Shah Capital, a long-term investor in telecoms company Veon, has criticized the company's current strategy, claiming that its share price is 80 percent lower than it should have been over the last decade.
The investor, which has a seven percent stake in Veon, said the company is performing well below its expectations.
In an open letter to Veon's board of directors, Himanshu H Shah, founder of Shah Capital, said that the company can improve its current share price on the Nasdaq of $29.50 to $160 per share by 2026, if the company makes a number of changes.
His comments come a few days after Veon announced plans to relocate its HQ from Amsterdam, Netherlands, to Dubai, United Arab Emirates.
“Veon’s share price continues to languish at ~2.5X EV/EBITDA valuation even with a deleveraged pristine balance sheet, strong recent operating growth metrics and impressive operating outlook as was presented by management on Veon Investor Day in June ’24.”
Shah suggests that Veon should look to monetize some of its assets, such as its telecom towers, of which its current portfolio stands at around 30,000.
“With an unlevered balance sheet and asset-rich portfolio of around 30,000 towers and meaningful other assets that can be monetized, Veon should trade at [a] substantially higher valuation compared to its emerging market telecom peers like Airtel Africa, Millicom, and America Movil which are trading at [a] median valuation of about five times their earnings before interest, taxes, depreciation, and amortization (EBITDA).”
Among its suggestions, Shah Capital has urged Veon to implement an improved cloud data center strategy.
The investor also said that Veon should introduce a $100 million buyback scheme, and list subsidiaries Jazz and JazzCash on the stock exchange market in Karachi, Pakistan, and Dubai.
Shah added that Veon's Ukrainian unit Kyivstar should be listed on the Nasdaq, a move it estimates could unfreeze ownership shares to unlock around $3 billion.
Veon, which operates in a number of countries including Ukraine, Bangladesh, and Pakistan, serves more than 160 million customers.
In June, the company pledged to increase its investment in Kyivstar to $1 billion. It said it will invest the figure into the telco over the five-year period from 2023 through 2027.
