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Millicom International Cellular SA SEDR TIGO SDB

Morningstar Rating
SEK 218.20 +7.30 (3.46%)
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Company Report

Millicom Earnings: Cost-Cutting Efforts Hit Margins but Should Drive Future Cash Flows

Xavier Niel’s impact on Millicom has been swift. The European telecom magnate, who has bought up nearly 30% of Millicom’s shares over the past year and had his lieutenant Maxime Lombardini appointed as COO last September, is known for driving efficiency. Millicom’s cost transformation effort, dubbed “Everest,” is moving further and faster than initially planned, with restructuring charges denting fourth-quarter profitability. Management now expects more than $250 million in annual savings, equal to more than 4% of revenue and nearly double the plan provided last quarter. Millicom also expects to produce $550 million of free cash flow in 2024, more than triple the amount generated over the past three years combined. We like the path Millicom is on, and we are leaving our fair value estimate at $30 per share, but the firm still has a lot to prove.

Price vs Fair Value

TIGO SDB is trading at a 32% discount.
Price
SEK 209.60
Fair Value
SEK 678.00
Uncertainty
High
1-Star Price
SEK 444.40
5-Star Price
SEK 475.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Millicom holds strong wireless market share across nine Latin American countries with a combined population of 120 million people and owns high-quality cable networks that can provide broadband to 13 million homes and businesses in the region.

Bears

Millicom’s recent acquisitions have pushed its debt load much higher than historical levels. This debt amplifies the economic, political, and competitive risks the firm faces.

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Trading Information

Previous Close Price
SEK 210.90
Day Range
SEK 214.90219.40
52-Week Range
SEK 156.60219.40
Bid/Ask
SEK 218.30 / SEK 218.70
Market Cap
SEK 37.41 Bil
Volume/Avg
322,385 / 273,267

Key Statistics

Price/Earnings (Normalized)
37.54
Price/Sales
0.60
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.15%

Company Profile

Millicom offers wireless and fixed-line telecom services primarily in smaller, less developed countries in Latin America. Countries served include Bolivia (100% owned), Nicaragua (100%), Panama (100%), El Salvador (100%), Guatemala (100%), Paraguay (100%), Colombia (50%), Costa Rica (100%), and Honduras (67% but not controlled or consolidated in the firm's financial statements). The firm’s fixed-line networks reach 13 million homes while its wireless networks cover about 120 million people. Increasingly, Millicom offers a converged package that may include fixed-line phone, broadband, and pay television in conjunction with wireless services. The firm plans to carve out its infrastructure assets and mobile financial services business in 2024.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Small Value
Total Number of Employees
16,527

Competitors

Valuation

Metric
TIGO SDB
AMX
Price/Earnings (Normalized)
37.5413.31
Price/Book Value
1.032.36
Price/Sales
0.601.28
Price/Cash Flow
2.534.95
Price/Earnings
TIGO SDB
AMX

Financial Strength

Metric
TIGO SDB
AMX
Quick Ratio
0.690.60
Current Ratio
0.820.67
Interest Coverage
1.253.13
Quick Ratio
TIGO SDB
AMX

Profitability

Metric
TIGO SDB
AMX
Return on Assets (Normalized)
−1.50%5.48%
Return on Equity (Normalized)
−6.01%24.26%
Return on Invested Capital (Normalized)
1.83%12.76%
Return on Assets
TIGO SDB
AMX
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