Dagens Industri reports Tigo UNE merger
Sweden's leading daily financial newspaper Dagens Industi published on 16 August an article by Millicom CEO Hans-Holger Albrecht on the announced merger of Tigo Colombia with UNE. A translation of this article appears below.
15 August: News stories from Latin America rarely frame the region in a positive light. This summer’s World Cup – while not eclipsed on the field – was frequently disrupted by labour strikes and civil unrest in Brazil’s major cities. Similarly, just last week Argentine President Cristina Kirchner and her government were forced to default on their debts for a second time in thirteen years.
The negative image that these high-profile stories create does not do justice to the economic transformation taking place in Latin America or the investment opportunities the region now offers to international businesses. As the economies of Brazil and Argentina have stumbled, other countries in the region have seized the opportunity to attract more inward investment.
The merger in Colombia between Millicom’s mobile company Tigo and the state-owned fixed-line provider UNE, announced yesterday, illustrates the growing confidence that investors are now placing in Latin America’s consumer market. I have travelled to Medellin three times since joining Millicom as CEO, and can say that the excitement surrounding this merger highlights the size of the opportunity and the scale of the economic transformation currently taking place in the Latin American region.
It also reflects the continuing shift of Millicom from being a company dependent on revenue from voice mobile calls, to one providing a “Digital Lifestyle” which offers a diversified range of services. It is in the spirit of the entrepreneurism created by our founder, Jan Stenbeck.
UNE is based in Medellin, the city once famous for drug trafficking and lawlessness. It has undergone a transformation in recent years and was last year awarded the title of ‘world’s most innovative city’ by the Wall Street Journal, demonstrating Colombia’s revival and the wider trend towards economic reform and expanding investment opportunities.
In 2014/2015, the World Bank has forecast economic growth in Colombia at an impressive 4.6 percent. This figure contrasts significantly with the predicted stagnation of the economies in the continent’s traditional powerhouses, Brazil and Argentina.
Swedish trade with Colombia continues to steadily grow. In 2010, the two countries opened a foreign trade office in the Swedish Embassy in Bogota to improve business relations. Historically trade relations have focused on the import of coffee and other commodities from Colombia to Sweden, but this merger highlights the need for Swedish businesses to move now and take advantage of many new opportunities, particularly in the services sector.
At Millicom we have identified the potential of the Colombian consumer market, in large part due to the current Colombian
government’s ability to implement successful economic policies and bring security to the population. Last week, President Juan Manuel Santos was inaugurated into office for a second term, showing these reforms are popular with the people as well as business.
Rapid economic growth has fuelled the development of an emerging middle class. Today, almost a third of Latin American families now belong to the middle-classes, which has led to an increase in the demand for high-quality consumer goods and services.
The telecommunications sector in Latin America is set to continue growing at a rate of nearly three times the global average, boosted by these new consumers. The growth in services shows that the region is successfully diversifying its economy away from commodities.
By investing in private enterprises that improve the quality of the services provided to the burgeoning middle classes, the telecommunications industry constitutes part of an essential infrastructure transition that can enable Latin American economies to sustain their impressive rates of growth.
Hans-Holger Albrecht is President and CEO of Millicom, a Swedish telecommunications and digital lifestyle company operating across Africa and Latin America.