During its Q1 2015 Results, released 22 April 2015, Millicom says it saw a 22 percent increase in its revenue which stood at $1.71 billion, and 1.14 million mobile net adds, mostly driven by Tanzania, Colombia, Chad and Honduras.
It’s perfomance in Africa was also spectacular.
The firm announced a revenue growth of 16% up from 13% in the last quarter, with double digit organic revenue growth in all markets except Chad. EBITDA of $57 million with a margin improvement.
“As my first set of results since joining Millicom at the start of the month, I am pleased to present a strong performance. Underlying organic revenue growth was up 9.7%, demonstrating improvements across both our Latin American and African markets and a continuation of the momentum we saw last year,” said Mauricio Ramos, CEO, Millicom.
The firm pegs its growth to the rapid adoption of smartphones which are accelerated its mobile and data revenues. The firm saw an increasing mobile data penetration which now stands at 27.6% (up 7% in one year) representing nearly 16 million customers and a further 110,000 customers became users of Tigo’s mobile financial services in the first quarter with customers transacting $2.6 billion – an 33% increase since the same period last year.
The firm said in Africa, its focused on growing both volume and value and DRC and Senegal returned to growth with Tanzania’s performance also accelerating which together delivered a total organic revenue growth for the region of 16%.
“Rwanda launched the country’s first mobile-based free of charge savings product, promoting financial inclusion. LTE arrives in Tanzania for the first time this month as we become the largest and fastest 4G network in this market,” said Ramos.
To further align and make its regional hubs more efficient, Millicom has restructured its operating model to create two regions; Millicom Latam and Millicom Africa to enable it to continue to invest long term in these markets whilst managing costs. Millicom’s corporate costs reduced by 5% this quarter and the firm aims to bring them down one by one.
The firm says its mobile service revenue grew by 3.6% in local currency with the mobile customer base increasing by 11% (1.14 million net adds in Q1). The growth largely came from Tanzania, Chad, Colombia and Honduras. The firm says during Q1 it sold over 1.3 million smartphones and added 594,000 new mobile data users, with 338,000 net additions in Africa and 233,000 from Central America.
“Momentum in voice has slowed down and was flat overall compared to Q1 last year with Africa up 11% and Latam declining by 4% on MTR cuts, lower volume and price competition. Voice and SMS revenue combined declined by 3.3% in Q1 at group level,” the firm announced adding that its data penetration increased to 27.6% of its mobile customer base, an increase of 0.5 percentage points compared to the previous quarter and 6.7 percentage points year-on-year. The growth is pegged on affordable smartphones, targeted data products and packages like Tigo Music in Latin America and in Ghana and Tanzania as well Internet.org in Colombia, Guatemala, Tanzania and Paraguay.
The firm’s Mobile Financial Services (MFS) added 110,000 new users in Q1 and the customer base reached 9.6 million, up 31% in one year with DRC, Honduras, Senegal and Guatemala. Year-on-year, Millicom added almost 1.3 million new users in Africa after Tigo Cash , reflecting the national interoperability announced in Tanzania and the new savings product recently launched in Rwanda. Overall MFS revenue was up 43% with an average ARPU at $1.06, up 1% in local currency.
Below is a summary of Millicom’s perfomance in Africa.
Africa Q1 revenue increased by 16% in local currencies to $248 million with unfavourable currency movements offsetting most of this growth. Mobile service revenue was up 13% at $218 million with voice and SMS growing by 10% and data by 68%. MFS revenue at $21 million was up 46% with all countries but Chad experiencing healthy momentum.
Millicom’s customer base in Africa grew in Q1 with more than 737,000 net customers, particularly in Tanzania (+508,000) and Chad (+280,000) while DRC declined as we focused our commercial efforts on ARPU growth rather than customer intake. The data penetration rate has increased by 5.3 points over the last 12 months to 20.8%. EBITDA at $57 million increased by 8% year-on-year despite adverse currency movements (up 24% in local currency). This was a 1.5 percentage point improvement of the margin at 22.9% as we continue our cost optimization process.
Strong customer growth in mobile (+508,000) led to revenue growth of 18% to $92 million (8% on a reported basis). Voice and SMS revenue were up 9% but the biggest growth drivers were mobile data (+61%) and MFS (+49%). Mobile ARPU declined due to the dilution from new customers. The EBITDA margin in Q1 reached 36%, up 5 percentage points compared to Q1 14.
This was a tough quarter for Chad with a flat revenue base in local currency but a 17% decline in USD terms, despite growing the subscriber base by over 280,000. The macro-economic background, deriving from the lower oil crude price, has impacted the general population. The EBITDA margin declined by around 2 percentage points to 35%.
Other parts of Africa
Millicom says its other African markets experienced excellent momentum with double-digit growth for each of them. Senegal rebounded from 5% in Q4 2014 to 17% in Q1. Rwanda growth rate accelerated sequentially from 6% to 19% driven by net additions of 148,000, voice growing 15% and data growing over 38%. The growth pace in Ghana remained above 20% and DRC, despite social protests and a temporary ban of mobile internet, delivered a very good revenue performance up 27%. The combined EBITDA margin of these 4 countries slightly improved to 8.6%.