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VEON sees damage to its reputation over main shareholder's connection to Fridman, problems with partners

MOSCOW. May 6 (Interfax) – Reputational damage has been done to telecommunications holding VEON in connection with the fact that its main shareholder, investment company LetterOne, which holds a 47.85% stake, is affiliated with Mikhail Fridman and Petr Aven, VEON said in an annual report.

"As a result of the association of Designated Persons with our largest shareholder, we have suffered reputational harm," VEON said.

Fridman and Aven, who have 37.86% and 12.13% respective stakes in LetterOne, have been placed on the sanctions lists of the European Union and the United Kingdom. The EU has also introduced sanctions on Alexei Kuzmichev and German Khan, although the two are no longer shareholders in the investment company, VEON said.

The holding has telecom assets in Russia, Ukraine, Kazakhstan, Pakistan, Bangladesh, and other countries, but half of its consolidated revenue is generated by Russia’s VimpelCom. "As VEON is perceived by some as having undue exposure to Russia, we have experienced difficulties in transacting with certain key suppliers, business partners and other key counterparties at the Group level, and we cannot rule out the possibility that we may not be able to appoint an auditing firm for the audit of our financial statements for the year ended December 31, 2022," VEON said.

VEON does not have controlling shareholder. LetterOne has a 47.85% stake, and the free float is 43.8%. The sanctions on Fridman do not therefore impact the holding’s operations, VEON has said multiple times. However, the possibility of not being able to continue working with partners could have a negative impact on the company’s business and financial position, it said.