Fitch Ratings has affirmed
The senior unsecured rating has a Recovery Rating of 'RR4'/50%. The Outlook on the IDR is Stable.
The rating reflects weak Russian and Ukrainian operating environments following Fitch's downgrades of the Country Ceiling of
VEON's ratings have been withdrawn for commercial purposes. Fitch will no longer provide ratings or analytical coverage of VEON.
Key Rating Drivers
Deconsolidate Russia and
Weaker Operating Environment: VEON benefits from wide geographic diversification across emerging markets, but with limited contribution from operations in countries with strong operating environments. Without
Substantial Foreign-Exchange (FX) Mismatch: VEON faces a significant mismatch between its cash flows in local currency and significant foreign-currency debt. However, EBITDA generated in
High Deconsolidated Leverage: With Russian and Ukrainian operations deconsolidated, VEON's leverage is expected to be around 3.5x net debt/EBITDA at end-2022. As we forecast pre-dividend free cash flow (FCF) to be neutral to negative till 2024, VEON could reduce leverage from organic EBITDA growth, which we expect to be around mid-single digits in 2023 and 2024. The resumption of dividend payments in 2023 could increase leverage further, as could adverse FX movements.
1Q22 Results Reasonable: VEON reported flat revenue in 1Q22 and a 4% decline in EBITDA. However, revenue and EBITDA grew between single- and low double-digit percentages annually in all countries in local-currency terms. Most, if not all key performance indicators, improved in 1Q22 in all countries where VEON operates.
Derivation Summary
No longer relevant as the ratings have been withdrawn.
Key Assumptions
No longer relevant as the ratings have been withdrawn.
RATING SENSITIVITIES
No longer relevant as the ratings have been withdrawn.
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
Liquidity and Debt Structure
Strong Liquidity: As of
VEON's liquidity is sufficient to meet its obligations over the next 12 months and the company has no material debt maturing in 2022.
Issuer Profile
VEON is a facilities-based mobile network operator with leading or well-established competitive positions in most of its countries of operations including
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
Following the withdrawal of the ratings of VEON, Fitch will no longer be providing the associated ESG relevance scores.
RATING ACTIONS
Entity / Debt
Rating
Recovery
Prior
senior unsecured
LT
B+
Affirmed
RR4
B+
senior unsecured
LT
WD
Withdrawn
B+
LT IDR
B+
Affirmed
B+
LT IDR
WD
Withdrawn
B+
senior unsecured
LT
B+
Affirmed
RR4
B+
senior unsecured
LT
WD
Withdrawn
B+
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
(C) 2022 Electronic News Publishing, source