Earnings Call Transcript - VEON Q3 2025

Anand Ramachandran, Chief Corporate Development Officer

Hello. Good afternoon, and good morning to everyone. Thank you for joining us today for VEON's Third Quarter 2025 results for the period ending 30th September 2025. My name is Anand Ramachandran, Chief Corporate Development Officer for VEON. Allow me to introduce our senior management in the room today. Next to me is Mr. Kaan Terzioglu, our Group CEO; and next to him, Mr. Burak Ozer, our Group CFO. Today's presentation, as usual, will begin with the key highlights and business update from Kaan, followed by a discussion of the financial results from Burak. We will then open the line for Q&A. Before we begin, please note that today's presentation may include forward-looking statements, which involve certain risks and uncertainties. These statements relate to the company's anticipated performance, 2025 guidance, market development, operational and network investments and the company's ability to realize its targets and initiatives. Our actual results may differ materially due to risks detailed in our annual report on Form 20-F and other filings with the SEC. The earnings release and presentation, including reconciliations of non-IFRS measures are all available on our Investor Relations website. With that, let me hand it over to Kaan.

Kaan Terzioglu, Group CEO

Thank you, Anand. Good morning, good afternoon, and welcome to everyone. I want to start by highlighting a significant milestone. In September, our monthly digital service users exceeded the number of monthly telecom SIM card users for the first time, marking a pivotal moment in our evolution as a digital operator. This reflects the vast opportunities before us and the remarkable growth that lies ahead. We have over 0.5 billion people in our markets, with increasing digital adoption, enhanced connectivity, and strong demographic trends. These markets are not only large but are also growing rapidly, supported by innovation and favorable conditions that foster consistent growth. Central to this opportunity is our digital operator model, which is uniquely capable of driving this transformation. By integrating connectivity, digital platforms, and financial inclusivity, we are creating sustainable growth and lasting value for our customers, communities, governments, and shareholders. Now, moving on to the main points from our Q3 results. I am happy to report that we have achieved another strong quarter, beginning with our financial results. Our revenues increased by 7.5% year-on-year in U.S. dollar terms. Our U.S. dollar EBITDA grew by 19.7% year-on-year. This marks yet another quarter with over $1 billion in revenue and more than $0.5 billion in EBITDA. Based on this performance, we are raising our fiscal year 2025 EBITDA outlook. We now anticipate EBITDA growth for the year of 16% to 18% in local currency terms, an increase from our previous estimate of 14% to 16%. Secondly, we are experiencing exceptional growth in our digital services portfolio. Our direct digital revenues surged by 63% in U.S. dollar terms and now represent 17.8% of our total group revenues. Our AI 1440 strategy is becoming increasingly important to our operations, with ongoing developments in large language models and their integration into AI-powered customer solutions. We are rolling out localized multilingual features at scale through our super app platforms. Thirdly, we are making significant progress with our asset-light strategy. We finalized the sale of our Kyrgyzstan operations this quarter, allowing us to optimize our portfolio and focus on key growth markets. Our global partnership with Starlink aims to provide satellite connectivity across all of VEON's operating markets, ensuring reliable connectivity in hard-to-reach areas. Kyivstar is set to launch nationwide coverage following necessary approvals, and Beeline Kazakhstan plans to roll out services in Kazakhstan with testing activities commencing in the coming months. Lastly, we continue to create value for our shareholders. The successful listing of Kyivstar on NASDAQ unlocked substantial value, with a current market valuation of $2.8 billion compared to $1.25 billion in equity, which is 2.3 times its book value. We retain an 89.6% stake in Kyivstar, valued at $2.5 billion based on its current market price. We are pleased that uncertainties regarding VEON’s ongoing viability have been alleviated, reflecting improved liquidity and a stronger balance sheet. Furthermore, our Board has authorized a $100 million share and/or bond repurchase program, which clearly demonstrates our confidence in our growth prospects and our commitment to delivering value to all our investors. Let's move on to key financial metrics for Q3. To summarize our performance: telecom and infrastructure revenues, adjusted for TNS+ divestment, grew by 3.5% compared to the reported 0.5% shown on this page. This indicates the effectiveness of our differentiated networks, products, and services in driving ARPU and customer engagement while lowering churn. Our direct digital revenues increased by 63%, accounting for 17.8% of total group revenue. On the profitability front, our EBITDA margin continues to grow, with year-to-date margins expanding by 320 basis points year-on-year, highlighting both scalability and cost discipline. Our last twelve months EPS stands at $8.89, reflecting a rise of 60.2% year-on-year. Nonetheless, the reported EPS for Q3 alone showed a loss of $1.84 per share due to two non-cash charges totaling $259 million. The first charge was $162 million associated with SPAC sponsor shares in connection with the Kyivstar listing, recognized as share-based compensation under IFRS in the third quarter. The second was a $97 million