Millicom International Cellular Sa ((TIGO)) has held its Q4 earnings call. Read on for the main highlights of the call.
Millicom International Cellular SA’s recent earnings call highlighted a robust financial performance, marked by record cash flow and improved margins. Despite these achievements, the company acknowledged challenges such as a decline in service revenue, competitive pressures, and currency fluctuations in certain markets.
Record Equity-Free Cash Flow
Millicom reported a remarkable achievement with a record equity-free cash flow of $728 million for 2024, excluding tower sales. This milestone signifies a significant financial turnaround for the company, showcasing its ability to generate substantial cash flow.
OCF Margin Improvement
The company achieved an impressive 8 percentage point increase in its Operational Cash Flow (OCF) margin, reaching nearly 31%. This sets a new record for Millicom, reflecting enhanced operational efficiency and cost management.
Leverage Reduction
Millicom successfully reduced its leverage to 2.42 times, meeting its target of maintaining leverage below 2.5 times. This reduction underscores the company’s commitment to strengthening its balance sheet and financial stability.
Strong Performance in Guatemala
Guatemala was a standout performer, reporting a 10% increase in OCF to $692 million and achieving an impressive EBITDA margin of 54%. This growth highlights the market’s robust contribution to Millicom’s overall success.
Panama’s Exceptional Year
Panama experienced a noteworthy year with close to 5% service revenue growth and a record EBITDA margin of 50%. These results demonstrate the market’s resilience and potential for continued growth.
Dividend and Share Buyback Program
Millicom reinstated its shareholder remuneration program, paying a dividend of $1 per share in January and launching a $150 million share buyback program. This move reflects the company’s confidence in its financial health and commitment to returning value to shareholders.
Service Revenue Decline
The company faced a 2.9% decline in service revenue, amounting to $1.34 billion. This was impacted by a $30 million foreign exchange effect in Colombia and a $25 million impact from Panama B2B projects, highlighting areas of concern.
Bolivia Currency Impact
Millicom anticipates negative impacts on service revenue and EBITDA due to Bolivia’s currency devaluation and the adoption of new IAS 21 accounting standards, posing challenges in this market.
Competitive Pressure in Costa Rica and Bolivia
Intense competition in Costa Rica is affecting the Average Revenue Per User (ARPU) and customer base, while Bolivia faces challenges from currency devaluation. These competitive pressures are significant hurdles for the company.
Forward-Looking Guidance
Looking ahead, Millicom provided detailed financial guidance for 2025, emphasizing strategic priorities and financial targets. The company aims for a record equity-free cash flow of approximately $750 million, maintaining leverage below 2.5x, and continuing revenue growth. Strategic initiatives include the sale of Lati International and acquiring Telefonica’s stake in Coltel, alongside reinstating shareholder remuneration through dividends and share buybacks.
In summary, Millicom’s earnings call reflected a strong overall performance with record cash flow and margin improvements. However, challenges such as service revenue decline and competitive pressures remain. The company’s forward-looking guidance underscores its strategic focus and commitment to financial growth and stability.