Ladies and gentlemen, thank you for standing by. Welcome to the VEON Third Quarter 2019 Investor and Analyst Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and one on your telephone keypad. I must advise you this conference is being recorded today, Monday the fourth of November, 2019. I would now like to hand the conference over to your first speaker today, Nik Kershaw. Thank you, sir. Please go ahead.
Hi, morning ladies and gentlemen, and welcome to VEON's Third Quarter 2019 results. It's Nik Kershaw here, Group Head of Investor Relations. I'm pleased to be joined on the line by Ursula Burns, our Chairman and CEO, Murat Kucukos, our Deputy Chief Financial Officer, and Alex Kazbegi, the Group Chief Strategy Officer. Kjell Johnsen, our outgoing Chief Operating Officer, as well as Kaan and Sergi, our incoming joint CEOs, are also with us today. The presentation will start with an overview of our achievements for the first nine months of the year from Ursula, followed by a brief summary of our financial performance during the third quarter from Murat. Alex will then provide an operational review of the third quarter at the country level, after which Ursula will close the formal part of the call with an outlook for the balance of the year and some final remarks.
As always, with these calls, we will ensure that there's ample time for your questions at the end, and we'll ask the operators to moderate that. However, before getting started, I would just like to remind you that we may make forward-looking statements during today's presentation, which involve certain risks and uncertainties. These statements relate in part to the company's anticipated performance and guidance for 2019, future market developments and trends, operational and network development and network investments, and the company's ability to realize its targets and commercial and strategic initiatives, including current and future transactions. Certain factors may cause actual results to differ materially from those in the forward-looking statements, including the risks detailed in the company's annual report on Form 20-F and other recent public filings made by the company with the SEC.
The earnings release and the earnings presentation, each of which include reconciliations of non-IFRS financial measures presented today, can be downloaded from our website. With that, I'd like now to hand the call over to Ursula.
Thank you, Nik, and good morning to everyone, and thank you for taking your time to dial into our third quarter results announcements this morning. Let me start our presentation by summarizing where our business stands as we move into the final quarter of what has been another eventful year for us. This will be a familiar slide to those of you who joined us for our Capital Markets Day presentation back in September. It sets out the core elements of VEON's investment case, alongside our achievements and milestones at the nine-month point. Taking each of these in turn. First, we continue to capitalize on the growth opportunities offered by our operating markets, which rank among the industry's most dynamic. Their growing youthful populations and low levels of smartphone penetration present us with a unique demographic dividend not present in developed markets.
Monetizing our customers' appetite for data through the introduction of a growing ecosystem of digital products and services is our strategy. Second, strong operational execution is fundamental to our success as a business. Here, I'm pleased to report continued progress in growing our EBITDA through both solid revenue generation and by further reductions in our cost base throughout the group. Third, managing an appropriate capital structure is vital to ensuring that we can reinvest in our core business and pursue growth opportunities in new services and adjacent industries. The upgrade in our long-term credit rating by Fitch to investment grade during the quarter was a welcome validation of the good progress that we've made in recent months. Fourth, active management of our portfolio is a vital component in maximizing value for our shareholders.
Here, the successful conclusion of the GTH tender offer was an important milestone, enabling us to simplify our corporate structure, and this will allow us to enjoy the cash flows and economic benefits of these operating companies in full. Harnessing these elements together is our new strategy framework, which stretches our long-term growth ambitions beyond our core connectivity businesses into new services enabled through the latest digital technologies and over time, to future assets that will define the products and services of tomorrow. Looking to the next slide. Ours is a diversified portfolio of businesses which, as we set out at our Capital Markets Day, naturally separates into three pillars. Our cornerstone, Russia, the growth engines of Pakistan, the Ukraine, Uzbekistan and Kazakhstan, and our frontier markets, the largest of which are Algeria and Bangladesh.