charge related to the sale of our Kyrgyzstan business, resulting in cumulative currency translation adjustments. It's worth noting that Q3 results contributed $76 million to our shareholders' equity. I want to stress that these non-cash charges do not affect VEON's operational performance, cash generation, or financial guidance, which remains strongly backed by our organic growth and margin expansion in key markets. Moving forward, our last twelve months CapEx intensity, excluding Ukraine, was 17.7%, aligning with our guidance. Net debt, excluding leases, was $1.72 billion as of September. The reduction in leverage to 1.13x reflects our operational and financial discipline and the effectiveness of our asset-light strategy. Our last twelve months equity free cash flow reached $584 million. We concluded the quarter with a cash position of $1.67 million, which includes $653 million at the headquarters. Now, let's examine our growth trajectory, focusing on three key points. First, on a like-for-like basis, after adjusting for the deconsolidation of TNS+, the Uklon acquisition, and the sale of Deodar and Kyrgyzstan, our revenues would have increased by 10% in U.S. dollars compared to the reported 7.5%. Second, our EBITDA grew by 19.7% in U.S. dollars, showcasing the strength of our strategy and execution quality. Finally, I am pleased that our growth momentum continues to outpace inflation and nominal GDP growth, demonstrating our ability to implement fair pricing while capturing a larger share of customer spending. Now, I want to delve into our digital revenue performance. Starting last quarter, we began to provide clarity on the components of our digital service revenues to offer greater transparency into the growth and potential of our digital businesses. There are three key points to note. First, financial services form the largest component, making up 54% of total digital revenues, which have increased by 33% year-on-year. Second, growth is widespread, with solid contributions across our entertainment, ride-hailing, enterprise, and premium digital brand segments. Third, our sustainable cost advantages, such as low customer acquisition expenses and an optimized distribution model, are driving this growth, enabling us to scale profitably and maintain strong unit economics. Now let's review our progress with multiplay users, which refers to customers who use at least one digital service in addition to our voice and data connectivity services. Multiplay is a crucial aspect of our digital operator strategy and growth narrative. The adoption of 4G facilitates multiplay, making increased 4G usage an essential growth driver. This 4G foundation is increasingly transitioning to multiplay, supported by our vast and relevant range of digital products and services. The multiplay segment fosters growth through improved customer engagement, higher data consumption, more frequent usage of voice services, enhanced retention, and ARPU growth. Our multiplay customers generate 3.8 times the ARPU of a voice-only subscriber. Notably, this ratio remains strong even as multiplay adoption becomes a larger share of our overall subscriber base. In the third quarter, multiplay customers generated 55.4% of our total revenue, with this segment growing revenue-wise by 23% year-on-year. Moving on to different operations, I will present growth performance in local currency terms across our markets. We delivered robust double-digit revenue growth in all markets except Bangladesh. Although Beeline Kazakhstan's headline revenue growth appears as single-digit, on a like-for-like basis, revenues increased by 23.3%. In Bangladesh, we are encouraged by the return to year-on-year revenue growth for the first time in 14 months as of September 2025. Our profitability trends across markets also remain strong. Although tax effects impacted the headline figures for Beeline Kazakhstan and Beeline Uzbekistan, organic profitability trends are still very solid after adjustments. Also, it is important to note that our consolidated financial results for Ukraine include full consolidation of Ukraine Tower Company, while the stand-alone disclosures for KGL Group released this morning do not include UCT. We can address specific questions and discuss market-specific issues during the Q&A session. Now, let’s focus on the success of our Financial Services business in Pakistan, which is the largest component of our Financial Services unit. This quarter, we completed the operational separation of JazzCash, which will continue to provide technology and services to MMBL. Both businesses are now fully owned subsidiaries of VEON. This strategic step is crucial for accelerating growth and unlocking value in our digital financial services portfolio. The business is experiencing significant growth, as demonstrated by the 40% year-on-year increase in gross transaction value for the quarter, which now represents 13% of Pakistan's GDP over the last 12 months. This growth is fueled by a 48% rise in total transactions and a 38% increase in transactions per user. JazzCash, with its extensive merchant network of over 700,000, processes more than 80% of all Raast payments value under the Prime Minister's Cashless Society initiative. Loan origination saw a sharp increase this quarter, with the average number of digital loans disbursed daily rising by nearly 26%, amounting to an average of 153,000 micro loans issued on a single day in Q3. Recently, JazzCash reached a notable milestone with its highest single-day lending disbursement of PKR 1.1 billion through 200,000 loans. We take great pride in JazzCash's achievements. Thanks to its trusted brand, deep market penetration, and expanding ecosystem, JazzCash is driving Pakistan's swift transition to a cashless