Millicom preaches caution after a tough 2020

The operator managed to maintain a steady course despite the pandemic, but says it is not out of the woods yet.

Anne Morris, Contributing Editor, Light Reading

February 12, 2021

3 Min Read
Millicom preaches caution after a tough 2020

Millicom, the Luxembourg-based operator that provides fixed and mobile services in Latin America and Africa under the Tigo brand, signaled some relief that it ended 2020 in reasonable shape given the effects of the COVID-19 pandemic.

As remarked by its CEO, Mauricio Ramos, 2020 was "one of the most challenging years in our 30-year history."

The operator took action early on to mitigate the effects of lockdowns across the globe, instigating crisis management initially to protect staff and maintain connectivity for customers and then turning to protecting cash flow by suspending all non-essential investment.

Figure 1: Touch choices: 2020 has been the hardest year in three decades, according to Millicom's CEO. (Source: Fiona Graham / WorldRemit on Flickr CC2.0) Touch choices: 2020 has been the hardest year in three decades, according to Millicom's CEO.
(Source: Fiona Graham / WorldRemit on Flickr CC2.0)

After a difficult first two quarters, business began to pick up again in June and gained momentum in the fourth quarter, Ramos said.

However, the operator is not resting on its laurels.

"While we are encouraged by recent trends, our plans for 2021 reflect the fact that in our markets the pandemic is hitting a second wave, unemployment remains very high, government finances are stretched, and it remains unclear when the worst of the economic impact of this health crisis will pass," the CEO added.

"We don't think we're out of the woods yet," Ramos said during the earnings call. "2021 is still highly uncertain. So in 2021, we will use the same flexible, and prudent, and successful management approach that works very well for us in 2020."

Keeping a hold on cash

Millicom plans to keep a tight rein on costs in 2021, aiming for operating cash flow of US$1.4 billion and deciding against the payment of a cash dividend this year. It achieved an operating cash flow of $1.5 billion in 2020 through the implementation of cost and capex reduction programs.

In terms of its outlook, the operator is maintaining its medium-term ambition to achieve mid-single-digit organic service revenue growth, mid-to-high single-digit organic EBITDA growth, and around 10% organic OCF growth for the Latin American segment.

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"That said, due to ongoing uncertainty around COVID-19, we expect that our financial performance in 2021 will likely remain below this medium-term ambition," Millicom added.

In the fourth quarter of 2020, group revenue fell 5.3% year-on-year to $1.1 billion due to the impact of the COVID-19 pandemic and currency effects. Operating profits fell 4.3% to $123 million. The net loss for the period was $56 million, compared to a net profit of $223 million in Q4 2019.

On a more positive note, Millicom noted that most operating and financial metrics improved sequentially in Q4 compared to Q3 2020.

In 2020 as a whole, group revenue fell 3.8% year-on-year to $4.17 billion, while operating profits were 22.4% lower at $446 million. The net loss for the year was $344 million, compared to a net profit of $149 million for 2019.

The underlying net debt was $5.32 billion as of December 31, 2020, a decrease of $387 million during the final quarter.

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— Anne Morris, contributing editor, special to Light Reading

About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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