Millicom (Tigo) updates its financial targets

Millicom (Tigo) updates its financial targets

Luxembourg, June 28, 2023 – Millicom informs that it now expects to achieve lower than previously expected cumulative equity free cash flow for the three years up to and including 2024. Millicom now targets cumulative equity free cash flow of at least $500 million for the 2022-2024 period, as compared to the prior target of between $800 million to $1 billion.

In addition, potential asset monetizations and partner equity funding being pursued in Colombia could add an estimated $100 to $150 million of additional cash flows; and the company continues to progress on its plans to carve out and monetize Lati, the company’s newly-created tower business.

The revised target reflects the following considerations:

• Higher Spectrum Costs – Total spectrum costs in 2023 are now expected to be approximately $215 million due to (a) higher than initially expected upfront cash payment to renew, for 20 years, our 1900 MHz spectrum license in Colombia, (b) the acquisition of 2.6 GHz spectrum in Guatemala in early June, and (c) the recently announced auctions now being planned in Guatemala (700 MHz). In addition, Colombia recently announced a planned 5G auction, which is expected to impact 2024.
• Higher Financing Costs – Total financing charges are now expected to be higher than previously expected in 2023 and 2024, mostly reflecting the impact of elevated interest rates on the company’s variable-rate local currency debt in Colombia, as well as recently introduced commissions on the purchase of U.S. dollars in Bolivia.
• Guatemala – In tandem with the acquisition of strategically-important spectrum, management has decided to elevate levels of investment and commercial activity to sustain market leadership and protect long-term profitability of the company’s largest operation.
• Home – We now expect the softer Home operational performance to continue in some countries, partially offset by reduced investment in this area. 

Based on the company’s outlook, 2024 is expected to be the strongest year of equity free cash flow generation in the three-year period due to savings from Project Everest (the company’s efficiency program), and lower expected spectrum investment and lower one-time items compared to 2023.