Veon Suffers Currency Loss in Uzbekistan; Names New Finance Chief
Telecommunications firm Veon Ltd. ADR (VEON) said Friday that the devaluation of the Uzbek som versus the U.S. dollar will decrease net assets by $485 million, lower revenue and reduce free cash flow.
The Uzbek government said last week it would remove the currency peg against the dollar. It reset the official exchange rate at 8,100 Uzbek som per dollar, a devaluation of approximately 92%.
"As a result, Veon expects annualized decreases in revenues of $300 to $350 million," the Netherlands-based company said in a statement.
The impact represents approximately 3.5% of the group's revenue and approximately 5.5% of underlying earnings before interest, tax, depreciation and amortization. The net-debt-to-Ebitda ratio will immediately go up 0.1 times, Veon said. The company, which in February changed its name from VimpelCom Ltd., reports in dollars.
Due to the currency liberalization, Veon might be able to repatriate cash from Uzbekistan more effectively in the long run, the company said. Cash held by Unitel, its Uzbek subsidiary, is now valued at around $350 million.
Veon in a separate note said Chief Financial Officer Andrew Davies has decided to step down after four years. A spokesman said the resignation is not related to the currency loss.
Mr. Davies will be succeeded by Trond Westlie, former CFO of Danish shipping conglomerate A.P. Moeller-Maersk (AMKBY) and Norwegian telecommunications group Telenor ASA (TEL.OS).
Mr. Westlie will join Veon on Oct. 2 and assume his duties as CFO on Nov. 9. Mr. Davies will remain on the management team until year's end.
The currency loss comes after the company in August said revenue rose to $2.4 billion in the quarter ended June 30, compared with $2.2 billion in 2016. Ebitda rose to $931 million from $811 during the period.
In 2016, Veon agreed to pay $795 million to U.S. and Dutch regulators to settle allegations it violated the Foreign Corrupt Practices Act by bribing a government official in Uzbekistan.
Write to Nina Trentmann at Nina.Trentmann@wsj.com; @Nina_Trentmann
(END) Dow Jones Newswires
September 15, 2017 07:33 ET (11:33 GMT)