VEON Ltd. (VEON) Earnings Call Transcript & Summary

[Audio Gap] results presentation for the period ended 31 December 2021. I'm Nik Kershaw, VEON's Group Director of Investor Relations. I'm pleased to be joined in the room today by Kaan Terzioglu, our Group CEO; as well as Serkan Okandan, our group CFO, and Alex Bolis, Head of Corporate Strategy as well as Investor Relations. Today's presentation will begin with an operational overview from Kaan, followed by a financial review from Serkan. Then Kaan will come back and close. As always, we will ensure that there is ample time for your questions, but we would ask that you save these for the end of the presentation. Before getting started, I would like to remind you that we may make forward-looking statements during today's presentation, which involve certain risks and uncertainties. These statements relate in part to the company's anticipated performance and operational guidance, future market developments and trends, operational and network development and network investments and the company's ability to realize its targets and commercial and strategic initiatives, including current and future transactions. Certain factors may cause actual results to differ materially from those in the forward-looking statements, including the risks detailed in the company's annual report on Form 20-F and other recent public filings made by the company with the SEC. The earnings release and the presentation, each of which includes reconciliations of non-IFRS financial measures presented today can be downloaded from our website. With that, let me hand over to Kaan.

Thank you, Nik. Good morning to all, and welcome to the presentation of our fourth quarter and full year results for 2021. Before we start reviewing our performance, allow me to say a few words on the recent escalation of conflict between Russia and Ukraine, 2 out of the 9 markets we currently serve. It is heartbreaking and deeply unsettling to see 2 countries with such profound [ times ] of conflict. I would like to say that our thoughts and prayers are with everyone affected by the current situation. This is a very sad time for all and our top priority is the safety and security of our employees and their families. At the same time, our teams are making every effort to ensure service continuity as communication is even a more essential need than ever in these extreme situations. With this on top of our minds, it is important to point out that our company is currently supported by a cash position of $2.3 billion, by a further USD 1.5 billion of undrawn committed bank lines. We will continue to ensure at all times an ample liquidity position to cover all the operational and financial requirements [indiscernible]. Let us now review 2021. This has been a strong year for VEON across our key markets and key market performance indicators. Group revenue grew 10.1% year-on-year on a local currency basis, closing above our high single-digit values. EBITDA was up 8.9% in local currency, supported by our focus on value and good cost control and above our minimum 8% guidance. CapEx intensity closed at 23.4 percentage points, within our guidance range and 1.2 percentage points lower than prior year. In reported currency, revenues were up 6.8% and EBITDA was up 5.7%, supported by our disciplined inflationary pricing and effective hedging policies. In terms of quarterly performance, we delivered now 3 quarters of double-digit revenue growth, closing Q4 at 11.1 percentage local currency growth in top line and 9.5 percentage [ year-over-year ]. In reported currency, this performance corresponds to 12.2% for revenues and 10.6% for EBITDA [indiscernible]. Importantly, our performance improved throughout the year, positioning us well for the medium term. Moving on to Slide 6. The main driver of these results have been the progress in our digital operator strategy, enabled by our 4G investments and the expansion of digital services in adjacent markets. Over the past 12 months, our 4G users increased by 30%, reaching 97 million customers. We now serve nearly 1 out of 2 customers with 4G services, up from just below 40% 4G penetration of our subscriber base 1 year ago. Over the past 2 years, we have increased our 4G penetration from 28% of our subscriber base to 48%. This gives us confidence that we are on track towards our 70% 4G penetration aspiration in the medium term. Our 1-month active Double and Multiplay 4G customers reached 61.3 million at the end of '21 with a growth rate of 32% year-on-year. In 2021, these customers generated nearly 60% of our subscriber revenues. In line with this, our combined data and digital revenues increased from 18.2% in local currency terms. Slide 7. Looking at the Q4 performance of each of our operations, you can see here the summaries. We