VEON Ltd. (VEON): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for a sharp, fact-based breakdown of VEON Ltd.'s competitive position using the Porter's Five Forces framework as we close out 2025. Honestly, even with a solid USD 1,115 million in Q3 revenue and that aggressive digital pivot underway, the pressures haven't let up; we need to see how their asset-light moves affect supplier power and if that digital ecosystem is truly sticky enough to tame high customer price sensitivity in frontier markets. This analysis cuts through the noise, focusing on the core pressures and the 2025 numbers that matter, so dig in below to see exactly where the leverage lies across suppliers, customers, rivals, substitutes, and new entrants.

VEON Ltd. (VEON) - Porter's Five Forces: Bargaining power of suppliers

You're analyzing the supplier landscape for VEON Ltd. (VEON), and honestly, the power dynamic is shifting as the company executes its asset-light strategy. This move, while freeing up capital, immediately elevates the negotiating position of the entities that now own or supply critical infrastructure.

Network Equipment Vendors Hold Significant Leverage

The core infrastructure-the radios, the core network gear-still comes from a concentrated group of global players, like Ericsson and Huawei. For VEON, switching out this foundational technology isn't like changing a software subscription; the capital expenditure and the operational disruption mean switching costs are inherently high. This dependence limits VEON Ltd.'s negotiation leverage on price when renewing major contracts for 4G and especially for ongoing 5G rollouts. You see this play out in the long-term commitments required for next-generation network deployment.

TowerCos Gain Power Post-Divestiture

The asset-light strategy is the clearest indicator of this supplier power shift. By selling off physical assets, VEON converts a fixed asset base into a long-term operating expense, effectively creating a new, powerful class of supplier: the TowerCos. A prime example is the recent strategic infrastructure partnership in Pakistan, where VEON's subsidiary assets vested into Engro Connect. The total enterprise value of this transaction was reported at $562.7 million.

This transaction, which unlocked capital for VEON's digital transformation, simultaneously locked in Jazz, VEON's Pakistani operator with 71.5 million cellular subscribers as of Q4 2024, to a long-term lease agreement with the new owner. This structure means the TowerCo now has a captive, long-term customer for its now-owned infrastructure.

New Lease Obligations Create Significant Recurring Costs

The consequence of the asset-light model is a new, significant, and non-negotiable cost structure. Annual lease payments to these TowerCos represent a substantial, recurring drain on operational cash flow. These new fixed obligations are reported to be in the range of $85 million-$90 million annually during the 2025-2027 period. For a company serving nearly 150 million connectivity customers across its footprint, managing these fixed lease costs against variable service revenues is a key financial challenge.

Here's a quick look at the scale of the shift in financial commitment:

Concentration in Technology Supply

Beyond the TowerCos, the power of specialized technology suppliers remains a constant pressure point. The reliance on a few specialized vendors for complex 4G/5G technology limits VEON Ltd.'s negotiation leverage on price, especially when securing equipment for network upgrades or capacity expansion. This is a structural issue in the telecom industry, but it becomes more acute when combined with the new, rigid lease structures from the TowerCos.

The power of suppliers is therefore high, driven by both the specialized nature of network technology and the contractual lock-in resulting from infrastructure divestitures. You need to watch the terms on those long-term lease agreements closely; they are the new cost floor.

VEON Ltd. (VEON) - Porter's Five Forces: Bargaining power of customers

You're analyzing the customer power in VEON Ltd.'s operating environment, which is heavily concentrated in dynamic frontier markets like Pakistan and Bangladesh. Honestly, in these regions, basic connectivity is often seen as a commodity, meaning customers have significant leverage, especially on price.

The power of the customer is amplified because switching costs for basic voice and data services are low. When a customer is only using voice and basic data, the friction to move to a competitor offering a slightly better price point is minimal. This price sensitivity directly translates to higher churn risk for the non-engaged subscriber base. For instance, as of the third quarter of 2025, voice-only customers exhibit significantly higher churn rates compared to those who have adopted the digital ecosystem.

VEON Ltd.'s primary defense against this inherent customer power is its DO1440 Digital Operator strategy, which aims to build a sticky ecosystem around its core connectivity offering. By bundling services like mobile payments (JazzCash in Pakistan) and entertainment (Tamasha in Pakistan and Toffee in Bangladesh), the company increases the total value proposition, thereby raising the effective switching cost.

The success of this strategy is visible in the growth metrics for the multiplay segment-customers using at least one digital platform alongside their 4G services. As of September 30, 2025, VEON Ltd. reported 43.5 million multiplay customers, marking a 23.3% year-over-year increase. This segment is becoming the core revenue driver, with multiplay revenues accounting for 55.4% of consumer revenues in 3Q25.

