Tigo-UNE Nine-Months 2023 Net Loss Hits US$128 Million, but Outlook Improves
Luxembourg-based cell-phone/telecom/internet multinational Millicom announced October 25 that its half-owned Tigo-UNE subsidiary in Colombia — the other half owned by Medellin-based public utility EPM – has posted a net loss of US$138 million for the first nine months of 2023 (January through September).
(The Tigo-UNE joint venture with EPM also incorporates related subsidiaries Colombia Móvil, Edatel, Orbitel Servicios, Cinco Telecom Corp., Inversiones Telco and Emtelco, Millicom noted.)
For the first nine months of 2023, Tigo-UNE revenues in Colombia hit a favorable US$956 million, up 2.5% in local-currency terms, “as high-single-digit growth in mobile (cell-phone) and mid-single-digit growth in business-to-business (B2B) services more than offset a decline in home-segment” telecom services, according to Millicom.
However, joint-venture earnings before interest, taxes, depreciation and amortization (EBITDA) delivered a net loss of US$28 million — despite a 9% improvement in EBITDA along with positive margins as measured in Colombian pesos, according to Millicom.
Meanwhile, a just-completed COP$600 billion/US$142 million capitalization boost — shared equally by EPM and Millicom – indicates a better longer-term outlook for Tigo-UNE, according to Millicom.
On that front, Colombia’s Ministerio de Tecnologias, Informacion y Comunicaciones (MinTIC) recently approved Tigo-UNE’s renewal of its 1,900-megahertz broad-band spectrum license, which obligates the company to pay COP$1.14 trillion (US$281 million) over the next 20 years, via annual installments.
The first payment (US$60 million) is due November 1, 2023, Millicom noted, with the recent capital raise ensuring sufficient funds for this spectrum-license down payment.
“The boosted equity capital is part of a more comprehensive plan to fund the 1900-MHz spectrum renewal and to refinance other Tigo-UNE short-term debt maturities,” Millicom added.
Millicom CEO Mauricio Ramos added that the Tigo-UNE venture this month successfully leveraged its total investments for cell-phone network and spectrum infrastructure by sharing costs with Spain-based Telefonica (operating as “Movistar” in Colombia).
Meanwhile, Wall Street bond rater Fitch Ratings announced October 25 that it has just boosted its risk ratings for Tigo-UNE — thanks to the recent capitalization agreement.
“This capital injection, along with an agreement to refinance bank debt with Bancolombia, has allowed the company to greatly reduce its refinancing risk,” according to Fitch.
“These new resources were used in part to pay the maturity of a COP$150 billion [US$36 million promissory note due on October 20, 2023,” including refinance of a bank loan taken with Bancolombia, Fitch added.
On the other hand, “the deployment of ‘5G’ technology [as required for advanced cell-phone services] will add to the company’s investment needs in the coming years,” Fitch noted.
“Due to these trends, Fitch projects that Tigo-UNE’s leverage profile will gradually weaken from historical levels, with debt-to-EBITDA and net-debt-to-EBITDA at around 2.1-times (x) and 2.6-x, respectively,” the company added.
