Millicom/Tigo reports Q4-2010 results

Mergers, Acquisitions and Financial Results

Millicom International Cellular (MIC) has reported a drop in profit for the fourth quarter ended 31 December 2010, reflecting the absence of gains from discontinued operations included in results for the year-ago period. The Luxembourg-based telco said net profit declined to USD157.2 million from USD454.2 million in the same period of 2009, when the results included a gain of USD289 million from the disposal of non-core businesses in Cambodia, Sri Lanka and Sierra Leone. Revenues for the quarter grew 10% to USD1.07 billion, while operating profit rose to USD281.4 million from USD243.8 million. For the full year MIC's profit surged to USD1.65 billion, while revenues grew 16% to USD3.92 billion. Capital expenditure for 2010 totalled USD731 million; for the current year the company expects CAPEX to exceed USD800 million. The company added that it expects to dispose of its operation in Laos in 2011.

Customers in Africa increased by 23% year-on-year, bringing the total at the end of December to just below 15 million. The lower intake for the region as a whole compared to Q3 is partly due to mandatory customer registration processes in Ghana and Tanzania which give rise to greater volatility. This is best illustrated by the fact that the Tanzanian market contracted in Q4, probably as a consequence of lower multiple SIMs following mandatory registration.
Revenues in Africa were up 5% year-on-year to $239 million, with local currency revenues up 12% following pricing pressure mainly in Ghana and Tanzania, with no elasticity yet at this stage. We also have limited capacity in Senegal as we are investing in capex only through the operation‟s own cash generation.  DRC and Tanzania continued to demonstrate the strongest local currency growth, recording year-on-year increases of 21% and 20% respectively.  In DRC, the regulator introduced high minimum tariffs for all operators in December, which we expect to cause a slow down in the rate of penetration growth.  VAS revenues increased by 41% in Africa year-on-year and now account for 10% of the region‟s recurring revenues.
ARPU for the region was down 11% year-on-year in local currency.  We have seen increased pricing activity in Africa in recent months and in some markets we have adjusted our cross-net tariffs through headline price reductions or promotional activity in order to maintain affordability.  We will monitor closely whether elasticity will follow in the coming months. 
EBITDA for Africa for Q4 10 reached $100 million, up 12% year-on-year. The EBITDA margin was 41.7%, up 2.4 percentage points over Q4 09. 
Capex in Africa amounted to $120 million in Q4 and $278 million for the full year or 31% of revenues.  We expect capex in Africa to increase as a percentage of sales in 2011 as we invest in order to capitalize on the region‟s growth potential and to address the possible increase in traffic from lower tariffs.  We will also begin to invest in 3G in several major urban areas.