VEON - 2Q19 Results a Mixed Bag; Weak EFCF

VEON's quarterly results are typically a mixed bag due to the number of countries in the portfolio and the differing operating/regulatory dynamics. In a nutshell, the Russian results were weak; Ukraine performed strongly; Pakistan, Bangladesh and Algeria saw a deterioration; and Uzbekistan saw some positive trends. GTH's mandatory tender offer expires on August 6, and there has been no update as yet. The dividend is suggested at $0.13 per share (4.2% yield, broadly in line with our expectations), with a record date of August 14. Equity FCF in 2Q19 excluding licenses, the positive effect of IFRS 16 and a $175 mln payment from Ericsson was $74 mln, down from $205 mln in 1Q19. The bad news for EFCF is that the proposed cost of the Pakistan license came in above expectations at $450 mln (excluding applicable taxes of around 13%; the outcome can be appealed to the Islamabad High Court before August 21). The good news is that in July, Ukraine's National Bank abolished limits on the repatriation of dividends.