VEON [VEON] Conference call transcript for 2025 q3
2025-11-10 07:00:00
Fiscal: 2025 q3
Anand Ramachandran: Hello. Good afternoon, and good morning to everyone. Thank you for joining us today for VEON's Third Quarter 2025 results for the period ending 30th September 2025. My name is Anand Ramachandran, Chief Corporate Development Officer for VEON. Allow me to introduce our senior management in the room today. Next to me is Mr. Kaan Terzioglu, our Group CEO; and next to him, Mr. Burak Ozer, our Group CFO. Today's presentation, as usual, will begin with the key highlights and business update from Kaan, followed by a discussion of the financial results from Burak. We will then open the line for Q&A. Before we begin, please note that today's presentation may include forward-looking statements, which involve certain risks and uncertainties. These statements relate to the company's anticipated performance, 2025 guidance, market development, operational and network investments and the company's ability to realize its targets and initiatives. Our actual results may differ materially due to risks detailed in our annual report on Form 20-F and other filings with the SEC. The earnings release and presentation, including reconciliations of non-IFRS measures are all available on our Investor Relations website. With that, let me hand it over to Kaan.
Muhterem Terzioglu: Thank you, Anand. Good morning, good afternoon, and welcome to everyone. Let me begin with a remarkable milestone. In September, our monthly digital service users surpassed monthly telecom SIM card users for the first time, a defining moment in our journey as a true digital operator. This signals the scale of the opportunity ahead of us and the extraordinary growth still to come. Across our footprint, more than 0.5 billion people, and we see a rising digital adoption, expanding connectivity and powerful demographic momentum. These markets are not just large. They are accelerating, underpinned by innovation and low base effects that create multiple vectors of sustained growth. At the heart of this opportunity is our digital operator model, uniquely positioned to capture and drive this transformation. By combining connectivity, digital platforms and financial inclusion, we are unlocking sustainable growth and enduring value creation for customers, communities, governments and shareholders alike. And now let's start the key messages from our Q3 results. I am pleased that we have delivered another strong quarter, starting with our financial performance. Our revenues grew 7.5% year-on-year in U.S. dollar terms. U.S. dollar EBITDA increased by 19.7% year-on-year. This is yet another $1 billion-plus revenue quarter and a $0.5 billion plus EBITDA quarter. On the back of this performance, we are raising our fiscal year 2025 EBITDA outlook. We now expect 16% to 18% EBITDA growth for the year in local currency terms, up from 14% to 16% earlier. Second, we are driving exceptional momentum in expanding our digital services portfolio. Direct digital revenues grew 63% in U.S. dollar terms and now contribute 17.8% of our total group revenues. Our AI 1440 strategy is becoming central to our operations with ongoing work on large language models and increasing integration into Agentic AI-powered customer-facing solutions. We are delivering localized multilingual features at scale through our super app platforms. Third, we continue to make good progress in executing our asset-light strategy. We have completed the sale of our Kyrgyzstan operations this quarter, further streamlining our portfolio and focusing on core growth markets. Our global framework agreement with Starlink aims to bringing direct-to-sell satellite connectivity to all of VEON's operating markets, ensuring resilient connectivity even in hard-to-reach areas. Kyivstar is on track to launch nationwide coverage subsequent to approvals. Beeline Kazakhstan is planning to launch services in Kazakhstan as we plan to test activities over the next couple of months. And finally, we continue to deliver for our shareholders. The landmark listing of Kyivstar on NASDAQ unlocked significant value with a current market valuation of $2.8 billion compared to $1.25 billion of equity, which is 2.3x of its book value. We retain an 89.6% stake in Kyivstar, which is worth $2.5 billion at Kyivstar's current market price. We are pleased that uncertainties regarding VEON's going-concern status have been mitigated, reflecting stronger liquidity and a more resilient balance sheet. And finally, our Board has approved another $100 million share and/or bond repurchase program, a clear demonstration of our confidence in our growth prospects and our continued commitment to deliver value to all our investors. Let's move to Q3 key financial metrics. Let me summarize our performance for the quarter. Telecom