Atlas ups bid for Millicom amid tower sale talks

Atlas Luxco increased its offer for Luxembourg-based telecom operator Millicom from US$24 to US$25.75 per share.

After Millicom rejected the previous all-cash offer for the Latin America-focused telco, the potential buyer increased the offer by 7.3%. 

The offer values Millicom at approximately US$4.4bn while the value of the tender amounts to approximately US$3.1bn as Atlas is already Millicom’s biggest shareholder with a 29% stake.

According to Atlas, the new offer represents Millicom’s highest share price over the last two years and a 27.5% premium compared to the volume weighted average trading price during the 90 calendar days ended May 22, the last day prior to market speculation regarding a potential public offer for the company.

The offer is open until August 16 but could be extended. 

TOWER SALE TALKS 

Meanwhile Millicom, which operates as Tigo, confirmed there are ongoing negotiations for the sale of a majority of its towers but declined to disclose any more information.

In January, fund KKR reached a deal to acquire 1,100 wireless towers from Millicom’s Tigo Colombian subsidiary. That was after the company finished the carve-out of its tower business, Lati, at the end of 2023. At the time, the company had 9,000 sites in seven countries.

News of the talks comes after the company reached a non-binding agreement with Telefónica for the potential takeover of the Spanish group’s Colombian carrier Coltel for US$400mn in cash and the potential acquisition of EPM’s stake in JV TigoUne. 

“Now we're ready to move from a defensive mode to an offensive strategy”, CEO Marcelo Benitez said about its operation in Colombia during Millicom’s Q2 conference call.

Moreover, Millicom and Liberty Latin America announced on Thursday an agreement to combine their operations in Costa Rica. 

After the transaction, Liberty Latin America and its minority partner in Costa Rica will hold an approximate 86% interest while Millicom will have the other 14%.

“Colombia and Costa Rica are the only two countries where we have not historically been able to grow our equity free cash flow. And these projects should help us,” CFO Bart Vanhaeren said.

The company has improved its cash flow in Colombia and is planning a second phase of growth in the country with significant upgrades in its HFC network.

FINANCIAL RESULTS AND CAPEX

Millicom plans full-year capex of US$700mn for 2024, approximately US$100mn less than in 2023.

The telco said its Q2 revenues rose 4.7% year-on-year to US$1.46bn, reflecting organic growth in most countries. Mobile revenue was up 5%.

“We have invested in other operations to enhance our mobile network capacity to support the growing demand of mobile data. This has enabled us to increase our carefully planned price increases, beginning with prepaid,” Benitez said. He added that the company continued to migrate prepaid customers to postpaid as well as promote converged offerings.

Net profit was US$78mn compared with a loss of US$22mn a year earlier.