Millicom’s headline financials for the third quarter of this year were negatively affected by currency volatility in both Latin America and Africa, but on an organic basis the telco turned in a solid performance.
However, its results announcement on Thursday was marred by the news late on Wednesday that it is investigating possible improper payments at its Guatemala business.
The operator said it reported those payments, made by its joint venture in Guatemala, to law enforcement authorities in the U.S. and in Sweden, but said it is not able to predict the duration or the outcome of the matter at present.
Millicom owns 55% of Tigo in Guatemala, with the remainder in the hands of Miffin Associates.
Guatemala is the largest of Millicom’s Central America markets, with 8.4 million mobile customers as of the end of September; it had 16 million in the region as a whole, which also includes Honduras and El Salvador, as well as fixed broadband and TV services in Costa Rica.
Millicom consolidates its Guatemala and Honduras JV’s results with its own, but in its latest results announcement revealed that it has not made any agreement over put and call options with its partners in those markets, which will therefore likely expire at the end of the year unexercised. Hence it will start accounting for Guatemala and Honduras as joint ventures – rather than consolidated operations – from 2016, although it notes that this will have a minimum impact on its net income and dividends.
Central America contributed US$636 million to revenues while South America – comprising Bolivia, Colombia and Paraguay – brought in $764 million, giving Millicom $1.4 billion in turnover in Latin America.
The addition of $241 million from the telco’s Africa n operations – it operates in six markets in the region – brought the group total to $1.64 billion, down by 2% on a reported basis.
However, Millicom reported organic revenue growth of 7.2%, excluding the impact of exchange rate changes and its recently-acquired UNE business in Colombia.
"The third quarter saw increased currency volatility across many emerging markets," said Mauricio Ramos, who became Millicom’s CEO earlier this month.
"We experienced significant currency devaluations in some of our key markets such as Colombia, Paraguay and Tanzania," Ramos said. "However we made some solid progress in converting our potential into profitable growth."
Indeed, the telco posted reported EBITDA growth of 2.1% to $560 million, an increase of 7.9% on an organic basis.
Millicom reached 60 million mobile customers during the quarter, ending September with 60.15 million, just over half of whom – 31.68 million – were in Latin America with the remainder in Africa.
In Latin America it had 2.96 million homes connected to its cable service out of a footprint of 7.5 million.
