$VEON：一只被打残的新兴市场电信股，藏着4倍空间？| Samit Umatiya，UIG Funds

Let me just give everyone a disclaimer. Nothing on this podcast is investing advice. You can see the full disclaimer in the show notes or at the end of the podcast. That’s always true, but we’re talking about a U.S.-listed stock today with its hands in a lot of different international markets, so that obviously comes with added risk. Just keep that in mind.

Samit, the company we’re going to talk about is VEON. They trade under the ticker VEON on, I think, the NYSE. I can’t remember whether it’s the NYSE or Nasdaq, but it’s Nasdaq. What is VEON, and why are they so interesting?

VEON, in a nutshell, is a telecom company. When you talk about telecom companies, there’s this low-growth, low-return-on-invested-capital stigma around them, which is why they’re normally priced at low multiples. Then you toss in an emerging- and frontier-market company like VEON, and especially with all the AI hype going on right now, why would anyone want to take a look?

These are areas we like to focus on. I think that’s where a lot of the mispricing and undervaluation are. For VEON, let’s go over some background history before we dive into the investment thesis, the valuation, and all that.

VEON was formed in 1991 as VimpelCom, and it was founded by an American named Augie Fabela. Augie was born and raised in Chicago. He had multiple side gigs and jobs in the telco space, and one of his endeavors was a sales opportunity in Soviet Russia. I think 1991 was the last year of Gorbachev’s rule in the Soviet Union before it dissolved.

He was headed over to Russia for the sales opportunity when he came across a scientist, Dr. Dmitri Zimin—I think I’m pronouncing that right. Basically, he and Augie got together and formed what is VEON today.

For a little background context, I know everyone has a stigma around Soviet Russia—how bad it used to be and all the propaganda around it—but I think we could all agree that there were human rights abuses. Without getting too political, there was suppression of speech, religion, and all that. I think Augie’s whole mentality was, “Let’s create a platform, let’s create a company that allows for the circulation of free speech. It allows the citizens of Soviet Russia to communicate with each other.” That’s where they got the idea for VimpelCom, which is now VEON.

They formed VimpelCom in 1991 and took it public in 1995. It was the first, I believe, Russian company to be listed on the NYSE, on the American stock market. By 2005, they had expanded into Ukraine, and by 2011, they were in 18 countries.

After 2011, they realized they were too levered. They had made all these acquisitions in countries like Algeria and Italy, and it was time to deconsolidate and make a lot of divestitures in those countries. After doing so, they landed on 6 markets: Russia, Ukraine, Pakistan, Bangladesh, Uzbekistan, and Kazakhstan. Until recently—I’d say about 3 years ago—they had their Russian operations, which they divested for reasons we can dive into.

I’m pretty sure people can figure out the reasons they had to divest the Russian operations. That’s a great history. I wouldn’t have been able to add much.

I am a little surprised because, as you said, the company has been around for a while. Especially before the Russian invasion, I know this was a popular—at least in its prior form, it was kind of a popular—sum-of-the-parts pitch among value investors. It’s kind of the Arrested Development meme: “Did it work for them? No, but it might work for us now,” because people were just getting their heads cut off.

Since the Russian invasion, I am surprised. Maybe I’m just not following the same circles I used to, but I just haven’t heard a lot of people talk about this, pitch this, or anything. I’m particularly surprised because we’ll talk about Ukraine and everything, but they IPO’d 85% of their Ukraine subsidiary. So you’ve got the sum of the parts here.

I’m surprised by the lack of interest here. I’ll ask you: You’ve got a write-up in your fund letter, and you’ve obviously researched and talked about it. Do you feel that lack of interest? Have you had a lot of investors nibble on this and say, “Hey, we’re curious about this”?

Our first exposure to VEON was when we came across it on the risk screener. We were looking into the Ukrainian play when the war started. I think it was a very neglected part of the market, and we knew that once this war ends—it’s not a question of if, but when—there would be a huge tailwind in the reconstruction of Ukraine.

We were going back and forth, contemplating whether we wanted to invest in Ukraine. We came across this letter to management in mid-2022, and it was written up by Himanshu Shah of Shah Capital Management, based in South Carolina.

I read Shah’s letter, and it highlighted these points about how to get the towers monetized and all the asset-heavy infrastructure monetized so VEON could crystallize value. VEON was lagging, and let’s be honest: When you look at the stock price from right before the Russia-Ukraine war boiled over, it had halved—actually, it fell by a third afterward.

So it was about time to figure out how to get these assets monetized, and Shah took the lead on that. I think VEON now makes up around 40% of their portfolio, but back then, I believe it was still a good chunk—about 17% to 18%—when we were tracking it.

Back then, there was not a lot of chatter regarding VEON, not even a lot of chatter regarding Ukrainian assets. I think the war was so fresh that investors weren't really considering the implications or consequences of what was going to happen, and there was just a lot of looming uncertainty around that space. Even to this day, I was looking on Value Investors Club and, funny enough, I just saw a write-up on Kyivstar, their Ukrainian subsidiary. I think that was the first public write-up that I read.

