Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q4 2011 Earnings Presentation
51 slides from Millicom International Cellular's earnings presentation, Feb 8, 2012
Slide 1: Financial results Q4 2011
Millicom International Cellular S.A. Financial results Q4 2011 8th February, 2012 Mikael Grahne François –Xavier Roger
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, performance, costs revenues, revenues earnings and other trend information. information It is important to not
Slide 3: Q4 Highlights
Q4 Highlights • Revenue growth in local currency of 10.1% • Successful focus on high value customers: 80% of revenues generated from 30% of customers (ARPU > $10) • Mobile data grew by 58% year on year in Latin America, while the contribution to growth from MFS doubled versus Q3 2011 • EBITDA margin
Slide 4: Full Year 2011 Highlights
Full Year 2011 Highlights • Revenue growth in local currency of 10.5% • VAS exceeded $1.1 billion and reached 28.5% of revenues • EBITDA margin still at 46.1% despite accelerated investment in 3G and services • Strong normalized EPS increase (+26% year-on-year) • Close to $1 billion returned to shar
Slide 5: Financial Highlights Q4 YoY
Financial Highlights Q4 YoY US$ million Q4 11 Q4 10 $ Local growth currency Mobile customers (millions) 43.1 38.6 12% Mobile ARPU (US$) 9.3 9.5 -3% -2.7% Revenues 1,177 1,069 10% 10.1% EBITDA 536 497 8% 7.3% % of revenues 45.5% 46.5% -1.0 pt Capex* p 396 272 45% % of revenues 33.6% 25.5% 8.0 pt Oper
Slide 6: Selective commercial investments
Selective commercial investments 300 +4.6% 258 247 250 +6.1% 84 79 200 Subsidies cost US$m 150 Sales & Marketing costs (excl. subsidies) +4.3% 100 168 174 50 0 Q4 10 Q4 11 Lower growth of subsidies due to: 1) focus on ROIC, 2) tighter control procedures in place & 3) entry‐level handsets increasingl
Slide 7: Financial Highlights Full Year
Financial Highlights Full Year US$ million FY 11 FY 10 $ Local growth currency Mobile customers ((millions)) 43.1 38.6 12% Mobile ARPU (US$) 9.4 9.4 0% -2.4% Revenues 4,530 4,018 13% 10.5% EBITDA 2,087 1,896 10% 7.5% % of revenues 46.1% 47.2% -1.1 pt Capex* 848 704 20% % of revenues 18.7% 17.5% +1.2
Slide 8: Sustainable revenue growth
Sustainable revenue growth Revenue growth YoY ‐ local currency 13.0% 12.7% 11.85% 12.0% Avg 2010: +11.3% +11.0% 10.74% Avg 2011: 11.0% +10.5% 10.1% 10.0% 9.83% 10.53% 9.97% Avg 2009: 9.0% +8.8% 9.10% 8.65% 8.0% 8.39% 8.23% 7.0% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Slide 9: ARPU evolution
ARPU* evolution US$ Q4 11 YoY** Q3 11 Q2 11 Q1 11 Q4 10 Central America 12.0 -2.6% 11.8 11.9 12.1 12.2 South America 13.4 +2.2% 13.5 13.2 12.3 12.7 Latin America 12.7 -0.1% 12.7 12.5 12.2 12.5 Africa 4.8 -5.5% 4.9 5.1 5.2 5.4 Total Millicom 9.3 -2.7% 9.3 9.4 9.3 9.5 Stable ARPU in Latin America Lowe
Slide 10: 38% of customers generating 86% of revenues in Latin America
38% of customers generating 86% of revenues in Latin America Distribution of revenue share share* by mobile ARPU Revenue share Latin America # customers (millions) Q4 11 Q4 10 Change Q4 11 % ARPU > $10 86.4% 85.7% +0.7 pt 9.7 37.7% ARPU < $10 13.6% 14.3% -0.7 pt 16.1 62.3% Total 100.0% 100.0% 25.8 1
