Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q3 2009 Earnings Presentation
39 slides from Millicom International Cellular's earnings presentation, Oct 20, 2009
Slide 1: Financial Results Q3 2009
Millicom International Cellular S.A. Financial Results Q3 2009 October 20th, 2009 Mikael Grahne François-Xavier Roger
Slide 2: Caveat
: : Caveat All figures presented exclude discontinued operations (Cambodia, Laos, Sri Lanka and Sierra Leone), except where otherwise stated. Historical figures have been restated to provide a comparable base, where necessary. 2
Slide 3: Q3 highlights
: : Q3 highlights • No improvement of trading conditions • 9% underlying constant currency revenue growth, slight recovery in foreign exchange • VAS/3G revenue +46% YoY • Focus on ARPU/value/quality rather than quantity of customers • Market share growing strongly: +0.8 percentage points • EBITDA ma
Slide 4: Financial Highlights YoY
: : Financial Highlights YoY US$m Q3 09 Q3 08 Change YoY Customers ('000) 31,857 26,476 20% Revenues 856 800 7% EBITDA 392 346 13% % of revenues 45.8% 43.2% 2.6% Net Profit 143 161 -12% Capex 141 293 -52% % of revenues 16% 37% Operating Free Cash Flow * 140 33 324% % of revenues 16.4% 4.1% Free Cash
Slide 5: Financial Highlights QoQ
: : Financial Highlights QoQ US$m Q3 09 Q2 09 Change QoQ Customers ('000) 31,857 30,758 4% Revenues 856 814 5% EBITDA 392 371 6% % of revenues 45.8% 45.6% 0.2% Net Profit 143 114 25% Capex 141 166 -16% % of revenues 16% 20% Operating Free Cash Flow * 140 120 17% % of revenues 16.4% 14.7% Free Cash F
Slide 6: Customers: from quantity to quality/value
: : Customers: from quantity to quality/value Focus on value Higher churn on low-end Limited erosion of ARPU customers in local currency Prepaid customers ARPU Q2 Q3 QoQ > $ 20 11.9% 13.3% Q1 -8.5% $ 5-20 30.0% 29.8% = <$5 58.1% 56.9% Q2 -2.4% 100.0% 100.0% Q3 -1.4% Improved quality of revenues 6
Slide 7: Revenue growth – Forex impact
: : Revenue growth – Forex impact US$m 950 7% - 9% 900 9% 52 -71 7% 850 75 800 856 750 800 700 30 8 a nce EG A pact 30 9 Q V Q nue rfo rm / NA ex im u e ve pe E T For ven Re ing AMN Re l y der Un Revenue growth from underlying performance of Forex loss of 9% 9% 7
Slide 8: Revenue growth – Forex effect by region
: : Revenue growth – Forex effect by region US$m Revenue Local currency Forex Acquisitions Revenue Growth Q3 08 growth growth growth Q3 09 Central America 340 0% -4% 326 -4% South America 273 13% -12% 277 1% Africa 187 21% -14% 200 7% Non Cellular 7% 52 Total MIC 800 9% -9% 7% 856 7% Strong growth i
Slide 9: Revenue split by category
: : Revenue split by category US$m Q3 09 Q3 08 $ Local currency growth growth Airtime 589 601 -2% 6% % of Recurring Rev. 76% 79% VAS/SMS/3G 149 112 33% 46% % of Recurring Rev. 19.3% 14.6% Other * 118 87 35% 31% Total Revenues 856 800 7% 9% * T elephone & Equipment + Amnet-Navega VAS/SMS/3G revenue >
Slide 10: VAS revenue growing
: : VAS revenue growing SMS - Other VAS % on recurring revenue 25% 19% 20% 16% 17% 15% 8% 9% Other VAS as a % of recurr. rev 6% 10% SMS as % of recurr. rev. 5% 10% 10% 10% 0% VAS revenue 19.3% of recurring Q1 09 Q2 09 Q3 09 revenue Note: Other VAS includes Ringback tones / Data (web browsing)/ Conte
Slide 11: Market share evolution
: : Market share evolution 2007 2008 2009 30% 28.7% 29% 27.9% 28% 27.1% 27.2% 27.2% 27.0% 27% 26% 25.4% 26.6% 25% 24% 24.6% 24.9% 23% 22% 21.8% 21% 20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 M MIC IC M arke t Share * Market * for DRC , Market Share of Kinshasa/ BAS Congo, only region where Millicom operat
Slide 12: Churn evolution
