Theodore O'Neill • Litchfield Hills Research, LLC

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Group CEO Kaan Terzioğlu clarified that the 57% year-on-year growth in digital revenue was almost entirely organic, with the Uklon acquisition being the only inorganic component ($21.7 million). While declining to speculate on specific targets, he confirmed that VEON will continue to pursue both organic and inorganic growth opportunities in its markets.

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CEO Kaan Terzioğlu clarified that the digital business's 57% year-on-year growth was predominantly organic. The only inorganic contribution was the $21.7 million in revenue from the newly acquired Ookla. While not speculating on specific targets, he affirmed that VEON's digital strategy includes both organic and inorganic initiatives tailored to each market's needs.

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Group CEO Kaan Terzioğlu stated that the 57% year-on-year growth in digital revenue was almost entirely organic, with the only inorganic contribution being $21 million from the recent Ookla acquisition. While declining to speculate on specific targets, he confirmed that VEON's strategy includes both organic and inorganic efforts to expand its digital services in its markets.

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CFO Michael Connaway attributed the strong OpEx performance to the roll-off of transitional service agreements with NEC and disciplined cost management, confirming this low-cost mindset will continue. CEO Pete Smith noted that while not yet in the model, a persistent tariff environment could create a positive catalyst for new business from U.S. customers seeking domestic suppliers, potentially materializing in about 12 months.

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CFO Michael Connaway attributed the strong gross margin rebound to an improved revenue mix, specifically a better geographic dispersion with North America's recovery and a favorable product mix with higher software sales. He also noted the newly acquired 4RF business contributed positively with its above-average margins. CEO Pete Smith confirmed the company has high customer diversification, stating that in the last two quarters, the largest customer did not exceed 6% of revenue.

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CEO Pete Smith explained that FWA is a significant growth driver for backhaul, as FWA users consume substantially more data than mobile users. He noted this trend is favorable for Aviat's business, as it increases overall backhaul needs. CFO Michael Connaway confirmed that the Q1 M&A expenses were not expected to repeat at that level, stating they would be "significantly less" in Q2 and would normalize in the second half of the year, absent any new M&A activity.

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CEO Pete Smith reported that fiscal 2024 private network revenue was the highest in three years and that market share is trending favorably. He contrasted muted CapEx from historical Aviat Tier 1s in the U.S. and Africa with a favorable spending environment from Pasolink's Tier 1 customers. Regarding buybacks, Smith confirmed they would lean into them given the share price but noted that execution is difficult due to persistent quiet periods from the delayed filings.

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CFO Farouq Tuweiq responded that market uncertainty creates opportunities and that while operations may shift geographically, the company's long-term, customer-centric design-in strategy remains committed. Regarding M&A, he noted that the market has become quiet as potential sellers have paused to wait for more clarity on the tariff situation, leading to a slowdown in activity in Q2.

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Executive Daniel Bernstein confirmed the AI application is primarily in data centers. Executive Farouq Tuweiq clarified that the 2027 timeline for the remaining Enercon stake is fixed by contract and has no accelerators. He added that while increased European defense spending would be positive, the benefit to Enercon depends on whether Europe buys locally or imports from the U.S. and Israel.

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Executive Farouq Tuweiq explained that Enercon expands the Power segment into the Aerospace and Defense markets, creating cross-selling opportunities with the Connectivity segment. CEO Daniel Bernstein added that Bel's European manufacturing base can help Enercon expand and that offering a combined product basket strengthens relationships with military customers. Regarding rail, Tuweiq and Bernstein clarified that while customers are global, manufacturing is centered in Slovakia, making European seasonality a key factor, with many sales going to European-based customers.

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Executive Farouq Tuweiq explained that Bel benefits from general data center growth but strategically avoids the hyperscaler market, focusing on the other half of the industry. Executive Daniel Bernstein elaborated on this niche strategy, stating Bel targets profitable applications like school buses and heavy equipment for EV, and testing equipment for data center ICs, rather than pursuing low-margin, high-volume business as it had in the past with customers like Facebook.

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Executive Lincoln Mali detailed the consumer growth strategy, highlighting significant room to grow market share from its current 11%, increase cross-sell penetration, and enter the non-grant market via the Adumo payout business. Executive Naeem Kola added that FY25 CapEx would be similar to FY24, with a continued focus on growth investments like Kazang devices and cash vaults in the merchant division.

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