Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q2 2012 Earnings Presentation
56 slides from Millicom International Cellular's earnings presentation, Jul 18, 2012
Slide 1: Q2 2012 Results presentation
Millicom International Cellular S.A. Q2 2012 Results presentation Mikael Grahne François –Xavier Roger July 18, 2012 1
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, revenues, earnings and other trend information. It is important to note that Millicom’s actual results in the
Slide 3: Agenda
Agenda Q2 2012 Highlights Tigo in Motion Our Financial Results 3
Slide 4: Q2 2012 Highlights
Q2 2012 Highlights 4
Slide 5: Q2 Highlights- Key events
Q2 Highlights- Key events Innovation capabilities strengthened through category staffing $350 million cash returned to shareholders (ordinary dividend and share buy back) Acquisition of Cablevision Paraguay: stretching our Tigo brand to Paraguayan homes 50% of revenues from VAS crossed in Pa
Slide 6: Q2 Highlights- Revenue growth
Q2 Highlights- Revenue growth US$m 1,200 +8.9% Underlying growth 1,180 1,160 1,140 1,120 1,100 1,080 1,060 1,040 1,020 1,000 Q2 11 Q2 12 Increased revenue growth at 8.9% in Q2 versus 8.4% in Q1 6
Slide 7: Q2 Highlights- EBITDA margin
Q2 Highlights- EBITDA margin 47.0% 0.4% 0 46.0% 0.5% 45.0% 1.7% 44.0% 0.6% 46.2% 43.0% 45.8% 45.8% 45.7% 42.0% 44.0% 43.4% 43.4% 41.0% 40.0% EBITDA % Q2 11 Guatemala one- EBITDA % Q2 11 Pricing Investment for One-off items EBITDA % Q2 12 off adjustment excl. Guatemala growth and others Investment fo
Slide 8: Attractive EBITDA margin
Attractive EBITDA margin EBITDA Margin Q1'12 vs Q1'11 50.0% 45.0% 40.0% Average Q1’11 margin: 36.3% 35.0% Average Q1’12 margin: 34.0% 30.0% 25.0% 20.0% Entel Chile Millicom (after AMX Telefonica Latin Vivo Oi NII Holding corp. costs) America Q1 2011 Q1 2012 Source: Company Reports, Bloomberg 8
Slide 9: Tigo in Motion
Tigo in Motion 9
Slide 10: Tigo in Motion
Tigo in Motion Tigo Brand Distribution Network Category Update 10
Slide 11: Tigo Brand
Tigo Brand 11
Slide 12: History of the Tigo brand
History of the Tigo brand Multi Brand Scenario Unique Brand- since 2004 Global Brand- 2012 Local Taglines Aquí Estoy! Express yourself Aquí Estoy contigo! Open up your world Plus près de moi / toi The new cellular experience 12
Slide 13: Smile, you've got Tigo
Smile, you’ve got Tigo ‘Do you want | your credit to last longer?
Slide 14: The Tigo Brand is one of our most valuable assets
The Tigo Brand is one of our most valuable assets Entering the Global top 100 Brand Value* $2,700 m Market Capitalisation $11,726 brands (BrandFinance® Telecoms Brand Value/Market Capitalisation 23% 500) in 2012: Tigo ranked 52nd Brand Rating AA+ with a Brand Value estimated at $2.7 billion In C
Slide 15: Monitoring our Brand strengths
Monitoring our Brand strengths We measure our ability to convert Awareness into Loyalty In one of our countries in Central America: real customer survey Loyalty 50 Which one would you recommend to your friends? Which one do you use? Tenure 52 Which Telecom brand would Consideration 77 you consider u
Slide 16: Distribution Network
Distribution Network 16 16
Slide 17: Leveraging on our Distribution Network
Leveraging on our Distribution Network Over 690k Points of Sales in 14 countries Superior Distribution Management System providing real time sales and inventory One POS for fewer than 400 people in our markets Distribution network is a valuable asset with which to sell more services 17
Slide 18: Category Update
Category Update 18
Slide 19: Tigo Innovation: Key Enabler of Growth
