Q2 2026 VEON Ltd Earnings Call
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Speaker #1: Anand Ramachandran, you may begin.
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Speaker #2: Thank you, Lucy. Good morning and good afternoon to everyone joining us for VEON's second quarter results. We are the largest Nasdaq-listed company on Dubai, and we are taking this opportunity to host this call out of New York and are very pleased to be able to do that.
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Speaker #2: So we thank the people in the room who've joined us. Thank you for the people who've joined us on the webcast. My name is Anand Ramachandran, Chief Corporate Development Officer.
Speaker #2: Let me introduce management in the room. Next to me is Kaan Terzioglu, our Group CEO. Next to him, Burak Ozer, our Group CFO. As usual, Kaan will begin with a strategic and operational highlight, followed by Burak with a review of a financial performance, and we'll then open up the call for Q&A.
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Speaker #2: Before we begin, do note that today's presentation contains some forward-looking statements, involving risks and uncertainties, further details are available in our SEC filings, including our Form 20F.
Speaker #2: Our earnings release and presentation are also available on our investor relations website. With that, let me hand the call over to Kaan.
Speaker #3: Thank you, Anand. Good morning, everyone. So exciting to have you in the room here in New York and do this earnings release here. Beyond excellent financial results, this quarter marks another important milestone in VEON's transformation.
Speaker #3: We are becoming much more than a telecommunications company. Today, VEON is building one of the world's largest digital ecosystems across emerging markets. Combining connectivity, financial services, digital consumer platforms, and enterprise solutions, our telecom networks connect more than 150 million customers.
Speaker #3: Our digital platforms deepen those relationships every day. The result is stronger growth, stronger cash generation, and increasing shareholder returns. Most importantly, today's results give us the confidence to raise the outlook for the year.
Speaker #3: Let me explain how we think about VEON today. Everything begins with connectivity. Connectivity is not the destination. It is our foundation, it is our competitive advantage, it gives us scale, it gives us distribution edge, it gives us trust.
Speaker #3: And it gives us daily engagement with millions of customers. On top of that foundation, we have built three digital growth engines. Financial services, digital life, digital enterprise.
Speaker #3: They reinforce one another. Every new service strengthens the customer relationship. Customers stay longer. They spend more. They generate more data. Better data improves AI.
Speaker #3: Better AI creates better products. Better products create more cash. That cash allows us to invest again. That is the VEON flywheel. Once you understand the flywheel, results are much easier to understand.
Speaker #3: Growth is broad-based. Telecommunications continues to grow twice as fast compared to traditional players. Digital is growing substantially faster. Multiple times faster. Digital now contributes almost 27% of our total revenues.
Speaker #3: Cash generation continues to improve. Since August 24, we have already bought back 183 million dollars' worth of shares. Today, we are taking the next step.
Speaker #3: Starting with this year, we commit to canceling at least 100 million dollars of shares every year. Not as a one-time action. But as a sustainable capital allocation framework.
Speaker #3: I am particularly pleased with the consistency of our execution. That consistency is why we are raising our full-year guidance. A little color. Reported EBITDA growth was affected by three exceptional accounting items.
Speaker #3: Bangladesh benefited from a provision release last year. Profit comparisons include the Pakistan Tower transaction last year. And this year, it includes the non-cash fair value adjustment on Kyivstar Group warrants.
Speaker #3: If you adjust for these items, our underlying business is even stronger. Revenue grew 18%, EBITDA grew more than 15%, like-for-like earnings per share actually grew 88% year on year.
Speaker #3: This is the clearest measure of our true momentum. On the subject of consistency, Pakistan continues to deliver outstanding performance. Ukraine continues growing with extraordinary circumstances.
Speaker #3: Kazakhstan, Uzbekistan, and Bangladesh all delivered. This matters. It tells us that VEON operating model is becoming repeatable across markets. Only a few years ago, digital represented a relatively small part of VEON.
Speaker #3: Today, digital has become one of our main growth engines. Our digital platforms now reach more than 227 million customers. Importantly, all three digital businesses are profitable.
Speaker #1: You have joined the meeting as an attendee and will be muted throughout the meeting.
Speaker #2: Consistency, Pakistan, continues to deliver outstanding performance. Ukraine continues growing with extraordinary circumstances. Kazakhstan, Uzbekistan, and Bangladesh all delivered. This matters. It tells us that VEON operating model is becoming repeatable across markets.
Speaker #3: Financial services, digital life, digital enterprise. They scale efficiently, they require less capital, and they generate attractive returns. Digital revenues grew more than 53%. Digital EBITDA increased more than 66%.
Speaker #2: Only a few years ago, digital represented a relatively small part of VEON. Today, digital has become one of our main growth engines. Our digital platforms now reach more than 227 million customers.
Speaker #3: Digital is now generating profits and cash more than telecom business. Financial services best demonstrate how the flywheel works. We do not begin with lending.
Speaker #2: Importantly, all three digital businesses are profitable. Financial services, digital life, digital enterprise. They scale efficiently, they require less capital, and they generate attractive returns.
Speaker #3: We begin with engagement. Customers use payments every day. Daily engagement builds trust. Trust creates data. Data improves underwriting. Underwriting enables lending, insurance, and wealth management.
Speaker #2: Digital revenues grew more than 53%. Digital EBITDA increased more than 66%. Digital is now generating profits and cash, more than the telecom business. Financial services best demonstrate how the flywheel works.
Speaker #3: Pakistan demonstrates this model at scale. JazzCash has evolved from a payments application into a complete financial ecosystem. Our acquisition of TPL Insurance represents another important milestone in that journey.
Speaker #3: And our Mastercard partnership will accelerate AI-enabled financial products across every market. If there is one slide I hope you will remember. It is this one.
Speaker #2: We do not begin with lending. We begin with engagement. Customers use payments every day. Daily engagement builds trust. Trust creates data. Data improves underwriting.
Speaker #3: Connectivity brings customers. And digital deepens engagement. Engagement increases loyalty. Higher cash generation funds better products. Every turn of the wheel strengthens the next. That is why Multiplay customers already generate significantly higher value.
Speaker #2: Underwriting enables lending, insurance, and wealth management. Pakistan demonstrates this model at scale. JazzCash has evolved from a payments application into a complete financial ecosystem.
Speaker #2: Our acquisition of TPL Insurance represents another important milestone in that journey. And our Mastercard partnership will accelerate AI-enabled financial products across every market. If there is one slide I hope you will remember: it is this one.
Speaker #3: And why we believe we are still in the early chapters of the story. With that, I will hand over to Burak to take you through the financials in more detail.
Speaker #3: Burak?
Speaker #1: Thank you. In second quarter, revenue grew 17% to 1.27 billion dollars. With growth across all of our five markets. First half revenue also grew 17% to 2.47 billion dollars.
Speaker #2: Connectivity brings customers. And digital deepens engagement. Engagement increases loyalty. Higher cash generation funds better products. Every turn of the wheel strengthens the next. That is why multiplay customers already generate significantly higher value.
Speaker #2: 7.6% to 929 million dollars. Driven by disciplined pricing and rising customer engagement. Digital revenue grew 53.6%, reaching 342 million dollars. Reflecting broader adaptation across platforms and products.
Speaker #2: And why we believe we are still in the early chapters of the story. With that, I will hand over to Burak to take you through the financials in more detail.
Speaker #2: Plus our recent acquisitions. EBITDA reached 552 million dollars. Up 6.2%. At a 43.4% margin. First half EBITDA grew 11.5% to USD 1.07 billion dollars.
Speaker #2: Burak?
Speaker #3: Thank you. In the second quarter, revenue grew 17% to 1.27 billion dollars. With growth across all of our five markets. First half revenue also grew 17% to 2.47 billion dollars.
Speaker #2: Telecom and infrastructure EBITDA were 428 million dollars. Down 3.8%. At a 46.1% margin. SKU noted earlier, the year-on-year comparison reflects last year's Bangladesh provision release.
Speaker #3: 7.6% to $929 million, driven by disciplined pricing and rising customer engagement. Digital revenue grew 53.6%, reaching $342 million, reflecting broader adaptation across platforms and products.
Speaker #2: Digital EBITDA grew 66.2% to 123 million dollars. Digital is less capital intensive than telecom. And that's driving strong cash conversation as it scales. Profit and EPS for the period reflects 489 million dollars of gain on the Pakistan Tower sale in second quarter of last year.
Speaker #3: Plus our recent acquisitions. EBITDA reached 552 million dollars. Up 6.2%. At a 43.4% margin. First half EBITDA grew 11.5% to USD 1.07 billion dollars.
Speaker #2: And a 22 million dollar fair value loss on KGL warrants in this quarter. Cash generation was strong in the period. Operating cash flow rose 238% in the quarter.
Speaker #3: Telecom and infrastructure EBITDA was $428 million, down 3.8%, at a 46.1% margin. As noted earlier, the year-on-year comparison reflects last year's Bangladesh provision release.
Speaker #2: To 463 million dollars. And 51% for the first half to 860 million dollars. Equity free cash flow after leases and licenses grew 47.5% for the first half to 320 million dollars.
Speaker #3: Digital EBITDA grew 66.2% to 123 million dollars. Digital is less capital intensive than telecom. And that's driving strong cash conversation as it scales. Profit and EPS for the period reflects 489 million dollars of gain on the Pakistan tower sale in second quarter of last year.
Speaker #2: EFCF for the second quarter was impacted by prepayment of taxes in Pakistan that will not reoccur. Now turning the balance sheet and capital allocation.
Speaker #3: And a 22 million dollar fair value loss on KGL warrants in this quarter. Cash generation was strong in the period. Operating cash flow rose 238% in the quarter.
Speaker #2: We ended the quarter with 2.2 billion dollars in cash. Including 468 million dollars at headquarters. Net debt excluding leases was 1.8 billion with lease adjusted leverage at 1.1 times.
