Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q4 2008 Earnings Presentation
45 slides from Millicom International Cellular's earnings presentation, 2009
Slide 1: Millicom International Cellular S.A. Q4 2008 Investor Presentation
Millicom International Cellular S.A. Q4 2008 Investor Presentation
Slide 2: Diversified emerging market operator with a global footprint
Diversified emerging market operator with a global footprint... Amnet: 38m Guatemala 13m Central America: South America: Africa*: Asia: Mobile El Salvador 7m 28 m 61 m 163 m 42 m operations’ Honduras 8m pops under Costa Rica 4m license*: 294 m Nicaragua 6m Guatemala 13m El Salvador 7m Senegal 13m Ch
Slide 3: Millicom: well positioned in attractive markets
Millicom: well positioned in attractive markets • Emerging market opportunity – Low penetration = high growth potential • Potential growth opportunities for Millicom – ‘Triple A’ business model – Strength of consumer brand ‘Tigo’ in voice market • Broadband opportunity • Efficient low cost operator
Slide 4: Low Telecom Penetration = High Growth Potential
Low Telecom Penetration = High Growth Potential 120% 100% Wireless penetration* 80% 60% 40% 20% 0% Low penetration countries *Penetration rates for Millicom markets derived from Interconnect Figures shown in brackets : Country population Millicom well set to exploit J curve in penetration growth 4
Slide 5: Market share opportunity
Market share opportunity • Low market share in highly populated markets • ‘Triple A’ strategy outperforms competitors’ business models • Reaping benefit of past capex 100% 75% 50% 25% 0% 212m pops under license 82m pops under license 5
Slide 6: Market share evolution: Q4 07 – Q4 08
Market share evolution: Q4 07 – Q4 08 Asia CAM SAM Africa Gain % Senegal +5% Tanzania +9% DRC: +8% Guatemala: +3% 80.0 70.7 Paraguay: +5% 70.0 Laos +3% 60.0 54.7 54.9 Sri Lanka +4% 50.0 45.345.0 44.7 42.6 40.0 33.6 36.0 28.2 28.1 26.0 30.0 20.0 17.9 20.0 8.5 10.0 0.0 Market C M El G C Pa bia D M G T
Slide 7: Value Added Services (VAS) / Data
Value Added Services (VAS) / Data • VAS include SMS, Ring-Back tones, music downloads, Balance transfers etc • VAS revenues growing faster than voice revenues – VAS accounts for over 30% of recurring revenues in Paraguay – Increase in Data and VAS contributing to stabilization of ARPU in Latin Ameri
Slide 8: The Broadband Opportunity
The Broadband Opportunity • Customers in more mature markets showing strong demand for broadband services – Pyramid research has identified fixed broadband as fastest growing segment within communications sector in Latin America • Demand met with 3 pronged approach: 1. 3G – mobile broadband services
Slide 9: Amnet footprint and subscribers
Amnet Amnet footprint and Business overview subscribers • Amnet founded in 1997 MIC footprint New footprint • Owned by Michael Kazma and private investors Guatemala Nicaragua • Amnet is leading Pay-TV service provider Corporate Services Corporate Services in Central America – Leading provider of cab
Slide 10: Amnet – Key Data
Amnet – Key Data Total Revenue (US$m) 44 42 40 38 36 34 32 30 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Total Homes Passed 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Total Home Passed Bidirectional Total Home Passed One Direc
Slide 11: Short term positioning ensuring long term prospects