reported encouraging results across all our operating companies. We reported solid top line performance in all the markets with double-digit local currency growth in 5 countries. EBITDA trends were also positive across all operations. Our group revenue growth was driven by all countries as each country reached a healthy growth momentum in '21. Most notably, in Russia, our turnaround made good progress. Let me now talk about this on the next slide. In Q4, Beeline Russia recorded total revenue growth of 7.7%, service revenue growth of 6.6%, mobile service revenue growth of 6% and EBITDA growth of 4.3%. This means 4 consecutive quarters of total revenue growth and 3 consecutive quarters of growth in service revenues -- mobilized service revenues and EBITDA. What is more encouraging is the upward trajectory within the quarter. In the month of December, Beeline Russia's mobile service revenues were up 7.1% year-on-year. The operational foundation for this growth is our 4G user base, which grew to 25.5 million at the end of the quarter with a year-over-year growth rate of 13%. 4G users now account for 55% of our total customers in Russia, improving Net Promoter Scores, higher ARPU and lower churn. Our brand renewal, widening B2B portfolio, growth in digital services and strong partnerships have contributed to this performance. With these results, we consolidated our position as a strong #3 player in the market. Let's continue with Ukraine. Over the past few years, Kyivstar delivered consistent growth quarter after quarter, and the final quarter of 2021 was no exception. We reported 12.5% growth in revenues, 8.7% in EBITDA in Q4. For the full year, revenues increased 14.3% and EBITDA is up 13.1%. This financial performance has been supported by the consistent price in 4G penetration across our base. We added 2.8 million 4G subscribers year-on-year and nearly 5 million over the past 2 years corresponding to 68% growth since the end of 2019. In 2021, we added 3,400 4G sites to our network, enabling the growth of 4G customers and executing our strategy of 4G for all, not 5G for few. Kyivstar has strong profitability, infrastructure leadership, growing convergent services and a very strong brand. And it has been recognized as the best employer of Ukraine. I would like to again thank all our employees there for their exceptional team strength and dedication in these highly challenging times. God be with you. On Slide 10, we look to Pakistan. Jazz grew 13.7% in revenue and 14.8% in EBITDA. These results were enabled by a 40% increase in our 4G subscribers. 4G penetration has now reached 48% in our customer base. Our digital services are another important contributor to customer loyalty, engagement and value generation. Our fintech service, JazzCash continued to grow in 2021 and reached 15.2 million monthly active users, up 25% year-on-year. The ARPU of JazzCash customers who also use JazzCash is higher than the ARPU of an average Jazz user by more than 40%. Our entertainment application, Tamasha was launched in October in 2021, building on Jazz TV and offering TV streaming and video-on-demand services. Tamasha's multi-active users reached 1.2 million at the end of the year with 72% growth over Jazz TV users by the end of 2020. In Q4, total watch time of Tamasha users was 4x the total watch time of Jazz TV users in 2020. As we flagged during the recent Investor Day in December last year, Pakistan is a land of digital opportunities. Next slide, Kazakhstan. Following the unrest in January, we were glad to see the quick return to stability in the country. The recently held Foreign Investors' Council meeting, chaired by President Tokayev, demonstrated the government's commitment to maintaining a reliable, predictable and fair environment for investors. Our industry can contribute significantly to the sustainable growth of Kazakhstan through digital fusion and Beeline Kazakhstan continued to work in this direction in Q4. Our mobile and fixed network expansion continued at a steady pace, including rural areas. We connected 644 remote communities across Kazakhstan, improving the livelihoods of more than 800,000 people. What is particularly important is that the progress on this coverage in cooperation with our competitors sharing our network infrastructure as we connect remote settlements. Together, we can use resources responsibly and efficiently, while reducing the combined carbon footprint for our industry. The digital services that we are building on top of this connectivity layer support bridging the digital devices in Kazakhstan. With a strong focus on 4G and digital services, our revenues in Q4 were up 21.1% and 22.6% for the full year. We have now reached 64% penetration of our 4G subscribers in our customer base with a growth rate of 21% year-on-year for 2021. Our