This research analyzes the impact of COVID-19 on the Veon group during 3Q20. Despite the decline in revenue in 3Q20 YoY, the operator performed well compared to 2Q20. Outlook for 2020 remains unchanged.

Omdia view


Veon started to recover in 3Q20 after it felt the full impact of COVID-19 lockdowns in 2Q20. Reported revenue was up 5.4% quarter-on-quarter (QoQ) in 3Q20. Across its markets, Veon is committed to expanding its 4G networks in order to meet the considerable demands for data, driven by the crisis as lockdowns have accelerated adoption of a range of digital services. The recent announcement of a new governance model with lean HQ and local Board of Directors, a new depository agreement and Veon Armenia divestment are all positive for shareholder value. Veon’s identification of growth areas, based on its performance during the pandemic, will allow it to meet its long-term target of data and digital revenue expansion.

Veon revenue hit by currency headwinds in 3Q20, but a steady recovery from the crisis is in progress 

Veon’s total revenue declined 10.4% year-on-year (YoY) to $1,993.2 million in 3Q20, mainly due to currency headwinds during the quarter. Revenue declined only 1.3% YoY in local currencies. Service revenue declined 10.6% YoY to $1,855.8 million. As its operations remained impacted by lockdown measures throughout 3Q20, total revenue from Russian operations declined 18.2% YoY, negatively impacted by a sharp decline in roaming revenue (-68% YoY) due to travel restrictions. In Pakistan, total revenue rose 5.9% YoY, attributable to the surge in mobile data revenue, while in Ukraine, Kyivstar recorded revenue growth of 2.1% YoY led by strong ARPU from increased data demand and accelerated 4G adoption after the ease of lockdown restrictions.

In 3Q20, the group saw a steady sequential recovery in operating trends as data services remained strong and data revenue continued to grow at a double-digit pace in local currency (+13.1% YoY). The group added 20 million 4G users YoY, and had a total of 73 million 4G users by the end of 3Q20. Quarterly EBITDA fell 9.0% YoY to $898.1 million, mainly due to currency headwinds of $90 million, broadly similar to currency headwinds of $89 million in 2Q20. In 3Q20, the company recorded an operating loss of $367.2 million, mainly due to the non-cash impairments against the carrying value of goodwill in Russia. Capital expenditure was $437.2 million in 3Q20, up 10.0% YoY, mainly due to Veon’s focus on its 4G network investment program.

Veon confirmed FY20 guidance and anticipates a low- to mid-single-digit decline in both revenue and EBITDA YoY in local currency, and capex intensity of 22–24%. We expect that the gradual lifting of lockdown measures in its operating markets will support a steady recovery for the rest of 2020.

Figure 1: Veon 3Q20 net subscriber adds/losses per market (millions) Figure 1: Veon 3Q20 net subscriber adds/losses per market (millions) Source: Omdia, based on Veon earnings releases

Veon focuses on its network, cost cutting, and accelerating digital adoption

Lockdown measures continued to impact Veon’s operations throughout 3Q20, while the ease of lockdowns enabled the operator to start recovering in its operating markets. As a result, Veon had a strong QoQ improvement in its revenue and EBITDA in 3Q20.

During the quarter, lockdowns have accelerated digital adoption, driving additional growth in self-care (monthly active users increased by 33% YoY in Russia, 52% in Ukraine, 158% in Pakistan, and 94% in Kazakhstan) and digital customers (TV active users were up 41% YoY in Russia, 37% in Ukraine, and doubled in Kazakhstan). Strong demand for digital services enabled the operator to continue to grow data revenue. The pandemic has placed a greater emphasis on the importance of digital sales channels (permanently closing 637 retail stores in Russia over the last twelve months), with the operator’s recent investment in self-care applications and the digital business support systems that enable them.

The operator’s focus on cost control (lean HQ, new operating model, fewer retail stores, debt refinancing, etc.) allowed it to mitigate the impact of declining revenue on group EBITDA margins and will remain a key priority for the near future. The group continued to enhance its capital structure during the pandemic through debt refinancing that supported the lowering of borrowing costs, and extended maturities.

The long-term growth opportunities in its markets remain highly attractive and lockdowns have generated increased demand for digital services, which the operator is well positioned to capture through current levels of network capex. Veon’s capex intensity over the last twelve months was 21.8%—COVID-19 had no significant impact on its capex plans.

Veon should invest further in content to remain relevant in the digital ecosystem, and seek opportunities in adjacent markets 

The telco has seen steady recovery QoQ in 3Q20, as strict lockdown measures were eased across its markets. The pandemic may present great opportunities in the long term, so telcos should continue to invest and position themselves strategically to benefit. To tap into the opportunities, telcos like Veon should focus on fully implementing their digital strategies and continue to expand their digital services portfolio with an increased focus on building innovative 5G use cases. Most immediately, this involves continued investment in networks to capture faster digital adoption and fixed-line data demand. Other than Russia, the early-stage nature of the operators’ markets provides it with a structural growth opportunity in digital adoption.

The sale of Veon Armenia to Team LLC for $51 million is expected to close shortly. Veon should continue to focus on possible M&A, simplify its group structure, and focus on adjacent markets with long-term growth opportunities.

Though the operator began to see improvements in 3Q20, the pandemic and the resulting economic crisis are not over yet. It is therefore crucial for telcos to find ways to support their customers through this difficult time. Growth in its B2B segment, mobile data revenue, and home connectivity services show encouraging signs of confidence for the operator in the near term.

Customer centricity and improving the customer experience in the post-pandemic world should be prioritized. Internal transformation must continue after the boost that lockdown has generated. Mitigating the financial impact of the pandemic should be a priority, alongside investment to capitalize on the longer-term opportunities it presents.

Table 1: Veon key metrics—3Q20 vs. 2Q20 and 3Q19





QoQ (% Var.) – 3Q20 vs 2Q20

YoY (% Var.) – 3Q20 vs 3Q19

Total revenue ($m)






Service revenue ($m)












EBITDA margin (%)






EBIT ($m)






Capex ($m)






Mobile subs (000s)






Fixed-line subs (000s)






Source: Omdia based on Veon Earnings releases


Further reading

"Forecast update: Mobile revenues in Russia to be heavily impacted by COVID-19" (September 2020)

“Telco resilience to COVID-19 will be short-lived without change” (February 2020)


Laxmareddy Vittalapuram, Senior Analyst, Europe