Luxembourg-based mobile holding company Millicom International Cellular (Nasdaq: MICC) is unlikely to make acquisitions in the short term with its South American units, Millicom's CEO Marc Beuls said in a conference call.
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Beuls was commenting on the company's most recent purchase of broadband and TV provider Amnet in order to bolster Central America operations, but said future acquisitions in South America were not likely in the short term.
According to Beuls, with the exception of Paraguay, Millicom does not have a dominant market share in its South American operations. The company's newest unit in Colombia was purchased from state-run telcos EPM and ETB in August 2006 for US$479mn.
Beuls said the company wants to focus on boosting its mobile market share in Colombia, as well as promoting its 3G mobile internet operations across all of its markets.
In Central America, the company has a leading position in Honduras, Guatemala and El Salvador, he added, and wants to compete with América Móvil (NYSE: AMX, Nasdaq: AMOV) and Telefónica (NYSE: TEF) that offer TV and fixed line broadband services.
3G VERSUS FIXED BROADBAND
Millicom's ultimate objective is to create an open platform of internet access with a combination of 3G, IP and cable networks so that customers can access internet anywhere, irrespective of the technology.
The executive added that Millicom would not rule out the possibility of introducing WiMax as a complementary technology.
UPSELLING WITH AMNET
The company received final regulatory approval to acquire 100% of Amnet for US$510mn on October 1. Amnet was a unique acquisition opportunity, Beuls said, as it was the leading provider of broadband and cable TV services in Honduras and El Salvador. It also serves Costa Rica and provides fixed telephony in El Salvador and Honduras, as well as corporate data services in all three countries plus Guatemala and Nicaragua.
Beuls said that the addition of Amnet would help the company to upsell value added service offerings of higher quality and faster internet and TV to its more affluent customers.
Generating new content will be a key focus, he added. However, while soccer is a big draw in Central America, rights to broadcast matches are already held by open TV.
The company will provide packages of 128kbps for around US$20 per month. Amnet's network is capable of speeds of 2, 4 and 6 Mbps, though some upgrades may be done to make higher speeds more widely available.
The executive said that incorporating Amnet would probably not impact Millicom's overall business until 2009.
Citing a study from Pyramid Research, Beuls said fixed line was expected to lead broadband adoption in Central America with CAGR of at least 24% for the next five years.
The executive added that 64% of Amnet's network was already bi-directional, therefore facilitating the introduction of advanced, interactive television as well as voice services.
Regarding the acquisition of Amnet, Beuls said Millicom is providing US$300mn of its own equity and US$200mn in bank funding for which it obtained an interest rate of under 10%.
