September 26, 2023

UNE-EPM Full-Year 2021 Net Losses Worsen Year-on-Year

Medellin-based telecom/internet/cable-TV giant UNE-EPM – a joint venture between Medellin utility EPM and Spain-based telecom multinational Millicom – announced a COP$572 billion (US$150.5 million) net loss for full-year 2021, more than twice the COP$212 billion (US$55.8 million) net loss in 2020.

While red-ink continues to bleed the company (popularly known as “Tigo”), gross revenues nevertheless grew in 2021, to COP$5.1 trillion (US$1.3 billion), compared to COP$4.8 trillion (US$1.26 billion) in 2020, according to the company.

The latest losses come on the heels of an EPM board decision last year aiming to jump-start the process of selling its stake in the venture. But that process has stalled in the Medellin City Council.

UNE-EPM has now posted net losses in 2021, 2020 and 2018, while its 2019 net profit came-in at just COP$519 million (US$128,000).

Despite the relatively poor results in recent years, Wall Street bond rater S&P (BRC Ratings) last year nevertheless had issued a report indicating a brighter future for the unit.

In an October 4, 2021 filing with Colombia’s Superfinanciera oversight agency, UNE-EPM disclosed that the S&P/BRC ratings report cited a strong “AAA” bond rating for Tigo.

“For the next few years, we project profitability margins close to 32.5% and leverage indicators — measured as net debt to EBITDA — around 2-times, which we consider consistent with the rating,” according to BRC’s report.

“Despite an environment of greater competition and high investment commitments, the generation of the company’s own resources will continue to provide favorable levels of liquidity for the continuity of its operation, which reflects a ratio of sources-over-uses above 1.2-x for the next two years.

“In the next two years, we estimate that the home segment will mitigate the reductions in the mobile business and the small and medium-sized business market, so we project revenue growth of close to 4% in the next two years,” that report concluded.

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