Tigo Innovation: Key Enabler of Growth 100 Recurring revenues growth YoY (US$M at constant forex) 90 80 Information, Entertainment, Solutions, MFS 70 Communication 60 59 53 50 66 73 59 40 30 20 29 33 10 16 16 14 0 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Record absolute growth from innovation in Q2 2012 19
Slide 20: Over 80% of Growth from new Categories
Over 80% of Growth from new Categories Local Contribution US$m Q2 12 Q2 11 currency to recurr. rev.* growth** growth Q2 12** Communication (voice, SMS) 814 828 1.7% 16% Voice 710 730 0.7% 6% SMS 105 98 9.0% 10% Information (Data services) 161 121 35.3% 49% of which Mobile Data 120 86 44.2% 43% Enter
Slide 21: Room for further product penetration growth
Room for further product penetration growth Highest Lowest Total MIC Q2 12 Q2 11 Change market market (pts) Q2 12 Q2 12 SMS 53.3% 51.0% 2.3 79.1% 15.9% (com m unication) Ring Back Tone 24.6% 25.4% -0.8 39.6% 4.7% (entertainm ent) Data (2G+3G) 11.7% 10.1% +1.6 22.3% 1.4% (inform ation) Tigo Lends You
Slide 22: & we have a pipeline filled with new products
& we have a pipeline filled with new products We have 5 categories fully dedicated to innovation Entrepreneurial spirit is part of our DNA We move fast: from test-market to systemized roll out, we target 6 months We are resourcing these categories with talent from different industries 22
Slide 23: Information- Strong growth in Mobile
Information- Strong growth in Mobile 4 Traffic and Revenue growth 3 2 Q1 10=1 1 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Data Traffic Revenue Revenue and Traffic Growth highly correlated Acceleration of Traffic growth supported by rapid decline in production costs 23
Slide 24: Information- Increasing usage & penetration
Information- Increasing usage & penetration Latin America Q2 12 Q1 12 QoQ growth Total data users* 2G+3G (millions) 4.2 3.8 10% % of total cus tomers 15.5% 14.2% 1.2 pt Total Data Revenue 2G+3G 113.6 104.0 9% of which: Handsets (US$) 67.4 59.9 13% Datacards (US$) 46.2 44.1 5% Data revenues 2G+3G as
Slide 25: Information- Devices are enablers
Information- Devices are enablers Growth in mobile data supported by: 1) Improved affordability of quality Smartphones & 2) Accelerated subsidies Less than 5% of our customers are smartphone users Growing share of Android (market share 2x that at YE11) Android Blackberry Modems Data Subscriber
Slide 26: Information- Accelerated investment in subsidies
Information- Accelerated investment in subsidies 100 Growth in LC +16.2% 90 80 70 60 Subsidy cost* US$m 50 87 40 77 30 20 10 0 Q2 11 Q2 12 Subsidy costs supporting growth and increasing almost twice as fast as revenues 26 * Cost of subsidized devices
Slide 27: Entertainment- Beyond Ring Back Tones
Entertainment- Beyond Ring Back Tones Revenues grew 13% YoY in H1 (16% in Q2) Ring Back Tones < 1/3 of revenues in H1 Innovation pipeline accelerating SMS Web browsing available across Latin America & will be offered in all markets before YE Billing solution available in one of our markets
Slide 28: Solutions- Strong potential
Solutions- Strong potential Second fastest growing category: 37% in LC in H1 Category with over 100 product launches in the pipeline Zero Balance Products (ZBP): close to 20% of airtime sold is paid for by someone other than the user Tigo Care offers promising potential- m-Health segment alr
Slide 29: Solutions- Focus on Tigo Care
Solutions- Focus on Tigo Care Tigo Care is an umbrella brand that encompasses products related to health, safety, insurance and welfare that Tigo can offer to its customers. Tigo Care is designed also to increase loyalty through churn reduction Health Help Insurance Post Paid Medical 911 Phone Appoi
