February 22, 2018 / 7:11 AM / 3 months ago

UPDATE 2-Veon shares jump on Q4 results, despite Uzbek currency setback

(Adds comments on app performance, share jump, details)

AMSTERDAM, Feb 22 (Reuters) - Mobile telecommunications company Veon said on Thursday fourth-quarter core profit fell nearly 4 percent to $753 million, mainly due to the devaluation of the Uzbek som, but a strong cash flow and underlying sales growth boosted its shares.

Underlying earnings before interest, taxation, depreciation and amortisation, excluding exceptional costs, decreased 6.9 percent, led by falls in Russia, Algeria and Bangladesh and increased corporate costs, Veon said in a statement. Fourth quarter sales fell 1.4 percent to $2.3 billion.

For the full year, Veon reported 1.9 percent organic revenue growth and 7.5 percent higher EBITDA. Its free cash flow rose 31 percent year-on-year to $1.1 billion, significantly ahead of guidance, it said. Shares jumped 6.8 percent to 3.16 euros ($3.88).

Amsterdam-based VEON has staked its future on a messaging app of the same name, designed to compete with the likes of Facebook Inc’s WhatsApp and Rakuten Inc’s Viber by offering online services.

It plans to offer free services to its roughly 240 million global customers via its mobile network without users incurring additional data charges. It first launched the new platform through its Italian joint venture with CK Hutchison called Wind Tre.

Wind Tre’s revenue fell 11 percent to 1.6 billion euros in the fourth quarter, driven by an 8.1 percent decline in mobile service revenue, as competition saw its customer base fall 5.8 percent to 29.5 million, it said.

The company’s flagship mobile app, which has been launched in Italy, Russia, Ukraine, Georgia and Pakistan since November 2016, has been downloaded more than 8 million times, said head of corporate communications, Mark MacGann.

Veon did not provide user numbers, but MacGann said the product roll out “is on track”. It has targeted reaching all customers in 12 countries this year.

Veon, formerly known as Vimpelcom, said its 2018 performance would continue to be hit by the Uzbek currency liberalization, the sale of a telecommunications tower in Pakistan and the unwinding of its Euroset joint venture in Russia.

“We expect flat-to-low single-digit organic growth for both group revenue and EBITDA,” it said. ($1 = 0.8140 euros) (Reporting by Anthony Deutsch; editing by Muralikumar Anantharaman and Jason Neely and Jon Boyle)

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