In terms of equity research or any public writing on the name, I haven't really seen much. I think it has to do with a lot of the complexities regarding VEON and its 5 different emerging markets. I think it's just really hard to grasp. I don't really blame anyone, but once you dig deep into it and do the sum-of-the-parts valuation, as we'll talk about, it makes sense why this is such a gem.

No, that's perfect. And I'm with you, Samit. Kyivstar—maybe it's because I run in the SPAC circles, but I know people have talked about that off and on. I've had people talk about it. Every time it looks like Ukraine's going to make a push or the war's going to end, the first thing I always hear people mention is Kyivstar, right? It's this narrow-float company that's probably going to rebuild the telecom infrastructure in Ukraine as this comes to an end.

You could see a lot of plays there. It's a really direct play, but I've just never heard anyone talk about VEON. Let's turn to that. I've got questions on some of the different subsidiaries and their value, but you mentioned there are kind of 5 subsidiaries these days because the Russian subsidiary is gone. Why don't we start with the sum of the parts, and you can quickly outline the couple of markets they're in, how you think about the value, and how you would build it up?

As we're talking, I think the stock is trading at about $51 per share. Maybe we can build up to a sum of the parts with each of the different components.

Sure. I think we could start with the sum of the parts and then dive into it. If you start with what's already in the market, as you said yourself, VEON's stake in Kcell is about 84.6%. If you take that stake, it's valued at approximately $2.8 billion. VEON's enterprise value as of the last few weeks is about $4.9 billion, so the Kcell stake alone accounts for more than half of the total market cap.

Every other asset in the portfolio—whether that's Pakistan, Bangladesh, Kazakhstan, Uzbekistan, the group's digital platform, the fintech ecosystem, or even the enterprise technology business—is currently valued at about $700 million of equity value, or roughly $2.1 billion of enterprise value after you back out Kcell. When you look at what those 4 markets actually generate, it's phenomenal. If you look at 2025 revenues, Pakistan is at about $1.6 billion, Kazakhstan is at $816 million, Bangladesh is at $460 million, and Uzbekistan is at $308 million.

That totals about $3.24 billion for the remaining 4 groups, excluding Kyivstar. These aren't declining assets, as we know. They're growing in the mid- to high-teens. Every asset except Bangladesh, which we can dive deeper into, has grown in both local-currency and U.S.-dollar terms.

When you look at these 4 emerging markets, which are growing double digits outside of Bangladesh, if you apply a 1-time revenue multiple to that, which I think is very conservative, that gives you $3.24 billion of enterprise value. Before you even apply any other multiple for growth or digital-platform economics, the 4 non-Ukraine markets alone are worth about 66% of VEON's total enterprise value.

Just pause there real quick. I want to walk through a few different things. Let's start with the valuation and the multiple you just threw out there in a second, but can we start with the enterprise value? You said $2.7 billion of enterprise value a couple of times. When I was prepping, my enterprise value came out very differently, so I just want to see where I'm missing the ball here.

I've got 75 million shares outstanding at about $50 per share. I hate to do back-of-the-envelope math on the pod, but that comes out to just shy of $4 billion of market cap, off the top of my head. Then I'm looking at their balance sheet, and this is the end-of-Q4 balance sheet, but I see $4 billion of noncurrent debt, $1 billion of current debt, and $1.7 billion of cash. The cash is actually something I want to talk about later, but when I do that, I come out with a much higher enterprise value, approaching $8 billion.

Can you help me bridge the gap between your $2.7 billion enterprise value and the roughly $8 billion number I had in my notes?

Sure. This is basically the napkin math that I did. If you were going based on, let's say, your Q4 numbers, the math I did during Q4 was that VEON had a market cap of about $3.4 billion. They had about $1.7 billion in net debt, so that gave you about $5.1 billion in enterprise value.

You back out VEON's percentage in Kyivstar, which was about 84%. Back then, it was about 89%; they did an additional offering, so it's about 84.6%. Their percentage of that comes out to about $2 billion. If you calculate in Q4 terms and subtract the $2 billion of Kyivstar from the $5.1 billion, the residual enterprise value we got was $3.1 billion.

Okay, so you're just talking about buying the VEON HoldCo. You're saying, “Take the Kyivstar stake at its market value, and we're buying the VEON HoldCo for $3 billion.” Kyivstar we can put off to the side because what you're doing is taking the market price, and we can talk about whether that's undervalued or overvalued. But you're talking about the VEON HoldCo being about $3 billion of enterprise value, which gets you the Pakistan assets. Okay, that makes sense.

Let's go to the next thing. You said, both in your write-up and when you were talking, that you value the Pakistani telecom revenue in some of these subsidiaries at 1× revenue. I've followed telecom for a while, and I haven't really seen people talking about valuing a telecom on a revenue multiple before. What is the basis for the revenue multiple, and how do you think about that valuation?

I want to get rid of this telecom label that we're applying to VEON. I think that's what's causing this perception lag in valuation. Right now, the digital mix is about 25% of VEON's total revenues. In the next 4 years, management is guiding to about 50%. Sure, telecom still comprises a majority of the revenue, but I still like to move past that and focus on what's driving the future growth and the majority of VEON's value.

In your case, I completely agree: when you look at a legacy telecom operator, you're not valuing it based on a revenue multiple. But you can value a technology company based on a revenue multiple, and our lens is that we see VEON as a technology company more so than a telecom company.

