Millicom International Cellular S.A. · NASDAQ:TIGO

Millicom International Cellular — Q2 2013 Earnings Presentation

41 slides from Millicom International Cellular's earnings presentation, 2013

  1. Slide 1: 2013 Q2 Results Presentation

    2013 Q2 Results Presentation Hans-Holger Albrecht, President and CEO François-Xavier Roger, CFO

  2. Slide 2: Disclaimer

    Disclaimer This presentation may contain certain “forward-looking statements” with respect to Millicom’s expectations and plans, strategy, management’s objectives, future performance, costs, revenue, earnings and other trend information. It is important to note that Millicom’s actual results in the

  3. Slide 3: Today's agenda: Growth accelerating, focus on efficiencies

    Today’s agenda: Growth accelerating, focus on efficiencies Results at a glance  Operational Performance  Mobile  Mobile Financial Services  Cable & Digital Media  Online Financial Results Closing remarks Q&A 3

  4. Slide 4: Q2 at a glance

    Q2 at a glance Growth accelerating, focus on efficiencies

  5. Slide 5: Q2 2013 – Growth accelerating, focus on efficiencies

    Q2 2013 – Growth accelerating, focus on efficiencies  Like-for-like* revenue growth accelerated to 9.4% YoY  Mobile is proving resilient with 2% growth in LC, 5.6% like-for-like with record recruitment of new data users. 3% of mobile base upgraded in H1  Positive developments in new business unit

  6. Slide 6: Growth resting on four pillars

    Growth resting on four pillars Contribution to Recurring Revenue Revenue growth (LC) $1.3 bn Online 35% MFS 17% Cable & Digital Media 13% $1.2 bn Mobile 35% $1.1 bn Q2 2012 Q2 2013  Like-for-Like growth at 9.4% was an acceleration versus Q1  Growth well distributed between our four pillars 6

  7. Slide 7: Digital is now over one third of revenues

    Digital is now over one third of revenues +$114 m in incremental revenue 100% 25% 27% 28% 30% 32% 34% 80% Digital 60% Voice & SMS 40% 75% 73% 72% 70% 68% 66% 20% 0% Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13  34% of recurring revenues come from Digital (non voice/sms mobile)  Increasing contribution from

  8. Slide 8: Operational performance

    Operational performance We believe in better. We believe in ticd

  9. Slide 9: Resilient mobile business

    Resilient mobile business 18% Mobile data penetration  Regulatory pressure was high in Q2: 16% § 3.2 points on revenue growth 14% § 1.6 points on EBITDA margin 12% including one off events 10% 8%  New regulatory changes have been 6% proposed in Ghana, Tanzania, Rwanda Q1 12 Q2 12 Q3 12 Q4 12 Q1 13

  10. Slide 10: Strong growth in mobile data traffic and revenues

    Strong growth in mobile data traffic and revenues Traffic growth (x factor) Subsidies (Net) 5 Revenue Traffic LC 4 growth 23% 3 2 Q1 10=1 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 12 Q2 13 10 10 10 10 11 11 11 11 12 12 12 12 13 13  Revenue and traffic growth highly correlated  Mobile informat

  11. Slide 11: Cable & digital media – Building momentum

    Cable & digital media – Building momentum organically 900 RGUs by region (000s) 3,000 600 Homes passed added (000s) 50% and % of homes connected 800 2,500 500 45% 2,000 400 40% 700 1,500 300 35% 600 1,000 200 30% 500 500 100 25% 400 0 0 20% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q1 12 Q2 12 Q3 12 Q4 12

  12. Slide 12: MFS – on the right track

    MFS – on the right track  MFS penetration at 13.1% across 45% MFS Penetration (%) TZ footprint*, 10% over total mobile base as percentage of mobile customers 40%  ARPU at $1.35 for users and increasing 12.3% Y-o-Y in LC 35% 30% RW  Tigo Matic launched in Rwanda – ATM for cash-in, cash-out and top

  13. Slide 13: Online - New launches and synergies

    Online - New launches and synergies  In Q2, the Online category generated revenue of $20 million and EBITDA losses of $14 million  Business update:  is the 2nd most visited website for sport goods and is 1st in its category  has become the 4th most visited website in Nigeria  is the startup of

  14. Slide 14: Financial results

    Financial results We believe in better. We believe in ticd

  15. Slide 15: Financial results reflects opportunities and challenges

    Financial results reflects opportunities and challenges Like-for-like Q2 13 Q2 12 $ growth growth Mobile 47,454 44,550 6.5% Customers Cable & Digital Media 830 594 39.8% (000s) MFS 4,886 2,698 81.1% Mobile 7.9 8.4 (1.4%) ARPU ($) Cable & Digital Media 34.0 31.7 3.4% MFS 1.35 1.22 12.3% Revenue ($m)

