service revenue443816 %
Sales of equipment, accessories and other44%
Operating expenses224225-0.4 %
Adjusted EBITDA47240517 %
Adjusted EBITDA margin67.8 %64.3 %3.5 pp
RESULTS OF OPERATIONS IN UAH
Nine months ended September 30,
In millions of UAH (except as indicated)202020192020-2019 change %
Total operating revenue18,46116,57711 %
Mobile service revenue17,18915,48611 %
- of which mobile data9,5968,03719 %
Fixed-line service revenue1,17299518 %
Sales of equipment, accessories and other10196%
Operating expenses5,9355,9250.2 %
Adjusted EBITDA12,52710,65218 %
Adjusted EBITDA margin67.9 %64.3 %3.6 pp





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SELECTED PERFORMANCE INDICATORS
Nine months ended September 30,
202020192020-2019 change %
Mobile
Customers in millions25.8 26.4 -2%
Mobile data customers in millions16.8 16.3 3%
ARPU in US$2.8 2.5 12%
ARPU in UAH73 65 12%

TOTAL OPERATING REVENUE
Our Ukraine total operating revenue increased by 10% (USD terms) and 11% (local currency terms) year-on-year. This was primarily driven by strong growth in mobile data consumption owing to strong 4G adoption on the back of our continued focus on 4G connectivity and digitalizing solutions for customers. Fixed line revenue also grew year-on-year, as customers continued to draw on fixed-line data at home.
ADJUSTED EBITDA
Our Ukraine Adjusted EBITDA increased by 17% (USD terms) and 18% (local currency terms) year-on-year. This was primarily due to solid revenue performance and lower service and commercial costs in the nine-month period ended September 30, 2020 when compared with the same period last year. This was partially offset by the higher structural operating expenses.
SELECTED PERFORMANCE INDICATORS
As of September 30, 2020, we had 25.8 million mobile customers in Ukraine, representing a decrease of 2% year-on-year. The decrease was a result of increased churn rate and lower gross additions as a result of closures of stores under lockdown measures as well as reduction in multi-SIM users in the market and demographic trends in Ukraine. Our mobile data customer base observed an increase of 3% year-on-year.
Our mobile ARPU in Ukraine increased by 12% (USD terms and local currency terms) year-on-year, due to data usage growth.

KAZAKHSTAN
RESULTS OF OPERATIONS IN US$
Nine months ended September 30,
In millions of U.S. dollars (except as indicated)202020192020-2019 change %
Total operating revenue350370-5 %
Mobile service revenue289279%
- of which mobile data14611230 %
Fixed-line service revenue574916 %
Sales of equipment, accessories and other441-90 %
Operating expenses1621573 %
Adjusted EBITDA188212-11 %
Adjusted EBITDA margin53.7 %57.5 %-3.8 pp






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RESULTS OF OPERATIONS IN KZT
Nine months ended September 30,
In millions of KZT (except as indicated)202020192020-2019 change %
Total operating revenue143,264140,5282 %
Mobile service revenue118,192106,57811 %
- of which mobile data59,58342,58240 %
Fixed-line service revenue23,25518,57325 %
Sales of equipment, accessories and other1,81715,376-88 %
Operating expenses66,38059,82011 %
Adjusted EBITDA76,88580,708-5 %
Adjusted EBITDA margin53.7 %57.4 %-3.7 pp

SELECTED PERFORMANCE INDICATORS
Nine months ended September 30,
202020192020-2019 change %
Mobile
Customers in millions9.7 10.2 -5%
Mobile data customers in millions7.1 7.0 1%
ARPU in US$3.2 3.1 3%
ARPU in KZT1,318.0 1,166.0 13%

TOTAL OPERATING REVENUE
Our Kazakhstan total operating revenue decreased by 5% (USD terms) and increased by 2% (local currency terms) year-on-year. The increase in local currency terms was mainly due to strong demand for our data and fixed line services. This increase was partially offset by the impact of compensation received in 2019 in relation to the termination of a network sharing agreement with Kcell, resulting in higher revenues in 2019.
ADJUSTED EBITDA
Our Kazakhstan Adjusted EBITDA decreased by 11% (USD terms) and 5% (local currency terms) year-on-year. This was primarily due to increased personnel costs, certain non-income taxes and technology expenses, partially offset by the revenue growth as described above.
SELECTED PERFORMANCE INDICATORS
As of September 30, 2020, we had 9.7 million mobile customers in Kazakhstan, representing a decrease of 5% year-on-year. The decrease was mainly due to post IMEI registration barriers resulting in lower gross additions. The number of our mobile data customers in Kazakhstan increased by 1%, mainly due improved data bundle offers and data services.
Our mobile ARPU in Kazakhstan increased by 3% (USD terms) and 13% (local currency terms) year-on-year, due to data usage growth.