To dive into Pakistan a little, the JazzCash angle is really worth isolating here because it shows how distorted the valuation has become. When you take MTN Mobile Money—that's MTN's fintech business—it operates in a much less penetrated market than JazzCash and at very low transaction volumes. It has been valued at, I would say, a higher multiple than VEON's Jazz subsidiary when you look at third-party deals.

The same thing applies to Airtel Africa and its fintech business. It has attracted strategic investors at substantial premiums compared with its telecom parent's implied value.

There are 2 really important, insane details that you need to focus on. First, they're processing about $60 billion in transaction value. That's about 15% of Pakistan's GDP. That's really insane. You don't really get that from a telecom company, right?

That is growing at double-digit rates in and of itself, and it has never been independently valued. In my opinion, it's only fair to properly and reasonably value a business that is not only processing such high amounts, but is processing 15% of GDP. That can't be understated.

If you look at management's 2024 capital markets transcript and read through that, management has acknowledged that the company is looking to crystallize that value, whether it's their fintech business, through a strategic investor, a spin-off, an IPO—whatever it is. They have stated explicitly that their intent is to crystallize that value. I think you saw it happen with Kyivstar, but when you see it happen with JazzCash, I think that's when a lot of the misunderstanding goes away. I think that would set up a huge catalyst.

No, look, it's funny you mention MTN and Airtel because, as I think we mentioned before we started recording, when I was doing work on this, I saw the JazzCash piece, and it is growing wicked fast.

I’m looking at the 20-F right here: digital financial services in Pakistan were $156 million in 2023, $277 million in 2024, and $377 million in 2025. This is just wild, bonkers growth. And that’s in U.S. dollars, too, so it’s not like it’s inflated by currency or anything.

You think about that and say, “Oh my God, if they spin out, like Airtel...” I think I had a friend on who pitched Airtel about 2½ or 3 years ago, and that was part of the thesis. I was like, “This sounds too simple. It sounds too good to be true.” Then they get a mark, and the stock is off to the races.

I’m kind of with you. If they sold a piece of JazzCash, what would this be worth? I haven’t done a crazy deep dive into this, but you see those growth numbers, think about it, and you’re like, “Oh my God, this thing could be a jewel.” I was rambling there. I’ll pause and let you say anything else on Jazz, Pakistan, or anything.

Yeah, like you said, I completely agree. The growth rate is through the roof, and if you take that assumption on a free cash flow basis, the math looks very compelling.

Just recently, in Q1 2026, VEON as a group generated about $246 million of equity free cash flow. Obviously, I don’t want to do this—I’m not the type to just take a quarterly number and extrapolate it—but if you were to be conservative, that annualizes to a run rate of roughly $1 billion or more. If you look at the 2024 capital markets presentation management put out, their target was also $900 million to $1 billion in equity free cash flow by 2027. I really think they’re on target to reach that, probably by 2027, if not by 2028.

When you look at the balance sheet, I think net debt, excluding all leases, is about 1.0 to 1.1 times EBITDA. A clean balance sheet for a business of this size and complexity is unheard of. It’s very rare. You usually see businesses in complicated emerging and frontier markets that are laden with debt.

In addition to this, they’ve initiated a $100 million share buyback. I think management collectively owns about 1.7% to 1.8% of the company, so they have skin in the game. We can dive more into management in a bit, but I think that setup in and of itself, with $1 billion in free cash flow and applying a reasonable multiple of 15 times free cash flow, is compelling.

As we said, if you look past VEON being a telecom company and acknowledge it as a digital operator, 15 times for a tech company is not out of the blue. I think that gives you an implied equity value of $15 billion, which is about 4 times what it’s trading at right now. You don’t have to believe in a perfect outcome, Andrew. I think you just have to believe that the free cash flow trajectory holds, that they get to that 50% digital mix, and that the secular tailwinds driving each of these 5 emerging and frontier markets hold up. I don’t know—that’s a tough ask.

Just on digital: their digital revenues are growing really quickly, right? I read the Q4 and one conference presentation they were at, so I don’t know, but the 2 things that jumped out at me were that they had done some bolt-ons. The growth is off the charts, but I was having trouble separating the organic growth from the total growth. Have they broken out what the organic growth is versus the bolt-on growth?

I don’t think so. I haven’t seen anything in a 20-F yet that has made that distinction clear, so I couldn’t tell you that.

Okay, no problem. One thing that I have—Liberty Global is kind of apples to oranges, but there is some carryover from Liberty Global, right? You’ve got a big telecom with a lot of different subsidiaries and a kind of complicated cap structure. Here, you’ve got Kcell, where they own about 85%, so you can start doing the whole holdco-opco thing.

One thing I was thinking about, because Liberty Global has had this, too, is that Pakistan, to some extent, Ukraine, and Kazakhstan for sure have pretty big capital controls. How do you think about when you’ve got the holdco with a lot of the value in the opcos, but there might be capital controls affecting how you get the cash out or place a fair value on those types of things?