Short term positioning... • Capex reduction – capex for 2008 of $1.4bn – capex for 2009 to be around $1bn • Cash generation • Strong EBITDA margins and market share gains in 2008 • Managing currency translation effect • Focus on existing businesses ...ensuring long term prospects 11
Slide 12: Capex peaks in 2008
Capex peaks in 2008 • Continuing to reap benefits of past investment • Capex to sales ratio falls from 42% to mid teens in medium term • Capex for 2009 expected to be $1 billion 3,500 1,500 1,400 3,000 1,300 1,200 1,100 2,500 Revenue US$m 1,000 Capex US$m 900 2,000 800 700 1,500 600 500 1,000 400 30
Slide 13: Capex by Region vs. YoY Revenue Growth
Capex by Region vs. YoY Revenue Growth Share of capex Share of capex SAM CAM CAM 19% SAM 33% 27% 22% Q4 08 Q4 07 Asia AMNET Africa Africa 12% 2% Asia 28% 48% 9% Revenue Growth Q4 07 to Q4 08 Central America 8% Capex shifting from South America 9% Latin America to Africa 28% Africa and Asia Asia 20%
Slide 14: Strong Balance Sheet
Strong Balance Sheet • Q4: $0.7 billion of cash • Net debt to EBITDA = 1x • Average debt maturity = 3 years • Free cash flow positive in 2009 Well managed debt maturities - as at 31/12/08 (US$ ‘000) 800 692 700 600 497 500 453 400 312 333 300 179 200 145 100 0 Less than 1 year 1-2 years 2-3 years 3-
Slide 15: Currency translation effect
Currency translation effect Q408 Revenue Growth ($m) • 3% revenue erosion in Q4 due to currency depreciations vs US$ • Colombian Peso (-11%) • Ghanaian Cedi (-30%) • African currencies linked to € (-11%) • Tanzanian Shilling (-9%) • Q408 revenues with average Q308 exchange rate applied = US$ 963m FY
Slide 16: Focus on Africa: The engine of growth
Click Focusto on addAfrica title Add Title The engine of growth 16
Slide 17: New market added in Africa
New market added in Africa • Millicom has won tender for 3rd national license in Rwanda • New JV created between Millicom (87.5%) and local company Marathon Corporation (12.5%) - paying US$ 60m for 15 year license • Attractive market characteristics: – A small and densely populated country with 10m
Slide 18: Africa's Growth Story – implementing Triple A strategy
Africa’s Growth Story – implementing Triple A strategy Affordability - Accessibility - Availability • Committed to bringing Africa to Millicom average margin 800,000 700,000 600,000 500,000 US $ ('000s) 400,000 300,000 200,000 100,000 0 2003 2004 2005 2006 2007 2008 Revenue EBITDA 18
Slide 19: Africa – Millicom's fastest growing region
Africa – Millicom’s fastest growing region • 163 million people under license / 55% of Millicom’s potential market • Weighted average penetration of 20.6%* • Six operations: focus on leading positions • number 2 market position in Chad, Ghana, Mauritius and Senegal • number 3 in DRC and Tanzania • A
Slide 20: Africa – Capex and network expansion
Africa – Millicom’s fastest growing region Capex and network expansion in Africa USD (000’s) 700,000 603 600,000 500,000 400,000 334 300,000 245 200,000 111 100,000 0 2005 2006 2007 2008 Chad DRC Ghana Mauritius Senegal Tanzania Rwanda (license) Growth (%) Dec 06 – Dec 08 Cells Chad 324% DRC 292% Gh
Slide 21: Well positioned, strong balance sheet, short term positioning
• Well positioned in attractive markets • Strong balance sheet • Short term positioning ensuring long term prospects