The diversification benefits of these, each with their own unique operating characteristics and differing levels of market development, was clear in quarter three, during which underperformance in Russia was offset by operating strength in our growth engines, keeping our group revenue and EBITDA on track with full year targets. Much of our longer term growth will come from revenue opportunities outside of our core connectivity business. This is evident in the initial traction that we are seeing in new services, KPIs for which we have set out here. Fundamental to these are the self-care ecosystem that we are deploying in a number of our key markets, which transform the relationship between us and our customers. These are enhancing our understanding of the individual needs of our customers and helping us to tailor local services to match.
These include content services like pay TV, which in Russia now attracts 1.8 million monthly active users. These also include transformative digital financial services in markets like Pakistan, one of the world's most unbanked, where our market-leading JazzCash platform now accounts for just under 7% of our total revenue in that market. Turning to numbers. Our business is in good shape as we enter Q4. On an organic basis, we have delivered revenue growth of 4.6% at the 9-month stage and roughly twice this growth rate in organic EBITDA, which stands at 8.8% for the first three quarters. Data continues to drive our growth and dominate our medium-term revenue opportunities, as we develop new products and services to monetize the demand that we see across our markets.
Cost remains a core focus for us, and here we continue to deliver on the one percentage point reduction in cost intensity that we committed to as an annual ambition for three years when we announced full-year results in 2018. This is on top of our commitment to progressively reduce our corporate cost, and we remain on target to halve these from their full-year 2017 levels as we exit this financial year. Our business is a cash generative one, and at the 9-month stage, delivered just over $900 million in equity free cash flow against our full-year goal of around $1 billion. Finally, we have continued to maintain levels of investment in our networks necessary to maximize the value of our core connectivity franchise, as well as developing new services.
More of how these are being phased in at the country level when Alex takes us through our individual markets later in the call. I announced one very important milestone for our group just a few days ago, the end of VEON's external compliance monitorship, which concludes our deferred prosecution with the U.S. Department of Justice. This decision demonstrates that VEON has successfully established a robust and sustainable compliance and controls program. VEON's commitment to ethics, compliance, and controls is unwavering and is reflected in our structures, procedures, and daily ways of working throughout the organization. On that note, I would like to hand over to Murat, who will take you through the group's financial performance during the third quarter.
Thank you, Ursula, and good morning, everyone. Turning to our group financial performance summarized here on slide eight. Operationally, Q3 was a solid quarter for the group. The changes in tax and administration fee in Pakistan had a material impact on our reported growth rates, the precise impact of which we have reconciled in detail in our earnings release. These aside, our financial performance is sound and tracking in line with our expectations. Reported revenue and EBITDA growth were -4% and 16.5% respectively. At the group level, organic revenues declined 0.9% year-over-year. Excluding the impact of the Pakistan tax and fee changes, the growth rate was 2.4% year-over-year. Once again, data revenue led our service revenue growth, rising by 18.4% organically year-over-year, with particularly strong performances from Ukraine, Pakistan, and Bangladesh.
Currency weakness was far less of a factor in Q3 compared with prior quarters. The negative FX impact on our top line was limited to $72 million compared to $179 million in the last quarter as a result of a relatively stable ruble and stronger Ukrainian hryvnia. EBITDA grew organically by 5% year-over-year, resulting in a healthy pre-IFRS 16 EBITDA margin of 38.6%. Excluding the impact of Pakistan tax and fee changes, the year-over-year organic EBITDA growth was 11%, a solid result supported by lower costs. We continued to make good progress on cost control during Q3, with our cost intensity ratio declining 2.2 percentage points as compared to the prior year, aided particularly by lower operating costs in Russia, Ukraine, and HQ costs, which are 25% lower at the 9-month stage versus last year. Our Q3 reported equity free cash flow, excluding licenses, was $370 million.
Excluding IFRS 16 adjustments, equity free cash flow was $269 million and reached $902 million for the first nine months. These equity free cash flow numbers include a negative impact of $136 million paid by VEON in respect of the GTH tax settlement, which was not included in our full-year equity free cash flow guidance of $1 billion. We are on track to deliver on our equity free cash flow target for full year 2019, excluding this impact. All in all, our results demonstrate clearly the portfolio effect of the strong results from our growth engines offsetting the weakness in our largest market, Russia, a factor Alex will address in detail later in the call. Moving to slide nine.