: : Churn evolution MIC TOTAL 6.0% 5.5% 5.4% 5.5% 5.1% 5.0% 4.7% 4.5% 4.0% Focus on higher quality Q4 08 Q1 09 Q2 09 Q3 09 customers Churn by Region QoQ Lower value customers under economic pressure Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2Q3 8.0% 7.1% 7.1% 7.7% 6.0% 4.9% 4.7% 5.0% 3.5% 3.6% 4.0% 2.5% 2.0% 0.0% CAM S
Slide 13: Regional review
Click to add title Regional review
Slide 14: Quarterly Highlights – Central America YoY
: : Quarterly Highlights – Central America YoY US$m Q3 09 Q3 08 Reported Local currency growth growth Customers ('000) 12,366 10,846 14% Revenues 326 340 -4% 0% EBITDA 180 185 -3% 2% % of revenues 55% 54% 1% Capex 23 47 -52% % of revenues 7% 14% Operating Free Cash Flow 94 89 5% % of revenues 29% 26
Slide 15: Quarterly Highlights – South America YoY
: : Quarterly Highlights – South America YoY US$m Q3 09 Q3 08 Reported Local currency growth growth Customers ('000) 8,414 7,192 17% Revenues 277 273 1% 13% EBITDA 113 97 17% 35% % of revenues 41% 35% 5% Capex 29 89 -67% % of revenues 11% 33% Operating Free Cash Flow 83 12 610% % of revenues 30% 4%
Slide 16: Quarterly Highlights – Africa YoY
: : Quarterly Highlights – Africa YoY US$m Q3 09 Q3 08 Reported Local currency growth growth Customers ('000) 11,077 8,438 31% Revenues 200 187 7% 21% EBITDA 75 64 17% 47% % of revenues 37% 34% 3% Capex 82 156 -47% % of revenues 41% 84% Operating Free Cash Flow -21 -60 % of revenues -10% -32% Growth
Slide 17: Quarterly Highlights – Amnet + Navega
: : Quarterly Highlights – Amnet + Navega US$m Q3 09 Q2 09 Growth QoQ Revenue Generating Units '000 611 578 6% % of home passed 2-way 79% 76% 3% Net Revenues 52 50 4% EBITDA 24 25 -3% % of revenues * 45% 47% -1% Capex 6 20 -71% % of revenues 11% 38% Operating Free Cash Flow 12 -9 % of revenues 23% -
Slide 18: Financial review
Financial review
Slide 19: Quarterly Capex/Depreciation
: : Quarterly Capex/Depreciation 450 400 350 300 250 200 150 Depreciation 100 Capex 50 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Capex % of revenue 37% 50% 24% 19% 16% CAPEX adjusted to growth 19
Slide 20: Quarterly Interest expense
: : Quarterly Interest expense 55 50 50 47 46 35% fixed rate 45 43 42 * 65% variable rate 40 target for 2010 35 around 50/50 30 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Effective rate 9.0% 10.0% 7.9% 8.4% 7.9% Total Interest expense (US$m) Not restated for Asian disposal * Excluding the reversal of the cost fo
Slide 21: Taxes
: : Taxes US$m Q3 09 Q3 08 YTD YTD PBT 511 512 Taxes 144 132 Effective tax rate 28% 26% Effective tax rate in line with previous year 21
Slide 22: Quarterly EPS
: : Quarterly EPS EPS (USD) Normalized EPS (USD) * 1.43 1.28 1.35 1.49 1.13 1.50 1.29 1.31 1.11 1.05 1.00 0.61 0.50 - Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 * excluding discontinued operations and impact of DTA in Colombia EPS improvement with Capex slow-down and forex gains 22
Slide 23: Debt maturity as at 30.09.09
: : Debt maturity as at 30.09.09 700 1000 900 800 700 600 454 500 400 563 300 404 200 280 298 246 100 110 0 Less than 1 1-2 years 2-3- years 3-4 years 4-5 years more than 5 year Debt maturity (US$m) Average maturity above 3 years Post closing, Amnet refinancing closed for 2 years at a rate below the
Slide 24: Debt management
: : Debt management US$m USD Local Currency Total Central America 260 112 372 South America 62 653 715 Africa * 307 275 582 Total Operations 629 1,040 1,669 % of total debt 38% 62% Corporate 686 686 Total MIC 1,315 1,040 2,355 % of total debt 56% 44% * Of which 12m in EUR Maximize debt in local curr
Slide 25: Free cash flow
: : Free cash flow Free Cash Flow (US$m)* 150 108 100 69 59 50 1 0 (50) (100) (101) (150) Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 * EBITDA - Capex +/- WC- Interests - Taxes - Corporate costs Increasing Free Cash Flow: 14.4% of revenues in Q3 09 25
Slide 26: Operating Free Cash Flow by region
