A long-term investor in Veon has publicly criticised the operator’s board of directors for underperformance, calling for immediate action to improve the company’s fortunes.
Shah Capital Management, which owns 7% of Veon’s shares, stated that the company’s share price “continues to languish” despite having “a deleveraged pristine balance sheet,” recent strong growth, and an “impressive operating outlook,” as presented by the management team at Veon Investment Day in June.
Veon’s shares are currently trading at US$29.49 on the Nasdaq. Shah Capital claimed it has a plan to multiply this figure fivefold, to around US$160 by 2026. The firm outlined several reasons for the low share price.
Shah Capital highlighted low trading volume, a lack of shareholder capital returns in the form of buybacks and dividends, and the perception of Veon as a bureaucratic European company with a complex structure and high headquarters operating costs. Other factors include the operator paying a higher tax rate than most emerging market companies, and not being recognised by the investment community as a fintech or cloud data centre company.
The firm proposed a several measures to boost Veon’s share price, including a US$100 million buyback programme and listing its Pakistani unit, Jazz and/or JazzCash, on the Karachi and Dubai bourses. Shah Capital also recommended listing its Ukrainian unit, Kyivstar, on the Nasdaq to unfreeze ownership shares and release approximately US$3 billion.
Additionally, the firm called for a stronger cloud data centre strategy, measures to lower Veon’s tax rate, and an improved governance model between HQ and its units to “unlock Veon’s tremendous unrealised potential.”
Shah Capital CIO Himanshu Shah said Veon should be trading at a significantly higher figure, comparing it to other operators from emerging markets such as Airtel Africa, Millicom, América Móvil, and MTN.
“Veon’s equity price has underperformed by 80% over the last ten years while the Nasdaq has risen over 400% since 2014. Therefore, a faster execution of Shah Capital’s strategic roadmap should be implemented as soon as possible,” said the CIO.