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UZBEKISTAN
RESULTS OF OPERATIONS IN US$
Nine months ended September 30,
In millions of U.S. dollars (except as indicated)202020192020-2019 change %
Total operating revenue150197-24 %
Mobile service revenue149195-24 %
- of which mobile data8388-6 %
Fixed-line service revenue11%
Sales of equipment, accessories and other%
Operating expenses99945 %
Adjusted EBITDA51103-50 %
Adjusted EBITDA margin34.0 %52.2 %-18.2 pp
RESULTS OF OPERATIONS IN UZS
Nine months ended September 30,
In billions of UZS (except as indicated)202020192020-2019 change %
Total operating revenue1,4931,696-12 %
Mobile service revenue1,4791,683-12 %
- of which mobile data818762%
Fixed-line service revenue910-13 %
Sales of equipment, accessories and other5355 %
Operating expenses99180922 %
Adjusted EBITDA503887-43 %
Adjusted EBITDA margin33.7 %52.3 %-18.6 pp
SELECTED PERFORMANCE INDICATORS
Nine months ended September 30,
202020192020-2019 change %
Mobile
Customers in millions6.8 8.4 -19 %
Mobile data customers in million4.7 5.3 -11 %
ARPU in US$2.2 2.4 -8 %
ARPU in UZS21,819 21,033 %
TOTAL OPERATING REVENUE
Our Uzbekistan total operating revenue decreased by 24% (USD terms) and 12% (local currency terms) year-on-year. The decrease was primarily due to a lower subscriber base impacted by a new excise duty and IMEI registration implementation, as well as weaker business activity due to COVID-19 restrictions.
ADJUSTED EBITDA
Our Uzbekistan Adjusted EBITDA decreased by 50% (USD terms) and 43% (local currency terms) year-on-year. This was primarily driven by reduced revenues as described above, with operating expenses remaining relatively stable.



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SELECTED PERFORMANCE INDICATORS
As of September 30, 2020, we had 6.8 million mobile customers in Uzbekistan representing a decrease of 19% year-on-year. The decrease was the result of our strategic focus on high value customers resulting in a higher churn rate. As of September 30, 2020, the number of our mobile data customers in Uzbekistan decreased by 11% to 4.7 million.
Our mobile ARPU in Uzbekistan decreased by 8% (USD terms) and increased by 4% (local currency terms) year-on-year, due to the strategic focus on high value customers as described above.
ALGERIA
RESULTS OF OPERATIONS IN US$
Nine months ended September 30,
In millions of U.S. dollars (except as indicated)202020192020-2019 change %
Total operating revenue519577-10 %
Mobile service revenue516575-10 %
- of which mobile data19516717 %
Sales of equipment, accessories and other3250 %
Operating expenses295315-6 %
Adjusted EBITDA224262-15 %
Adjusted EBITDA margin43.2 %45.4 %-2.2 pp
RESULTS OF OPERATIONS IN DZD
Nine months ended September 30,
In millions of DZD (except as indicated)202020192020-2019 change %
Total operating revenue65,16668,769-5 %
Mobile service revenue64,77968,581-6 %
- of which mobile data24,53219,89023 %
Sales of equipment, accessories and other388189105 %
Operating expenses37,06337,557-1 %
Adjusted EBITDA28,12731,212-10 %
Adjusted EBITDA margin43.2 %45.4 %-2.2 pp
SELECTED PERFORMANCE INDICATORS
Nine months ended September 30,
202020192020-2019 change %
Mobile
Customers in millions14.2 15.0 -5 %
Mobile data customers in millions9.1 9.4 -3 %
ARPU in US$4.0 4.1 -2 %
ARPU in DZD499 493 %
TOTAL OPERATING REVENUE
Our Algeria total operating revenue decreased by 10% (USD terms) and 5% (local currency terms) year-on-year. This was primarily due to lower subscriber base in an aggressively competitive market and the negative impact of a change in the Mobile Termination Rate (MTR) and economic slowdown due to the pandemic. Data revenue growth remained strong due to higher usage as a result of the roll-out of the 4G network.



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ADJUSTED EBITDA
Our Algeria Adjusted EBITDA decreased by 15% (USD terms) and 10% (local currency terms) year-on-year. This was primarily due to the decrease in total revenue as described above, as well as increased personnel and technology costs.
SELECTED PERFORMANCE INDICATORS
As of September 30, 2020, we had 14.2 million mobile customers in Algeria, representing a decrease of 5% year-on-year. The decrease was driven by a higher churn rate. Our mobile data customers in Algeria also saw a decrease of 3% year-on-year, due to higher churn rate and price competition.
Our mobile ARPU in Algeria decreased by 2% (USD terms) and increased by 1% (local currency terms) year-on-year. The increase in local currency terms was driven by increased pricing and a more high-value customer base.