digital-only second brand, Izi, is gaining traction through gamification and music streaming, proposing unprecedented offerings on the market for local and roaming services. BeeTV is evolving into a multi-platform video on-demand application supporting a last choice of entertainment functions. It has reached nearly 400,000 monthly active users, up by 48% year-on-year with ARPU more than 50% higher than the average subscriber. Bangladesh on next slide. While accelerating its shift to 4G and data, Banglalink recorded a revenue of 8.3% year-on-year growth in the quarter. Its 4G subscriber base was up by 50%, and data revenues grew by 24%. Our entertainment platform, Toffee, now has 6.4 million monthly active users, an increase of 2.6x year-on-year, while maintaining high engagement levels in terms of watch time. 70% of Toffee users are non-Banglalink subscribers, which makes Toffee a clear example of how our all-access digital service strategy is working in Bangladesh. Given the supportive macroeconomic and population dynamics, we strongly believe in the digital growth of this company. As part of our 2022/'24 plan, we intend to increase our 4G population coverage from 70% to 95% moving into [ a national offering ]. This will enable the growth of our market share from its current level, about 18%, to our fair share of spectrum, which is in low to mid-20s. Finally, let me turn to our other markets, which are summarized here on Slide 13. In Q4, Uzbekistan recorded its second quarter of double-digit growth with a year-on-year growth rate of 10.7%. The turnaround in this country is remarkable. Georgia, which bounced back very strongly from the heavy impact of COVID, reported its third consecutive quarter of double-digit growth, with 11.1% growth in Georgia. Kyrgyzstan grew 8.2% in Q4, joining other operations in their solid revenue growth performance. Our 4G subscriber base in Uzbekistan, Georgia, and Kyrgyzstan continued to increase at high teen rates with even higher year-on-year growth in Double and Multiplay users. I would like to congratulate all 3 of our CEOs who are appointed to their positions in 2021 and their leadership teams for the successful turnaround in these countries. As far as Algeria stands, we remind you that the [ good ] exercise procedure is progressing according to shareholder agreements. On Slide 14, let me give you further flavor on the progress of our digital operator strategy, which underpins the success stories across the business. As of the end of 2021, Doubleplay and Multiplay 4G subscribers made up 34% of our customer base. In Q4, these subscribers generated 62% of our revenue, which compares to 53% in 2020. This revenue upside is the consequence of greater engagement and value generation capacity of these customers. Our Doubleplay 4G users generated more than 3x the ARPU of the Singleplay voice users. And if they also use at least 1 of our digital services, the ARPU multiple grows about 4x. These are also reflected in the slide. Churn rate nearly halts for Doubleplay 4G users versus a Singleplay voice and goes down to 1/3 if they are a Multiplay user. Let's now take a more granular look into some of our digital products. Slide 15 is a snapshot of some of our main digital products and partnerships, which are key enablers of our digital operator strategy. We have provided details on many of these services and products elsewhere in the presentation to allow me to expand on high-level trends. This was a request from all of yourselves during the last quarter. The fintech applications in Pakistan, Russia, Ukraine generated an ARPU uplift of 40% to 60% versus total customer bases in their respective markets. For television and video ads in more digitally mature markets like Russia and Ukraine, the ARPU uplift was around 70%, while Toffee users in Bangladesh and Tamasha users in Pakistan generate around 2.5x the ARPU of the total base. Finally, our self-care applications continue to be the gateways to digital engagements. Across the group, the number of monthly active users of our self-care applications grew 26% year-on-year, reaching 32 million. This is an area that will be our focus in 2022 as the usage of our self-care applications also drive up ARPU and reduce churn. A wide portfolio of digital applications contributes to the engagement of our customer base. As you know, several of these products, including JazzCash and Toffee are in our special focus of as high value, high potential assets under the ventures pillar of our strategy. Khairil Abdullah will be joining our leadership team as of tomorrow, with a focus to further build and monetize these outstanding assets and is following our call today. Welcome, Khairil, to the team. I would like now to hand the call over to Serkan to discuss our financial results in more detail. Serkan?

