VEON Ltd (VEON) 2022 Q1 法說會逐字稿

Good morning and good afternoon, ladies and gentlemen, and welcome to VEON's first quarter trading update for the period ended 31 March 2022. I'm Nik Kershaw, VEON's Group Director of Investor Relations. I'm pleased to be joined in the room today by Kaan Terzioglu, our Group CEO; as well as Serkan Okandan, Group CFO; and Alex Bolis, Head of Corporate Strategy, Communications and Investor Relations.

Today's presentation will begin with an overview from Kaan followed by a financial review from Serkan. And Kaan will then come back and close before we move to the Q&A. (Operator Instructions) We have already received a number of questions from investors. In the Q&A session, we will repeat the details of the question and the name of the institution. We will look to answer as many of the questions as we can in the time allotted. And in the interest of time, we may group together some of the questions that are related.

Before getting started, I would like to remind you that we may make forward-looking statements during today's presentation which involve certain risks and uncertainties. These statements relate in part to the company's anticipated performance and operational guidance, future market developments and trends, operational and network development and network investments and the company's ability to realize its targets and commercial and strategic initiatives, including current and future transactions.

Certain factors may cause actual results to differ materially from those in the forward-looking statements, including the risks detailed in the company's annual report on Form 20-F and other recent public filings made by the company with the SEC. The trading update in the presentation, each of which includes reconciliation of non-IFRS financial measures today, can be downloaded from our website.

With that, let me hand over to Kaan.

Thank you, Nik. Good morning all, and welcome to the presentation of our first quarter trading update. Before we start going through the numbers, I would like to say that this has been a challenging and character building time for our group. At the same time, all of our teams have shown exceptional focus while stay in due course and delivering positive results.

In particular, I want to thank our colleagues in Ukraine who, in unbelievably difficult circumstances, have kept the Kyivstar network functioning. They have undertaken extraordinary humanitarian actions to support Kyivstar's customers and communities.

Now let me start with some key figures for the quarter. Group revenues grew by 9.8% year-on-year on a local currency basis, in line with the growth in the second half of 2021. Local currency EBITDA for the quarter was up 5.7%. Adjusted for exceptional charitable donations and employee support costs during the quarter, normalized EBITDA was up 7.3%. CapEx was $367 million, down 6.2% year-on-year. Given the current operating environment, CapEx for the full year will be lower than we previously anticipated. Importantly, all our operations are generally self-funding for their requirements. In addition to this, we have $1.3 billion in cash held at the headquarter's level.

That said, let me give you more detail on our performance in March, which better reflects the current operating environment. First and foremost, we prioritized protecting our people wherever and whenever needed in during these times. In March, we faced the full impact of the current conflict on our operations. Despite this, our 4G subscribers were up 24.3% year-on-year, passing the 100 million mark, and March revenues were up 8.6% in local currency. Reported currencies, revenues were down 11.9%, impacted by currency volatility.

Our decentralized governance model empowered local management teams to drive their country operations effectively. At the group level, we continued with our financial derisking, reinforced through debt management and prioritizing liquidity. The financial performance of Ukraine remained strong and our operations were kept up and running throughout the month. We will cover this in more detail in coming slides.

On the next slide, you see that VEON is a global company operating in 9 countries and providing service to 220 million subscribers, which is an essential humanitarian service. We are committed to our industry's mission of improving lives through telecommunication services and access to mobile Internet. As that sector, we enable billions of people around the world to connect to their loved ones to vital opportunities and fair information.

An important driver of our strategy and Q1 results is our progress in implementing our digital operator strategy, enabled by our 4G investments over the last 2 years. Over the past year, our 4G users increased by 24.3%, improving revenues as we continued building our digital platform. I am proud that we have now exceeded 100 million 4G user milestone. Actually, including Algeria, our 4G users are at 108.3 million. Over the last 2 years, our 4G penetration grew from 29.2% to 48.8%, and we are consistently progressing towards the 70% penetration mark that we have previously indicated. Our data and digital revenues were up 15.8% year-on-year in local currency terms.

