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Telecom firm Millicom trims outlook as margin pressure grows
July 17, 2013 / 6:58 AM / 4 years ago

Telecom firm Millicom trims outlook as margin pressure grows

STOCKHOLM (Reuters) - Emerging markets telecoms group Millicom (MICsdb.ST) trimmed its margin forecast for the year on Wednesday due to regulatory pressure and higher investment in mobile data services in Africa.

The company, controlled by Kinnevik (KINVb.ST), the investment vehicle of Sweden’s Stenbeck business family, said it expected an operating margin (EBITDA) of around 40 percent versus its previous outlook for a margin in above 40 percent.

Subsidies to boost the uptake of mobile data use in Africa and price cuts by regulators had hurt results in the second quarter, the company said.

“As a consequence, our margins in the first half of 2013 came under more pressure than expected. This strengthens our determination to extend our cost and capex optimization program,” CEO Hans-Holger Albrecht said in a statement.

Millicom is aiming to reduce annual operating costs by $100 million by 2016 at the same time as it grows revenue from financial services, cable TV and mobile data to offset falling income from traditional voice calls.

The company said in March it would double revenues over the next five years and has been diverting resources to build its new platforms, squeezing margins.

Millicom is also looking to branch out into e-commerce where it sees synergies between telecoms, mobile financial services and online shopping, buying a stake in Rocket Internet’s operations in Latin America and Africa.

Earnings before interest, tax, depreciation and amortization (EBITDA) in the second quarter were $463 million versus a mean forecast of $470 million in a Reuters poll of analysts and $513 million in the year-ago quarter.

Reporting by Simon Johnson; editing by Niklas Pollard

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