- The shares fell the most since 2009 in Stockholm trading
- CEO says it's unlike a bribery scandal at TeliaSonera
Millicom International Cellular SA shares fell the most since 2009 after the carrier controlled by Sweden’s Stenbeck family said it had reported suspected “improper payments” at its Guatemalan business to law enforcement authorities.
The payments were made on behalf of the company’s joint venture Comunicaciones Celulares SA, which sells mobile services under the Tigo brand, the Luxembourg-based company said in a statement Wednesday. Comcel’s other owner is billionaire Mario Lopez Estrada. Both parties are cooperating with the investigation, Millicom said. Representatives for Comcel couldn’t immediately be reached outside regular business hours to comment.
“We’ve said to our team all around our operations that they need to fully understand that we’ve done the right thing and we have zero tolerance,” Chief Executive Officer Mauricio Ramos said in an interview Thursday. “We want to be fully compliant and they must know we will come out of this a much stronger company.”
Millicom fell 11 percent to 454.8 kronor at 12:30 p.m. in Stockholm trading after earlier dropping as much as 12 percent, the biggest intraday decline since March 2009.
Millicom has hired Covington & Burling LLP, which conducted the investigation that uncovered the payments, to review its compliance practices globally, Ramos said.
Comcel, which is Guatemala’s largest mobile provider, is building out a 4G network in the country, investing about $50 million annually to win 700,000 users per year to the faster network.
Peer TeliaSonera AB is facing bribery accusations over how it bought phone licenses in Uzbekistan in 2007 and is embroiled in legal probes in Sweden, the Netherlands and with the U.S. Justice Department. Millicom’s situation is different because the company uncovered the potentially unlawful behavior itself and proactively reported it to authorities, Chief Financial Officer Tim Pennington said in an interview.
“The markets we operate in are extremely difficult and that is why we absolutely have to take a zero tolerance approach to these things,” Pennington said. “Millicom over its past has had success in taking difficult markets, making difficult decisions and doing things that aren’t popular or easy, and they’ve been right, and this is another case of that.”