Millicom International Cellular SA (MICC) has announced first quarter 2010 financial results. Quarterly total revenue of $905 million was an improvement of 16% year-over-year but down 2% sequentially. First quarter revenue of $905 million was also better than the Zacks Consensus Estimate of $891 million. This was mainly due to higher contribution from African and Latin American regions.
On a GAAP basis, net income in the quarter was $155.5 million or $1.43 per share, compared to a net income of $138.5 million or $1.28 per share in the prior-year quarter and a net income of $454.2 million or $4.18 per share in the previous quarter. However, first quarter adjusted (excluding special items) EPS was $1.40, significantly above the Zacks Consensus Estimate of $1.25. This was primarily due to impressive contribution from the high-margin value-added services products.
Quarterly gross margin was 79.1%, compared to 78.3% in the year-ago quarter. EBITDA during the first quarter was $423.8 million, compared to $351.8 million in the prior-year quarter and $430.7 million in the previous quarter. This reflects the aggressive cost cutting measures taken by management during the past one year.
Quarterly EBITDA margin was 46.8%, compared to 45.2% in the year-ago quarter and 46.6% in the previous quarter. This was well above management’s long-run target of 45%. Millicom guided EBITDA margin to remain above 45% during 2010, a respectable level for telecommunications carriers.
As of Mar 31, 2010, Millicom had approximately 35.1 million wireless subscribers, up 21% year over year. Out of this number, 1.5 million were high-speed 3G subscribers. During the reported quarter, the company added 1.2 million net new mobile customers. This reflects a massive swing in customer intake in Chad, Tanzania, and DRC.
During the first quarter, operating free cash flow was $234.3 million, compared to $105 million in the prior-year quarter. This represents 25.9% of total revenue. Total free cash flow was $200.1 million in the same quarter, compared to just $66.4 million in the year-ago quarter.
At the end of the quarter, Millicom had approximately $1,531.4 million of cash & marketable securities on its balance sheet, compared to $1511.2 million at the end of fiscal 2009. Total debt was approximately $2,355.2 million at the end of the same quarter, compared to around $2,346.9 million at the end of fiscal 2009.
Segment-wise Results
Central America generated $322 million of quarterly revenue, down 1.2% year over year. South America generated $312 million of quarterly revenue, up 17% year over year. Africa generated $217 million of quarterly revenue, up 26% year over year. Cable segment generated the rest $54 million of quarterly revenue, up 9% year over year.
Share Buyback and Dividend
On Apr 15, The Board of Directors of Millicom decided to return $800 million to its shareholders through a unique combination of special dividend and share buyback program. The company will pay a special dividend of $4.60 per share in addition to the proposed 2009 annual dividend of $1.40. The special dividend will have total worth of $500 million. The rest $300 million will be paid through share buyback program from open market purchase on NASDAQ by the end of 2010.
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