and infrastructure segment revenues on a like-on-like basis that adjusts for TNS+ this divestment grew 3.5% versus the reported 0.5% number that you see on this page. This reflects the impact of our differentiated networks, products and services in continuing to drive ARPU and subscriber engagement while reducing churn. Our direct digital revenues were up 63% and represents 17.8% of total group revenue. On profitability, our EBITDA margin continues to grow. Year-to-date margins have expanded by 320 basis points year-on-year and reflect both scale efficiencies and cost discipline. Last 12-month EPS stands at $8.89, up 60.2% year-on-year. However, the reported EPS for Q3 alone was a loss of $1.84 per share as we recorded 2 noncash charges totaling $259 million. First was a charge of $162 million related to the SPAC sponsor shares in connection with the Kyivstar listing, which is treated as a share-based compensation according to IFRS and has been recognized in the third quarter. Second was a charge of $97 million for the sale of our Kyrgyzstan business, triggering a cumulative currency translation adjustments. For the avoidance of doubt, Q3 results has contributed $76 million to our shareholders' equity. I will emphasize that these noncash charges have no impact on VEON's underlying operational performance, cash generation or financial guidance, which remains firmly supported by our strong organic growth and margin expansion across our key markets. Moving on, our last 12 months CapEx intensity, excluding Ukraine, was 17.7%, and it is in line with our guidance. Net debt, excluding leases, stood at $1.72 billion as of September. The improvement in leverage to 1.13x reflects our operational and financial discipline and the success of our asset-light strategy. Our last 12 months equity free cash flow reached $584 million. Finally, we ended the quarter with a cash balance of $1.67 million, including $653 million at the headquarters level. Let's look at our growth trajectory, and I will highlight 3 key points. First, on a like-for-like basis, which adjusts for deconsolidation of TNS+, the Uklon acquisition and the sale of Deodar and Kyrgyzstan business, our revenues would have grown 10% in U.S. dollars versus the reported 7.5%. Secondly, our EBITDA rose 19.7% in U.S. dollars, underscoring the resilience of our strategy and the quality of execution. Finally, I am pleased that our momentum continues to exceed inflation and nominal GDP growth, showcasing our ability to implement fair pricing while capturing greater share of customer wallet share. Let me dive into our digital revenue performance. Starting last quarter, we began breaking out the components of our digital service revenues to provide you with greater transparency into growth and potential of our digital businesses. Let me make 3 points here. First, financial services are the largest component, accounting for 54% of total digital revenues, growing 33% year-on-year. Second, growth is pretty broad-based with solid contributions across our entertainment, ride-hailing, enterprise and premium digital brand segments. Third, our sustainable cost advantages are how our low customer acquisition costs and optimized distribution model is driving this growth. These enable us to scale profitably and maintain strong unit economics. Let's look into our progress with regard to multiplay users. Multiplay users count customers that use at least one digital service in addition to our voice and data connectivity services. Multiplay is a key feature of our digital operator strategy and growth story. 4G enables multiplay, making increased 4G adoption is a key growth driver. And it is this 4G base that is increasingly shifting to multiplay, driven by our extensive and relevant suite of digital products and services. The multiplay segment drives growth through stronger customer engagement, higher data consumption, more frequent usage of voice services, improved retention and ARPU expansion. Our multiplay customers generate 3.8x the ARPU of a voice-only subscriber. Encouragingly, this ratio continues to sustain even as multiplay adoption expands as a proportion of our overall subscriber base. In the third quarter, 55.4% of our total customer revenues were generated by multiplay customers, and this segment grew revenue-wise 23% year-on-year. Let's look into different operations growth performance. And I'll use local currency terms across our markets for this. We have delivered strong double-digit revenue growth across all of our markets, apart from Bangladesh. While the headline revenue growth for Beeline Kazakhstan shows as single digit, revenues on a like-for-like basis, adjusting for TNS+ deconsolidation was up 23.3%. In Bangladesh, we are encouraged that the revenue returned to year-on-year growth for the first time in 14 months in September 