MIICF - Millicom International Cellular SA

[Guest JoelS]

background: cable/telecom company, operates in south and central america, and Africa.

Market cap - $7bn. Price per share - $68.87

 

Revenue sourced from: C. America  38%, S. America 46%, and Africa 16%.

 

2015 Guidance is:

 

revenue of 6.8 - 7.2 bn.

ebitda 2.12 - 2.26bn

capex 1.25 - 1.35bn

 

2015 EV/Ebitda: (7.0bn m.cap + 4.3bn net debt)/2.2bn ebitda = 5.13x

 

                                      Net debt/Ebitda = 1.95x

                                      cost of debt = 6.1%. Average maturity on debt at June 30 was 5.8 years.

 

At 6x EBITDA i get an equity value of 8.9bn, or +27% on today's price. At 8x EBITDA, +90% on today's share price.

 

Millicom's CEO of three months, Mauricio Ramos, was with Liberty Global for 14 years, and head of Liberty Global's latin american division until the Lilac tracker. (I'd be interested to know why he left, if anyone knows?)

 

In 2013 Millicom set a target for 9bn in revenue by 2017. At an EBITDA margin of 35%, that gives EBITDA in 2017 of 3.15bn.

At 6x 2017 EBITDA, I get an EV of 18.9bn. If they don't increase net debt, the equity value will be $14.3bn versus $7bn today.

At 8x 2017 EBITDA, I get an EV of 25.2. With no increase in net debt, the equity value will be $20.9bn v $7bn today.

 

From some sources, it looks like it will take longer to hit the $9bn mark.

 

The Q2, 2015 conference call was good, and I came away impressed with Mauricio Ramos - he describes himself as "a cable guy".

They're looking to go from 7.2m homes passed to 10m homes passed in LATAM over the next three years, to become the second largest cable operator in the region. They also have 60m mobile subscribers, mostly under the TIGO brand, and only 1/4th of those subscribers have smart phones. They want to 1. "build the digital lifestyle" and 2. "monetize the digital lifestyle".

 

Risks: Poor underlying economies, they don't grow as expected, currency related problems, cornerstone shareholder - Kinnevik, competition/overbuilding?..

If anyone else is familiar with the company, it'd be great to hear your thoughts, as i've only just become acquainted.

 

 

 

 

 

[Guest JoelS]

Investor relations: http://www.millicom.com/investors/

Morningstar write up: http://analysisreport.morningstar.com/stock/research?t=MIICF&region=usa&culture=en-US&productcode=MLE

FT article posted in the LiLac thread: http://www.ft.com/intl/cms/s/0/87296d88-3092-11e5-8873-775ba7c2ea3d.html?siteedition=intl#axzz3jLcdJIBI

 

 

[sae85400]

Millicom International Cellular S.A. is a dedicated emerging markets telecom provider with mobile operations in numerous countries in Central America, South America and Africa. The Company also offers various combinations of fixed broadband and cable TV services in multiple countries in Central America. Millicom is the largest wireless operator in El Salvador, Guatemala, Honduras, Paraguay and Chad.

 

85% of the revenues come from Latin America vs just 15% in Africa. They have recently expanded their service offerings to include TV, broadband and financial services. 

 

Last year Millicom hired Mauricio Ramos, he spend the last 16 years as President of Liberty Global($LILA), Latin America division, he also sits on the new $CHTR board of directors.

 

Company is rumored to be in negotiations with Orange ($ORAN) to sell it's African operations to focuse more on Lation America. This could be a great acquisition for a number of telecom players ($LILA, $AMX, $TEF). And get paid a 4.46% dividend while you wait

 

 

[accutronman]

Mario Gabelli in this week's issue of Barron's on Millicom:

 

In January, I recommended Millicom International Cellular [MIICF]. I still like it. The stock is around $60, and there are 100 million shares. The company has wireless telecom assets in Africa, South America, and Central America. Part A of what I anticipated has happened: John Malone’s Liberty Global [LBTYA] created a tracking stock last summer, Liberty LiLAC Group [LILAK], for its telecom operations in Latin America and the Caribbean.

 

What is part B?

 

Millicom announced it is selling off its African assets, except in Tanzania. The former head of LiLAC’s Chilean business now runs Millicom. I can see Millicom merging into LiLAC a year from now. Millicom is trading for five times enterprise value to Ebitda [earnings before interest, taxes, depreciation, and amortization]. The company could fetch as much as $100 a share in the next several years. We like the prospects for Latin America. Argentina’s new president, Mauricio Macri, is turning the country around. The whole region appears to be bottoming out.

 

[Phaceliacapital]

Anyone still looking at this name?