VEON Ltd. (VEON): PESTLE Analysis [Nov-2025 Updated]

You're looking at VEON Ltd. (VEON) and trying to cut through the noise of emerging markets, right? The headline is this: The company is aggressively transforming its risk profile, shifting from a pure telecom operator to a digital-first platform, and the numbers are starting to prove the strategy works. We're seeing a significant operational outperformance, with the full-year 2025 local currency EBITDA growth outlook raised to between 16% and 18%, but you still have to map the geopolitical and currency risk country-by-country. The real story is how the USD 198 million in direct digital revenue from Q3 2025-a 63.1% jump-is insulating the business from macro headwinds.

Political: Geopolitical Risk and Post-Divestment Stability

The political landscape is still the largest variable, but it has clarified significantly since the Russia exit. The core political risk is now concentrated in the ongoing geopolitical instability in Ukraine, which directly impacts Kyivstar's network operations, but the recent listing of the Kyivstar Group has unlocked value, with VEON's 89.6% stake valued at USD 2.5 billion as of November 2025. This move helps ring-fence the asset's value. You must now manage regulatory risk country-by-country, dealing with government influence on telecom pricing and infrastructure investment in places like Pakistan and Kazakhstan. The key action here is to maintain strong local government relations, which is the only way to mitigate adverse regulatory decisions or license non-renewal risk.

Economic: Inflation, Currency Volatility, and Debt

The economic environment is a classic emerging market trade: high growth potential but brutal currency risk. High inflation, especially in Pakistan and Uzbekistan, erodes real revenue and margin, which is why the local currency revenue growth of 13% to 15% for FY2025 translates to a lower 7% to 8% growth in US Dollar terms. Significant currency volatility, like with the Pakistani Rupee, increases the cost of their US Dollar-denominated debt. Here's the quick math: the net debt excluding lease liabilities stood at USD 1.729 billion in Q3 2025. The high capital expenditure (CapEx) required for network upgrades, which is guided to be in the 17% to 19% intensity range (excluding Ukraine) for 2025, against a tight credit environment, means the cost of capital is a major headwind. Still, the underlying growth is robust.

Sociological: The Digital Demand Driver

This is where the opportunity is. Large, youthful populations in markets like Pakistan and Uzbekistan are driving massive, insatiable demand for mobile data. This demographic shift is fueling the company's digital strategy. The high and growing demand for affordable digital financial services (FinTech) is a key opportunity, especially with the success of JazzCash in Pakistan. Increasing digital literacy and smartphone adoption accelerate the shift to 4G/digital services, which is why direct digital revenue is now 17.8% of total Group revenue, up from 11.7% a year ago. Migration and urbanization patterns affect network planning, so you need to keep CapEx focused on high-density urban centers to maximize return on investment.

Technological: 4G, 5G, and the Starlink Play

Technologically, 4G penetration is the near-term battleground. Aggressive 4G network expansion is crucial to capture market share and improve quality of service. However, the pressure to start 5G deployment in high-value urban centers, particularly in Kazakhstan, is rising. The most interesting development is the non-exclusive global framework agreement with Starlink, making VEON the first operator with a multi-country Direct to Cell partnership. This is a smart move to extend coverage in remote areas and compete with Over-The-Top (OTT) services, which requires constant innovation in digital offerings. The need for massive investment in fiber backhaul to support data traffic growth is a constant CapEx drain, but it's non-negotiable for future digital revenue growth.

Legal: Navigating Regulatory Patchwork

The legal environment is a patchwork. You are dealing with complex and varying data localization and privacy laws across the Commonwealth of Independent States (CIS) region, which adds operational complexity and cost. Regulatory scrutiny on market consolidation and potential anti-monopoly actions is a constant threat. Licensing and spectrum auction costs are a significant, non-discretionary expense that eats into free cash flow. Plus, the legal frameworks for digital financial services (FinTech) are still maturing; for example, the company is actively looking to upgrade its microfinance banking license for JazzCash to a full digital bank license in Pakistan, creating regulatory uncertainty but also a massive potential upside.