Slide 22: Quarterly Results
Quarterly Results 22
Slide 23: Group Revenue, EBITDA and Total Subscribers by Cluster – Q4 2008
Group Revenue, EBITDA and Total Subscribers by Cluster – Q4 2008 Revenue EBITDA 5% 4% 7% 6% 39% 16% 20% 49% 25% 29% Total Subscribers 14% 35% Central America Amnet 28% South America Africa 23% Asia 23
Slide 24: Central America
Central America US$m Q4 08 Q4 07 Growth Revenues 355 329 8% EBITDA 199 168 19% EBITDA Margin 56% 51% Total Subscribers* 11,181 8,825 27% (‘000) * Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest 24
Slide 25: South America
South America US$m Q4 08 Q4 07 Growth Revenues 260 239 9% EBITDA 100 75 33% EBITDA Margin 39% 31% Total Subscribers* 7,461 5,893 27% (‘000) * Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest 25
Slide 26: Africa
Africa US$m Q4 08 Q4 07 Growth Revenues 183 143 28% EBITDA 64 46 41% EBITDA Margin 35% 32% Total Subscribers* 9,049 5,568 63% (‘000) * Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest 26
Slide 27: Asia
Asia US$m Q4 08 Q4 07 Growth Revenues 66 55 20% EBITDA 24 20 18% EBITDA Margin 37% 37% Total Subscribers* 4,353 2,965 47% (‘000) * Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest 27
Slide 28: Highlights - Group
Highlights - Group US$m Q4 08 Q4 07 Change FY 08 FY 07 Change Subscribers ('000) 32,044 23,251 38% 32,044 23,251 38% Revenues 907 766 18% 3,412 2,624 30% EBITDA 406 309 31% 1,468 1,119 31% EBITDA margin 45% 40% 43% 43% Net Profit * 66 113 -41% 518 697 -25% Capex 465 300 55% 1,431 1,050 37% Capex% of
Slide 29: Revenue split by category
Revenue split by category US$m Q4 08 Q4 07 Growth FY 08 FY 07 Change Airtime 663 607 9% 2,615 2,096 25% % of Total Revenues 73% 79% 77% 80% VAS/SMS 134 78 72% 443 233 90% % of Total Revenues 15% 10% 13% 9% Other 110 80 36% 354 295 20% % of Total Revenues 12% 11% 10% 11% 1,049 Total Revenues 907 766
Slide 30: Strong Underlying Growth: Total Subscribers
Strong Underlying Growth Total Subscribers* ('000) Quarterly YoY Growth rate 35,000 100% 32,044 90% 30,000 30,456 80% 28,347 25,000 26,076 70% 23,251 60% 20,000 56% 59% 58% 53% 50% 15,000 40% 38% 10,000 30% 20% 5,000 10% 0 0% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 * Total subscriber figures represe
Slide 31: Strong Underlying Growth: Revenues
Strong Underlying Growth Revenues (US$m) Quarterly YoY Growth rate 950 100% 850 907 90% 867 840 80% 750 799 766 70% 650 60% 550 50% 450 40% 41% 42% 37% 30% 350 27% 20% 250 18% 10% 150 0% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 31
Slide 32: Strong Underlying Growth: EBITDA
Strong Underlying Growth EBITDA (US$m) Quarterly YoY Growth rate 450 90% 400 80% 406 350 372 70% 353 338 300 309 60% 250 50% 200 40% 150 34% 36% 34% 30% 31% 100 25% 20% 50 10% 0 0% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 32
Slide 33: Appendices
Click to add title Appendices
Slide 34: Balance Sheet
Balance Sheet Asse ts De c. 31 2008 De c. 31 2007 Equity & Liabilitie s De c. 31 2008 Dec. 31 2007 Non-curre nt assets Equity Intangible 990.4 467.5 Share capital & premium 642.5 417.4 Property, Plant and Equipment 2,787.2 2,066.1 Net profit for the period 517.5 697.1 Other non-current assets 58.5 1
Slide 35: Composition of quarterly revenues