  16. Slide 16: Regional growth driven by South America in Q2

    Regional growth driven by South America in Q2 $1,300 m Revenue evolution by region 17 13 $1,250 m 20 1 50 $1,200 m 2 $1,150 m 1,254 1,258 1,258 1,233 1,234 $1,100 m 1,181 1,181 1,183 $1,050 m $1,000 m Q2 12 CAM SAM Africa Online Cablevision FX Q2 13 16

  17. Slide 17: All four pillars contribute to Growth

    All four pillars contribute to Growth $1,300 m Revenue evolution by category 15 13 $1,250 m 20 10 25 $1,200 m 20 $1,150 m 1,256 1,258 1,258 1,226 1,236 $1,100 m 1,201 1,181 1,181 $1,050 m $1,000 m Total Mobile Cable* MFS Online Other** FX Total Revenue Revenue Q2 12 Q2 13 * Includes Cablevision ** I

  18. Slide 18: EBITDA margin under pressure

    EBITDA margin under pressure 46% 44% 0.8% 42% 1.1% 1.7% 40% 0.3% 1.6% 38% 1.1% 43.4% 36% Investment for growth 39.5% 34% 36.8% 32% 30% EBITDA% Pricing Commercial Category Others Underlying Regulatory Online Dilution EBITDA% Q2 12 Pressures Building EBITDA% and One-Offs Effect Q2 13 Q2 13 18

  19. Slide 19: Normalized EPS Q2

    Normalized EPS Q2 Q2 13 Q2 12 $ growth EBITDA 463 513 (10%) Corporate Costs (45) (32) 37% Category building Depreciation (215) (199) 8% Increased network amortization – Cablevision Net Finance Costs (56) (52) 8% Releverage Taxes (50) (54) (8%) Others (38) (3) NA FX losses Normalized Net Profit* 135

  20. Slide 20: Tax rate well below 30%

    Tax rate well below 30% $m Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 PBT 116 216 224 178 294 Normalized PBT** 186 189 222 227 244 Reported Taxes (61) (68) (156) (60) (85) of which Non recurring items* (11) (16) (102) (5) (31) Normalized tax expenses** (50) (52) (54) (55) (54) Normalized tax rate 26.8% 27.5% 24.

  21. Slide 21: Free cash flow reflects investment for growth

    Free cash flow* reflects investment for growth $300 m 100.00% $244 80.00% $m Q2 13 Q2 12 Change $204 $200 m EBITDA 463 513 (10%) $172 60.00% Movements in WC (26) (58) (55%) Capex (net of disposals) (200) (177) 13% $100 m $82 40.00% Taxes paid (151) (138) 9% 6.9% 14.3% 20.00% OFCF 86 140 (39%) 21.1%

  22. Slide 22: Net Debt/EBITDA at around 1.2x

    Net Debt/EBITDA at around 1.2x $m Q2 13 Q1 13 Gross Debt* 3,339 3,303 Cash** 1,019 1,228 Net Debt 2,320 2,075 Net Debt / EBITDA*** 1.2 1.0 * Including mark to market of bonds **Including pledged deposits, time deposits and restricted cash *** Net Debt / LTM EBITDA 22

  23. Slide 23: Debt management provides natural hedges

    Debt* management provides natural hedges Currency Interest rate US$ m Local** USD Fixed Float Total Central America 588 443 701 331 1,032 % 57% 43% 68% 32% South America 685 374 495 564 1,059 % 65% 35% 47% 53% Africa 82 167 73 175 249 % 33% 67% 29% 71% Corporate 645 140 785 785 % 82% 18% 100% Total

  24. Slide 24: Limited share of guaranteed debt

    Limited share of guaranteed debt Central America: South America: Africa: Corporate: Total debt: $1,032m Total debt: $1,059m Total debt: $249m Total debt: $785 m* 8% guaranteed 4% guaranteed 79% guaranteed 100% guaranteed Guatemala-$234m Honduras-$269m Senegal-$0m Chad – $84m m guaranteed 0% 0% guara

  25. Slide 25: Diversified debt sourcing

    Diversified debt sourcing Q1 2013 Q2 2013 ($3,088m) ($3,123m) 242 228 161 Banks 313 1,041 Bonds 1,303 Development Financial Institutions Shareholder Loans 1,230 + Others 1,694  Public debt (bonds) is now our largest source of funding offering a better balance and improving liquidity * Excluding fin

  26. Slide 26: Increasing average maturity

    Increasing average maturity 973 $1,000 m 852 $800 m $600 m 489 493 384 $400 m 302 298 216 $200 m 52 37 - $0 m Cash < 1y 1-2 y 2-3 y 3-4 y 4-5 y 5-6 y 6-7 y 7-8 y 8-9 y 9-10 y  Average maturity of 4.2 years * Excluding finance leases 26

