Executive Summary / Key Takeaways

• Unique Market Opportunity: Kyivstar Group Ltd. (NASDAQ:KYIV) represents a singular, pure-play investment opportunity in Ukraine's burgeoning digital economy, having recently listed on Nasdaq amidst a challenging geopolitical backdrop, signaling strong investor confidence in its long-term potential.
• Robust Digital Transformation: The company is aggressively executing a "digital operator" strategy, expanding beyond traditional mobile and fixed connectivity into high-growth digital services like ride-hailing (Uklon), e-health (Helsi), and big data, driving significant revenue and EBITDA growth in the first half of 2025.
• Proven Resilience and Strong Liquidity: Despite the ongoing conflict and past operational disruptions, Kyivstar has demonstrated remarkable operational resilience and robust cash flow generation, maintaining a strong liquidity position of approximately $534 million as of July 31, 2025, with no material external debt.
• Dominant Market Position with Technological Edge: Kyivstar leverages its extensive 2G, 3G, and 4G LTE network infrastructure, coupled with strategic acquisitions and in-house technology development, to offer a comprehensive and integrated suite of services, providing a competitive moat against both local and international rivals.
• Geopolitical Risks Remain, but Mitigated: While the ongoing war and potential sanctions present material uncertainties, management has implemented comprehensive mitigation strategies, including business continuity plans and active engagement with authorities, to safeguard operations and shareholder interests.

Ukraine's Digital Frontier: Kyivstar's Strategic Evolution

Kyivstar Group Ltd. (NASDAQ:KYIV) stands as a pivotal player in Ukraine's telecommunications landscape, recently making headlines as the "first and only pure-play Ukrainian investment opportunity" on the Nasdaq Stock Market. This milestone, achieved on August 15, 2025, is not merely a financial event but a testament to the company's profound resilience and ambitious strategic pivot towards becoming a comprehensive digital operator. At its core, Kyivstar provides essential mobile connectivity across 2G, 3G, and 4G LTE networks, alongside robust fixed-line voice and data services. However, its vision extends far beyond traditional telecom, embracing a diverse digital portfolio that includes Kyivstar TV, big data and technology services through Kyivstar.Tech, digital health via Helsi, and ride-hailing and delivery through Uklon.

The company's journey began in 1994, with its primary operating entity, JSC Kyivstar, formally established in 1997. Over decades, it solidified its position as a leading provider, building an extensive network infrastructure that underpins its current offerings. This foundational strength is crucial in a market that demands reliable and ubiquitous connectivity. Kyivstar's overarching strategy is to leverage this strong base to expand into new, high-growth digital consumer services, thereby diversifying its revenue streams and deepening its engagement with its 23 million subscribers. This strategic direction is a direct response to evolving consumer demands and the broader industry trend towards integrated digital ecosystems.

In the competitive Ukrainian telecom market, Kyivstar faces formidable rivals such as Vodafone Ukraine (VOD) and Lifecell (TKC). Vodafone, backed by a global brand, offers extensive network coverage and advanced data services, while Lifecell competes aggressively on pricing and network expansion. Against these, Kyivstar differentiates itself through its deep local market expertise, a comprehensive suite of integrated digital services, and a focus on localized innovation. Its proprietary network technology and regulatory licenses for spectrum access create significant barriers to entry, helping to defend its market position. For instance, Kyivstar's advanced 4G infrastructure is designed to offer notably more reliable connectivity, which is a critical advantage against competitors like Lifecell, whose focus on urban affordability might sometimes come at the expense of broader network stability. This superior service quality can translate into improved gross margins and market share, particularly in business segments.

Beyond Ukraine, Kyivstar also encounters indirect competition from global players like e& (formerly Etisalat) (ETISALAT) in overlapping service areas such as cloud and connectivity. While e& benefits from superior infrastructure scale and regulatory advantages in the UAE, Kyivstar's cross-border expertise and focus on emerging digital trends offer a unique value proposition. The company's strategic adaptability and product innovation, particularly in integrating new digital services, position it to potentially achieve faster innovation cycles compared to some larger, more bureaucratic global players.

Technological Edge and Digital Expansion

Kyivstar's core differentiated technology lies in its robust and continuously evolving mobile and fixed network infrastructure, complemented by a suite of digital platforms. Its 2G, 3G, and 4G LTE networks provide the backbone for mobile voice and data services, while its fixed networks support converged services for both consumers and businesses. The tangible benefits of this infrastructure include widespread coverage and consistent service quality, which are paramount in a country undergoing significant reconstruction and digital transformation.

The company's strategic investments in its digital portfolio are a clear differentiator. Kyivstar TV, offered on IPTV and mobile platforms, expands its entertainment offerings. Kyivstar.Tech provides big data and technology services, leveraging analytics to enhance customer experience and develop new solutions. The self-care application MyKyivstar and consumer cloud offerings further embed the company into its subscribers' daily digital lives. These initiatives are not merely add-ons; they are integral to its "digital operator" strategy, aiming to create a sticky ecosystem of services.

Recent acquisitions underscore this technological and strategic expansion. In September 2024, Kyivstar acquired 100% of LLC Lan Trace, expanding its internet and TV services in the Kyiv region. A more significant move was the acquisition of 97% of Uklon Group, a leading Ukrainian ride-hailing and delivery platform, for $158 million, which closed on April 2, 2025. This acquisition brings Uklon's strong brand value, established customer relationships, and technological expertise into Kyivstar's fold. The integration is expected to generate operational synergies, leading to cost savings and improved service offerings, while also expanding market reach and subscriber growth potential. The goodwill recognized from this acquisition reflects the anticipated future economic benefits from these elements. Furthermore, Kyivstar increased its ownership in Helsi Ukraine, an e-health sector entity, to 97.99% in May 2025, demonstrating a commitment to digital health services.

