Joining the rush to carve out and monetize towers, Latin American mobile group Millicom International Cellular says it is on track with plans to create a towerco by the end of next year.
Some analysts believe Millicom has missed the boat in terms of maximum valuation for the towers, amid fears that, in the current economic climate, capital for infrastructure M&A may be less available. On the other hand, physical infrastructure often attracts investment in a time of economic uncertainty as companies seek tangible assets.
Millicom CEO Mauricio Ramos said the group, which first set out plans to reorganize its assets in February, was “on track for a late-2023 moment”. He added that the business was “hitting the milestones in the interim that we need to hit, to hit that timeframe”, such as setting up new entities and transferring assets.
Speaking during the recent Morgan Stanley Technology, Media and Telecom conference, Ramos said Millicom’s preferred approach would be to create a deconsolidated and independent towerco and then sell a stake, probably of 50%, to a partner. The new entity would include the group’s portfolio of over 10,000 towers across nine Latin American markets.
However, other options would be considered, including a controlled spin-out of the towerco, or a “straightforward” sale-and-leaseback deal with another infrastructure player. But the route of separation followed by part-monetization “better decouples MNO from infra”, Ramos added. “It creates more value because the towerco becomes independent and has more upside for our existing shareholders, and maximizes the equity ownership that we would retain.”
This option also provides the flexibility in future to sell the towerco completely, to mount an IPO, or to merge it with another player. In that context, an outright sale in the first stage would only happen if someone made a “knock-out offer”, he added.
He did not provide any update on whether the new entity would also include Millicom’s 150,000 kilometers of fiber and 13 data center hubs. These assets were highlighted when the operator announced its infrastructure reset plan, but it has always said it would prioritize towers.
French telecoms investor Xavier Niel recently acquired a 7% stake in Millicom via Atlas Investissement (the same vehicle Niel used to buy 2.5% of Vodafone in September). The team has been providing advice on the infrastructure plan, said Ramos.
This plan is the latest phase of a significant reorganization of assets at Millicom, which began with the exit from Africa – the firm completed the sale of its last African unit, Tigo Tanzania, in April this year. It has been doubling down on Latin America and since 2018 has expanded into Guatemala, Nicaragua, and Panama.