Veon ignores the war in Ukraine, and its Russian subsidiary, VimpelCom, cooperates with Russian government

Veon is a large international telecom group with assets in eight countries and headquarters in the Netherlands. Its shares are traded in the United States, and its revenue amounts to $8 billion. Among other things, Veon is the parent company of the largest Ukrainian mobile operator Kyivstar, which has already lost billions of hryvnias due to the war.

Another interesting fact is that Veon is the parent company of VimpelCom, one of the three largest telecom providers in Russia. It cooperates with the Russian government, as Russian officials say. It helps make communications available in the Ukrainian territories occupied since February 24.

The Veon management sees no contradictions in this. The company does not call Russia’s war in Ukraine “a war” in its press releases and continues to develop its Russian business. Veon has not left and does not plan to leave the Russian market. It invests in the company’s development and remains on the list of the largest taxpayers, while the Russian army destroys its Ukrainian assets and kills the Ukrainian people.

AIN.Capital explains how the international company Veon became an abettor of the Russian criminal government and continues to speak about supporting Kyivstar while avoiding sanctions.

Russia has three big telecom providers — Megafon, MTS, and VimpelCom. After the invasion of Ukraine this year, they got a problem: what should they do with Ukrainian territories temporarily occupied by Russian troops. Especially in the case of the Kherson region and 60% of Zaporizhzhia region: Russians shut down Ukrainian telecom providers and set up a Russian one, so now there is a new provider, +7Telecom, that belongs to the Crimean K-Telecom provider.

Megafon, MTS, and VimpelCom have managed to avoid the European and international sanctions so far. Specifically, VimpelCom, a subsidiary of the European telecom group Veon, whose stocks are traded on the stock exchange and shares of which belong to Fridman and Aven — Russian oligarchs under sanctions who have already lost their control over Alfa-Bank Ukraine and Borjomi.

However, this case seems to be a problem only for foreigners because Veon and its subsidiary VimpelCom don’t think so.

The Russian government demanded that the telecom providers establish mobile services on the occupied territories. According to different sources, +7Telecom has already issued over 200,000 SIM cards. What comes next? — Cheap calls. At the request of the Russian Ministry of Digital Transformation, Megafon, MTS, and VimpelCom changed their pricing policies. According to the Commersant newspaper, VimpelCom changed its prices from 25 to 3 rubles per minute after the Russian officials asked it. The company is so hypocritical: such calls are tariffed as international calls to avoid sanctions, and the provider claims to follow recommendations of the Russian Ministry of Digital Transformation.

There is no public statement regarding the price changes by any telecom providers. At Veon, there is also no information about those changes in public.


Notably that the Dutch company Veon, VimpleCom’s owner, does not respond to the company’s activity in Russia. Furthermore, in a recent letter to Veon shareholders, the company explicitly states that it continues to develop advanced communication technologies even in a difficult economic situation. Mikhail Fridman has left the Board of Directors, but the company still has huge debt obligations to Russian banks. On February 17 alone, the company received 30 billion rubles for VimpelCom from Russia’s bank VTB. It also has debts to Alfa-Bank Russia and Sberbank.

In its letter to shareholders, the company avoids the topic of war by all means. Here, for example, is a recent letter from the company’s CEO, where he speaks about the incredible work of the Kyivstar team in providing communication services to Ukrainians. Notably, Veon’s management imagines that base stations in Ukraine are collapsing by themselves. How else to explain the company avoids not just mentioning the war but Russia at all. It is a paradox.

At the same time, things are not going very well at Veon. Its capitalization fell to $1 billion, and its share price is about 50 cents. Ukraine’s Kyivstar alone reported the same revenue for 2021. Now the company’s shareholders are worrying that Veon may get into the seventh set of sanctions precisely because of its operations in Russia. Veon is one of the few companies still operating in Russia that didn’t report any investment reduction in the region or any ownership change. The war doesn’t exist on Veon’s official agenda.

How is Kyivstar doing? The Chief Executive Officer Oleksandr Komarov stated that the company’s losses have already reached billions of hryvnias. The company has lost access to the network in all the temporarily occupied territories. The company has also lost over one million subscribers who left Ukraine. It provides free communication services to Ukrainians and donates tens of millions to charity. Moreover, the company has paid 4.2 billion hryvnias of taxes to the Ukrainian budget, one-third of which was paid in advance. Komarov claims that Kyivstar is autonomous enough in decision-making, so it doesn’t avoid the topic of war.

Veon, almost half-owned by Letter One of Mikhail Fridman and Peter Aven, who are under the sanctions, does not seem to have such autonomy. It will continue to operate in Russia, providing Russian communication services across the Ukrainian territories occupied by the Russian soldiers since February 24 and paying taxes to finance the Russian “special operation.”