In terms of capital controls, you saw this trapped cash in Ukraine, at least under martial law, right? Capital controls restricted VEON. I think the limit was about $1 million of upstreaming per month, which is nothing for a multibillion-dollar company. That severely restricts your ability to repurchase shares and pay dividends.

Essentially, this was a huge risk when the Ukraine war started because VEON had much more debt than it does now and much less cash. The digital mix they had then was a fraction of what it is now. They were implementing this digital operator strategy, so for a company that was much more telecom-heavy and telecom-based back then than it is now, I think it was a huge hit. You saw the share price drop.

Now, if you really look at the balance sheet, they’re cash-heavy and have the ability to do these share repurchases. Especially in countries like Ukraine, where these capital controls are temporary, it’s a question of when rather than if these capital controls will cease to exist.

I know you mentioned these other countries. I think the same logic applies to them as well. I don’t think these capital controls are preventing VEON from returning capital to shareholders, so I don’t think they should be a material adverse effect on the valuation of the business. What you really need to look at is the growth and the secular tailwinds in each of these countries, and I think that overshadows any of the regulatory hurdles you mentioned.

That makes sense. So, look, you’re talking about big upside, right? You’re saying, “Hey...” And I kind of agree. I’m looking at their Q4 or Q1 deck, and they’re talking about JazzCash and—what’s the other one?—Mobilink Bank. They’ve got slide 10 in there, and they basically say, “We’re Uber. We’ve got ride-hailing and entertainment.” This is a literal super app that is growing really quickly, and they’ve got diversified revenue streams.

My overarching question is something I like to ask everyone: the market’s a really competitive place, and VEON is not a company that has tons of research on it from a lot of the places I’ve seen. This is covered—J.P. Morgan has had some coverage of them in the past. I think there were 5 analysts asking questions on the Q1 earnings call. New Street Research, which is a completely telecom-focused company, is willing to assign big multiples to telecoms they think have a lot of upside.

You could say you’ve gamed out this big upside to the growth case and to some of the sum-of-the-parts value. Why? What is the market missing here? Why is the market asleep at the wheel? It is well covered.

I think, Andrew, this is a really good question. I think the most interesting growth driver here is what’s missing. I think that’s the missing piece. When you really apply a first-principles lens, it makes it much easier.

Sure, some of these markets have significant geopolitical turmoil and instability, whatever you want to call it. But when you see where they’re headed in the next 5, 10, or 15 years, there’s no doubt that these emerging markets—whose average population age, hear me out on this, is 29 years old in Kazakhstan, about 27 in Uzbekistan, about 26 in Bangladesh, and about 22 in Pakistan—are very young.

Compare that with a mature country like America, where the average age is 40. These people are going to move with the prosperity of their respective countries. These markets have incredibly young populations, as tends to be the case in emerging markets.

Across this footprint, barely half of the population are internet users. About 34% of those above the age of 15 possess even a formal bank account, and only a third of adults have ever sent or received a digital payment in their lives.

As the youth become more educated, there’s more economic prosperity in these countries, and there’s increased access to education, technology, healthcare, banking, and whatever else, there’s obviously going to be an improvement in quality of life throughout these countries. There’s no doubt that these will serve as secular tailwinds over the next 5 or 10 years.

In my opinion, I’ve never been more bullish on the business and never been more bullish on emerging markets like VEON.

And I knew that because you had your letter, and I was like, “Hey, what about this company? What about this company for the podcast?” And you were like, “No, VEON, VEON, VEON, VEON.”

On your demographics point, I've got a friend who pitched emerging-markets towers before, and he's like, “Look, you don't understand the demographics here. A lot of these, as you said, the median age is 19. A third of the population is 13 and under. If you believe people are going to use their devices, this is not the US where, hey, 10 years from now we're facing decline. They actually have a growing population, so, mathematically, the demand for data is going to grow.”

And he's pitching towers. If you believe towers are going to be how this is delivered, you just kind of have a mathematical equation of where the demand has to go up over time. And in some of these emerging markets, what you're saying, I think that makes total sense.

Ukraine is obviously a big one here, right? One of the reasons they've been able to stay in this war is Starlink, right? And you start thinking about when the Ukraine-Russia war ends, there's going to be a lot of capex to get rebuilt—the local telecom, all this sort of stuff. But then you also start thinking that Starlink is taking some share in the United States domestically. How do you think about Starlink as it relates to a risk to these businesses?

So, I think when you think about Starlink, especially in the context of Ukraine, I think Elon Musk publicly went out and said, “We're going to do all we can to help the government of Ukraine fight this war against Russia,” and obviously closed off all essential services that Starlink provides to Russia.

When you think about Ukraine, I think the biggest thing about Ukraine is the postwar reconstruction. In my opinion, I know we talked about Pakistan, with JazzCash being 15% of total GDP and $60 billion in total transaction value, but I really think the crown jewel of VEON is Kyivstar.

Between 2023 and 2026, VEON ended up investing about $1.3 billion. That's $300 million more than they set out to invest in their Capital Markets Day targets. And so, I think with Starlink, they have partnerships with Starlink. I think they are seeking to expand these partnerships with Starlink, and I think that's going to be huge for Ukraine because a lot of the tower infrastructure has been destroyed. About 5% of the power grid in Ukraine has been destroyed, and a lot of repairs are needed.

