Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q4 2019 Earnings Presentation
42 slides from Millicom International Cellular's earnings presentation, Feb 25, 2020
Slide 1: A Transformational Year
A Transformational Year Fourth Quarter 2019 Mauricio Ramos, CEO Tim Pennington, CFO February 25th, 2020 Millicom International Cellular S.A.
Slide 2: Safe Harbor
Safe Harbor Cautionary Language Concerning Forward-Looking Statements Statements included herein that are not historical facts, including without limitation statements concerning future strategy, plans, objectives, expectations and intentions, projected financial results, liquidity, growth and prosp
Slide 3: Non IFRS measures
Non IFRS measures This presentation contains financial measures not prepared in accordance with IFRS. These measures are referred to as “non-IFRS” measures and include: non-IFRS service revenue, non-IFRS EBITDA, and non-IFRS Capex, among others defined below. Annual growth rates for these non-IFRS m
Slide 4: 1. Q4 and FY 2019 Financial Highlights
1. Q4 and FY 2019 Financial Highlights
Slide 5: Financial Highlights – Q4 2019
Financial Highlights – Q4 2019 IFRS Group Consolidated Financial Statements Revenue Operating Profit Net Income +17% +21% $223m $1,150m $129m $223m $980m $107m Q4 2018 Q4 2019 Q4 2018 Q4 2019 $-94m Q4 2018 Q4 2019 Source: Millicom. All figures on an IFRS basis and therefore do not include the fully
Slide 6: Financial Highlights – Full Year 2019
Financial Highlights– Full Year 2019 IFRS Group Consolidated Financial Statements Selected P&L data Key Observations US$ million 2019 2018 % Var •A Increased revenue due to acquisitions Revenue 4,336 A 3,946 9.9% Cost of sales (1,201) (1,117) 7.5% •B Increased D&A due to acquisitions and Operating e
Slide 7: 2. A Transformational Year
2. A Transformational Year
Slide 8: The building blocks of a transformational year
The building blocks of a transformational year Strategic Enhanced development and Operational shareholder liquidity positioning and governance strength & strategic Purpose-driven team optionality Continued inspired by Sangre operational and Tigo organic development Source: Millicom. 8
Slide 9: Strategic development
Strategic development >$3bn portfolio repositioning 1• Acquired Cable Onda 1• Attained #1 position in CAM 2• Acquired Telefonica 2• Added Panama with #1 position Latam Panama, Nicaragua and 3• Fixed and mobile in ALL markets Costa Rica* 4• #1 or #2 position in ALL markets 1• Sold Chad 1• Millicom no
Slide 10: Enhanced liquidity and governance
Enhanced liquidity and governance US Nasdaq Listing 1• Enhanced US presence and liquidity 2• SOX compliance Kinnevik Distribution 3• 100% free float Source: Millicom. 10
Slide 11: Continued operational and organic development
Continued operational and organic development Year-End FROM TO 20191 Prepaid STRATEGY Subscription-based 61% service Subscription revenue Analog / 3G NETWORK Digital / 4G & HFC 39% 4G SPDU2 penetration Transactional CUSTOMER NPS 33 Transactional NPS score CAPITAL Broad Focus ALLOCATION Latam-only FM
Slide 12: Added >4m 4G data customers…
Added >4m 4G data customers… Latam 4G Smartphone Data Customers (‘000) Latam 4G Smartphone Data Penetration* 39% 15,398 31% +34% 10,487 22% 7,230 11% 3,631 2016 2017 2018 2019 2016 2017 2018 2019 4G data users 4G data users from acquisitions Source: Millicom. * Percent of total mobile customers 12
Slide 13: …expanded mobile postpaid subscriber base…
…expanded mobile postpaid subscriber base… Mobile postpaid net adds Improved postpaid growth Subscription revenue 61% Latam organic postpaid subscriber net Latam postpaid organic service revenue Latam subscription revenue as % of service additions (‘000), growth (%), revenue*, 2019 2016 – 2019 2016
Slide 14: …solved for all spectrum deficiencies
…solved for all spectrum deficiencies 1• Low and High frequencies in all markets 2• Strong 4G spectrum position achieved in all markets Strong spectrum position in all markets Mhz 165 125 115 95 99 90 68 65 El Salvador Guatemala* Honduras Colombia Paraguay Bolivia Nicaragua Panama High band Low band
Slide 15: Added 900k homes passed and 350k customer relationships…