Environmental: ESG and Climate Resilience

Environmental, Social, and Governance (ESG) reporting is no longer optional; it's a factor in the cost of capital. There is increased regulatory pressure for energy efficiency in network infrastructure to meet climate goals, which means CapEx must increasingly focus on green technology. You also need to plan for better e-waste management and recycling programs in high-growth markets where smartphone churn is high. Finally, climate change risks, such as the persistent threat of flooding in Pakistan, directly threaten physical network resilience, so network hardening must be a line item in the CapEx budget. Investors are watching ESG transparency closely.

Next Step: Finance: Draft a sensitivity analysis on the 2025 EBITDA guidance (16%-18% LCY growth) against a 10% further depreciation of the Pakistani Rupee and Ukrainian Hryvnia by the end of Q4 2025. Owner: Portfolio Manager.

VEON Ltd. (VEON) - PESTLE Analysis: Political factors

Geopolitical instability in Ukraine directly impacts network operations and subscriber base.

You can't talk about VEON's political risk without starting in Ukraine. The ongoing war remains the single biggest operational and political headwind, but Kyivstar, VEON's Ukrainian subsidiary, is showing incredible resilience. For the first quarter of 2025 (1Q25), Kyivstar's total operating revenue was $255 million, marking a robust 37.1% year-on-year growth in USD terms, with Adjusted EBITDA surging 50.5%. This performance is a testament to the team's ability to operate under extreme duress, but it hides the massive capital expenditure needed to repair and maintain the network.

To mitigate this risk, VEON is doubling down on its commitment, pledging a $1 billion investment in Ukraine's digital infrastructure through 2027. Plus, the launch of Starlink's Direct to Cell service in November 2025 is a critical strategic move, enabling Kyivstar's 22.5 million mobile customers to stay connected even when terrestrial networks are damaged. This is not just a commercial decision; it's a political statement on resilience and national infrastructure support.

Post-Russia divestment, the company is now less exposed to major power sanctions risk.

The successful divestment of the Russian business, PJSC VimpelCom, has fundamentally de-risked VEON from the most severe geopolitical sanctions imposed by major Western powers. This strategic exit has effectively 'ring-fenced' the company, allowing it to focus on its high-growth frontier markets. Honestly, the biggest residual sanctions-related political risk now centers on the potential nationalization of Kyivstar in Ukraine.

This risk stems from the historical ownership structure involving LetterOne, which has been subject to sanctions. While VEON continues to assert its independence and has taken steps to mitigate this, the possibility of adverse executive action by Ukrainian authorities remains a tail risk. The planned IPO of Kyivstar in the second half of 2025 is a clear action to crystallize value and demonstrate its separate, Western-aligned corporate governance.

Government influence on telecom pricing and infrastructure investment in emerging markets.

Government influence is a constant factor in frontier markets, manifesting as both opportunity and risk. In Kazakhstan, the government views VEON's Beeline Kazakhstan as a key partner in its digital transformation agenda, actively encouraging investment in 5G deployment, data centers, and digital platforms. This is a supportive political environment that helps drive VEON's local-currency revenue growth, which is projected to be between 13% to 15% for the full fiscal year 2025.

Conversely, in Bangladesh, political influence can be directly adverse. While the government partially rolled back a supplementary duty increase that hurt 2024 results, the new Telecommunications Network and Licensing Policy 2025 (approved September 18, 2025) introduces a foreign ownership cap of 85% for network access licenses. This means Banglalink must ensure at least 15% domestic participation within three years, which requires careful political and financial navigation.

Risk of adverse regulatory decisions or license non-renewal in key operating regions.

The regulatory environment in VEON's key markets is characterized by high financial demands and evolving compliance requirements. This is where the rubber meets the road. Regulators often use license renewals to extract significant fees or mandate costly infrastructure rollouts, effectively acting as a hidden tax on operations.

Here's the quick math on regulatory risk across key markets:

You must manage regulatory risk country-by-country.

The takeaway is simple: VEON's political risk is not a single, monolithic issue; it's a portfolio of country-specific challenges. You can't use the same playbook in Almaty as you do in Dhaka. The strategy must be a granular, country-by-country effort.

• In Ukraine: Focus on network resilience and Western capital market alignment (Kyivstar IPO).
• In Pakistan: Prepare for significant license renewal fees and manage high regulatory financial demands.
• In Bangladesh: Navigate the new foreign ownership cap and maintain strong QoS compliance to avoid adverse action.
• In Kazakhstan: Align digital expansion (like the OLX acquisition) with the government's national digitalization goals.

