Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q3 2017 Earnings Presentation
31 slides from Millicom International Cellular's earnings presentation, Oct 25, 2017
Slide 1: 2017 Q3 results
2017 Q3 results Millicom International Cellular S.A. Mauricio Ramos, CEO Tim Pennington, CFO October 25, 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: 1. CEO review
¥ MILLICOM 1. CEO review THE DIGITAL LIFESTYLE Mauricio Ramos
Slide 4: Key highlights
Key highlights Millicom returns to positive revenue growth 1 Continued strong 4G net adds 2 Record HFC net adds 3 Revenue growth is back... and recovery is broad-based 4 Colombia at a turning point 5 Closing 2017 with strong momentum 4
Slide 5: Continued strong 4G net adds in Latam
1 Continued strong 4G net adds in Latam… On track to beat our 3 million 4G net add target for the year 4G network build in Latam 4G data user net additions Latam 4G coverage in % of population covered Latam B2C Smartphone net new data users (000s) by quarter , 2016 – 2017 4G points of presence (PoP)
Slide 6: …and record HFC net adds as well
2 …and record HFC net adds as well We are building and connecting record numbers of new HFC homes Added 2x more homes passed YTD Connected 74% more HFC homes in 2017 YTD Latam new HFC homes passed by quarter, 2016 – 2017 (000s) Latam new HFC homes connected by quarter, 2016 – 2017 (000s) +102% +74%
Slide 7: Latam returns to growth
3 Latam returns to growth Third consecutive quarterly improvement in Latam revenue growth Latam service revenue growth Latam service revenue growth by business unit %YoY growth, Q1 16 – Q3 17 %YoY growth, Q3 17 % of Latam Service revenue Mobile Voice, -13.5% 32% SMS & Others 2.9% Mobile Data 19.5% 2
Slide 8: Latam growth recovery is broad based
3 Latam growth recovery is broad based We have good momentum in all of our largest Latam markets El Salvador Guatemala Honduras Service revenue, year-on-year (%), Q1 16 – Q3 17 2.7% 3.5% 0.0% 0.3% -1.6% -1.4% -0.6% -0.7% -0.8% -1.0% -3.7% -0.8% -4.8% -1.6% -2.5% -6.4% -3.9% -4.3% -4.8% -2.5% -8.7% Q
Slide 9: Colombia at a turning point
4 Colombia at a turning point Planting the seeds for sustainable and profitable long term growth HFC growth offset copper churn in Q3 4G adoption accelerating Homes connected (thousands), Q1 16 – Q3 17 4G Smartphone data users (thousands), Q1 16 – Q3 17 1,071 1,097 1,017 1,043 +250 996 1,015 985 1,6
Slide 10: Colombia new product launches
4 Colombia new product launches Increased differentiation with Next Generation TV Key Features Integrates linear TV and OTT Personalization Search function Anytime, anywhere Supports both high-end and entry- level options Increasing B2B focus – Data center launch and Tigo Business Forum
Slide 11: Maintaining capital discipline with an eye on FCF
5 Maintaining capital discipline with an eye on FCF Solid FCF generation while we invest to drive faster growth Annual equity FCF EFCF up 19% YTD $m, 2014-2016 $m, 9M 16 – 9M 17 +19% 204 171 269 235 -43 2014 2015 2016 9M 16 9M 17
Slide 12: Closing 2017 with strong momentum
5 Closing 2017 with strong momentum Strong commercial performance is driving improving growth and operating leverage On pace to exceed our KPI targets for 2017 Q4 2017 Outlook More than 3m 4G net adds Latin America growth, year-on-year: Well over 1m new HFC homes Service Revenue 2% - 4% passed E
Slide 13: 2. CFO review
¥ MILLICOM 2. CFO review THE DIGITAL LIFESTYLE Tim Pennington
Slide 14: Key highlights
Key highlights Millicom returns to positive revenue growth 1 Growth improving across the board 2 Margin resilience 3 FCF growth 4 Active debt management 14
Slide 15: Key financial metrics
1 Key financial metrics Group service revenue growing again Service Revenue a EBITDA a and Margins Capex b $m, Q3 16 – Q3 17 $m and %, Q3 16 – Q3 17 $m, 9M 16 – 9M 17 1.7% 3.4% $28 1,399 1,423 556 632 538 604 Q3 16 Q3 17 Q3 16 Q3 17 9M 16 9M 17 36.0% 36.8% a) Q3 16 numbers are adjusted to Q3 17 FX r
Slide 16: Service revenue
1 Service revenue Improvement across the board on a sequential basis Group sequential organic service revenue growth analysis %YoY, Q2 17 – Q3 17 50bps 1.7% 80bps 170bps -1.4% Q2 17 Latam ex CO Colombia Africa Q3 17 16