Slide 30: MFS– Accelerating momentum
MFS– Accelerating momentum Tigo Cash penetration % (as a % of mobile customers) 35.0% 30.0% Paraguay 25.0% Tanzania 20.0% Rwanda 15.0% 10.0% 5.0% 0.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2010 2010 2011 2011 2011 2011 2012 2012 MFS in only 3 countries contributed 9% of total recurring revenue growth in Q
Slide 31: Our Financial Results
_ O @ — Our Financial Results
Slide 32: Financial Highlights Q2 YoY
Financial Highlights Q2 YoY US$ million Q2 12 Q2 11 $ Local Underlying growth currency growth Mobile customers (million) 44.6 41.3 7.8% Mobile ARPU (US$) 8.9 9.4 -4.8% -1.1% Revenues 1,181 1,120 5.4% 9.4% 8.9% EBITDA 513 513 -0.1% 3.6% % of revenues 43.4% 45.8% -2.4pt -2.7pt Capex* 264 151 75.1% % o
Slide 33: Quarterly Highlights – Central America YoY
Quarterly Highlights – Central America YoY US$m Q2 12 Q2 11 Reported Local currency Underlying growth growth growth Mobile customers (million) 15.2 14.1 7.8% Mobile ARPU (US$) 11.4 11.9 -4.6% -3.4% Revenues 476 449 6.0% 7.9% 6.3% EBITDA 237 232 2.0% 4.1% % of revenues 49.7% 51.6% -1.9 pt -2.6pt Cape
Slide 34: Quarterly Highlights – South America YoY
Quarterly Highlights – South America YoY US$m Q2 12 Q2 11 Reported Underlying growth growth Mobile customers (million) 11.7 10.7 10.0% Mobile ARPU (US$) 13.0 13.2 -1.3% 2.0% Revenues 466 425 9.7% 13.5% EBITDA 185 182 2.0% 6.8% % of revenues 39.8% 42.8% -3.0pt Capex* 92 62 50.0% % of revenues 19.8% 1
Slide 35: Quarterly Highlights – Africa YoY
Quarterly Highlights – Africa YoY US$m Q2 12 Q2 11 Reported Local currency growth growth Mobile customers (million) 17.6 16.6 6.5% Mobile ARPU (US$) 4.5 5.1 -11.9% -3.2% Revenues 239 246 -2.9% 5.7% EBITDA 91 99 -8.6% -1.5% % of revenues 38.0% 40.4% -2.4 pt Capex* 84 46 85.4% % of revenues 35.3% 18.5
Slide 36: Normalised EPS
Normalised EPS US$ million Q2 12 Q2 11 $ growth EBITDA 513 513 0% Corporate costs -32 -30 5% Depreciation -199 -189 5% Net Finance Costs -52 -39 34% Taxes -55 -57 -5% Others 1 -7 Normalized Net Profit * 176 187 -6% No. of shares (million) 101.2 105.0 Normalized EPS 1.74 1.78 -2% Normalized EPS almos
Slide 37: Evolution of taxes
Evolution of taxes US$m Q2 12 Q1 12 Q4 11 Q3 11 Q2 11 PBT 294 200 243 304 214 Normalized PBT 242 260 281 284 261 Reported taxes -85 -91 -9 166 -57 of w hich: Non recurring items * -30 -10 58 231 0 Normalized tax expenses** -55 -81 -67 -64 -57 Normalized tax rate 22.7% 31.2% 24.0% 22.6% 22.0% Tax rat
Slide 38: Free Cash Flow
Free Cash Flow US$m350 328 US$m Q2 12 Q2 11 Change 300 OFCF 140 268 -48% 248 244 250 Net Interest paid -32 -27 20% 215 200 Corporate Costs paid -26 -26 -2% FCF 82 215 -62% 150 100 82 50 0 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 FCF* as % 19.2% 28.5% 21.0% 20.8% 8.7% of revenue Ca
Slide 39: Releveraging post dividend & share buy back
Releveraging post dividend & share buy back US$m Q2 12 Q1 12 Gross Debt 2,655 2,478 Cash* 981 1,170 Net Debt 1,674 1,308 Net Debt/EBITDA 0.8 0.6 * Including pledged deposits +time deposits 39
Slide 40: Well distributed Debt maturities
Well distributed Debt* maturities Average maturity of 3.0 years * Excluding finance leases 40
Slide 41: Sources of funds- increasing Diversification
Sources of funds*- increasing Diversification Diversification of sources of funds with Bonds and Development Finance Institutions accounting for 39% 41 * Excluding finance leases
Slide 42: Debt split by currency and interest rate