The core action is to embed political risk mitigation directly into the capital expenditure (capex) plan, which is expected to be in the 17% to 19% range of revenue for 2025 (excluding Ukraine). Defintely, this is a cost of doing business in these high-growth, high-risk markets.

VEON Ltd. (VEON) - PESTLE Analysis: Economic factors

The economic landscape for VEON Ltd. in 2025 is a dual-edged sword: high inflation and a steep cost of capital create significant headwinds, but the company's strategic shift to digital services is successfully outpacing the inflation drag and improving its credit profile. You need to focus on the company's ability to sustain local-currency revenue growth above the average weighted inflation rate.

High inflation, particularly in Pakistan and Uzbekistan, erodes real revenue and margin.

While inflation is a persistent threat to real revenue, VEON's pricing power and digital strategy are currently mitigating the erosion. For the third quarter of 2025 (3Q25), the blended weighted average inflation rate across VEON's markets stood at 9.2%. Fortunately, the company's local currency revenue growth of +11% year-over-year (YoY) for 3Q25 successfully exceeded this inflation rate. That's a strong operational win, but it's a constant battle.

In core markets, inflation remains a major factor. For example, the International Monetary Fund (IMF) projects Uzbekistan's inflation for 2025 to reach 9.1%. In Pakistan, the annual inflation rate accelerated to 6.20% in October 2025. This persistent price pressure means input costs for energy, utilities, and wages are rising quickly, which compresses margins unless pricing adjustments are made defintely and consistently.

Significant currency volatility (e.g., Pakistani Rupee) increases the cost of US Dollar-denominated debt.

Currency volatility is a major risk because VEON's debt is primarily US Dollar-denominated, whereas its revenue is in local currencies like the Pakistani Rupee (PKR) and Uzbekistani Som (UZS). A weakening local currency means more local revenue is needed just to service the same dollar debt amount. However, the currency picture in 2025 is more stable than in recent years.

The Pakistani Rupee, for instance, has shown relative stability in 2025, trading between its lowest point of ₨278.48 (January) and its highest of ₨289.90 (August) against the US Dollar. As of November 25, 2025, the rate was around ₨283.3220 per USD. A key structural protection is that approximately half of VEON's USD 4.86 billion gross debt (as of September 30, 2025) is held at the operating company level, which acts as a natural hedge against currency fluctuations for those local operations. That structural hedge is smart risk management.

Lower per-capita income in core markets limits average revenue per user (ARPU) growth.

The low per-capita income in markets like Pakistan and Uzbekistan inherently caps the average revenue per user (ARPU) from traditional telecom services. The strategy to overcome this is by transitioning from a connectivity provider to a digital operator (DO1440 strategy), which drives higher-value usage.

This strategy is working: Multiplay customers-those who use a digital service like JazzCash or Hook alongside 4G connectivity-deliver 3.8x higher ARPU and show a 50% lower churn rate compared to voice-only users. This is where the real value is unlocked. Direct digital revenues, a clear sign of this strategy's success, surged 63.1% YoY to reach USD 198 million in 3Q25, now accounting for 17.8% of total Group revenue.

High capital expenditure (CapEx) required for network upgrade against a tight credit environment.

To support the high-ARPU digital strategy, significant capital expenditure (CapEx) is required for 4G network expansion and modernization. This investment is non-negotiable for growth. The Group's CapEx for 3Q25 was USD 223 million. For the full fiscal year 2025, VEON expects its CapEx intensity (CapEx/Total Revenue, excluding Ukraine) to remain within the 17% to 19% range. This consistent investment is crucial, but it requires access to capital.

Cost of capital is a major headwind.

The cost of capital, reflecting the perceived risk of operating in frontier markets, remains high. This is a major headwind for financing the CapEx program. In July 2025, VEON issued USD 200 million in senior unsecured notes with a high annual interest rate (coupon) of 9.000%. This rate is a concrete indicator of the borrowing cost in the current tight credit environment. However, the company's financial discipline has improved its leverage profile, which helps offset some of the cost pressure. The net debt to Last Twelve Months (LTM) EBITDA ratio, excluding lease liabilities, improved to a manageable 1.13x as of September 30, 2025, down from 1.32x in the prior quarter. This low leverage is a sign of financial strength that helps manage the high cost of new debt.

