10 reasons why Millicom is losing positions at Colombian Telecommunications ranking
By Unitratel Labour Union.
Unitratel is a Colombian employee Union inside the TigoUNE and Edatel companies. Preoccupied on seeing how the Millicom administration is making mistakes after mistakes resulting in a deep and fast deterioration of the company health. Each day the company is loosing participation in the Colombian Telco market at the point is falling to fourth position when it was struggling for the first one when the 3 companies joined since more than ten years ago. This union made an analysis to illustrate how and where those mistakes were made and continues to be made more and more until the point, we forecast the company will enter in a no return way.
1. Lack of vision for the middle and long term. By the time UNE joined with TIGO, it had a Gpon project to be the first in Colombia to offer high speed connectivity for home using Optical Fiber in Colombia. However, the CEO of new company(TigoUNE) stopped the project and many experts in this technology were forced to leave the company by several non saint maneuvers , so most of those engineers were recruited by Claro, the competition. The money of this project, perhaps, was sent to headquarters whether in Sweden, Luxemburg, other countries in Central or South America. As a result, Millicom is unable to offer high speed internet service at home by optical fiber, now a days. Meanwhile the competitors are receiving thousands of clients looking for better connectivity Tigo couldn{t offer. This lack of vision makes the company loose clients until the point Millicom had to joint the competitor Movistar which has telecommunications services by optical fiber, to share the infrastructure as last option due to Claro is far away as undoubtable leader., number one.
2. Bad Decisions have made competitors, like Claro and WOM, take advantage. The problem here is that TigoUNE in steady falling below the fourth position of all Telco companies. This has created a weir atmosphere for clients who have made the decision to leave the company, seeking for better services. It is unbelievable that a competition like WOM just settled in Colombia few years ago, have gotten 4 million clients, most of them come fom Tigo.
3. Firing expert Engineers has given competitors to recruit them with better salaries. This is the case of WOM who have recruited the most amount of engineers that were foced to leave the company in strategic areas. Wom, for instance, is installing dozens and dozens of new antennas connecting more people while Tigo is selling them and renting them again paying a huge amount of money each month. Claro does not sell any antenna as Tigo does, they are investing more and more in infrastructure every day with the help of experienced engineers that TigoUNE fired or called to leave the company. WOM is growing up in a scandalous way, meanwhile TigoUNE is loosing clients in all scenarios. However, the 200 million pesos CEO of TIGO (the salary per month in Colombian pesos), as it is called on the street, Marcelo Cataldo, asks frequently to MinTic(Telecommunications ministry) to declare Claro as “dominant operator” to get more subsidies and benefits from the Government and the competitors like Claro. In other words, he wants to be prized by his mistakes, bad administration. His idea is to get on the desk what he has lost on the street because of his bad decisions. That would be horrible for customers and free competitive market. He only wants to earn money without any effort deceiving the Minister by arguing the market is hard but hiding the bad practices inside the company int both areas, processes and human resources .
4. Selling strategic infrastructure such as Antennas: Neither of the competitors, Nor Clark nor WOM are selling their antennas and then rent them. Most of competitors employees like Claro are laughing at TigoUNE practices, selling antennas to take them rented back is a practice that make the new owner richer and make TigoUNE company loose competitiveness. On the street people say that the seller and buyer are the same and they are doing that a maneuver to pass the most valuable assets to other of his branches, If so, it is a bad message for New York stock market.
5. Poor Analysis to open shops. The useful life of a shops is very short. Shops that are open with a huge investment is close in short terms due to low revenues showing a lack of experience in knowing the local market, poor analyzes in where to open a new shop.
6. Unstable and unreliable internet service. In the past, users used to recognize UNE services as synonym of high quality such as TV and internet. Now a days, those reference points have disappeared and instead of that, the internet at home is very unreliable, for instance, once an individual connect his/her mobile to home wifi appears the message “Connect without internet” that is perhaps because the network was expanded preserving a weak signal, in other words there are many users connected to the same infrastructure. They do not expand the network because the incomes are not enough, the continue using HFC thick cable which is impossible to place in ½” pipe in our houses. This thick cables only allow to connect 2 rooms, so the signal and speed is very weak and low, respectively.
7. Poor leadership of the CEO. It is a big mistake that the head of the company, CEO Marcelo Cataldo, goes to the media to announce that the company made a great decision to sell the antennas making the competitors laugh at him because it is like to say that we have to sell our houses to pay rent, instead. But the greatest mistake is to go to announce on the media using a misfortune example that a The pastry chef does not need to own an oven for his pastry so he/she should rent it, instead. That example gives an idea of poor knowledge and short vision of the 200million Pesos CEO,= of Tigo.
