In a letter shared with Capacity, Himanshu Shah, founder of Shah Capital, contended Veon’s equity price has underperformed by around 80% over the last 10 years and called for a drastic change of direction.
Veon’s Nasdaq share price currently stands at $29.50 per share. Shah Capital argued that the share price could potentially reach $160 per share by 2026 if the company implements a change of course.
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Shah Capital called on Veon to launch a $100 million share buyback program and commit to spending at least 50% of annual free cash flow on buybacks for the next two years in a bid to return capital to shareholders and potentially boost the company’s stock price.
The letter also called on the board to list subsidiaries Jazz and JazzCash on stock exchanges in Karachi and Dubai to “unlock [their] massive intrinsic value.”
Shah Capital suggested publicising Veon’s other businesses could lead to higher valuations.
The board was also called to list Ukrainian operator Kyivstar on the Nasdaq, which would unlock $3 billion. The shareholders suggested the Ukrainian government would be behind the move as it could attract future private US investment for the wartorn country.
Other steps the shareholders suggested included executing a cloud data centre growth strategy, implementing strategies to lower the company’s tax rate and improving its governance model between Veon’s headquarters and its operating companies.
The letter contended that Veon’s current low valuation is due to poor analyst coverage, a lack of shareholder capital return, perceived management issues, and the company not being seen as a fintech or cloud data centre investment.
Shah Capital wrote: “With an unlevered balance sheet and asset rich portfolio of around 30,000 towers and meaningful other assets that can be monetised, Veon should trade at [a] substantially higher valuation compared to its emerging market telecom peers like Airtel Africa, Millicom, and America Movil which are trading at [a] median valuation of about five times their earnings before interest, taxes, depreciation, and amortisation (EBITDA).”
Capacity has contacted Veon for comment.
Veon recently moved from its native home of Amsterdam to Dubai, United Arab Emirates to be closer to what it considers its key markets.
The company received confirmation this week (October 21 2024) that it was compliant with the Nasdaq listing requirements following its 2023 20-F filing.
“We have consistently maintained transparent communication with our investors and have diligently fulfilled our obligations,” said Kaan Terzioglu, VEON Group CEO.
“With this filing, VEON is now fully compliant with its listing requirements, and we look forward to taking the next steps in unlocking further value for our shareholders,”
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