Here's the quick math on CapEx: With LTM CapEx intensity at 17.7% (ex-Ukraine), and the full-year outlook in the 17% to 19% range, you can see the capital commitment is serious. The strategic action is clear: keep driving that 3.8x ARPU uplift from digital services to generate the cash flow needed to cover the high-cost debt and CapEx. Finance: monitor the 1.13x leverage ratio closely to ensure it stays below 1.5x by year-end.

VEON Ltd. (VEON) - PESTLE Analysis: Social factors

The social landscape in VEON's core markets, particularly Pakistan and Uzbekistan, presents a powerful demographic tailwind that is driving demand for digital services. You are looking at two of the world's most youthful and rapidly digitizing populations, creating a massive, near-term opportunity for mobile data and FinTech expansion. The challenge is ensuring network capacity and digital inclusion keep pace with this explosive growth.

Large, youthful populations in Pakistan and Uzbekistan drive massive demand for mobile data

The sheer size and youth of the population in VEON's key operating regions are the primary social catalysts for growth. Pakistan's population is estimated to be over 250 million people as of 2025, and Uzbekistan's permanent population reached 38 million in August 2025. Uzbekistan, in particular, has a high and rising fertility rate of 3.5 children per woman, ensuring a continually youthful workforce and subscriber base for years to come.

This demographic structure translates directly into soaring data consumption. For instance, on the Beeline Uzbekistan network, weekly data consumption has increased more than 11-fold over the past five years. This isn't just a volume play; it's a shift to high-speed services, with 93% of all traffic in Uzbekistan now transmitted via 4G networks in 2025. Pakistan, as VEON's largest market, reflects this trend with 190 million cellular mobile connections in early 2025.

High and growing demand for affordable digital financial services (FinTech) is a key opportunity

The demand for accessible digital financial services (FinTech) is a critical opportunity for a telecommunications company with a strong digital operator strategy. In Pakistan, financial inclusion-the percentage of adults using formal financial services-stood at 64% in 2025, but the government aims to increase this to 75% by 2028. This gap is where mobile operators step in. The State Bank of Pakistan projects the entire digital payments sector to reach $36 billion by the end of 2025.

VEON's own platforms are already capturing this value. The group's digital financial services, including JazzCash in Pakistan and Beepul in Uzbekistan, collectively processed over $40 billion in transactions in the year prior to May 2025. Uzbekistan is also seeing significant external validation of this trend, with local FinTech projects attracting over $260 million in foreign investments in 2025 alone. That's a massive vote of confidence in the market's digital future.

Increasing digital literacy and smartphone adoption accelerates the shift to 4G/digital services

The groundwork for digital services is being laid by rapidly improving digital access. Uzbekistan is nearing saturation, with internet penetration reaching 94.2% by August 2025. Pakistan is catching up, with 116 million internet users in January 2025, representing a 45.7% penetration rate. The quality of connection is also improving, as 74.0% of mobile connections in Pakistan are now considered broadband (3G, 4G, or 5G). This shift means subscribers are ready for more data-heavy services, not just voice calls.

However, a critical social risk lies in digital inequality. The mobile internet gender gap in Pakistan remains one of the widest globally, with only 39% of women using mobile internet compared to 61% of men. For VEON, this 22-percentage-point gap is a clear call to action. Closing it is not just a social imperative but a huge commercial opportunity, as it directly impacts the addressable market for services like JazzCash.

Migration and urbanization patterns affect network planning and subscriber concentration

Rural-to-urban migration is reshaping the geography of demand, which directly impacts network capital expenditure (CapEx) planning. Pakistan is urbanizing at the fastest rate in South Asia, with the urban population expected to exceed 50% by 2025 if current trends persist. Between 2017 and 2023, the urban population grew at an annual rate of 3.57%, significantly outpacing the overall population growth of 2.55%.

This rapid concentration of subscribers in cities and expanding urban centers requires a constant, heavy investment in network density, especially for 4G/5G. In Uzbekistan, internal migration flows in late 2024 showed that 75% of registered migration inflows were from rural to urban areas, confirming this concentration trend. You need to plan your network capacity for these dense, high-growth urban corridors, plus you must continue expanding into newly developing areas like the Republic of Karakalpakstan, where Beeline Uzbekistan has seen massive data usage growth following infrastructure expansion.