Speaker #3: To 463 million dollars. And 51% for the first half, to 860 million dollars. Equity free cash flow after leases and licenses grew 47.5% for the first half, to 320 million dollars.
Speaker #2: We completed a 1.4 billion dollar bond offering this quarter. Substantially addressing our 2027 maturities ahead of schedule and extending average headquarters debt maturity beyond four years.
Speaker #3: EFCF for the second quarter was impacted by prepayment of taxes in Pakistan that will not reoccur. Now turning the balance sheet and capital allocation.
Speaker #2: With that, I'll hand the call back to Kaan.
Speaker #1: Thank you, Burak. Let me
Speaker #3: Thank you, Burak. Let me return to capital allocation. Since August 24, we have bought back 183 million dollars of shares. We delivered exactly what we said we would.
Speaker #3: We ended the quarter with 2.2 billion dollars in cash. Including 468 million dollars at headquarters. Net debt excluding leases was 1.8 billion, with lease adjusted leverage at 1.1 times.
Speaker #3: Now we are institutionalizing that discipline, beginning this year we will cancel at least 100 million dollars of shares annually. Returning capital to shareholders is now part of our long-term financial framework.
Speaker #3: We completed a 1.4 billion dollar bond offering this quarter. Substantially addressing our 2027 maturities ahead of schedule and extending average headquarters debt maturity beyond 4 years.
Speaker #3: We are seeing strong execution. expected. Cash generation continues to strengthen. And as a result, we are increasing our guidance. Revenue growth is now expected to be 15 to 18%.
Speaker #3: With that, I'll hand the call back to Khan.
Speaker #4: Thank you, Burak.
Speaker #2: Let me thank you, Burak. Let me return to capital allocation. Since August 24, we have bought back $183 million of shares. We delivered exactly what we said we would.
Speaker #3: EBITDA growth is now expected to be 9 to 12%. Our capital expenditure outlook remains unchanged. These revisions reflect confidence in the underlying strength of our business.
Speaker #2: Now we are institutionalizing that discipline. Beginning this year, we will cancel at least $100 million of shares annually. Returning capital to shareholders is now part of our long-term financial framework.
Speaker #3: Looking ahead, please join us at our Capital Markets Day in New York on November 16. There we will present the next chapter of VEON's long-term strategy and value creation.
Speaker #2: We are seeing strong execution. Digital is scaling faster than expected. Cash generation continues to strengthen. As a result, we are increasing our guidance.
Speaker #3: Let me leave you with one thought. Connectivity provides the foundation. Digital creates the growth. And the flywheel generates the returns. Our second quarter results demonstrate that the strategy is working.
Speaker #2: Revenue growth is now expected to be 15 to 18%. EBITDA growth is now expected to be 9 to 12%. Our capital expenditure outlook remains unchanged.
Speaker #3: And I believe we are only at the beginning. Thank you very much. Operator, now we can take the questions.
Speaker #2: These revisions reflect confidence in the underlying strength of our business. Looking ahead, please join us at our Capital Markets Day in New York on November 16.
Speaker #4: May I Operator, may I suggest we start with questions in the room and then I'll probably queue in to queue you in to get questions from online attendees.
Speaker #2: There, we will present the next chapter of VEON's long-term strategy and value creation. Let me leave you with one thought: connectivity provides the foundation.
Speaker #5: Thank ank you.
Speaker #4: So if I may start. In the room, it would be great if you could put your hand up. There's a mic which will come around to you.
Speaker #4: If you could state your name, and your institution, and then your questions, that would be great. Tim?
Speaker #2: Digital creates the growth. And the flywheel generates the returns. Our second quarter results demonstrate that this strategy is working. And I believe we are only at the beginning.
Speaker #6: Always.
Speaker #5: Good morning.
Speaker #2: Jesse Sobelson with BTIG. The guidance increase, how much was currency and how much was organic and where are you specifically seeing outperformance versus original expectations?
Speaker #2: Thank you very much. Operator, now we can take the questions.
Speaker #1: May I operator, may I suggest we start with questions in the room and then I'll probably queue in to queue you in to get questions from online attendees.
Speaker #3: So as I mentioned, consistency was one of the key drivers. You may notice a little bit out of cycle results from Kazakhstan, but this is normal.
Speaker #1: So if I may start in the room, would be great if you could put your hand up. There's a mic which will come around to you if you could state your name and your institution and then your questions.
Speaker #3: And it is fundamentally due to the VAT regulations change in the country, which was a 6 percentage points increase. Now, the concept of how much of is the valuation, how much is performance, our business model is very simple.
Speaker #1: That would be great. Tim?
Speaker #4: Always.
Speaker #5: Good morning.
Speaker #1: Thanks.
Speaker #3: The way to do business in frontier markets, in emerging markets, relies on your ability to continuously in a disciplined way to adjust your prices with nominal GDP growth.
Speaker #5: Jesse Soberson with BTIG. The guidance increase: how much was currency and how much was organic? And where are you specifically seeing outperformance versus original expectations?
Speaker #3: And we rely on the fact that GDP and GDP growth is the best indicator of our wallet share success. Now, devaluation and inflation will converge in three, five, seven year cycles.
Speaker #2: So as I mentioned, consistency was one of the key drivers. You may notice a little bit out of cycle results from Kazakhstan, but this is normal.
Speaker #2: And it is fundamentally due to the VAT regulations change in the country, which was a 6 percentage point increase. Now, the concept of how much of it is the valuation, how much is performance—our business model is very simple.
Speaker #3: We are keeping our discipline on that front and currently we are expecting actually about 9.5% inflation in weighted average in our markets. This is up from 8%.
Speaker #2: The way to do business in frontier markets, in emerging markets, relies on your ability to continuously, in a disciplined way, adjust your prices with nominal GDP growth.
Speaker #3: And the overall devaluation is 3% less than what we have expected to happen.
Speaker #2: And we rely on the fact that GDP and GDP growth is the best indicator of our wallet share success. Now, devaluation and inflation will converge in 3, 5, 7 year cycles.
Speaker #2: From a currency perspective, the currency assumptions in Q1 versus Q2 did not change. So it was mainly organic. From a growth perspective.
Speaker #3: Yeah.
Speaker #1: Thanks.
Speaker #2: We are keeping our discipline on that front and currently we are expecting actually about 9.5% inflation in weighted average in our markets. This is up from 8%.
Speaker #5: I'm Vincent Fernando, from 01 Investment Research. So I just want to talk a bit about your financial services business. So I see that you've achieved about 45% year over year growth in the first half.
Speaker #5: What's the latest in terms of your regulatory kind of, I guess, development outlook? Particularly with Bangladesh. So maybe you could talk about the latest for Pakistan, which I know is much more mature.
Speaker #2: And the overall devaluation is 3% less than what we have expected to happen.
Speaker #3: From a currency perspective, the currency assumptions in Q1 versus Q2 did not change, so it was mainly organic from a growth perspective.
Speaker #5: Bangladesh and Ukraine, which is very early, but would you start to have an outlook for Ukraine maybe even when new licenses might be available, et cetera?
Speaker #2: Yeah.
Speaker #5: Thank you.
Speaker #3: So let me first of all give a little bit of a color our business. Our business is really doing extremely well in Pakistan. We have 60 million bank accounts on a monthly basis, 27 million active users of our platform, JazzCash.
Speaker #6: Vincent Fernandez from 01 Investment Research. I just want to talk a bit about your Financial Services business. I see that you've achieved about 45%.
Speaker #6: Your growth in the first half, what's the latest in terms of your regulatory kind of, I guess, development outlook? Particularly with Bangladesh. So it may be good to talk about the latest for Pakistan which I know is much more mature.
Speaker #3: We issue 225,000 nano loans every single day. We transact close to 16% of Pakistan's GDP. We have 1.6 million merchants on our network. We are a financial giant when it comes to the landscape.
Speaker #6: Bangladesh and Ukraine which is very early but we start to have an outlook for Ukraine maybe even when new licenses might be available, etc.
Speaker #3: And naturally, with that comes the responsibility to work hand in hand with the authorities, including finance ministry and central bank, to make sure that we are basically serving the people in the right levels.
Speaker #6: Thank you.
Speaker #2: So let me first of all give a little bit of a color our business. Our business is really doing extremely well in Pakistan. We have 60 million bank accounts on a monthly basis, 27 million active users of our platform JazzCash.
Speaker #3: I'm confident that the regulatory environment will also support us to expand our capacity to even grow our lending potential. We would actually this success, we believe, is quite repeatable in other markets, especially in Bangladesh and in Uzbekistan.
Speaker #2: We issue 225,000 nano loans every single day. We transact close to 16% of Pakistan's GDP. We have 1.6 million merchants on our network. We are a financial giant when it comes to the landscape.
Speaker #3: That's why we are working again with the new government of Bangladesh in terms of creating the right platform for us to launch which we will start with payment services and later on move into full scale a financial ecosystem in Bangladesh as well.
Speaker #2: And naturally, with that comes the responsibility to work hand in hand with the authorities, including the finance ministry and central bank, to make sure that we are basically serving the people at the right levels.
Speaker #3: And I expect that to happen in Q3. With regard to our operations in Uzbekistan, in order to accelerate deployment of similar services in all the countries, we are looking forward to getting necessary digital banking licenses in every single market we have.
Speaker #2: I'm confident that the regulatory environment will also support us to expand our capacity to even grow our lending potential. We would actually this success we believe is quite repeatable in other markets especially in Bangladesh and in Uzbekistan.
Speaker #3: We do have already payment solutions and digital wallets in Uzbekistan and Kazakhstan. And in Ukraine, we are looking for the regulatory environment to allow us also to proceed in the same direction.
Speaker #2: That's why we are working again with the new government of Bangladesh, in terms of creating the right platform for us to launch. We will start with payment services and later on move into a full-scale financial ecosystem in Bangladesh as well.