economy and is set to unlock significant long-term value for VEON. Let’s take a closer look at the ongoing momentum of our digital ecosystem. We continue to experience robust and diverse growth across our platforms, with the total number of monthly active users reaching 143.3 million, reflecting a 39% year-on-year increase. Our digital-only user base has more than doubled to reach 50 million, now representing nearly 35% of our total digital users. As mentioned earlier, digital engagement surpassed mobile engagement for the first time in September, underscoring how our platforms are becoming the primary customer interface and revealing new opportunities for cross-selling, advertising, and monetizing digital services. Over the past year, transaction values increased by 50%, totaling $48.8 billion across our financial services platforms. Now, let’s look at our digital portfolio, concentrating on consumer-focused platforms. Our Financial Services segment has expanded by 25%, reaching 42.1 million users across all platforms. I previously highlighted JazzCash, while in Kazakhstan, Beepul and in Uzbekistan are also scaling up their roles as the financial facet of our digital ecosystem in their respective regions. Our entertainment platforms had a strong quarter as well, with Tamasha in Pakistan and Toffee in Bangladesh achieving record engagement levels, thanks to the Asia Cup Cricket tournament, which also drove a significant increase in advertising demand. In Ukraine, Kyivstar TV's revamped partnership heightened direct customer engagement significantly. Additionally, BeeTV in Kazakhstan and Kinom in Uzbekistan continued to gain momentum, reinforcing the growing strength of our regional entertainment portfolio. Our super apps are also expanding, positioned as a comprehensive digital hub that seamlessly integrates essential services from healthcare to entertainment and enhances customer engagement throughout our footprint. Uklon's ride-hailing service reached 3.6 million users, demonstrating substantial growth in active riders, trip volumes, and digital engagement in Ukraine and Uzbekistan. Our premium digital brands, which encompass various life cycle, digital identity, and productivity tools, also experienced strong user growth, reaching 3.3 million users. With evolving lifestyle and content integrations, these platforms are designed to cater to changing customer needs with curated high-value experiences. Now let’s shift focus to our enterprise platforms, which are transitioning from internal facilitators to market-facing tech leaders, spearheading the next generation of augmented intelligence and innovation. This shift opens new revenue opportunities and strengthens our position as a next-generation digital operator. QazCode, Kyivstar Tech, Garaj, U-Code, and bCloud are securing new contracts and delivering augmented intelligence solutions, cloud services, and data center solutions to corporate and government sectors, expanding our footprint in fast-growing enterprise tech markets. Across these companies, we now employ nearly 2,000 engineers, software developers, and data scientists executing at scale to create commercially viable next-generation digital products. Our advertising technology initiative, VEON AdTech, is scaling rapidly, driven by augmented intelligence and big data. It connects with over 70 million screens across our operations, providing measurable returns on investment for advertisers. Built on our proprietary AI and data infrastructure, this platform creates a comprehensive advertising ecosystem that allows for precise audience targeting, real-time optimization, and establishes a robust new monetization layer across our digital offerings. Now, let’s discuss how we are integrating augmented intelligence across our ecosystem. We refer to this initiative as AI1440, representing augmented intelligence for every single minute of the day. In Kazakhstan, our Kaz-LLM is now operational in four languages: Kazakh, Turkish, English, and Russian. This is enhancing agentic features across various platforms. In Ukraine, Kyivstar Tech is collaborating with the Ministry of Digital Transformation to develop the country's first sovereign Ukrainian language model, which is a significant step in building national AI capabilities. We plan to extend this capability to Uzbek, Bangla, and Urdu while deepening market-specific insights. AI is increasingly becoming agentic across our applications, transforming customer engagement from self-service to entertainment and education. In the entertainment realm, AI recommendation systems now engage nearly 35 million monthly active users across Tamasha, Kinom, Kyivstar TV, and Hitter. On the Tamasha platform, AI drives over one-third of all live TV sessions and nearly 60% of video-on-demand views. The AI news channel alone has become the third most-watched channel on the platform, often featuring male or female news anchors presenting live news. In customer service, our SIMOSA AI chat assistant autonomously manages nearly one million user interactions each month. Our customized personal growth solutions have also seen significant uptake among our consumer audience. Janymda AI Tutor engages 17,000 monthly users, while Ryze AI tools processed more than 16,000 requests, assisting students in crafting their CVs. Additionally, we are innovating with AI for enterprise applications. QazCode has successfully launched Aventa AI, an enterprise-grade AI-native platform designed to enhance agentic workflows across HR, finance, and procurement roles. In conclusion, augmented intelligence is now a core component of our ecosystem, providing measurable benefits across all of our markets. I will now hand over to Burak, who will provide a detailed overview of the financials.

