The credit rating of VEON Holdings B.V. (hereinafter, the Company, VEON, or the Group) has been affirmed by ACRA based on an analysis of the consolidated financial and operating data of its parent group VEON Ltd. The credit rating of VEON is based on its strong business profile underpinned by its market position in Russia and the growing share in other markets where the Company operates, as well as good geographical diversification. The credit rating is further supported by the scale of the Company’s activities characterized by the high volume of its revenues, very high profitability and very strong liquidity position. The rating is constrained by the Company’s medium leverage and coverage, as well as the average assessment of its cash flow.

VEON provides telecommunications and digital services in emerging markets. It is headquartered in Amsterdam. As of the end of Q3 2021, the subscriber base of VEON amounted to 202.9 mln mobile users and 4.6 mln fixed line users (growth of 5.5% and 4.4% compared to Q3 2020, respectively). The Company’s most important market (accounting for 46% of its revenues for 9M 2021) is Russia, where VEON ranks third in terms of size and number of users among mobile operators. Other major markets in terms of business share are Pakistan (17% of total revenues) and Ukraine (12% of total revenues). The key shareholder of VEON is investment firm LetterOne (with a 47.9% share in the Company’s authorized capital). A significant share of the Company’s stocks (43.8%) is in free float, while the remaining 8.3% is owned by Dutch fund Stichting.


Strong business profile and very strong geographical diversification. The key area of VEON’s activities is the provision of mobile communication and fixed line services (approximately 92% share in consolidated revenues) in Eastern Europe, Central and South Asia, and North Africa. ACRA notes the sufficiently high level of 4G network coverage in all the key jurisdictions where the Company is present. To provide communication services, VEON operates modern telecommunications infrastructure, a significant part of which it owns. In 2021, the Group sold part of its mobile network towers for USD 957 mln. The deal involves the further lease of this infrastructure by VEON. In 2021, the Company also exercised a put option to sell its share of business in Algeria. These factors indicate that the Company is carrying out work to optimize its business processes and manage FX risk.

Very large size and very high profitability. The Company’s revenues amounted to USD 5.7 bln for 9M 2021, having increased by 5.0% compared to the same period in 2020. The total subscriber base (excluding Algeria) as of the end of Q3 2021 stood at 207.5 mln (growth of 5.5% vs. Q3 2020), and monthly average revenue per user (ARPU) ranged fr om USD 1.4 in Pakistan and Bangladesh to USD 4.7 in Russia (RUB 361). ACRA notes that the Company recorded growth in revenues and subscriber base in all key areas of business in 2021. For 9M 2021, revenue in national currencies increased compared to the same period in 2020, including 5.3% growth in Russia and 15.3% and 14.9% growth in Pakistan and Ukraine, respectively. This indicates positive changes in the operational management of VEON. The Company has a very high level of profitability. FFO profitability before fixed charges and taxes for the past several years has ranged within 43–50%. According to ACRA’s assessments, this indicator will remain within the aforementioned range over the next three years.

Very high level of corporate governance. VEON’s top managers boast vast industry experience. The Company has a board of directors consisting of eleven members, seven of whom are independent. The board of directors has established committees for corporate governance, finance, audit and risk, and compensation. The decision-making processes, financial policy and risk management are well regulated and effective. ACRA notes that VEON’s information transparency is very high.

Medium leverage and medium interest payment coverage. According to ACRA’s calculations, the ratio of total debt adjusted for operating lease to FFO before fixed charges was 3.4x for 2020. The Agency expects leverage to decrease by the end of 2021, primarily due to growth of FFO before fixed charges. The Company’s leverage is under a certain amount of pressure from currency risk, since a significant share of its debt obligations is denominated in US dollars, while operating cash flows are denominated in rather volatile currencies of developing countries (VEON uses elements of natural and financial hedging). ACRA notes that the Company has made significant improvements in terms of debt currency mix over the last few years. The loan portfolio is diversified in terms of lenders. ACRA assumes that the ratio of FFO before fixed charges to fixed charges will stand at 3.2x at the end of 2021. ACRA expects gradual improvement of the Company’s leverage and interest payment coverage metrics in 2022–2023.

Very strong liquidity and medium cash flow. The Company is characterized by very strong liquidity. VEON has extensive expertise in financial markets: 43.8% of the Company’s shares are in free float and the Group is active in the bond market. The volume of open credit lines amounted to USD 1.25 bln as of September 30, 2021. The Company currently maintains a high level of capital expenditures (20–23% of revenues); however, this indicator is likely to stabilize and then decline to 20% in the future. The Company is actively investing in upgrading its communications infrastructure in Moscow, the Moscow Region, and St. Petersburg. VEON is investing in the deployment of 4G networks, especially in regions wh ere 4G penetration remains low. In 2019, the Company adopted a new dividend policy, according to which it plans to pay at least 50% of FCFE (Free Cash Flow to Equity) after deducting license costs. Despite pressure fr om capital expenditures and dividend payments, ACRA expects that the Company’s FCF will be positive over the next three years.

key assumptions

  • Moderate growth of revenues over the next three years;

  • No significant currency devaluations in the countries wh ere the Company has a significant share of business;

  • Maintaining the current dividend policy and reducing the ratio of capital expenditures to revenues by 2023.

potential outlook or rating change factors

The Stable outlook assumes that the rating will most likely stay unchanged within the 12 to 18-month horizon.

A positive rating action may be prompted by:

  • Ratio of total debt adjusted for operating lease to FFO before fixed charges falling below 2.0x amid sustainable business growth in key markets in the coming years due to faster increase of the size of the subscriber base and ARPU;

  • Weighted average FCF profitability increasing to 5%.

A negative rating action may be prompted by:

  • Ratio of total debt adjusted for operating lease to FFO before fixed charges exceeding 3.5x;

  • Ratio of FFO before fixed charges to fixed charges falling below 2.5x;

  • FFO profitability before fixed charges and taxes falling below 40%.


Standalone creditworthiness assessment (SCA): aa-.

Adjustments: none.


No outstanding issues have been rated.


The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Non-Financial Corporations under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities.

The credit rating of VEON Holdings B.V. was published by ACRA for the first time on December 25, 2020. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.

The credit rating was assigned based on data provided by VEON Holdings B.V., information from publicly available sources, and ACRA’s own databases. The credit rating is solicited, and VEON Holdings B.V. participated in its assignment.

In assigning the credit rating, ACRA used only information, the quality and reliability of which was, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.

ACRA provided no additional services to VEON Holdings B.V. No conflicts of interest were discovered in the course of credit rating assignment.

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