UNE-EPM (Tigo) Posts Net Loss for 2Q 2024, Outlines Market-Exit Plan
Medellin-based UNE-EPM –half-owner of the “Tigo” cell-phone, internet and cable-TV venture (with Millicom owning the other half) in Colombia – announced August 14 a COP$33.9 billion (US$8.4 million) net loss for second quarter (2Q) 2024, an improvement over the COP$290.6 billion (US$72 million) net loss in 2Q 2023.
Revenues also dipped slightly, to COP$1.34 trillion (US$334 million), from COP$1.36 trillion (US$339 million) in 2Q 2023.
As for first half (1H) 2024, UNE-EPM revenues dipped to COP$2.68 trillion (US$668 million), from COP$2.73 trillion (US$680 million) in 1H 2023, while the 1H 2024 net loss totalled COP$129 billion (US$32 million), better than the COP$439 billion (US$109 million) net loss for 1H 2023.
UNE-EPM blamed the 2Q 2024 revenue decline “mainly due to the reduction in commercial and sales activity in the home business unit (television, internet and fixed telephony services), generated mainly by the slowdown in the market and the industry in general, which has been impacted by macroeconomic variables such as inflation, exchange rates and market competition with lower offers and rates.
“However, this lower commercial activity in [2Q 2024] revenues was offset by a reduction in the company’s operating costs and expenses, which generated a positive result in earnings before interest, depreciation and amortization and higher than that compared to the same quarter of 2023,” the company added.
Sellout Plan
Meanwhile, the city of Medellin — which owns UNE-EPM´s share in the Tigo-UNE joint venture with Millicom — has now begun the process of obtaining permission to sell that 49.99% share in the venture (see Medellin Herald July 25, 2024).
In an August 14 presentation to the Medellin City Council – which has the final word on whether to sell the city´s half-stake in Tigo-UNE – EPM General Manager John Maya Salazar laid-out the case for exiting the Colombian telecom market.
“I have a responsibility not only for what UNE represents, but also for the other businesses and services of EPM,” Salazar explained in his presentation.
“The risk in the telecommunications sector implies that in the future, new capitalizations may be required for UNE — and this would have an impact on the power generation, transmission, water, energy, gas and solid waste businesses of EPM, by taking away from us the capacity to make strategic investments in these services for the community.
“The reasons for the sale are directly related to the high competitive intensity and the capital requirements to guarantee sustainability and continuity in the [telecom] market, which, added to the rapid technological obsolescence, generate a greater risk for EPM when participating in this industry.
“There is also a risk that new capitalization needs will arise, a situation that materialized in 2023 when the company raised the need for resources of COP$600 billion [US$149 million], of which EPM contributed half.”
While EPM envisions a formal, two-stage process for selling its current half-share in Tigo-UNE, “in the event of not carrying out the sale in those two stages, the statutes of UNE and its shareholders agreement establish the existence of a preferential right for the other shareholders of the company, that is, Millicomm, which would have the opportunity to directly acquire EPM’s shares in UNE;” Salazar explained.
“If Millicom does not exercise its preferential right, then EPM could involve it in a joint sale process of 100% of the shares owned by both shareholders. This clause can be executed by EPM before December 31, 2026,” he concluded.