Speaker #1: Ukraine, is there enough opportunity of work likely back?
Speaker #5: To kind of have a halfway solution before you can have your own full license. Could you work with maybe a bank to have to start building a financial services?
Speaker #2: And I expect that to happen in Q3. With regard to our operations in Uzbekistan, in order to accelerate deployment of similar services in all the countries, we are looking forward to getting necessary digital banking licenses in every single market we have.
Speaker #3: It's early it's early to give you a clear answer on that, but clearly we will be looking for every possible business model in terms of how we can serve our customers the way they deserve the service.
Speaker #2: We already have payment solutions and digital wallets in Uzbekistan and Kazakhstan. In Ukraine, we are looking for the regulatory environment to allow us to proceed in the same direction.
Speaker #3: Thank you.
Speaker #5: Thank you. Tim Horan, Oppenheimer.
Speaker #4: In Ukraine, is there enough opportunity for work likewise?
Speaker #2: You have a great relationship with SpaceX and Starlink. Could you just describe that relationship, how it's evolving? Also, how's the quality of the service that they're providing to you?
Speaker #2: To kind of have a halfway
Speaker #6: ...solution before you can have your own full license. Could you work with maybe a bank to start building a financial services?
Speaker #2: And how do you think that changes that connectivity, changes these value-added services over time based on the fact that we're going to have connectivity almost everywhere?
Speaker #2: It's an early it's early to give you a clear answer on that but clearly we will be looking for every possible business model in terms of how we can serve our customers the way they deserve the service.
Speaker #3: As I mentioned, connectivity is the foundation. It's our competitive advantage. And there is no excuse for it is not to be available. It has to be ubiquitous.
Speaker #2: Thank you.
Speaker #3: It has to be affordable, accessible. Because all our business model relies on that connectivity in the digital services part. Now, if you assess the situation in different countries, we operate in emerging markets in frontier markets, in Ukraine there's an ongoing war going on.
Speaker #6: Oh, thank you. Tim Horan Oppenheimer. You have a great relationship with SpaceX and Starlink. Could you just describe that relationship, how it's evolving? Also, how's the quality of the service that they're providing to you?
Speaker #3: And there are cases where our infrastructure, terrestrial infrastructure, may not be accessible due to landmines. It might be on the front line. There might be energy outages.
Speaker #6: And how do you think that connectivity changes these value-added services over time, based on the fact that we're going to have connectivity almost everywhere?
Speaker #3: And in those cases, we have observed that it is essential to integrate our terrestrial network with the satellite platforms. And that's exactly what we did.
Speaker #2: As I mentioned, connectivity is the foundation. It's our competitive advantage. And there is no excuse for it not to be available. It has to be ubiquitous.
Speaker #3: As of last quarter, more than 6 million people utilize the capabilities of connecting their smartphones without any other additional equipment directly to satellites. And utilize messaging and light data services.
Speaker #2: It has to be affordable, accessible, because all our business model relies on that connectivity in the digital services part. Now, if you assess the situation in different countries, we operate in emerging markets and frontier markets.
Speaker #3: This is remarkable because if you think about it, this allows us to be relevant to our customers literally every single minute in a day.
Speaker #2: In Ukraine, there's an ongoing war. There are cases where our infrastructure, terrestrial infrastructure, may not be accessible due to landmines. It might be on the front line.
Speaker #3: And also it gives us the advantage that being a trusted partner when it comes to connectivity. We are expanding these capabilities to other markets to Kazakhstan, to Bangladesh.
Speaker #2: There might be energy outages, and in those cases, we have observed that it is essential to integrate our terrestrial network with the satellite platforms.
Speaker #3: We do not see Starlink as a substitution. We are complementary to each other. And we are naturally in our markets, in sovereign countries, with sovereign regulations, protected in a way to keep our license and our technical responsibilities in each country to serve the populations in a safe and secure manner.
Speaker #2: And that's exactly what we did. As of last quarter, more than 6 million people utilize the capabilities of connecting their smartphones without any other additional equipment directly to satellites.
Speaker #2: And utilize messaging and light data services. This is remarkable because, if you think about it, this allows us to be relevant to our customers literally every single minute of the day.
Speaker #3: I look forward to extending our partnership with Starlink but also clearly there is going to be many other alternatives. And we will do our best to make sure that our customers are always connected.
Speaker #2: And also it gives us the advantage that being a trusted partner when it comes to connectivity. We are expanding these capabilities to other markets.
Speaker #3: So that they can always do financial services on our platforms. They can always do access marketplaces, healthcare services, education services, entertainment services, if they are our customers on connectivity side.
Speaker #2: To Kazakhstan, to Bangladesh. We do not see Starlink as a substitution; we are complementary to each other. And we are naturally in our markets, in sovereign countries with sovereign regulations, protected in a way to keep our license and our technical responsibilities in each country to serve the populations in a safe and secure manner.
Speaker #2: So I know you've had texts for a little while. That sounded like it was working well. How's the data connectivity going? And related to that too, do you have an exclusivity for a period of time with them?
Speaker #2: I look forward to extending our partnership with Starlink but also clearly there is going to be many other alternatives. And we will do our best to make sure that our customers are always connected so that they can always do financial services on our platforms.
Speaker #3: First, in terms of quality, we have initiated the light data services in Ukraine. And we are optimizing certain applications and such is also here our CEO in Ukraine.
Speaker #3: And those applications are optimized in a way that they can function in this light data environment. We do not have exclusivity. I do not believe in exclusivities.
Speaker #2: They can always do access marketplaces, healthcare services, education services, entertainment services, if they are our customers on connectivity side.
Speaker #3: Customers have the exclusivity to select their telecom operators when it is necessary.
Speaker #6: So I know you've had texts for a little while. That sounded like it was working well. How's the data connectivity going? And, related to that too, do you have an exclusivity for a period of time with them?
Speaker #2: Thank you.
Speaker #2: First, in terms of quality, we have initiated the light data services in Ukraine. And we are optimizing certain applications and such is also here our CEO in Ukraine.
Speaker #4: I don't see any other questions in the room. So operator, shall we pass to the online attendees for their questions?
Speaker #6: Thank you. For those of you in the Zoom webinar, if you'd like to ask a question, please click on the raise hand button on the bottom of your screen.
Speaker #2: And those applications are optimized in a way that they can function in this light data environment. We do not have exclusivity. I do not believe in exclusivities.
Speaker #6: When is your turn to ask a question, you will see receive a prompt to be promoted as a panelist. Please accept wait a moment and once you have been introduced, you may unmute yourself, turn your video on, and ask your question.
Speaker #2: Customers have the exclusivity to select their telecom operators when it is necessary.
Speaker #6: Written questions can be submitted on the webcast by using the ask a question tab at the top right of your screen. Our first question comes from Nicholas Patton with Edison Group.
Speaker #6: Thank you.
Speaker #7: I don't see any other questions in the room. So, operator, shall we pass to the online attendees for their questions?
Speaker #6: Please turn on your video and mute yourself and ask your question.
Speaker #8: Thank you. For those of you in the Zoom webinar, if you'd like to ask a question, please click on the raise hand button on the bottom of your screen.
Speaker #2: Nicholas, you might be on mute.
Speaker #8: When it is your turn to ask a question, you will see receive a prompt to be promoted as a panelist. Please accept wait a moment and once you have been introduced, you may unmute yourself, turn your video on, and ask your question.
Speaker #6: Nicholas, please turn on your camera.
Speaker #2: My apologies. Can you hear me now?
Speaker #3: Yes, we can.
Speaker #2: Excellent. Thank you. A couple of questions. So the first one on the guidance. I'm struck by how much the guidance has changed since the full year 25 numbers.
Speaker #8: Written questions can be submitted on the webcast by using the "Ask a Question" tab at the top right of your screen. Our first question comes from Nicholas Patton with Edison Group.
Speaker #2: So at the low end of the guidance, full year 25, we're at 9%. We're now at 18% for the top end of the guidance for second quarter.
Speaker #8: Please turn on your video, mute yourself, and ask your question.
Speaker #2: And on EBITDA, we've gone from 5 at the low end to now 12 at the top end. Can you just run us through briefly the key drivers of that change?
Speaker #2: Nicholas, you might be on mute.
Speaker #2: And I guess the question from investors is, what makes you so sure that you can achieve those numbers now when you were unsure you couldn't achieve those numbers at the top end of the scale at the full year 25 numbers?
Speaker #8: Nicholas, please turn on your phone.
Speaker #3: My apologies. Can you hear me now? Excellent. Thank you. A couple of questions. So the first one on the guidance. I'm struck by how much the guidance has changed since the full year 25 numbers.
Speaker #2: And the second question is regarding the new businesses. I mean, the numbers are I'm going to hate myself for saying this, but they really are an impressive set of numbers.
Speaker #3: So, at the low end of the guidance for full year '25, we're at 9%. We're now at 18% for the top end of the guidance for the second quarter.
Speaker #3: And on EBITDA, we've gone from $5 million at the low end to now $12 million at the top end. Can you just run us through briefly the key drivers of that change?
Speaker #2: And the digital businesses have been growing like crazy. But when you look at the digital businesses, let's say 3 to 5 years in time, are you still able to leverage the capital returns that come from the established fixed asset base?
Speaker #3: And I guess the question from investors is, what makes you so sure that you can achieve those numbers now when you were unsure you couldn't achieve those numbers at the top end of the scale at the full year 25 numbers?
Speaker #2: Or do you have to invest more in the fixed asset base? And how do those returns on capital change between the core telecom business and the digital business?
Speaker #2: Let's say in 3 to 5 years time. And I'm reminded of your answer, Kaan. I think it was on the first quarter and maybe it was the full year numbers.
