The Tigo Une company was created after the merger of the telecommunications portfolio of the public services company EPM and the operator Tigo, whose owner is Millicon. At the beginning, the Antioquia public services company had 50 percent of the shareholding plus one share, but then he ceded control to his partner in exchange for a bonus, so today he does not have the ability to make decisions nor manage.
EPM is a residential public services company that in its first stage, in 1955, only served the inhabitants of Medellín, is organized as an “industrial and commercial company of the State”, that is to say, it is owned by the District of Medellín and currently it reaches 123 municipalities in Antioquia serving 3.6 million inhabitants.
For its part, Millicom was born in 1990, it is a telecommunications company with headquarters in Luxembourg and a corporate office in Miami, Florida. Listed on the Nasdaq stock exchange, it is a leading provider of fixed and mobile telecommunications services in Latin America. It has two brands Tigo and Tigo Business with digital products, including Tigo Money, Tigo Sports, Tigo ONEtv.As of March 31, 2023, Millicom employed approximately 19,300 people and provided fiber cable and mobile services to approximately 50 million customers.
The mayor of Medellín, Daniel Quintero, and the manager of EPM, Jorge Carrillo.
Where is the problem?
According to Jorge Carrillo, the current manager of EPM, the decision they reached to cede control, at the time showed benefits “until 2014 there was a normal dividend payment, but for more than six years this company will not cover any penny of dividends to EPM“, said.
The mayor of Medellin, Daniel Quintero, who is the president of the board of directors of EPMhas said that Millicom asks to capitalize Tigo UNE with $750,000 million and that EPM has to give half of those resources, but to obtain them, it is necessary to have the approval of the Medellín Council, in addition to the fact that on five occasions they have announced the risks, by the amount of investment that is required for the company and that is close to $1 billion per year.
Today an extraordinary Shareholders’ Meeting was planned, but the decision was made to suspend it and it is expected to resume within a month, on June 30, 2023. This after in a meeting with the ICT Minister, Mauricio Lizcano, the directors of the companies agreed to establish a negotiating table to seek alternatives that guarantee the financial sustainability of the company.
fulfillments
Last March, Tigo-UNE informed the Financial Superintendency losses of 473,813 million pesos during 2022, reason for which the Assembly decided not to distribute profits for the current year. And for the first quarter of 2023 published a negative net result of 148,395 million pesos.
Mayor Quintero himself assured that Millicom requested the capitalization and EPM will have to put half of the resources “which would force them to take public resources to deliver to Tigo-UNE.” Another option that is on the table, according to the president, is a dilution of public shares.
The Board of Directors of EPM has requested Millicom to immediately report on the financial situation of Tigo-UNE to the Financial Superintendence, of Companies, the SIC and the Mintic.
—Daniel Quintero Calle (@QuinteroCalle) May 26, 2023
The future of you
In addition to the departure of the meeting between the MinTIC and the directives of Tigo, EPM and Millicom in which the companies agreed to establish a negotiating table and seek the stability of the company.
According to Saúl Kattan, the Digital Transformation advisor of the Presidency of the Republic of Colombia, the government seeks to bring the parties closer.
“Tigo wants to improve its presence in the local market and for that they need additional resources. It already depends on the shareholders to make that decision. This is a long process and it is normal for companies to look at strategic options to grow and improve. Partners who have different visions have to agree. One is a telecommunications operator and the other is a utility company,” he explained.
Tigo closed last year with revenues of $5.44 billion, a growth of 5.9 percent over 2021. But the net result closed at -$474,000 million.
The company explained that the result was due to macroeconomic variables, such as inflation, currency depreciation and also a higher expense for amortization and interest associated with the acquisition of spectrum in the 2019 700MHz auction.
This year, the firm also has to advance in the renewal of the spectrum and the auction prepared by the National Government of 5G.
On the other hand, Millicom is in a sale process between two investors: on the one hand, Marcelo Claure and Apollo Global Management, and on the other, Xavier Niel.
Although neither group has ruled on the Colombian subsidiary, the negotiations between Millicom and the Colombian government could be completely different if a new investment group enters.