Slide 11: Revenues by service
Revenues by service US$m Q4 11 Q4 10 $ Local growth currency Voice 746 725 3% 3.6% % of Voice+VAS revenues 71.5% 75.4% -3.9 pt VAS - SMS 105 95 10% 8.0% % of Voice+VAS revenues 10 0% 10.0% 9 9% 9.9% +24.4% +0 1ptt +0.1 VAS growth VAS-non SMS 193 141 37% 35.5% % of Voice+VAS revenues 18.5% 14.7% +3.8
Slide 12: VAS contributing >28% of revenues
VAS contributing >28% of revenues + 3.9 pts Q4 11 35.0% 33.6% 30.0% 28.4% 28.5% 27.1% 25.6% 24.6% 25.0% VAS as a% of revenues 20.0% 15.0% 11.8% 10.0% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 LATAM Africa of which SMS VAS is: 9.9% 10.0% 9.8% 10.0% 10.0% 11.8% 4.3% In Latin America more than 1/3 of revenues come
Slide 13: Category review
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Slide 14: Revenues by category
Revenues by category Local Contribution US$m Q4 11 Q4 10 currency to recurr. rev.* growth growth Q4 11 Communication (voice, SMS) 851 820 4% 33% Information (Data services) 137 95 43% 46% off which hi h Mobile M bil Data D t 98 61 58% 40% 100% Entertainment (TV, Ringback tones, games) 84 78 8% 7% So
Slide 15: Good growth in data revenue in Latin America (2G+3G)
Good growth in data revenue in Latin America (2G+3G) Latin America Q4 2011 Q3 2011 QoQ growth Total data users* 2G+3G (millions) 3.9 3.7 6% % of tota l cus tomers 15.6% 14.7% 0.9 pt of which: 3G Data users* (millions) 1.9 1.7 14% % of tota l cus tomers 7.7% 6.8% 1.0pt Total Data Revenue 2G+3G 93.0 8
Slide 16: Product penetration
Product penetration Highest Lowest Total MIC Q4 11 Q4 10 Change market market (pts) Q4 11 Q4 11 SMS 56.0% 58.0% -1.9 88.4% 22.5% (com m unication) Ring Back Tone 25 0% 25.0% 25 4% 25.4% -0 3 -0.3 38 4% 38.4% 6 1% 6.1% (entertainm ent) Data (2G+3G) 11.8% 8.2% +3.7 27.8% 0.1% out of which 3G 6.3% 4.3%
Slide 17: Tigo Cash gaining momentum
Tigo Cash gaining momentum Tigo Cash penetration % in first 2 markets launched (as a % of mobile customers) 20.0% 15 0% 15.0% Paraguay 10.0% Tanzania 5.0% 0.0% Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Tigo Cash launched in 7 markets, 3 more launches planned in 2012 (Bolivia, Chad and
Slide 18: Regional review
Regional review
Slide 19: Quarterly Highlights – Central America YoY
Quarterly Highlights – Central America YoY US$m Q4 11 Q4 10 Reported Local currency growth growth Mobile customers (millions) 14.6 13.5 8% Mobile ARPU (US$) 12.0 12.2 -2% -2.6% Revenues 478 447 7% 6.2% EBITDA 245 229 7%pt 6.3% % of revenues 51.3% 51.3% +0.0 pt Capex 90 82 9% pt % of revenues 18.8% 1
Slide 20: Quarterly Highlights – South America YoY
Quarterly Highlights – South America YoY US$m Q4 11 Q4 10 Reported Local currency growth growth Mobile customers (millions) 11.2 10.1 10% Mobile ARPU (US$) 13.4 12.7 5% 2.2% Revenues 450 383 18% 14.4% EBITDA 189 168 12% 7.5% % of revenues 41.9% 43.9% -2.0pt Capex* 160 112 43% % of revenues 35.6% 29.