Looking at our Q3 performance on a country level, revenue weakness in Russia is a key feature, a function of the network quality and distribution challenges we face there, and the unlimited data bundles that continue to dominate the marketplace. Alex will discuss this in greater detail when he takes you through the all-country performance. Tax and admin fee effects aside, the weakness in Russia was offset by the performance of our growth markets, which delivered growth rates in organic revenues and EBITDA well above the group average. As a single cluster, our frontier markets deliver a broadly flat organic revenue performance, and it was particularly encouraging to see the teams in Algeria and Bangladesh execute well in their challenging macro environments.
Finally, it is gratifying to report an increase in reported EBITDA for the quarter, helped by good cost control in Russia and continued progress in reducing our corporate costs. Moving to slide 10. Looking at our Q3 performance by product, once again, data revenues led growth at the group level, providing offset to weakness in voice revenues, as well as the lower equipment and accessory sales in Russia. As noted on the previous slide, lower costs helped our EBITDA performance, more than offsetting the small decline in organic service revenue. The impacts of both FX and IFRS 16 are also depicted here. In the case of FX, pleasing the lower numbers than in recent quarters, as I discussed earlier. The result was reported total revenue of $2,223,000,000 and reported EBITDA of $987 million, once the positive impact of IFRS 16 amounting to $129 million is accounted for.
Moving to income statement. Reconciling these with our Q3 income statement, a few other items are worth it to note when comparing our financial performance with Q3 2018. Depreciation, amortization, and other line includes $89 million in impairments related to Kyrgyzstan, compared to $782 million in impairments in previous year, same quarter. Reported financial expenses increased impacted by IFRS 16 and by $41 million related to the put option liability with respect to 15% non-controlling interest of Jazz Pakistan. Excluding these, net financial income and expenses decreased year-over-year, mostly due to lower levels of debt. All in all, net income from continued operations for Q3 reaches $30 million compared to $780 million dollars loss of last year.
Again, for comparative purposes, note that Q3 2018 results include a gain of $1,279,000,000 presented as profit from discontinued operations as a result of the completion of the sale of VEON's 50% stake in Italy joint venture to CK Hutchison. We have no such adjustments in Q3 2019. I am on slide 12, looking at our debt stock across the quarter. It is gratifying to see that our net debt and gearing trends are both stable over the quarter, with our leverage ratio standing at 1.7 times at end of quarter, the same level at which we entered the quarter. This adjusts to 2.1 times on an IFRS 16 basis, which is again the same as end of second quarter. This was achieved despite its number of significant payments during the quarter.
Aside from CapEx, excluding licenses of $372 million, we also paid $296 million in respect to our interim full year 2019 dividend, and $225 million in Pakistan as a security deposit in respect to our spectrum license renewal. Taxes of $131 million, which includes the second and final payment of the tax settlement with GTH, reached with the Egyptian authorities of $82.3 million, and the first payment of $54 million was in Q2. We also recorded a $90 million financial gain in relation to the write-back of the deposit held on balance sheet with respect to the projected cost of MTO for GTH. With that, let me hand over to Alex to take you through the performance of our individual markets during the quarter.
Thank you, Murat. Good morning, everybody. Turning first to our largest market, Russia. This is slide 13. In Russia, our operation continues to face challenges related to, firstly, the coverage and performance gap we still have with our competitors, despite making improvements. Secondly, market pricing structures favoring unlimited tariff plans. Thirdly, effectiveness of our distribution. These all together have negatively affected our performance. Beeline saw a year-on-year decline in its mobile customer base due to these factors, as well as due to the decline in sales through alternative distribution channels. While quarter-on-quarter, we saw increase in customer base. Mobile service revenue followed the subscriber trends, and while data volumes continued to grow strongly, up 53% year-on-year, data revenue growth was slower, 3% in this quarter.
