Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q3 2018 Earnings Presentation
34 slides from Millicom International Cellular's earnings presentation, Oct 24, 2018
Slide 1: 2018 Q3 results
2018 Q3 results Cable expansion accelerating Mauricio Ramos, CEO Tim Pennington, CFO October 24th, 2018 Millicom International Cellular S.A.
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: Q3 Highlights
Q3 Highlights Cable expansion accelerating 1 Strong operating momentum continues 2 Colombia growing 3 Spotlight on Cable 4 Cable Onda 4
Slide 5: Service revenue growth in line with plan
1 Service revenue growth in line with plan Latam service revenue growth Latam %YoY growth, Q1 16 – Q3 18 5.5% 4.7% 2.9% 3.1% 3.4% 2.3% 0.9% -0.5% -1.3% -2.0% -2.3% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Note: Q1 2018 and Q2 2018 figures re-presented to reflect application of IFR
Slide 6: All three business units growing
1 All three business units growing Mobile B2C (58% of service rev) Home (25% of service revenue) B2B (16% of service revenue) Mobile B2C service revenue LC %YoY, Q1 17 – Q3 18 Home service revenue LC %YoY, Q1 17 – Q3 18 B2B service revenue LC %YoY, Q1 17 – Q3 18 2.1% 0.9% 1.0% 0.2% 12.6% 12.5% -0.9%
Slide 7: B2C Mobile growing in 4G and postpaid
1 B2C Mobile growing in 4G and postpaid Steadily growing our 4G customer base Improved performance in postpaid Latam B2C Mobile 4G subscribers (millions), Q3 16 – Q3 18 Latam B2C Mobile postpaid net additions, (000)s, 9M16 – 9M18 +52% 192% 135 8.6 46 5.6 -66 2.4 Q3 16 Q3 17 Q3 18 9M 16 9M 17 9M 18 7
Slide 8: Home growth drivers trending higher
1 Home growth drivers trending higher Connecting more HFC Homes Adding more HFC RGUs ARPU rising Latam HFC homes connected (000) Latam HFC RGU net additions (000) Latam Home ARPU ($/month) 9M 2016 – 9M 2018 9M 2016 – 9M 2018 Q3 2016 – Q3 2018 +55% +33% +2% 313 679 28.9 28.2 510 27.1 202 362 116 9M 1
Slide 9: Colombia investments starting to pay off in Home
2 Colombia investments starting to pay off in Home Colombia Home KPIs continue to improve HFC accelerating as copper churn moderates Home ARPU rising Colombia - LTM homes connected net additions, HFC and Other, Q316 – Q318 Colombia – Home ARPU $, Q3 16 – Q3 18 +26% +7.7% +20% 101 80 67 -80 -98 -115
Slide 10: New initiatives to accelerate growth in Mobile
2 New initiatives to accelerate growth in Mobile Simplifying postpaid offer in Colombia Simplified the offer to just 3 plans ($18, $25 and $33 per month) Focus on experience, innovation, commercial offer, and devices 10
Slide 11: Home revenue 9% CAGR in USD in last 3 years
3 Home revenue 9% CAGR in USD in last 3 years Homes Passed Homes Connected HFC Homes Passed (000), Q3 15 – Q3 18 HFC Homes Connected (000), Q3 15 – Q3 18 +16% +16% +18% +12% +11% +10% 9.387 2.642 8.107 2.277 6.848 1.851 2.038 6.177 Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2015 Q3 2016 Q3 2017 Q3 2018 RGUs
Slide 12: Millicom Cable revenue annualizes to $2.2 billion