Slide 21: Quarterly Highlights – Africa YoY
Quarterly Highlights – Africa YoY US$m Q4 11 Q4 10 Reported Local currency growth growth Mobile customers (millions) 17.3 15.0 16% Mobile ARPU (US$) 4.8 5.4 -11% -5.5% Revenues 249 239 4% 10 6% 10.6% EBITDA 102 100 2% 9.2% % of revenues 41.0% 41.7% -0.7 pt Capex* 145 78 85% % of revenues 58.1% 32.7%
Slide 22: Financial review
Financial review
Slide 23: Evolution of taxes
Evolution of taxes US$m Q4 11 Q3 11 Q2 11 Q1 11 PBT 243 304 214 311 Reported taxes -9 166 -57 -82 of w hich: Non recurring items * 57 231 0 0 Normalized tax expenses** expenses -66 -64 -57 -82 Normalized tax rate 27.4% 21.2% 26.8% 26.4% Normalized tax rate in 2011 at 25.2% ((27% in 2010)) 23 * DTA C
Slide 24: EPS growth of 9% in Q4 partly impacted by forex
EPS growth of 9% in Q4 11 partly impacted by forex US$ million Q4 11 Q4 10 $ growth EBITDA 536 497 8% Corporate costs -35 -30 16% Building categories D Depreciation i ti -185 185 -167 167 11% Positi e adj Positive adj. Colombia Q410 Net Finance Costs -45 -57 -21% Debt at operating level Taxes -66 -5
Slide 25: Strong normalized EPS growth in 2011: +26%
Strong normalized EPS growth in 2011: +26% US$ million FY 11 FY 10 $ growth EBITDA 2,087 1,896 10% Corporate costs -113 -106 7% Depreciation -739 739 -691 691 7% Hi h capex Higher Net Finance Costs -172 -204 -16% Debt at operating level Taxes -270 -242 12% Forex gain/loss -29 -30 -5% Others -26 -17
Slide 26: Free Cash Flow
Free Cash Flow US$m 350 328 300 248 250 229 215 200 191 US$m Q4 11 Q4 10 Change 150 OFCF 300 310 -3% Net Interest paid -23 -56 -60% 100 Corporate Costs paid -29 -25 17% 50 FCF 248 229 8% 0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 FCF* as % 21.5% 17.7% 19.2% 28.5% 21.0% off revenue
Slide 27: Shareholder remuneration
Shareholder remuneration • $2.4 $ dividend p per share to be p paid in 2012 will be p proposed p to the AGM on May 29 (33% growth in ordinary dividend). • Share buy back program of up to $300m to be executed in Stockholm in the US or through MTFs Stockholm, • Excess cash to be returned to shareholde
Slide 28: Asset productivity - Towers
Asset productivity ‐ Towers • Full completion of tower transaction in Ghana • Further closings in Tanzania and Colombia in Q4 11 with approx 2/3rds of committed towers in each market transferred by YE11 • First closing in DRC in Q4 11 ‐ around 50% of towers transferred by YE11. • Acquisition of a 40
Slide 29: Leverage: Net Debt/EBITDA
Leverage: Net Debt/EBITDA US$m Q4 11 Q3 11 Change Gross Debt 2,438 2,209 229 Cash * 931 1,054 -123 Net Debt 1,507 1,157 350 Net Debt/EBITDA 0.7 0.5 Some re‐leverage following shareholder returns in 2011 * Including pledged deposits and time deposits 29
Slide 30: Gross Debt maturity
Gross Debt maturity* US$m 700 454 600 500 400 595 300 527 200 309 321 286 239 100 6 0 < 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5-6 years 6-7 years Average maturity at 3 years 48% of gross debt at fixed rates 30 * Excluding finance leases
Slide 31: Guidance for 2012
