Millicom International Cellular Sa ((TIGO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Millicom International Cellular SA recently held its earnings call, revealing a strong operational performance and strategic progress. The company showcased significant growth in its mobile and B2B segments, alongside successful strategic acquisitions. Despite facing challenges such as currency impacts and a decline in service revenue in certain areas, Millicom’s overall trajectory remains positive. This optimism is further supported by the declaration of a special dividend and robust cash flow generation.
Strong Operational Execution
Millicom is on track to deliver $750 million in equity free cash flow for the year, with adjusted EBITDA reaching a new high of 46.7%, an increase of 3.2 points year-over-year. The company’s leverage has also improved, dropping to 2.18x, indicating a solid financial footing.
Strategic Acquisitions and Transactions
The company successfully executed acquisitions of Telefónica’s Uruguay operations and reached a definitive agreement for Telefónica Ecuador. Additionally, Millicom partially closed an infrastructure transaction with SBA, unlocking over $500 million in proceeds, which strengthens its strategic position.
Mobile Business Growth
Millicom’s mobile business added nearly 250,000 net postpaid customers, up from 178,000 a year ago. This represents a 14% growth in the postpaid customer base, bringing the total to nearly 9 million customers, showcasing the company’s ability to expand its market presence.
Home Business Recovery
The home business segment added 41,000 customers in the quarter, nearly four times the intake from Q2 last year. The broadband customer base also saw an increase of roughly 8%, indicating a recovery in this segment.
B2B Segment Performance
Millicom’s B2B service revenue grew nearly 4% organically, driven by a 16% CAGR in digital services over the past two years and a 13% year-on-year increase in mobile B2B. This highlights the company’s successful focus on digital transformation.
Colombia Market Performance
In Colombia, service revenue accelerated to nearly 5% year-over-year on an organic basis. The mobile postpaid customer base grew by 15%, reflecting strong market performance in this region.
Guatemala Operational Success
The postpaid customer base in Guatemala expanded by 20% year-over-year, leading to healthy growth in mobile service revenue of more than 5%. Operating cash flow reached a record $191 million this quarter, underscoring operational success.
Special Interim Dividend
Millicom declared a special interim dividend of $2.5 per share, reflecting its confidence and capital discipline. This move underscores the company’s commitment to delivering shareholder value.
Service Revenue Decline
Service revenue for the quarter totaled $1.28 billion, marking a year-over-year decline of 5.9% due to adverse foreign exchange impacts, which accounted for approximately $110 million in total FX headwinds.
Challenges in Home Business Revenue
While service revenue in the home business remained slightly negative at minus 1.4%, this was an improvement from minus 6.1% last year, indicating a gradual recovery.
Bolivia’s Economic Impact
In Bolivia, service revenue in local currency increased by 7%, but this was insufficient to cover devaluation, resulting in an $84 million impact from the application of accounting standard IAS 21.
Forward-Looking Guidance
Looking ahead, Millicom is poised to achieve $750 million in equity free cash flow for the year, having already achieved $395 million by the first half. The company remains committed to maintaining a leverage ratio below 2.5x. The mobile segment is expected to continue its impressive growth, and the company is focused on further expanding its B2B services.
In conclusion, Millicom International Cellular SA’s earnings call highlighted a positive sentiment with strong operational performance and strategic progress. Despite some challenges, the company’s strategic acquisitions, mobile business growth, and commitment to shareholder value through dividends position it well for future success.