8. Unplugging Town connection: Edatel is a brand inside the holding that connects people in the remote towns by a combination of microwaves and cable. It has enough infrastructure installed during decades of operation. Millicom wrongly made the decision to close those locations so Claro is making a huge business selling a lot to those people who are being unplugged by Edatel. Any one could think that by closing Edatel locations, people would move to Mobile in the same joined company, Tigo. But Tigo does not have signal in those remote towns so Claro is taking advantage of that mistake and they are increasing the gap between them. Claro, looking that mistake, increased the costs of services in those towns so people must take it because there is no option, representing a problem to the government who has to guarantee connectivity to those remotes areas. So with all in all, Marcelo Cataldo is kneeing to Mintic to declare Claro as dominant operator to receive more subsidies. That is unbelievable.
9. Selling key Buildings and real estates. they are selling the most important buildings that belong to UNE and Edatel, others are making business they rent to third parties receiving considerable amount of money but sacrificing the connectivity in the towns.
10. Bad use of human Resources. Marcelo Cataldo started a witch hunt against employees. The last persecution was planned strategically. He denied to negotiate with unions in order to freeze salaries in two years in a row without any increment in order to make a very poor offer to employees and Directives to leave the company. So this guy the 200millions CEO created a weir and persecuted atmosphere to employees had to abandon the company. He called private financial founds to persuade employees to put their tiny amount of money he offered in their accounts to be free of tax, but they must leave the money for 10 years, resulting a worse solution . In other words, He gave a place inside the company to catch that money
He really believe that with professionals bad paid could compete with strong companies like Claro and WOM who are breathing at Tigo’s neck
The company has a good income but the money is being sent out the country to headquarters. By the time EPM wants to recover the company back the surprise would the major assets are placed to another company, so EPM wil recover only the UNE’s Logo.
a great update, thanks for staying on top at such a specific level.
1 question, 2 comments :
- can you point to some reference\discussion on why you believe the new TIGO C-suite to be 'world-class'? the prior CEO stuck my as quite sophisticated although he may have suffered from some overconfidence. his guatemalan aggregation was well done in a stressful time.
- your key point is dead-on; with seemingly greater global telecom bargains each quarter, niels can get distracted by the latest shiny opportunity. no sign this environment flipping soon.
- the irony of tough economic times anywhere is that telecom use (also alcohol too!) goes up, but unlike beer, the business model is not really structured for greater profit per client usage.
I just had in mind Lombardini as COO (and likely successor CEO) plus the other Iliad guys on the board. I don't think Ramos et all are among the worst by any stretch, but the performance of Niel's other operations speak for themselves. Iliad and Niel have an uncanny ability to accurately target markets with competitive weaknesses and run with low costs to exploit the market space maximally. Just look at what they are about to achieve in Italy. We can imagine something like that happening in Colombia, which would increase the value of Tigo massively in the longer run, especially if they can become 100% owners.
The jury is still out on the Guatemala purchase. If margins stabilize at +50% again with unchanged market share, it will be probably have been worth it for shareholders. But it came at a hefty price (negative multiple arbitrage against Tigo stock) and it also ultimately dethroned Ramos when the equity raise made the stock so cheap that Niel started to build his stake. If this gets bought out anywhere near these levels, a large reason why that happened is because of the dilution associated with the Guatemala deal.
If they didn't believe in stable margins in the long term they shouldn't have paid over 6x EBITDA for the asset since it's not a growth market, especially not when a large chunk of that was paid with newly issued stock at a lower multiple. Nobody said a word about risk of pressure to margins after closing, but then that was played off as "totally expected" when it was already a fact.
Granted, among other infra, the Guatemalan towers couldn't have been included in Lati if they were still only 50% owners.
The 25% difference from through 2023 you talk about and higher multiples what is the value of that in cash or per share? If you have any thoughts of that?
Will Also be very interesting to see what happening with other assets during the year such as Tigo Money and maybe Data centers along with stronger operational performance.
"In addition, potential asset monetizations and partner equity funding being pursued in Colombia could add an estimated $100 to $150 million of additional cash flows; and the company continues to progress on its plans to carve out and monetize Lati, the company’s newly-created tower business."
Yes, your right, i have also read that, but didnt made the connection to Colombia as for the Towers, only for what partner equity could mean for the cashflow in Colombia, But that is probably the right interpretation. Do you know how the tower portfolio are shared between the countries they are operating in? Maybe they are selling towers in more than one country in the first deal aswell.
And a follow up, so you think Lati could be worth around 10usd/share in the current environment? That is not less given the share price... Interesting times ahead, we will see how much they get.
10 reasons why Millicom is losing positions at Colombian Telecommunications ranking
By Unitratel Labour Union.
Unitratel is a Colombian employee Union inside the TigoUNE and Edatel companies. Preoccupied on seeing how the Millicom administration is making mistakes after mistakes resulting in a deep and fast deterioration of the company health. Each day the company is loosing participation in the Colombian Telco market at the point is falling to fourth position when it was struggling for the first one when the 3 companies joined since more than ten years ago. This union made an analysis to illustrate how and where those mistakes were made and continues to be made more and more until the point, we forecast the company will enter in a no return way.
