Mario Gabelli picks emerging market cellular company Millicom International Cellular (Nasdaq: MICC) in the annual Barron’s Roundtable 2010.
“It is a cheap company that participates in the growth of emerging markets. It has about 29 million wireless customers in Central America, South America and Africa. It sold off its wireless business in Southeast Asia. The stock sells for $80, and there are 108 million shares. The company is controlled by Kinnevik (KINVB.Sweden), a Swedish concern.
“Millicom has a billion dollars of debt, and revenue is expected to be $3.5 billion this year. Ebitda [earnings before interest, taxes, depreciation and amortization] is $1.6 billion. The company trades for 5.8 times Ebitda. Cash will build up dramatically in the next four or five years, because capital spending is flattening out. Ebitda will grow to $2.1 billion and earnings will grow to near $10 a share in 2013 from $6 this year.”
“Millicom has 11.2 million customers in Central America, out of an available population of 28 million. Its African markets have a population of 163 million, and it has nine million customers there. The potential for growth remains significant. At some point, a larger company could buy them, such as MTN (MTN. South Africa) or Vivendi (VIV.France). One of Kinnevik’s last surviving founders died. The company is controlled by his daughter, Christina Stenbeck, who is in her early 30s. She is very smart and aggressive, and something could happen.”