On Slide 10, we provide further granularity into the progress of our digital operator strategy and customer-based transformation. Our Multiplay subscribers, who are the users of at least one of our digital services, on top of our 4G data and voice services, have increased 28% year-on-year and reached 29.7 million. Multiplay customers typically demonstrate materially higher engagement levels. In the first quarter, Multiplay ARPU, average revenue per user, was 3.8x more than a single-play voice user, while the churn is only 40% of that of a single-play voice user. We have achieved well-balanced growth across all our operations due to a higher subscriber base with higher 4G penetration, with increased consumption of digital application and disciplined inflationary pricing.

We also saw strong momentum across markets in terms of EBITDA. In Ukraine and Kazakhstan, you will notice the normalized EBITDA as well as reported. This shows the adjustments for charitable donations and extraordinary employee support during the quarter for the events that has unfolded in Kazakhstan in January and later in Ukraine.

Let me now take you through the individual performances of our large markets, including Uzbekistan this time. I will start with Ukraine. We have lost one of our engineers in Bucha. Thanks to him and hundreds of Kyivstar engineers, we are working tirelessly and we kept our networks functioning. The work of our team in Ukraine has been extraordinary. As of today, 92% of our network sites remain operational and we continue to roll out new sites. National roaming has been strengthened through network sharing amongst the domestic operators.

We continue to support the safety and security of our people. We are helping our 3,900 employees through economic support and temporary accommodation; our communities, through charitable donations and nursing homes; our customers by waiving top-up and Internet fees and offering free education services. We have seen millions of refugees flee the country, and we continue to support these customers with services such as roam like home.

I would like to commend our fellow domestic and international telecom operators, industry associations and vendor communities for their exemplary partnership at this difficult time. In these exceptional circumstances, Kyivstar has delivered another quarter of impressive results, with double-digit revenue growth up 15.1% and the normalized EBITDA growth of 9.3%.

The strength and resilience of our operations is shown by our March numbers, with both total and service revenues up by 16.7%. This was the seventh consecutive quarter of double-digit revenue growth for Kyivstar, whose growth in Q1 is consistent with the increases reported over the past 2 years despite unprecedented challenges.

We do acknowledge the uncertainties the prolongation of the conflict will bring with regards to our operational performance. But I would like to take this opportunity to thank the team once again for their dedication to keeping our customers connected.

Let's turn to Russia. Beeline's extensive 4G rollout over the previous 2 years has proven of fundamental importance on our ongoing operations. We have 25.3 million 4G users, up 9.2% year-on-year. They now account for 56% of Beeline Russia's total customers.

Beeline recorded year-on-year growth in terms of both revenue and EBITDA. Total revenue grew by 5.6%, with service revenue growth of 4.1%. In March, total revenues grew 3.6% and service revenues grew 3.7%. Handset availability remains a challenge for the whole market. We note the impact of the unprecedented currency volatility, with the March average exchange rate used for consolidation being RUB 104.1 per dollar, impacting reported revenue numbers, which declined 25.9% year-on-year.

Let's take a look at our performance in Pakistan, where we continue to gain market share. It is encouraging to see Jazz growing revenues by 9.1% year-on-year. This was delivered despite the 5% increase in withholding tax from 10% to 15% and the 30% reduction in mobile termination rates. Today, 49% of our customers enjoy our 4G services. 17% of our subscribers are Multiplay's customers consuming at least one of our digital services, like JazzCash or Tamasha accounting for 35% of our subscriber revenues.

JazzCash continued to grow in Q1 2022 with monthly active users up 12.2% year-on-year to 15.7 million. The average revenue per user of JazzCash among Jazz subscribers are 40% higher than the average -- Jazz average revenues per user. We recently applied for a digital retail banking license to support our financial services offering and take it to the next level. We strongly believe JazzCash presents a real value opportunity for our company and for our shareholders.

For Tamasha, monthly active users increased 35% year-on-year to $1 million and total watch time increased an impressive sevenfold year-on-year. Tamasha user ARPU is 2.4x higher than the average Jazz user ARPU. We have secured a 15-year extension of our spectrum license in 900 and 1,800 megahertz bands for a total of $486.2 million. We have made an initial payment of PKR 44.5 billion, equivalent to USD 243.1 million. This payment was funded through a local banking facility, which matures in 2031, the balance payable in equal installments over 5 years.

Turning to Kazakhstan. Following the difficult start to 2022, services are rapidly restored to full operation. The unrest in January was quickly addressed by the government. Despite the loss of services in some areas for up to 10 days, Beeline Kazakhstan reported its fourth consecutive quarter of growth above 20%.

