Millicom (NASDAQ: TIGO), operating under the brand name, Tigo, provides telecommunications services in emerging markets in Central America (Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Panama) and in South America (Colombia, Bolivia, Paraguay). Tigo is the No. 1 or No. 2 provider of mobile, broadband internet and pay TV services in eight out of its nine Latin American markets. The company also has operations in Africa but in 2022, will exit Africa with the completion of its telecom assets disposal in Tanzania.
Tigo’s Latin American infrastructure assets are formidable, comprising over 10,000 towers, more than 93,000 fiber route-miles, 13 data centers and greater than 12 million homes-passed with broadband. This infrastructure supports over 44 million mobile customers and more than 4 million residential broadband customers.
In its recent Virtual Investor Day, Tigo management presented plans to revamp its operating profile with several key infrastructure moves. Mauricio Ramos, Tigo CEO said, “Today, we are outlining our vision for Tigo, a purpose-driven company with a big market opportunity, a clear strategic focus, and a passionate team that makes things happen, the right way, and with Sangre Tigo. The targets we are laying out today are bold and ambitious, and we have well-defined plans in place to achieve them.”
First, Tigo will carve out an independent tower company to manage the company’s portfolio of more than 10,000 owned towers across eight Latin American countries. Management expects the standalone towerco to enhance shareholder return on the company’s digital infrastructure assets and maximize the tower business potential while attracting growth capital from new investors. Such a move provides Tigo with strategic options around these infrastructure assets. The company expects to complete this carve out in the next 12-18 months.
On the wireline front, Tigo is expanding its fixed broadband network, targeting three million additional home-passings in the next three years. All new passings will use fiber-to-the-home architecture, accelerating its transition away from legacy hybrid fiber-coax technology. Tigo expects to cover 20 million home passings in the next five years, reaching 15 million passings by 2024. The company aims to connect over 1 million new residential broadband customers in the next three years.
Tigo also plans to spin out TIGO Money, the company’s nascent financial technology platform that serves more than 5 million users and generates roughly $50 million in annual revenues on $4+ billion worth of financial transactions a year. TIGO Money creates opportunities for Tigo to bolster financial inclusion for citizens in the countries in which it operates while capturing a greater share of an estimated $14 billion total addressable fintech market. This initiative is also expected to be completed in the next 12-24 months.
With these targets, the company expects to realize organic operating cash flow growth of around 10 percent a year over the next three years, assuming mid-single-digit annual organic service revenue growth and annual capex of around $1.0 billion. It is targeting cumulative equity free cash flow of $800 million to $1.0 billion over that period.
By John Celentano, Inside Towers Business Editor
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