I think when this revitalization of infrastructure happens, when this reinvestment just comes back into Ukraine, Starlink will be viewed through the lens of a partner rather than a competitor. That's how I personally view it. I could be wrong, but that's what I personally think.

Why do you think partner instead of competitor? Because where I was kind of going is: you look at the rebuilding and say, “Hey, does it make sense to go to one of these smaller towns where the local towers have been destroyed, where the service—does it make sense to go rebuild it, or do you just string up a dish to Starlink?” How do you think about that? Because that could really cut into a lot of the rebuild in Ukraine, or a lot of profits.

Especially, I mean, your worst-case scenario—because these are national telecom players, right?—is, “Hey, they're required to go build out to the rural areas, and even though they're required to, people are preferring the Starlink service.” So, you have all the capex and none of the associated revenue, profits, or anything with that.

So, if I'm understanding your question, you're saying, why would people side with Kyivstar when they could just switch their subscriptions over to Starlink?

Yeah.

So, I think with Starlink, what you're saying is it's a LEO satellite constellation, basically. And I think with LEOs, the best advantage you have—at least with Ukraine—is that a lot of the population lives in very rural areas where coverage, broadband coverage, is very weak. I think Starlink, more so than your national telecom operator like Kyivstar, benefits those areas.

And I think when you're already within, for example, Kyivstar, it isn't just telecom, right? We talked about all these digital verticals, and I think I forgot to mention them, but you have your ride-hailing services, healthcare, fintech, and entertainment. So, Kyivstar isn't just telecom, right?

If you're just looking for coverage and you're in the rural areas, yeah, maybe Starlink might be the right fit for you. But if you're already a Kyivstar subscriber and you're already using the healthcare platform—if you're already signed up on healthy, you're already using Uklon, basically the Ukrainian Uber, and if you're using entertainment and fintech services—your banking is tied up to Kyivstar as well. What incentive do you have to switch?

And so, I think VEON realizes that we can't really thrive as a legacy telecom operator. You have competitors coming into these markets—Starlink's a really good example you brought up. You even have regional telecom operators, and so that's just a race to the bottom. I think that's where the digital transformation is coming into play.

Each of these 4 or 5 verticals is kind of creating that stickiness. And if you really look at the retention ratio, if you are a multiplay user compared to a single-play user or a voice-only customer, your retention ratio is 66% higher than it would be if you were a voice-only customer. So, it's showing up in the numbers as well.

Not to mention the ARPU in a lot of these countries, like Ukraine. Your ARPU is about $3.60, compared to the average in these countries of about $10. The only way to bridge that gap is cross-selling these digital services—fintech, entertainment, banking, and all that we just talked about. I think that's a huge deterrent, and if you started researching a business like this today, I think you wouldn't realize that until you grasped the depth of how sticky these digital products really are.

No, I mean, just to come back to the Starlink question, I think you hit the nail on the head. For a lot of rural places, as we're seeing domestically and across the world, I think the Starlink product makes a lot of difference. But I've done a lot of work on this, and Starlink just has no chance in the cities. Once you start talking about a mobile phone, are you going to get the Starlink router and go all the way around? It's just a lot cheaper to use a tower.

So, never say never, but the main reason I ask is that Ukraine does have a lot of rural areas, and it's got so much Starlink right now. It is the 1 place where you say, “Hey, where's Starlink going to fit in a post-reconstruction world where they're looking and saying, ‘Hey, what do we need to build? What do we not need to build?’”

Let me come back to the digital. Obviously, you were very bullish on digital. I'm pretty bullish on digital, though I am a little hesitant on the digital for this reason.

Kaspi is Kazakhstan, right? Am I remembering that correctly? I think it's Kazakhstan. They're the Kazakhstan super app. Obviously, VEON has a Kazakhstan subsidiary. Kaspi's the Kazakhstan super app, and it's growing quickly. It dominates that market.

I've got a lot of smart friends who are in it, and the stock's done okay, right? It's probably flat-ish over the past few years. They pay out a dividend, so you do get the dividend. I think most people are kind of up on it, but you've never gotten the multiple boost that I think a lot of bulls thought was coming.

Despite the fact that it's still growing quickly, it's throwing off tons of cash flow and everything, right? So, I just wonder, when you think about that Kaspi example, that is an emerging-market super app that is completely dominant in Kazakhstan, but despite delivering a lot of what the bulls thought, I'm just looking at my Bloomberg, which is not perfect, but it's kind of trading at—I mean, it's growing organically 15% to 25% per year, and it's probably trading at a little over 1× revenue, which, to be fair, is about what you're targeting when you threw out multiples.

But I look at Kaspi and say, “Hey, to date, there hasn't been a pot of gold at the end of that rainbow for investors. Is there really a pot of gold for this VEON-controlled Pakistani app or whatever? Does that make sense?”

Yeah. So, on that, I think the pot of gold is still yet to come, and probably the investors in Kaspi have been waiting for so long. I don't know how much longer, but I think if you really look at VEON as a whole—I know I'm going to circle around to the question—right now, what they're kind of implementing is this AI 1440 strategy.