2025. Our profitability trends across markets were strong as well. Headline numbers for Beeline Kazakhstan and Beeline Uzbekistan were impacted by tax effects. However, after adjusting for these, organic profitability trends remain very strong. Finally, please note that our consolidated financial results for Ukraine include full consolidation of Ukraine Tower Company, UTC, whereas the stand-alone disclosures for KGL Group that are also released this morning excludes UCT. We can take specific questions and discuss market-specific issues during the Q&A session. Let me now turn into the Financial Services business success story in Pakistan. This business is the largest component of our Financial Services business, which I have highlighted earlier. This quarter, we completed the operational separation of JazzCash. JazzCash will continue to provide technology and services to MMBL. Both are now fully owned subsidiaries of VEON. This is a key step in accelerating growth and unlocking value across our digital financial services portfolio. The business continues to deliver strong growth, as you see on this page. Gross transaction value for the quarter rose 40% year-on-year, representing 13% of Pakistan's gross domestic product on a last 12-month basis. This was driven by a 48% increase in total transactions and a 38% increase in transactions per user. JazzCash with its over 700,000 merchant base processes over 80% of all Raast payments value under the Prime Minister's Cashless Society initiative. Loan origination expanded sharply this quarter with the daily average number of digital loans rising by nearly 26%. The average of 153,000 micro loans disbursed on a single day in Q3. More recently, JazzCash achieved a major milestone with its highest ever single-day lending disbursement of PKR 1.1 billion through 200,000 loans. We are extremely proud of what JazzCash has achieved. With its trusted brand, deep market reach and a growing ecosystem, JazzCash is leading Pakistan's rapid transition to a cashless economy and is positioned to unlock meaningful long-term value for VEON. Let us now have a closer look at the continued momentum of our digital ecosystem. We continue to see strong and broad-based growth across platforms with the total monthly active users growing now to 143.3 million, up 39% year-on-year. Our digital-only user base has more than doubled to 50 million and now represents nearly 35% of our total digital users. As I highlighted earlier, digital engagement exceeded mobile engagement for the first time in September, an important milestone that highlights how our platforms are becoming the primary customer interface and unlocking new opportunities for cross-sell, advertising and digital services monetization. Over the last 12 months, transaction values grew 50% to reach $48.8 billion throughout our financial services platforms. Let's look in a more detailed outlook to our digital portfolio, and we focus on consumer-centric platforms on this page. Our Financial Services segment has increased by 25% to reach 42.1 million users across all platforms. I highlighted JazzCash earlier. Simply in Kazakhstan, Beepul in Uzbekistan continue to scale their roles as the financial layer of our digital ecosystem in their countries. Our entertainment platforms delivered a strong quarter as well. Tamasha in Pakistan and Toffee in Bangladesh achieved record levels of engagement, fueled by the excitement of Asia Cup Cricket tournament. This also drove a sharp uptick in advertising demand. In Ukraine, Kyivstar TV's revised partnership has elevated direct customer engagement to an entirely new level. Meanwhile, BeeTV in Kazakhstan and Kinom in Uzbekistan continued to gain solid traction, reinforcing the growing strength of our regional entertainment portfolio. Our super apps continue to scale, positioned as one-stop digital hub. These platforms are seamlessly integrating essential services from health care to entertainment and driving deeper customer engagement across our footprint. Uklon's ride-hailing service reached 3.6 million users and recorded strong growth in active riders, trip volumes and digital engagement in Ukraine and Uzbekistan. Our premium digital brands, spanning life cycle, digital identity, productivity tools saw users grow strongly to 3.3 million. With evolving lifestyle and content integrations, these platforms are designed to meet evolving customer needs with curated high-value experiences. Let's move to our enterprise platforms. These platforms are transforming from internal enablers to market-facing technology leaders, driving next generations augmented intelligence and innovation. This opens up new revenue pools and strengthens our position as next-generation digital operator. QazCode, Kyivstar Tech, Garaj, U-Code and bCloud are winning new contracts, delivering augmented