Millicom International Cellular S.A. reported group revenue of $1.7 billion, with EBITDA of $561 million and an EBITDA margin of 32.9% for the second quarter 2015.
Article continues below
Net loss for the period was $99 million. Adjusted EPS was loss of 5 cents per share compared to a profit of 27 cents a share in Q2 2014 largely due to higher taxes and losses from Associates, partially offset by lower minority interests.
After a strong end to 2014 and an encouraging Q1 2015, trends in Q2 were solid despite major currency headwinds. Organic revenue growth (excluding UNE) was 9%.
This was more than offset by currency factors which reduced revenue by $148 million (-10.3%) to a growth rate of -1.3% (excluding UNE).
The gross margin at 72.6% was lower than in Q2 2014 (75.3%) which like in the previous quarters was mostly due to the mix effect on our revenue base, with higher handset sales, which are typically at lower margin. Operating expenses increased by 11%, largely due by the inclusion of UNE which was not consolidated in Q2 2014.
Excluding this effect, Group operating expenses increased by $7 million and the operating cost to revenue ratio fell 1.2 percentage points to 39.9%. This was driven by good control over marketing spend and corporate costs which fell to $55 million, $4 million lower than the previous quarter and declining for the fourth consecutive quarter.
EBITDA at $561 million was 17% higher than Q2 2014 and 0.3% higher excluding UNE. The EBITDA margin was 32.9%, a dilution of 0.2 percentage points largely due to the lower margins of UNE.
Excluding UNE, the EBITDA margin improved by 0.5 of a percentage point and excluding telephone and equipment sales, the margin improved by 1.5 percentage points to 35.7%. Depreciation and amortization was $337 million, in line with Q2 14 but $84 million higher than last year mainly due to the inclusion of UNE.
Operating Profit declined by $2 million to $223 million. Net financial expenses at $89 million were stable compared to last year and $32 million lower than Q1 which factored in one-off expenses on early redemption of the El Salvador bond. Other net non-operating expenses of $94 million largely represent foreign exchange losses of $45 million and changes in the fair value of call and put options on minority interests for $40 million.
Net losses from associates and joint ventures of $12 million result from Millicom’s share of the results of tower companies and Online businesses. Taxes booked of $91 million were $34 million higher than Q2 2014 due to change in profit mix, inclusion of UNE and higher taxes on repatriations.
Non-controlling interests declined from $58 million to $36 million mostly due to increased losses in Colombia. The net loss for the quarter was $99 million, and excluding non-recurring items resulted in an adjusted EPS of 5 cents. ■