: : Operating Free Cash Flow by region OFCF by Region (US$m) Q3 08 Q3 09 120 89 94 100 83 80 60 40 20 12 12 0 -20 -40 -21 -60 -60 -80 Central America South America Africa Non Cellular Improvement of OFCF in all the regions Less dependance from Central America (from 217% to 56% of total OFCF) 26
Slide 27: Outlook Full Year 2009
: : Outlook Full Year 2009 Stabilization of EBITDA Margin at current level Capex around OFCF* as US$m 700 (50$m a % of pushed to revenue in 2010) mid-teens •OFCF= Operating Free Cash Flow: EBITDA - CAPEX - WC movements - Taxes 27
Slide 28: Disposal of Asia
: : Disposal of Asia US$m Enterprise Multiple Equity Buyer Status value 2009 Value 100% EBITDA Cambodia 605 7.1 346 Royal Group signed Sri Lanka 207 7.4 155 Etisalat completed Laos 102 7.5 65 Vimpelcom signed Total Asia 914 7.2 566 weighted 28
Slide 29: Use of cash
: : Use of cash leadership (# 1-2) Analysis of external growth options Medium term return ROIC > WACC Redeem HY bond If no attractive targets available in short term Return funds to shareholders 29
Slide 30: Appendix
Click to add title Appendix 30
Slide 31: Overview
: : Overview Amnet: 38m Guatemala 13m Central America: South America: Africa*: Asia: Mobile El Salvador 7m 28 m 63 m 169 m 42 m operations’ Honduras 8m pops under Costa Rica 4m license*†: 260m Nicaragua 6m Guatemala 13m El Salvador 7m Senegal 14m Chad 10m Laos 7m Cambodia 14m Ownership: 55.0% Owners
Slide 32: Penetration rates
: : Penetration rates CAM SAM Africa MIC Avg penetration Avg penetration Avg penetration Avg penetration 84.2% 83.4% 25.3% 46.4% 120.0 96.2 91.0 87.0 100.0 77.2 79.8 76.5 80.0 52.1 48.8 60.0 41.8 27.0 Average 40.0 16.4 18.0 MIC 20.0 8.5 0.0 Ho Ch Se El G Bo Co Pa DR M G Rw Ta ua ha au ne nz nd a Sa
Slide 33: Market share evolution QoQ
: : Market share evolution QoQ CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share 53.5% 16.3% 30.4% 28.7% 70 65 60 56 47 49 49 50 42 36 36 40 32 28.7 30 25 25 Average MIC 20 9 10 0 G B Pa D Ta El H C C Se M G M ua ol RC on ol ha ha au IC nz ra Sa ne Q2 09 Q3 09 iv
Slide 34: Movements of main currencies vs USD YoY
: : Movements of main currencies vs USD YoY Closing rate Closing rate Change Q3 09 Q3 08 Guatemala GTQ 8.34 7.47 -12% Central America Honduras HNL 18.90 18.90 0% Bolivia BOB 7.02 7.02 0% South America Colombia COP 1,921.43 2,190.70 12% Paraguay PYG 4,910.00 3,990.00 -23% DRC CDF 860.64 562.50 -53% G
Slide 35: Average impact of currencies
: : Average impact of currencies Exchange rate impact 100 100.0 95.7 96 93.6 93.1 92.0 92.5 91.9 91.7 92.2 92 90.5 90.6 89.5 87.9 88 84 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Slight recovery in foreign exchange 35
Slide 36: Q3 09 Market Overview – by Segment
: : Q3 09 Market Overview – by Segment Central Amnet/ Millicom Segments South America Africa† Total America Navega Market Overview Population (million)* 28 63 169 260 Mobile Penetration** 84% 83% 25% 46% Operational Data Total Customers (000) 12,366 8,414 11,077 31,857 Attributable Sub (000) 8,547 8
Slide 37: Market Overview – by Country
: : Market Overview – by Country Latin America Central America AMNET South America El Salvador Guatemala Honduras Bolivia Colombia Paraguay Shareholding 100.0% 55% (p) 66.7% (p) 100.0% 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
Slide 38: Market Overview – by Country
: : Market Overview – by Country Africa Chad DRC Ghana Mauritius Rwanda Senegal Tanzania Shareholding 100.0% 100.0% 100.0% 50% (p) 87.5% (p) 100.0% 100.0% License Period (yrs) 10 yrs fr 2004 20 yrs fr 1997 15 yrs fr 2004 15 yrs fr 2000* 15 yrs fr 2008 20 yrs fr 1998 25 yrs fr 2007 Date of Expiry 201
Slide 39: Forward-looking statements
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 future cou
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