Business Context and Reporting Period
Company: Millicom International Cellular S.A. (Tigo)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Unaudited interim condensed consolidated financial statements for the three-month and twelve-month periods ended December 31, 2024.
Business Overview: Millicom is a leading provider of fixed and mobile telecommunications services in Latin America, operating in Guatemala, Colombia, Panama, Honduras, Bolivia, Paraguay, El Salvador, Nicaragua, and Costa Rica. The company focuses on mobile services, broadband, and mobile financial services (Tigo Money).
Key Financial Metrics
All figures in millions of U.S. dollars unless otherwise noted.
| Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 |
|---|---|---|---|---|
| Revenue | 1,428 | 1,475 | 5,804 | 5,661 |
| Operating Profit | 373 | 228 | 1,342 | 826 |
| Net Profit (Attributable to Owners) | 31 | (63) | 253 | (82) |
| EBITDA | 618 | 557 | 2,469 | 2,111 |
| EBITDA Margin | 43.3% | 37.7% | 42.5% | 37.3% |
| Equity Free Cash Flow (EFCF) | 236 | 39 | 777 | (34) |
| Capital Expenditures (Cash Capex) | 264 | 262 | 677 | 809 |
| Gross Debt | 5,815 | 6,678 | 5,815 | 6,678 |
| Net Debt | 5,174 | 5,956 | 5,174 | 5,956 |
| Leverage (Net Debt/EBITDAaL) | 2.42x | 3.29x | 2.42x | 3.29x |
Material Changes vs. Prior Period
- Profitability Turnaround: The company returned to profitability in FY 2024, reporting a net profit of $253 million compared to a net loss of $82 million in FY 2023. Operating profit surged 62.5% year-over-year to $1.34 billion.
- Revenue Growth: Full-year revenue increased 2.5% to $5.80 billion. Q4 revenue declined 3.2% year-over-year primarily due to the absence of large B2B projects in Panama that occurred in Q4 2023.
- Cost Efficiency: Operating expenses decreased 6.2% year-over-year, and depreciation/amortization declined due to efficiency programs and a change in accounting estimates extending the useful life of fiber optic assets.
- Debt Reduction: Gross debt decreased by $863 million year-over-year to $5.815 billion. Leverage improved significantly from 3.29x to 2.42x, bringing the company within its target range of 2.0-2.5x.
- Legal Provision: A significant non-operating expense of $88 million was recorded in Q4 2024 related to a legal provision for an adverse ruling in the Costa Rica breach of contract case with Telefónica.
Guidance, Outlook, and Risks
- 2025 Guidance: Millicom targets Equity Free Cash Flow (EFCF) of approximately $750 million for 2025. This assumes full-year run-rate savings from 2024 efficiency measures and lower restructuring costs, partially offset by weaker projected foreign exchange rates and legal risks.
- Shareholder Remuneration: Following the improvement in leverage, the Board approved a new dividend policy proposing an annual dividend of $3.00 per share, payable in quarterly installments. An interim dividend of $1.00 per share was paid in January 2025, and an additional $0.75 per share is scheduled for April 2025.
- Strategic Initiatives:
- Colombia: Progressing on a mobile network sharing agreement with ColTel (Telefónica) and a potential acquisition of Telefónica's stake in ColTel.
- Costa Rica: A cashless merger with Liberty Latin America is expected to close in H2 2025, leaving Millicom with a ~14% minority stake.
- Tower Divestment: Sale of Lati International (towers in Central America) to SBA Communications is expected to close in mid-2025.
- Risks and Contingencies:
- Legal: Ongoing litigation in Costa Rica (Telefónica case) and other jurisdictions. Total claims against the group are $209 million, with $104 million provisioned.
- Foreign Exchange: Volatility in local currencies (Colombian Peso, Paraguayan Guarani) impacts reported USD results.
- Regulatory: Risks related to spectrum licensing, tax matters, and potential changes in government policy in operating countries.
Investor Verification Checklist
- Legal Provision Impact: Verify the finality of the $88 million Costa Rica legal provision and potential for further appeals or settlements.
- Transaction Closures: Monitor the closing dates and regulatory approvals for the Costa Rica merger (Liberty Latin America) and the tower sale to SBA Communications.
- Colombia Integration: Assess the financial impact and timeline of the mobile network sharing agreement with ColTel and the potential acquisition of Telefónica's stake.
- Dividend Sustainability: Confirm the Board's ability to maintain the new $3.00 annual dividend policy given the 2025 EFCF target of $750 million and potential FX headwinds.
- Accounting Changes: Review the impact of the revised useful lives for fiber optic assets on future depreciation charges and EBITDA.