Guidance for 2012 • EBITDA margin g around mid 40s • Capex not to exceed 20% of revenues • OFCF margin around 20% Capex excluding potential new spectrum, green‐field cable and capitalization of leasing costs for towers transferred to tower companies OFCF Operating OFCF= O i FFree Cash C h Flow: Fl E
Slide 32: New organization structure
New organization structure • New organization structure introduced with 3 key components: • 14 in‐market organizations • 5 Global Categories(Communication, Information, Entertainment, Solutions and MFS) • Global Support Functions • Objective to accelerate the development of new products in our categ
Slide 33: Appendix
Appendix
Slide 34: Overview
Overview Central America: South America: Africa*: Mobile Amnet: 39m 28m 61m 176m operations’ pops Guatemala 14m under license: El Salvador 6m 265m Honduras 8m Costa Rica 5m Guatemala 14m El Salvador 6m Senegal 13m Chad 11m Nicaragua 6m Ownership: 55.0% Ownership: 100% Ownership: 100% Ownership: 100%
Slide 35: Mobile revenue growth driven by value focus
Mobile revenue growth driven by value focus 15.0% YoY growth 10.0% Customers 5.0% Revenue growth * ARPU in local currency** 0.0% ‐5.0% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 * Revenue = customers x ARPU in local currency ** Mobile ARPU based on total revenues excluding cable and roaming 35
Slide 36: Revenue by service - LATAM
Revenue by service ‐ LATAM US$m Q4 11 Q4 10 $ Local growth currency Voice 532 515 3% 2% % of Voice+VAS revenues 66.4% 70.8% -5.6 pt VAS - SMS 94 83 13% 9% % of Voice+VAS revenues 11.8% 11.5% +0.1 pt +23.7% VAS growth VAS non-SMS 175 129 36% 33% % of Voice+VAS revenues 21.9% 17.7% +5.5 pt Other * 127
Slide 37: Revenue by service evolution - LATAM
Revenue by service evolution ‐ LATAM + 4.4 pts 40.0% 33.5% 33.6% 35 0% 35.0% 32.4% 30 6% 30.6% 29.2% 30.0% 25.0% 20.8% 21 7% 21.7% 21 9% 21.9% 17.7% 18.9% 20.0% VAS non-SMS as a % of 15.0% Voice+VAS 10.0% VAS - SMS as % of 11.8% Voice+VAS 5.0% 11.5% 11.7% 11.6% 11.8% 0 0% 0.0% Q4 10 Q1 11 Q2 11 Q3 1
Slide 38: Strong growth of mobile data revenue (2G+3G) in Latin America
Strong growth of mobile data revenue (2G+3G) in Latin America Data revenue (2G+3G) ‐ Latin America 120 Q4 2011: 100 +58% YoY growth 80 US$ millions 60 40 20 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Commercial investment in 3G shows good results 47% of LATAM’s recurri
Slide 39: Revenue split by service - Africa
Revenue split by service ‐ Africa US$m Q4 11 Q4 10 $ Local growth currency Voice 214 210 2% 8% % of Voice+VAS revenues 88.2% 89.9% -1.7 pt VAS - SMS 10 12 -10% -2% % of Voice+VAS revenues 4.3% 4.9% -0.6 pt +31.0% VAS grow th VAS-non SMS 18 12 51% 62% % of Voice+VAS revenues 7.5% 5.2% +2.3pt Other *
Slide 40: Revenue split evolution - Africa
Revenue split evolution ‐ Africa + 1.7 pts 14.0% 11 4% 11.4% 11 8% 11.8% 12.0% 10.5% 10.1% 9.9% 10.0% 8 0% 8.0% 7 3% 7.3% 7 5% 7.5% 5.2% 5.5% 6.2% 6.0% VAS non-SMS as a % of Voice+VAS 4.0% VAS - SMS as % of 4.9% 4.4% 4.3% 4.3% Voice+VAS 2.0% 4.1% 0.0% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 VAS revenue almost
Slide 41: Penetration rates
Penetration rates CAM SAM Africa * MIC Avg penetration Avg penetration Avg penetration Avg penetration 92.9% 96.2% 47.9% 68.8% 120.0% 111.6% 103.1% 95.8% 93.0% 100.0% 89.4% 85.2% 80.0% 68.4% 66.1% 64.5% Average MIC 60.0% 49.6% 40.4% 40.0% 29 2% 29.2% 30.4% 20.0% 0.0% * For DRC , only penetration in