1. Lack of vision for the middle and long term. By the time UNE joined with TIGO, it had a Gpon project to be the first in Colombia to offer high speed connectivity for home using Optical Fiber in Colombia. However, the CEO of new company(TigoUNE) stopped the project and many experts in this technology were forced to leave the company by several non saint maneuvers , so most of those engineers were recruited by Claro, the competition. The money of this project, perhaps, was sent to headquarters whether in Sweden, Luxemburg, other countries in Central or South America. As a result, Millicom is unable to offer high speed internet service at home by optical fiber, now a days. Meanwhile the competitors are receiving thousands of clients looking for better connectivity Tigo couldn{t offer. This lack of vision makes the company loose clients until the point Millicom had to joint the competitor Movistar which has telecommunications services by optical fiber, to share the infrastructure as last option due to Claro is far away as undoubtable leader., number one.
2. Bad Decisions have made competitors, like Claro and WOM, take advantage. The problem here is that TigoUNE in steady falling below the fourth position of all Telco companies. This has created a weir atmosphere for clients who have made the decision to leave the company, seeking for better services. It is unbelievable that a competition like WOM just settled in Colombia few years ago, have gotten 4 million clients, most of them come fom Tigo.
3. Firing expert Engineers has given competitors to recruit them with better salaries. This is the case of WOM who have recruited the most amount of engineers that were foced to leave the company in strategic areas. Wom, for instance, is installing dozens and dozens of new antennas connecting more people while Tigo is selling them and renting them again paying a huge amount of money each month. Claro does not sell any antenna as Tigo does, they are investing more and more in infrastructure every day with the help of experienced engineers that TigoUNE fired or called to leave the company. WOM is growing up in a scandalous way, meanwhile TigoUNE is loosing clients in all scenarios. However, the 200 million pesos CEO of TIGO (the salary per month in Colombian pesos), as it is called on the street, Marcelo Cataldo, asks frequently to MinTic(Telecommunications ministry) to declare Claro as “dominant operator” to get more subsidies and benefits from the Government and the competitors like Claro. In other words, he wants to be prized by his mistakes, bad administration. His idea is to get on the desk what he has lost on the street because of his bad decisions. That would be horrible for customers and free competitive market. He only wants to earn money without any effort deceiving the Minister by arguing the market is hard but hiding the bad practices inside the company int both areas, processes and human resources .
4. Selling strategic infrastructure such as Antennas: Neither of the competitors, Nor Clark nor WOM are selling their antennas and then rent them. Most of competitors employees like Claro are laughing at TigoUNE practices, selling antennas to take them rented back is a practice that make the new owner richer and make TigoUNE company loose competitiveness. On the street people say that the seller and buyer are the same and they are doing that a maneuver to pass the most valuable assets to other of his branches, If so, it is a bad message for New York stock market.
5. Poor Analysis to open shops. The useful life of a shops is very short. Shops that are open with a huge investment is close in short terms due to low revenues showing a lack of experience in knowing the local market, poor analyzes in where to open a new shop.
6. Unstable and unreliable internet service. In the past, users used to recognize UNE services as synonym of high quality such as TV and internet. Now a days, those reference points have disappeared and instead of that, the internet at home is very unreliable, for instance, once an individual connect his/her mobile to home wifi appears the message “Connect without internet” that is perhaps because the network was expanded preserving a weak signal, in other words there are many users connected to the same infrastructure. They do not expand the network because the incomes are not enough, the continue using HFC thick cable which is impossible to place in ½” pipe in our houses. This thick cables only allow to connect 2 rooms, so the signal and speed is very weak and low, respectively.
7. Poor leadership of the CEO. It is a big mistake that the head of the company, CEO Marcelo Cataldo, goes to the media to announce that the company made a great decision to sell the antennas making the competitors laugh at him because it is like to say that we have to sell our houses to pay rent, instead. But the greatest mistake is to go to announce on the media using a misfortune example that a The pastry chef does not need to own an oven for his pastry so he/she should rent it, instead. That example gives an idea of poor knowledge and short vision of the 200million Pesos CEO,= of Tigo.
8. Unplugging Town connection: Edatel is a brand inside the holding that connects people in the remote towns by a combination of microwaves and cable. It has enough infrastructure installed during decades of operation. Millicom wrongly made the decision to close those locations so Claro is making a huge business selling a lot to those people who are being unplugged by Edatel. Any one could think that by closing Edatel locations, people would move to Mobile in the same joined company, Tigo. But Tigo does not have signal in those remote towns so Claro is taking advantage of that mistake and they are increasing the gap between them. Claro, looking that mistake, increased the costs of services in those towns so people must take it because there is no option, representing a problem to the government who has to guarantee connectivity to those remotes areas. So with all in all, Marcelo Cataldo is kneeing to Mintic to declare Claro as dominant operator to receive more subsidies. That is unbelievable.