2 of 3 subscribers in Kazakhstan are 4G customers, driving the exceptional performance in revenue and EBITDA. The growth of our data and digital revenue was up 39.5%, driven by the higher use of our digital applications. Our financial services offering simply has reached 125,000 users. Users of our second brand, Izi, a fully digital operator now exceeds 100,000. Due to the success of these and other digital services, our average revenue per user in Kazakhstan is up 21.1% year-on-year.

Slide 16 is about Bangladesh. Growth in Bangladesh has accelerated in line with our decision to invest in our nationwide coverage. We recorded revenue growth of 8.6% year-on-year in the quarter, gaining market share in Q1, with a full quarter revenue acceleration in the month of April to above 10%. Our 4G subscriber base was up 40% to 12.5 million and data revenues increased by 22%.

Over the past 2 years, our 4G penetration in Bangladesh has more than doubled from 16% to 35%. Driven by Toffee, our video platform, 9% of our subscribers account for more than 18% of our subscriber revenues, demonstrating the impact of digital applications and Multiplay subscriber base. In March, Banglalink launched the country's first digital health platform, Health Hub, with the goal of making health care affordable and accessible to millions of Bangladeshis.

We concluded the acquisition of a further 40 megahertz spectrum in 2,300 band, funded again through a local banking syndicate. This doubles our spectrum holding in Bangladesh and it ensures we retain the leading position in spectrum per subscriber. We are progressing well with our rollout plans for 2022. In Bangladesh, our 11,400 strong tower portfolio has been ring-fenced and talks with potential buyers are progressing.

Uzbekistan, for the first time featuring alone, a remarkable turnaround story for the group. Our revenues grew 22.6% and EBITDA grew 24.5%, and we are back to being #1 in customer market share. The Uzbekistan economy is opening up to international investors and this is encouraging us in our outlook for the country. We will continue to facilitate the digital transformation of the country. 4G subscribers reached 4.7 million with a 4G penetration of 62%, a 12 percentage point increase year-on-year, 1 percentage point every single month. This is, in turn, supported the 31.5% increase in data revenues, which is a key driver of our overall performance.

Let me also give you a slight update on the other markets. Georgia reported 4G subscriber growth of 16.4% year-on-year, representing a 4G penetration of 71.3%. Revenues grew by 13.7% and EBITDA up 22.7%. Kyrgyzstan reported subscriber growth of 21.5% year-on-year, penetration of 63.5%. Multiplay customers more than doubled over the year. Revenues grew 9.7% with EBITDA up 26.5%.

Let me also mention Algeria, which we have not consolidated since Q3 2021 since we exercised our put option. Djezzy remains one of the strongest brands in the country, a role model enterprise and continues to perform strongly, reaching high single-digit growth in Q1. The valuation of the put option has been finalized, and it is set at $682 million for our stake in the operator. We remain committed to ensuring a smooth transition as Djezzy is well placed to lead Algeria's digital transformation.

Let me focus some of our digital products. On the fintech side, JazzCash has increased its user base by 12.2% year-on-year, serving 15.7 million customers and now also serving 145,000 merchants, a growth rate of 61% last year. The total number of transactions processed by JazzCash reached 518 million, up 40.3% year-on-year. Gross transaction value for the last 12 months was close to PKR 3.5 trillion, about USD 20 billion equivalent. This amounts to approximately 6.5% of gross domestic product of Pakistan.

Looking at entertainment services, Banglalink's Toffee is the #1 entertainment platform in the country and grew 87% year-on-year to 6.3 million users. Over 75% of this user base are non-Banglalink customers, with an average watch session of 20 minutes. The entertainment platform Tamasha replaced Jazz TV last October, and has now more than 1 million monthly active users, up 35% year-on-year, with increasing levels of customer engagement. Rebranding of Jazz TV as Tamasha is a demonstration of our efforts to provide all-access entertainment services.

Let me pause there and hand the call over to Serkan to discuss our first quarter financial results in more detail. Serkan?

Thanks, Kaan. Good morning or good afternoon to everyone. In the coming slides, I will elaborate on the financial highlights in this Q1 trading update. As we have already stated in the notice to readers on Slide 3 of this trading update, the numbers presented today have been complied according to IFRS standards and reviewed by the management but have not been externally reviewed or audited.

