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VEON’s Disinvestment in Beeline Kyrgyzstan: A Strategic Move or Caveat?

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The telecommunications giant VEON has made the groundbreaking decision to vacate Kyrgyzstan, in a strategic move to sell its controlling interest in Beeline Kyrgyzstan to CG Corp Global’s affiliate CG Cell Technologies. The plan involves VEON divesting their entire 50.1% interest to CG Corp Global, creating an overall valuation of the enterprise at nearly 3.4 times the business’s EBITDA in the future year of 2023.

VEON’s current financial data implies a $22 million EBITDA for Beeline Kyrgyzstan in 2023. This computes to an approximate transaction worth of $37.5 million for the 50.1% stake. Verny Capital is the proud holder of the outstanding 49.9% stake in the venture.

CG Corp Global made a formal declaration expressing their delight at becoming a significant investor in the Kyrgyzstan telecommunications sector. “We are thrilled to team up with our business associates in this collaborative adventure as we foster the business’s growth. It’s crucial to us that patrons persist in receiving the contemporary, dependable, and superior connectivity and digital solutions they have grown accustomed to,” they stated.

Approval from regulatory bodies is a standard requirement and is yet to be granted for this sale to proceed.

There’s been substantial expansion in Beeline Kyrgyzstan’s in the last couple of years, as observed by VEON’s CEO Kaan Terzioglu. He commented, highlighting the division’s “seven successive quarters of two-figure revenue expansion, extensive infiltration and quality of 4G offerings, and a robust foundation in digital capabilities”.

Notwithstanding the fair growth, VEON’s business in Kyrgyzstan remains their smallest globally, generating mere $56 million in revenue in 2023. By comparison, their next smallest market, Uzbekistan, generated a much higher revenue figure of $269 million in the same year.

VEON, with operational mobile networks in Pakistan, Kazakhstan, Bangladesh, Uzbekistan, and Georgia, has faced a turbulent couple of years. Following Russia’s invasion of Ukraine in 2022, they withdrew entirely from Russia, selling the unit to top-tier management representatives by year-end. The company is now committed to restoring and enhancing its embattled Kyivstar operations in Ukraine, with a $600 million investment pledge to refurbish and extend the company’s networks over the next three years.

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