Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Millicom International Cellular SA (TIGO, Financial) reported a record equity free cash flow of $271 million in Q3 2024, surpassing previous quarters.
- The company achieved strong customer growth with nearly 300,000 postpaid net additions and 70,000 home net additions, marking the strongest net additions since 2021.
- Service revenue growth was driven by a 4% increase in the mobile business, supported by prepaid price increases and customer migration from prepaid to postpaid.
- Millicom's restructuring efforts have led to significant cost reductions and improved operational efficiency, contributing to a leaner and more cash-generative company.
- The company announced strategic transactions in Colombia, Costa Rica, and a tower transaction in Central America, expected to enhance returns in the coming years.
Negative Points
- Millicom faced currency headwinds in Colombia and Paraguay, impacting overall financial performance.
- The company incurred $73 million in restructuring and other one-off charges in Q3 2024, including severance payments and insurance costs.
- Increased competitive pressure was noted in Guatemala, particularly in regions where Millicom previously had a stronghold.
- The home business in Colombia experienced a double-digit decline in service revenue, although signs of recovery were noted.
- Millicom's operations in Bolivia are challenged by a difficult currency situation, leading to conservative capital deployment in the region.
Q & A Highlights
Q: Can you provide an update on the CapEx guidance for 2024 and expectations for 2025?
A: Marcelo Benitez, CEO: We are on track to stay below the $700 million CapEx target for 2024. For 2025, we expect to maintain similar levels, focusing on return-based investments and short-term projects. Bart Vanhaeren, CFO, added that the current levels are sustainable and recurring, with potential upsides as cost-saving programs mature.
Q: What is the expected impact of the recent tower transaction on leasing costs and equity free cash flow?
A: Bart Vanhaeren, CFO: The transaction is expected to close mid-2025, with an annual equity free cash flow impact of approximately $40 million. This includes savings from ground leases and tax shields, but excludes interest savings from debt reduction.
Q: Could you elaborate on the competitive pressures in Guatemala and your strategy to address them?
A: Marcelo Benitez, CEO: We are facing increased competition in certain regions where we previously had a stronghold. Our strategy involves strengthening network capacity, enhancing distribution, and offering more value for the same price to defend our market position.
Q: How is the M&A process in Colombia progressing, and what are the implications for shareholder remuneration?
A: Bart Vanhaeren, CFO: We are in the process of regulatory filings and negotiations for the Colombia transaction, targeting completion in Q4 2025. Regarding shareholder remuneration, discussions will occur once leverage reaches 2.5, with potential for share buybacks or dividends depending on capital allocation decisions.
Q: Can you discuss the performance and growth prospects of the B2B segment?
A: Marcelo Benitez, CEO: B2B growth is driven by SME convergence solutions, digital services like cybersecurity and cloud, and upselling to large enterprises. Despite some sequential slowdown due to currency effects, we see strong demand and low churn in digital services.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