  27. Slide 27: 2013 Guidance amended

    2013 Guidance amended  2013 Group EBITDA margin expected to be around 40% excluding Online (from above 40%)  Capex / revenues to peak around 20% not including spectrum or asset acquisitions (unchanged)  Online division expected to deliver revenue of close to $100 million and EBITDA losses to be i

  28. Slide 28: Concluding remarks

    Concluding remarks We believe in better. We believe in ticd

  29. Slide 29: Q2 2013 – Growth accelerating, focus on efficiencies

    Q2 2013 – Growth accelerating, focus on efficiencies  Like-for-like* revenue growth accelerated to 9.4% YoY  Mobile is proving resilient with 2% growth in LC, 5.6% like-for-like with record recruitment of new data users. 3% of mobile base upgraded in H1  Positive developments in new divisions: 

  30. Slide 30: Questions & Answers

    We believe in better. We believe in ticd

  31. Slide 31: Appendix

    We believe in better. We believe in ticd

  32. Slide 32: New reporting structure

    New reporting structure Communications Voice Mobile Data Information Other VAS Entertainment Fixed Telephony Cable & Digital Fixed Broadband Media Pay TV Solutions MFS MFS Online Online 32

  33. Slide 33: Revenues by regions and by divisions

    Revenues by regions and by divisions Central South $m Africa Online Millicom America America Mobile 365.9 446.2 216.4 1,028.5 Cable & 78.5 28.3 0.5 107.3 Digital Media MFS 0.9 5.6 11.9 18.4 Online 19.8 19.8 Others 25.1 51.9 7.3 84.3 Millicom 470.4 532.0 236.1 19.8 1,258.2 33

  34. Slide 34: Mobile Voice- Penetration rates

    Mobile Voice- Penetration rates CAM SAM Africa MIC Av. Penetration Av. Penetration Av. Penetration Av. Penetration 94.2% 97.7% 54.6% 73.0% 120% 104.6% 101.2% 97.6% 95.9% 96.9% 100% 83.0% 80% 76.2% 70.7% 69.8% 61.7% 60% 43.1% 43.2% 40% 31.6% 20% 0% * For DRC , only penetration in Kinshasa-BAS Congo a

  35. Slide 35: Mobile Voice-Market shares

    Mobile Voice-Market shares CAM SAM Africa MIC Av. Market Share Av. Market Share Av. Market Share Av. Market Share 53.7% 20.1% 28.3% 29.5% 80% 70% 67.0% 59.3% 60% 53.0% 52.4% 50% 40.3% 41.7% 40% 34.1% 33.4% 35.0% 28.9% 30.1% 30% 20% 12.4% 16.9% 10% 0% 35

  36. Slide 36: Movements of currencies vs USD YoY

    Movements of currencies vs USD YoY Closing Rate Average Rate Q2 13 Q1 13 Change Q2 13 Q1 13 Change Guatemala GTQ 7.83 7.78 1% 7.80 7.84 0% Honduras HNL 20.49 20.25 1% 20.37 20.14 1% Nicaragua NIO 24.71 24.41 1% 24.56 24.27 1% Costa Rica CRC 504.53 504.65 0% 504.46 508.20 -1% Bolivia BOB 6.91 6.91 0%

  37. Slide 37: Market overview – by region

    Market overview – by region Central Millicom Regions South America Africa Online Total America Market Overview Population (m) 28 63 186 277 Mobile Penetration 94.2% 97.7% 54.6% 73.0% Operational Data Total Mobile Customers (m) 15,571 12,873 19,010 47,454 Attri. Customers (m) 11,856 12,873 18,745 43,

  38. Slide 38: Market overview – LATAM

    Market overview – LATAM Latin America Central America South America El Salvador Guatemala Honduras Bolivia Colombia Paraguay Shareholding 100% 55% (p) 66.70% 100% 50% + 1 share 100% License 20y from 1998 15y from 2003 25y from 1996 20y from 1995 10Y from 2013 5y renewal Date of Expiry 2018 2018 2021

  39. Slide 39: Market overview – Africa

    Market overview – Africa Africa Chad DRC Ghana Mauritius Rwanda Senegal Tanzania Shareholding 100% 100% 100% 50% (p) 87.5% 100% 100% Licence 10 y from 2004 12y from 2012 15y from 2004 15y from 2000* 15y from 2008 16y from 2012 25y from 2007 Date of Expiry 2014 2024 2019 2016 2022 2028 2032 Market Ov

  40. Slide 40: Information- Increasing usage & penetration

    Information- Increasing usage & penetration Latin America Q1 13 Q2 13 QoQ Total Data Users* 2G+3G (m) 5.5 6.0 9% % of total customers (penetration) 19.1% 21.0% +1.9 pt. Total data Revenue 2G+3G (US$ m) 138.1 142.9 3% of which Handsets 99 106 8% Datacards 39 37 (7%) Data Revenues 2G+3G as % of total

  41. Slide 41: Thank You!

    We believe in better. We believe in ticd

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