Thanks, Kaan. Good morning and good afternoon to all participants. In the coming slides, I will elaborate on our financial results for the fourth quarter and full year in more detail. Let me first focus on the key numbers summarized here on Slide 17. 2021 has been a strong year for the group across all the key financial metrics, and this positions us well for the coming years. There were some one-off items in the year, and these are, as always, set out in the earnings release. But of more significance in Q4 '21, we concluded the sale of our tower assets in Russia, which added USD 225 million to full year net profits, and after accounting for the increase in these liabilities, group net debt decreased by USD 131 million. For full year 2021, revenue rose by 10.1% year-over-year in local currency terms and 6.8% on a reported basis, accelerating as we move through it. Full year group EBITDA increased by 8.9% in local currency terms and by 5.7% on a reported basis. They know -- to note that in the fourth quarter, local currency EBITDA was higher by a solid 9.5% versus last year. The group also reported USD 801 million in net profit versus a net loss of $315 million in 2020. Our CapEx was directionally flat year-over-year. What we saw were 1.2 percentage points decline in the CapEx intensity ratio to 23.4% as revenue continued to increase. Finally, on this slide, equity free cash flow was USD 341 million for the year, higher by 38% year-over-year. Moving now to Q4 performance and looking at revenue in more detail on Slide 18. The quarter was strong across all our markets, with particularly high growth rates in Kazakhstan, Pakistan, Ukraine, Georgia and Uzbekistan, all delivering double-digit revenue growth. Also noteworthy is the encouraging performance from Russia where positive momentum has continued. Once again, this performance was supported by a strong 4G adoption and customer growth with a further increase in data usage. These mirror the increase in demand we are seeing for our growing range of digital services. Moving to Slide 19, which sets out our EBITDA performance in greater detail. We recorded a particularly strong EBITDA performance in the quarter and after normalizing for the gain in Kazakhstan Q4 last year related to the government grant on radio frequencies, our group locally currency EBITDA was up by 11% year-over-year. We reported double-digit EBITDA growth in 5 of our operating countries, and in Russia, we reported EBITDA higher by 4.3% year-over-year, the best quarterly performance we have seen in more than 15 quarters for our operations in Russia. Also particularly noteworthy was the turnaround we had seen in Uzbekistan. After weak performances for a number of years, over the first 6 months, the business has delivered a superb turnaround and EBITDA in Q4 was significantly higher by 35.7% year-over-year. Over the medium term, a key element of our EBITDA improvement will be the expected contribution from Project Optimum. On Slide 20, I would like to remind you again about Project Optimum in more details. To reiterate our ambition here, we aim to achieve a 1 percentage point improvement in group EBITDA margin each year over the next 3 years, which represents around USD 250 million run rate cost reduction in group by the end of 2024. While we initiated Project Optimum during '21, the first full year benefits will be in 2022. Our continued success in reducing our corporate overhead also made a positive contribution to group profitability this year. HQ corporate overhead costs further declined by 17% year-over-year. Moving to Slide 21 on CapEx. 4G network group investments further progressed during the quarter. While CapEx in the quarter was lower year-over-year, this was largely impacted by the larger CapEx deployment in the early part of the year. Full year CapEx of USD 1.8 billion was largely flat, although we saw CapEx intensity decline to 23.4%, within our guided range of 22% to 24% as we reported higher revenues. As we saw in previous quarters, Russia was again the primary focus of this investment, accounting for just over 50% of our CapEx spend in the quarter. Continued investments in our digital capabilities and services remained a key strategic focus throughout the quarter and helped us to grow our digital users significantly. Turning now to group debt on Slide 22. At the group level, while gross debt increased quarter-on-quarter, net debt was largely stable at USD 8.1 billion. The key factor to note here was the higher level of cash, which increased to USD 2.3 billion at year-end. I would also like to note that net debt, excluding these liabilities, decreased to USD 5.4 billion. Our cash and committed undrawn credit facilities totaled USD 3.7 billion and highlights the strong liquidity position of the group. Our leverage ratio was 2.4x to 4x and is in line with our internal level of comfort, although higher than the limit of 2.4x given our dividend policy. We concluded RUB 90 billion of funding in December, which allowed us to keep the average tenor of our funding at 3.3 years. However, global trend of interest rates resulted in a 100 basis point year-over-year rise in our average cost of debt to 6.9%. Moving to equity free cash flow on Slide 23. The group reported USD 421 million equity free cash flow for the year and $334 million after license payments. This reflects our strong EBITDA performance throughout the year, together with stable CapEx. As we look forward over the next few years, we expect to see continued local EBITDA with stable to declining CapEx levels, which should support free cash flow generation in the coming years. This brings us to Slide 24, which summarizes our performance versus guidance. As Kaan has already covered, our '21 results were better or in line with our guidance on all metrics. Looking now to the year ahead, given the current context around Russia and Ukraine, which together account for around 65% of our group revenues, we are not at this stage providing any guidance for the full year 2022. With regards to dividends, our policy remains unchanged. This is at least 50% equity free cash flow or after-license payments, while at the same time ensuring group leverage does not exceed 2.4x. As our leverage ratio is 2.4x to 4x at the end of '21, we continue to focus on strengthening our balance sheet and concentrate on financial resources to further debt reduction in the coming quarters and creating dividend capacity for the future. With that, let me hand over to Kaan for some closing remarks, before we turn the floor over to your questions.

