Millicom puts faith in mobile internet, cable TV and B2B for future growth - Mobile World Live

Millicom puts faith in mobile internet, cable TV and B2B for future growth

21 JUL 2016

Millicom complained wider economic factors exacerbated the decline in its legacy voice and SMS business in Q2, as it manages the transition to a more promising data, cable TV and B2B-based future.

CEO Mauricio Ramos admitted revenue for the operator group, which operates in Latin America and Africa, was “weaker than expected” in the quarter.

Total revenue fell by six per cent to $1.57 billion while service revenue, which excludes equipment sales, fell by four per cent to $1.47 billion.

As a result of macroeconomic pain, the group revised its outlook for the rest of the year. From a forecast of service revenue that will grow by mid single digit, Millicom said the rest of the year will see low to mid single digit revenue growth.

However, it has maintained its previous guidance for adjusted Ebitda growth, which excludes restructuring, integration and other one-off items. Adjusted Ebitda will grow by a mid to high single digit.

Belt tightening
But clearly the company is prepared for a period of belt tightening, reducing its capex outlook from between $1.15 billion and $1.25 billion to around $1.10 billion.

On the same theme, Ramos talked up the range of internal initiatives to improve efficiency under the mantle of Project Heat, which targets $200 million of savings as well as making the company more adaptable to changing circumstances.

Nearly one third of the company’s base now uses mobile data, as smartphone adoption grew to 40 per cent. More than 600,000 data customers were added in Q2.

Likewise, the company talked up its cable television business, which covers home as well as fixed B2B services. The company sees this business as the future, and it already accounts for 27 per cent of service revenue. The company has passed 7.8 million homes for cable TV.

B2B business
Interestingly, the company said it is developing a B2B business. During the quarter, its Tigo Business unit built its first data centre in Paraguay, as well as further facilities in Chad and Senegal. The centres are a response to the growth in data traffic that is “changing the digital landscape across every one of our markets”.

Tigo Business also announced last week a partnership with Microsoft which will provide cloud computing to businesses in the Latam region, further extending its B2B offering.

Overall net profit was $44 million in the second quarter against a $99 million loss in the year ago period.

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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