Appendix - Tower Sale To Drive Tigo's 4G Expansion - SEPT 2017

BMI View: T igo ' s tower sale fits within our investment rationalisation key view for 2017. A move to improve operational and capex efficiency, it will allow Tigo to invest in services to expand 4G coverage, opening up better data monetisation prospects.

Millicom-owned Tigo has sold approximately 1,200 of its towers to the Colombian subsidiary of American Tower Corporation. The cash deal is valued at around COP448bn (USD147mn). This transaction is very similar to the tower sale by Tigo Paraguay in April 2017, where it also sold to American Tower. Millicom believes that the gains in operational efficiency will allow it to invest in improving the connectivity experience for its customers. This will most likely be an expansion in 4G coverage through the country.

We expect further tower sales to help drive 3G/4G uptake in Colombia. While mobile services are saturated and top-line subscription growth has stalled, there are still opportunities for 3G/4G migration. As Tigo invests in improving 4G coverage we also expect it to try to upsell its customers on to 3G/4G data plans, offering better monetisation opportunities. As was the case with the sale in Paraguay, this operation fits within one of our key views that are playing out for 2017 - rationalisation of investment ( see ' Telecoms Mid-Year Update: Key Themes For 2017 ' , July 5 2017). The sale of operators' passive infrastructure assets to a specialised tower company does not only represent a significant cash injection, but also reduces the operator's capex in the future. With no infrastructure building and maintenance costs, that freed-up capital is usually invested in improving services.

Opportunities Remain For 3G/4G Growth
Colombia Mobile Market Forecasts
f = BMI forecast. Source: Operators, BMI.

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