Over two thirds of the 1.5 million customer growth experienced by telecoms group Millicom has been driven by Africa, according to the firm’s third quarter report.

Millicom offers a range of digital services to over 45 million customers under the ‘Tigo’ brand name in 15 emerging markets as well as e-commerce sites across Africa and Latin America. African markets where Millicom operates includes the likes of Ghana, Tanzania and the Democratic Republic of Congo (DRC).

On Monday, Millicom reported a drop in third-quarter core profit as its online business dragged the firm down.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were $459 million compared to $507 million for the same period in 2012.

Millicom added that it expects its core profit margin to be around 40% in 2013, excluding its online business.

Its online business made an EBITDA loss of $18 million in the third quarter. This business is particularly involved in e-commerce, marketplace sites and online services.

Nigerian e-commerce website Jumia, for instance, is among e-commerce websites that have received investment from Millicom. Earlier this year, ITWeb Africa reported how Millicom provided Jumia with $35 million in funding.

Despite losses in its online business units, Millicom has reiterated its strong African customer growth, largely owing to greater investment on the continent.

“Growth in Africa accelerated, fuelled by over one million new customers of which 250 thousand in Democratic Republic of Congo’s Kivu province in the third quarter,” says Millicom’s financial report.

“In Ghana, we were pleased to grow the customer base by over 100 thousand, for the second quarter in a row,” adds the report.
However, in countries such as Tanzania, Millicom has had a more challenging experience.

“In Tanzania, the 70% reduction in interconnection rates in March leading to intense price competition, combined with a more stringent registration policy enforced in June (whereby new customers have to be identified with a physical ID), led to negative net additions in Q3,” says Millicom.

Data growth

In its quarterly report, Millicom has also further pointed to a rise in its data customer levels across its emerging market operations.

The firm says that in total, around 5.7% of Millicom total mobile customers were upgraded to data services in the year-to-date.

“Penetration reached 19.1% in Central America, 26.3% in South America and 12.8% in Africa,” says the firm.

Future plans for its global operations

Looking forward, the group plans to cut its annual operating costs by $100 million by 2016 while increasing revenue from financial services, cable TV and mobile data.

Millicom aims to do this as it seeks to offset falling income from traditional voice calls.

Meanwhile, the company says it plans to reinvest in Africa, where possible, and also launch services in the West African nation of Senegal.

“In Africa, we will continue to reinvest where we see opportunities for value creation. Evidence of this can be seen in the recent launch of our operations in the Kivu region of the Democratic Republic of Congo,” says Millicom.

“We have received a very positive response from customers which demonstrates the strength of the Tigo brand, and growth has exceeded our expectations.

“Lastly in Africa, we are looking forward to the launch of our services in Senegal, our last remaining market to be launched,” adds the company.