• Pakistan's urban population growth rate is the fastest in South Asia.
• Uzbekistan's urban population growth was 2.1565% in 2024.
• Migration is shifting demand from rural to urban areas, driving the need for urban network densification.

VEON Ltd. (VEON) - PESTLE Analysis: Technological factors

Aggressive 4G network expansion is crucial to capture market share and improve quality of service.

You can't win the digital operator game without a solid foundation, and for VEON, that foundation is still 4G Long-Term Evolution (LTE). The near-term battleground in markets like Pakistan and Kazakhstan is all about expanding and densifying the 4G network to handle surging data traffic. Honestly, the biggest risk is falling behind on coverage and quality, which drives churn.

The company's capital expenditure (CapEx) for 3Q 2025 was USD 223 million, reflecting a sustained commitment to network modernization. For the full fiscal year 2025, VEON expects its CapEx intensity (CapEx as a percentage of revenue, excluding Ukraine) to remain within the 17% to 19% range, specifically targeting high-speed data networks. This investment directly fuels the 4G roll-out in key growth markets like Bangladesh, Pakistan, and Kazakhstan.

4G penetration is the near-term battleground.

The immediate fight is converting existing subscribers to 4G users and expanding population coverage, not just building new towers. Here's the quick math: higher 4G penetration means higher Average Revenue Per User (ARPU) because people use more data, so it's a direct revenue driver.

In Kazakhstan, the 4G user penetration for Beeline Kazakhstan has reached 73% (based on 2024 estimates, which is the latest detailed data), but there is still a gap to close in population coverage, which was last reported at 69%. In Ukraine, Kyivstar's 4G subscriber base penetration is lower at 30%, but its population coverage is stronger at 77%, showing the varying stages of network maturity across the Group. The focus must be on closing the user penetration gap in all markets.

Pressure to start 5G deployment in high-value urban centers, particularly in Kazakhstan.

While the long-term vision includes 5G, the immediate reality is that VEON is prioritizing 4G saturation and digital services. You see this in the timeline: Beeline Kazakhstan is advancing Direct to Cell plans-a 5G-related technology-but is targeting messaging services in 2026 and data connectivity thereafter. This is a realistic, phased approach, not a costly, immediate 5G race.

The cost of a massive 5G build-out in frontier markets is huge, so a cautious, city-by-city deployment, starting with high-value use cases, is the defintely smarter play. They already tested the waters, conducting a large-scale 5G trial in Shymkent, Kazakhstan, back in 2019, but the 2025 strategy is clear: maximize the return on 4G first.

Competition from Over-The-Top (OTT) services requires constant innovation in digital offerings.

The biggest technological threat isn't another telecom operator; it's the Over-The-Top (OTT) players like WhatsApp, Netflix, and local fintech apps. They use your network for free and compete for your customer's wallet share. VEON's counter-strategy, the 'digital operator' model, is working, but it needs constant innovation.

The growth in this segment is phenomenal, showing the strategy is sound:

The company is explicitly targeting to increase the share of direct digital revenue to 50% in the next three to five years, focusing on services like JazzCash in Pakistan and the healthcare app Helsi in Ukraine. Plus, they are using local Large Language Models (LLMs), like KazLLM in Kazakhstan, to power new educational and other digital services in local languages.

Need for massive investment in fiber backhaul to support data traffic growth.

The explosion in data consumption from 4G and digital services demands massive fiber backhaul (the high-capacity lines that connect cell towers to the core network). However, VEON is taking an 'asset-light' approach to this infrastructure layer.

This is a strategic choice: instead of owning and funding the entire fiber network, they are selling non-core infrastructure assets. For example, in May 2024, VEON agreed to sell its 49% stake in TNS Plus LLP (TNS+), a wholesale fiber provider in Kazakhstan, for USD 137.5 million. TNS+ operates a substantial fiber network of more than 14,000 km throughout Kazakhstan. This move frees up capital for the 4G and digital service layers, effectively outsourcing the massive backhaul investment to infrastructure partners.

The core technology focus is shifting from pure infrastructure ownership to:

• Software and AI: Building local-language digital platforms.
• Radio Access Network (RAN) Efficiency: Upgrading 4G sites with technologies like FDD Massive MIMO in cities like those in Kazakhstan to increase capacity without new spectrum.
• Innovative Backhaul: Using solar-powered radio relay nodes to connect off-the-grid 4G sites in remote areas of Kazakhstan.

