Millicom on Tuesday reported strong revenue growth in the three months to the end of June, despite the impact of adverse currency effects on its numbers, but the telco swung to a net loss and revised down its guidance.
The emerging markets-focused operator posted revenues of US$1.7 billion in the second quarter, up 17.8% on the sam e period a year ago. On an organic basis – excluding Colombian cable operator UNE, which became part of Millicom in August – revenue was up by 9%.
The operator also grew EBITDA by 17.2% to $561 million, but it reported a net loss of $99 million, compared with a $27 million profit a year ago.
Millicom’s results were hit by "severe foreign exchange devaluations" in many of its markets, new CEO Mauricio Ramos, who took up his role in April, said.
"We are taking firm actions to mitigate the impact of the currency fluctuations by continuing to focus on operational efficiencies and tightly managing the group’s margins, which is why we were still able to post positive like for like EBITDA growth," Ramos said.
"We have also continued our focus on reducing corporate costs, which fell for the fourth consecutive quarter," he added.
Millicom reduced its guidance to take the currency effects into account though. It expects to generate revenue of $6.8 billion-$7.2 billion in the full year, some $3 billion lower than the range it shared in February, and dropped its predicted EBITDA figure to $2.12 billion-$2.26 billion.
The new chief executive is optimistic on the firm’s growth prospects though, highlighting two key areas of focus: mobile products and services, and the expansion of its cable footprint.
"Smartphone adoption is our winning card and drives increasing levels of data usage," Ramos said, noting that Millicom added 1.9 million new mobile customers in Q2 to reach 60 million in total, just over a quarter of which own smartphones.
"So our prize is to continue to expand our customer base and convert customers who have yet to upgrade to smartphones and data packages," Ramos said.
On the cable side, Millicom is seeing an uptick in the number of services it provides per household.
"More than half of our households now take two or three services from us," Ramos said. The firm ended Q2 with 7.2 million homes passed and 4.9 million cable RGUs (revenue-generating units).
"And we have only just begun," Ramos said. "We are swiftly seizing the opportunity to grow to 10 million homes passed in Latin America over the next three years, largely through organic growth, to become the second largest cable operator in the region," he said.
