Lahore, August 30, 2023 (PPI-OT): The ratings incorporate robust business profile of the Company, represented by its leading market share of ~38% with ~74mln cellular subscribers as of Mar'23. Cellular market is dominated by three large players and they collectively possess ~87% of market share, whereas ~63% of market is preliminary in the hands of two players Jazz and Telenor. Overall performance of telecom sector has recently been impacted due to rising inflation and interest rates which caused an unprecedented increase in cost of doing business, USD-based high spectrum and license fee further creates liquidity challenges. Despite all macroeconomic turbulence and sector-specific operational challenges, the topline of the Company posted ~14.3% growth in CY22. Similarly, during first half of CY23, it reported ~19.2% revenue growth as better pricing strategy helped to improve average revenue per user (ARPU). Jazz has expanded its 4G network with 1500 new 4G sites.

Currently, there are 125mln 3G/4G subscribers and Jazz holds the position of market leader. Ratings draw comfort from formidable sponsors support and strong business volumes. VEON is committed to strengthening country’s digital ecosystem and establishing the largest tier-III certified data center “Jazz Digital Park”; developing the largest homegrown OTT platform, Tamasha, and various cloud platforms. Financial risk profile of the Company exhibits a stable outlook demonstrated by healthy cashflows, comfortable coverages, and working capital cycle. Capital structure is leveraged however the parent company reportedly has ample cashflows. Thus, there are no significant risks leading to continuity of operations.

The ratings are dependent upon the sustenance of a leading market position, robust revenue growth and profitability, and a sound financial matrix. As capital structure becomes leveraged, maintenance of sound financial discipline is imperative to hold.

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Analyst,

The Pakistan Credit Rating Agency Limited (PACRA)

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Lahore, Pakistan

Tel: +92-42-5869504-6

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Email: [email protected]

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