Moving first to our revenues. In Q1 '22 saw strong performance across all of our markets, with Kazakhstan, Ukraine, Georgia and Uzbekistan all delivering double-digit growth. Russia reported revenue growth of 5.6% and Pakistan recorded growth of 9.1%. This strong growth in Pakistan comes despite changes to taxation legislation and the reduction in mobile termination rates, which impacted our revenues negatively. Adjusting for these 2 developments, underlying revenue growth in Pakistan would be double digit as well. In Kazakhstan, the 20% growth -- revenue growth was delivered despite the headwinds from the unrest in January.

The overall revenue performance for the quarter was supported by strong 4G adoption and the continued increase in data usage. I would also like to highlight that reported revenues were impacted by high FX volatility, especially in Russia and particularly during the month of March. As Kaan mentioned, the average ruble exchange rate used in our U.S. dollar financial in March was RUB 104.1.

Moving on to Slide 22, which outlines our EBITDA performance in greater detail. Local currency EBITDA was up by 5.7%, although this was impacted by extraordinary charitable donations and employee support expenses in Kazakhstan and Ukraine. Adjusting for these expenditures, normalized EBITDA would be up by 7.3% year-over-year, a very solid result. Four of our operating countries, Pakistan, Georgia, Uzbekistan and Kyrgyzstan, witnessed double-digit EBITDA growth, while in Russia, EBITDA increased by 2.8% year-over-year, marking 4 consecutive quarter of growth.

I must also note that the share of energy costs to total OpEx is approximately 12% for the group, and we have seen a notable increase in energy costs across our markets. The overall effect on the group has been an increase of approximately 25% in energy costs which is a significant increase for this expense line. Over the time, as we do for inflation in general, we will address this specific cost increase through appropriate pricing across our operations.

Turning now to Slide 23, I will expand a little on VEON's balance sheet. Our total cash position stands at USD 1.9 billion, with USD 1.3 billion at the headquarter level. This position is held in both U.S. dollars and euro and highlights the group's continued strong liquidity position. We have also made good progress on our Algeria put option, with the valuation process completed at USD 682 million for our stake in Djezzy.

Our leverage ratio improved slightly versus year-end '21 and was 2.4x at the end of the first quarter. At the group level, gross debt decreased quarter-over-quarter, primarily because of the weakening ruble as well as the repayment of VEON bonds matured in March. We have actively addressed our exposure to sanctioned banks. We early settled the bilateral loan from VTB in March the group has no further position outstanding to VTB. We are also winding down our exposure to Sberbank and Alfa Bank through the novation of RUB 90 billion bilateral debt to our subsidiary in Russia.

I would also like to highlight that net debt, excluding lease liabilities, decreased to $5.4 billion, bringing our leverage ratio, excluding leases, to 1.8x. HQ net debt also fell to $3.7 billion, following the novation of VEON's ruble-denominated debt from Sberbank and Alfa Bank.

Moving to Slide 24. We show our debt and liquidity positions in detail. Our gross debt, excluding leases, reduced to $7.1 billion, with a total cash position of $1.9 billion. As I previously mentioned, $1.3 billion of this cash is at the HQ level. Our net debt currently stands at $5.2 billion, excluding leases, and at $7.8 billion, including leases. Looking at the currency breakdown. 45% of net debt is denominated in rubles, with the tower transaction completed in December last year, supporting our move towards a more balanced currency mix across our debt profile.

Turning now to Slide 25, we have some details on the impact of the recently concluded RUB 90 billion debt novation to Russia. Excluding Russia, net debt at the group level stands at $4.9 billion, with net debt at the Russia level totaling $2.8 billion.

Moving to Slide 26, we outline the group's debt maturity schedule. As you can see from the chart, we have a favorable maturity schedule for the near term with no further material repayment at the HQ level for the remainder of 2022. Our next upcoming obligation is $529 million bond maturing in Q1 '23, followed by a $700 million bond in second quarter '23. It is also important to note that we have and continue to meet all our legal obligations for all interest and capital payments due on our debt in a timely fashion.

Turning to Slide 27, we detail changes in our cost of debt and average debt maturity. In recent years, we have worked to increase local currency funding, focusing to align our debt with revenues. While this is a positive development from a fixed risk perspective, it does come with a higher cost of debt. Higher funding costs in some operating countries, particularly in Russia and Pakistan, after increases in Central Bank benchmark interest rates, have also impacted our average cost of debt, which now stands at 7.7%. Meanwhile, our average debt maturity remains stable at 3.3 years.