Our reduced focus on low margin equipment sales during the quarter resulted in a 10% drop in respective sales year-on-year. On the positive side, number of broadband customers continued to grow, resulting in an 8% growth in respective revenues. Managing costs against this challenging revenue environment remains our focus. In this area, cost control measures in Q3 allowed for a positive year-on-year growth in EBITDA, bucking the revenue trend. Our LTM CapEx to sales continued to increase in this quarter, following our focus on network quality improvements, and we expect this ratio to reach 22% for the full year 2019, inclusive of Yarovaya-related CapEx and pre-IFRS 16. As an example, number of our 4G base stations increased 43% quarter-on-quarter during the third quarter of 2019.
As we mentioned, we are actively addressing challenges that we face in Russia, following the three priorities set out at our Capital Markets Day in September. Namely, first, continuing network quality and performance improvements. Secondly, optimization of our distribution footprint. Thirdly, restoring price discipline to the marketplace through simplified bundled offers. Given the sequencing of these priorities, a turnaround in our Russian operations is likely to take several quarters. Turning to slide 14, Ukraine. It was another quarter of solid outperformance for Kyivstar. With service revenue growth of 18.3% in what remains one of our strongest growing markets. Successful marketing activities alongside improving network quality and availability drove strong growth in data usage, up almost 17% year-on-year on a per subscriber basis, and a 37% rise in data revenues.
Kyivstar's mobile customer base saw a slight fall, down 0.8% year-on-year, as multi-SIM users continued to decline, but this was more than offset by a solid rise in ARPU, +19.9% year-on-year, led by data services. EBITDA, pre-IFRS 16, increased by 27.7% year-on-year, driving an EBITDA margin of 62.1%, up from the 57.5% recorded in Q3 last year. Strong revenues led the EBITDA performance, while good cost control in the period further supported margin expansion. Reported EBITDA, post IFRS 16, increased by 33.1% year-on-year as a consequence. We continued the rollout of our 4G LTE network during the quarter, which is reflected in the 61.8% rise in CapEx during the quarter. That is excluding licenses on a pre-IFRS 16 basis. In July 2019, the National Bank of Ukraine abolished limits on the repatriation of dividends. This is a positive decision, and one that will support the VEON group's cash flows.
During Q3, Kyivstar upstreamed 4.5 billion hryvnia in dividends from Kyivstar. Turning to the next page, slide 15, Pakistan. Jazz continues to perform well operationally, and although there is a number of moving parts to Pakistan's reported numbers this quarter, our underlying business there is fundamentally strong. Worthwhile to note here that the financial impact of this effect will carry on until second quarter 2020. We have explained at length in our earnings release how the suo moto order and the administration fee reversal affected our reported numbers. Adjusting for these, organic revenues and EBITDA increased by 14.3% and 14% respectively during the quarter. Jazz subscribers, which grew 5.6% year-on-year, significantly increased their data volume consumption, which grew more than 70% year-on-year, driven by growing smartphone penetration and subscription to more services. Jazz TV is an example here.
It had over three and a half times more monthly active users in September than at the end of 2018, namely 558,000 versus 154,000 in December 2018. Illustrating how major event coverage can impact its use, we saw average time on app rise by two-thirds during the Cricket World Cup in June and July of this year. Rising to 26 minutes per day, compared to 15 and a half minutes per day during the five months prior. Fast-growing data consumption translated into mobile data revenue growing by about 25% year-on-year to comprise just under a third of Jazz total revenues. DFS revenues continued to contribute positively to our data revenues, with JazzCash revenues increasing 43% year-on-year in the quarter. We continue to make significant investments in our network to accelerate coverage rollouts.
I would note that in September 2019, Jazz deposited 50% of its disputed license renewal fee, approximately $225 million, as security under protest in order to maintain its appeal in the Islamabad High Court regarding the PTA's underlying decision on the license renewal. Moving to the next slide 16, Uzbekistan. This is another market where tax has an impact on our reported numbers. The business delivered a 4.6% sequential improvement in revenue year-on-year. While total reported revenue decreased by 8.8% on a year-on-year basis, adjusting for the impact of the reduction in mobile termination rates and the introduction of the 15% excise tax, revenues would have grown by around 7% year-on-year.