Slide 17: Latam
1 Latam Financial performance continues to improve in Latam Latam service revenue Latam OCF (YTD) $m, Q3 16 – Q3 17 $m and margin, 9M 16 – 9M 17 +0.7% +2.3% 1,021 1,028 Latam EBITDA $m and margin, Q3 16 – Q3 17 +2.5% 1,275 25.6% 25.5% 1,246 539 526 Q3 16 Q3 17 Q3 16 Q3 17 9M 16 9M 17 39.3% 39.6% Q3
Slide 18: Colombia
1 Colombia Investing in sales and marketing while absorbing regulatory challenges Service revenue growth Colombia EBITDA bridge YoY growth, Q3-17 % Revenue, Q3 17 -1.1% 0.9% -3.6% -0.4% 1.6% 3.8% 28.5% 2.6% 25.0% 0.3% Q3 17 Mobile regulatory Discontinued Growth ex- EBITDA Regulatory Sales & General
Slide 19: Africa
1 Africa Africa still challenging Africa service revenue Africa OCF (YTD) $m, Q3 16 – Q3 17 $m and margin, 9M 16 – 9M 17 -18.1% -3.1% 81 67 Africa EBITDA $m and margin, Q3 16 – Q3 17 -9.4% 153 17.5% 15.4% 148 46 42 Q3 16 Q3 17 Q3 16 Q3 17 9M 16 9M 17 30.4% 28.5% Q3 16 numbers are adjusted to Q3 17 F
Slide 20: EBITDA
2 EBITDA Latam EBITDA growth offsetting Africa EBITDA evolution by region $ million, Q3 16 – Q3 17 +3.4% 9 4 13 +0.5% 3 556 538 535 Ebitda Q3 16 FX Ebitda Q3 16 LatAm Africa Corporate Ebitda Q3 17 (constant currency) 36.0% as % of revenue 36.8% 20
Slide 21: Cost review and margin sustainability
2 Cost review and margin sustainability Reinvesting G&A savings into sales and marketing to support growth Group total OPEX base Group LTM EBITDA $m and growth YOY per OPEX segment, Q3 16 - Q3-17 LTM EBITDA margin , Q3 16 – Q3 17 -0.3% 562 561 +6.8% Sales & 270 Marketing 289 35.9% 35.6% 35.5% 35.4%
Slide 22: Q3 P&L review
3 Q3 P&L review P&L Summary Key Observations US$ million Q3 17 Q3 16 % Var • Gain on sale of towers in Paraguay A Revenue 1,509 1,486 1.6% EBITDA 556 535 3.9% • Net financial expenses include the B Depreciation & amortization debt management costs (327) (332) (1.2%) Other operating 20 A 1 NM • Taxes
Slide 23: 9M cash flow
3 9M cash flow EFCF up 19% higher year-on-year 9M 2017 cash flow $ million 703 125 1,674 177 352 846 114 318 204 Ebitda including Cash capex Working capital Operating Taxes paid Finance charges FCF Dividend to EFCF discontinued (ex-spectrum and others cash flow minorities operations and licenses) 36
Slide 24: Debt
4 Debt Debt management activity in Q3 Net debt evolution Debt profile $ million, 31 December 2016 – 30 September 2017 % of gross debt, 30 September 2017* 4 Gross debt currency exposure LC debt 265 USD debt 204 36 40% 60% 4,274 4,181 Gross debt distribution Opco Holdco 24% Net debt Equity FCF Spectru
Slide 25: Summary
Summary 1 Exceeding customer net additions targets 2 Revenue growth recovery is broad-based 3 Investing for future growth 4 Maintaining cost and capital discipline 25
Slide 26: Q&A
¥ MILLICOM Q&A THE DIGITAL LIFESTYLE
Slide 27: Debt maturity profile
Debt maturity profile The 2021s have been reclassified as short term debt – repaid in Q4 2017 Debt maturities by year a $ million Average life of 5.1 years b 919 Low maturities in 2017 after 751 750 redemption of 2021 Notes 653 543 498 387 400 GT $800m 281 21s 25s 28s $473m $500m $500m PY 139 SEK $3
Slide 28: Gross debt by country
Gross debt by country Central America: South America: Africa: Corporate: Total MIC Debt: Total debt $1,613m Total debt $1,925m Total debt $347m Total debt $1,753m $5,639m 22% guaranteed) 1% guaranteed 67% guaranteed 0% guaranteed 11% Guaranteed Honduras: $400m 56% guaranteed Guatemala: $994m Chad: $
Slide 29: Net debt by country
Net debt by country Central America: South America: Africa: Total Net Debt: $1,231m $1,603m $184m Corporate $4,274m Leverage 1.1x Leverage 1.6x Leverage 1.00x $1,257m Leverage 2.0x Honduras: $368m Leverage 1.3x Guatemala: $681m Leverage 1.0x Chad: $48m El Salvador: $106m Leverage 0.8x Rwanda: $69m C
Slide 30: Currency exposure of debt
Currency exposure of debt Local currency 35% of gross debt (40% proformai) Sept. 2017 Gross debt including finance leases Cash Net debt US$ Local Total Total USD Local Total 1,715 1,824 3,538 705 1,300 1,533 2,833 Latin Americaii 48% 52% 100% 46% 54% 100% 174 173 347 163 167 17 184 Africa 50% 50% 10
Slide 31: * \LLICoM
* \LLICoM r ) THE DIGITAL LIFESTYLE
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