intelligence solutions, cloud services and data center solutions to corporate and government clients, expanding our presence in fast-growing enterprise technology markets. Across these companies, we have now nearly 2,000 engineers, software developers, data scientists executing at scale to build commercializable next-generation digital products. Our advertising technology business, VEON AdTech, is scaling rapidly, powered by augmented intelligence and big data. It reaches over 70 million screens across our footprint, delivering measurable return on investment for advertisers. Built on our own AI and data infrastructure, the platform provides 360-degree advertising ecosystem, enabling precise audience targeting, real-time optimization and creating a powerful new monetization layer across our digital portfolio. Let's turn now how we are embedding augmented intelligence across our ecosystem. We call it AI1440, augmented intelligence for every single minute in a day. In Kazakhstan, our Kaz-LLM is now alive in 4 languages, Kazakh, Turkish, English and Russian. -- powering agentic features across multiple platforms. In Ukraine, Kyivstar Tech is co-developing the country's first sovereign Ukrainian language model with the Ministry of Digital Transformation, a landmark step in building national AI capabilities. We will extend this capability to Uzbek, Bangla and Urdu and deepen market-specific intelligence. Across our applications, AI is becoming truly agentic and reshaping customer engagement from self-service to entertainment and education. In entertainment, AI recommendation engines now reached nearly 35 million monthly active users across Tamasha, Kinom, Kyivstar TV, [ Rithmm ] and Hitter. On Tamasha, AI already drives over 1/3 of all live TV sessions and nearly 60% of video-on-demand plays. Its AI news channel has alone became the third most watched channel on the platform. The news channel is sometimes having male or female news anchors that presents the news on live TV. In customer care, our SIMOSA AI chat assistant now autonomously manages customer journeys for nearly 1 million users every month. Our customized personal growth solutions are seeing strong adoption with our consumer audience. Janymda AI Tutor engages 17,000 monthly users, while Ryze AI tools processed over 16,000 requests, helping students write their CVs. We are also innovating with AI for enterprise. QazCode successfully launched Aventa AI, an enterprise-grade AI native platform designed to scale agentic workflows across HR, finance and procurement functions. In summary, augmented intelligence is now a leading layer in our ecosystem, delivering measurable impact for us across all our markets. I will now hand over to Burak, who will take you through the financials in more detail.
Burak Ozer: Thank you, Kaan. Looking at group revenues, we delivered total revenue of USD 1.115 billion in the third quarter, representing a growth of 7.5% in U.S. dollar terms. As previously noted by Kaan, the quarter included the deconsolidation of TNS+ in Kazakhstan, the consolidation of Uklon and the sale of Deodar and our Kyrgyzstan business. On a like-for-like basis, that adjust for this, our revenues grew 10%, underscoring the continued momentum across our operating markets. Direct digital revenues grew 63% year-on-year to reach $198 million. Digital services now account for 17.8% of total revenues, up from 11% a year ago. Turning the page to profitability. EBITDA for the quarter was USD 524 million, representing growth of 19.7%. The EBITDA margin stood at 47% for the quarter, up 410 basis points year-on-year and was supported by operating leverage and disciplined cost management across all markets. We note that our digital services now account for 17.8% of group revenue. While digital margins are structurally lower, their significantly lower CapEx intensity ensures comparable cash conversion relative to telecom services. As our revenue mix continues to shift in this direction, we remain focused on sustaining EBITDA growth at scale while enhancing group-wide capital efficiency and long-term free cash flow generation. Turning now to the balance sheet. We ended the quarter with USD 1.67 billion in cash and deposits, of which USD 653 million is held at headquarters. Net dividends upstream from operating companies during the quarter totaled USD 96 million and USD 285 million for the year-to-date. Gross debt stood at USD 4.86 billion, up slightly from June and reflected the completion of our USD 200 million bond issuance during the quarter. Approximately half of our external debt is now held at operating company level, providing natural currency hedging. Net debt was USD 3.48 billion, while net debt, excluding leases, improved to USD 1.73 billion, bringing leverage down to 1.13x EBITDA. Let me now hand the call back to Kaan.