Data revenues, as in all growth engine cluster countries, drove our operational performance, rising by 20.3% year-on-year on the back of a doubling of mobile data traffic, supported by our continued rollout of high-speed data networks, increased smartphone penetration and the increased uptake of bundled offerings by our subscribers. Despite the tax headwinds, we were able to bring our EBITDA margin to 53%, an eight-percentage point margin expansion in 12 months on a pre IFRS 16 basis. Our LTM Q3 2019 CapEx to revenue ratio was higher than last year, reflecting high levels of investment in the first half of 2019. On the regulatory side, we have an expectation that Uzbekistan's international gateway will be liberalized at or around the end of 2019. This, in our view, would be a positive for the country. Moving to the next slide, 16, Algeria.
Algeria remains a challenging market, both in terms of microenvironment and political uncertainty, as well as the high levels of price competition that persists in the sector. Against this backdrop, Djezzy maintained its focus on both prepaid and postpaid customers with a segmented approach to the market, which it continued to outperform through NPS leadership and an increasing relative share of what remains a contracting market for mobile services. Our customer base reflected this top-down trend, contracting by 4.3% as competition remained intense in a declining subscriber marketplace. This also impacted ARPU, which declined by 1.2% year-on-year during the quarter. It's significant to note that on a sequential basis, ARPU rose 9.2%, reflecting Djezzy's introduction of a modernized and updated tariff portfolio.
At the same time, Djezzy saw a further increase in data customers, which contributed to a 27.8% year-on-year increase in data revenues, following continued rollout of our 3G and 4G networks. The decline in revenue remains a challenge for EBITDA performance, which ranked 2.5% year-on-year, being also impacted by increased HR costs and bad debt recognition this quarter. The increase in CapEx year-on-year reflects changes in a year phasing of investments. LTM CapEx sales rose as a consequence to 15.2%, that's pre IFRS 16, up from 11.3% in Q3 2018. Moving to the next slide 17, Bangladesh. Bangladesh's operational turnaround continued in Q3, with Banglalink delivering its fourth consecutive quarter of service revenue growth, despite a competitive marketplace and continuously challenging regulatory environment.
Banglalink once again remained focused on improved network availability and customer acquisition, which was rewarded by a year-on-year acceleration in revenue growth, which was 3.8% in the quarter. Service revenue increased by 5.2% year on year, driven by the further expansion of Banglalink's distribution footprint and the introduction of new higher priced bundled offers. Data revenue increased by 26.4% year on year, driven by increased smartphone penetration and data volume growth, up 83% on a per subscriber basis. EBITDA pre IFRS 16 decreased year on year by 4%, as higher revenues was largely offset by the increase in the minimum tax rate. However, excluding the impact of the tax change, pre IFRS 16 EBITDA growth would have been 7.1% higher. CapEx, excluding licenses, pre IFRS 16 increased considerably year on year, reflecting the continued rollout of our 4G LTE network following the introduction of the service in February 2018.
Now I would like to hand over back to Ursula for the closing comments and guidance for the remainder of 2019.
Thank you, Alex. Let me close the formal part of this call with some observations on where we stand at the nine-month stage of our financial year. Overall, I'm encouraged that the diversified portfolio of businesses that we operate has collectively delivered another solid quarter. Quarter three has been a complicated one in terms of regulatory changes in a number of our markets, particularly Pakistan. The operating performance of the group remains solid and growth opportunities remain on track. That said, the continued underperformance of Russia is something that we are working hard to address. We are in the process of making a course correction in strategy here, which will take a number of quarters to take full effect. We remain committed to improving the operating performance of Russia, our largest market.
In the meantime, we shall continue to drive our revenue opportunities across our markets, guided by our new strategy framework and supported by the new partnership between Sergi Herrero and Kaan Terzioglu as joint Chief Operating Officers, whom together bring a terrific blend of skills through which to manage the three operating pillars of our business. Underpinning this strategy is the greater flexibility that is embodied by our new dividend policy that we announced in September, which will provide the flexibility that we require to execute on VEON's investment opportunities in a way that maximizes returns for our shareholders. Finally, our financial guidance.
