Veon workers in bomb shelters maintain Ukraine’s largest mobile network – CEO

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STOCKHOLM/AMSTERDAM — Thousands of employees of telecoms operator Veon are working from bomb shelters in Ukraine and moving equipment to border areas to maintain a digital lifeline for refugees fleeing war, it said on Friday the general manager of the company.

Their work has helped about 85% of Veon’s telecommunications network remain operational in Ukraine since the Feb. 24 Russian invasion, Veon CEO Kaan Terzioglu said in an exclusive interview with Reuters. But other risks loom both from power shortages and from the conflict itself.

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Amsterdam-listed Veon operates Ukraine’s largest mobile provider as Kyivstar with 4,000 employees and a 25% market share.

Terzioglu, who spoke via Zoom conference call from the Netherlands, described how the company is coping with war, sanctions and financial problems all at once.

Terzioglu provided a lens through which a company provides a telephone network to a rapidly expanding diaspora.

Employees “practically work in shelters and whenever they have the chance, they go out into the field to do maintenance,” Terzioglu said.

The parts of the network that do not work are mainly due to a loss of power and are not targeted by Russian forces, he said. To retrieve those parts, workers had to run gasoline to the generators, which Terioglu described as “one of the most logistically heavy jobs our employees try to do.”

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Russia’s attack, which Moscow calls a “special operation” to demilitarize the country, killed hundreds of civilians, reduced urban areas to rubble and sparked a humanitarian crisis. Russia denies targeting civilians in the country of around 44 million people.

More than 3.2 million people have fled and another 2 million have been internally displaced, according to United Nations data.

Based on cellphone data, Terzioglu estimated that 4 million refugees had left and 10 million were displaced.

Apart from opening its offices as refugee shelters, Veon has also topped up mobile accounts free of charge, said Terzioglu, who became the Veon Group CEO last July. In his previous position as CEO of Turkcell, he grappled with the Syrian refugee crisis.

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Veon has also received support from American, Chinese and European companies in the technology and telecommunications industry. While carriers such as Orange, Tele2 and Vodafone have waived interconnect and roaming charges, equipment manufacturers such as Huawei and ZTE have contributed to maintaining the network. Those companies and companies like Ericsson, Nokia, Microsoft Corp and Oracle Corp have made a “heroic effort” to keep the networks running, Terzioglu said.


Veon also owns the second largest telecommunications network in Russia, operating as Beeline, its most profitable market. This means that Veon must manage the impact of sanctions and political concerns on both sides of the border.

Veon has approximately 29,000 employees in Russia and the company has taken steps to operate its Ukrainian and Russian businesses separately from each other.

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The company has also quickly distanced itself from Russian oligarch Mikhail Fridman, whose investment vehicle LetterOne has a 47.9% stake in Veon, and an additional 8.3% economic stake through a Dutch foundation. The European Union imposed sanctions on Fridman on Feb. 28, a move he said he would fight.

Terzioglu said Fridman, who resigned from the Veon board on February 28 and from the LetterOne board on March 3, “no longer has any economic interest in LetterOne.”

LetterOne, which did not respond to a request for comment, said on March 3 that Fridman’s assets had been frozen and he had been stripped of his shareholder rights.

Terzioglu said he could not speculate whether the company could possibly face EU sanctions or nationalization by the Russian government, but he hoped it would be ruled out on humanitarian grounds.

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“We will do our best to position it as an essential service,” he said.

Veon also faces financial worries, with its shares down 56% year-to-date, and its US dollar-denominated debt – worth $5.4 billion at the end of 2021 – trading at distressed levels.

On March 4, Fitch downgraded the company’s credit ratings to junk status, saying that together Russia and Ukraine accounted for 62% of earnings before interest, taxes, depreciation and amortization (EBITDA) of $3.3 billion. dollars in 2021.

Russian capital controls and the war meant that the company might not be able to move funds in or out of either country.

The company issued several updates to reassure investors about its liquidity, with $2.1 billion in cash at the end of February, including $1.5 billion in the Netherlands.

Terzioglu said he was aware of reports from a group of bondholders looking of talks and welcomed the opportunity to address them, although none have reached the company so far.

“Having them organized gives us the opportunity to explain why they shouldn’t be worried and that we are well funded to meet our obligations,” he said. (Reporting by Supantha Mukherjee in Stockholm and Toby Sterling in Amsterdam; editing by Kenneth Li and Grant McCool)



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Casey J. Nelson