3 Millicom Cable revenue annualizes to $2.2 billion 10 million Homes Passed 4 million Homes $2.2 7 million Connected billion RGUs Fixed B2B 12 Note: Based on annualized Millicom Q3 revenue for Home and B2B fixed, proforma for Cable Onda acquisition
Slide 13: Cable economics for Millicom
3 Cable economics for Millicom 1. Standalone cable economics Unlevered Low cost Pre-tax Pricing to build ROI > 30% Power With scope to expand homes passed by 50% and grow B2B 2. Leveraging Millicom assets Brand + Network + Talent + Distribution 3. Preparing for the future Convergence + 5G Note: ROI
Slide 14: Cable Onda: Expected closing Q4 2018
4 Cable Onda Expected closing Q4 2018 14
Slide 15: Free cash flow continues to grow
4 Free cash flow continues to grow FCF growth is crucial to support our organic plans and pursue inorganic opportunities Equity FCF up ~$400 million in last 3 years Equity FCF up 19% YTD $m, 2014-2017 $m, 9M 16 – 9M 18 +399 +19% 356 243 269 204 235 171 -43 2014 2015 2016 2017 9M 16 9M 17 9M 18 15
Slide 16: 2. CFO review
¥ MILLICOM 2. CFO review THE DIGITAL LIFESTYLE Tim Pennington
Slide 17: Financial Highlights
Financial Highlights On track with our 2018 goals 1 KPIs driving sustain revenue growth 2 EBITDA growth driven by core Latam businesses 3 All P&L profit metrics improving… 4 …and cashflow continues to strengthen 5 And net debt reduces again 17
Slide 18: Key financial metrics – Q3 2018
1 Key financial metrics – Q3 2018 Sustained growth Service Revenuea EBITDAa and Margins Q3 OCF and Marginsb $m, Q3 17 – Q3 18 $m and %, Q3 17 – Q3 18 $m and margin, Q3 17 – Q3 18 4.2% 2.6% 1,399 550 564 309 309 1,342 Q3 17 Q3 18 Q3 17 Q3 18 Q3 17 Q3 18 37.0% 37.7% 20.7% 20.6% a) Q3 17 numbers are ad
Slide 19: EBITDA – Q3 2018
2 EBITDA – Q3 2018 Latam biggest contributor to EBITDA growth EBITDA evolution by region $ million, Q3 17 – Q3 18 +2.6% 5 13 22 -0.4% 2 564 553 550 Ebitda Q3 17 FX and other Ebitda Q3 17 LatAm Africa Corporate Ebitda Q3 18 (constant currency) 37.0% as % of revenue 37.7% Q3 17 numbers are adjusted to
Slide 20: Latam
2 Latam Solid growth returning to Latam Latam service revenue Latam OCF $m, Q3 17 – Q3 18 $m and margin, Q3 17 – Q3 18 +1.4% +4.7% 278 Latam EBITDA 275 $m and margin, Q3 17 – Q3 18 +4.2% 1,268 20.4% 20.4% 1,212 525 504 Q3 17 Q3 18 Q3 17 Q3 18 Q3 17 Q3 18 Capex / 37.2% 38.4% Revenue 16.8% 18.0% Notes
Slide 21: Service revenue in our main Latam markets
2 Service revenue in our main Latam markets El Salvador Guatemala Honduras Service revenue, year-on-year (%), Q1 16 – Q3 18 5.4% 6.4% 2.6% 5.7% 2.1% 3.5% 6.4% 0.3% 2.7% -1.6% 0.3% 3.4% 0.0% -0.1% -3.6% -0.6% -1.4% 0.0% -3.7% -0.8% -3.9% -0.7% -0.8% -4.8% -1.0% -6.4% -2.5% -1.6% -7.7% -4.3% -8.7% -4.
Slide 22: EBITDA progression by country
2 EBITDA progression by country Strong performance in Bolivia and a return to EBITDA growth in Colombia El Salvador Guatemala Honduras EBITDA ($m), margin and year-on-year growth, Q3 17 – Q3 18 +4.7% (3.1%) (23.0%) 3.7% Adj 38 168 171 75 71 30 11 7 63 64 Q3 17 Q3 18 Q3 17 Q3 18 Q3 17 Q3 18 36.4% 30.