BANGLADESH
RESULTS OF OPERATIONS IN US$
Nine months ended September 30,
In millions of U.S. dollars (except as indicated)202020192020-2019 change %
Total operating revenue403406-0.7 %
Mobile service revenue396397-0.3 %
- of which mobile data998122 %
Sales of equipment, accessories and other79-22 %
Operating expenses231236-2 %
Adjusted EBITDA1731702 %
Adjusted EBITDA margin42.8 %41.8 %1.0 pp
RESULTS OF OPERATIONS IN BDT
Nine months ended September 30,
In millions of BDT (except as indicated)202020192020-2019 change %
Total operating revenue34,24134,1850.2 %
Mobile service revenue33,59133,4480.4 %
- of which mobile data8,4196,84623 %
Sales of equipment, accessories and other651737-12 %
Operating expenses19,57619,895-1.6 %
Adjusted EBITDA14,66514,2902.6 %
Adjusted EBITDA margin42.8 %41.8 %1.0 pp
SELECTED PERFORMANCE INDICATORS
Nine months ended September 30,
202020192020-2019 change %
Mobile
Customers in millions32.8 33.1 -1 %
Mobile data customers in millions20.5 21.6 -5 %
ARPU in US$1.3 1.3 %
ARPU in BDT112 113 -1 %


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TOTAL OPERATING REVENUE
Our Bangladesh total operating revenue largely remained at par with the same period last year in both USD and local currency terms. The negative effects of the pandemic crisis was offset by consistent performance in acceleration of service revenue growth following spectrum acquisition and enhanced network availability, along with the continued expansion of Banglalink’s distribution footprint.
ADJUSTED EBITDA
Our Bangladesh Adjusted EBITDA increased by 2% (USD terms) and increased by 2.6% (local currency terms) year-on-year. This was mainly due to consistent performance on revenue and operational savings partially offset by the increase in minimum tax rates adversely impacting operational costs.
SELECTED PERFORMANCE INDICATORS
As of September 30, 2020, we had 32.8 million mobile customers in Bangladesh, representing a decrease of 1% year-on-year, mainly due to higher churn rate during the period. The number of mobile data customers increased by 5% due to continued efforts to attract new customers, successful targeting of voice-only customers and network expansion.
Our mobile ARPU in Bangladesh remained stable in both USD terms local currency terms, when compared with the same period last year.


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LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
Working capital is defined as current assets less current liabilities.
As of September 30, 2020, we had negative working capital of USD 2,705 million, compared to negative working capital of USD 3,269 million as of December 31, 2019. The change of net working capital compared to December 31, 2019 was mainly due to a decrease in short term borrowings and trade payables position in addition to the devaluation of local currencies across the Company's operational footprint.
Our working capital is monitored on a regular basis by our management. Our management expects to repay our debt as it becomes due from our operating cash flows or through additional borrowings. Although we have a negative working capital, our management believes that our cash balances and available credit facilities are sufficient to meet our short-term and foreseeable long-term cash requirements.


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INTERIM CONSOLIDATED CASH FLOW SUMMARY

Nine months ended September 30,
(In millions of U.S. dollars)20202019
Net cash flows from operating activities1,875 2,285 
Net cash flows from / (used in) investing activities(1,410)(1,387)
Net cash flows from / (used in) financing activities(694)(1,468)
Net increase / (decrease) in cash and cash equivalents(229)(570)
Net foreign exchange difference(59)(23)
Cash and cash equivalents at beginning of period1,204 1,791 
Cash and cash equivalents at end of period, net of overdraft916 1,198 

For more details, see the Interim Condensed Consolidated Statement of Cash Flows in our unaudited interim condensed consolidated financial statements attached hereto.
OPERATING ACTIVITIES
During the nine-month period ended September 30, 2020, net cash inflows from operating activities decreased to USD 1,875 million from USD 2,285 million during the nine-month period ended September 30, 2019. The decrease is mainly due to lower revenues as well as a one-off cash inflow of USD 350 million in the same period last year, relating to the revised arrangement with Ericsson. This was partially offset by the positive impact of changes in working capital balances.
INVESTING ACTIVITIES
During the nine-month period ended September 30, 2020, net outflow for investing activities was USD 1,410 million compared to net cash outflow of USD 1,387 million for the same period last year. This increase reflects the continued high levels of network investment in Russia, and was partially offset by the cash outflow in the first quarter of 2019 relating to amounts pledged as collateral for the Mandatory Tender Offer with respect to the acquisition of non-controlling interests in GTH.
Acquisitions and Disposals
For information regarding our acquisitions and disposals, see Note 5 and Note 6 to our unaudited interim condensed consolidated financial statements attached hereto.
FINANCING ACTIVITIES
During the nine-month period ended September 30, 2020, net cash outflow for financing activities was USD 694 million compared to net cash outflow of USD 1,468 million during the nine-month period ended September 30, 2019. The change in net cash flows from financing activities was driven mainly by non-recurring outflow for acquisition of non-controlling interest in the previous period. The outflow was further reduced by a relatively smaller net repayment of debt as well as lower dividends paid during the nine-month period ended September 30, 2020 compared to the nine-month period ended September 30, 2019.
During the nine-month period ended September 30, 2020, we raised USD 3,212 million, net of fees (2019: USD 1,910 million) and repaid USD 3,558 million (2019: USD 2,120 million) under various debt facilities. Furthermore, we paid USD 259 million (2019: USD 520 million) of dividends to the shareholders of VEON Ltd. During 2020, a significant amount of debt raised was used to refinance existing debt, in order to achieve lower borrowing costs and extend maturities.
For information regarding changes to our debt portfolio during the nine-month period ended September 30, 2020, see Note 7 to our unaudited interim condensed consolidated financial statements attached hereto.