These technological advancements and strategic acquisitions contribute directly to Kyivstar's competitive moat. By offering an integrated suite of services, from core connectivity to digital lifestyle applications, Kyivstar aims to increase customer loyalty and average revenue per user (ARPU). This comprehensive approach allows the company to capture a larger share of consumer spending on digital services, enhancing its financial performance through higher revenue and potentially better margins, solidifying its market positioning as a holistic digital solutions provider.

Financial Performance and Operational Resilience

Kyivstar's recent financial performance underscores its operational strength and the successful execution of its digital operator strategy, even amidst significant external pressures. For the six-month period ended June 30, 2025, total operating revenues surged to $539 million, marking a robust 28.03% increase from $421 million in the same period of 2024. This growth was primarily driven by mobile service revenue, which climbed 28.93% to $508 million, notably including contributions from the newly acquired Uklon ride-hailing services. Fixed service revenue also saw a respectable 12.00% increase to $28 million.

Profitability metrics reflect this positive trend. Adjusted EBITDA for the six-month period reached $306 million in 2025, a substantial 31.90% increase from $232 million in 2024. This indicates strong operational leverage and effective cost management. For the more recent three-month period ended June 30, 2025, total operating revenues grew 20.85% to $284 million, with mobile service revenue up 21.82% to $268 million. Adjusted EBITDA for this quarter increased 19.42% to $166 million.

The acquisition of Uklon Group, completed on April 2, 2025, immediately contributed to these results, adding $22 million in revenue and $6 million in profit before tax by June 30, 2025. On a pro forma basis, had Uklon been acquired at the beginning of the year, its contribution would have been $41 million in revenue and $10 million in profit before tax for the six-month period, highlighting the strategic impact of this expansion.

Kyivstar's liquidity position is robust, providing a strong buffer against uncertainties. As of July 31, 2025, the company held $446 million in cash and cash equivalents, along with $88 million in other liquid financial assets, totaling approximately $534 million in available funding. This significantly exceeds its projected operating expenditures for the next twelve months. Furthermore, Kyivstar has "no material external debts and therefore no external debt covenants," a remarkable position that enhances its financial flexibility. The company also demonstrated strong financial discipline by repaying $472 million in April 2025 U.S. Dollar denominated Notes and $100 million in June 2025 Russian Ruble denominated Notes during the first half of 2025. This financial resilience, proven through the full-scale war since 2022, is a critical factor for investors considering the unique market environment.

Outlook and Risk Assessment

The outlook for Kyivstar is shaped by its strategic growth initiatives and the persistent geopolitical realities in Ukraine. The Nasdaq listing itself is a significant forward-looking development, broadening the company's U.S. and international shareholder base and providing access to global capital markets. This move is expected to support further investments in its digital operator strategy and network expansion. The provisional accounting for the Uklon acquisition, which is subject to final valuation adjustments until April 2, 2026, suggests potential for further financial refinement and integration benefits.

However, the investment thesis is inextricably linked to the ongoing war in Ukraine, which presents "material uncertainties" that could impact the company's ability to continue as a going concern. Potential future impairment charges, which could be material, remain a risk if the conflict escalates or macroeconomic conditions deteriorate. The company also faces risks from the interpretation and enforcement of international sanctions and potential Ukrainian counter-sanctions, which could complicate business decisions. A notable past challenge was the freezing of corporate rights in Kyivstar and its subsidiaries in October 2023, though these restrictions were successfully unfrozen in November 2024, demonstrating the company's ability to navigate complex legal and political landscapes. The imposition of currency exchange controls in Ukraine could also limit the company's ability to convert local currencies or repatriate cash and dividends.

Management has proactively addressed these risks with comprehensive mitigation strategies. These include robust business continuity plans to protect personnel and operations, active engagement with stakeholders, diversification of supply chains, and enhanced risk management policies. Critically, management is actively monitoring sanctions and engaging with Ukrainian authorities to ensure compliance and provide assurances regarding ownership and management, confirming that Russian nationals do not participate in Kyivstar's management or benefit from its assets. This proactive stance, combined with its proven ability to generate strong cash flows even during wartime, provides a degree of confidence in its operational continuity.

Conclusion

Kyivstar Group Ltd. offers a compelling, albeit complex, investment proposition as a leading digital operator in Ukraine, now publicly traded on Nasdaq. The company's strategic pivot towards an integrated digital ecosystem, fueled by acquisitions like Uklon and Helsi, is driving significant revenue and EBITDA growth. Its robust network infrastructure and expanding digital portfolio provide a strong competitive moat against local rivals like Vodafone Ukraine and Lifecell, while its local market expertise and innovation capabilities allow it to differentiate effectively.

Despite the inherent geopolitical risks associated with operating in Ukraine, Kyivstar has demonstrated exceptional resilience, maintaining a strong liquidity position and effectively managing its debt. Management's proactive risk mitigation strategies and the successful unfreezing of its corporate rights underscore its capacity to operate and grow in a challenging environment. For investors seeking exposure to a unique, high-growth digital economy with a proven track record of resilience, Kyivstar represents a distinctive opportunity, balancing significant potential with carefully managed risks. The company's continued execution of its digital operator strategy and its ability to capitalize on the post-war reconstruction and digital transformation of Ukraine will be critical determinants of its long-term success.