Thank you, Serkan. Let me now on Slide 26 give you a reminder of what priorities we had in 2021 at the start of the year and the related achievements. I'm pleased to report that every one of these 7 points has been executed from 4G network rollout targets to Russia going back to growth and double-digit growth in Ukraine, Pakistan and Kazakhstan building digital scale through targeted verticals, optimizing capital structure, streamlining our portfolio and focus on cost efficiencies and creating tower business units and crystallizing the value. In terms of the operational foundations of our business, we have every reason to be confident in the capacity of our group and the business potential. We look forward to continuing our strong execution in 2022. Serkan mentioned, given the current macro ambiguities in 2 of our largest operations, like the [ freeze in motion ] [Audio Gap] therefore, we will not be sharing any guidance at this stage. With that, I would like to thank you for your attention and turn the call over to the operator for questions. Operator?

Can you hear me?

Yes, I can hear you well.

I was just wondering just sort of more general question, I guess, around capital allocation in the current environment. Obviously, you've got a lot of challenges in a couple of your markets. How do you balance between investing in the network, but at the same time, keeping your leverage in check, obviously, with the currency moving against you and with dollar on your -- dollar debt on your balance sheet. I'd just be interested to hear sort of big picture thoughts about how you sort of develop your strategy for capital allocation. And then just in terms of your Russian -- I've seen your Russian company accounts for the 9-month period, you hadn't paid a dividend up to HQ. I was wondering if there had been a dividend paid subsequent to the 9-month period over the last quarter? And if so, could you sort of give an indication as to how much that is and how much cash you actually have at HQ at the moment? And then final questions -- final question, if I can. Just in terms of the equipment suppliers who your key vendors at the moment in, I guess, Russia and Ukraine would be key and how do you get access to that equipment? How do you pay for that equipment? Any sort of context you can give around those challenges. Obviously, it's a very fluid situation, so I appreciate that. But if you could give any comments around that, that would be helpful.

Thank you, Alastair. Alastair, as you can imagine, we have a capital allocation methodology based on reflecting the potential in the countries, cost of capital as well as return on investment on specific projects which we [ would have ] systematically applied. Having said that, it's one of the reasons why we did not provide the guidance. It's obviously change of the dynamics which will require us to adjust the investments that we will be making in our business in line with the progression of the current macroeconomic situations. So I would like to keep in mind that our disciplined policy of making sure that we create cash and continue to control our cash balances, will be of high priority over the next couple of months.

