A long-term investor in operator group Veon outlined its dissatisfaction with the company’s underperformance, pressing for immediate changes to be implemented by its board of directors and management.

Shah Capital Management, which owns just under a 7 per cent stake in the operator, stated in a letter to Veon’s board of directors it is “disappointed” with a share price that continues to languish “even with a deleveraged pristine balance sheet, strong recent operating growth metrics and impressive operating outlook”.

Veon’s shares trade at $29.50 on the Nasdaq. Shah Capital has designs for the price to hit 5X that, to around $160 by 2026.

The investor started by pinpointing why it believes the company has a low valuation, with factors including: low share volume; lack of shareholder capital return; a perception that the company still runs as a bureaucratic European company; pays a substantially higher tax rate compared to emerging market providers; and the company is not perceived as an attractive fintech and cloud data centre investment.

Recommendations
Among its recommendations, the investor wants Veon to implement a $100 million buyback scheme, list subsidiaries Jazz and/or JazzCash on the Karachi and Dubai stock exchanges and list Ukrainian unit Kyivstar on the Nasdaq to potentially unfreeze ownership shares and unlock around $3 billion.

It also called for an improved cloud data centre strategy, moves to lower Veon’s tax rate and a better governance model to unleash the company’s “tremendous unrealised potential”.

The investor further argued Veon should trade at a substantially higher valuation compared to its emerging market telecoms peers, name-checking Airtel Africa, Millicom, America Movil and MTN.

“Veon’s equity price has underperformed by -80 per cent over the last ten years while the Nasdaq has risen over 400 per cent since 2014,” wrote Shah Capital CIO Himanshu Shah. “Therefore, a faster execution of Shah Capital’s strategic roadmap should be implemented as soon as possible.”

The criticism comes shortly after Veon announced it would move its headquarters from Amsterdam to Dubai.