reports
- Chris Hoare
- Chris Hoare
GEM Telcos: Consolidation – THE theme driving improved trends for EM T...
Earlier this month we published on how Global EM Telco Capex is falling rapidly, in large part driven by consolidation. On average EM Telco markets have fallen from a peak of 7 players to under 3. We expect many to end up with 2, or even a single network. How much further far might this cut capex?
- Chris Hoare
Liberty Latin America (Buy, TP: $14.5, +164%) Q1 25: Mixed; weak PR (...
Group headline trends improved materially, although the recovery in Puerto Rico is slower than we expected. Subscriber losses in PR were also higher than expected. However, capex in PR fell 30%, and as a result, PR net debt also fell by $15m. Headlines are disappointing but the cash flow picture in PR seems to be improving.
- Chris Hoare
Global EM Telcos & Towers Still rising – NSR GEM Top-10 May ‘25 Updat...
Despite global volatility our EM Top Picks posted positive returns again in April and now up 34% YTD on average. As we have been arguing for some time EM Telco is a much better space than it used to be and this is now being reflected by the market it seems.
- Chris Hoare
- Chris Hoare
Global EM Telcos & Towers NSR GEM Top-10 March ‘25 Update: February a...
February was another good month for our top EM Telcos, now up 15% YTD on average. This note also includes key news & other thoughts in order to help investors generate alpha within the EM Telco space. With performance strong so far, we make no changes to our picks.
- Chris Hoare
Millicom (Buy, TP: $36, +30%) - Q4 24: Slower trends but strong EFCF
Millicom has reported a slower set of Q4 results and both service revenue and EBITDA came in a shade below consensus expectations. However, the EFCF performance was strong, well above expectations in Q4 and the guide for 2025 EFCF of ~$750m is also above consensus (in line with us).
- Chris Hoare
- Chris Hoare
Liberty Latin America (Buy, TP: $14.8, +105%) Q4 24: Mixed, PR still ...
Group headline trends improved, although Puerto Rico remains weak at revenue/EBITDA. However, subscriber losses in PR also eased and Group capex guidance was cut as a result of which the company is maintaining guidance of $1bn of cumulative FCF between 2024 & 2026 (albeit while acknowledging they are behind after the first year). Results look better for the equity than debt holders in PR we think
- Chris Hoare
Millicom (Buy, TP: $34, +24%) Impressive new shareholder remuneration...
Millicom has announced a new , very positive , shareholder remuneration policy which includes resuming regular cash dividends, sustaining or growing cash dividend every year, and keeping a prudent capital structure. The new dividend policy is well ahead of our expectations.
- Soomit Datta
TIGO (Buy, TP: $34, +29%) Millicom - Q3 24: Solid quarter; raised EFCF...
Millicom has reported a solid set of results with improving service revenue trends, a nice reversal in Home Broadband nets adds (driven by Colombia) and strong EFCF this quarter. The company has lifted its FY24 guidance for EFCF to ~$650m from “more than $600m previously” – though consensus is close to this level for FY24.
- Soomit Datta
Liberty LA (BUY, TP: $13, +38%) Liberty LA / LCPR bonds - Outlook int...
Liberty LA will report Q3s in early November with focus largely on Puerto Rico and monthly EBITDA. Relative to the recovery aspiration by YE of $45m per month, we think they’ll be some way off (so does consensus) and performance of the bonds and, to a less degree the equity (LCPR equity is implied at zero we think), will be driven by commentary on momentum in the newly launched products.
- David Lopes
- Soomit Datta
LatAm Telcos - EM wireless concentration: LatAm points to Millicom and...
Drawing on the work of our colleague Chris Hoare (HERE for Africa), we broaden out our EM analysis of market concentration in wireless. LatAm screens well, in the largest market of Brazil (5 to 3 consolidation) but crucially also for the smaller caps of Millicom and – best in class – Liberty Latin America which remain the two top picks in the sector.
- Soomit Datta
Millicom (Buy, TP: $30, +17%) Multiple M&A’s: Millicom (BUY) in Colom...
A series of transactions, involving four separate parties, have been proposed by Millicom (and with a MOU with Telefonica) which could take the patchy Colombian telco market to an effective duopoly, with Millicom as a strong no2. The deal could yet stumble (multiple parties, involves a formal privatization, regulation), will take a little while to consummate, leaves question marks over WOM (which filed for protection locally in April), but we think can comfortably create over $1 billion of syner...
- Soomit Datta
Liberty LA (Buy, TP: $13, +45%) AMX (Buy, TP: $22 (from $24), +40%) L...
Liberty LA announced this week that AMX will take control of their 50/50 JV in Chile. This isn’t surprising but still cements a good “exit” for Liberty LA (putting zero value on the residual 9% stake this implies a 15.5x exit on FY 23 VTR EBITDA) and requiring a long-term perspective from AMX in order to turnaround the business - though we note recent top line and KPIs look to be (finally) stabilising.
- Soomit Datta
TIGO (Buy, TP: $30, +30%) Millicom - Upgrades following Q1s support r...
Following strong Q1s last week we have pushed our target to $30, from $24. Underlying upgrades are 5-6% at EBITDA and we have trimmed capex further. Partly mitigating factors are 1/ We have cut our expectation for a dividend from Honduras, and 2/ Built in a 50% likelihood of a devaluation in Bolivia, though this doesn’t appear very imminent (we include in our valuation, not in estimates)
- Soomit Datta
Liberty LA (Buy, TP: $13, +60%) Q1 24 - Tough optics in Q1, but PR EBT...
Liberty LA Q1 24 was always going to be a difficult print and we saw this in the Puerto Rico numbers, with revenue hit by much lower equipment sales (lower commercial efforts) and EBITDA by even higher than expected integration costs. With that said, the integration has now been completed, and a “restored” PR monthly EBITDA guide of $45m has been reiterated for during H2 ($23m in Q1) which with integration eliminated, the TSA almost entirely falling away, cost savings (10% headcount reduction) a...
- Soomit Datta
Liberty LA (Buy, TP: $13, +110%) Liberty LA - T-Mobile FWA in Puerto ...
Having published a couple of days ago and highlighted T-Mobile’s early-March FWA launch in Puerto Rico we want to clarify what may be an important nuance – Liberty PR cut prices not immediately following the early March FWA launch, as we first understood, but rather had cut toward the end of last year (October) on digital channels only. As such the FWA launch prices are approximate to Liberty’s digital offers (a small discount), Liberty hasn’t needed to respond thus far, and while we still see s...
- Soomit Datta
LILA US (Buy, TP: $13, +102%) Call with CFO Chris Noyes / T-Mobile FW...
We hosted a call with Liberty LA’s CFO, Chris Noyes, last week which focused on the very strong operational performance at CWC/Costa Rica, and the imminent turnaround in Puerto Rico (full migration off AT&T from April). We feel good about momentum here, though have cut underlying revenue a touch in Puerto Rico to reflect recently lowered fixed prices in response to T-Mobile’s FWA early March launch. We will watch this closely but with PR fixed BB ~6% of group revenue we don’t think it materially...
- Soomit Datta
LILA US (Buy, TP: $14, +110%) Liberty LA Q4s - Unpicking the $1 billi...
Liberty LA numbers last night were in-line, a mix of very weak Puerto Rico and very strong profitability in the Caribbean and Panama. We think most focus, however, will be on the new FCF guide (2024-26) - breaking from a 1-year outlook - which we attempt to break down in this note. It feels achievable and is only a touch below our existing estimates once we adjust for the refinancing assumption (for the 2027-29 debt stack) embedded in the guide.
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