VEON Ltd. (VEON) - PESTLE Analysis: Legal factors

Complex and varying data localization and privacy laws across the Commonwealth of Independent States (CIS) region.

The patchwork of data localization and privacy regulations across VEON's footprint, which includes CIS-adjacent markets like Pakistan, is a constant operational risk. You have to navigate a maze of conflicting requirements on where customer data must be stored, processed, and how it can be transferred cross-border. This isn't just a compliance headache; it's a direct cost to your IT architecture.

For example, in Pakistan, where VEON operates the JazzCash FinTech platform, the regulatory environment is in flux as of 2025. The passage of the Prevention of Electronic Crimes (Amendment) Act, 2025, has increased government oversight on digital content and platforms, which raises concerns about greater access to user data. Plus, the long-awaited Personal Data Protection Bill (PDPB) remains unformalized, leaving a significant legal vacuum for core data privacy standards.

This legal uncertainty directly impacts a massive, sensitive data pool. As of September 30, 2025, VEON's Pakistan banking operations held $282 million in customer deposits, underscoring the scale of financial data that is subject to these evolving, and often ambiguous, local laws. You need to maintain a high level of technical compliance, which is why your operating companies in key markets like Pakistan and Ukraine have pursued re-certification under the ISO 27001 (Information Security Management System) standard.

Regulatory scrutiny on market consolidation and potential anti-monopoly actions.

In the telecom sector, any major corporate action draws immediate attention from competition authorities. VEON is defintely engaged with regulators on significant transactions in 2025, which requires substantial legal resources and carries execution risk.

Two major corporate actions in 2025 highlight this scrutiny:

• The planned listing of Kyivstar Group Ltd. on the Nasdaq Stock Market in Q3 2025 requires multiple regulatory and shareholder approvals, a process that is highly visible and subject to international legal oversight.
• The amalgamation of PAK Tower Company into Engro Connect, a subsidiary of Engro Corporation Limited, in Pakistan, is subject to sanctioning by the local court and customary regulatory approvals.

While no major anti-monopoly fine has been announced against VEON in 2025, the global trend is toward stricter enforcement. Regulators in your markets are increasingly sensitive to market dominance, especially as you expand your digital services. The risk is that a local competition authority could launch an investigation, potentially leading to fines or mandated structural changes, which would disrupt your strategy.

Licensing and spectrum auction costs are a significant, non-discretionary expense.

The cost of acquiring and renewing spectrum licenses is a non-negotiable part of being a mobile operator. These are massive, non-discretionary expenses that directly impact your capital allocation strategy and free cash flow. This is a capital-intensive business, period.

For the 2025 fiscal year, VEON has committed to significant network investment, reflecting the need to secure spectrum and upgrade infrastructure to support 4G and future 5G services. Your total Group Capex (capital expenditure) for the third quarter of 2025 (3Q25) was $223 million. The full-year 2025 capex intensity (Capex as a percentage of revenue) is expected to be in the 17% to 19% range (excluding Ukraine), a clear indicator of the scale of mandatory investment required for licenses and network modernization.

Here's the quick math on the investment scale:

Legal frameworks for digital financial services (FinTech) are still maturing, creating uncertainty.

Your digital financial services, like JazzCash, are a major growth driver, with financial services revenues growing 32.6% to $107.5 million in 3Q25. But this growth is happening faster than the legal frameworks can keep up, especially in your frontier markets.

The core challenge is that the regulations are often reactive, not proactive, leading to a fragmented legal landscape. While the State Bank of Pakistan (SBP) has established a regulatory sandbox for FinTech innovation and the Regulations for Electronic Money Institutions (EMIs), the overall framework is still catching up to the speed of digital product development.

Key areas of legal uncertainty for FinTech in 2025 include:

• Data Privacy: The delay in the Personal Data Protection Bill in Pakistan means a lack of clear, comprehensive rules for handling sensitive customer data, increasing regulatory risk for a major player like JazzCash.
• Digital Oversight: The new Prevention of Electronic Crimes (Amendment) Act, 2025, introduces a new layer of state control over digital platforms, which could impact user trust and operational freedom for FinTech services.
• Anti-Money Laundering (AML)/Know Your Customer (KYC): Compliance with AML/CTF (Counter-Terrorism Financing) regulations remains a high-stakes, constantly evolving legal obligation, requiring significant investment in compliance technology and personnel to avoid hefty fines and reputational damage.