Speaker #3: And the second question is regarding the new businesses. I mean, the numbers are I'm going to hate myself for saying this, but they really are an impressive set of numbers.
Speaker #2: When you went through the difference between the digital and the core telecom returns on capital, I thought that was a very interesting and instructive answer.
Speaker #3: And the digital businesses have been growing like crazy. But when you look at the digital businesses, let's say three to five years in time, are you still able to leverage the capital returns that come from the established fixed asset base or do you have to invest more in the fixed asset base?
Speaker #2: So I'd be interested to hear an update on that and to hear how you think those capital returns change through time. Thank you.
Speaker #3: Nicholas, thank you very much. Actually, you are absolutely right. I wish we could have been more precise to quarters ago. But flywheel is working.
Speaker #3: And how do those returns on capital change between the core telecom business and the digital business, let's say in three to five years' time?
Speaker #3: And flywheel is working better than we expected. And as you have rightly pointed in your second part of your question, it is growing. It is growing 50, 60% year on year.
Speaker #3: And I'm reminded of your answer, Khan. I think it was on the first quarter. Maybe it was the full year numbers. When you went through the difference between the digital and the core telecom returns on capital, I thought that was a very interesting and instructive answer.
Speaker #3: And it is beyond what we have expected. But it's not only about the top line growth. The EBITDA growth of digital services is also above our expectations, significantly above.
Speaker #3: So I'd be interested to hear an update on that and to hear how you think those capital returns change through time. Thank you.
Speaker #3: Actually, EBITDA grew 66%. So the margin on the digital services is expanding as well. So those two things combined, gives us the confidence to raise our guidance.
Speaker #2: Nicholas, thank you very much. Actually, you are absolutely right. I wish we could have been more precise to quarters ago. But flywheel is working.
Speaker #3: And I think what we see, it's a sustainable business model. We are systematically seeing that more customers are embracing our solutions. And we still have room to sustain this growth.
Speaker #2: And Flywheel is working better than we expected. And, as you rightly pointed out in the second part of your question, it is growing—it's growing 50 to 60 percent year on year.
Speaker #3: When it comes to cash generative capacity, now, our original business idea a year ago when I talked with you that the digital services would deliver a margin of 20 to 25%.
Speaker #2: And it is beyond what we have expected. But now, it's not only about the top-line growth. The EBITDA growth of digital services is also above our expectations, significantly above.
Speaker #2: Actually, EBITDA grew 66%. So the margin on the digital services is expanding as well. So those two things combined give us the confidence to raise our guidance.
Speaker #3: We are at 36%. And digital services has a capex to revenue ratio of 7%. Now, 36 minus 7 makes 29. On the foundation side, we do have a margin of 45%.
Speaker #2: And I think what we see, it's a sustainable business model. We are systematically seeing that more customers are embracing our solutions. And we still have room to sustain this growth.
Speaker #3: And 20% goes to capex. And you end up with 25. So actually, that's why I'm saying the digital services cash generation capacity has exceeded our expectations as a business model a year ago, which I am very happy to see.
Speaker #2: When it comes to cash generative capacity—now, our original business idea a year ago, when I talked with you, was that the digital services would deliver a margin of 20 to 25 percent.
Speaker #3: Having said that, please don't forget, foundation is our competitive edge. And we will not stop investing in that. And we will keep investing in where it is necessary, just like in Pakistan.
Speaker #2: We are at 36%. And digital services has a capex to revenue ratio of 7%. Now, 36 minus 7 makes 29. On the foundation side, we do have a margin of 45% and 20% goes to capex.
Speaker #3: We have recently bought some spectrum. We are now lighting up the spectrum for 4G, extended 4G, and 5G. We will do exactly the same in other markets.
Speaker #2: And you end up with 25. So actually, that's why I'm saying the digital services cash generation capacity has exceeded our expectations as a business model a year ago, which I am very happy to see.
Speaker #3: But the balance of our growth coming from digital will slowly actually put us in a better position in terms of cash generation capacity. And I'm happy that it is happening faster than we expected.
Speaker #2: Having said that, please don't forget, foundation is our competitive edge. And we will not stop investing in that. And we will keep investing in where it is necessary, just like in Pakistan.
Speaker #3: Apologize that expectation was not spot on two quarters ago, but I think we are on the right side of that equation.
Speaker #1: Kaan, if I may just add on to that. At the end of first quarter, I think we pointed out that we wanted to see how the macro impact of what was happening in the Middle East and oil prices weighed in on operations.
Speaker #2: We have recently bought some spectrum. We are now lighting up the spectrum for 4G, extended 4G, and 5G. We will do exactly the same in other markets.
Speaker #1: So we admit the very clear point of therefore, our holding on EBITDA just to get better clarity on how things evolved. And clearly sitting here today, it's pleasing to see that they've turned out better than we thought, not just on the margin side, but also on the revenue side.
Speaker #2: But the balance of our growth coming from digital will slowly actually put us in a better position in terms of cash generation capacity. And I'm happy that it is happening faster than we expected.
Speaker #1: So I think that's also the additional fact that I wanted to point out that leads to where we are today relative to year end.
Speaker #2: I apologize that the expectation was not spot on two quarters ago, but I think we are on the right side of that equation.
Speaker #2: And last, on your capex question, whether we will spend more in the future, yes, but the capex ratio will not go over 7% with the growth in revenue accelerating.
Speaker #4: Khan, if I may just add on to that. At the end of the first quarter, I think we pointed out that we wanted to see how the macro impact of what was happening in the Middle East and oil prices weighed in on operations.
Speaker #2: So definitely we'll stay with the same capex ratios on our digital businesses. Sorry, just to follow up, is 7% capex to sales for the digital businesses in isolation?
Speaker #4: So, we admit the very clear point of, therefore, our holding on EBITDA, just to get better clarity on how things evolved. And clearly, sitting here today, it's pleasing to see that they've turned out better than we thought—not just on the margin side, but also on the revenue side.
Speaker #3: Yes, that's today what we spent.
Speaker #2: Yeah, but you're saying that it won't go above that in the future either?
Speaker #3: Yes, because of the growth in the revenue projections. I actually would expect it to decline, in a way. Yeah.
Speaker #4: So I think that's also the additional fact that I wanted to point out that leads to where we are today relative to year end.
Speaker #2: And last, on your CapEx question—whether we will spend more in the future—yes, but the CapEx ratio will not go over 7%, with the growth in revenue accelerating.
Speaker #1: And business is evolving. And I think the message is we're very pleased with the momentum of the business. Business is evolving. Margins are turning out better than where we expected.
Speaker #1: The flywheel as Kaan pointed out is working and working incredibly well. And we take it as we go along. But as things stand, as Burak pointed out, we expect this business to continue to generate pretty material cash.
Speaker #2: So definitely we'll stay with the same COPEX ratios on our digital businesses.
Speaker #3: Sorry, just to follow up, is 7% COPEX to sales for the digital businesses in isolation?
Speaker #1: And as the business grows, hopefully, we continue and see it progressing in the same direction.
Speaker #2: Yes, that's what we spent today.
Speaker #3: Yeah, but you're saying that it won't go above that in the future either?
Speaker #2: Makes sense. Thank you, guys.
Speaker #2: Yes, because of the growth in the revenue projections. I actually would expect it to decline, in a way. Yeah.
Speaker #3: Thank you, Nicholas.
Speaker #4: Thank you. Our next question comes from Adrian Cundy with Emerging and Frontier Capital. You may now unmute your audio, turn on your video, and ask your question.
Speaker #4: And business is evolving. And I think the message is we're very pleased to the momentum of the business. Business is evolving. Margins are turning out better than where we expected.
Speaker #5: Good morning, Kaan, Burak, Anand. It's good to see you and congratulations on delivering again this quarter. I have two questions. One about just sort of your use of headquarter liquidity going forward, given that you've really turned the corner on the debt restructuring.
Speaker #4: The flywheel, as Khan pointed out, is working and working incredibly well. And we take it as we go along. But as things stand, as Burak pointed out, we expect this business to continue to generate pretty material cash.
Speaker #4: And as the business grows, hopefully we continue and see it progressing in the same direction.
Speaker #5: And that you've moved into a positive free cash flow to equity profile. Nearly a billion dollars of cash at the headquarters. And no major repayments until it's out beyond what you're upstreaming till '31, '33.
Speaker #3: Makes sense. Thank you, guys.
Speaker #2: Thank you, Nicholas.
Speaker #1: Thank you. Our next question comes from the Adrian Kundy with Emerging and Frontier Capital. You may now unmute your audio, turn on your video, and ask your question.
Speaker #5: Good morning, Khan, Burak, Anand. It's good to see you, and congratulations on delivering again this quarter. I have two questions. One about your use of headquarter liquidity going forward, given that you've really turned the corner on the debt restructuring.
Speaker #5: Can we sort of expect further reinvestment of that cash into any of the key countries? Particularly if it needs to capitalize digital bank or do you think you can continue to grow those the opcos with their domestic cash flows?
Speaker #5: And M&A, broadly, is that now new markets that are keeping an eye on, given that you have dry powder at the headquarters? That's my first question.
Speaker #5: And that you've moved into a positive free cash flow to equity profile. Nearly a billion dollars of cash at the headquarters. And no major repayments until it's out beyond what your upstreaming till '31, '33.
Speaker #5: My second question comes down to sort of the coming back to the capital capex intensity. And thank you for the 7% number just now.
Speaker #5: Can we expect further reinvestment of that cash into any of the key countries, particularly if it needs to capitalize digital banks, or do you think you can continue to grow those OpCos with their domestic cash flows?
Speaker #5: 5G launching in Pakistan, Uzbekistan talking about significant investment in 5G post the sale of Mobius. 40% of sales by 2030 something is I saw a headline.
Speaker #5: And M&A, broadly, is that now new markets that you are keeping an eye on, given that you have dry powder at the headquarters? That's my first question.