9. Selling key Buildings and real estates. they are selling the most important buildings that belong to UNE and Edatel, others are making business they rent to third parties receiving considerable amount of money but sacrificing the connectivity in the towns.
10. Bad use of human Resources. Marcelo Cataldo started a witch hunt against employees. The last persecution was planned strategically. He denied to negotiate with unions in order to freeze salaries in two years in a row without any increment in order to make a very poor offer to employees and Directives to leave the company. So this guy the 200millions CEO created a weir and persecuted atmosphere to employees had to abandon the company. He called private financial founds to persuade employees to put their tiny amount of money he offered in their accounts to be free of tax, but they must leave the money for 10 years, resulting a worse solution . In other words, He gave a place inside the company to catch that money
He really believe that with professionals bad paid could compete with strong companies like Claro and WOM who are breathing at Tigo’s neck
The company has a good income but the money is being sent out the country to headquarters. By the time EPM wants to recover the company back the surprise would the major assets are placed to another company, so EPM wil recover only the UNE’s Logo.
a great update, thanks for staying on top at such a specific level.
1 question, 2 comments :
- can you point to some reference\discussion on why you believe the new TIGO C-suite to be 'world-class'? the prior CEO stuck my as quite sophisticated although he may have suffered from some overconfidence. his guatemalan aggregation was well done in a stressful time.
- your key point is dead-on; with seemingly greater global telecom bargains each quarter, niels can get distracted by the latest shiny opportunity. no sign this environment flipping soon.
- the irony of tough economic times anywhere is that telecom use (also alcohol too!) goes up, but unlike beer, the business model is not really structured for greater profit per client usage.
Thank you.
I just had in mind Lombardini as COO (and likely successor CEO) plus the other Iliad guys on the board. I don't think Ramos et all are among the worst by any stretch, but the performance of Niel's other operations speak for themselves. Iliad and Niel have an uncanny ability to accurately target markets with competitive weaknesses and run with low costs to exploit the market space maximally. Just look at what they are about to achieve in Italy. We can imagine something like that happening in Colombia, which would increase the value of Tigo massively in the longer run, especially if they can become 100% owners.
The jury is still out on the Guatemala purchase. If margins stabilize at +50% again with unchanged market share, it will be probably have been worth it for shareholders. But it came at a hefty price (negative multiple arbitrage against Tigo stock) and it also ultimately dethroned Ramos when the equity raise made the stock so cheap that Niel started to build his stake. If this gets bought out anywhere near these levels, a large reason why that happened is because of the dilution associated with the Guatemala deal.
yes, ramos could not control the timing, but according to m* very few public telecoms ever hit, much less sustain, an operation > 50%
"EBITDA margins above 50% in Guatemala, a level few carriers globally have attained"
of course it is simpler to us minority shareholders; we need to be aware of our own total return vs opportunity cost elsewhere. ouch.
If they didn't believe in stable margins in the long term they shouldn't have paid over 6x EBITDA for the asset since it's not a growth market, especially not when a large chunk of that was paid with newly issued stock at a lower multiple. Nobody said a word about risk of pressure to margins after closing, but then that was played off as "totally expected" when it was already a fact.
Granted, among other infra, the Guatemalan towers couldn't have been included in Lati if they were still only 50% owners.
The 25% difference from through 2023 you talk about and higher multiples what is the value of that in cash or per share? If you have any thoughts of that?
Will Also be very interesting to see what happening with other assets during the year such as Tigo Money and maybe Data centers along with stronger operational performance.
Nice read.
$2 per share maybe.
I would keep my eye closest on infra deals in Colombia next.
Interesting. So Colombia Will be first transaktion then probably?
That's what has been singled out by the company.
"In addition, potential asset monetizations and partner equity funding being pursued in Colombia could add an estimated $100 to $150 million of additional cash flows; and the company continues to progress on its plans to carve out and monetize Lati, the company’s newly-created tower business."
Yes, your right, i have also read that, but didnt made the connection to Colombia as for the Towers, only for what partner equity could mean for the cashflow in Colombia, But that is probably the right interpretation. Do you know how the tower portfolio are shared between the countries they are operating in? Maybe they are selling towers in more than one country in the first deal aswell.
And a follow up, so you think Lati could be worth around 10usd/share in the current environment? That is not less given the share price... Interesting times ahead, we will see how much they get.
You were absolutely right on Colombia. Looking forward to your update.
Nice to see everything moving in the right direction.
https://millicom.gcs-web.com/news-releases/news-release-details/tigo-colombia-sell-towers-kkr