EXCLUSIVE: Veon Shelters employees maintain Ukraine’s largest mobile network, CEO says

A picture of the logo of Kyivstar, one of Ukraine’s largest telecom companies, at the company’s headquarters in Kyiv, Ukraine, March 3, 2016. REUTERS / Gleb Garanich / File Photo

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Stockholm/Amsterdam (Reuters) – Thousands of telecoms company Veon employees are working from shelters in Ukraine and moving equipment to border regions to maintain a digital lifeline for refugees fleeing war, the company’s CEO said on Friday.

Their work has helped about 85% of Veon’s communications network continue to operate in Ukraine since the Russian invasion on February 24, Can Terzioglu, CEO of Veon, said in an exclusive interview with Reuters. But other dangers loom from the lack of electricity and the conflict itself.

Amsterdam-listed Veon operates the largest mobile phone provider in Ukraine under the name Kyivstar with 4,000 employees and a market share of 25%.

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Terzioglu, speaking through a Zoom call from the Netherlands, described how the company is dealing with war, sanctions and financial concerns at the same time.

Terzioglu provided a lens through which a company would provide a telephone network to the rapidly expanding diaspora.

The staff “practically work outside the shelters and the moment they have the opportunity, they go out into the field to do maintenance,” Terzioglu said.

He explained that the parts of the network that stopped working were mostly due to power outages and were not targeted by Russian forces. Reclaiming these parts required workers to run gasoline for the generators, which Terioglu described as “one of the most logistically heavy-handed work our people are trying to do.”

The Russian offensive, which Moscow calls a “special operation” to disarm the country, has killed hundreds of civilians, reduced city areas to rubble and sparked a humanitarian crisis. Russia denies targeting civilians in a country of about 44 million people.

United Nations data showed that more than 3.2 million people fled and another two million were internally displaced.

Based on cell phone data, Terzioglu estimated that 4 million refugees have left, and 10 million have been displaced.

Terzioglu, who became CEO of the Veon Group last July, said that apart from opening its offices as refugee shelters, Veon also raised mobile phone accounts for free. In his previous job as CEO of Turkcell, he dealt with the Syrian refugee crisis.

Veon has also received support from American, Chinese and European companies in the field of technology and communications. While operators such as Orange, Tele2 and Vodafone have waived interconnection and roaming fees, equipment makers such as Huawei and ZTE are helping with network maintenance. These companies, including Ericsson, Nokia, Microsoft and Oracle, have made “heroic efforts” to keep the networks running, Terzioglu said.

Russian connection

Veon also has the second largest telecommunications network in Russia, and operates under the name Beeline, the most profitable market. This means that Fillon must overcome the impact of sanctions and political concerns on both sides of the border.

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

The company also moved quickly to distance itself from Russian oligarch Mikhail Friedman, whose investment company LetterOne holds a 47.9% stake in Veon, and an additional 8.3% economic stake through a Dutch foundation.

The European Union imposed sanctions on Friedman on February 28, a decision he said he would fight.

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

LetterOne, which did not respond to a request for comment, said March 3 that Friedman’s assets had been frozen and shareholder equity stripped.

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

“We will do everything in our power to make it a necessary service,” he said.

Veon is also facing financial concerns, with its shares down 56% in the year to date, and its dollar-denominated debt — worth $5.4 billion at the end of 2021 — trading at distressed levels.

On March 4, Fitch cut the company’s credit rating to junk status, saying that Russia and Ukraine together account for 62% of its $3.3 billion EBITDA for 2021.

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

The company has issued several updates to reassure investors that it remains liquid, with $2.1 billion in cash as of the end of February, of which $1.5 billion is in the Netherlands.

Terzioglu said he was aware of reports that a group of bondholders were seeking talks and welcomed the opportunity to address them, although none have reached the company yet.

“Their regulation gives us the opportunity to explain why they are not concerned, and that we are well funded in terms of meeting our obligations,” he said.

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(Additional reporting by Subanta Mukherjee in Stockholm and Toby Sterling in Amsterdam; Editing by Kenneth Lee and Grant McCall

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