Millicom Drives Solid Cash Flow in Q4 Despite Soft Revenue Growth

Millicom’s fourth-quarter results were underwhelming once again with currency weakness, economic uncertainty, and country-specific challenges all weighing on growth. Management repeatedly mentioned that the firm has begun raising prices to offset inflation and that it will continue raising prices this year given the competitive response thus far. We expect Millicom will be able to raise prices at least in line with the pace of local inflation in most markets given the favorable structure of the wireless industries in most of the countries it serves. The firm didn’t provide an outlook for 2023, but reaffirmed its medium-term targets, including 10% annual operating cash flow growth, with price increases and a new cost-cutting initiative contributing. Management also declined to comment further on discussions with private equity investors concerning a potential acquisition of Millicom. We aren’t changing our $30 fair value estimate.