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BORROWINGS
As of September 30, 2020, the principal amounts of our external indebtedness represented by bank loans and bonds amounted to USD 6,959 million, compared to USD 7,519 million as of December 31, 2019. As of September 30, 2020, our debt includes overdrawn bank accounts related to a cash-pooling program of USD 165 million (December 31, 2019: USD 46 million).
As of September 30, 2020, VEON had the following principal amounts outstanding for interest-bearing loans and bonds as well as cash-pool overdrawn bank accounts:
EntityType of debt/ original lendersInterest rateDebt currencyOutstanding debt (mln)Outstanding debt
(USD mln)
Maturity
date
VEON Holdings B.V.Loan from Sberbank7.3500% RUB 30,000 377 03.06.2024
VEON Holdings B.V.Loan from SberbankCBR Key Rate + 2.2% RUB 37,500 471 03.06.2023
VEON Holdings B.V.Loan from SberbankCBR Key Rate + 2.2% RUB 12,500 157 03.06.2023
VEON Holdings B.V.Loan from Alfa Bank7.5000% RUB 30,000 376 10.03.2025
VEON Holdings B.V.Loan from VTBCBR Key Rate + 1.85% RUB 30,000 376 09.07.2025
VEON Holdings B.V.Notes3.9500% USD 600 600 16.06.2021
VEON Holdings B.V.Notes7.5043% USD 417 417 01.03.2022
VEON Holdings B.V.Notes5.9500% USD 529 529 13.02.2023
VEON Holdings B.V.Notes4.9500% USD 533 533 17.06.2024
VEON Holdings B.V.Notes4.0000% USD 1,000 1,000 09.04.2025
VEON Holdings B.V.Notes7.2500% USD 700 700 26.04.2023
VEON Holdings B.V.Notes6.3000%RUB20,000 251 18.06.2025
VEON Holdings B.V.Notes6.5000%RUB10,000 126 11.09.2025
VEON Holdings B.V.Cash-pool overdrawn accounts **152 
TOTAL VEON Holdings B.V.6,065 
PJSC VimpelComLoan from VIP Finance Ireland*7.7480%USD262 262 02.02.2021
PJSC VimpelComOther10 
TOTAL PJSC VimpelCom272 
PMCLLoan from Habib Bank Limited6M KIBOR + 0.90% PKR 667 15.12.2020
PMCLLoan from ING Bank N.V.6M LIBOR + 1.9% USD 37 37 15.12.2020
PMCLLoan from MCB Bank Limited6M KIBOR + 0.8% PKR 2,667 16 15.12.2020
PMCLLoan from Habib Bank Limited6M KIBOR + 0.35% PKR 6,667 40 15.06.2022
PMCLSyndicated Loan Facility6M KIBOR PKR 3,394 21 15.12.2023
PMCLSyndicated Loan Facility6M KIBOR PKR 2,111 13 15.12.2023
PMCLSyndicated Loan Facility6M KIBOR + 0.35% PKR 17,117 103 15.06.2022
PMCLSyndicated Loan Facility6M KIBOR + 0.75% PKR 33,848 204 02.09.2026
PMCLIslamic Financing Facility6M KIBOR + 0.75% PKR 10,000 61 02.09.2026
PMCLOther15 
TOTAL Pakistan Mobile Communications Limited514 
BanglalinkSyndicated Loan FacilityAverage bank deposit rate + 4.25% or 5.75% BDT 6,939 82 24.06.2022
BanglalinkSyndicated Loan FacilityAverage bank deposit rate + 3.0% BDT 872 10 24.12.2020
BanglalinkOther3 
TOTAL Banglalink Digital Communications Ltd.95 
Other entitiesCash-pool overdrawn accounts** and other14 
Total VEON consolidated6,959 
* Funded by the issuance of loan participation notes by VIP Finance Ireland.
** As of September 30, 2020, some bank accounts forming part of a cash pooling program and being an integral part of VEON’s cash management remained overdrawn by USD 165 million. Even though the total balance of the cash pool remained positive, VEON has no legally enforceable right to set-off and therefore the overdrawn accounts are presented as financial liabilities and form part of our debt.
For additional information on our outstanding indebtedness, please refer to Note 7 of our unaudited interim condensed consolidated financial statements attached hereto.


