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The Dutch operator group has finally agreed to exit the Russian market via a sale of the unit to its executive leadership team
Ever since the Russian invasion of Ukraine in February last year, Veon has found itself in the unenviable position of owning mobile operators on both sides of the conflict.
In Russia, the Dutch company wholly owns Vimpelcom, Russia’s third-largest operator, which accounts for around half of Veon’s total revenues. Meanwhile, in Ukraine, it owns Kyivstar, the country’s largest operator.
Naturally, this convoluted situation has created a litany of challenges for Veon over the past year, with the company having seen its share price plunge by around 60% since the war began.
But while Veon indicated relatively early on in the conflict that it would like to follow numerous other firms in exiting the Russian market, doing so has proved problematic.
It was only after many months of debate, in November last year, that Veon announced it had struck a deal with a group of Vimpelcom’s executive leadership team, agreeing to sell the business to them for around $1.83 billion.
The group, lead by current Vimpelcom CEO Aleksander Torbakhov, said that they had presented Veon with the “most balanced offer” in what they called the “competitive process of selling the asset”. However, it should be noted here that Veon had previously valued the business at roughly $5 billion, hence the purchase represents a significant discount.
Nonetheless, Veon CEO Kaan Terzioglu at the time commented that the deal was the “optimal solution” for the company.
The Russian government, however, seemingly disagreed, with reports late last month suggesting that the buyout was opposed by the Russian finance ministry, economy ministry, and the central bank. According to sources, initial drafts of the deal had been rejected and sent back to involved parties for renegotiation.
Now, Veon has announced that it has obtained approval from required regulators, with the deal expected to close this summer.
“We are pleased to have reached this significant milestone in the transaction, which is expected to be accretive to equity, reduce VEON’s debt, and improve its credit profile,” said Terzioglu.
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