TASHKENT/SEPT. 21 (The Bulletin) — Veon, the New York-listed Amsterdam-headquartered telecoms company formerly called Vimpelcom, said that that the liberalisation and devaluation of the Uzbek soum had cost it hundreds of millions of dollars.

Earlier this month, the Uzbek government scrapped a US dollar peg for the Uzbek soum, allowing it to lose half its value. The move was generally applauded as necessary to modernise Uzbekistan’s economy and for giving foreign investors clarity but businesses already entrenched in Uzbekistan said there would be a cost.

Veon, which operates the Unitel subsidiary in Uzbekistan under the Beeline brand, said there were advantages in the long-run but that, in the short term, profits were lower.

“Under these liberalized exchange rules, Veon may in the longer term be able to more effectively repatriate cash from Uzbekistan,” it said in a statement. 

“[But] as a result [of the devaluation], Veon expects annualised decreases in revenues of $300-350m and in underlying EBITDA of $175-225m.” These comments are important as they come from a company already doing business in Uzbekistan.

Veon has previously been fined for paying a bribe to a company ultimately owned by the daughter of Uzbek president Islam Karimov for market access to Uzbekistan in 2007/8.

Sweden’s Telia and Norway’s Telenor have also been fined for paying bribes in Uzbekistan.

ENDS

— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017