The performance that we've delivered during the first nine months of the year puts us on track to deliver against our targets, namely, low single digit organic revenue growth, at least mid-single digit organic growth of EBITDA, and equity free cash flow, excluding licenses, of approximately USD 1 billion. These are targets that I am happy to reconfirm today. Before I hand over to the operator, I would like to thank Kjell Morten Johnsen for his commitment to the group over the past number of years, and most recently as COO for the group. We wish him all the best in his future endeavors. Thank you, Kjell, from myself and from the company. With that, I will hand the call back to the operator for questions. Operator?
Thank you, madam. Ladies and gentlemen, we will now start the question and answer session. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel the request, please press the hash key. That's star and one to ask a question, and the hash key to cancel. We'll just wait a few moments while people register for questions. Thank you. Your first question comes from the line of Cesar Tiron of Bank of America. Please ask your question.
Hi, everyone. Thanks for the call, thanks for the opportunity to ask questions. I have two questions, if that's okay. They're both on Russia. The first one, in which areas were you able to save cost in Russia to allow for margins to expand? Do you think that's sustainable? By this I mean, if you have another couple of quarters of negative service revenue growth, are we going to see margins decreasing again? The second question, if you can talk a bit more on the details on the increased CapEx plan in Russia. Is this mainly going to increasing base stations? How long do you think you need to bridge the gap with competitors? I think you're trying to do so for a couple of years now.
Are we going to see Russian CapEx trending towards 22% only for this year or also going forward? Thank you so much.
Alex, why don't you start?
Cesar, thank you. Let me start now. If you look at our EBITDA performance for this quarter, there were also a number of the certain provisions. There were one reversal of certain provisions previously, that affected it. However, we also reduced our commercial costs because we have closed down 120 shops, that clearly affected the performance of the EBITDA positively. Going forward, as we said, we are committed to improve the EBITDA margin and the cost intensity by one percentage point. Clearly that target has not changed. Now, on the second question about the CapEx, as we guided for the long-term LTM CapEx to revenue for the full year will be about 22%. That does include the ROI. However, we will do in Russia whatever is necessary for us to fix the gaps which we feel they still exist in the market.
We have addressed this issue. As I said, the LTE base stations just in this quarter grew about 43%. Clearly we are very much on track to addressing all kind of performance gaps we might still have in the market. We will look at the targeted investment in order to bring up the speed, the coverage, and the capacity in the areas where we feel it is most needed.
Thank you. If you just allow me a follow-up. Sorry for the housekeeping question, would you please disclose what was the EBITDA margin in Russia or the change in EBITDA margin in Russia, excluding this provision reversal?
Go ahead.
The impact in Russia is close to in the south of 1 billion RUB in the quarter three, the reversal of bad debts and all the related provisions that were reversed.
Thank you so much.
Thank you.
Thank you. Your next question comes from the line of Vyacheslav Degterev of Goldman Sachs. Please ask your question.
Yes, thanks for the presentation. A question on Russia. What's the strategy for the distribution improvements in the country? Do you aim to continue reducing the number of stores broadly at a similar pace, meaning around 120 stores per quarter? Thank you.
Ionut.
Slava, on Russia, it's a two-pronged question, I would say. One is that, as you know, the distribution system or network, if you wish, for all the players is very inefficient. We are very much welcoming the moves by all the other players in the market to also reduce their footprint. I think recently the MTS again repeated that they will be reducing their footprint in the market. We also showed that we are optimizing our network, 120 stores down just in this quarter. Clearly that process will continue. Our general aim is to convert, so to say, the inefficient stores to much more efficient ones, close down the ones which are less efficient, and move generally to more digital, more online sales. That will be our long-term goal.
I was going to add something, but I think Alex covered it all. It's optimizing distribution as much as it is optimizing the cost.
Okay. Thank you.
Thank you. Once again, ladies and gentlemen, if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel the request, please press the hash key. Your next question comes from the line of Alexander Vengranovich of Renaissance. Please ask your question.
