VAS, e-commerce, broadband expected to double Millicom's revenues by 2017

Wednesday, March 6, 2013

Emerging markets mobile telco Millicom (Nasdaq: MICC) has set a target of doubling its revenues to US$9bn in the next five years as the company increases its focus on online and mobile commerce as well as data, broadband and TV, the company said in a statement.

In Latin America Millicom has mobile operations in Guatemala, El Salvador, Honduras, Colombia, Paraguay and Bolivia, through the Tigo brand, and internet services throughout Central America. In 2012, the company posted revenues of US$4.8bn.

As voice revenues slow, the telco is ramping up the focus on value added services it has had for several years.

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This week the company raised its stake in two e-commerce companies in Africa and Latin America to 35% from 20%.

Millicom said that its focus with the companies would be on classifieds, mobile health and mobile learning applications, leveraging strong local market presence.

"Millicom is changing - fast. Our previous strategy served the company well, but we will now build on the core mobile offering to propel Millicom into an era where it becomes a digital lifestyle brand, offering a diverse range of services to meet rapidly-changing customer needs in emerging markets," Millicom's CEO Hans-Holger Albrecht said during an investor event in London.

In terms of mobile the company said it would seek to grow its 3G and 4G data revenues, adding up to 18mn new mobile subscribers by 2017, and targeting between US$900mn-1.3bn in revenues over the five year period. Data revenues will be boosted by offerings of bundled services with digital products like music and video.

Another pillar of growth is mobile financial services (MFS) given that 80% of the population in the markets where Millicom operates is unbanked. The company believes it already has a 10% share of MFS globally and expects to add US$600mn-1bn in revenues from those products by 2017.

In terms of cable broadband and TV, the company will push growth of its fixed line and TV presence throughout the region. The firm is currently in negotiations to acquire Colombian mobile competitor UNE, and is evaluating selective TV platform launches via DTH or over the top (OTT) services.

The company also said that its focus on cost optimization would enable it to save US$100mn in opex. Capex will be limited to 15% of revenues as early as 2016.

"With targeted investments, robust insight, a new organizational structure focused on execution and an ambitious business plan, we look forward to a rapid transition to achieve renewed growth, sustainable profitability and strong shareholder returns over the next few years," Albrecht said.