Muhterem Terzioglu: Thank you, Burak. Let me conclude with our outlook for the year. Despite ongoing macro and geopolitical challenges, VEON continues to execute strongly across all markets. We are revising our EBITDA outlook for the full year and now expect EBITDA growth of 16% to 18% in local currency terms for the full year. We are maintaining our revenue guidance of 13% to 15% growth in local currency terms. In U.S. dollar terms, we expect this to translate to 7% to 8% revenue growth and 10% to 11% EBITDA growth for the full year, assuming no significant fluctuations in exchange rates from current levels. Our capital intensity, excluding Ukraine, remains with 17% to 19% range. These targets are based on a blended weighted average inflation rate of 8.2%. In closing, we are pleased with our business momentum. Looking ahead, we remain confident in VEON's trajectory and the opportunities before us. As I highlighted earlier, the Board has approved another $100 million share and/or bond repurchase program, reinforcing VEON's confidence in long-term value creation. VEON is well positioned to sustain growth and long-term value creation for our shareholders, customers and communities we serve. Thank you for your attention and support. Now we can open the line for Q&A.
Operator: [Operator Instructions] Our first question comes from Jesse Sobelson with BTIG.
Jesse Sobelson: This is Jesse Sobelson with BTIG. I just wanted to ask about the recent transaction involving Kyivstar and the decision to bring the asset public via SPAC. Could you share the motivation for choosing a SPAC structure for this process? And then additionally, you noted that you own nearly 90% of the asset. Looking ahead, how are you thinking about your future ownership stake? Would you consider selling a portion of the holdings to generate liquidity? How would you balance the liquidity versus maintaining control of the asset?
Muhterem Terzioglu: Thank you very much, Jesse, for the question. So with regard to Kyivstar's de-SPAC transaction, we are a true believer in Ukraine's future, and that's why we are championing invest in Ukraine now initiative throughout the world. And we thought it would be the right thing for us to find a deal certain fast track to list Kyivstar. And that's why we have opted for a de-SPAC process. And I'm very glad to conclude it on a successful basis as Kyivstar is now listed in NASDAQ at a valuation, which is 2.3x its net equity value of $1.25 billion at $2.8 billion. I think this was a very, very successful transaction from our side. Now naturally, SPAC comes with additional cost, given that deal certainty element and the speed of transaction process. But overall, I think being a pioneer in making sure creating opportunities for international investors in Europe and U.S. in participating for the future growth of Ukraine, I think it was the right thing. Now looking with the same perspective, we are keen to allow more investors to invest in Kyivstar. So we will be open for diluting our current position further to allow people from Ukraine, first of all, to have a chance to invest in Kyivstar and any credible international investor to also come in and be part of the success story that will be built in Ukraine. And we will continue championing our invest in Ukraine now initiative all around the world as well. Thank you.
Operator: Our next question comes from Nicholas Paton with Edison Group.
Nicholas Paton: Just a quick question on Kyivstar. There's quite a lot of cash at the head office level. I think it's $600 million or so. What's the plan for that? And how easy will that be to repatriate up the chain?
Muhterem Terzioglu: I think Nicholas, $653 million is the headquarters cash at VEON, not Kyivstar.
Anand Ramachandran: Kyivstar $470 million.
Muhterem Terzioglu: $470 million would be the right amount for Kyivstar. And as you know, we are still at war. So Martial law still stays in place. During the Martial law, there are limitations on upstreaming. There is $1 million per company type of a dividend limit. But what we would like to see actually is just in line with our Invest in Ukraine Now initiative, you will see us actually investing in Ukraine. And we have been active with Helsi acquisition and Uklon acquisition. We believe that there is a unique opportunity to build a digital ecosystem in the country. And naturally, based on the needs of the country, whether it is energy resilience, energy storage needs or investing in growth opportunities, we will be also looking into those. But in the meantime, our objective is to make sure that we keep our cash safe in assets that are in either generating cash or creating capacity for us to protect ourselves from potential devaluations.
Operator: Our next question comes from Adrian Cundy with Emerging & Frontier Capital.
Adrian Francis Cundy: Sorry, my video is not functioning well today. So I just [indiscernible] you can see my picture. I have 2 questions. First, relating to UTC and just infrastructure in general within Kyivstar, will we be seeing you continue to pursue divestment on the Pakistan model of tower assets in the Ukraine? Or is VEON planning to retain control of that for the foreseeable future, particularly given that Kyivstar is now talking about a significant network upgrade and is beginning to touch on 5G in line with the national development strategy. And the second question I have relates to the financial services in Pakistan. Now that JazzCash and the bank are stand-alone entities, how do you sort of see them working with the [indiscernible] business? Can we get some more color on what type of loans are being extended? And finally, do you sort of see further initiatives and value extraction for the Pakistan business?