Speaker #5: Kazakhstan, obviously, Bangladesh will come. And then is Starlink. What did a relative margins look like between a Starlink data ARPU versus a terrestrial ARPU on 5G?
Speaker #5: My second question comes down to sort of the coming back to the capital capex intensity. And thank you for the 7% number just now.
Speaker #5: Which is more profitable? And what do you sort of see the balance of? And where will you be focusing your 5G investment? And are you confident that you can continue extended 4G early stage 5G and high density areas at the current capex sales ratios?
Speaker #5: 5G launching in Pakistan, Uzbekistan talking about significant investment in 5G post the sale of Mobius. 40% of sales by 2030 something is I saw a headline.
Speaker #3: Adrian, let me first start with the part about M&A. We are extremely disciplined when it comes to decisions about growing through inorganic means. Now, naturally, there are very accretive in-market consolidation opportunities that we will always be looking after.
Speaker #5: Kazakhstan, obviously. Bangladesh will come. And then, is Starlink. What do the relative margins look like between a Starlink data ARPU versus a terrestrial ARPU on 5G?
Speaker #5: Which is more profitable? And what do you see as the balance of that? Where will you be focusing your 5G investment? Are you confident that you can continue to extend 4G, early-stage 5G, and high-density areas at the current capex-to-sales ratios?
Speaker #3: But I truly believe that our stock price at today, trading at 3.5 times EBITDA, is not at the level that we would be looking into acquisitions at a broad level.
Speaker #3: And I will keep that discipline very, very strong over the next couple of years. So that's number one. But of course, in-market consolidation, naturally accretive synergies, these are things that we will be in the market continuously.
Speaker #2: Adrian, let me first start with the part about M&A. We are extremely disciplined when it comes to decisions about growing through inorganic means. Now, naturally, there are very accretive in-market consolidation opportunities that we will always be looking after.
Speaker #3: Now, you ask about the profitability of Starlink versus our other networks, terrestrial networks. If you look to the cost of producing mobile data, we are terrestrial networks in terms of deployment of towers, equipment, et cetera.
Speaker #2: But I truly believe that our stock price today, trading at 3.5 times EBITDA, is not at the level at which we would be looking into acquisitions at a broad level.
Speaker #2: And I will keep that discipline very, very strong over the next couple of years. So that's number one. But, of course, in-market consolidation, naturally accretive synergies—these are things that we will be in the market for continuously.
Speaker #3: Versus having access to satellite connectivity. And let me give you an example in Kazakhstan. Kazakhstan, the size of Kazakhstan is probably bigger than the entire United States and 20 million people live there.
Speaker #3: If I would try to deliver license requirements just in railways and roads based on terrestrial networks, it would cost me a fortune. So I do not see actually cost differentials or additional cost when it comes to access to satellite platforms.
Speaker #2: Now, you ask about the profitability of Starlink versus our other networks, terrestrial networks. If you look at the cost of producing mobile data, we are terrestrial networks in terms of deployment of towers, equipment, etc.
Speaker #3: I consider it actually quite reasonable when it comes to comparing the connectivity versus terrestrial connectivity. Having said that, this is networks, fiber networks with satellites.
Speaker #2: versus having access to satellite connectivity. And let me give you an example in Kazakhstan. Kazakhstan, the size of Kazakhstan is probably bigger than the entire United States and 20 million people live there.
Speaker #3: It's complementing it when it is needed. And I think with that regard, the utility value to the customers definitely is much higher than the cost of the technology brings.
Speaker #2: If I would try to deliver license requirements just in railways networks, it would cost me a fortune. So I do not see actually cost differentials or additional cost when it comes to access to satellite platforms.
Speaker #5: And just to add to that, as Kaan said during the presentation, we will definitely use cash for shareholder return. On top of that, he just mentioned the M&A opportunities that we have in order to grow our business for in-market consolidation.
Speaker #2: I consider it actually quite reasonable when it comes to comparing the cost of satellite connectivity versus terrestrial connectivity. Having said that, this is not about substituting terrestrial networks or fiber networks with satellites.
Speaker #5: And maybe on the fintech side, in priority. Last but not least, we will be addressing some higher cost debt that is sitting on the balance sheet today.
Speaker #5: To make sure that we kind of balance the cost to debt ratio there in terms of interest expenses. Okay. Thank you very much.
Speaker #2: It's complementing it when it is needed. And I think, in that regard, the utility value to the customers definitely is much higher than the cost that the technology brings.
Speaker #4: Thank you. And next question will come from Matthew Harrigan with Benchmark Stone X. Please unmute and ask your question.
Speaker #6: And just to add to that, as Khan said during the presentation, we will definitely use cash for shareholder return. On top of that, he just mentioned the M&A opportunities that we have in order to grow our business for in-market consolidation.
Speaker #6: Great. Thank you. Firstly, when you look at the digital side and you clearly your market leader in some areas where there's very substantial TAM, witnessed in other markets, and you can see a really nice growth curve, all the way around.
Speaker #6: And maybe on the fintech side, in priority. Last but not least, we will be addressing some higher-cost debt that is sitting on the balance sheet today.
Speaker #6: But you're also involved on the LLM side as a critical player, working with Google, Gemma, and Costco, clearly. How do you see the utility of LLM models developing for your frontier markets?
Speaker #6: To make sure that we kind of balance the cost-to-debt ratio there, in terms of interest expenses.
Speaker #5: Okay. Thank you very much. Thank you.
Speaker #1: Thank you. Our next question will come from Matthew Harrigan with Benchmark StoneX. Please unmute and ask your question.
Speaker #6: And are they eventually monetizable in concert with your partners? And then secondly, clearly, in some other markets, you'd be trading it people would be talking about targets of five times EV to sales rather than five times EV to EBITDA.
Speaker #7: Great. Thank you. Firstly, when you look at the digital side I mean, clearly, you're a market leader. In some areas where there's very substantial TAM, witnessed in other markets.
Speaker #7: And you can see a really nice growth curve all the way around. But you're also involved on the LLM side as a critical player, working with Google, Gemma, and Costco, clearly.
Speaker #6: But when you think about valuation without giving out a number, I mean, clearly, Pakistan is one of the cheaper markets in the world. I mean, even relative to the Morgan Stanley MSCI frontier markets basket.
Speaker #7: How do you see the utility of LLM models developing for your frontier markets? And are they eventually monetizable in concert with your partners? And then secondly, clearly, in some other markets, you'd be trading it people would be talking about targets of five times EV to sales, rather than five times EV to EBITDA.
Speaker #6: But how do you feel about valuation in terms of I mean, should people be doing 10-year models rather than five-year models? I mean, growth rates relative to GDP.
Speaker #6: I mean, do you think you get a fundamental re-rating of Pakistan or clearly Ukraine? I mean, if that starts trading like Poland, you've got an immediate pop in Keystar.
Speaker #6: But just kind of playing in a capital markets professor, just any thoughts you had on valuation without trying to say, well, I know you're not going to say what you think your stock is worth.
Speaker #7: But when you think about valuation without giving out a number, I mean, clearly, Pakistan is one of the cheaper markets in the world. I mean, even relative to the Morgan Stanley MSCI Frontier Markets basket.
Speaker #6: Thank you. And congratulations on the results and the guidance.
Speaker #3: Yeah. Thank you, Matthew. Let me start with the second question you asked because clearly, we will be this year doing more than half a billion dollar of sales and maybe I'm on the low side giving this number.
Speaker #7: But how do you feel about valuation, in terms of— I mean, should people be doing 10-year models rather than 5-year models? I mean, growth rates relative to GDP.
Speaker #3: In Pakistan alone, on financial services, and if you look to the benchmarks, financial services, businesses of this nature, is just about to be IPO'd for seven, 7.5 times the revenues, not EBITDA.
Speaker #7: I mean, do you think you get a fundamental rerating of Pakistan or clearly Ukraine? I mean, if that starts trading like Poland, you've got an immediate pop in Keystar.
Speaker #3: So clearly, this excites me a lot because it shows the value that we are creating in the marketplace. And now Pakistan is a $2 billion run rate business for us.
Speaker #7: But just kind of playing in a capital markets professor, just any thoughts you had on valuation without trying to say, oh, I know you're not going to say what you think your stock is worth.
Speaker #7: Thank you, and congratulations on the result and the guidance.
Speaker #3: And among that, about half a billion coming from financial services shows the potential of the country. 250 million people and 20 million outside of Pakistan.
Speaker #2: Yeah, thank you, Matthew. Let me start with the second question you asked, because clearly we will be, this year, doing more than half a billion dollars of sales—and maybe I'm on the low side, giving this number.
Speaker #3: I think it's a unique market. We are blessed to be given the chance to serve Pakistani around the world. And we will continue investing.
Speaker #2: In Pakistan alone, on financial services, and if you look to the benchmarks, financial services businesses of this nature are just about to be IPO'd for 7 to 7.5 times the revenues—not EBITDA.
Speaker #3: And I think the question you asked, whether the valuations will reflect that markets always get it right. And I'm confident in that. So time will show it.
Speaker #2: So clearly, this excites me a lot because it shows the value that we are creating in the marketplace. And now Pakistan is a $2 billion run-rate business for us.
Speaker #3: Now, looking to the first question you asked, AI. I was reading today the CEO of Oredo making a very relevant comment. He says, I am seeing AI everywhere, except for P&L.
Speaker #2: And among that, about half a billion coming from financial services shows the potential of the country. 250 million people and 20 million outside of Pakistan.
Speaker #3: But in reality, there is, I believe, a fundamental reality, we have to focus on. Value proposition, right? A company exists because it proposes a value to the customer.
Speaker #2: I think it's a unique market. We are blessed to be given the chance to serve Pakistanis around the world, and we will continue investing.
