Millicom International Cellular SA (TIGO) Q2 2024 Earnings Call Highlights: Strong EBITDA ...

GuruFocus News
4 min read

In This Article:

  • Equity Free Cash Flow: $268 million for Q2 2024.

  • Leverage: Ended Q2 at 2.7 times.

  • Organic EBITDA Growth: Almost 20%.

  • Mobile Service Revenue Growth: 5% in Q2 2024.

  • B2B Service Revenue Growth: Almost 6% organically in Q2 2024.

  • Colombia EBITDA Margin: 39.5%, a new record.

  • Guatemala Service Revenue Growth: 3% in Q2 2024.

  • Panama Mobile Service Revenue Growth: 14% in Q2 2024.

  • Service Revenue: $1.36 billion in Q2 2024, up 5.5% year-on-year.

  • EBITDA: $634 million, up 23.1% year-on-year.

  • CapEx: Expected to be less than $700 million for full year 2024.

  • Net Debt: Reduced by $325 million to $5.65 billion.

  • Q2 Leverage: 2.77, down from 3.1 in Q1 2024.

Release Date: August 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Millicom International Cellular SA (NASDAQ:TIGO) reported a significant increase in equity free cash flow, reaching $268 million, which was used to reduce net debt.

  • The company achieved organic EBITDA growth of almost 20%, driven by growth in mobile and B2B business and significant efficiencies.

  • Mobile service revenue grew 5% in Q2, marking an acceleration from the previous year's growth.

  • The B2B segment showed strong performance with a 6% organic growth in service revenue, supported by a 30% growth in digital solutions.

  • Millicom's efficiency programs have led to a reduction in employee costs by 15% and a significant decrease in spending on external services and programming.

Negative Points

  • The company faces intense competitive pressure in Guatemala, although there is some market stability.

  • Colombia's home business experienced a double-digit decline, offsetting mobile growth.

  • There is uncertainty surrounding the potential acquisition of Telefonica Colombia, with a lengthy process ahead.

  • Millicom's CapEx for 2024 is expected to be significantly lower than in 2023, which may impact future growth opportunities.

  • The company is no longer able to access sufficient US dollars in Bolivia, affecting its ability to pay international vendors.

Q & A Highlights

Q: On the long-term plan, where do you see further improvements from the current levels up to the 2026 target? Also, regarding the Colombia announcement, is the main rationale to gain scale and grow profitability, or are you encouraged by your own improvements in Colombia? A: We believe our operational and efficiency initiatives are sustainable and will reflect fully in 2025 and 2026. CapEx will grow slightly but align with revenue growth to strengthen networks. Regarding Colombia, the market is challenging, but rationalization makes sense. Combining businesses will allow better returns and financial stability, enabling responsible network investments and sustainable cash flow.

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