Muhterem Terzioglu: Well, let me start answering your first question about our tower business in Ukraine. Naturally, it's no surprise, I think no secret that we have a strategy of being asset-light, and we see actually tower operations more valuable under the management of independent tower companies, which allows sharing of infrastructure among multiple operators. So it's no different in Ukraine. So the first step was us creating our independent tower company is, I think, a move in the right direction, but we will be looking for opportunities around sharing infrastructure in the country in a more effective way and ultimately, making sure that the tower operations are owned and operated by an independent party, which can further focus on marketing activities of this infrastructure. There are multiple benefits of separating towers from the operating companies. As you know, our telecom industry has been heavily penalized by cross-subsidization of business models like infrastructure businesses and service businesses. And in everything we do, we try to avoid that and make sure that we focus on the right customer rather than cross-subsidizing different businesses. So you will see more actions and news on that front. We are one of the biggest infrastructure providers, of course, in Ukraine, but I believe no telecom company can afford to have its own exclusive networks. We need to learn to share networks, and that's the path for increasing cash generation capacity for our businesses. So -- and that's the first question. The second question, financial services business. In countries like Pakistan, the unmet demand in financial service area is huge. People who are unbanked, who have no way of having access to financial services is an existing opportunity that we have supported. So that's why we have our microfinance bank, MMBL as well as our digital wallet operator, JazzCash, serving our customers there. We have close to 50 million bank accounts and a monthly active user base of 22 million people. On an average day in Q3, we issued 153,000 nano loans. These loans are around $30 to $40 in nature. And they are really the type of money that a taxi driver would need if they would have a flat tire or they need to have 1 day advance of putting gasoline into their tank or a housewife would need that $30 to buy some flour, sugar and eggs to make some cookies and sell in the marketplace. These are really the type of loans that provides lifeblood to practically to small businesses, to family businesses, and we are very proud to make this work. Now naturally, we have also a merchant network of 700,000 merchants. These networks also allow us to significantly drive cashless economy in the country. We operate a significant portion of entire Raast transactions, which is the mobile payment clearance platform, and we transact almost 13% of total GDP. So for us, it's not only being big, but it is being really serving the customers on a daily basis. And this business is growing at 33% year-on-year, and it is, I think, going to be an extremely successful case study when it comes to the digital banking and fintech businesses. We will, of course, be looking into how we can take this business even at a higher scale. And you might see actually some strategic investors also looking into this together with us.
Anand Ramachandran: What was the third question again? Can you repeat it, please?
Adrian Francis Cundy: I guess the follow-up is just on that on even a stand-alone, is there any -- are you looking at value extraction or value recognition for your digital assets in places like Pakistan?
Muhterem Terzioglu: I think the answer is clearly, yes, as the opportunities come to the right level and scale. For us, digital services portfolio we have serves 2 important purposes. One is the multiplay strategy that we have on our regular telecom business. As our customers use our digital services, they stay longer with us, they consume more. And then, of course, the direct digital revenue potential of these service lines from entertainment to financial services drives additional growth for us. And to be precise, the ARPU level increase and the churn reduction of digital services impact on our SIM user base has nothing to do with the direct digital revenues that we report. These are 2 different growth. The growth on one side drives our business on telecom side and the other one drives the business on the digital services. And when the right scale arrives, of course, we will be looking for crystallization of the value of our digital services portfolio.
Operator: Our next question comes from Ahmed Mostafa with Inam.
Ahmed Mostafa: I have two questions. Jazz delivered a strong EBITDA margin uplift this quarter. And yet you have indicated that consolidated margins may soften over the long run as digital services say. So how do you manage this trade-off between scale and profitability? And second, you have raised your EBITDA growth guidance for this year. So could you walk us through the main drivers behind this improvement in the EBITDA margin?