Burak Ozer, Group CFO

Thank you, Kaan. Looking at group revenues, we delivered total revenue of USD 1.115 billion in the third quarter, representing a growth of 7.5% in U.S. dollar terms. As previously noted by Kaan, the quarter included the deconsolidation of TNS+ in Kazakhstan, the consolidation of Uklon, and the sale of Deodar and our Kyrgyzstan business. On a like-for-like basis, that adjusts for this, our revenues grew 10%, underscoring the continued momentum across our operating markets. Direct digital revenues grew 63% year-on-year to reach $198 million. Digital services now account for 17.8% of total revenues, up from 11% a year ago. Turning the page to profitability. EBITDA for the quarter was USD 524 million, representing growth of 19.7%. The EBITDA margin stood at 47% for the quarter, up 410 basis points year-on-year and was supported by operating leverage and disciplined cost management across all markets. We note that our digital services now account for 17.8% of group revenue. While digital margins are structurally lower, their significantly lower CapEx intensity ensures comparable cash conversion relative to telecom services. As our revenue mix continues to shift in this direction, we remain focused on sustaining EBITDA growth at scale while enhancing group-wide capital efficiency and long-term free cash flow generation. Turning now to the balance sheet. We ended the quarter with USD 1.67 billion in cash and deposits, of which USD 653 million is held at headquarters. Net dividends upstream from operating companies during the quarter totaled USD 96 million and USD 285 million for the year-to-date. Gross debt stood at USD 4.86 billion, up slightly from June and reflected the completion of our USD 200 million bond issuance during the quarter. Approximately half of our external debt is now held at operating company level, providing natural currency hedging. Net debt was USD 3.48 billion, while net debt, excluding leases, improved to USD 1.73 billion, bringing leverage down to 1.13x EBITDA. Let me now hand the call back to Kaan.

