Tigo growth slows in Africa
Tigo, operated by Millicom, reported slow growth from its operations in Africa in the past financial year, blaming price wars and SIM registration for the slowdown. The company provides telecoms services to over 30 million customers in 13 countries in Latin America and Africa.
The company said in its latest financial report that its customer numbers in Africa increased by 23% year-on-year, bringing the total at the end of December to just below 15 million.
However, it saw a slowdown in customer growth in the region during the fourth quarter, which it attributed in part to mandatory customer registration processes in Ghana and Tanzania which give rise to greater volatility.
Tigo’ s revenues in Africa were up 5% year-on-year to USD239 million, with local currency revenues up 12% following pricing pressure mainly in Ghana and Tanzania.
DRC and Tanzania continued to demonstrate the strongest local currency growth for the company, recording year-on-year increases of 21% and 20% respectively. In DRC, the regulator introduced high minimum tariffs for all operators in December, which it expecst to cause a slow down in the rate of penetration growth. Value added services revenues increased by 41% in Africa year-on-year and now account for 10% of the regionâ€Ÿs recurring revenues.
Tigo said its average revenue per user (ARPU) for the region was down 11% year-on-year in local currency, due to growing price wars and a need to adjust cross-net tariffs.
Its capital expenditure in Africa amounted to USD120 million in Q4 and USD278 million for the full year -or 31% of revenues.
Tigo said: “ We expect capex in Africa to increase as a percentage of sales in 2011 as we invest in order to capitalize on the region’ s growth potential and to address the possible increase in traffic from lower tariffs. We will also begin to invest in 3G in several major urban areas. “
Tigo noted that its asset optimization plans were advancing, with almost two-thirds of its towers in Africa to be outsourced by the end of this year.
It added that the litigation over its license in Senegal with the Senegalese Government continues at the International Center for the Settlement of Investment Disputes (ICSID). ICSID has scheduled a hearing on the case for December 2011.