Muhterem Terzioglu: Ahmed, good point. We thought the digital services businesses would be having a bigger dilution on our EBITDA margins. So far, we failed on that. Yes, our EBITDA margins are also improving compared to the business as our digital services are growing. But I think I attribute that on really discipline when it comes to operational cost management of our operations. But let me also give the word to our CFO, Burak, anything you would like to add on that?
Burak Ozer: Yes. On top of the discipline in terms of driving efficiencies on cost side, we are also having disciplined price actions, price increases that we are taking in line with the market conditions that would beat the inflation, devaluation plus the GDP growth. So those 2 combined together definitely is helping our margin.
Operator: Our next question comes from Vincent Fernando with Zero One.
Burak Ozer: We can't hear you yet.
Anand Ramachandran: Operator, shall we try again move to the next question maybe come back to Vincent.
Vincent Fernando: Can you hear me now?
Anand Ramachandran: Yes.
Vincent Fernando: I apologize for that. I just want to ask again on the JazzCash and MMBL. Now that you have these more operating independently, do you plan to also try to take some of the capabilities in that -- in those businesses and then maybe bring it to expand your fintech business in other markets? The other question is that when you look at the MAUs for JazzCash, it's about 20.6 million, I think, most recently. Your total telco subs are 72.7 million. So there's still a lot of room to actually convert just your existing subs into JazzCash or MMBL customers. So are there other strategies you have to sort of increase the penetration for that as well? Those are my 2 questions.
Muhterem Terzioglu: Vincent, I think you're spot on in terms of both organic and accelerated growth opportunities in this business. Now you need to keep in mind that Pakistan is still a frontier market where 4G penetration as well as smartphone penetration has certain limits in terms of the penetration capabilities. I translate those into upsides that are in front of us. So one of the key initiatives that you will see us focusing on in Pakistan is smartphone ownership. Affordable smartphones will be critical. And they will come up with, of course, their own embedded digital services on top of that. So we have quite a lot of appetite in this conversion. And I would like to make sure that everybody who is our customer is having access to the digital services, whether it be on financial services or entertainment or health care or education to have access to these platforms. So you're right. In addition to the growth that we see, I think the organic growth can accelerate, and that's the basis of the sustainable growth expectation we have from the marketplace really. Now with regard to our ability to leverage the competencies and the experiences that we built in Pakistan in other markets, absolutely. And that's why we are very excited about the growth potential in Bangladesh and potentially in Ukraine. And the know-how that we have in terms of risk managing a bank, first of all, but also having credit scoring engines fine-tuned for these type of nano loans, all these capabilities are applicable in all the markets. And of course, our intention is to make sure that we leverage these, just like our intention around making Uklon or Helsi, our health care platform or our ridesharing platform also be available through all the super apps we have in all the countries.
Vincent Fernando: Got it. Just one little quick follow-on on that. So Pakistan, I believe, has a digital bank licensing framework. But I guess under MMBL, you also have a license there. Do you -- is there value in you having one of those digital bank licenses? Or is it that you can actually operate -- you can have MMBL, I guess, operate on parts where you want more banking services, JazzCash and payments? Just want to understand if that's something that's part of the road map or maybe just not needed?
Muhterem Terzioglu: We operate currently under the microfinance banking license. However, I believe that we can do more and we can contribute more to the Cashless Economy Initiative of Prime Minister, that will require us to upgrade our license to a digital bank, full digital bank license, and we are in the process of looking for ways of achieving that sooner rather than later. I think the success story of JazzCash is very visible and recognized very strongly by the Pakistani government as well. They want the same. We want the same. And I think we will get to a level of much higher capabilities if we upgrade it to a full digital bank license, and we are working on it.
Operator: Our next question comes from Ali Zaidi with Inam.
Ali Zaidi: So my question is related to ride-hailing. We have seen that it already contributes -- it's like the third largest contributor to the digital revenue. So do you have any plans to like explore other markets for this business, specifically Pakistan considering recent exits of the major player in that country. Do you see a potential for like an entry and growth in this segment?
Muhterem Terzioglu: So Ali, the ride-hailing business is really -- when you look to the markets, it's a city-by-city operation. So currently, it operates in 28 cities, 27 of those cities are in Ukraine. One is in Tashkent in Uzbekistan. And we clearly have an ambition and appetite to grow this business in a certain priority list to other markets. Whether this will be starting from Kazakhstan or Pakistan or at the same time, we are working on different sort of initiatives, but it will be a city-by-city decisions as every city has different characteristics.
