On the day of Q2 results, Millicom CEO Mauricio Ramos discusses monetising data, smartphone uptake, convergence and M&A across the company’s two regions, Latin America and Africa.
TelecomFinance: Congratulations on your new role, how have your first…
On the day of Q2 results, Millicom CEO Mauricio Ramos discusses monetising data, smartphone uptake, convergence and M&A across the company’s two regions, Latin America and Africa.
TelecomFinance: Congratulations on your new role, how have your first 100 days been?
Mauricio Ramos: Tim Pennington [Millicom’s Group CFO and interim CEO since Hans-Holger Albrecht stepped down in December] has been a great friend and a great colleague, showing me the ropes. We have a great management team and there’s a great corporate culture here.
TF: How has being at Millicom in Latin America differed from your time there at Liberty?
MR: It’s a combination of a strong team and great markets. There’s a tremendous opportunity in fixed-line, since cable and broadband penetration in our markets is still quite low. There are also tremendous opportunities in mobile, since smartphone penetration in our markets is still not quite yet 30%. We are very focused on convergence and digital lifestyle as part of our organic growth strategy. It has been a tremendous breath of fresh air.
TF: Can you tell us more about the digital lifestyle strategy Millicom is pursuing?
MR: There are two main pillars: building digital services for consumers, and monetising for shareholders. We expect that smartphone penetration in our markets will rise from 30% to 70-80%, while digital set-top box penetration will rise from the current sub 5% to 70-80%. This quarter, we added two million new smartphone users across both regions.
TF: Does Millicom intend to become a content producer in Latin America, where it is increasingly adding cable services to its initial mobile offering?
MR: Our strategy is to be a converged operator, providing seamless, integrated services across fixed and mobile. First, we build our mobile position and then build a cable footprint underneath that. We see content as an enabler to drive data usage. Our content strategy is to drive at least point of parity, offering the same content as all the other operators in Latin America. We will drive points of differentiation for example by producing local sports – soccer – in markets where there will be demand.
TF: Which mobile financial services is Millicom offering, and in which markets?
MR: We see mobile financial services (MFS) as both a revenue generator and also an enabler to our core business. For example, customers can use the service to prepay top-ups, or to pay for DTH via a mobile wallet. There is a massive opportunity to move money and MFS is doing best in Tanzania, Paraguay, El Salvador and Honduras, where we have a significant numbers of customers who are unbanked. . We offer payment services in every market apart from Colombia, where there are some regulatory issues that we hope will be resolved soon. In Tanzania, our most developed market, we offer savings, insurance and loan services. We see 30-40% of revenue growth in MFS, and there are interesting synergies with our mobile and cable businesses in terms of top-ups and lower churn.
TF: Do you see the entrance of AT&T into Latin America as a threat or opportunity?
MR: We don’t spend a lot of time thinking about hypothetical situations, and have been totally focused on building cable, monetising data and pursuing B2B opportunities. That said, we already compete with DirecTV.
TF: What have you learned so far about Millicom’s Africa business?
MR: Absent the currency headwinds, revenue, EBITDA and subscribers are all up. We are focused on organic growth, but consolidation will add strategic optionality.
TF: Do you think that yesterday’s announcement that Orange will buy four markets from Airtel will be the catalyst for African telecoms consolidation?
MR: It may be the beginning of momentum towards the long talked about wave of consolidation.
TF: Do you think you’ll be able to introduce the cable model in Africa?
MR: The cable model makes sense in high density areas. But for now, there is still a tremendous opportunity in mobile, which is where our capex is focused. Our markets are in the very early days of smartphone penetration and next generation services.
TF: What’s the outlook for convergence in Africa? How similar or different will it be from Latin America? What will be the impact of emerging fibre providers such as Liquid Telecom?
MR: Convergence typically plays out once there is penetration in both fixed and mobile. So we are first driving penetration and building networks in mobile.
TF: Do you intend to carry out more in-country consolidation, as you have done with Zantel in Tanzania?
MR: We will look wherever opportunities arise for in-fill acquisitions that fit into our existing footprint, as the synergies over cost base are typically high.