Now I would like to hand over to Kaan for his closing remarks.

Thank you, Serkan. Let me close our presentation with a summary of our priorities ongoing. It will continue to be our #1 priority to protect our people and their families. They are our major assets in terms of providing these services to the countries that we serve at.

Number two, service continuity is our priority when it comes to providing essential humanitarian services reaching to our customers in 9 countries. And business continuity will be following the service continuity as we ensure the services are available and through the business continuity, properly monetized, in that order. Three, we will continue protecting in all circumstances, the good standing of our company, providing appropriate liquidity and capital structure. Four, all our businesses will continue to deliver growth. And five, our active portfolio management remains focused on monetization opportunities as we execute our asset-light strategy.

With these priorities in mind, I would like to thank you for your attention, to all the 224 people who are online currently, and I will hand over to Nik, so again we can move to the Q&A session. Thank you.

Afternoon to everyone, again. Just thanks very much for we've had a number of questions coming already. I think we're going to start off firstly with a question that's coming from Sharp Capital in Raleigh.

Firstly, that comment on the exemplary work that has been done by Kyivstar. The first question on this to you, Kaan, is, why is we are not listing Jazz and Banglalink on the respective stock exchanges in a reasonable time frame to unlock the big value opportunity which would also further improve our relationships with the governments?

Michael, thank you very much for your question and thank you for your comments about the efforts and the spectacular work by -- especially by the Ukrainian team. I appreciate that. Of course, when it comes to financial results and decisions of the management, more than efforts, results count.

I would like to highlight that you have exactly been pointed the right area of creating value when we look at the sum of the parts valuation of our company. It is no surprise that as the aggregator of multiple operators beyond name might be foreign to investors, but our assets, especially in Bangladesh with Banglalink brand and Jazz in Pakistan are crown jewels of those economies and are very much known by all the investor base when it comes to local markets.

As the markets evolve and capital markets develop in these countries, we will be looking forward to looking how we leverage this from the best perspective of our shareholder base. And we can hardly say that we congratulate you for pointing the opportunity and it will be on our radar.

The next question in a similar vein is why is VEON not listing JazzCash and potentially even selling a stake to a fintech player to unlock some of the hidden value in JazzCash?

Unlocking value, whether on public platforms or private platforms, is clearly a high agenda item for us. With regard to JazzCash, we have been implementing our strategy step-by-step and, recently, implementing and applying for the digital banking license is an important milestone. As we progress, we will explore both public and private opportunities as we create value for the company.

The next question is coming from Exor Capital in London. Maybe, Kaan, if you can comment on how the conflicts in the Ukraine has impacted the performance both in Russia and Ukraine with respect to both the operations, net potential network investments and demand?

So thank you very much, Matteo, Gabriel, Darius, and thanks a lot for your continued support to our company and confidence. I'm very glad to see shareholders like yourself taking attention on our company's operations and investments. Clearly, the conflict has impacted on our operations in both countries. And especially when it comes to our Ukrainian operations, the humanitarian disaster has been observed on a day-to-day basis by our people on the ground, themselves under the impact as well.

The nature of the business in these difficult times, as people increase their mobility, and almost 70% of the people, including our employees, have been moving from their homes to alternative locations, was visible. Our offices were opened as shelters, not only to our people and their families, but also people on the road. Most of our employees are working from different locations today, about 10% out of the country.

In the last 2 years, COVID has taught us a lot in terms of how to keep a company up and running from remote locations. Whether our people are outside of the country, in the country in different cities or in shelters, we manage to continue to work and support our customers in the best way we can. And that showed actually its impact in terms of our network operations, only 8% as of yesterday of our base stations are not operational. We will be looking forward to reconstruct the network and repair to 100% levels as soon as the conflict stops.

And as you can imagine, currently, the investment plans that we have created for both Ukraine and Russia is not going to be continuing as the plans were. And the demand continues to be at the same levels despite the fact that it is coming from maybe different revenue lines, not necessarily from consumer business, but from roaming, from international connectivities and so forth. And we expect actually that this level of operation to be supported by us and continuing to see even in the month of April double-digit growth in Ukraine and despite the difficulties.