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FUTURE LIQUIDITY AND CAPITAL REQUIREMENTS
During the nine-month period ended September 30, 2020, our capital expenditures excluding licenses and right-of-use assets (“CAPEX exc. licenses and ROU”) were USD 1,214 million compared to USD 1,163 million in the nine-month period ended September 30, 2019. The increase was primarily due to continued investment in network development in Pakistan, Ukraine and Bangladesh.
We expect that CAPEX exc. licenses and ROU in 2020 will mainly consist of investing in high-speed data networks to capture mobile data growth, including the continued roll-out of 4G networks in Russia, Algeria, Bangladesh, Pakistan and Ukraine. We expect these expenditures to continue to be significant throughout the remainder of 2020.
Management anticipates that the funds necessary to meet our current and expected capital requirements and debt repayments in the foreseeable future (including with respect to any possible acquisitions) will come from:
Cash we currently hold;
Operating cash flows;
Borrowings under bank financings, including credit lines currently available to us; and
Issuances of debt securities on capital markets.
As of September 30, 2020, we had an undrawn amount of USD 1,679 million under existing credit facilities.
Management expects that positive cash flows from our current operations will continue to provide us with internal sources of funds. The availability of external financing depends on many factors, including the success of our operations, contractual restrictions, availability of guarantees from export credit agencies, the financial position of international and local banks, the willingness of international banks to lend to our companies and the liquidity of international and local capital markets.
Below is the reconciliation of CAPEX exc. licenses and ROU to cash flows used in the purchase of property and equipment and intangible assets:
Nine months ended September 30,
(In millions of U.S. dollars)20202019
CAPEX exc. licenses and ROU1,214 1,163 
Adjusted for:
Additions of licenses50 18 
Additions of right-of-use assets124 116 
Difference in timing between accrual and payment for capital expenditures(101)(100)
Purchase of property, plant and equipment and intangible assets1,287 1,197 


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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from adverse movements in foreign currency exchange rates and changes in interest rates on our obligations.
As of September 30, 2020, the largest currency exposure risks for our group were in relation to the Russian ruble, the Pakistani rupee, the Algerian dinar, the Bangladeshi taka, the Ukrainian hryvnia and the Uzbek som, because the majority of our cash flows from operating activities in Russia, Pakistan, Algeria, Bangladesh, Ukraine and Uzbekistan are denominated in each of these functional currencies, respectively, while our debt, if not incurred in or hedged to the aforementioned currencies, is primarily denominated in U.S. dollars.
As of September 30, 2020, we held approximately 57% of our readily available cash and bank deposits in U.S. dollars in order to hedge against the devaluation risk of currencies in countries where we operate. We also hold part of our debt in Russian rubles and other currencies to manage this risk. Nonetheless, if the U.S. dollar value of the Russian ruble, Algerian dinar, Pakistani rupee, Bangladeshi taka, Ukrainian hryvnia or Uzbek som were to dramatically decline, it could negatively impact our ability to repay or refinance our U.S. dollar denominated indebtedness. Our treasury function has developed risk management policies that establish guidelines for limiting foreign currency exchange rate risk.
For more information on risks associated with currency exchange rates, see the section of our 2019 Annual Report entitled “Item 3—Key Information—D. Risk Factors—Market Risks—We are exposed to foreign currency exchange loss and currency fluctuation and translation risks.”
In accordance with our policies, we do not enter into any treasury transactions of a speculative nature.
As of September 30, 2020, the interest rate risk on the financing of our group was limited as 82% of our group’s total debt was fixed rate debt.







 
 
 
















Unaudited interim condensed
consolidated financial statements

VEON Ltd.

As of and for the nine and three-month periods
ended September 30, 2020





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VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
1



INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
for the nine and three-month periods ended September 30
Nine-month periodThree-month period
(In millions of U.S. dollars, except per share amounts)Note2020201920202019
Service revenues5,629 6,161 1,856 2,076 
Sale of equipment and accessories269 322 109 121 
Other revenue83 125 28 27 
Total operating revenues25,981 6,608 1,993 2,224 
Other operating income4350 — 
Service costs(1,130)(1,154)(384)(397)
Cost of equipment and accessories(263)(323)(100)(117)
Selling, general and administrative expenses(1,965)(2,201)(613)(723)
Depreciation(1,193)(1,218)(389)(406)
Amortization(260)(299)(82)(94)
Impairment (loss) / reversal6(790)(100)(789)(90)
Gain / (loss) on disposal of non-current assets(16)(28)(4)(13)
Gain / (loss) on disposal of subsidiaries— — — 
Operating profit / (loss)368 1,636 (366)384 
Finance costs(568)(670)(177)(249)
Finance income20 44 16 
Other non-operating gain / (loss)100 14 (1)— 
Net foreign exchange gain / (loss)(15)(29)(20)
Profit / (loss) before tax(95)995 (533)131 
Income tax expense3(255)(360)(111)(100)
Profit / (loss) for the period(350)635 (644)31 
Attributable to:
The owners of the parent(356)599 (620)35 
Non-controlling interest36 (24)(4)
(350)635 (644)31 
Basic and diluted gain / (loss) per share attributable to ordinary equity holders of the parent($0.20)$0.34 ($0.35)$0.02 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
2



INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the nine and three-month periods ended September 30
Nine-month periodThree-month period
(In millions of U.S. dollars)Note2020201920202019
Profit / (loss) for the period(350)635 (644)31 
Items that may be reclassified to profit or loss
Foreign currency translation1(705)(9)(219)(31)
Other10 10 
Items reclassified to profit or loss
Other(13)— (8)— 
Other comprehensive income / (loss), net of tax(711)1 (221)(21)
Total comprehensive income / (loss), net of tax(1,061)636 (865)10 
Attributable to:
The owners of the parent(987)668 (836)29 
Non-controlling interests(74)(32)(29)(19)
(1,061)636 (865)10 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.


VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
3



INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of
(In millions of U.S. dollars)NoteSeptember 30, 2020December 31, 2019
Assets
Non-current assets
Property and equipment56,155 7,340 
Intangible assets64,065 5,688 
Investments and derivatives7287 235 
Deferred tax assets176 134 
Other assets165 163 
Total non-current assets10,848 13,560 
Current assets
Inventories98 169 
Trade and other receivables533 628 
Investments and derivatives7216 82 
Current income tax assets31 16 
Other assets303 354 
Cash and cash equivalents81,081 1,250 
Total current assets2,262 2,499 
Total assets13,110 16,059 
Equity and liabilities
Equity
Equity attributable to equity owners of the parent(25)1,226 
Non-controlling interests857 994 
Total equity832 2,220 
Non-current liabilities
Debt and derivatives77,061 7,759 
Provisions116 138 
Deferred tax liabilities108 141 
Other liabilities26 33 
Total non-current liabilities7,311 8,071 
Current liabilities
Trade and other payables1,684 1,847 
Debt and derivatives72,109 2,585 
Provisions169 222 
Current income tax payables161 102 
Other liabilities844 1,012 
Total current liabilities4,967 5,768 
Total equity and liabilities13,110 16,059 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
4



INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the nine-month period ended September 30, 2020
Attributable to equity owners of the parent
(In millions of U.S. dollars)
NoteNumber of
shares
outstanding
Issued
capital
Capital
Surplus
Other
capital
reserves
Accumulated
deficit
Foreign
currency
translation
TotalNon-
controlling
interests
Total
equity
As of December 31, 20191,749,127,404 2 12,753 (1,887)(1,330)(8,312)1,226 994 2,220 
Profit / (loss) for the period— — — — (356)— (356)(350)
Other comprehensive income / (loss)— — — (6)(4)(621)(631)(80)(711)
Total comprehensive income / (loss)— — — (6)(360)(621)(987)(74)(1,061)
Dividends declared10— — — — (262)— (262)(64)(326)
Other— — — (2)26 (26)(2)(1)
As of September 30, 20201,749,127,404 2 12,753 (1,895)(1,926)(8,959)(25)857 832 

for the nine-month period ended September 30, 2019
Attributable to equity owners of the parent
(In millions of U.S. dollars)
NoteNumber of
shares
outstanding
Issued
capital
Capital
Surplus
Other
capital
reserves
Accumulated
deficit
Foreign
currency
translation
TotalNon-
controlling
interests
Total
equity
As of December 31, 2018 1,749,127,404 2 12,753 743 (1,412)(8,416)3,670 (891)2,779 
Adjustments arising due to IFRS 16— — — — (3)— (3)(1)(4)
As of January 1, 20191,749,127,404 2 12,753 743 (1,415)(8,416)3,667 (892)2,775 
Profit / (loss) for the period — — — — 599 — 599 36 635 
Other comprehensive income / (loss) — — — 59 69 (68)
Total comprehensive income / (loss) — — — 600 59 668 (32)636 
Dividends declared10— — — — (525)— (525)(108)(633)
Changes in ownership interest in a subsidiary that do not result in loss of control— — — (2,563)— — (2,563)1,965 (598)
Other— — — (9)(1)(8)(7)
As of September 30, 20191,749,127,404 2 12,753 (1,809)(1,349)(8,358)1,239 934 2,173 

VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
5




for the three-month period September 30, 2020
Attributable to equity owners of the parent
(In millions of U.S. dollars)NoteNumber of
shares
outstanding
Issued
capital
Capital
Surplus
Other
capital
reserves
Accumulated
deficit
Foreign
currency
translation
TotalNon-
controlling
interests
Total
equity
June 30, 20201,749,127,404 2 12,753 (1,894)(1,303)(8,747)811 891 1,702 
Profit / (loss) for the period— — — — (620)— (620)(24)(644)
Other comprehensive income / (loss)— — — (1)(3)(212)(216)(5)(221)
Total comprehensive income / (loss)— — — (1)(623)(212)(836)(29)(865)
Dividends declared10— — — — — — — (5)(5)
Other— — — — — — — — — 
September 30, 20201,749,127,404 2 12,753 (1,895)(1,926)(8,959)(25)857 832 

for the three-month period September 30, 2019
Attributable to equity owners of the parent
(In millions of U.S. dollars)NoteNumber of
shares
outstanding
Issued
capital
Capital
Surplus
Other
capital
reserves
Accumulated
deficit
Foreign
currency
translation
TotalNon-
controlling
interests
Total
equity
June 30, 20191,749,127,404 2 12,753 744 (1,157)(8,342)4,000 (1,010)2,990 
Profit / (loss) for the period — — — — 35 — 35 (4)31 
Other comprehensive income / (loss) — — — — (15)(6)(15)(21)
Total comprehensive income / (loss) — — — 35 (15)29 (19)10 
Dividends declared10— — — — (228)— (228)— (228)
Changes in ownership interest in a subsidiary that do not result in loss of control— — — (2,563)— — (2,563)1,965 (598)
Other— — — (1)(2)(1)
September 30, 20191,749,127,404 2 12,753 (1,809)(1,349)(8,358)1,239 934 2,173 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
6



INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine-month period ended September 30
Nine-month period
(In millions of U.S. dollars)Note20202019
Operating activities
Profit / (loss) before tax(95)995 
Non-cash adjustments to reconcile profit before tax to net cash flows
Depreciation, amortization and impairment loss / (reversal)2,243 1,617 
(Gain) / loss on disposal of non-current assets16 28 
(Gain) / loss on disposal of subsidiaries— (1)
Finance costs568 670 
Finance income(20)(44)
Other non-operating (gain) / loss(100)(14)
Net foreign exchange (gain) / loss15 29 
Changes in trade and other receivables and prepayments(133)(181)
Changes in inventories45 (19)
Changes in trade and other payables81 (6)
Changes in provisions, pensions and other(10)51 
Interest paid(475)(517)
Interest received19 49 
Income tax paid(279)(372)
Net cash flows from operating activities1,875 2,285 
Investing activities
Purchase of property, plant and equipment and intangible assets(1,287)(1,197)
Payment on deposits(127)(913)
Receipts from deposits42 693 
Receipts from / (investment in) financial assets(29)
Other cash flows from / (used in) investing activities, net(9)26 
Net cash flows from / (used in) investing activities(1,410)(1,387)
Financing activities
Proceeds from borrowings, net of fees paid*73,212 1,910 
Repayment of debt7(3,558)(2,120)
Acquisition of non-controlling interest(1)(604)
Dividends paid to owners of the parent(259)(520)
Dividends paid to non-controlling interests(88)(134)
Net cash flows from / (used in) financing activities(694)(1,468)
Net (decrease) / increase in cash and cash equivalents(229)(570)
Net foreign exchange difference(59)(23)
Cash and cash equivalents at beginning of period, net of overdrafts1,204 1,791 
Cash and cash equivalents at end of period, net of overdrafts**8916 1,198 
*    Fees paid for borrowings were US$21 (2019: US$19).
**    Overdrawn amount was US$165 (2019: US$119)
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
7


Notes to the interim condensed consolidated financial statements
(in millions of U.S. dollars unless otherwise stated)

GENERAL INFORMATION ABOUT THE GROUP
1    GENERAL INFORMATION
VEON Ltd. (“VEON”, the “Company” and together with its consolidated subsidiaries, the “Group” or “we”) was incorporated in Bermuda on June 5, 2009. The registered office of VEON is Victoria Place, 31 Victoria Street, Hamilton HM 10, Bermuda. VEON’s headquarters and the principal place of business is located at Claude Debussylaan 88, 1082 MD Amsterdam, the Netherlands.
VEON generates revenue from the provision of voice, data and other telecommunication services through a range of mobile and fixed-line technologies, as well as selling equipment and accessories.
The interim condensed consolidated financial statements are presented in United States dollars (“U.S. dollar” or “US$”). In these notes, U.S. dollar amounts are presented in millions, except for share and per share (or American Depository Shares (“ADS”)) amounts and as otherwise indicated.
VEON’s ADSs are listed on the NASDAQ Global Select Market (“NASDAQ”) and VEON’s common shares are listed on Euronext Amsterdam, the regulated market of Euronext Amsterdam N.V. (“Euronext Amsterdam”).

