Millicom unveils $3B capex plan; tower spinout on cards

Millicom, headquartered in Luxembourg, has recently underlined its commitment to expand in Central and Latin America (CALA).

As part of its new three-year strategic and financial plan, Millicom intends to splash out $3 billion over the next three years to expand its mobile and broadband networks in CALA.

The operator has already made a flurry of acquisitions in recent years to shore up its presence in Central America, including a blockbuster $2.2 billion cash deal signed off in November 2021 to take full control of Tigo Guatemala. It was the largest-ever foreign direct investment in the Central American country.

Figure 1: Millicom's three-year plan includes expanding its fixed broadband network to cover an additional 3 million households in Central and Latin America.
(Source: Megapress/Alamy Stock Photo)

"We're definitely the largest European and American investor in those markets," Millicom CEO Mauricio Ramos told the Financial Times (paywall applies) ahead of the company's virtual investor day.

Ramos seemed to argue in the FT interview that Central America was underrated as an investment opportunity.

Scratch beneath the pejorative headlines of poverty, migration, and political instability indicted the CEO, and you'll find faster growing economies than the Latin American average.

An important engine of growth, he maintained, was record flows of dollar remittances helping to keep currencies stable.

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Ramos is going all in on CALA, having said in 2021 the operator will exit Africa.

The three-year plan envisages expanding its fixed broadband network – mainly with FTTH – to cover an additional 3 million households. According to the FT report Millicom currently passes 12.4 million households.

The "medium term" aim – timeframes were not specified – is to hit the 20-million mark.

Millicom's website says it provides fixed and mobile services in Bolivia, Colombia, El Salvador, Guatemala, Honduras, and Paraguay. Fixed-only services are available in Costa Rica and Nicaragua.

The big carveout

In an attempt to unlock more shareholder value, as a part of a broader structural reorganization, Millicom will spinout its tower assets (some 10,000 sites) in a bid to attract "growth capital" from new investors.

The spinout is expected within the next 12 to 18 months.

There's also a plan to carve out Tigo Money as part of the reorg within the same timeframe as the tower spinout.

According to Millicom, "Tigo Money has a unique opportunity to increase financial inclusion in Tigo's market while capturing a leading share of an estimated $14 billion total addressable fintech market opportunity."

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— Ken Wieland, contributing editor, special to Light Reading