VEON — Direct Digital drives earnings higher

VEON delivered a strong Q225, with revenue of $1,087m beating our estimate (3.4%) and underlying EBIT, (stripping out a $498m gain), of $322m, 13.2% ahead of our estimate. We have increased our adjusted EPS estimate by 3.4% to $5.33 in FY25 and 4.9% to $6.63 in FY26, and new reported EPS to $12.39 in FY25 and $6.77 in FY26. Progress towards the listing of Kyivstar has been rapid and, assuming all goes to plan, the deal may complete with the listing achieved during the second week of August. The digital business generated Q2 Direct Digital revenue of $180m, up 56.6% y-o-y, contributing 16.5% of group revenue. VEON estimates FY25 growth of 13–15% (vs 12–14% previously). Our DCF-based valuation generates a fair value of $65.7 (vs $60.1 previously).