And just a couple of things regarding -- because you asked capital allocation in relation to the impact on leverage, as you have seen from the presentation, 50% -- roughly 50% of the leverage is in U.S. dollar and 40%, around 40%, 41% is in ruble. So in case of any depreciation in the local currencies, in this case, ruble, that will impact our leverage positively because our debt in ruble will be at a lower amount in U.S. dollars. That will be a positive impact. Move back and move to question number two. You asked about the cash position of the group. We have roughly $2.3 billion cash out of which $1.6 billion in HQ and almost 100% of the cash is in hard currency, mainly U.S. dollar and all the cash is in Europe -- European or U.S. banks. So they are fully accessible to HQ, all USD 1.6 billion. And on top of that, we have a bond maturity, which will be due tomorrow. And for that -- and the amount is USD 417 million plus accrued interest, which will get around USD 430 million. In order to keep our cash reserves intact for the future on loans, we decided to utilize the RCF that we have in place, which is a committed facility and hopefully, we will fund the repayment of the bond tomorrow through using the RCF facility, which will leave us, again, $1.6 billion cash available at HQ for the future needs. Yes, regarding the supplies and the payment terms, of course, for the big vendors, we have specific agreements per -- as to each country. There are different tenors. But as you can guess, we are -- we keep negotiating with our key vendors to get favorable payment terms. As I said, it's first on vendor to vendor, country to country, but we are effectively negotiating and discussing with our vendors as a long-term strategic partner with them to prolong the payment terms to our key vendors.

And Alastair, as second nature, our current capital structure is a major enabler for us. Being a group allows us to allocate capital effectively and raise that [indiscernible] competitive rates and access to markets and these [ regimens ] are most valuable, especially in unpleasant situations like [indiscernible].

I have a couple, sorry about that. The first one, I just wanted to understand if the SWIFT issue prevents you from today making payments or sourcing equipment in the Ukraine or Russia? That's one. Second, I just wanted to get back to the Algeria put option. Do you have any update on the timing? And can you please guide us to what magnitude of cash inflow do you expect? Third question would be on the Russian debt. What percentage of it is floating rate? And if there's a significant percentage in floating rate, how fast does it adjust to the kind of short-term rates because they've been increased to 20% in Russia? And then the last question, in which country is most of your cash held?

Thank you, Cesar. Serkan, go ahead.

Okay. And so Cesar, I think you have multiple questions. Okay. If I miss anything, please let me know. I think first question was about SWIFT and the potential impact on us regarding payments and sourcing equipment. It is to my knowledge just before -- until the start of this meeting, SWIFT is still functioning. So actually, we have multiple bank accounts in multiple banks, and those banks are having -- we have bank accounts in multiple banks in ruble, Euro, U.S. dollar and in the different currencies. So we have alternative routes to move the cash in and out of countries. So as you know, in Ukraine, there is captive controls in place imposed by the Central Bank of Ukraine. So there is no cash outflow in U.S. dollar or Euro out of Ukraine. That's the only control that we have at -- or [indiscernible] that we have for the moment. But as I said, we have different bank accounts in different jurisdictions, in different, different currencies. So we are in discussions with our relationship banks from different countries how we can mitigate any kind of SWIFT -- changes in the SWIFT regulation. But so far, it's functioning. I'm skipping Algeria, probably Kaan will comment on that. Regarding debt, in Russian, in ruble debt. In ruble, we have bank loans and also bond. As you know, all the bonds that in ruble, they are all in fixed rates, so we are fine. Regarding the bank loans, we have a mixture of floating and fixed interest rates. And basically, we have none there is -- which are [ pure ] Russian banks. At the moment, a majority of the debt -- bank debt are floating, majority only -- if you only look at the bank debt. But if you combine all the debt, including the bond, the majority of the debt is fixed rate. And as you mentioned, the Central Bank of Russia increased benchmark interest to 20% today. Effective [ date ] for that increased rate will be by the end of March at different, different rates depending on our agreements with the banks. So the impact on the interest will start to kick in after April, after Q2. Maybe I should pause at this moment without going into more detail.

Thank you, Serkan. And Cesar, with regard to your Algeria question, all procedures connected to the exercise of our put option in Algeria are being performed by both parties in accordance with our shareholders agreement. As a matter of fact, as we speak, the process is further progressing. And with slight delays, everything is on the right track, and I will be actually visiting Algeria over the next couple of weeks. We'll go back through the process and make sure it is on track as well. I won't be able to give you more color at this stage considering the [indiscernible] questions.

