Netherlands-based Veon appears to have found a quick and tidy route out of Russia.

Just weeks after announcing that VimpelCom was up for sale, Veon last week agreed to offload it to the unit’s management team, led by CEO Aleksander Torbakhov, for $2.1 billion. The deal values VimpelCom at $6.09 billion, and will be funded primarily by VimpelCom assuming a chunk of Veon debt, which stood at $8.2 billion at the end of September.

It’s hardly surprising that Veon has taken this option. It is highly unlikely that foreign suitors were lining up to buy it. One can probably take a good guess at what the current practicalities and related restrictions are when it comes to financing a multi-billion dollar investment into a Russian telecoms provider. There is also the impact on reputation to consider. In addition, the Russian government would doubtless closely scrutinise a foreign takeover and potentially block it outright, depending on who the buyer was.

As for domestic suitors, they too might well struggle to raise funds or get a reasonable interest rate from banks inside Russia, and access to foreign financing is presumably nigh on impossible.

“After considering numerous options, I am confident that the agreed sale of Veon’s Russian operations to the VimpelCom management team represents an optimal solution for Veon, its Russian operations and the stakeholders of both companies, including customers, shareholders and creditors, as well as employees both in and outside of Russia. Veon is committed to ensuring the transaction is seamless for staff and customers in Russia, with no disruption to the services currently provided,” said Veon CEO Kaan Terzioğlu, in a statement.

“This transaction will be equity accretive, result in significant deleveraging of Veon’s balance sheet and will enhance Veon’s credit profile,” he added.

There’s no getting away from it though: Russia’s invasion of Ukraine has ultimately forced Veon to give up the jewel in its crown.

Financially, VimpelCom was by far and away the biggest single division in the group. In the three months to 30 September, it turned over $1.19 billion, around 57 percent of group revenue. EBITDA came in at $510 million, which also equates to 57 percent of group EBITDA. This is a telco that operates in eight markets and has 203 million mobile customers, only 46 million of which live in Russia.

But Veon knows more than most what it can cost to do business with the wrong people. It wasn’t so long ago that Veon used to be called VimpelCom. It adopted the Veon brand in 2017, in the wake of a high-profile scandal in Uzbekistan, where it was accused by authorities in the US and Netherlands of paying huge bribes in order to enter the market. It ended up paying a settlement of $835 million.

By pulling out of Russia, Veon joins a list of more than 1,000 companies to have curtailed their activities there or withdrawn altogether since the invasion. This is according to a list maintained by Yale School of Management’s Chief Executive Leadership Institute (CELI). Other notable comms companies on that list include Deutsche Telekom, Nokia and Ericsson. Given that more than 1,000 companies don’t think it’s prudent to operate in Russia, it was always going to be a stretch for Veon to find a buyer.

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