Millicom International Cellular SA (MICC) has declared third quarter 2010 financial results. Quarterly total revenue of $1,017.7 million was an improvement of 13% year-over-year.Third quarter revenue was also better than the Zacks Consensus Estimate of $990 million.
For the first time in Millicom’s history, the company was able to generate more than $1 billion of quarterly revenue. This was mainly due to higher contribution from African and Latin American regions and favorable movement of foreign exchange rates.
On a GAAP basis, net income in the third quarter 2010 was $1.2 billion or $11.09 per share compared with a net income of $142.7 million or $1.31 per share in the prior-year quarter. However, second quarter adjusted (excluding discontinued operations and revaluation of Honduras operations) EPS of $1.31 was significantly below the Zacks Consensus Estimate of $1.53.
Quarterly gross margin was 80% compared with 79.1% in the year-ago quarter. EBITDA during the third quarter was $483.8 million compared to $418 million in the prior-year quarter. Quarterly EBITDA margin was 47.5% compared with 46.2% in the year-ago quarter.
At the end of the third quarter 2010, Millicom had approximately 37.443 million wireless subscribers, up 18% year-over-year. Out of this number, 2.1 million were high-speed 3G subscribers. During the reported quarter, the company added 715,000 net new mobile customers. Consolidated ARPU in the third quarter was $9.4 compared to $9.8 in the prior-year quarter.
During the third quarter 2010, operating free cash flow was $245 million compared to $227 million in the previous quarter. This represents approximately 24% of total revenue. Total free cash flow was $203 million in the same quarter compared to just $108 million in the year-ago quarter.
At the end of the third quarter of 2010, Millicom had approximately $1,660.0 million of cash & marketable securities on its balance sheet compared with $1,511.2 million at the end of fiscal 2009. Total debt was approximately $2,988.0 million at the end of the same quarter compared with around $2,346.9 million at the end of fiscal 2009. At the end of the third quarter 2010, debt-to-capitalization ratio was 0.37 compared to 0.45 at the end of fiscal 2009.
Segment wise Results
Central Americagenerated $376 million of quarterly revenue, down 1.0% year-over-year. South America generated $355 million of quarterly revenue, up 21% year-over-year. Africa generated $230 million of quarterly revenue, up 22% year-over-year. Cable & Fixed Broadband segment generated the rest $57 million of quarterly revenue, up 8% year-over-year.
Outlook
Due to the strong margin performance in 2010 and the full consolidation of Honduras in the second half of the year Millicom maintains its EBITDA margin guidance to around 47.0%.Operating free cash flow margin guidance was raised to 20%.Millicom continues to expect to invest approximately $700 million in capital expenditures for 2010.
We maintain our long-term Neutral recommendation on Millicom. Currently it is a short-term Zacks Rank # 3 (Hold) stock.
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