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UPDATE 1-Millicom sees margin slip in hiking infrastructure spend
February 12, 2013 / 8:16 AM / 5 years ago

UPDATE 1-Millicom sees margin slip in hiking infrastructure spend

* EBITDA $528 million vs forecast $518 mln

* Sees 2013 EBITDA margin declining, above 40 pct (Adds background, company comment)

STOCKHOLM, Feb 12 (Reuters) - Sweden-based mobile operator Millicom expects margins to narrow this year as it steps up spending on infrastructure to secure long-term growth, the company said on Tuesday in reporting fourth-quarter profits ahead of forecasts.

After years of expanding in Latin America and Africa, Millicom has shifted its focus from simply acquiring new subscribers to selling more profitable data services to its existing client base - like money transfers and cable TV.

“In 2013 the transition from voice to data and from analogue to digital TV will accelerate as we ensure Millicom remains a growth company,” Chief Executive Hans-Holger Albrecht said in a statement.

The company said around 35 percent of revenue was now related to data and products like mobile money transfer ... “well on track to reach our mid-term ambitions to diversify revenue and to reduce reliance on mobile voice services”.

Growing data services, however, has meant increased investment in both infratstructure and marketing and the company saw a decline in its core margin in 2012.

This will continue in 2013, and Millicom said it expected its core profit margin to fall from the 43.2 percent achieved in 2012 - excluding its recently acquired online business.

Millicom forecast a core EBITDA margin above 40 percent, excluding the Rocket Internet business, for 2013.

Capital investment will peak at around 20 percent of revenue from 19.1 percent in 2012, the group said.

Earnings before interest, tax, depreciation and amortisation slipped to $528 million, down from $536 million a year ago but ahead of the average forecast of $518 million given by analysts in a Reuters poll. (Reporting by Simon Johnson; Editing by Greg Mahlich)

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