Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q1 2017 Earnings Presentation
28 slides from Millicom International Cellular's earnings presentation, Apr 26, 2017
Slide 1: 2017 Q1 results
2017 Q1 results Mauricio Ramos, CEO Tim Pennington, CFO 26 April 2017
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
Slide 3: CEO review
CEO review Mauricio Ramos We believe in better. We believe in tico
Slide 4: Strategy recap
Strategy recap 1 Build high speed data networks for both mobile and fixed services Two-fold reconfiguration to accelerate revenue growth and drive 2 superior cash flow growth Page 4
Slide 5: Building high speed data networks
1 Building high speed data networks Sustaining rapid deployment of our high speed data networks MOBILE NETWORK CABLE NETWORK 4G Network build in Latam Homes passed Coverage in % of population covered, Thousands Homes passed , Q1 16 – Q1 17 Coverage 4G Points of presence (PoP) PoP 327 2.0x 4,664 1,01
Slide 6: Adding higher value customers
2 Adding higher value customers Continued strong customer intake MOBILE FIXED 4G data users Homes connected Copper B2C Smartphone data users (million), Q1 16 – Q1 17 Homes connected (000s), Q1 16 – Q1 17 HFC Total 3.8 3,120 3,020 +100 2,138 +185 1,953 1.3 1,068 981 2016 Q1 2016 Q2 2016 Q3 2016 Q4 20
Slide 7: Strategic progress – service revenue
3 Strategic progress – service revenue Revenue reconfiguration on track… Mix evolution Q1 2017 YoY growth Legacy Latam voice & sms 27% 32% -16.6% (B2C + B2B) 18.1% 24% 20% Strategic focus Latam mobile data (B2C + B2B) 53% Home 7.3% 46% 7.0% 26% 29% B2B 6.4% Home + Fixed B2B Other Africa* and other *
Slide 8: Growth still challenged, but trends improving
4 Growth still challenged, but trends improving …with signs of inflection in markets where mobile data > voice and SMS Latam Colombia Paraguay Service revenue growth Service revenue growth Service revenue growth %YoY growth, Q1 16 – Q1 17 %YoY growth, Q1 16 – Q1 17 %YoY growth, Q1 16 – Q1 17 2,3% 7,
Slide 9: Cost reconfiguration
5 Cost reconfiguration Margins and cash flow also on track LTM EBITDA margin LTM OCF margin %, LTM reported margin %, LTM reported 35.1% 19,2% 34.8% 18,3% 33.3% 33.6% 16,6% 14,4% 32.9% 13,4% Project HEAT Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 Margin of 36.8% OCF margin appr
Slide 10: Capital Allocation
6 Capital Allocation Focusing capital on strategic priorities Ghana Paraguay JV with Airtel Tower deal Creating a strong #2 Disposing non-core with close to $300m of asset revenue and 10m subscribers Monetizing dollar assets and adding to A more profitable and local currency valuable business liabil
Slide 11: Building momentum
7 Building momentum Strong progress in build-out of our High Speed Data 469 4G PoP / 1 networks 370k HFC built 392k 4G subs / 2 Continued addition of higher value customers 63k HFC connected > 53% strategic 3 Revenue reconfiguration on track revenue 4 Growth still challenged, but trends improving Tu
Slide 12: CFO review
CFO review Tim Pennington We believe in better. We believe in tico
Slide 13: Macro outlook
Macro outlook Economic environment more stable GDP Growth COP Spot rate and 90 day moving average1 %, FY17e COP/USD, Jan 2016 – Apr 2017 3,500 Costa Rica 4.0% 3,300 3,100 El Salvador 2.3% 2,900 2,700 Honduras 3.4% Dec 2015 Mar 2016 Jun Sep 2016 Dec Mar 2016 2016 2017 Guatemala 3.3% Colombia Inflatio
Slide 14: Key financial metrics
Key financial metrics Positive underlying trends 1 Service Revenue a $m, Q1 16 – Q1 17 2 EBITDA a and Margins $m, Q1 16 – Q1 17 3 Capex b $m, Q1 16 – Q1 17 0.0% -1.5% 556 555 -$38m 1,443 1,421 36.0% 36.8% 193 155 Q1 16 Q1 17 Q1 16 Q1 17 Q1 16 Q1 17 US$ million a) Q1 16 numbers are adjusted to Q1 17
Slide 15: Service revenue
Service revenue Improvement in LatAm trends offset by Africa Sequential organic group service revenue growth analysis %YoY, Q4 16 – Q1 17 -0.9% -1.4% 1.1% -1.5% -1.3% -0.5% Q4 16 reported Senegal Q4 16 LatAm Africa Q1 17 Like-for-like Page 15
