VEON Veers Off-Course

VEON seems to have become a stark illustration of what can happen when a digital transformation project goes wrong.

Headquartered in Amsterdam, and serving nearly a quarter of a billion customers in Russia and various emerging markets, VEON was last year gushing about its rollout of new digital services and ambitious rebranding. (See VEON's Digital Overhaul Much More Than Rebranding.)

But following earnings disappointments, cuts to thousands of jobs and the sudden departure of its CEO in March, the operator formerly known as VimpelCom last week announced a dramatic restructuring and waved goodbye to a number of senior executives, including Christopher Schlaeffer, the man in charge of its digital strategy.

Other executives leaving in the management shake-up include Peter Chernyshov, the head of Eurasia and CEO of Ukraine's Kyivstar, and Mark MacGann, VEON's chief corporate and public affairs officer.

VEON says it is looking to replace Schlaeffer, but not Chernyshov or MacGann. As part of a broader restructuring, all of the company's operating units will now report directly to Kjell Morten Johnsen, VEON's chief operating officer. Aleksandr Komarov, the CEO of Beeline Kazakhstan, will take up the additional position of Kyivstar's CEO.

The latest upheaval comes several months after the resignation of former CEO Jean Yves Charlier amid shareholder gloom about VEON's efforts to move away from its traditional operating model. Ursula Burns, VEON's executive chair, assumed Charlier's responsibilities when he quit in March. (See VEON CEO Quits Amid Investor Gloom.)

Hit by losses at various joint ventures and associates, VEON saw its total net loss widen to about $105 million in the January-to-March quarter, from just $5 million a year earlier. That development came after the operator slashed about 2,000 jobs, or nearly 5% of its total workforce, in 2017. Its first-quarter revenues fell 1.4%, to about $2.25 billion, compared with the year-earlier period.

While the company's share price has gained nearly 15% on the US Nasdaq since March, to close at $3.03 on July 19, it has lost nearly a quarter of its value in the last year.

Designed to let customers access services from VEON as well as content partners such as MasterCard, a new mobile app was used by just 8.3 million of VEON's customers globally at the end of last year, following a hard launch in September.

VEON provided no update on usage in its first-quarter report and made zero mention of other strategic investments, including a data management platform, a new-look business support system (BSS), an enterprise support system and its network virtualization initiative.

— Iain Morris, International Editor, Light Reading

This is an edited version of a story that was originally published on Telco Transformation's sister site, Light Reading. To see the full story, click here.