Cesar, Nik just reminded me that you also asked where is our cash? HQ cash is in Europe.

And I know many of you have lots of questions around sanctions, so let me go through it here upfront with what I can say in this specific area. We are continuously monitoring the sanctions regulations, which are being issued by various jurisdictions in order to make sure we are complying with them. And I would like to also highlight that at the shareholder level, VEON is a public company with no controlling shareholders. So we do not expect any flow of sanction is coming from any of these issues as well. But this is a fluid situation. So we will be continuously monitoring and of course, keeping, if necessary, the public informed about it as well.

The next question is from Nicolas.

Just one quick question on your ability to get cash out of Russia with current sanctions that is being imposed on Russia because obviously, almost 50% of our revenues are coming from Russia.

So Nicolas, in Russia, we are -- we have been already in an investment cycle. So the upstreaming of cash from Russia has not been a priority for us on this particular note, but Serkan, please.

Yes, in our plans for this year, there is no projected plan to cash upstreaming from Russia. We only have some intercompany loans between HQ and Russia. Apart from that, there is no dividend upstreaming assumed in our plans, conversions.

The next question is from [ Tammy Lloyd ].

I also have a couple if that's okay. You recently announced that you've taken out loans with Russian banks which are now sanctioned. Can you talk a little bit about what might happen with these loans and your ability to keep borrowing in Russia? The second thing is, can you just remind us, following on from the Russian cash flow about cash flow from the other operations for the full year? And what your expectations are to be able to get cash out of your other operations? And just alluding to the comment earlier that you don't expect the shareholder to be an issue. Is that because LetterOne owns less than 50% of VEON and the rest is owned and [ in standing ] with an independent board?

Let me start with the last question, and then I will give it over to Serkan. As you have rightly summarized, we don't have a controlling shareholder, and we have an independent board in place. So that's basically [indiscernible].

If you allow me, I want to give you a little bit detail so that, that can shed also some light about Cesar's question on how floating interest rates will impact our overall cost of debt. So currently, we have, as I said, bonds in ruble. So they are not impacted from the sanctions, so they will be still in place. We have loans from 3 Russian banks amounting to RUB 120 billion. Depending on what rate you use, it's around USD 1.5 billion before today's depreciation in the currency. So these banks are Sberbank, VTB and Alfa-Bank. The way that we read the sanctions that is as of today, we can borrow cash from 2 out of 3 banks that I just named. For the VTB Bank, our loans from VTB Bank is amounting RUB 30 billion, which we have refinancing in February this year, after the year end. And most probably, that amount should be repaid to VTB within the deadline put as per these sanctions, which will be probably before end of March. So that's RUB 120 billion. So after repaying VTB by the end of March as per the sanctions regulation, our exposure or our borrowing from 2 Russian banks will be RUB 90 billion, and most of it will be floating. However, I want to link this to Cesar's question. Assuming that we will repay VTB RUB 30 billion by the end of March, our cost of debt, which is currently 6.9% overall group cost of debt, after this 20% revised interest rate in Russia, this cost of debt will only increase to 7.5%. So the immediate impact on our cost of debt will be 60 bps roughly, which will start to be impacting us starting from April this year because there will be a gradual transition to the new interest rates. That would be my answer for the one -- for the first question. Regarding the second. As I mentioned, Russia is within itself cash flow sufficient. We are not expecting any cash upstreaming from Russia as in dividends. Apart from Russia, we don't see any issue in upstreaming cash in, for example, Kazakhstan, Pakistan and other countries that we are operating. So the only question mark is Ukraine and we need to wait and see what's going to happen in Ukraine. But as I said at the beginning, we have $1.6 billion cash at HQ. And we want to keep this as our cash flow for the future.

And maybe just to be very clear, we were not planning to upstream cash from Russia and we will [indiscernible].

Yes, that's correct.

Our next question is from Ivan Kim.