And the next question to you, Serkan, also from -- what is the magnitude of CapEx delayed to preserve liquidity? And over what time frame do you expect to catch up on our initial capital investment plans?

Thank you, Nik. First of all, I should say that we have made sizable investments, especially in 4G networks, during the last couple of years across our footprint. And as a result of this, our CapEx investments would naturally slowing down because of this sizable investment in the next -- in the previous couple of years.

So -- and having said that, our spectrum acquisitions in local companies and the CapEx plans, in all, of course, are fully funded locally. So our HQ cash is immune from the CapEx rollout investments in the acquisition of licenses are immune. So as a result, we expect our CapEx in '22 in absolute numbers to be lower than the CapEx investments that we did in '21.

And then last question from Exor. Over to you, Kaan. Could you maybe provide an update on potential nonoperating sources of cash over the next couple of years, tower sales, Algeria puts or any other options, local financing, et cetera.

Thank you. And as you have heard from us, we are executing and we continue to execute on our asset-light strategy. And this started with the sale of our towers last year in Russia. We generated almost $1 billion of cash. And it will continue with our execution in Pakistan, Bangladesh, Kazakhstan and Ukraine.

All our tower assets are ready to be crystallized in terms of value. We truly believe that no operator today can afford to run its own towers. Network sharing and independent tower operators are facts of our new reality and will drive the delayering of the telecoms industry, and we will be pioneering that change.

In addition to tower transactions, we also believe that private and public placement of our digital assets, whether it be entertainment platforms like Toffee or financial services platforms like JazzCash, are also important value creation opportunities. We should also not forget that local markets are getting stronger, and our brands are ripe for local investors in certain countries which we will also consider when the right climate approaches.

I would like to also highlight Algeria. We have been working with the Algerian government and the sovereign fund of Algeria in a very cooperative manner over the last year. And finally, our final valuation of our stake has been agreed, as we have indicated in our press release, at $682 million. We do expect continuation of our share purchase agreement as planned, and that will be over the next couple of quarters. So I think that summarizes the noncash opportunities that we have in front of us.

The next question comes from GoldenTree, New York. This is to you, Serkan. For Kazakhstan, which is held under the Russian business, are we able to separate this out and provide -- and kind of then provide additional credit support for the bonds?

Yes. Thank you, Nik. First of all, it is true that our -- we are holding our Kazakh operations we have VimpelCom in Russia. That is historically there. However, in the last couple of years, we have restructured our group shareholding structure, and we moved our investments in Armenia, in Uzbekistan and recently in Kyrgyzstan from VimpelCom umbrella to VEON Holdings umbrella. And we are working a similar transaction for Kazakhstan as well with other cost directions as well. So we are working on it, and we will decide and execute to the best interest of our shareholders and all the stakeholders in the coming months and years.

And then on the other ruble base at the holdco, does the funding for the interest there come from holdco or from the Russian subsidiary?

The issue is VEON Holdings TV. And the debt service will be done by VEON Holdings TV as well.

Great. Now I've got quite a number of questions. I'm going to just group a few of them together. I think we'll first jump on to some liquidity questions and just maybe we can follow them in a logical sequence. Serkan, can you just update us on the current liquidity and cash needs from a headquarters perspective?

Okay. So as we discussed in the presentation, we had $1.9 billion cash at the group level at the end of March, out of which $1.3 billion is at HQ. And until end of the year, we do not have any debt repayment obligations. The earliest one is in February next year. And after novation of the ruble debt to Russia, the interest cost staying at the HQ level for this year is around USD 245 million.

Could you give us an update on the revolving credit facility?

Yes. As again, as you know, we have utilized $430 million from RCF back in February and we used that amount to repay our bond maturing in the beginning of March. Currently, we have USD 692 million committed under own facility. That amount is after the cancellation of the committed lines from Alfa Bank and Raiffeisen Russia. As a result of a new legislation in Russia, they had to cancel their commitments as per the RCF facility. So as of now, Alfa Bank and Raiffeisen Russia are not still in the RCF festival.

And then to you Serkan, of the novation of the ruble debt, does Russia still have intercompany debts to headquarters?

Yes, they do. After this -- within in the digital novation of RUB 90 billion debt, we have canceled the same amount of intercompany loans. And also, we have released VEON Holdings TV from its current position but after this transaction, we still have around RUB 57 billion intercompany debt in ruble plus we have USD 125 million debt as well from VimpelCom towards VEON Holdings TV.