Speaker #3: Customers matter still. The old type telecom companies, what is their value proposition? Number of minutes, number of SMSs, number of gigabytes. A digital operator, the transformation we have been going through for three, four years now, sells meaningful digital services.
Speaker #2: And I think the question you asked, whether the valuations will reflect that, markets always get it right. And I'm confident in that. So time will show it.
Speaker #2: Now, looking to the first question you asked, AI. I was reading today—the CEO of Oredo made a very relevant comment. He said, "I am seeing AI everywhere, except for P&L."
Speaker #3: It's not enough. AI will change this as well. We will be providing customers an intelligence platform. And I don't like to talk about this super intelligence, quantum this and that.
Speaker #2: But in reality, there is, I believe, a fundamental reality we have to focus on—value proposition, right? A company exists because it proposes a value to the customer.
Speaker #3: It's simple. We provide customers a chance to become superheroes, a doctor, a better doctor, a teacher, a better teacher. A farmer, a more productive farmer, a small business owner to be more efficient.
Speaker #2: Customers still matter. The old-type telecom companies—what is their value proposition? Number of minutes, number of SMSs, number of gigabytes. A digital operator, the transformation we have been going through for three, four years now, sells meaningful digital services.
Speaker #3: And a value proposition, like a better version of yourself. For $2 a month, for 50 cents a transaction. I think is unbeatable. And that's where we are heading.
Speaker #2: It's not enough. AI will change this as well. We will be providing customers with an intelligence platform. And I don't like to talk about this super intelligence, quantum, this and that.
Speaker #3: And that's our AI strategy. It will be all about sovereign LLMs. It will be all about embedding AI into our super apps, which has more than 65 million users today.
Speaker #2: It's simple. We provide customers a chance to become superheroes, a doctor, a better doctor, a teacher, a better teacher. A farmer, a more productive farmer, a small business owner to be more efficient.
Speaker #3: We do not have a problem of customer acquisition cost. We have a speed to market bringing these LLMs at the fingertips of 600 million people.
Speaker #3: And I see a huge revenue potential. And we are working with every single country. In our portfolio, developing these LLMs. I believe developing sovereign LLMs is by itself a business, but developing data inference capacity for the customers is another business.
Speaker #2: And a value proposition, like a better version of yourself, for $2 a month or 50 cents a transaction, I think is unbeatable. And that's where we are heading.
Speaker #2: And that's our AI strategy. It will be all about sovereign LLMs. It will be all about embedding AI into our super apps, which has more than 65 million users today.
Speaker #3: And those are the things that we are working on today.
Speaker #5: If I could add, Kaan, I think Matt as you're aware, Kaan mentioned 182 million dollars of stock bought back to date. So I think that's a very clear indication of management's perception of the stock being significantly undervalued.
Speaker #2: We do not have a problem with customer acquisition cost. We have a speed-to-market issue, bringing these LLMs to the fingertips of 600 million people.
Speaker #2: And I see a huge revenue potential. And we are working with every single country, in our portfolio, developing these LLMs. I believe developing sovereign LLMs is by itself a business.
Speaker #5: Today, we've again announced we are going to cancel minimum 100 million dollars of stock per year. So this is the velocity with free cash flow as we generate that should be the clearest indication reflection of what we think about the stock price.
Speaker #2: But developing data inference capacity for the customers is another business, and those are the things that we are working on today.
Speaker #5: Clearly, you're the expert. You're doing your own numbers as Kaan mentioned. There are comparables out there. But from our perspective, to generate that cash and use it to basically reflect in what is a very undervalued stock and therefore buying it back is probably the clearest signal that we can provide in the market.
Speaker #5: If I could add, Kan, I think Matt, as you're aware, Kan mentioned 182 million dollars of stock bought back to date. So I think that's a very clear indication of management's perception of the stock being significantly undervalued.
Speaker #5: And that we'll continue to do.
Speaker #6: Let's complex and on. Very much look forward to your capital markets day. Should be interesting.
Speaker #5: Today, we've again announced we're going to cancel a minimum of $100 million of stock per year. So this is the velocity with free cash flow as we generate, and that should be the clearest indication, a reflection of what we think about the stock price.
Speaker #2: Thank you.
Speaker #3: Looking forward to seeing you there, Matthew.
Speaker #2: Apologies. Thank you. Our next question comes from Max Findlay with Rothschild & Co. Please unmute and ask your question.
Speaker #7: Hi, all. Thank you for speaking to us today. And my questions are more focused on performance within your different markets. So Bangladesh feels like it's split between a continuingly tough telco market, but you're managing to offset this with some impressive digital performance and cost performance as well.
Speaker #5: Clearly, you're the expert. You're doing your own numbers, as Kan mentioned. There are comparables out there. But from our perspective, to generate that cash and use it to basically reflect in what is a very undervalued stock—and therefore buying it back—is probably the clearest signal that we can provide in the market.
Speaker #7: So first on the telco performance, Telenor was very cautious about recovering the market, but both Grameen Phones and your operational KPIs look to be heading in the right direction.
Speaker #5: And that will continue to do.
Speaker #7: Thanks, Kan. Thanks, Anand. Very much look forward to your Capital Markets Day. Should be interesting.
Speaker #7: And your EBITDA margin stabilized quarter on quarter. And I think expanded year on year view exclude a one-off from last year. So it'd be interesting to get your thoughts on how recovery proceeds from there.
Speaker #3: Thank you.
Speaker #2: Looking forward to seeing you there, Matthew.
Speaker #3: Apologies. Thank you. Our next question comes from Max Finley with Rothschild & Co. Please unmute and ask your question.
Speaker #6: Hi, all. Thank you for speaking to us today. My questions are more focused on performance within your different markets. Bangladesh feels like it's split between a continually tough telco market, but you're managing to offset this with some impressive digital performance and cost performance as well.
Speaker #7: Secondly, relating to Bangladesh, digital grew there. About 12 million dollars in absolute terms. Can you provide some color on what contribution came from holding the rights to the World Cup?
Speaker #7: And what we should expect from this in Q3? And kind of broader expectations about the fintech business, which you hope to get live in the second half of the year.
Speaker #6: So first, on the telco performance, Telenor was very cautious about recovering the market, but both Grameenphone's and your operational KPIs look to be heading in the right direction.
Speaker #7: And then a final question on Kazakhstan. There was obviously a very difficult quarter there with performance deteriorating sequentially from Q1. The strategy change there, as I understand, was to target higher value customers and to do this by bundling services.
Speaker #6: And your EBITDA margin stabilized quarter-on-quarter, and I think expanded year-on-year as well, excluding a one-off from last year. So it would be interesting to get your thoughts on how recovery proceeds from there.
Speaker #7: But local currency ARPU fell one and a half percent year on year. And margins have dropped by 7% year over year in Q1 and nearly 9% this quarter.
Speaker #6: Secondly, relating to Bangladesh, digital grew there. About 12 million dollars in absolute terms. Can you provide some color on what contribution came from holding the rights to the World Cup?
Speaker #7: So I guess the question is, is this shift in customer strategy working? And what can we expect in terms of margin recovery in the near term?
Speaker #6: And what should we expect from this in Q3? And, kind of, broader expectations about the fintech business, which you hope to get live in the second half of the year?
Speaker #7: Thank you very much.
Speaker #3: Thank you, Max. Let me start with Bangladesh. Clearly, I'm happy to see the stabilization of the market. And we have been consistently growing the last three quarters, year on year.
Speaker #6: And then a final question on Kazakhstan. It was obviously a very difficult quarter there with performance deteriorating, sequentially from Q1. The strategy change there, as I understand, was to target higher value customers and to do this by bundling services.
Speaker #3: And this quarter is an interesting one because I think it shows the potential of the country. There has been significant energy outages in Bangladesh in April and May.
Speaker #6: But local currency ARPU fell one and a half percent year on year. And margins have dropped by 7% year over year in Q1 and nearly 9% this quarter.
Speaker #3: To the level that the entire country has reduced its data consumption by 15%. Now, in an emerging market, you would expect data consumption to go up 40% year on year.
Speaker #6: So I guess the question is, is this shift in customer strategy working? And what can we expect in terms of margin recovery in the near term?
Speaker #3: This happened because of energy outages. And practically because of the humus trade crisis, oil being not available in certain places. So despite this, we managed to grow our business.
Speaker #6: Thank you very much.
Speaker #2: Thank you, Max. Let me start with Bangladesh. Clearly, I'm happy to see the stabilization of the market. And we have been consistently growing the last three quarters, year on year.
Speaker #3: But what really excites me in Bangladesh, we broke all records. And I was talking with Google executives recently. They said, we have never seen such a thing like this.
Speaker #2: And this quarter is an interesting one because I think it shows the potential of the country. There has been significant energy outages in Bangladesh in April and May.
Speaker #3: In World Cup, in terms of broadcasting the games to Bangladeshi population. In and outside of Bangladesh. I was actually yesterday at a restaurant and I met a Bangladeshi guy and the moment I said, do you know Banglalink and Toffee?
Speaker #2: To the level that the entire country has reduced its data consumption by 15%. Now, in an emerging market, you would expect data consumption to go up 40% year on year.
Speaker #3: He said, yes, I watched all the games from Toffee at $5 rather than 20. So it is good to see that we are even getting in New York some attention.
Speaker #2: This happened because of energy outages, and practically because of the humus trade crisis—oil not being available in certain places. So despite this, we managed to grow our business.
Speaker #3: But in terms of the monetization potential of digital services, the growth you see there is thanks to World Cup. And I think I congratulate United Cup that I have seen.
Speaker #2: But what really excites me in Bangladesh, we broke all records. And I was talking with Google executives recently. They said, we have never seen such a thing like this in World Cup, in terms of broadcasting the games to Bangladeshi population.
Speaker #3: But it also had a major impact in Bangladesh. And we are very happy to see that. And I'm more positive than other players in the market in terms of the progress and development of Bangladesh.
