Veon has reversed the centralisation policy of previous CEO Jean-Yves Charlier and the group is now insisting each of its 10 operating countries makes ts own investment cases.
At the same time, Ursula Burns, who first became chairman of Veon, then executive chairman, and then chairman and CEO since last year, has pursued a cost-cutting exercise across the group.
I met her at the company’s capital markets day in London, where she was addressing investors and advisors about the performance of the company.
Annual rate of revenue growth has risen from 3.2% in early 2018 to 7.5% in the second quarter of 2019, she told investors and analysts. But that’s only part of what’s happened in the past six quarters.
Since Burns took over as CEO, Veon has completed the sale of its 50% share in Italy’s Wind Tre to CK Hutchison, the Hong Kong owner of the Three/Drei/Tre mobile operations across Europe.
And in the last few weeks it has spent $723 million – including a tax bill – on taking over 42.3% of Global Telecom Holdings (GTH), an Egyptian company that controls Djezzy in Algeria, Bangalink in Bangladesh and Jazz in Pakistan. Veon bought most of that group for $6.6 billion a decade ago, when GTH was Orascom Telecom, owned by Egyptian businessman Naguib Sawiris.
What sort of manager is she, this woman who trained as a mechanical engineer and then spent most of her career at Xerox, starting as a new graduate in 1980s and leaving in 2017 as chairman of the board, having also been CEO for many years? She was the first African American woman to lead a Fortune 500 company.
High expectations
“I have extremely high expectations,” she tells me. “I can be very impatient. I expect my management team to engage and help us make the right decisions.”
And by engage, she means engage vigorously. “I like conflict. I like my team to come forward and I want people to disagree. I have no love for my idea being the best.”
If you’re CEO, says Burns, “you have to have a broader view, a fully integrated view.” As CEO she often sees “a picture that’s more integrated”, but she accepts that if her management colleagues disagree, then “I’ve probably missed something”. She accepts she can be wrong. How often? “At the beginning, once a day,” she smiles.
Burns did not expect to be CEO of Veon when she accepted the role of non-executive chairman in July 2017, when the board wanted to bring in external skills after a rocky time.
In 2016 the company agreed to pay a total of $835 million in settlement fees to US and Netherlands authorities after admitting it paid huge bribes to enter the Uzbekistan market ten years earlier. Other companies that got caught up in telecoms corruption in Uzbekistan were MTS, Telia and, in addition, Telenor, which had been a 33% shareholder in what was VimpelCom.
All the people from that time have gone, but Burns came into the company to help introduce and enforce ethical standards.
“Originally I was just a board member, though chairman,” she says, but quickly she became executive chairman and then CEO, something she didn’t expect when she retired from Xerox. “The only reason I’m doing this was the need for a leadership change at the top. Replacing Jean-Yves was something that was decided.”
Charlier was CEO of Veon from 2015 to 2018 and is now executive vice-chairman and CEO of the Digicel group.
Veon set about to search for a new CEO, but without immediate success. “Our portfolio means management is very difficult,” says Burns, who took on the role.
The management changes have continued, she smiles – rather fast.
“My tendency has been to be less patient. I was able to be flexible when I walked into the business because I was not involved before,” she says.
As a result, “we have made quite a lot of changes around here”. Burns has replaced five out of 10 managers, “now we will see a fair amount of stability for years to come”.
She’s still looking for a group CFO, to replace Trond Westlie, who was due to leave at the end of September after about two years in the role.
Digital development
She very quickly unravelled Charlier’s plan to centralise its digital development. He had set up a number of centralised development centres, including one just off London’s Old Street roundabout, seen as a hotbed of high-technology. The aim had been to develop what he called a personal internet platform which would be deployed in all Veon operating companies, from Beeline in Russia to Jazz in Pakistan.
Burns closed down the London development centre – though there is still a small business presence in the city. She’s also reduced the costs of the Amsterdam headquarters: Veon says it’s on track to halve them by the end of 2019. “One thing I know how to do is run a good business and run it well,” she says.
Now the CEO of each operating company has the job of cutting costs and proposing spending plans to the board. “Every CEO has a target for cost intensity,” she says. “This allows us to deploy our capital in the right way across the business.”
This is a 180-degree turn on Charlier’s policy. “The way we approached digital in the past was wrong footed,” she says. The company was “trying to deliver a digital platform for the different countries with a big bang approach”. The head office “would write a cheque for $150 million and say, go off and find a home for it”.
Now the company takes a market-by-market approach – which still means technology and ideas can be shared. For example, Beeline has a digital TV service and the company will use the Russian lessons if it wants to offer similar services elsewhere. It offers digital financial services in Pakistan, and lessons from there will inform other operating companies.
“There are more of these types of activity,” she says. But “it is very different from the past and the risk is lower”. The overriding principle of the Burns administration is that CEOs have to put a business case to get cash to develop products for their markets.
However two of her recent management appointments show Burns is perhaps more flexible than she indicates. In February 2019 she hired Alex Kazbegi, a former banker, as chief strategy officer; and in September Sergi Herrero, the global director of payments and commerce partnerships at Facebook, became chief operations officer of Veon Ventures, a new unit. Herrero’s role includes both setting up global partnerships and to develop centres of excellence.
Russian cornerstone
The biggest of these operating companies is Russia, which accounts for almost half of all Veon’s business. The company calls this its “cornerstone”. Veon is third in the market, “but it is cash generative”, she says. “It is a big piece of our business and we run it fairly well. We are going to invest to improve it. I’m pretty confident about our position.”
Then there are four operations that are growth engines – Kazakhstan, Pakistan, Ukraine and Uzbekistan. “There’s population growth, there’s technology growth. They are dying for services and they’re dying for access.” Veon’s operating companies in those countries are first in each market, she says.
There are five that are classified as frontier markets, the two largest of which are Bangladesh and Algeria. The others are Armenia, Georgia and Kyrgyzstan. Veon is looking here to the future potential.
“We invest appropriately. If we see a turn, we will invest more. But we have to be very careful about how we play them,” she says. “We manage them seriously and we expect returns, but they still have a long way to go.”
One of the things Veon isn’t doing is 5G, she says. “If anything miraculous happens and it moves faster than we expect then we will look at spending money on it.”
And Burns herself, what does she make of her future? She grew up, the child of Panamanian-born parents, in the Lower East Side of New York. She went to high school, where she found herself good at maths and went on to university – at a time when it was rare for a woman to study engineering, still rarer for a black woman.
Diversity challenges
She’s a strong believer in diversity, though she admits that this isn’t currently reflected in Veon’s senior management. There’s only one other woman, the chief people officer, on the team and – from their pictures – no other person of colour.
She retired once, from Xerox, where she spent 36 years, and planned to offer her experience by taking on non-executive board positions. Burns is on the board of ExxonMobil, Nestlé and Uber.
She joined the board of Veon, where she was landed with more responsibility than she expected. “My expectation was not to spend the rest of my life as a CEO,” she smiles. “I’m CEO of Veon until we select the next one. Before I walk out of the door we will have a great CEO.”