The financial incentive for moving customers from a basic voice-only plan to a multiplay digital service is substantial. The latest data from 3Q25 shows that multiplay users deliver 3.8x higher ARPU (Average Revenue Per User) than their voice-only counterparts. This uplift is the direct financial reward for successfully increasing customer engagement and reducing price-based churn. To be fair, the churn rate for these multiplay users is also dramatically lower, showing the stickiness effect: they exhibit 50% lower churn rates compared to voice-only users.

Here's a quick look at the digital ecosystem growth supporting this strategy as of the end of 3Q25:

The digital platforms themselves show strong individual traction, which feeds the overall ecosystem power. For example, in Pakistan, JazzCash reported 20.6 million MAUs in 1Q25, and the entertainment platform Tamasha reached 16.5 million MAUs in the same quarter. This scale in digital services is what allows VEON Ltd. to shift the customer relationship from a low-cost transactional one to a high-value, integrated digital partnership.

The power dynamic is clearly shifting as more customers adopt the digital layer. You can see the customer power eroding as they move from the basic connectivity layer to the bundled services layer:

• Low power for customers on basic voice/data plans due to high price sensitivity.
• Higher power for customers in markets like Bangladesh where revenue performance was noted as lower in 2Q25 compared to Pakistan.
• Decreasing power as customers adopt digital services, evidenced by the 3.8x ARPU uplift.
• Decreasing power due to lower churn among the 43.5 million multiplay users.
• The success of bundling connectivity with financial services, which grew revenues 32.6% to $107.5 million in 3Q25.

Finance: draft the sensitivity analysis on ARPU change if multiplay penetration hits 40% by year-end 2025.

VEON Ltd. (VEON) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive arena for VEON Ltd. (VEON) in late 2025, and the rivalry is definitely intense, especially in the core territories. Competition isn't just about who has the cheapest voice minute anymore; it's a fight for the digital wallet share, which is a much tougher battle to win.

Rivalry is high in established markets like Pakistan, where Jazz competes fiercely, and in Ukraine, where Kyivstar faces a difficult operational environment but remains a major player. To be fair, the operational backdrop in Ukraine adds a layer of complexity that competitors in less volatile regions don't face. Still, VEON Ltd. is a significant force across its footprint.

VEON Ltd. holds a strong standing, operating in five key geographical segments: Pakistan, Ukraine, Kazakhstan, Bangladesh, and Uzbekistan. As of September 30, 2025, the Group reported 149.5 million mobile subscribers, showing a 3.1% year-over-year decline. In Kazakhstan, Beeline is pushing differentiation hard, launching its AI-based Tutor powered by KazLLM in June 2025 and rolling out VEON AdTech capabilities across its SuperApp, BeeTV, and IZI products in the first quarter.

The nature of this rivalry is clearly pivoting away from traditional price wars toward digital service differentiation. This is where VEON is putting its chips down, focusing on fintech, entertainment, and other digital offerings. The numbers show this shift is gaining traction:

• Direct digital revenue growth in 3Q25 was 63.1% year-over-year in USD terms.
• Digital revenues accounted for 17.8% of Group revenue in 3Q25.
• Multiplay customers, those using at least one digital platform, grew 23.3% year-over-year to 43.5 million as of September 30, 2025.
• Multiplay revenues made up 55.4% of VEON's consumer revenues in 3Q25.

This focus on digital is crucial because multiplay users deliver 3.8x higher ARPU (Average Revenue Per User) and show 50% lower churn rates compared to voice-only users. Here's a quick look at how the revenue streams compared in the third quarter of 2025, showing the growing importance of the digital segment:

Despite the intense competition and the operational challenges in some regions, the market remains one where growth is possible, provided you execute the digital strategy well. VEON continues to expect local-currency revenue growth for the full year 2025 to be in the range of 13% to 15% year-on-year.

VEON Ltd. (VEON) - Porter's Five Forces: Threat of substitutes

You're looking at how external offerings could replace the core services VEON Ltd. (VEON) provides, and honestly, the threat is multifaceted, coming from digital messaging, satellite connectivity, and specialized financial technology.

The most immediate pressure comes from Over-The-Top (OTT) services. Think about it: services like WhatsApp and Zoom directly substitute the traditional voice and SMS revenue that used to be the bread and butter for telecom operators. People are choosing data-based communication over traditional minutes and texts. To counter this, VEON Ltd. is pushing hard on its digital pivot. For the third quarter of 2025, direct digital revenues showed serious momentum, growing 63.1% year-over-year to reach USD 198 million. This growth is key; it means digital services now account for 17.8% of the Group's total revenue, up from 12% in the same period last year. That's a clear sign they are actively working to mitigate the substitution risk by capturing the digital spend.