Operator: Our next question comes from Matthew Harrigan with The Benchmark Company.
Matthew Harrigan: I feel more confident in putting out a positive VEON preview than I do on T-Mobile or Comcast, which is -- I'm not sure whether that's good or bad from my perspective. But one thing that's interesting and clearly, the dynamics for you are different because you're such a market leader. But when you look at T-Mobile in the U.S., they have a very strong benefit from switching share relative, obviously, Verizon and AT&T to other large competitors that don't have as good a network, but still definitely big animals that they're wrestling with. And if you really assume that there's not a lot of growth in the U.S. mobile market, just by virtue of their switching share, they can continue to put up really, really nice numbers. And your -- that analysis, I guess, would be pertinent to you on the full gamut of apps that you're running as well as mobile. But are you such a market leader that anything that comes along with device innovation or any perceptions of network quality don't affect you that much because almost by definition, you're so much larger than your competitors that it's -- you almost definitionally have to erode a little bit? Or do you think that as you do get CES, you see -- and I know people are not buying iPhone 17 Pros in Pakistan very often. But do you feel like with switching share and device innovation and awareness of how powerful these apps are and how good it is to have the best mobile network when you're running these apps that it can help you? Or do you think that you're kind of largely a function that just really, really correlates with the overall market growth in mobile and the demand for the app? Sorry, a little long-winded there, but I'm sure you get the gist of it.
Muhterem Terzioglu: Matthew, I think the opportunity that in front of us is exciting from 2 perspectives, not only that we have the digital services, which are attractive to our customers, but also there are so many customers who are still not yet connected even. We're going to be having 90 million additional people who will be having access to 4G networks, who will be buying their first smartphones. And hopefully, those smartphones will be bought from us with our applications installed on them with their ability without having maybe a credit card that they can pay for the services for the games, for the videos for the channels that they need. And that's why I'm excited because, yes, we are big. We are -- except for Bangladesh, we are #1 in all the markets that we operate in. And in Bangladesh, we are #1 if you compare our entertainment platform and the other super apps that we have. And I truly believe that as our customers who have never touched yet any other service than calling somebody, and there are 40 million of them on our network. Those people will have a smartphone. They will have their first connection. They will watch their first movie online on mobile networks. And we are looking forward to those days and 40 million of them will be there to basically be our customers. That's why I believe the organic growth is an incredible opportunity. That's why I opened it with that slide. But the acceleration that will come through digital services will just be unmatchable as an opportunity for us to grab.
Matthew Harrigan: Okay. No, that's -- you're in a better position than having to fight to grab market share in a privileged position, but you kind of are the market growth. That's a good place to be.
Operator: [Operator Instructions] Our next question comes from Vincent Fernando with Zero One.
Vincent Fernando: There's a little lag, but I'm here. So I just want to double tap again on the fintech in Pakistan. You reported $23.8 million EBITDA for the third quarter. Are you able to give any color on maybe how much of that -- like where can we start to look at a run rate? Because you did $20.3 million in the second quarter, USD 23.8 million EBITDA in third quarter. I'm just trying to try to find a base for run rate. Is it relatively recurring in nature? I just want to understand that.
Muhterem Terzioglu: Yes. Our financial services business in Pakistan is actually quite a steady growth business. So over the last 6 quarters, every quarter, we have been seeing a continuous growth of 40% to 30% every single quarter. And looking into our future, I see no reason for this to go down. I think we'll continue keeping that lines. Clearly, the lending business has a balance sheet criteria in terms of growth. But currently, I feel comfortable with those.
Operator: We have no further questions at this time. I will now pass back to Anand Ramachandran for closing remarks.
Anand Ramachandran: Thank you. Thank you. Well, guys, thank you so much for dialing in as usual. Thank you so much for your support of VEON. As always, please e-mail us, call us here if you have any questions at all, and we'll continue talking. But till then until the next quarter, thank you, and bye-bye.
Muhterem Terzioglu: Thank you very much.
