L1 Technology – drawing on its expertise in technology and telecoms, banking, energy and retail sectors – is investing in technology and software companies that fundamentally improve business efficiency.
L1 Technology has a unique vantage point of the digital transformation at VEON. The company is reinventing its mobile phone business model and moving from monetising connectivity to data and acting as a trusted enabled gateway for payments and services for its millions of users.
Our strategy is to invest in technology and software companies that will enable businesses to improve their productivity.
Andrei GusevSenior Partner L1 Technology
B2B and B2C technology investments disrupting the telecoms sector
Software and new technology is creating opportunities for radical change of the telco IT infrastructure.
This year, L1 Technology made a strategic investment in Qvantel, the leading provider of cloud-based BSS for telecom operators. During 2016, Qvantel expanded and increased revenue by 46%.
On the B2C side, L1 Technology recently announced a USD $50 m investment in FreedomPop, which is disrupting the businesses of traditional mobile carriers by giving people the means to use mobile devices free of call charges. L1 received clearance from the Committee on Foreign Investment in the United States (CFIUS) for this investment. In 2016, FreedomPop grew its service revenue 53%.
L1 Technology also made a B2C strategic investment of USD $200 m in Uber with L1 providing local understanding and consumer knowledge in many emerging markets.
Transforming VEON from telco to tech company
L1 Technology has a 47.85% voting stake in VEON, the global technology company headquartered in Amsterdam, and a 13.22% stake in Turkcell, Turkey’s leading telecoms operator.
VimpelCom – now rebranded VEON – delivered all of its 2016 financial targets, generating USD $588 m underlying equity free cash flow. Drawing on its 20 years’ experience in the telecoms sector, L1 Technology’s aim is for VEON to transform from a traditional telco into a global technology company.
VEON is making good progress with its transformation. It completed the merger of its Italian assets with CK Hutchison. It has announced that it will launch the VEON internet platform in all countries by the end of 2017, having successfully launched in Italy in the fourth quarter of last year. VEON has introduced a new dividend policy with a 2016 dividend of USD 23 cents per share. VEON achieved a second listing on Euronext Amsterdam in the second quarter of 2017 to broaden its European investor base on the back of an increasing free float.
Dispute resolution seeker
L1 Technology made progress this year towards finding a resolution to the dispute with Cukurova over control of Turkcell. L1 won arbitration proceedings against Cukurova, opening the way to reinstate corporate governance in Turkcell. The tribunal of the London Court of International Arbitration upheld L1’s claim that it was entitled to launch a buyout procedure, triggered by the deadlock of corporate governance of Turkcell.
In order to complete the transaction within the time frame, Cukurova was required to discharge an injunction preventing the transfer of shares to L1. No such action was taken and therefore there was no legal means to buy out Cukurova shares.
Turkcell had a strong year in 2016 in LCU terms, with revenue and EBITDA increasing approximately 12% year-on-year. This reflected continued strong execution of the company’s digital strategy, strengthening of its position in core markets and focus on profitability. However, the share price in USD terms has decreased primarily due to the devaluation of the Turkish lira.