Yes, good afternoon. Just two questions. First one, again, a follow-up on the distribution in Russia. Based on what you've seen over the third quarter, have you already started to see that your competitors follow your movement with regards to the optimization or the distribution? Is just words at this stage, and you're probably the first one on the market to start really optimizing the number of the stores? That's the first question. The second question is on Uzbekistan, surprisingly. I've noticed that there is a sequential, quite substantial decrease of number of the subscribers in Uzbekistan over the last two quarters. Just wanted to understand whether there are any specific reasons for that or there are any one-offs there. Thank you.
On the distribution, it's difficult to comment what the competition does. Clearly, we need to wait when they will announce probably the actual numbers. However, just referring again to MTS, they announced, or they declared that they would be looking at reduction of the distribution footprint by up to, I think, 300 stores already last quarter and also before. I think we will see once the numbers were reported, what is the actual reduction there. In general, I would say that trend clearly towards more sales through the monobrand shops and optimization of the monobrand. Here, for instance, one other thing which I would mention is that it's us also changing the KPIs and looking at the long-term value of subscriber as the main KPI for signing new subscribers is the key for the overall market to cut down the overall footprint on the distribution side.
I don't think that I can say more on that one at the moment. In Uzbekistan, we basically have been focusing very much on the value. In that sense, we have deliberately, in some way, let go to some of the low-end subscribers, and the value focus actually worked out very well for us. We saw that the organic growth of the revenues have been very robust. However, going forward, given again, the competition is quite irrational in Uzbekistan, we will be reviewing and revising our tariff plans and our pricing model in order to be a bit more competitive in the market. However, there was nothing else but our focus on the value customers in this quarter.
Okay. Thank you. All clear.
Thank you. Once again, ladies and gentlemen, that is star and one to ask a question or the hash key to cancel. Your last question comes from the line of Andreas Kabisch of UBS. Please ask your question.
Hi. Hello. Thank you. I've got two questions, please. The first one on Russia, if you could just explain a bit how you're thinking in terms of balancing the cuts and the commercial costs, like you're saying, with apparently losing market share. I guess what I'm aiming at is, wouldn't it be better to wait with cutting commercial costs only after you've fixed some of the network issues that I think are partly to blame for the market share losses? The second question on Pakistan, if you could just please break down the impact of, rather the one impact of the reversal of the charges when you credited them to customers. What impact of the overall decline there was attributable to this one-off? Thank you.
Pakistan. Andre, let me take the first one. In general, agree the network should precede to any other sort of say, changes. However, the strategy in Russia is not just the distribution network, of course, it's also pricing. We have, of course, the background of pricing being very much skewed towards the unlimited prices. However, we have been also changing our pricing model as well. I don't know if you saw our new bundles in the market. They are much more geared, again, towards the value, if you wish. Specifically on the commercial side, I think that cutting commercial cost is not a goal. It just follows through the fact that we want to optimize our distribution footprint and distribution network, and we are just closing down the inefficient shops or repositioning them. That is driving the reduction of commercial cost.
It's not a deliberate cost-cutting exercise from our side. We are very committed to boost our presence in the market. Indeed, in that way, the network investments come first, and then, of course, all our commercial activities follow through that.
Go on,
Let me address the second part of the question. In particular, the reversal had a $14 million impact to Q3 results. While the tax and fees, other changes in the fee structure will have a continuous impact in the remaining three quarters more on a year-over-year comparative basis. For Q3, the impact was $14 million.
That's 40, yes?
One four. One four.
14. This effect will not be carried over into the fourth quarter because there's this 45 days of the validity of the reversals that you mentioned? Is this all open?
We totally have $26 million of reversals, of which $14 million is being recorded into Q3, and about $12 million would be affected partially into Q4. However, we anticipate a big chunk of this Q4 impact to be offset with the use of these services within the Q4. To be not having a full impact on top line in Q4.
All right. That's clear. Thank you very much.
Thank you. There are no further questions at this time. Please continue.
Well, if there's no more questions, thank you very much, everyone, for dialing in. If you do have any more questions, please just reach out to us. Thank you very much. Good day.
Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you all for participating. You may now disconnect.