Major developments during the nine-month period ended September 30, 2020
Financing activities
In July 2020, VEON Holdings B.V. successfully refinanced its existing RUB30 billion (US$422) bilateral term loan agreement with VTB Bank. For further details please refer to Note 7.
In June 2020, VEON Holdings B.V. entered into a new RUB bilateral term loan agreement with Sberbank for a total amount of RUB100 billion (US$1,450), which was used to refinance the existing Sberbank facilities. Currently, RUB80 billion remains outstanding under the new facilities. For further details please refer to Note 7.
In April 2020, VEON Holdings B.V. established a Global Medium Term Note program for the issuance of bonds in multiple currencies, with a limit equivalent to US$6,500. In June and September 2020, VEON Holdings B.V. issued senior unsecured notes of RUB20 billion (US$288) and RUB10 billion (US$135), respectively, under the program. For further details please refer to Note 7.
Coronavirus outbreak
On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide.
The second quarter saw the full impact on our operations of the lockdowns imposed across our markets in response to the COVID-19 pandemic. This resulted in material disruption to our retail operations following store closures, which impacted gross connections and airtime sales. Restrictions on travel resulted in a significant decline in roaming revenues and the loss of migrant customers from our subscriber base, particularly in Russia.
Although VEON’s operations remained impacted by lockdown measures throughout the third quarter, a gradual lifting of restrictions enabled the start of economic activity normalization and a sequential recovery in the performance of our operating markets.
Revenue trends remained divergent. Demand for our data services remains strong, enabling us to continue to grow our data revenues at a double-digit pace. We also experienced a continued shift in data traffic from mobile to fixed networks as lockdowns encouraged home working and schooling alongside a greater use of devices through our domestic broadband services.
An increase in demand for hard currencies has resulted in the devaluation of exchange rates in the countries in which VEON operates. As such, during the nine-month period ended September 30, 2020, the book value of assets and liabilities of our foreign operations, in U.S. dollar terms, decreased significantly, with a corresponding loss of US$705 recorded against the foreign currency translation reserve in the Statement of Comprehensive Income.
VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
8


Notes to the interim condensed consolidated financial statements
(in millions of U.S. dollars unless otherwise stated)
Our management has taken appropriate measures to keep our personnel safe and secure. As of the date of these financial statements, we have not observed any particular material adverse impacts to our business, financial condition, and results of operations, other than as described above, and the group liquidity is sufficient to fund the business operations for at least another 12 months.
Other developments
In September 2020, the Dhabi Group exercised its put option to sell VEON its 15% shareholding in Pakistan Mobile Communications Ltd ("PMCL"), the Company’s subsidiary in Pakistan. For further details please refer to Note 7.
In September 2020, VEON recorded impairment losses in respect of its operations in Russia and Kyrgyzstan of US$723 and US$64, respectively. For further details please refer to Note 6.
In the third quarter of 2020, as a result of a change in estimate, PMCL reversed a non-income tax provision of PKR11.2 billion (US$68).

VEON Ltd | Unaudited interim condensed consolidated financial statements as of and for the period ended September 30, 2020
9


Notes to the interim condensed consolidated financial statements
(in millions of U.S. dollars unless otherwise stated)
OPERATING ACTIVITIES OF THE GROUP
2    SEGMENT INFORMATION
Management analyzes the Company’s operating segments separately because of different economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies. All the segments are grouped and analyzed as three main markets - our cornerstone, our growth engines and our frontier markets - representing the Company's strategy and capital allocation framework.
Management evaluates the performance of the Company’s segments on a regular basis, primarily based on earnings before interest, tax, depreciation, amortization, impairment, gain / loss on disposals of non-current assets, other non-operating gains / losses and share of profit / loss of joint ventures and associates (“Adjusted EBITDA”) along with assessing the capital expenditures excluding certain costs such as those for telecommunication licenses and right-of-use assets (“CAPEX exc. licenses and ROU”). Management does not analyze assets or liabilities by reportable segments.
As of December 31, 2019, management decided to include Kazakhstan as a separate reportable segment due to the increased impact of Kazakhstan operations on the overall business (as described in the Group’s audited annual consolidated financial statements as of and for the year ended December 31, 2019). In addition, management decided to show the financial impact of HQ and eliminations separately from operating companies. Comparative figures for nine and three-month periods ended September 30, 2019 have been adjusted to reflect this change.
Financial information by reportable segment for the nine and three-month periods ended September 30, is presented in the following tables. Inter-segment transactions between segments are not material, and are made on terms which are comparable to transactions with third parties.
For the nine-month period ended September 30
Service revenueSale of equipment and accessoriesOther revenueTotal Revenue
MobileFixed
2020201920202019202020192020201920202019
Our cornerstone
Russia2,220 2,617 395 396 252 308 2,874 3,329 
Our growth engines
Pakistan837 926 — — 64 65 908 996 
Ukraine648 589 44 38 — — 696 630 
Kazakhstan289 279 57 49 40 350 370 
Uzbekistan149 195 — — — — 150 196 
Our frontier markets
Algeria516 575 — — — — 519 576 
Bangladesh396 397 — — — 403 406 
Other frontier markets82 102 20 22 — 106 130 
Other
HQ and eliminations(25)(25)— —