This Undervalued Telecom Finds Large Scale in Small Markets
Narrow-moat Millicom's dominant position in Latin America yielded impressive 2014 results despite currency headwinds.
Millicom International Cellular (MIICF) delivered impressive 2014 results despite significant currency headwinds in the fourth quarter. Even with the loss of virtually all revenue growth in its African operations and a 20% decline in the Colombian peso, its largest market, the firm basically hit our projections. We don't anticipate any significant changes to our fair value estimate, and we view this stock as significantly undervalued.
We think Millicom International Cellular is an interesting company. It has tended to focus on smaller and more out-of-the way countries than its larger peers have. As investors' interest shifted to the countries Millicom operated in, the firm often sold and realized a solid return on its investment. However, it kept a core business in Central America that was overlooked by America Movil (AMX) and Telefonica (TEF), the two mega operators in Latin America, until growth was slowing in the larger markets. In addition to Central America, it has expanded to some of the smaller South American countries and a few African countries.
Allan C. Nichols does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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