Great. And then could you comment on how much cash Russia upstreams to the group?

Currently, there is no possibility of any upstream because there are certain capital controls put in place in Russia, unless VimpelCom has certain licenses from the Minister of Finance, so-called C accounts. VimpelCom has applied to the Ministry of Finance for license, and it is still waiting for the approval of the ministry. However, having said that, we are not planning any upstream material streaming of dividend from Russia this year. So there won't be any significant impact on our plans for this year.

Great. Thanks. Kaan, there's another question. Can you update us on the cash requirements from our operating entities?

So about 2 years ago, we started the decentralization of our company, and that really also touched the governance structure as well as the way we decided on capital allocations. We have completed that decentralization to the level that all our operating companies can stand on their feet and they do not necessarily require cash injections from us.

And even when we do major renewals of licenses or spectrum acquisitions, we have a mechanism in place and availability of the credits from local facilities so that we can fund them locally. So that has been our ultimate objective. I'm glad to see that over the next 12 months, we do not see any need for injecting cash to any of our operations.

And also to you, Kaan, I mean, are we going to be providing any updated revenue and profitability guidance on the group level for this full year?

Although we see our monthly operations and the impact, I think it will be unprudent for us to provide any guidance for 2022. So I will refrain from that.

Great. Moving now to a couple of questions on Ukraine. Also to you, Kaan, what challenges are you facing in keeping the network running in Ukraine?

So first of all, the team has done a great job really. Unavailability of our base stations have deferred from 800 to 1,200 over these days as we continuously fixed the base stations, provided gasoline for the generators as well as built over 200 new ones. I expect these efforts to continue. And currently, we are at 92% availability on our radio area network and 100% availability on our core services.

Thanks. And how has the conflict impacted the operational performance in Ukraine?

As I mentioned, the operational performance is, of course, has 2 important components: service continuity and business continuity. I think we did a great job on both fronts. There has been instances, of course, where we had specific outages regionally and they have been all addressed at the right time.

I want to thank specifically for enabling the national roaming. I think it was a historical moment when the 3 operators decided to do national roaming so that our network truly functions as one, being redundancy factors.

And secondly, I also would like to thank to support our customers who are outside of the country in refugee status. 27 operators from Europe, they all participated in lowering the cost of interconnect and roaming services. And big thanks to them as well.

Thanks. And then a couple of questions on Russia. Can you describe the impact of the Russian economic conditions on PJSC VimpelCom? And will the current environment impact the ability to deploy network across Russia?

I'm sure you are well aware of the impacts of the sanctions. But specifically, there are 2 issues in terms of the volatility of the currency, which we have seen resulting in our operations and reported results. As you have noticed during the month of March, our average ruble currency, if you look to a weighted average day-to-day basis, was RUB 104.1. So that, of course, has a major impact.

But more importantly, I think we should be focusing on export controls. Clearly, there are different vendors that are supporting us and they have different ways of addressing these issues. Clearly, we have all the means to continue our investments as far as the compliance is required. But I can see that as we move on, I'm thankful that we have completed most of our infrastructure investments in the past, and that will give us the quality of the service that we provide from a humanitarian perspective in Russia.

Great. And then to you, Serkan, what does the current environment mean for our CapEx guidance for 2022?

Due to the ongoing developments and uncertainties, it is difficult to give a guidance for CapEx. However, what we can say at this moment in time, we should expect a lower CapEx in absolute number compared to '21 this year as we look to preserve liquidity across the group.

And then, Kaan, for you, the status of the Algerian put option and sort of processing how that's going.

Well, I tried to explain it during my first summary. But it's been a very collaborative and positive dialogue with the National Solvents Fund of Algeria. There was a predefined process. And the predefined process required a third valuation. We are done with that now. So the next step is follow the rules explained in our shareholders' agreement, which is, again, is going to be done according to the plans.

Great. Thanks very much, gentlemen. And thank you very much for everyone who's dialed in. I know there are a number of individual questions that we didn't cover. I'll make sure we come back to each question individually. We will also be coming back to all of you both through our monthly CEO letters through Kaan as well as our next quarterly results. So thank you very much, everyone. If you do have any additional questions, please reach out, and I will get back to you all. Thank you so much.

Thank you.

Thank you all.