Debt** split by currency and interest rate Group’s debt structure built to provide strong natural hedges against currency and interest rate risks •Local Currency defined as not subject to FX G&L (El Salvador & DRC are dollarized economies) 42 ** excluding finance leases
Slide 43: Debt by geography & corporate guarantees
Debt by geography & corporate guarantees* Central America: South America: Africa: Total debt: 1,112 m$ Total debt: 762m$ Total debt: 596 m$ 9% guaranteed 17% guaranteed 94% guaranteed Guatemala-272 m El Salvador-438 m Senegal-16 m Chad – 96 m TOTAL MIC DEBT: 0% guaranteed 0% guaranteed 0% guaranteed
Slide 44: Acquisition of Cablevision Paraguay
Acquisition of Cablevision Paraguay Binding agreement to acquire 100% of Cablevision Paraguay for $150m, leader in Pay TV Strategic rationale consistent with Convergent Strategy (since 2008 & Amnet deal) Expected benefits: 1) Growth: 22% LC growth in 2011 2) Improved quality of service for cus
Slide 45: Shareholder remuneration 2012
Shareholder remuneration 2012 $2.4 dividend per share was paid in June to shareholders $106m worth of shares were bought back in Q2 out of a share repurchase program of up to $300m Excess cash to be returned to shareholders, in the absence of further external growth opportunities 45
Slide 46: 2012 Guidance - updated
2012 Guidance - updated EBITDA margin around 43% (fine-tuned from around mid-40s%) Capex to revenues below 20% (unchanged) OFCF to revenues around 20% (unchanged) 46
Slide 47: Appendix
Appendix 47
Slide 48: LATAM - Revenue by category
LATAM - Revenue by category Local Contribution US$m Q2 12 Q2 11 currency to recurr. rev.* growth** growth Q2 12** Communication (voice, SMS) 608 602 2.6% 20% Voice 515 514 1.7% 11% SMS 93 88 7.9% 9% Information (Data services) 155 117 34.9% 53% of which Mobile Data 115 82 43.8% 47% 100% Entertainmen
Slide 49: AFRICA - Revenue by category
AFRICA - Revenue by category Local US$m Q2 12 Q2 11 currency growth Communication (voice, SMS) 206 226 -0.6% Voice 195 216 -1.5% SMS 12 10 18.6% Information (Data services) 6 4 48.0% of which Mobile Data 6 4 52.1% Entertainment (TV, Ringback tones, games) 9 8 37.7% Solutions (Tigo Lends You, Give me
Slide 50: Penetration rates
Penetration rates CAM SAM Africa * MIC Avg penetration Avg penetration Avg penetration Avg penetration 92.7% 97.3% 49.5% 69.9% Average MIC * For DRC , only penetration in Kinshasa-BAS Congo area is considered 50
Slide 51: Market share
Market share CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share 54.8% 18.8% 29.7% 29.8% Average MIC Increase QoQ Decrease QoQ Senegal Mauritius Chad Rwanda Honduras DRC Paraguay Guatemala Colombia Tanzania Ghana El Salvador 51 Bolivia
Slide 52: Movements of currencies vs USD YoY
Movements of currencies vs USD YoY Closing rate Closing rate Change Average rate Average rate Change Q2 12 Q2 11 Q2 12 Q2 11 Guatemala GTQ 7.85 7.81 0% 7.79 7.71 -1% Honduras HNL 19.56 18.90 -4% 19.45 18.90 -3% Central America Nicaragua NIO 23.51 22.42 -5% 23.39 22.28 -5% Costa Rica CRC 503.85 504.0
Slide 53: Market overview – by region
Market overview – by region Central South Millicom Segments Africa Total America America Market Overview Population (million) 28 62 180 270 Mobile Penetration 92.7% 97.3% 49.5% 69.9% Operational Data Total Mobile customers (million) 15.2 11.7 17.6 44.6 Attrib. Customers (million) 11.9 11.7 17.4 41.0
Slide 54: 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 55: 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 12 yrs fr 2012 15 yrs fr 2004 15 yrs fr 2000* 15 yrs fr 2008 20 yrs fr 1998 25 yrs fr 2007 Date of Expiry 2014 2024 2019
Slide 56: Thank you!
Thank you! tico ed
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