Kaan Terzioglu, Group CEO

Thank you, Burak. Let me conclude with our outlook for the year. Despite ongoing macro and geopolitical challenges, VEON continues to execute strongly across all markets. We are revising our EBITDA outlook for the full year and now expect EBITDA growth of 16% to 18% in local currency terms for the full year. We are maintaining our revenue guidance of 13% to 15% growth in local currency terms. In U.S. dollar terms, we expect this to translate to 7% to 8% revenue growth and 10% to 11% EBITDA growth for the full year, assuming no significant fluctuations in exchange rates from current levels. Our capital intensity, excluding Ukraine, remains with 17% to 19% range. These targets are based on a blended weighted average inflation rate of 8.2%. In closing, we are pleased with our business momentum. Looking ahead, we remain confident in VEON's trajectory and the opportunities before us. As I highlighted earlier, the Board has approved another $100 million share and/or bond repurchase program, reinforcing VEON's confidence in long-term value creation. VEON is well positioned to sustain growth and long-term value creation for our shareholders, customers and communities we serve. Thank you for your attention and support. Now we can open the line for Q&A.

Operator, Operator

Our first question comes from Jesse Sobelson with BTIG.

Jesse Sobelson, Analyst

This is Jesse Sobelson with BTIG. I just wanted to ask about the recent transaction involving Kyivstar and the decision to bring the asset public via SPAC. Could you share the motivation for choosing a SPAC structure for this process? And then additionally, you noted that you own nearly 90% of the asset. Looking ahead, how are you thinking about your future ownership stake? Would you consider selling a portion of the holdings to generate liquidity? How would you balance the liquidity versus maintaining control of the asset?

Kaan Terzioglu, Group CEO

Thank you very much, Jesse, for the question. So with regard to Kyivstar's de-SPAC transaction, we are a true believer in Ukraine's future, and that's why we are championing the 'invest in Ukraine now' initiative throughout the world. And we thought it would be the right thing for us to find a deal certain fast track to list Kyivstar. And that's why we opted for a de-SPAC process. And I'm very glad to conclude it on a successful basis as Kyivstar is now listed in NASDAQ at a valuation, which is 2.3x its net equity value of $1.25 billion at $2.8 billion. I think this was a very, very successful transaction from our side. Now naturally, SPAC comes with additional cost, given that deal certainty element and the speed of transaction process. But overall, I think being a pioneer in creating opportunities for international investors in Europe and the U.S. to participate in the future growth of Ukraine, I think it was the right decision. Now looking with the same perspective, we are keen to allow more investors to invest in Kyivstar. So we will be open to diluting our current position further to allow people from Ukraine, first of all, to have a chance to invest in Kyivstar and any credible international investor to also come in and be part of the success story that will be built in Ukraine. And we will continue championing our 'invest in Ukraine now' initiative all around the world as well. Thank you.

Operator, Operator

Our next question comes from Nicholas Paton with Edison Group.

Nicholas Paton, Analyst

Just a quick question on Kyivstar. There's quite a lot of cash at the head office level. I think it's $600 million or so. What's the plan for that? And how easy will that be to repatriate up the chain?

Kaan Terzioglu, Group CEO

I think Nicholas, $653 million is the headquarters cash at VEON, not Kyivstar.

Anand Ramachandran, Chief Corporate Development Officer

Kyivstar $470 million.

Kaan Terzioglu, Group CEO

$470 million would be the right amount for Kyivstar. And as you know, we are still at war. So martial law still stays in place. During the martial law, there are limitations on upstreaming. There is $1 million per company type of a dividend limit. But what we would like to see actually is just in line with our invest in Ukraine now initiative, you will see us actually investing in Ukraine. And we have been active with Helsi acquisition and Uklon acquisition. We believe that there is a unique opportunity to build a digital ecosystem in the country. And naturally, based on the needs of the country, whether it is energy resilience, energy storage needs or investing in growth opportunities, we will be also looking into those. But in the meantime, our objective is to make sure that we keep our cash safe in assets that are either generating cash or creating capacity for us to protect ourselves from potential devaluations.