Slide 16: Latin America
Latin America Improved margins and cash flow OCF Service revenue ($m) (EBITDA – Capex) $m and margin -1.3% 1 3 404 360 1,262 1,246 30.4% 27.5% EBITDA Q1 16 Q1 17 $m and margin Q1 16 Q1 17 -0.6% 2 541 538 40.1% 40.5% Q1 16 Q1 17 Q1 16 numbers at Q1 17 FX rates Capex excludes spectrum and licenses Pag
Slide 17: Africa
Africa Challenging quarter but growth in EBITDA and cash flow OCF Service revenue ($m) (EBITDA – Capex) $m and margin 1 3 -3.6% 32 26 181 174 18.3% 13.5% EBITDA Q1 16 Q1 17 $m and margin Q1 16 Q1 17 1.7% 2 52 53 28.2% 30.2% Q1 16 Q1 17 Q1 16 numbers at Q1 17 FX rates and excluding Senegal Capex excl
Slide 18: EBITDA
EBITDA Margin up 0.8 percentage points EBITDA evolution by Region US$ million, Q1 16 – Q1 17 0.0% 3 3 1 15 554 555 539 EBITDA Q1 16 FX EBITDA Q1 16 LatAm Africa Corporate EBITDA Q1 17 and other 36.0% 36.8% Page 18
Slide 19: Costs review
Costs review Focus on efficiencies in operations and corporate Total cost base $m Reported and % of revenue, Q1 16 vs. Q1 17 960 950 • Total cost down 1.0% Direct Cost 26.0% 25.7% • Operating expenses 1.2% down • Lower network operating costs • Corporate costs 3.7% lower Sales and Marketing 17.9% •
Slide 20: Q1 P&L review
Q1 P&L review Adjusted EPS stable US$ million Q1 17 Q1 16 % Var Revenue 1,505 1,499 0.4% EBITDA 555 539 2.8% D&A (332) A (316) 5.0% • A FX translation in Colombia Operating profit 223 223 0.2% Net Finance Charge (118) B (106) 11.2% • B Higher amount of local currency debt Others 23 C 11 +100% Associ
Slide 21: Q1 cash flow
Q1 cash flow Equity FCF improved by $100mn YOY in Q1 Q1 2017 Cash flow US$ million 555 274 66 215 33 126 56 50 6 EBITDA Cash capex Working Cash OCF Tax paid Interest Paid FCF Dividends to EFCF (ex-spectrum Capital minorities & license) and others 36.8% 14.3% 3.7% as % of revenue Page 21
Slide 22: Net debt
Net debt Slightly higher due to FX translation Net debt evolution US$ million, 31 December 2016 – 31 March 2017 4,181 4,201 50 0 15 55 295 307 3,894 Finance leases 3,886 Bank and bonds Net debt 2016 Equity FCF Spectrum M&A FX & others Net debt Q1 17 1.93x Net debt/LTM EBITDA 1.94x 2.15x Proportionat
Slide 23: Summary
Summary 1 Service revenue: Latam improvement offset by Africa 2 Continued focus on operational efficiency 3 Sustaining and improving operating cash flow 4 On track to deliver 2017 goals Page 23
Slide 24: Q&A
Q&A We believe in better. We believe in tico
Slide 25: Debt profile
Debt profile Long average maturity to debt profile Debt maturity profile a Average life of 5 years US$ million 897 915 747 644 585 388 GT 361 6.875% Low maturities 21s 6.625% in 2017 25s 6.0% 202 20s PY 143 118 4.75% SEK 6.75% 2017 2018 2019 2020 2021 2022 2023 2024 2025 >2026 Bank Financing Bonds P
Slide 26: Gross debt by country
Gross debt by country Central America: South America: Africa: Corporate: Total MIC Debt: Total debt $1,569m Total debt $1,597m Total debt $394m Total debt $1,748m $5,307m 21% guaranteed 1% guaranteed 69% guaranteed 0% guaranteed 12% Guaranteed Honduras: $398m (63% guaranteed) Guatemala: $993m Chad:
Slide 27: Net debt by country
Net debt by country Central America: South America: Africa: Corporate: Total Net Debt: $1,148m $1,340m $222m $1,491m $4,201m Honduras: $380m Ghana: $29m Guatemala: $647m Chad: $53m El Salvador: $52m Rwanda: $70m Costa Rica: $85m Tanzania: ($21m) Zantel: $93m Colombia: $784m Bolivia: $250m Paraguay:
Slide 28: Currency exposure of the debt
Currency exposure of the debt Mar - 17 Debt including finance leases Cash Net debt US$ Local Total Total USD Local Total 1,466 1,700 3,166 678 1,110 1,378 2,488 Latin America 46% 54% 100% 45% 55% 100% 215 179 394 172 204 18 222 Africa 55% 45% 100% 92% 8% 100% 1,748 0 1,748 257 1,493 -2 1,491 Corpora
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