Latin America-focused operator group Millicom suffered a double-digit decline in net profit during Q1, though executives remained bullish about the company’s underlying performance, noting the bulk of the declines related to higher expenses.
In its earnings statement, the operator noted net financial expenses totalled $137 million, compared with $81 million in Q1 2018. The bulk of the figure comprised higher gross debt incurred as part of its acquisition of Cable Onda, which closed in December 2018. Millicom also took a $16 million hit relating to changes in accounting standards, along with a one-off charge of $24 million in connection with financing activities.
Despite the higher expenses, CEO Mauricio Ramos, hailed the positives: “We delivered solid KPIs and organic growth, in line with our full year targets. In particular, I am pleased to report that the significant investments we have made in Colombia and Bolivia over the past several years are now beginning to produce faster revenue growth and rising levels of profitability.”
While net income during Q1 fell 16 per cent year-on-year to $14 million, revenue was up 5.1 per cent to $1.1 billion. Millicom stated the revenue growth “largely reflects the impact from a full quarter of Cable Onda’s revenue in Panama”, along with strong organic growth.
Combined these “more than offset the translation impact of weaker currencies in a majority of our markets,” it added.
In Latin America the operator added 269,000 4G smartphone data users to reach 10.8 million, an increase of 36.3 per cent year-on-year. It also expanded its post-paid customer base, adding 68,000 to end Q1 with 4.5 million, an increase of 6.4 per cent.
Last month Millicom struck an agreement to sell its operations in Chad to Morocco-based Maroc Telecom, as part of an ongoing strategy to exit Africa and focus on its Latin American operations.
During Q1, mobile subscribers declined 146,000 in Africa, with an increase in Chad partially offsetting declines in Tanzania, Millicom said.Subscribe to our daily newsletter Back