Millicom reported a drop in fourth-quarter revenues, hurt by weakness in its biggest market Colombia and El Salvador, while EBITDA increased thanks to improved profitability in Africa. Revenues fell 2.6 percent to USD 1.594 billion, and service revenue was down 0.9 percent on an organic basis. Adjusted EBITDA rose 3.1 percent to USD 566 million, helping the margin improve to 35.5 percent from 33.6 a year ago.
Over the full year, Millicom was at the low end of its outlook, with organic service revenue growth of 1.2 percent and organic growth in adjusted EBITDA of 4.3 percent. Capital expenditure fell 18 percent to USD 1.031 billion, helping operating cash flow increase 22.7 percent to USD 1.141 billion in 2016. The company left its dividend unchanged at USD 2.64 per share.
For 2017, Millicom again forecast organic service revenue growth in the low single-digit range and organic adjusted EBITDA up in the mid to high single-digit range, but both figures should be better than the growth rate in 2016, as it continues to narrow its focus on mobile data and cable expansion in Latin America.
In addition to the recently agreed sale of Tigo Senegal, the company plans to dispose of its 22 percent stake in Helos Towers Africa this year. Capex is forecast stable compared to 2016, with a focus on 4G expansion and fibre roll-out. Along with the increase in EBITDA, this should lead to around 10 percent growth in operating cash flow this year.
In Latin America, the mobile customer base fell by 1.8 percent over the year to 32.004 million, due mainly to disconnections of inactive prepaid users, while mobile data customers rose by 14.0 percent to 13.719 million. Mobile data revenue grew by nearly 23 percent over the full year, while voice and SMS revenue fell by 15 percent. This led to a 5.8 percent organic drop in ARPU to USD 8.4 in Q4. Millicom said the expansion of LTE networks was helping shore up ARPU, with the over 3.4 million 4G customers generating ARPU of over USD 20.
The company expanded its HFC network 12.2 percent last year to 7.152 million homes passed, including an acceleration in the last quarter to 304,000 new homes passed. The total cable network passed more than 8.1 million homes, ahead of the target of 8 million set at the start of the year. The number of HFC revenue-generating units rose by 13.9 percent in 2016 to 3.694 million. Residential cable ARPU was at USD 27.5, up 5.1 percent year-on-year excluding currency effects as the share of customers taking double- or triple-play plans rose to 59 percent.
