Millicom CEO: ‘We're not out of the woods yet’

Luxembourg-based Millicom International, which operates in Latin America under the Tigo brand, is cautiously optimistic about 2021, although the pandemic and economics still add unpredictability to the business scenario.

“We aren’t out of the woods yet. 2021 is still highly uncertain. So we’ll use the same flexible, prudent and successful management approach that worked so well for us in 2020,” CEO Mauricio Ramos (pictured) told analysts in a call.

Ramos did not commit to any capex target for 2021, but rather to a minimum operating cash flow of US$1.4bn.

In 2020, Millicom invested US$941mn in its Latin American operations, 6% less than 2019 capex. 

The original, pre-pandemic capex plan for 2020 was to invest US$1.1bn. However, 1QQ20, the company announced an initial capex reduction of US$200-300mn.

“US$1.4bn [of OCF] is a floor. Let's take from there and have the possibility to level that up,” Ramos said. 

The group is writing off the distribution of dividends this year, while buybacks would resume only in the second half of the year.

“Priorities will be investing in the business and further reducing net debt, rather than distributing dividends and buybacks," Ramos said. 

Millicom’s capex is focused on fiber cable and 4G LTE expansion.

BREAKDOWN

Millicom’s biggest operation in the region is in Guatemala, which in Q4 delivered 24% of its regional revenues. 

Colombia came next with 23% of the total, followed by Bolivia (11%), Honduras and Panama (10% each), Paraguay (9%) and El Salvador (7%).

All subsidiaries except those in Guatemala and El Salvador saw revenues drop in Q4. 

Millicom ended the year with 42mn mobile users, 4.5mn home broadband customers and 18mn 4G data users.

Despite the decreases, the pace of recovery is “very positive” and "we think we’re very well prepared going into 2021 with subscriber growth, resilient cash flow and reduced net debt," according to Ramos.

However, he said, “we’re confident that the reality still remains and that we’re still in the midst of a pandemic and the health crisis is still at emergency levels in our countries.” 

Ramos says it will take a while for the majority of the public to be vaccinated and for economies to return to normal.

Panama, Colombia and Bolivia are examples of countries that, according to the CEO, implemented new, although less severe, restrictions with direct and indirect impacts on the business.

Panama was singled out as a market where Millicom still sees a “weak economy,” while in Colombia the company experienced a significant drop in dollar terms. Bolivia “rebounded” on the other hand.

On Colombia, the entrance of WOM as a new market player was described as something to look at, although Millicom is not excessively concerned with greater competition. 

Tigo still only has a 15% market share in Colombia, which Ramos believes gives the operator room for growth.

“We expect and we are very bullish that Colombia will continue to deliver for us,” he said.

NOTES

Millicom also announced that it has notified holders of its notes due in 2026, 2028 and 2029 of its intention to exercise the right to redeem 10% of the outstanding principal of these at a price of 103%. 

Total considerations of approximately US$180mn will be funded from cash, consistent with the company's decision to prioritize debt reduction, the company said.