Added 900k homes passed and 350k customer relationships… Improving penetration rates Steadily increasing customer relationships Latam Penetration Rates and HFC Homes Passed (m), Latam HFC Customer Relationships (m), 2016 – 2019 2016 – 2019 HFC Penetration Rate HFC Homes Passed 30.2% 29.4% +350k 29.0
Slide 16: …with subscription continuing to drive growth
…with subscription continuing to drive growth Latam 2019 Organic Service Revenue Growth*, year-on-year 8.4% Latam Service Revenue Organic Growth 2.2% Q1 Q2 Q3 Q4 Prepaid Postpaid 0.0% -0.7% Mobile (B2C) B2B Home • Weaker macro and increased • Comparison against a very • Steady growth in most markets
Slide 17: Digital Highways
Purpose driven team – inspired by Sangre Tigo We build the Digital Highways that connect people, improve lives and develop our communities Customer Centric Engaged Employees* Socially Responsible NPS Score 82 80 33 • First sustainability bond issued 76 24 • Completed first GNI Assessment • Improved
Slide 18: Our transformation… in cash flow
Our transformation… in cash flow Latam OCF growth Latam OCF ($m) and organic OCF growth, 2018 – 2019 +8.3% 1,442 Sustained healthy network investment • 900,000 Homes Passed Net Adds • 350,000 Customer Relationship Net Adds 17% 17% • 1,800 4G network PoPs* added 2018 2019 OCF Margin 20.5% 24.2% Exclu
Slide 19: Focused on improving free cash flow
Focused on improving free cash flow Equity Free Cash Flow* Equity Free Cash Flow* (m) 2019 Group Equity Free Cash Flow (m) 2014-2019 1 Sustained healthy eFCF generation in 2019 • One-time costs, integration costs, and working capital 326 impacted 2019 306 2 Investing in 2019 and 2020 to structurally
Slide 20: 3. Q4 financial review
3. Q4 financial review
Slide 21: Q4 19 Latam Service Revenue
Q4 19 Latam Service Revenue Service revenue* ($m) and YoY organic growth*, Q4 18 – Q4 19 +14.2% -43 1,442 191 +2.3% 1,263 53 -22 Q4 2018 Organic Organic Cable Q4 2019 Perimeter** FX and Others Q4 2019 Growth Mobile & Other Fixed Organic Reported Source: Millicom. *Non-IFRS measure. Please refer to t
Slide 22: Q4 19 Latam Service Revenue by Country
Q4 19 Latam Service Revenue by Country Service revenue ($m), and YoY organic growth*, Q4 18 – Q4 19 Guatemala (22% of Latam) Honduras (10% of Latam) Panama** (11% of Latam) El Salvador (6% of Latam) +3.7% -0.5% +1.3% -4.4% 317 139 154 87 Q4 18 Q4 19 Q4 18 Q4 19 Q4 18 Q4 19 Q4 18 Q4 19 Colombia (25%
Slide 23: Q4 19 Latam EBITDA
Q4 19 Latam EBITDA EBITDA ($m) and YoY organic growth*, Q4 18 – Q4 19 +23.5% 648 47 -12 76 2.0% 524 12 Q4 2018 Organic Growth Q4 2019 Perimeter** FX and Others IFRS 16 Q4 2019 Organic EBITDA 38.0% 41.1% Margin Margin excluding 38.5% IFRS16 Source: Millicom. *Non-IFRS measure. Please refer to the non
Slide 24: Q4 19 Latam EBITDA by Country
Q4 19 Latam EBITDA by Country EBITDA($m), and YoY organic growth*, Q4 18 – Q4 19 Guatemala (27% of Latam) Honduras (11% of Latam) Panama** (11% of Latam) El Salvador (6% of Latam) -1.6% +0.8% -9.5% 19.0% +4.0% 185 72 73 40 Q4 18 Q4 19 Q4 18 Q4 19 Q4 18 Q4 19 Q4 18 Q4 19 48.0% 48.9% 50.3% 47.1% 45.5%
Slide 25: Looking more closely…Cable Onda ahead of plan
Looking more closely…Cable Onda ahead of plan 2019 EBITDA* ($m) 2019 OCF* ($m) 193 8 8 7 184 2 98 105 186 Acquisition Plan** 2019 Actual Acquisition Plan** 2019 Actual EBITDA outperformance IFRS 16 benefit OCF outperformance IFRS 16 benefit Source: Millicom. *Non-IFRS measure. Please refer to the no
Slide 26: …Bolivia continues to grow
…Bolivia continues to grow Steady growth in home Defending mobile market share Bolivia Home Service Revenue ($), Bolivia Mobile Subs. (‘000), Q1 18 – Q4 19 Q1 18 – Q4 19 +112 2x 3,716 3.7% 3,638 3,604 3,610 3,528 3,541 3,534 3,550 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4
Slide 27: … and Paraguay showing early signs of recovery
… and Paraguay showing early signs of recovery Home growing steadily Mobile base stabilized in H2 Paraguay GDP recovering Paraguay HFC Customers Paraguay Mobile Net Adds (‘000), Paraguay GDP Growth Year-on-Year, Q1 18 – Q4 19 Q1 18 – Q4 19 Q1 18 – Q3 19 6.7% 22% 154 5.1% 116 2.8% 1.2% 0.5% 9 9 -56 -
Slide 28: …Colombia… signs of sustainable growth
