An unusually large dark pool print was detected in VEON stock on August 30, 2019. The dark pool print was reported in the after-hours market on August 30, 2019 and was for 5.1 million shares at $2.61 for an approximate value of $13 million.
On August 6, 2019, VEON announced the results of its previously announced mandatory tender offer to purchase up to 1,997,639,608 shares of Global Telecom Holding S.A.E (“GTH”), representing approximately 42.31% of GTH’s issued shares.
The aggregate number of shares validly tendered and accepted for purchase and not validly withdrawn was 1,914,322,110 shares and the expected execution date for such purchase will be within 5 Egyptian business days. Following execution, VEON will hold approximately 98.24% of GTH’s total outstanding equity. VEON is pleased with the results of the Mandatory Tender Offer and remains committed to simplifying its corporate structure.
The total purchase price for the purchase of such shares is EGP 9,725 million (approximately USD 587 million at the current exchange rate), reflecting the offer price per share of EGP 5.08.
VEON intends to continue with the comprehensive restructuring of GTH as announced on June 26, 2019, including progressing both the delisting of GTH from the Egyptian Exchange and the offer to acquire substantially all of GTH’s operating assets in Algeria, Pakistan and Bangladesh.
On August 27, 2019, VEON announced that shareholders of GTH approved the delisting of GTH from the Egyptian Exchange. A Delisting Decree is expected to be published by the EGX in due course.
On August 1, 2019, VEON announced financial and operating results for the quarter ended June 30, 2019.
VEON Stock Q2 2019 Earnings Report
Revenue tracking in line: total revenue increased by 7.5% organically year on year with service revenue increasing 5.0% organically2 to USD 2,080 million, driven by particularly strong performances in Ukraine and Pakistan
Organic data revenue growth remains robust: the momentum in mobile data revenue continued in the period growing by 22.7% year on year organically, with Ukraine (+77%), Pakistan (+59%) and Bangladesh (+28%) delivering strong performances on the back of ongoing 4G/LTE investments
Reported revenue flat as currency headwind slows: the currency headwind in the period was limited to USD 179 million resulting in a decline in reported revenue of only 0.4% year on year. This compares to the 5.6% decline in the first quarter.
EBITDA (pre-IFRS 16) delivers good organic growth: EBITDA (pre-IFRS 16) increased organically2 by 11.1% year on year to USD 866 million, resulting in an EBITDA margin of 38.3%. Ukraine and Pakistan delivered particularly strong performances in organic EBITDA. Reported EBITDA grew by 16.1% year on year
Cost intensity ratio continues to improve organically: We recorded a 2.7 percentage point year on year organic2 improvement in our cost intensity ratio, helped in particular by Ukraine and Pakistan which both saw benefits from above-inflation revenue growth while we continued to progress on lower corporate costs
Corporate costs trending lower: Corporate costs were USD 60 million, which resulted in a 15% year on year decline in the first half 2019. This is in line with VEON´s ambition to reduce corporate costs by 25% year on year in FY 2019 and to halve the corporate cost run-rate from FY 2017 level by end-FY 2019
Equity free cash flow excluding licenses USD 338 million: In the quarter, adjusting for the positive effect of IFRS 16, the company generated USD 249 million equity free cash flow (excluding licenses), including USD 175 million from Ericsson. Equity Free Cash Flow excluding licenses for the half year adjusted for IFRS 16 impact was USD 630 million
Reported cash flow impacted by tax payment: cash flow was negatively impacted by the first payment of USD 54 million related to GTH tax settlement
FY 2019 guidance confirmed: Low single-digit organic growth for revenue, low to mid single-digit organic growth for EBITDA and Equity Free Cash Flow excluding licences of approximately USD 1 billion. While we are tracking ahead of our guidance at the interim period, we note the second half metrics are more challenging. Directionally there is upside to revenue and EBITDA.
“VEON reported a strong first half 2019 with continuing good operational performance. Despite the challenging market conditions, we continue to make steady progress on network performance and distribution optimization. Our strong results in Ukraine and Pakistan ensured a balanced performance for the Group. Our service revenue growth was largely driven by strong growth in data revenue on the back of the continued investment in our data networks in the period. This will remain a key focus for VEON over the medium-term while we explore new ventures in the longer-term.”
Institutional ownership in VEON stock increased by 15% over the previous 3-month period.
We are unable to determine if the unusually large dark pool print in VEON stock on August 30, 2019, was a buy or sell order. We need to see how VEON stock responds to the dark pool print during regular trading on Tuesday, September 3, 2019.
We are not adding VEON stock to the long-term buy and hold GST Portfolio at this time because the company has 1.8 billion shares outstanding. Until the company takes steps to improve its share structure, this ADR is just too risky of a gambit. However, a short-term swing trade could be setting up nicely off the uptrend line in the daily chart above.
Disclosure: We do not hold any position in VEON stock.