By Supantha Mukherjee and Toby Sterling
STOCKHOLM/AMSTERDAM (Reuters) – Thousands of telecom operator Veon employees are working from air raid shelters in Ukraine, moving equipment to border areas to maintain a digital lifeline for refugees fleeing the war, the company’s CEO said Friday.
Their work has helped keep about 85% of Veon’s telecom network operational in Ukraine since the Russian invasion on Feb. 24, Veon CEO Kaan Terzioglu said in an exclusive interview with Reuters. But further risks arise from both electricity shortages and the conflict itself.
The Amsterdam-listed Veon operates the largest mobile phone provider in Ukraine under the name Kyivstar with 4,000 employees and a market share of 25%.
Speaking via Zoom conference call from the Netherlands, Terzioglu described how the company is coping with war, sanctions and financial concerns at the same time.
Terzioglu provided a lens through which a company provides a telephone network to a rapidly spreading diaspora.
Workers “practically work from shelters and as soon as they have the chance they go to the field to do maintenance,” Terzioglu said.
The parts of the network that are not working were largely due to power loss and are not being attacked by Russian forces, he said. To keep these parts up to date again, workers had to run gasoline to generators, which Terioglu described as “one of the most logistically difficult jobs our people are trying to do.”
Russia’s attack, which Moscow calls a “special operation” to demilitarize the country, has killed hundreds of civilians, reduced urban areas to rubble and sparked a humanitarian crisis. Russia denies targeting civilians in the country of about 44 million people.
More than 3.2 million people have fled and another 2 million are internally displaced, United Nations data shows.
Based on mobile phone data, Terzioglu estimated that 4 million refugees had left and 10 million were displaced.
In addition to opening its offices as a refugee shelter, Veon has also upgraded mobile accounts for free, said Terzioglu, who became CEO of the Veon group last July. In his previous job as CEO of Turkcell, he struggled with the Syrian refugee crisis.
Veon has also received support from US, Chinese and European companies in the tech and telecom industries. While operators such as Orange, Tele2, and Vodafone (NASDAQ:) have waived interconnection and roaming charges, equipment manufacturers such as Huawei and ZTE (HK:) have helped maintain the network. These and companies including Ericsson (BS:), Nokia (NYSE:), Microsoft Corp (NASDAQ:) and Oracle Corp (NYSE:) have made a “heroic effort” to keep the networks running, Terzioglu said.
Veon also owns the second largest telecom network in Russia, operating under the name Beeline, the most profitable market. That means Veon has to deal with the impact of sanctions and political concerns on both sides of the border.
Veon has approximately 29,000 employees in Russia and the company has taken steps to separate its operations in Ukraine and Russia.
The company has also quickly distanced itself from Russian oligarch Mikhail Fridman, whose investment vehicle LetterOne has a 47.9% stake in Veon, and an additional 8.3% economic stake through a Dutch foundation.
The European Union imposed sanctions on Fridman on Feb. 28, a decision he said he would fight.
Terzioglu said Fridman, who resigned from the board of Veon on Feb. 28 and from the board of LetterOne on March 3, now “has no economic interest in LetterOne.”
LetterOne, which did not respond to a request for comment, said on March 3 that Fridman’s assets had been frozen and that he had been stripped of his shareholder rights.
Terzioglu said he could not speculate whether the company could eventually face EU sanctions or nationalization by the Russian government, but he hoped it would be ruled out for humanitarian reasons.
“We will do our best to position it as a service that is essential,” he said.
Veon is also dealing with financial concerns, with a share loss of 56% year-to-date, and its US dollar-denominated debt – $5.4 billion at the end of 2021 – trading at troubling levels.
On March 4, Fitch downgraded the company’s credit rating to junk status, saying Russia and Ukraine combined accounted for 62% of 2021’s earnings before interest, taxes, depreciation and amortization (EBITDA) of $3.3 billion.
Russian capital controls and the war meant that the company may not be able to move money to or from either country.
The company has issued several updates to reassure investors that it will remain liquid, with $2.1 billion in cash at the end of February, of which $1.5 billion is in the Netherlands.
Terzioglu said he was aware of posts https://www.bnnbloomberg.ca/veon-bondholders-enlist-advisors-ahead-of-planned-debt-talks-1.1739259 from a group of bondholders seeking talks and welcomed the opportunity to address them. , although no one has reached the company so far.
“By organizing them, we can explain why they have nothing to worry about and that we are well-funded to meet our commitments,” he said.
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