This is kind of built on the premise that in frontier markets, AI acts as a service creator rather than an efficiency or productivity booster, like it would in the US, Europe, or any other mature market, right? Take a professional, a lawyer or a doctor, for example.

AI might make them 10%, 20%, or even 30% more efficient. Whereas in rural markets, where a lot of the population in these frontier markets lives, a rural farmer who's never had access to a doctor, a loan officer, or an agricultural expert can now receive these services for the first time through AI. And so there's infinite marginal utility to this, I think.

I think there's a cultural context here. I think there's a misunderstanding for an investor based in New York or Chicago; it's hard for you to understand that. What VEON really grasps, that an AT&T or a Vodafone wouldn't really understand, is that you're providing this near-infinite increase in productivity and service access to these rural farmers. For example, VEON is developing LLMs like Kaza LLM, which are tailored to specific linguistic or cultural contexts. Now they're able to service about 1 million customer journeys per month in rural areas.

I mean, you can't do that if you're Vodafone or AT&T. You don't really understand the cross-border cultural or linguistic context, if that makes sense. In a lot of these markets that you mentioned—in Kazakhstan, Pakistan, or whatever country it is—about 60% of the population is rural-based. I think that really goes to show that if they're servicing about 1 million customer journeys now, in the early stages of these local LLMs, then it's only upside as to what's going to happen in the future.

I think VEON building this sovereign AI moat that global tech giants are finding hard to replicate or penetrate is effectively their strongest moat. They started this in Kazakhstan with KazLLM and then in Ukraine as well, with, I think, Samoilov or something—I can't pronounce it. And so I think that's really interesting. I'm excited to see where that 1 million customer journeys per month is headed.

No, that's really interesting, though. I certainly agree with that. They are developing their own AI, though. I don't know—I don't think they're signing up for massive data centers. So I wonder what model they're running on and all this sort of stuff.

But it does remind me of AT&T. I mean, AT&T had the exclusive on the iPhone here in 2008. Then, if you fast-forward to post-COVID, there was the huge spike in broadband demand post-COVID, but even since then, it's not like data demand has slowed. Basically none of—and again, I might be too jaded on telecom or too focused domestically—but AT&T didn't work after the iPhone, and none of the cable, fiber, or whatever telecom companies you want to label have worked since the post-COVID era.

I just wonder: Is there something structurally about telecom where, as you said, whether it's Ukraine, Pakistan, or wherever, the demand for data is going to be going up from all this AI? And by the way, they're talking about just launching 4G and 5G services, right? So they're way behind us in terms of that, but their data demand's going to be going up and their AI demand's going to go up. These guys have some local barriers, but then you look at it and you're like, man, it just feels like every telecom company forever has bungled any growth opportunity outside of their core, where they build a tower and run spectrum through it. I just wonder if they're actually going to be able to capture that opportunity.

So I think when you look at local geographies like these frontier markets, on average, their usage of data is about 7 GB per month. When you compare that to a mature country like America, that's about 20—let's say 21 or 22 GB per month.

It's got to be much higher than that.

For America? Oh, yeah. I would say, on average, that's—I could be wrong, but let's take your number. Let's say it's much higher than that. I mean, that leaves you a significant gap to close.

Based on what you said, when you're a company like AT&T or Vodafone in Europe, there's just not much growth from there. Yes, there will be significant data usage, but the jump from going from 7 to 24, 25, or even 30—you’re just not going to grow as much. I think that's where underpenetration serves as a huge tailwind to close that gap. And I think that's a huge tailwind as well.

That makes sense. I'm trying to find it, but I think Comcast and Charter just disclosed it. I think it's like 800 GB per month is how much their average is. Now, that's household, but I'm pretty sure it's extremely high.

So, the company has a $100 million repurchase that they're executing on. This is a $3 billion-ish equity company, so it's not huge, but it's also not small in the context. How do you think about capital allocation going forward? Because it is this interesting push and pull, right? You've got 4 to 5 emerging-market subsidiaries. You've got the publicly traded stake in Kyivstar, which is kind of a sliver, but you still own 85% of that. You've got that publicly traded stake. You've always got the question: Do we spin that out to shareholders? Do we buy that back? Do we buy our own stuff back?

Then you've got the 4 to 5 businesses with growth opportunities. And then you've got the traditional telecom business where, whether it's Ukraine rebuilding postwar or Pakistan—they just bought a bunch of spectrum in Pakistan—you've got all these capital allocation decisions and all these levers to pull. How do you think about the levers to pull, the capital allocation, and all of that going forward?

I think now that you've done the Kyivstar IPO, that was priority one. Now that that's gone successfully, I think you move on to the second priority. Amid all this, they're still doing the smaller tower monetizations here and there. But I think the next big catalyst for unlocking value here is the Pakistani subsidiary, with Jazz and JazzCash.

Like I mentioned to you, they process $60 billion in transactions. They're doing 15% of Pakistan's entire GDP, which is insane. Now they're in the middle of applying for a full digital banking license that allows them to offer wealth management services and unlock even higher-value revenue streams like remittances. If you think about remittances, they account for about 30% of Pakistan's GDP, which is really insane. A lot of these are coming from the Gulf countries, from Pakistani residents who have moved abroad, even to Europe.