Operator, Operator

Our next question comes from Adrian Cundy with Emerging & Frontier Capital.

Adrian Cundy, Analyst

Sorry, my video is not functioning well today. So I just wanted to ask you can see my picture. I have 2 questions. First, relating to UTC and just infrastructure in general within Kyivstar, will we be seeing you continue to pursue divestment on the Pakistan model of tower assets in Ukraine? Or is VEON planning to retain control of that for the foreseeable future, particularly given that Kyivstar is now talking about a significant network upgrade and is beginning to touch on 5G in line with the national development strategy. And the second question I have relates to the financial services in Pakistan. Now that JazzCash and the bank are stand-alone entities, how do you see them working with the digital business? Can we get some more color on what type of loans are being extended? And finally, do you see further initiatives and value extraction for the Pakistan business?

Kaan Terzioglu, Group CEO

Let me address your first question regarding our tower business in Ukraine. It's well known that we have a strategy focused on being asset-light, and we believe that tower operations are more valuable when managed by independent tower companies, enabling infrastructure sharing among multiple operators. Therefore, our initial move to create an independent tower company aligns with this strategy. We will seek opportunities for more effective infrastructure sharing in Ukraine and ensure that tower operations are managed by an independent entity that can concentrate on marketing the infrastructure. Separating towers from operating companies has numerous advantages. The telecom industry has faced challenges due to cross-subsidization between infrastructure and service businesses. We strive to avoid this and concentrate on our core customers rather than subsidizing different business sectors. Expect to see more developments in this area. While we are a leading infrastructure provider in Ukraine, I believe no telecom company can sustain exclusive networks. We need to embrace network sharing to enhance cash generation for our operations. Now, turning to your second question about our financial services business. In places like Pakistan, there is a significant unmet demand for financial services. Many people are unbanked and lack access to financial solutions, presenting us with a substantial opportunity. This is why we have established our microfinance bank, MMBL, as well as our digital wallet service, JazzCash, to cater to our customers. We have nearly 50 million bank accounts and a monthly active user base of 22 million. On an average day in the third quarter, we issued 153,000 nano loans, typically around $30 to $40. These loans are crucial for individuals—like taxi drivers needing funds for immediate repairs or housewives purchasing basic ingredients to sell homemade goods. These loans are essential for supporting small businesses and family operations, and we take pride in facilitating this. Additionally, our merchant network includes 700,000 merchants, which drives the cashless economy forward. We handle a significant volume of transactions through Raast, the mobile payment clearance platform, accounting for nearly 13% of the total GDP. Our focus is not just on scale but on daily customer service. This sector is expanding at a rate of 33% year-on-year, and I believe it will serve as a compelling case study in digital banking and fintech. We are also exploring ways to scale this business further and may welcome strategic investors to join us in this endeavor.

Anand Ramachandran, Chief Corporate Development Officer

What was the third question again? Can you repeat it, please?

Adrian Cundy, Analyst

I guess the follow-up is just on that on even a stand-alone, are you looking at value extraction or value recognition for your digital assets in places like Pakistan?

Kaan Terzioglu, Group CEO

I think the answer is clearly yes, as the opportunities come to the right level and scale. For us, the digital services portfolio we have serves two important purposes. One is the multiplay strategy that we have on our regular telecom business. As our customers use our digital services, they stay longer with us, they consume more. And then, of course, the direct digital revenue potential of these service lines from entertainment to financial services drives additional growth for us. And to be precise, the ARPU level increase and the churn reduction of digital services impact on our SIM user base has nothing to do with the direct digital revenues that we report. These are two different growth. The growth on one side drives our business on the telecom side and the other one drives the business on the digital services. And when the right scale arrives, of course, we will be looking for crystallization of the value of our digital services portfolio.

Operator, Operator

Our next question comes from Ahmed Mostafa with Inam.