Can I just follow up on this time line or no cash upstream from Russia? Is it just for this year? Or it's also kind of longer-term plan, so concern is '23 as well? My second question on Pakistani spectrum. I just wanted to make sure that you're going to go with a scheme where you pay 50% upfront and then you delay another 50% into installments over 5 years? And then lastly, on dividends. So just based on the -- the way you formulated it in the press release, do I understand correctly that you wouldn't have paid a dividend regardless the war and what's going on right now based on your leverage being above 2.4x?

Let me start with Pakistan, then I will continue. Unlike the last license renewal, this time, actually, the license renewal process is very predictable. And as is expected, we'll be paying 50% cash by the end of July and the rest will be over years. And this is in line with our plans and predictions. There won't be any surprises this time.

For your first question, I think it is too early to comment on '23 cash upstreaming. So -- which I cannot answer to that one with precise guidance. For the dividend, regarding the year 2021, your understanding is correct. We are not going to pay dividend for '21, of course, subject to Board and AGM approval.

Can I have, then, have just with another question. So on towers, do you plan still any tower sales in Pakistan or Bangladesh given the macro and world higher rates?

So we believe our asset value crystallization intent is still valid. We are working actually on Bangladesh, Pakistan and Kazakhstan in terms of taking these assets into the market. We will probably be slower with our intent in Ukraine, but our project of crystallizing the value and monetizing of assets and delayering our telecom operations is still valid.

Next question comes from Stella Cridge.

I had 2 follow-up questions on the financing side, if you don't mind. So firstly, could you just perhaps give us a bit more specific information on how much you've been able to upstream from Pakistan over the past year and whether you've been able to get anything from Bangladesh? And just in terms of the Pakistan macro situation, would you expect to be able to upstream in 2022? The second question was, I noticed your earlier comment about planning to draw on the RCF to pay the bond that's due tomorrow. And can I just confirm, do you need to get any approvals today to draw on that RCF or are you pretty confident that, that's 100% available to you to make that payment tomorrow?

Bangladesh, we are not upstreaming dividends from Bangladesh for the moment because we are in the investment phase. And for Pakistan, our company there is distributing dividend as 100% of net profit available. So we haven't seen any problem in upstreaming cash out of Pakistan during the last couple of years, and we don't expect any problem in it this year as well. Regarding the amount of the dividend upstreaming, as I mentioned, once we close the numbers in Pakistan, probably to the 100% of net profit available for the shareholders. RCF drawdown. Of course, we have initiated the drawdown request. It was end of last week. And we haven't faced any issue up to now. But of course, I can only confirm that we utilize the RCF and I see [indiscernible].

And if it's possible to ask one follow-up. I appreciate your earlier comment about there being no controlling shareholder in VEON. But I guess I could say there's perhaps still some concerns in the market about the combined shareholding across both entities. We've obviously seen some comments from the EU over the weekend about potential sanctions on 2 partners at LetterOne. And would you be able to give us any more color on the breakdown of shareholdings at the LetterOne level so that the market could assess the risk for VEON?

I think really, as the situation evolves, we need to be a little bit patient in terms of making any speculations around this topic. So I will ask your permission to wait for a while so that we see everything, and we will be back to you.

The last question is from [ Antonia Draghici ].

I hope you can hear me. I have 2 questions. You mentioned that the cash holdings that you have are in Europe. Would you mention -- would you mind sharing which countries and which banks those accounts are with? And also which banks are behind the RCF that you are drawing to pay the bond tomorrow?

Unfortunately, I cannot answer neither questions, but meanwhile I can try to answer a little bit in overall. First of all, we have multiple banks, around 6 to 10 banks, all are in Europe, European countries. All I can say, in EU countries and some of them are in the U.K. So without naming the banks. Regarding RCF funds, again, we have 10 RCF funds. They are from U.S., EU, U.K. and Asia. We don't, again, name banks, but we have 10 banks across the globe.

But just in terms of the banks in Europe that you have the account, are any of them, some of the Russian banks and local subsidiaries that potentially are under sanctions?

For the cash that we are keeping -- our cash that we are keeping, there is no Russian bank.

I want to thank you, all of yourselves, again. And looking forward to talk with you in the next quarter. Thank you very much, and we will close the call here today. Thank you.

Bye everyone.