Millicom: Future Growth Prospects

Company Overview

Millicom is a group of companies offering mobile services to a population coverage of 250 million people worldwide and 169 million people in Africa . It was established in 1990 and has expanded globally, offering voice, cable TV, data and value added services through partnerships and joint ventures. The company is headquartered in Luxembourg and has operations in 13 countries in Africa, Central America and South America. In Africa, its key markets are Chad, Senegal, Tanzania, Rwanda, Ghana and Mauritius. Millicom also started operations on Rwanda in December 2009 after being awarded a license in 2008. The gross mobile subscriber base of the company worldwide was 33.9 million, with 12.2 million subscribers in Africa at the end of December 2009.

Table 1: Millicom - Mobile Operations in Africa Q1 2017

Country Network Name Mobile Subscribers (Millions) Position
Senegal Tigo 3.76 1 of 3
Tanzania Tigo 11.25 3 of 7
Ghana Millicom 5.19 4 of 6
Mauritius Emtel 0.58 1 of 3
Chad Tigo 3.24 2 of 3
Rwanda Tigo 3.25 3 of 3


Source: Blycroft


Chart 1: Map of Millicom/Tigo Operations in Africa

Political Map of Africa showing the countries that Millicom/Tigo is active in

Business Strategy

Millicom aims to achieve consistent growth in order to obtain a number one or two position in each of their African regions by employing the following three strategies:

Establishing the brand

Millicom's brand development in Africa is still at a relatively early stage, with Tigo not yet as established as it is in Latin America. However, by investing in brand visibility, trade marketing strategies and direct saleforces the company has seen considerable market share growth over the last 12 months.


In Ghana, where the brand is well known, the company now has a dedicated trade marketing function whose role is to plan visibility in the market with the assistance of the trade marketing team and ensure the deployment of an effective budget. In it's younger markets, such as Chad and the DRC, the company is still focused on increasing basic visibility. Examples of this are the painting of over 2,000 square metres of walls with the Tigo logo in Chad, and sponsoring taxis in the capital city. And in the DRC, the company deployed a further 3,000 point of sale tables and 5,000 parasols to increase brand visibility.

DMS is also at quite different stages of implementation, with Chad and the DRC making their first deployments in their respective capital city areas during 2009. In Tanzania, the focus has been on training employees in the use of DMS to maximize its value to the business. In Ghana it has been used highly effectively to promote ePIN penetration.

Product innovation 

With the majority of demand in its African division still for voice and SMS services, Millicom has been seeking opportunities for innovation in the way its services are packaged and branded. While most of its African businesses have developed targeted bundles that stimulate both ARPU and usage, such as discounted calls to one or two other Tigo numbers in Ghana the DRC and Senegal, a range of unique products have been devised to increase customer numbers. Examples include the Xtreme SMS package offered to its customers in Tanzania and Ring Back Tone services which have proved hugely successful in both Tanzania and Chad. In Tanzania, the company pioneered RBT Star Copy to make it easy to copy tunes and subscribe to RBT.Customers. The tunes are copied simply by pressing the star key on their keypads when they hear a Ring Back Tone they like. RBT Star Copy has also acted as a highly effective form of viral marketing for the company.

Improving operations strategy

Millicom is making considerable improvements to its operations strategy in Africa. As a region where coverage remains focussed on predominantly urban areas, capex for 2009 was 51 percent of revenues. However, when it made the decision to outsource passive infrastructure in Africa by sharing tower networks with operators that cover similar regions, Millicom was responding to the difficult economic climate while allowing the business to focus on its sales, marketing, distribution, service innovation and customer care strategies. This decision was put into practise in January 2010 when the company signed its first tower agreement in Ghana and sold approximately 750 towers to Helios Towers Ghana.

Alternative power solutions are another focus for the company's African division, and by introducing LPG, deep cycle batteries and solar energy it is making cost effective steps towards having a more environmentally friendly presence in the region.

Financial and Operational Performance


The revenue of the company from its worldwide operations, for the financial year ending 2009, was USD 3.73 billion. Customer growth was 22 percent, with 6.2 million new customers in the year taking its total base to 33.9 million. Furthermore, group revenues were up 7 per cent to USD 3.373 million (2008: USD 3.151 million), with an underlying constant currency revenue growth of 10 per cent.

Performance in Africa

The company's revenues from African operations in 2009 amounted to USD 782 million, registering a 10 percent increase. Chad, the DRC and Tanzania proved to be the highest growth operations. The ARPU, at USD 6.4, is lower than for the rest of the group, reflecting the lower GDP per capita of these markets. Customer numbers were up 35 percent year-on-year to 12.2 million.


In terms of profitability, the EBITDA margin of the operator in Africa improved 3.1 percentage points year-on-year to 36.4 percent.

Figure 1: Revenue from the Mobile sector in Africa (2002-2004)

Revenue from the Mobile sector in Africa (2002-2004)

Source: Company Reports

Capital Expenditure

The company incurred a capex of USD 398 million on its African mobile operations in the financial year 2009. Although this was down 34 percent year-on-year and stood at 51 percent of revenues, the company continue to invest heavily in Africa. It reports that, even with outflows at the OFCF level of USD 64 million, it was cash flow positive in the fourth quarter of 2009

Operating KPIs

Millicom's total proportionate number of mobile subscribers in Africa at the end of December 2009 was 12,203,177. See below chart for further information on Millicom's operations in Africa.

Figure 2 shows the total proportionate mobile subscribers of Millicom in Africa from 2002 to end June 2005. Figure 3 depicts the break-up, by geography, of gross mobile subscribers, as at 30th June 2005.

Figure 2: Mobile Subscribers (2002-2005)

Millicom Mobile Subscribers (2002-2005)

Source: Source: Company Reports

(Details of ARPU and Churn Rate were not available from the operator)

Figure 3: Mobile Subscribers in Africa - by Geography (June 2005)

Mobile Subscribers in Africa - by Geography (June 2005)