Slide 42: Market Share
Market Share CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share 54.1% 18.1% 30.6% 29.7% 70.0% 63.8% 57.7% 57.5% 60.0% 54.4% 50.0% 43.6% 41.5% 40.0% 35.1% 34.9% 34.5% 29.9% 31.3% Average 30.0% MIC 21.3% 20.0% 10.2% 10.0% 0.0% Increase QoQ Decrease QoQ El Salvador D
Slide 43: Stable churn
Stable churn MIC TOTAL 5.2% 5.0% 5.0% 4.9% 5 0% 5.0% 4.8% 4.7% 4.6% 4.6% 4.4% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q3 11 Q4 11 Q3 11 Q4 11 Q3 11 Q4 11 Q3 11 Q4 11 8.0% 6.4% 6.7% 6 0% 6.0% 5 0% 5.0% 5.0% 5 0% 4.1% 3.8% 4.1% 4.0% 4.0% 2.0% CAM SAM Af i Africa MIC TOTAL 43
Slide 44: Market share evolution
Market share evolution Market share* (%) Total Central Am. South Am. Africa Q4 11 29.7% 54.1% 18.1% 30.6% Q3 11 30.4% 54.3% 18.7% 31.3% Q2 11 30.5% 54.4% 18.6% 31.7% Q1 11 29.9% 54.4% 18.2% 30.8% Q4 10 29.8% 53.8% 18.1% 31.1% Focus on high value customers triggers decrease in customer market share 4
Slide 45: Movements of currencies vs USD YoY
Movements of currencies vs USD YoY Closing rate Closing rate Change Average rate Average rate Change Q4 11 Q4 10 Q4 11 Q4 10 Guatemala GTQ 7.81 8.02 3% 6.92 8.03 14% Honduras HNL 19.12 18.90 -1% 18.97 18.89 0% Central America Nicaragua NIO 22.97 21.88 -5% 22.84 21.75 -5% Costa Rica CRC 511 84 511.84
Slide 46: Cash Flow generation
Cash Flow generation OFCF in m$ Q4 11 Q4 10 Change Central America 131 186 -30% South America 92 69 33% Africa 83 72 15% Other (incl. Corporate) -6 -16 Millicom 300 310 -3% % of revenues 25.5% 29.0% -3.5 pt Sustainable cash flow generation 46
Slide 47: Quarterly Interest expense
Quarterly Interest expense 65 63 2 60 55 12 49 50 47 45 7 44 42 7 2 5 40 49 42 35 40 40 39 30 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Total interest cost Other f inancial costs HY bond early redemption Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Effective 7.4% 7.2% 6.9% 7.1% 6.5% rate* Average effective interest rate of 6.
Slide 48: Market Overview – by Segment
Market Overview – by Segment Central South Millicom Segments Africa Total America America Market Overview Population (million) 28 61 176 265 Mobile Penetration 92.9% 96.2% 47.9% 68.8% Operational Data Total Mobile customers (000) 14.6 11.2 17.3 43.1 Attrib. Customers (000) 11.4 11.2 17.1 39.6 Capex
Slide 49: Market Overview – LATAM
Market Overview – LATAM Latin America Central America South America El Salvador Guatemala Honduras Bolivia Colombia Paraguay Shareholding 100.0% 55% (p) 66.7% 100.0% 50% + 1 share 100.0% License Period (yrs) 20 yrs fr 1998 15 yrs fr 2003 25 yrs fr 1996 20 yrs fr 1995 10 yrs fr 2003 5 yrs renewal Dat
Slide 50: Market Overview – Africa
Market Overview – Africa Africa Chad DRC Ghana Mauritius Rwanda Senegal Tanzania Shareholding 100.0% 100.0% 100.0% 50% (p) 87.5% 100.0% 100.0% License Period (yrs) 10 yrs fr 2004 20 yrs fr 1997 15 yrs fr 2004 15 yrs fr 2000* 15 yrs fr 2008 20 yrs fr 1998 25 yrs fr 2007 Date of Expiry 2014 2017 2019
Slide 51: Thank you!
Thank you! tico ew
Millicom International Cellular — Q4 2011 Earnings Presentation on 6ix