Composition of quarterly revenues 2007 2008 100% 90% 27% 27% 26% 26% 25% 24% 25% 23% 80% 70% 17% 19% 21% 21% 21% 20% 19% COS% 16% 60% S&M% 50% 13% 13% 12% 13% 13% 12% 13% 12% 40% G&A% 30% 44% 45% EBITDA% 20% 43% 43% 42% 43% 40% 42% 10% 0% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 (*) excluding
Slide 36: Quarterly Capex
Quarterly Capex 1,600 1,431 1,400 1,050 1,200 1,000 800 600 350 465 300 377 328 400 192 208 261 200 0 Q1 07 Q2 07 Q3 07 Q4 07 FY07 Q1 08 Q2 08 Q3 08 Q4 08 FY08 CAPEX (USD m) 36
Slide 37: Quarterly Debt – Net Debt/EBITDA ratio
Quarterly Debt – Net Debt/EBITDA ratio 2,500 2007 2008 2,158 1,834 1,735 2,000 1,636 1,642 1,805 1,827 1,507 1,500 1,175 1,212 1,087 1,058 993 1,001 1,000 904 674 500 - Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Total Debt Cash 1.2 1.0 1.0 0.8 0.7 0.6 0.5 0.6 0.5 0.5 0.5 0.4 0.4 0.2 0.0 Q1 07 Q
Slide 38: Quarterly Interest expense
Quarterly Interest expense 2007 2008 200 190 12% 180 10% 10% 10% 10% 10% 10% 160 9% 149 9% 9% 140 8% 120 100 6% effective rate 80 72 4% 60 50 41 31(*) 45 41 41 38 39 40 13** 2% 41 20 28 0 0% Q1 07 Q2 07 Q3 07 Q4 07 FY07 Q1 08 Q2 08 Q3 08 Q4 08 FY08 Total Interest expense (USD m) (*) Cost of early re
Slide 39: EPS: continuing and discontinued operations
- 6.90 EPS Total FY07 Discontinued 6.90 operations 2.43 FY07 DTA Colmbia 0.19 Continuing operations 4.28 FY07 Total FY2008 5.01 Discontinued operations 0.21 FY08 Colombian Deferred Tax Asset +32% +32% DTA Colmbia 0.42 0.42 EPS from continuing operations excluding Continuing operations 5.64 FY08 39
Slide 40: Taxes
Taxes US$m FY08 FY07 PBT 704 552 Taxes (*) 187 173 Effective tax rate 27% 31% (*) excluding Colombian Deferred Tax Asset Effective Tax Rate from 31% to 27% 40
Slide 41: Q4 08 Market Overview – by Cluster
Q4 08 Market Overview – by Cluster Central South Millicom Clusters America America Africa† Asia Amnet Total Market Overview Population (million)* 28 61 163 42 294 Mobile Penetration** 79.3% 79.3% 20.6% 29.1% 39.1% Operational Data Total Subscribers 11,181,251 7,460,771 9,048,652 4,353,278 32,043,952
Slide 42: Market Overview – by Country: Latin America
Market Overview – by Country La tin Ame rica Centra l America South Ame rica El Salva dor Gua te ma la Honduras Bolivia Colombia Pa ra guay Shareholding 100.0% 55% (p) 66.7% (p) 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 200
Slide 43: Market Overview – by Country: Africa
Market Overview – by Country Africa Chad DRC Ghana Mauritius Senegal Tanzania Shareholding 87.5% 100.0% 100.0% 50% (p) 100.0% 100.0% License Period (yrs) 10 yrs fr 2004 20 yrs fr 1997 15 yrs fr 2004 15 yrs fr 2000* 20 yrs fr 1998 25 yrs fr 2007 Date of Expiry 2014 2017 2019 2016 2018 2032 Market Ove
Slide 44: Market Overview – by Country: Asia
Market Overview – by Country Asia Cambodia Laos Sri Lanka Shareholding 58.4% (p) 74.1% 100.0% License Period (yrs) 35 yrs from 1996 20 yrs from 2002 10 yrs fr 2008* Date of Expiry 2031 2022 2018 Market Overview Population (million) 14 7 21 GDP per pop (PPP) $ 2,100 2,100 4,400 Mobile Penetration 29%
Slide 45: Exchange Rate Analysis
Exchange Rate Analysis Average YTD Closing Exchange Rates per Dollar Dec-08 Dec-07 % var Dec-08 Dec-07 Bolivia/Boliviano 7.25 7.84 -7% 7.03 7.64 Colombia/Peso 1994.75 2084.69 -4% 2249.50 2017.23 Ghana/Cedi 1.09 0.94 16% 1.27 0.97 Guatemala/Quetzal 7.59 7.70 -1% 7.78 7.66 Honduras/Lempira 18.90 18.90
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