Speaker #2: In and outside of Bangladesh. I was actually yesterday at a restaurant, and I met a Bangladeshi guy and the moment I said, do you know Banglalink?
Speaker #2: And Toffee, he said, yes, I watched all the games from Toffee at $5 rather than $20. So it is good to see that we are even getting some attention in New York.
Speaker #3: I think when the energy stabilization also normalizes, we will see higher growth rates from the country. Now, coming to Kazakhstan. There are a couple of things that we need to keep in increased.
Speaker #2: But in terms of the monetization potential of digital services, the growth you see there is thanks to the World Cup. And I think I congratulate the United States.
Speaker #3: 6%. And this is a significant change and we were not able to adjust this to the pricing. Normally, we are better in doing this.
Speaker #2: I think they run the best World Cup that I have seen. But it also had a major impact in Bangladesh. And we are very happy to see that.
Speaker #3: But in this particular case, 6% disappeared from top line. And you can imagine the impact of that to the EBITDA. The second important issue is we have a model of bundling smartphones into family packages.
Speaker #2: And I'm more positive than other players in the market in terms of the progress and development of Bangladesh. I think when the energy stabilization also normalizes, we will see higher growth rates from the country.
Speaker #3: It's a great idea. But it also has a temporary fluctuation in the marginality because of the day way it is accounted for. So those two important dynamics had an impact.
Speaker #2: Now, coming to Kazakhstan, there are a couple of things that we need to keep in mind. First of all, VAT rates have increased, right?
Speaker #3: I'm not concerned. Kazakhstan is the most advanced digitally aligned market that we have in our portfolio. And we are actually doing quite well despite the fact that we are providing 4G advanced services in Kazakhstan.
Speaker #2: Six percent. And this is a significant change, and we were not able to adjust this to the pricing. Normally, we are better in doing this, but in this particular case, six percent disappeared from the top line.
Speaker #2: And you can imagine the impact of that to the EBITDA. The second important issue is we have a model of bundling smartphones into family packages.
Speaker #3: We have a unique advantage in terms of customer satisfaction and net promoter scores. So overall, I see the Kazakhstan as a temporary issue in terms of margin erosion.
Speaker #2: It's a great idea, but it also has a temporary fluctuation in the marginality because of the way it is accounted for. So, those two important dynamics had an impact.
Speaker #3: But I'm sure that Kazakh market will prove itself to be an extremely dynamic and successful market as the time passes this year.
Speaker #2: I'm not concerned. Kazakhstan is the most advanced digitally aligned market that we have in our portfolio. And we are actually doing quite well despite the fact that we are providing 4G advanced services in Kazakhstan.
Speaker #5: And just to add on top, the Bangladesh, the on top of the World Cup, there was a pricing adjustment we did year over year for our services.
Speaker #5: That also impacted the revenue growth.
Speaker #1: Good. So I think just to complete that, digital is 13%. The World Cup health at 13%, but it's not as if we're going to call that a one-off.
Speaker #2: We have a unique advantage in terms of customer satisfaction and net promoter scores. So overall, I see the Kazakhstan as a temporary issue in terms of margin erosion.
Speaker #1: I mean, the flywheels in motion, there's a lot of other things. So we are hoping for that momentum to kind of continue to sustain itself.
Speaker #3: You know, there are countries which love cricket, like Pakistan. There are countries which like football, like Bangladesh. And every Bangladeshi is either a Brazilian fan or an Argentine fan.
Speaker #2: But I'm sure that Kazakh market will prove itself to be an extremely dynamic and successful market as the time passes this year.
Speaker #3: You can go to during the World Cup time, the country is full of Argentine and Brazil flags. So it was good that Argentina made to the last final game for us.
Speaker #5: And just to add on top, in Bangladesh, on top of the World Cup, there was a pricing adjustment we did year over year for our services.
Speaker #5: That also impacted the revenue growth.
Speaker #4: Okay. So I think just to complete that, digital is 13%. The World Cup health at 13%, but it's not as if we're going to call that a one-off.
Speaker #7: Thanks, guys. It's a shame there's no more Tartan Army supporters in Bangladesh. But we live and hope. Just coming back on the EBITDA margin point on Kazakhstan.
Speaker #4: I mean, these flywheels in motion, there's a lot of other things. So we are hoping for that momentum to kind of continue to sustain itself.
Speaker #7: I mean, is this margin depressed at the moment because you're bundling it in with low margin equipment revenues? So you don't expect further deterioration, but the kind of margins stay around the kind of 40, 45% kind of range where they've been Q1, Q2.
Speaker #2: You know, there are countries which love cricket, like Pakistan. There are countries which like football, like Bangladesh. And every Bangladeshi is either a Brazilian fan or an Argentine fan.
Speaker #2: You can go to during the World Cup time, the country is full of Argentine and Brazil flags. So it was good that Argentine made to the last final game for us.
Speaker #7: Is that the right way to interpret that?
Speaker #3: Max, first of all, let me correct one thing. We do not subsidize equipment. So it's not a matter of margin delusion because of subsidies of equipment.
Speaker #3: It is a matter of revenue recognition, which recognizes some of that margin in the previous quarters. Rather than this quarter, it's a cyclical movement of the volumes of business having the impact because the way the service and equipment integration into packages results in different type of an accounting procedure.
Speaker #6: Thanks, guys. It's a shame there's no more Tartan Army supporters in Bangladesh. But we live and hope. Just coming back on the EBITDA margin point on Kazakhstan, I mean, is this margin depressed at the moment because you're bundling it in with low margin equipment revenues?
Speaker #6: So you don't expect further deterioration, but the kind of margins stay around the kind of 40, 45% kind of range where they've been Q1, Q2.
Speaker #7: Bram, thank you.
Speaker #5: So in simple terms, in simple terms, we recognize equipment revenue upfront. And the higher margin service revenue gets recognized over the term. Therefore, as the business grows, we recognize more lower margin revenue upfront.
Speaker #6: Is that the right way to interpret that?
Speaker #2: Max, first of all, let me correct one thing. We do not subsidize equipment. So it's not a matter of margin dilution because of subsidies of equipment.
Speaker #2: It is a matter of revenue recognition, which recognizes some of that margin in the previous quarters rather than this quarter. It's a cyclical movement of the volumes of business having the impact, because the way the service and equipment integration into packages results in a different type of accounting procedure.
Speaker #5: And that's the success. That's actually success of business growing. That we recognize more lower margin revenue upfront. And then the higher margin service revenue will come in time.
Speaker #3: And this combined with the 6% VAT impact, you can understand where we are.
Speaker #7: Bram, very clear. Thank you. Thank you both.
Speaker #2: Our next question comes from Ahmed Mostafa with Inam. Please unmute, turn on your video, and ask your question.
Speaker #6: Bram. Thank you.
Speaker #5: So in simple terms, in simple terms, we recognize equipment revenue upfront. And the higher margin service revenue gets recognized over the term. Therefore, as the business grows, we recognize more lower margin revenue upfront.
Speaker #6: Hello everyone. Thanks for the presentation. Two questions from my side. First, digital EBITDA margin reached 36 this quarter. So what are the main levers and medium-term milestones for further margin expansion?
Speaker #5: And that's the success. That's actually success of business growing. That we recognize more lower margin revenue upfront. And then the higher margin service revenue will come in time.
Speaker #6: And second, which markets still have the most headroom to increase multiply penetration?
Speaker #2: And this, combined with the 6% VAT impact, you can understand where we are.
Speaker #3: Thank you. Thank you for the question. Now, let me answer it this way. There are markets already where number of digital service customers have exceeded number of our telecom customers.
Speaker #6: Bram, very clear. Thank you. Thank you both.
Speaker #1: Our next question comes from Ahmed Mustafa with Enam. Please unmute, turn on your video, and ask your question.
Speaker #7: Hello, everyone. Thanks for the presentation. Two questions from my side. First, digital EBITDA margin reached 36% this quarter. So, what are the main levers and medium-term milestones for further margin expansion?
Speaker #3: And when I look to advanced markets, especially the Pakistan being the highest, I think we are getting close to 38% of our revenues coming from financial and digital services.
Speaker #3: And this is just a quantitative because as we bring the right services to each market on financial services side entertainment side, healthcare, education, and AI services, I think we are going to see a constant increase.
Speaker #7: And second, which markets still have the most headroom to increase multiproduct penetration?
Speaker #2: Thank you. Thank you for the question. Now, let me answer it this way. There are markets already where number of digital service customers have exceeded number of our telecom customers.
Speaker #3: Our multiplay customer base was raised this quarter about 4.5%, which is actually the healthy trend that we would like to continue. The biggest upside that I see in this space is still Bangladesh.
Speaker #2: And when I look to advanced markets, especially Pakistan being the highest, I think we are getting close to 38% of our revenues coming from financial and digital services.
Speaker #3: And this is related to smartphone penetration in the country. There is an interesting metric that I want to share with you. If you look to GSMA reports for the five countries that we operate in, there's a 500, 30 million people lives.
Speaker #2: And this is just a quantitative ative because as we bring the right services to each market on financial services side entertainment side, healthcare, education, and AI services, I think we are going to see a constant increase.
Speaker #3: Number of people connected to internet is 288 million. Number of digital service customers we have is 228 million people. So basically, six out of 10 people whoever gets connected to internet is our customers already.
Speaker #2: Our multiplay customer base was raised this quarter by about 4.5%, which is actually the healthy trend that we would like to continue. The biggest upside that I see in this space is still Bangladesh.
Speaker #3: One way or the other. Now, we need to push for equal inclusion for woman on smartphone ownership. That's our number one priority. And that will mean that we have to work hand in hand with the governments and equipment producers to increase the smartphone penetration and especially on female population.
