Millicom International Cellular S.A. (MICC) is all set to complete the full divestment of its Asian operations by end 2009. Last June, the company took a strategic decision to get rid of its Asian businesses in the face of increased competition and an extremely tight credit market. The Asian region, consisting of Laos, Cambodia, and Sri Lanka, contributed just 8% of the company’s total revenues and its EBITDA contribution was even lower at 6%. Millicom engaged Goldman Sachs to help in the disinvestment process.
The company yesterday entered into an unconditional agreement with Emirates Telecommunications Corp. (Etisalat), a United Arab Emirates based international telecom service provider, to sell its largest Asian operation in Sri Lanka. Named as Tigo Sri Lanka, this is a 100% owned subsidiary of the company. Etisalat will pay approximately $155 million in cash. The deal expected to be closed by Oct 20.
In September, Millicom announced that it entered into an agreement to sell the entire 74.1% holding in Millicom Lao Co. Ltd., its Laos operation, to Vimpel Communications (VIP) of Russia for approximately $65 million in total cash proceeds. This deal is also expected to close by end 2009. In August, Millicom sold its 58.4% stake in CamGSM, its Cambodian operation to its local partner The Royal Group in a cash deal of $346 million. The deal is expected to close by end 2009.
Together, the divestiture of three Asian operations will generate approximately $565 million of cash to Millicom, in line with management expectations of $500 million – $600 million.
Millicom is now emphasizing more on the African region. Currently, the company is present in seven African nations and it may add another one by the end of this year. However, Africa is also seeing increased competition. Global telecom giant Vodafone Group Plc (VOD), South African MTN, Zain of Kuwait, and France Telecom (FTE) are existing players in this market. Despite their presence, Millicom’s African revenues rose 4% to $354 million during the first half of 2009 and its number of subscribers rose 41% to 10.6 million from 7.5 million.
Read the full analyst report on “MICC”
Read the full analyst report on “VIP”
Read the full analyst report on “VOD”
Read the full analyst report on “FTE”
Zacks Investment Research