What this estimate hides is the cost of compliance staff and legal counsel dedicated to monitoring and adapting to these daily changes across multiple jurisdictions. It's a non-stop, high-priority function.

VEON Ltd. (VEON) - PESTLE Analysis: Environmental factors

Increased regulatory pressure for energy efficiency in network infrastructure to meet climate goals.

The push for network energy efficiency is no longer a soft goal; it's a hard cost-driver and a regulatory necessity, especially in high-growth markets where network expansion is rapid. VEON is responding by integrating energy management into its core strategy, with a plan to establish Board-level oversight of energy efficiency targets in 2025. This includes annual reviews of energy intensity metrics, like kilowatt-hours per terabyte of data processed. The quick math shows an early win: in 2024, total data consumption on VEON's networks increased by 14% year-on-year, but total energy consumption was up only by 13% year-on-year. That small gap is where the savings and compliance live.

Operational efficiency is key to managing the Group's substantial energy footprint, which totaled 2.1 million MWh in 2024. They are actively deploying power-saving technology and renewable energy sources across their infrastructure.

• 70,093 BTS (Base Transceiver Stations) used power-saving technology in 2024.
• 1,085 BTS were powered by solar and/or wind energy in 2024.
• Banglalink, VEON's operator in Bangladesh, achieved a 2.3% year-on-year energy reduction per tower in 2024.

Need for better e-waste management and recycling programs in high-growth markets.

The rapid pace of network upgrades and the sheer volume of mobile devices in VEON's markets create an enormous electronic waste (e-waste) problem. Ineffective waste management drives up costs and creates significant environmental pollution risks. Honestly, a telecom operator has a responsibility to manage the entire lifecycle of its equipment.

VEON recognizes this, and their 2025 vision includes a target for the extended lifespan of equipment and reduced waste throughout the product lifecycle. While specific tonnage recycled is not publicly available, the strategy focuses on circular economy principles.

Key e-waste and circular economy initiatives include:

• Refurbishment and resale of IT hardware, extending equipment life.
• Collaboration with e-waste recycling partners to recover valuable materials.
• Employee engagement programs on office waste reduction.

Growing investor and public focus on Environmental, Social, and Governance (ESG) reporting transparency.

Investor scrutiny on ESG factors is defintely intensifying, moving from a niche concern to a core valuation metric. This focus is directly impacting VEON's cost of capital and its reputation. The good news is that the company's performance in this area is improving, which is a clear signal to the market.

The improvements in third-party ESG ratings over the 2024-2025 period demonstrate a tangible reduction in perceived risk.

Climate change risks (e.g., flooding in Pakistan) threaten physical network resilience.

Operating in frontier markets means dealing with heightened climate volatility. Pakistan, where VEON has a major presence through Jazz, is a prime example, ranking among the top ten countries most vulnerable to climate risk. The 2022 floods there, which affected 33 million people, caused an estimated USD 14.9 billion in damages. This isn't just a social issue; it's a direct threat to network uptime and infrastructure investment.

To mitigate this, VEON's Pakistan operations have set a clear 2025 target for sustainable energy generation. Plus, they are integrating climate-related risks, like energy price volatility and grid reliability, into their Enterprise Risk Management (ERM) framework. This is a smart move, because a resilient network is a profitable network.

ESG reporting is no longer optional.

The days of boilerplate sustainability reports are over. Investors and regulators demand transparency on how environmental risks translate into financial risks and opportunities. VEON is aligning its reporting with the Global Reporting Initiative (GRI) Standards and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The Group's total 2024 carbon emissions (Scope 1 and 2) stood at 0.8 Megatons. Specifically, Scope 1 (direct emissions) was 0.160 Megatons and Scope 2 (indirect from purchased energy) was 0.654 Megatons. What this estimate hides is the need for a clear decarbonization roadmap, which they are working toward by planning a TCFD-aligned climate-related scenario analysis in 2025. This analysis will directly assess the financial implications of climate change on the business model.