…Colombia… signs of sustainable growth Service Revenue*… … and EBITDA* growing and … …accelerating in Mobile and Home Service Revenue ($m) and Organic Growth* EBITDA ($m) and Organic Growth* Organic Service Revenue Growth* (%) 2017 – 2019 2017- 2019 2018 and 2019 Colombia B2B Organic Service Revenue
Slide 29: Key Financial Metrics – FY 2019
Key Financial Metrics – FY 2019 Latam Service Revenue* Latam EBITDA* Latam Capex Service Revenue ($m) and YoY Growth* EBITDA ($m) and YoY Growth* Capex ($m) and YoY growth 2018 – 2019 2018 – 2019 2018 – 2019 8.8% 17.6% 5.1% 5,514 2,443 1,002 954 5,069 2,077 2018 2019 2018 2019 2018 2019 Organic grow
Slide 30: FY 2019 Latam OCF
FY 2019 Latam OCF OCF (EBITDA-Capex) ($m) and YoY organic growth*, Q4 18 – Q4 19 +28.3% 1,442 185 -100 126 +8.3% 107 1,124 FY 2018 Organic FY 2019 Perimeter** FX & Others Accounting FY 2019 Organic OCF 20.5% 24.2% Margin Excluding IFRS 16 21.3% Source: Millicom *Non-IFRS measure. Please refer to the
Slide 31: FY 2019 Group eFCF
FY 2019 Group eFCF Group Consolidated IFRS Financial Data ($m), 2019 Additional debt to fund M&A and One-off charges one-off financing 662 related to M&A fees 237 -328 425 -141 -13 179 Operating Dividends and Operating free cash Net finance Net lease interest Dividend to NCI Equity free free cash fl
Slide 32: Net financial obligations evolution
Net financial obligations evolution Year on year evolution – 2019 vs. 2018 Underlying Proportionate Period Leverage* Leverage* Costa Rica YE 2018 2.18x 2.52x acquisition ~$570m** YE 2019 2.76x 3.19x 1,376 160 855 272 87 267 7,236 5,860 4,763 Underlying Underlying Spectrum Dividend M&A FX and Underly
Slide 33: 4. So...what's next?
4. So...what’s next?
Slide 34: Progressing towards our medium-term outlook…
Progressing towards our medium-term outlook… Latam segment Organic Growth Medium-term outlook Service revenue* Mid-single-digit EBITDA* Mid-to-high single-digit OCF (EBITDA less capex)* Around 10% Source: Millicom Earnings release from Q4 2018 dated February 17, 2019 at millicom.com/investors/report
Slide 35: Pivoting shareholder remuneration
Pivoting shareholder remuneration $500m $1 per share 3-year buyback + annual dividend Transitioning shareholder remuneration towards share buybacks 1• Targeting total shareholder remuneration of at least $800m over the next three years 2• Cash dividend of $1.00 per share* 3• Share buyback program of
Slide 36: Q&A
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Slide 37: Latam segment bridge – Q4 2019
Latam segment bridge – Q4 2019 Group revenue to Latam service revenue bridge, Q4 19 1,675 98 1,577 135 1,442 525 1,150 Revenue Guatemala Underlying * Africa Latam Telephone and Latam service and Honduras revenue revenue revenue equipment revenue* Group operating profit to Latam EBITDA* bridge, Q4 19
Slide 38: Capital structure
Capital structure Financial obligation profile 31 December 2019 Latam HQ Africa Geography 63% 32% 5% Bonds Banks Leases Source 57% 27% 16% Interest Fixed or Swapped Variable rates* 76% 24% FX Local Hard currency exposure* 37% 63% Less than 5y 5Y or more Maturity* 57% 43% * Excluding Leases 38
Slide 39: Debt Maturity Schedule
Debt Maturity Schedule Well spread maturities** Average life 6.1 years 1,899 Average cost of debt 6.1% 1,101 883 Comcel 659 (GT) 638 544 $800m 548 6.875% 408 29s $750m Panama 25s 26s 28s 6.250% $600m 221 $500m $500m Telecel $500m 4.500% 180 172 6.000% 6.625% (PY) 5.125% $300m SEK 2bn 5.875% 4.913%*
Slide 40: Gross financial obligations by country
Gross financial obligations* by country Central America South America Africa Corporate Group (underlying) $3,232m $2,190m $408m $2,801m $8,631m 13% guaranteed 2% guaranteed 0% guaranteed 0% guaranteed 5% Guaranteed Of which Leases: $1,376m Guatemala: $1,172m Honduras: $423m (0% guaranteed) (0% guara
Slide 41: Net financial obligations by country
Net financial obligations* by country Central America South America Africa Group (underlying) Corporate $2,878m $1,876m $377m $7,236m $2,105m Leverage: 1.79x Leverage: 1.77x Leverage: 2.89x Leverage: 2.76x Guatemala: $983m Honduras: $383m Leverage: 1.31x Leverage: 1.37x El Salvador: $335m Nicaragua:
Slide 42: Millicom - The Digital Lifestyle
tico MILLICOM THE DIGITAL LIFESTYLE
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