Veon backs out of GTH acquisition

Veon has announced it has backed out of plans to acquire GTH assets in Pakistan and Bangladesh due to the falling Pakistani Rupee and the reaction from GTH shareholders.

The acquisition was initially announced back in July to improve Veon’s footprint in emerging markets. The purchase was supposed to be funded through the €2.3 billion sale of Veon’s stake in Wind Tre to CK Hutchison, though the stars don’t seemed to have aligned for this bit of business.

The Pakistani rupee fell another 4% on Wednesday, setting a new record low, as the country continues to battle debt. The International Monetary Fund has promised funds to bailout the Pakistani government, though it appears this will not be enough to cover the shortfall. Analysts are predicting more troubled times ahead for the currency and Pakistani economy.

Aside from the gap in the spreadsheets, there are concerns the US would block any financial aid offered by the IMF due to concerns over Chinese investment in Pakistan in recent years. Considering the anti-China rhetoric which is gathering momentum in the US, this would hardly be a surprising move.

Coupled with a lack of approval from minority shareholders for the transaction it would appear Veon has had enough, perhaps considering the hassle too much in comparison to the gain.

Hutch buys Veon out of Wind Tre for €2.45 billion

CK Hutchison has doubled down on the Italian market by giving Veon €2.45 billion for the half of Wind Tre it didn’t already own.

Labelling it Italy’s leading operator, Hutch wittered on about how this is a key step in consolidating its telecoms assets, how this would allow it to continue driving synergies and bits of corporate gibberish. In fact, according to Ovum’s WCIS, Wind Tre is the second Italian MNO by subscriber with 28.5 million, while TIM has 31 mil.

“We are delighted to become sole owners of Wind Tre, which gives us the strongest possible platform to drive increased and recurring value for our shareholders, said Canning Fok, Group Co-Managing Director of CK Hutchison. “Having pioneered mobile technology and digital leadership in Italy for over 15 years, CK Hutchison looks forward to continuing to invest in Italy’s digital future, benefitting consumers and businesses across the country.”

Veon, meanwhile, is mainly going to use the cash to pay off some debts and get its leverage ratio down to 1.8x. Around a billion dollars of it will be spent on buying the assets of Global Telecom Holding in Pakistan and Bangladesh, along with 1.6 billion of new debt, which presumably makes sense to Veon’s accountants.

“Our goal is to drive greater value for our shareholders through a more focused and optimized portfolio” said Ursula Burns, Executive Chairman of Veon. “To this end, the company has identified four immediate priorities: simplifying the group’s structure, increasing our operational focus on emerging markets, strengthening the group’s balance sheet and supporting the company’s current dividend policy. Today’s transactions are important steps towards this goal.

“We intend to provide a more comprehensive update on Veon’s strategy in the coming weeks, which will cover, among other things, our ambition to deliver operational excellence across our portfolio, supported by a refocused and expert HQ that provides strategic expertise and direction to our businesses.”

Veon CEO calls it a day with no replacement lined up

CEO Jean-Yves Charlier has decided to step away from the artist formerly known as Vimpelcom but they don’t seem to have even started looking for a new one.

Ursula Burns, who has been Chairman of Veon since July 2017, will now become Executive Chairman, which basically means she’s doing the CEO job too. To be fair she’s pretty well qualified for the gig, having been CEO of Xerox from 2009-2016, but she’s presumably now in the board member phase of her career, including American Express, Exxon Mobil, Nestlé and Uber, and Diageo next month.

“It has been a privilege to lead Veon through a critical period in its history,” said Charlier. “Over the past three years, we have achieved a profound transformation of the group and I am immensely proud of all that we have accomplished. The transformation creates a solid foundation for a positive path for the company in the years ahead and I wish Ursula and the Veon teams across the world the very best.”

“The supervisory board and I want to extend our thanks to Jean-Yves for his contribution during his time at Veon,” said Burns. “He leaves the company having led three years of performance, structural and business transformation, and he will assist me with the transition.

“With Veon’s unique geographic footprint, and a strong push on our digital agenda to better serve our 240 million customers, we are well positioned to compete, grow and prosper in the markets we serve. I look forward to working even closer with Veon’s management team to build on our strong foundations and find further opportunities to unlock value for our shareholders.”

The protagonists clearly want to create the impression of everything being mellow, groovy and under control. But the ideal succession choreography for losing a CEO is for the process of replacing them to be well underway by the time you go public. This doesn’t seem to be the case here and Veon is even having to hastily promote Kjell Morten Johnsen from Head of Major Markets to interim COO to help Burns out.

This latest executive turmoil follows Jon Eddy, Head of Emerging Markets and Mikhail Gerchuk, Head of Eurasia, stepping down in February. “I would like to thank Jon and Mikhail for their strong leadership and commitment over the years,” said Charlier at the time, perhaps using that opportunity to jot down some ideas for his own leaving canned quotes.

Telenor says enough is enough with troubled Veon

Most Norwegians we’ve met to date have been nice, relatively laid back people, but the execs at Telenor have seemingly been pushed to breaking point, resulting in the divestment of Veon.

It’s been in the works for a while, and it would appear Telenor has finally gotten sick of dealing with Veon. There has been ‘debate’ over the future strategic direction of the company, but it won’t be long before the Norwegians finally ditch their final 19.7% stake in Veon.

Telenor has announced it has begun an offering of 90 million Veon shares, roughly a 5.1% stake in the telco, priced at $4.15, with the offering expected to close on September 25. This will leave Telenor holding onto 14.6% of Veon, though plans are to transfer this stake to an exchangeable bond. Telenor will be able to clean its hands of any association.

This should come as little surprise considering the saga which played out in Uzbekistan back in years gone, when the business was known as Vimpelcom. Back in 2015, Telenor announced plans to divest its stake in the business, citing ‘challenging’ conditions. Apparently paying hundreds of millions of dollars to firms controlled by Uzbekistan’s President Islam Karimov for a leg-up in the country, is a no-no in Oslo.

And while many might view this as an admirable move by a telco wanted to keep its hands clean, let’s not forget Telenor was not completely absent of wrong-doing. A seconded Telenor employee raised concerns of corruption back in 2011, but this news didn’t make it to the CEO until March 2014, and then onto the board in December later that year. From there the memo was lost until October 2015 when it made its way to the Norwegian government, the majority shareholder of Telenor. Negligence or incompetence – we’ll let you decide, but neither should be present.

Telenor is on the verge of getting rid of the headache, which also blamed Uzbekistan for a recent profit warning, and it will receive a nice little $365 million boost in cash in the first instance. Seems a bit backward to be rewarding the telco when you look at the saga from angles, but hey-ho.