Here's a quick look at that digital acceleration:

Next up, we have a long-term, infrastructure-level substitute: Direct-to-Cell satellite services. VEON Ltd. signed a non-exclusive global framework agreement with Starlink, making them the first operator with such a multi-country deal. This technology allows ordinary smartphones to connect directly to satellites, potentially bypassing terrestrial network coverage entirely in remote areas. The deal grants access to over 150 million potential customers across VEON's markets. The rollout plan is aggressive, too. Kyivstar in Ukraine is set to launch service in the fourth quarter of 2025, and Beeline in Kazakhstan is targeting messaging in 2026, followed by data. Still, the partnership is non-exclusive, so VEON is keeping options open, discussing future plans with Amazon's Project Kuiper, AST SpaceMobile, and Eutelsat OneWeb for 2027 and 2028.

Finally, don't forget the financial services battleground where VEON's JazzCash operates. While JazzCash is a major player, boasting 48 million customers and being the largest digital lender in Pakistan with an average of 140,000 digital loans disbursed daily via ReadyCash, the local fintech scene is vibrant and competitive. There are roughly 450 FinTech startups in Pakistan. You have established competitors like Easypaisa and rapidly growing, well-funded entities like Finja. These local startups are plugging gaps in lending, payments, and digital wallets, directly competing for the same digital wallet share and financial services revenue that VEON Ltd. is trying to grow.

The substitution risks manifest in several ways:

• OTT apps eroding traditional voice and SMS revenue streams.
• Direct-to-Cell satellite tech threatening coverage monopolies in rural areas.
• Fintech startups challenging JazzCash's market share in digital finance.

VEON Ltd. (VEON) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for VEON Ltd. is moderated by significant structural barriers, though the company's strategic shift towards an asset-light model introduces new dynamics for digital-only competitors.

High capital expenditure remains a substantial deterrent for any company looking to build a competing mobile network infrastructure from scratch. You see this clearly in VEON Ltd.'s own investment plans. For the full year 2025, VEON expects its capex intensity (capital expenditure as a percentage of revenue, excluding Ukraine) to remain within the tight range of 17% to 19%. To put that into perspective based on recent performance, the Last Twelve Months (LTM) capex intensity as of the third quarter of 2025, excluding Ukraine, was reported at 17.7%. This level of sustained, heavy investment in network modernization and digital infrastructure sets a high financial hurdle.

Regulatory barriers are particularly complex and lengthy in the frontier markets where VEON Ltd. operates. While specific details on spectrum licensing timelines across all six operating countries are proprietary, the general environment suggests high friction. For instance, in Kenya, a market peer context, reports as of November 2025 highlight that stringent non-tariff measures, such as licensing hurdles and standards compliance delays, add layers of uncertainty and cost for investors. Furthermore, the broader industry faces challenges in spectrum allocation, which can delay new deployments and increase operational costs, as satellites rely on limited frequency bands.

VEON Ltd.'s ongoing execution of its asset-light strategy directly impacts the infrastructure barrier. The company completed the sale of its 49% stake in the Kazakh wholesale telecommunications infrastructure provider TNS+ for a total consideration of USD 137.5 million. This divestment allows Beeline Kazakhstan to focus on digital services-like Simply, Izi, and BeeTV-while securing access to the necessary physical network through long-term commercial contracts. This model lowers the barrier for new digital competitors who can potentially partner for access rather than build from scratch. However, for a new company attempting to launch as a full network operator, the need to acquire spectrum, secure rights of way, and deploy physical assets remains a massive, capital-intensive undertaking that the asset-light strategy does not eliminate for them.

The sheer scale of VEON Ltd.'s customer base acts as a powerful network effect barrier. As of late 2025, VEON provides converged connectivity and digital services to nearly 160 million customers across its operating regions. This massive installed base translates into higher switching costs for customers who are integrated into VEON's ecosystem, especially those utilizing its growing suite of digital services. For example, multiplay customers-those using at least one digital platform alongside 4G-show 50% lower churn rates compared to voice-only users.

The network effect barrier is reinforced by customer engagement metrics:

• Multiplay customers increased by 24.1% year-over-year as of June 30, 2025, reaching 43.3 million.
• Multiplay customers represent 32.9% of the total user base as of June 30, 2025.
• Multiplay customer ARPU (Average Revenue Per User) is 3.7x higher than voice-only users.

Finance: review the impact of the TNS+ sale proceeds on 2026 capex plans by next Tuesday.