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Millicom CEO positive despite 'challenging operating conditions' in Africa

Millicom CEO positive despite 'challenging operating conditions' in Africa

Millicom, which trades under the brand Tigo, has described Africa as 'challenging' in its results for FY2017, including Q4 2017.

Service revenue for Millicom in Africa declined 6.3% on an organic basis, to reflect local currency and at a constant perimeter in the last quarter of 2017, whereas growth of 3.1% was achieved in Latin America – where the company has decided to intensify its focus.

Mauricio Ramos, CEO at Millicom said, "In Africa, we delivered on our commitment to generate positive free cash flow from the region in 2017. We also disposed of our operation in Rwanda, and we completed a merger in Ghana, consistent with our strategy to focus on the Latam region."

The company now runs its business in only two African markets, namely Tanzania and Chad after a merger of operations with Airtel in Ghana and exits from Senegal and Rwanda.

Millicom said that for Q4 2017 Africa operations represented less than 10% of Group revenue and EBITDA.

"We enter 2018 with positive momentum in our largest markets and with the financial strength to support our long term growth plans and create shareholder value. I expect that 2018 will be an even better and more exciting year for Millicom," added Ramos.

The company reports that in Q4 it added 356,000 mobile subscribers in Africa, driven by large gains in Tanzania and Chad. The number of subscirbers now stands at more than 11 million in Tnanzania and around 3 million in Chad.

By country, Tanzania continued signs of steady recovery since according to the results after touching a low point in the second quarter of 2017. Service revenue growth in that country reached almost 10% in the fourth quarter, but this was offset by a sharp contraction in Chad and a more modest decline in Rwanda.

"EBITDA margin (in Africa) declined 360 basis points to 32.4% in Q4 2017, and EBITDA declined 15.9% year-on-year, due to the decline in revenue. On a sequential basis, margin continued to recover from the Q2 2017 low thanks to improved profitability in Tanzania. Capital expenditures in Africa were focused mainly on our mobile business and totalled $23 million in Q4 and $81 million for the full year 2017. This compares to capex of $118 million in 2016, excluding our discontinued operations," the company added.

Millicom expects 2018 service revenue in Latin America to grow by between 2 and 4% while EBITDA growth is projected to be between 3% and 6% year-on-year in constant currency.

The mobile operator says it plans to dedicate approximately US$1 billion in capital expenditures to that region this year and while, "For Africa, we expect the region will continue to produce positive equity free cash flow."

No details on expected capital expenditure in Africa for 2018 have been realesed so far.

Total revenue for the company as a whole rose 2.1% year-on-year to reach $1,558 million in 2017. The board is set to recommend an unchanged ordinary dividend of $2.64 per share at its Annual General Meeting scheduled for 4 May 2018.


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