Ahmed Mostafa, Analyst

I have two questions. Jazz delivered a strong EBITDA margin uplift this quarter. And yet you have indicated that consolidated margins may soften over the long run as digital services say. So how do you manage this trade-off between scale and profitability? And second, you have raised your EBITDA growth guidance for this year. So could you walk us through the main drivers behind this improvement in the EBITDA margin?

Kaan Terzioglu, Group CEO

Ahmed, good point. We thought the digital services businesses would be having a bigger dilution on our EBITDA margins. So far, we failed on that. Yes, our EBITDA margins are also improving compared to the business as our digital services are growing. But I think I attribute that on really discipline when it comes to operational cost management of our operations. But let me also give the word to our CFO, Burak, anything you would like to add on that?

Burak Ozer, Group CFO

Yes. On top of the discipline in terms of driving efficiencies on cost side, we are also having disciplined price actions, price increases that we are taking in line with the market conditions that would beat the inflation, devaluation plus the GDP growth. So those two combined together definitely is helping our margin.

Operator, Operator

Our next question comes from Vincent Fernando with Zero One.

Burak Ozer, Group CFO

We can't hear you yet.

Anand Ramachandran, Chief Corporate Development Officer

Operator, shall we try again move to the next question maybe come back to Vincent.

Vincent Fernando, Analyst

Can you hear me now?

Anand Ramachandran, Chief Corporate Development Officer

Yes.

Vincent Fernando, Analyst

I apologize for that. I would like to ask again about JazzCash and MMBL. Now that they are operating more independently, do you plan to leverage some of their capabilities to expand your fintech business into other markets? Additionally, when you consider the monthly active users for JazzCash, which is around 20.6 million, and your total telecom subscriptions at 72.7 million, there is significant potential to convert existing subscribers into JazzCash or MMBL customers. What other strategies do you have to enhance penetration in this area? Those are my two questions.

Kaan Terzioglu, Group CEO

Vincent, I think you're spot on in terms of both organic and accelerated growth opportunities in this business. Now you need to keep in mind that Pakistan is still a frontier market where 4G penetration as well as smartphone penetration has certain limits in terms of the penetration capabilities. I translate those into upsides that are in front of us. So one of the key initiatives that you will see us focusing on in Pakistan is smartphone ownership. Affordable smartphones will be critical. And they will come up with, of course, their own embedded digital services on top of that. So we have quite a lot of appetite in this conversion. And I would like to make sure that everybody who is our customer has access to the digital services, whether it be on financial services or entertainment or health care or education to have access to these platforms. So you're right. In addition to the growth that we see, I think the organic growth can accelerate, and that's the basis of the sustainable growth expectation we have from the marketplace really. Now with regard to our ability to leverage the competencies and the experiences that we built in Pakistan in other markets, absolutely. And that's why we are very excited about the growth potential in Bangladesh and potentially in Ukraine. And the know-how that we have in terms of risk managing a bank, first of all, but also having credit scoring engines fine-tuned for these types of nano loans, all these capabilities are applicable in all the markets. And of course, our intention is to make sure that we leverage these, just like our intention around making Uklon or Helsi, our health care platform or our ridesharing platform also become available through all the super apps we have in all the countries.

Vincent Fernando, Analyst

Got it. Just one quick follow-up on that. So Pakistan has a digital bank licensing framework, and under MMBL, you also have a license there. Is there value in having one of those digital bank licenses? Or can MMBL operate in areas where you want more banking services, JazzCash, and payments? I just want to understand if that’s something that’s part of the roadmap or if it’s not necessary.

Kaan Terzioglu, Group CEO

We operate currently under the microfinance banking license. However, I believe that we can do more and we can contribute more to the Cashless Economy Initiative of the Prime Minister, that will require us to upgrade our license to a digital bank, full digital bank license, and we are in the process of looking for ways of achieving that sooner rather than later. I think the success story of JazzCash is very visible and recognized very strongly by the Pakistani government as well. They want the same. We want the same. And I think we will get to a level of much higher capabilities if we upgrade it to a full digital bank license, and we are working on it.

Operator, Operator

Our next question comes from Ali Zaidi with Inam.