In order to take advantage of that and unlock that opportunity, they've veered off into applying for a full digital banking license. Before they had this license, they were making 200,000 nano-loans every single day for about $30, $40, or even $50, which is nothing if you really think about it, but that's enough to feed a family or take care of a family for a week. For those who had tight financial conditions, they were able to apply for these loans, and they were giving out about 200,000 nano-loans. Being able to step up from that requires this banking license.

This wouldn't have been possible without their long-term ties to the country, which is also a competitive advantage and barrier to entry for competitors. As I mentioned in the last capital markets call of 2024, management hinted that they wanted to IPO, do a spin-off, or pursue some other form of independent monetization for JazzCash. Recently, they've hammered that home and emphasized it.

I think it's crucial that you start off with JazzCash and work your way throughout each of these emerging frontier markets, because it's worked well with Kyivstar. If it goes well with JazzCash, you could do the same thing with Banglalink and with each of your digital verticals. The ceiling—there's no ceiling to this. You could just veer off in any number of different ways.

I think each of those steps to unlocking value gets rid of that conglomerate discount that investors or the market is placing on VEON. I think that serves as a huge catalyst in the next 3 or 4 years.

No, look, I went through notes from OpenVault from 2023. Broadband usage was 600 GB at the customer level. Now, that's broadband, not mobile. You might have been referring to mobile, which I think is higher.

No, look, you hit the nail on the head. I want to turn to the elephant in the room, but I've just been so fascinated because I could see it, right? You've got this stock trading for $50, and when you start going through JazzCash and all these digital businesses, you've got this stock trading like a busted emerging-markets telecom. I don't want to say busted, but it's trading like an emerging-markets telecom company.

And then you start looking at all of these different potential growth subsidiaries. I have seen this before where it's like, “Hey, you've got these Russian subsidiaries, and you go from trading at a 10× free cash flow multiple, if that, as a telecom to, hey, we've got this subsidiary growing 50% per year. It's going to trade for 10× revenue.”

That's how you get the legendary, “20 years from now, how did this guy get rich?” stories: “Oh, he invested in this thing before it exploded.” I'm fascinated by that upside, but on the other hand, I've followed telecom a lot, and it's really hit me. Let me turn it to you.

The last elephant in the room. We mentioned the history here, right? These guys had to give up their Russian subsidiaries. Forty-five percent of the stock is still owned by individuals who—I don't know exactly, but they certainly have Russian ties, right?

They're sanctioned by the EU, the US, and Ukraine. They own 45%. I don't think they have involvement with the business, but the first thing anyone's going to do is look at this company, pull it up, and say, “45% owner sanctioned by the EU, US, and Ukraine,” all this other stuff. What's going to happen to that stake?

So, what's going on there, and what do you think plays out there?

So, I think there's still a stigma by association. Dating back to October 2023, when they divested and had this total exit from Russia, on the financial side it required a massive accounting reclassification, to the tune of 3.4 billion in currency-translation losses from this exit. And I think what you mentioned about 45.5% of VEON's shares being tied to beneficial owners of LetterOne certainly creates reputational harm.

These are some of the risks. If we were to dive into the risks, I think this would be one of the bigger risks, right? This association can make international banks, equipment suppliers, and investors reluctant to engage, even though VEON itself obviously is not a sanctioned entity. If you're uncomfortable with that reputational harm, then I think VEON might not be for you.

Because let's be honest, you've seen what's happened in the last 5 years. They divested their Russian operations. And especially for Pakistan, in the last 15 years they've rolled through 10 different prime ministers. VEON still grew despite all that. VEON still grew despite all this geopolitical turmoil and currency debasement.

At this point, maybe I'm numb to it, and I've been holding VEON for long enough, but I think this is a feature, not a flaw, of holding a business like VEON. If you see that 4 of their frontier markets have grown in local-currency terms and US-dollar terms, the only geography that hasn't grown is Bangladesh. That's not out of the blue; we know what's going on geopolitically with the civil unrest and student protests. We've seen what happened to their currency, so that's not really a surprise.

And like I said, it's a question of when, not if, this rebounds. For me, I don't think any of this will get resolved in the next 2 or 3 years. We've seen how long the war in Ukraine has taken. I'm comfortable holding a business surrounded by geopolitical turmoil.

Because I know, like I mentioned, we've gone through the demographics of these countries. We went through the underpenetration of these countries in terms of technology, banking, and education. And so, what you're seeing with VEON right now is that its operating segments 10 years from now will be a completely different story. If that's something you're comfortable holding, then I think VEON might be for you.

It's just funny because you said Pakistan has gone through 10 prime ministers in 15 years. And you said that like it's an emerging market. It's like, well, Britain's gone through what, 7 in 7 years? Japan and South Korea, I think, have both gone through 5 in 7 years. So, they're running at a rate below where these allegedly developed markets are running. I just think that's kind of funny.

Let me just ask one more time, though. I think you talked about the geopolitical risk. But if I was just looking at the micro risk, that 45% block that LetterOne owns with the Russians, what happens to that block?

That's a good question. I wish I knew the answer to that. But I think for VEON to get rid of that Russian subsidiary, I think that was step 1. I haven't heard anything from IR or management even considering or talking about LetterOne. Maybe it's just for optics, I don't know.

