Millicom set to 'invest more to capture growth'

Telecom operator Millicom International, which has units in Bolivia, El Salvador, Guatemala, Honduras, Paraguay, Nicaragua, Colombia and Costa Rica, has presented a results report and a promising outlook.

Prepaid recharges recovered rapidly during the first quarter as pandemic-related mobility restrictions were lifted, broadband and television services expanded, and B2B services keep recovering, CEO Mauricio Ramos said during the results call.

"We will probably invest more to capture growth," Ramos said but did not detail any capex figures.

In 2020, Millicom invested US$941mn in its Latin American operations, 6% less than in 2019. For 1Q21, the company reported capex of US$167mn, almost 4% less than in the year-ago period.

The number of household customers increased by 7% to 4.7mn and mobile subscribers by 8.5% to 42.8mn.

Ramos said that a record 166,000 residential connections were added in the quarter.

Low broadband penetration and poor service quality confronting growing demand for higher quality connections provide ideal conditions for organic growth, according to Ramos.

Millicom recently adjusted its cable strategy to safeguard capex, leading to network penetration growth to 32.6%.

"We anticipate that the strength in revenues will continue during Q2, we see that all countries are growing," Ramos said.

CFO Tim Pennington highlighted a 6.1% (local currency) income growth in Guatemala due to growth in residential services. El Salvador income grew by 8.9%, driven by mobile services. "In Panama and Bolivia we are still somewhat behind schedule but the gap is beginning to narrow," he added.

Millicom reported revenues of US$1.53bn and Ebitda of US$638mn for its Latin American operations, a rise of 6.3%. Cash flow expanded 10.4% to US$471mn, consistent with the US$1.4bn forecast for the year.

COLOMBIA

Revenues in Millicom's most important regional operation, under the Tigo brand, grew 3.1% as the company faces new competition from WOM.

Ramos said pressure on ARPU for commercial offers could rise but the three main operators quickly reacted to WOM’s proposal. “In Colombia we are not incumbent, we are defiant. We have a completely new and free network that allows us to play the volume game,” he said.

Millicom will improve its network and expand commercial and distribution capacity in response to WOM.

In addition, Tigo has acquired spectrum to increase coverage and improve its Bogotá footprint, where it has operated a high-frequency network.

Ramos hailed ETB’s opening of its fiber network. "Now we can have access to both mobile and landlines in Bogotá," he said.

FINANCIAL SERVICES

Millicom is also looking to grow in financial services. "We are trying to build the business for the long term," Ramos said.

The company renewed management of the financial services business and plans to improve local capabilities. Millicom has close to 5mn financial services clients with some US$1bn in transactions.