Ali Zaidi, Analyst

My question is about ride-hailing. It has become the third-largest contributor to our digital revenue. Are there any plans to explore other markets for this business, particularly in Pakistan, especially following the recent exits of major players in that country? Do you see potential for entry and growth in this segment?

Kaan Terzioglu, Group CEO

So Ali, the ride-hailing business operates on a city-by-city basis. Currently, it is active in 28 cities, with 27 of those located in Ukraine and one in Tashkent, Uzbekistan. We have a clear ambition to expand into other markets based on a prioritized list. This could involve starting in Kazakhstan or Pakistan, and we are exploring various initiatives, but expansion will be determined on a city-by-city basis due to the unique characteristics of each city.

Operator, Operator

Our next question comes from Matthew Harrigan with The Benchmark Company.

Matthew Harrigan, Analyst

I feel more confident in providing a positive preview for VEON compared to T-Mobile or Comcast, though I'm uncertain if that's a good or bad sign from my viewpoint. It's interesting to note that the dynamics for you are different since you're a market leader. In the U.S., T-Mobile has a significant advantage in switching customers compared to Verizon and AT&T, as well as other large competitors with less robust networks. Even if growth in the U.S. mobile market is limited, T-Mobile can still report strong numbers due to their switching share. This analysis could also apply to the range of apps you manage, along with mobile services. Do you think being such a market leader means that device innovation and perceptions of network quality have minimal impact on you? Since you are substantially larger than your competitors, is some erosion almost inevitable? Or do you believe that as you compete, the factors of switching share, device innovation, and recognition of your robust apps and mobile network can positively influence your results? Or are you largely reliant on the overall growth of the mobile market and demand for apps? Apologies for being a bit lengthy, but I hope you understand the essence of my question.

Kaan Terzioglu, Group CEO

Matthew, I believe the opportunity ahead of us is very exciting from two angles. First, we have appealing digital services for our customers, and second, many customers are still not connected. We are expecting 90 million additional people to gain access to 4G networks, many of whom will be purchasing their first smartphones. I hope they will choose our devices with our applications pre-installed, allowing them to use our services for games, videos, and channels without necessarily needing a credit card for payment. This excites me because, aside from Bangladesh, we are the leading provider in all the markets we serve. In Bangladesh, we still lead in terms of our entertainment platform compared to other super apps. I am confident that the 40 million customers on our network, who have only used basic calling services, will soon have smartphones and access to their first online movie on mobile networks. We eagerly anticipate this change, as these 40 million individuals will become our customers. This highlights the incredible opportunity for organic growth, which I wanted to emphasize. Additionally, the growth in digital services represents a unique opportunity that we are ready to seize.

Operator, Operator

Our next question comes from Vincent Fernando with Zero One.

Vincent Fernando, Analyst

There's a slight delay, but I'm here. I want to revisit the fintech situation in Pakistan. You reported $23.8 million in EBITDA for the third quarter. Can you provide any insights on where we might see a run rate? You had $20.3 million in the second quarter and then $23.8 million in the third quarter. I'm trying to establish a base for the run rate. Is it relatively recurring in nature? I just want to get a better understanding of that.

Kaan Terzioglu, Group CEO

Yes. Our financial services business in Pakistan is actually quite a steady growth business. So over the last six quarters, every quarter, we have been seeing continuous growth of 40% to 30% every single quarter. And looking into our future, I see no reason for this to go down. I think we'll continue keeping that lines. Clearly, the lending business has a balance sheet criteria in terms of growth. But currently, I feel comfortable with those.

Operator, Operator

We have no further questions at this time. I will now pass back to Anand Ramachandran for closing remarks.

Anand Ramachandran, Chief Corporate Development Officer

Thank you. Thank you. Well, guys, thank you so much for dialing in as usual. Thank you so much for your support of VEON. As always, please e-mail us, call us here if you have any questions at all, and we'll continue talking. But till then until the next quarter, thank you, and bye-bye.

Kaan Terzioglu, Group CEO

Thank you very much.