Slide 23: Cost review and margin progression
2 Cost review and margin progression Steady upward margin trend continues Group total OPEX base Last 12 month Group EBITDA margin OPEX organic growth* YoY (in $), Q3 17 – Q3 18 Last 12-month EBITDA margin, Q3 2015 – Q3 2018 +3.1% 541 (3.0%) +400 bps Sales and Marketing 36.9% 35.6% 33.6% +9.6% Genera
Slide 24: P&L review – Q3 2018
3 P&L review – Q3 2018 Significant profit improvement below EBITDA P&L Summary Key Observations US$ million Q3 18 Q3 17 % Var A• Lower D&A due to the full amortization of some intangibles in Revenue 1,498 1,494 0.3% Colombia, Guatemala and Honduras EBITDA 564 553 2.2% Depreciation & amortization (30
Slide 25: Cash flow – 9M 2018
4 Cash flow – 9M 2018 We generated $243 million of equity FCF year-to-date 9M 2018 cash flow $ million 688 91 1,676 203 304 897 148 391 243 Ebitda including Cash capex Working capital Cash flow from Taxes paid Finance charges FCF Dividend to eFCF discontinued (ex-spectrum and others operations minor
Slide 26: Capital structure
5 Capital structure In 9M net debt reduced by $284m and leverage at 1.82x Net debt evolution in 2018 Debt profile $ million, 31 December 2017 – 30 September 2018 30 September 2018 243 30 Latam HQ Africa 54 Geography 274 16 74% 20% 5% 133 Fin. Bonds Banks Source Leases 4,071 53% 40% 7% 3,786 Interest
Slide 27: Debt profile
5 Debt profile Comfortable capital structure and liquidity with no major maturities until 2022 Debt maturity profile $ million Average life of 5.6 years* 994 42 839 34 744 713 38 79 515 46 403 GT 26s 25 355 $800m $500m 299 31 26 25s 28s $500m 151 $500m PY $300m 27 20 7 2018 2019 2020 2021 2022 2023
Slide 28: On track
On track Confirming our Latam segment full year targets 28
Slide 29: Recap
Recap 1 Our strategy is working 2 Sustained growth 3 Solid financials and KPIs YTD 4 2018 outlook on track 5 Strengthened balance sheet and growing cash flow 6 Making progress on U.S. listing – Nasdaq chosen 29
Slide 30: Q&A
¥ MILLICOM Q&A THE DIGITAL LIFESTYLE
Slide 31: Gross debt by country
Gross debt by country Central America: South America: Africa: Corporate: Total MIC Debt: Total debt $1,834m Total debt $1,901m Total debt $268m Total debt $1,030m $5,033m 32% guaranteed 4% guaranteed 57% guaranteed 0% guaranteed 16% Guaranteed Honduras: $401m (40% guaranteed) Guatemala: $988m Chad:
Slide 32: Net debt by country
Net debt by country Central America: South America: Africa: Total Net Debt: $1,417m $1,601m $109m Corporate $3,786m Leverage 1.24x Leverage 1.52x Leverage 0.65x $659m Leverage 1.70x Honduras: $361m Leverage 1.4x Guatemala: $698m Leverage 1.0x Chad: $44m El Salvador: $242m Leverage 1.7x Costa Rica: $
Slide 33: Currency exposure of debt
Currency exposure of debt September 2018 Debt including finance leases Cash Net debt US$ Local Total Total USD Local Total 1,748 1,988 3,736 717 1,445 1,574 3,019 Latin America* 47% 53% 100% 48% 52% 100% 94 173 268 159 90 18 109 Africa 35% 65% 100% 83% 17% 100% 982 48 1,030 371 619 40 659 Corporate
Slide 34: * \LLICoM
* \LLICoM r ) THE DIGITAL LIFESTYLE
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