September 15, 2017 / 6:02 AM / 10 months ago

CORRECTED-UPDATE 2-Veon expects profit hit from Uzbek currency devaluation

(Corrects bullet point to say 2017 free cash flow will be lower than previously forecast, not lower than in 2016)

* Veon warning follows swing to loss in Q2

* Company cuts 2017 free cash flow guidance

* Company says CFO change not linked to warning

* Veon, formerly Vimpelcom, seeks new future as tech company

By Toby Sterling and Alan Charlish

AMSTERDAM, Sept 15 (Reuters) - Emerging markets-focused telecoms company Veon Ltd warned on Friday that Uzbekistan’s sharp currency devaluation last week would hurt its 2017 revenues and profits.

The company, formerly known as Vimpelcom, also said CFO Andrew Davies will step down in November after four years in the post and be replaced by Trond Westlie, financial director at AP Moller Maersk until last year and before that at Telenor.

A spokesman for Netherlands-based Veon said the change in CFO had been planned before the profit warning and the two were not linked.

Veon has been overhauling its telecoms business to reinvent itself as an internet player with the VEON messaging app, but after returning to growth late last year it slipped back into the red this year, blaming impairments, bond redemptions and losses at its Italian joint venture.

Uzbekistan only accounts for 5.5 percent of Veon’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA), but revenues would be affected after the central Asian country devalued its sum currency last week by around 92 percent, as part of economic reforms.

“As a result, Veon expects annualized decreases in revenues of $300-350 million and in underlying EBITDA of $175-225 million,” the company said in a statement.

Veon said its full-year revenues in 2016 were about $9 billion and underlying EBITDA was around $3.6 billion.

The company’s other main markets are Russia, Pakistan, Algeria, Bangladesh and Ukraine. It said it expects 2017 underlying equity free cash flow of between $850 million and $950 million, down from a previous guidance of $900 million-$1 billion.

It said it would still see low single-digit organic revenue growth in 2017, despite the impact from Uzbekistan.

Last year the company paid $795 million to settle a U.S. and Dutch investigation into a corruption scandal in Uzbekistan in which the company was accused of using shell companies and phoney contracts to funnel funds to a close relative of Uzbekistan’s president.

Reporting by Alan Charlish and Toby Sterling; Editing by Sunil Nair and Susan Fenton

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