Speaker #2: And this is related to smartphone penetration in the country. There is an interesting metric that I want to share with you. If you look at GSMA reports, for the five countries that we operate in, there are about 530 million people living there.
Speaker #2: Number of people connected to internet is 288 million. Number of digital service customers we have is 228 million people. So basically, six out of 10 people whoever gets connected to internet is our customers already.
Speaker #6: Thank you. Thank you.
Speaker #3: Thank you.
Speaker #2: Our next question comes from Jake Ng with New Street Research. Please unmute your audio, turn on your video, and ask your question.
Speaker #2: One way or the other. Now, we need to push for equal inclusion for women in smartphone ownership. That's our number one priority. And that will mean we have to work hand in hand with the government and equipment producers to increase smartphone penetration, especially among the female population.
Speaker #3: Jake, you're on mute.
Speaker #5: Yes. Hi. Sorry. Hi. This is Jake. So I understand that beyond currently as a global framework agreement with Starlink and no Starlink is present in Ukraine, you guys are working with them in Kazakhstan and Bangladesh already.
Speaker #5: Is there a possibility of us seeing this in Pakistan and Uzbekistan as well? Just this.
Speaker #7: Thank you. Thank you.
Speaker #2: Thank you.
Speaker #3: Thanks, Jake. I assume Chris is on vacation already. So please pass my regards to him and tell him both you and him invited to the capital markets day.
Speaker #1: Our next question comes from Jake Ng with New Street Research. Please unmute your audio, turn on your video, and ask your question.
Speaker #3: The answer is yes, as long as the governments allows us to. So there are quite a number of regulations to get to this point.
Speaker #2: Jake, you are unmute.
Speaker #5: Yes. Hi, sorry. Hi, this is Jake. So I understand that Dion Carly has a global framework agreement with Starlink, and I know Starlink is present in Ukraine. You guys are working with them in Kazakhstan and Bangladesh already.
Speaker #3: And it takes a while to show the governments that this is an essential need for the populations. I think there should be no country in the world which would not be integrating their terrestrial networks with satellite platforms.
Speaker #5: Is there a possibility of us seeing this in Pakistan and Uzbekistan as well? Just this.
Speaker #3: And we should not consider this as a threat. This is a responsibility for the populations. And actually, I wish the regulatory environments would be forcing every single regulator operator to do this.
Speaker #2: Thanks, Jake. I assume Chris is on vacation already. So please pass my regards to him and tell him both you and him invited to the capital markets day.
Speaker #3: We are doing ourselves. And we are working with all the countries regulators to also demonstrate the value of doing this.
Speaker #2: The answer is yes, as long as the government allows us to. So, there are quite a number of regulations to get to this point.
Speaker #5: And on top, our contractual terms do give us benefits as we add on more countries with Starlink. Is it possible to elaborate on any of these benefits you ou mentioned?
Speaker #2: And it takes a while to show the government that this is an essential need for the populations. I think there should be no country in the world which would not be integrating their terrestrial networks with satellite platforms.
Speaker #3: I suggest we keep the commercial details to ourselves. Thanks a lot for the question. But I don't think we can share that.
Speaker #2: And we should not consider this as a threat. This is a responsibility for the populations. And actually, I wish the regulatory environments would be forcing every single regulator or operator to do this.
Speaker #5: Okay. Thank you.
Speaker #2: Thank you. Our next question will come from Ali Zaidi with Inam. Please unmute, turn on your video, and ask your question.
Speaker #2: We are doing ourselves. And we are working with all the countries regulators to also demonstrate the value of doing this.
Speaker #4: Hi everybody. Thank you so much for the opportunity. I just have one question. So you have called out that there is a high energy cost in Pakistan.
Speaker #5: And on top of that, our contractual terms do give us benefits as we add on more countries with Starlink. Is it possible to elaborate on any of these benefits you mentioned?
Speaker #4: And there are also energy-related disruptions in Bangladesh as well. So in Ukraine, you responded to that kind of problem. Like by buying the generation, directly.
Speaker #4: So is it something you would consider in Pakistan and Bangladesh as well?
Speaker #2: I suggest we keep the commercial details to ourselves. Thanks a lot for the question. But I don't think we can share that.
Speaker #3: Good question. Of course, in Ukraine, we have a stronger appetite to deploy capital in terms of this type of investments. In other markets, we are looking for alternative methods.
Speaker #5: Okay. Thank you.
Speaker #1: Thank you. Our next question will come from Ali Zaidi with Enam. Please unmute, turn on your video, and ask your question.
Speaker #8: Hi, everybody. Thank you so much for the opportunity. I just have one question. So, you have called out that there is a high energy cost in Pakistan.
Speaker #3: Actually, deploying solar farms only works if there is a strong grid distributing the energy in the country. And both in Bangladesh and Pakistan, the grid infrastructure is not at the level that we can do the same playbook.
Speaker #8: And there are also Bangladesh as well. So in Ukraine, you responded to that kind of problem like by buying the generation directly. So is it something you would consider in Pakistan and Bangladesh as well?
Speaker #3: Having said that, more and more, there are site-based technologies that could allow us to do solar and wind generation for the specific sites. Actually, last year, we have deployed one of those sites in Kazakhstan, at a very remote location, which still works in a perfect manner.
Speaker #2: Good question. Of course, in Ukraine, we have a stronger appetite to deploy capital in terms of this type of investment. In other markets, we are looking for alternative methods.
Speaker #3: So we will be looking for those. There are already projects in place, especially in Pakistan, to solarize some of our sites. Giving very encouraging results.
Speaker #2: Actually, deploying solar farms only works if there is a strong grid distributing the energy in the country. And both in Bangladesh and Pakistan, the grid infrastructure is not at the level that we can do the same playbook.
Speaker #4: Thank you so much.
Speaker #3: Thank you.
Speaker #2: Thanks. And last question comes from Theodore O'Neill with Litchfield Hills. Please unmute and ask your question.
Speaker #2: Having said that, more and more, there are site-based technologies that could allow us to do solar and wind generation for the specific sites. Actually, last year, we deployed one of those sites in Kazakhstan at a very remote location, which still works in a perfect manner.
Speaker #1: Thank you very much. Congratulations on the quarter. I'm looking over the results for the quarter. And I'm struck by the fact that country by country, you've got with the exception of Bangladesh for reasons you already mentioned, you've got double-digit growth in revenue in dollars.
Speaker #2: So, we will be looking for those. There are already projects in place, especially in Pakistan, to solarize some of our sites, giving very encouraging results.
Speaker #1: But the mobile customer numbers are essentially unchanged. At some point, do you need to see those mobile customer numbers go up? Or is it partly what you just talked about too?
Speaker #8: Thank you so much.
Speaker #2: Thank you.
Speaker #1: It was the female population. You're trying to address.
Speaker #1: Thanks. And last question comes from Theodore O'Neill with Litchfield Hills. Please unmute and ask your question.
Speaker #3: Yes. So first of all, we are focused on the flywheel that I described. How much of that customers are multi-play customers versus just an M2M SIM card or practically customers who are only using our voice services.
Speaker #4: Thank you very much. Congratulations on the quarter. I'm looking over the results for the quarter, and I'm struck by the fact that, country by country—with the exception of Bangladesh, for reasons you already mentioned—you've got double-digit growth in revenue in dollars.
Speaker #3: And we are very satisfied with that evolution overall. In our markets, there is still a challenge, especially when it comes to Pakistan and Bangladesh, which are big populations.
Speaker #4: But the mobile customer numbers are essentially unchanged. At some point, do you need to see those mobile customer numbers go up? Or is it partly what you just talked about, too, with the female population?
Speaker #3: In terms of smartphone availability, so our ability to make smartphones affordable and accessible and also penetrating into markets which there is very low smartphone ownership, especially the women, I think is a critical success factor.
Speaker #4: That you're trying to address.
Speaker #2: Yes. So first of all, we are focused on the flywheel that I described. How much of that customers are multiplay customers versus just an M2M SIM card or practically customers who are only using our voice services.
Speaker #3: And of course, we have programs to address those. But you will only see that growth picking up in the way that we want with regard to multi-play customer base if we can grow the penetration of smartphones in the markets.
Speaker #2: And we are very satisfied with that evolution overall. In our markets, there is still a challenge, especially when it comes to Pakistan and Bangladesh, which are big populations, in terms of smartphone availability.
Speaker #1: Thank you. We'll see you November 16th.
Speaker #3: Thank you.
Speaker #2: Thank you. We have no further questions at this time. I'll now hand back to Anand Ramachandran for closing remarks.
Speaker #2: So our ability to make smartphones affordable and accessible and also penetrating into markets which there is very low smartphone ownership, especially the women, I think is a critical success factor.
Speaker #4: Thank you so much. I'd probably make a last call for any follow-up questions in the room. I don't see any. So with that, guys, thank you very much for your time and attention.
Speaker #2: And of course, we have programs to address those. But you will only see that growth picking up in the way that we want, with regard to multiplay customer base, if we can grow the penetration of smartphones in the markets.
Speaker #4: As Khan said, we will have the capital markets day in November. And obviously, the third quarter results before that. Thank you very much for your attention and support to VEON.
Speaker #4: We'll keep talking. But see you as a part of this group again next quarter. Thank you so much.
Speaker #4: Thank you. We'll see you on November 16th.
Speaker #2: Thank you.
Speaker #1: Thank you. We have no further questions at this time. I'll now hand back to Anand Ramachandran for closing remarks.
Speaker #8: Thank you so much. I'll probably make a last call for any follow-up questions in the room. I don't see any. So with that, guys, thank you very much for your time and attention.
Speaker #8: As Khan said, we will have the Capital Markets Day in November, and, obviously, the third quarter results before that. Thank you very much for your attention and support to VEON.
Speaker #8: We'll keep talking. But see you as a part of this group again next quarter. Thank you so much.
Speaker #2: Thank you. Thanks a lot.