But even in the one-on-one conversations I've had, I haven't really heard any substance on LetterOne. So, I wish I had the answer to that.

No, it's very strange, right? Because 45% is a hell of a lot, right? You're 5.1% away from literally controlling the company just by buying. And 5.1%—I don't know how much money they have, but it's not that much money.

Even without that, at 45% you can throw some pretty crazy shareholder proposals, and if everyone's not voting, you might be able to pass them. So, they're close to control. Now they're sanctioned, but you just think, hey, sanctions come off. Am I all of a sudden working at a weird company?

On the flip side, you saw what happened with NAEVIAS. NAEVIAS hit like 15 other home runs, but they had to sell their Russian operations, and they managed to buy back a lot of stock very cheaply from sanctioned individuals, right?

So, you look at this and wonder, hey, is that 45% an opportunity? They've got the share-repurchase program. They don't want to go over 1× levered; they don't want to go over 1.5× levered. But is there a scenario where they do an asset swap and retire that 45% for a song?

Or they IPO JazzCash, and they have 500 million lying around and say, hey, we'll take that 45% stake off. It's worth roughly 1.3 billion dollars; we'll pay you guys 900 million dollars and walk away. Those are interesting upside scenarios.

Look, I think we've covered all of my notes. Again, this is just one where I'm looking and, on the one hand, you see a history of value destruction and emerging-market telecom, and on the other hand you see all of these great growth assets that are potential hidden gems. So, that's just how I'm thinking about it. Anything else we should be talking about or covering?

So, I think it's very interesting. If you were to pick up the book on VEON today, I think there's 1 key fact that most people don't realize, and I'm going to be upfront with you: I didn't realize it until I was looking into the recent quarterly updates about a month ago.

We spoke about Augie Fabela, the founder and then CEO, who's now the chairman of the company. Augie's philosophy was that he wanted to bring free speech and open communication to Russia, and he wanted to bring that to Ukraine and then to each of these emerging frontier markets where they operate. And I think that's a pattern that they've translated.

In each of these emerging markets where you see success—in Ukraine with the Kyivstar IPO, for example—I think a lot of that is translatable into these different frontier markets because they have the same underlying demographics and similar secular tailwinds. The majority of their populations are in rural areas.

You can't completely extrapolate and say, “100% this is what's going to happen.” But for the most part, you get an idea of, okay, if this Kyivstar IPO went well, then maybe the JazzCash IPO presents an opportunity to realize significant value in that. And so, as these steps unfold, you'll see pages turn and some of that value crystallize.

I think that starts with management themselves right now. CEO Khan Terzioglu was the biggest backer of the AI 1440 strategy. 1440 basically means the 1,440 minutes of the day that VEON wants to be relevant in your lives, right?

If you're with a legacy telco operator, when's the only time you think about them? If your calls drop or something happens, right? That's the only time you're going to think about them. But if you also have digital services and fintech, entertainment, healthcare, and ride-sharing, you're thinking about VEON 24/7.

I think that was the idea behind this AI 1440 strategy. It's not really a new game plan. Khan Terzioglu, the CEO, implemented a similar model at Turkcell, a Turkish telecom company where he worked before.

And so, he has a good track record of materializing and executing on this plan. With his ownership of about 1%, I think he still has skin in the game. I’m very supportive of what Kaan has done.

Not to mention, it takes serious discipline and serious muscle to operate in crisis management. I wouldn’t call it a crisis because this is the normality of these frontier markets. But to divest in Russia, work through hyperinflation in Pakistan, and have a prime minister overthrown in Bangladesh, it takes guts. When you’re VEON and you’ve operated in these tumultuous markets over the last 2½—almost 3—decades, that’s in your DNA. I think that becomes part of your moat. It’s hard to take down a company when that’s ingrained in the culture.

The CEO—you mentioned the CEO had done this in a prior role. Where was that?

Turkcell. It’s a Turkish company.

Was it publicly traded?

I’m not sure if Turkcell—let’s see.

No, no, yeah, yeah, I don’t need you to Google it. I was just wondering: did he spin off the growth assets there?

So, I think it is a public company. Sorry, what was the question?

No, no, yeah, yeah, I don’t need you to Google it. I was wondering if he had successfully spun off the growth assets. If he had, that would be very interesting because—

I just got visions of this. This is not the perfect example, but GE 5 years ago—it’s a little bit longer than 5 years ago. When Larry Culp came in, the whole argument was that he was going to break it up and look at the sum of the parts, and I was skeptical. A lot of people were skeptical. I remember people going on and saying, “Larry Culp is going to destroy his reputation. This is a disaster.”

And you look at it, and you’re like—benefit of hindsight, obviously—but GE Vernova was worth like 5x what the whole company was trading for at that time, or something. You look at a company like IDT that's always had these successful spins. It’s not lost on me: you’ve got these really interesting—again, the caveat is the emerging-market status—but you’ve got these really interesting emerging-market assets, growthy assets, and if you’re doing these spin-outs, my God, can things get crazy.

Anyway, we’re way over an hour. Samit, this has been awesome. Thank you so much for coming on, and we’ll chat soon.