Millicom International Cellular S.A. · NASDAQ:TIGO

Millicom International Cellular — Q3 2013 Earnings Presentation

36 slides from Millicom International Cellular's earnings presentation, November 2013

  1. Slide 1: 2013 Q3 Results Presentation

    2013 Q3 Results Presentation Hans-Holger Albrecht, President and CEO Marc Zagar, Interim CFO, EVP Controlling & Analytics

  2. 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

  3. Slide 3: Agenda

    Agenda Q3 at a glance Operational Performance Q3 Financial Results Q&A Appendix 3

  4. Slide 4: Q3 2013 – Accelerating growth and continuing investment for the future

    Q3 2013 – Accelerating growth and continuing investment for the future  8.1% LC revenue growth (6.25 in Q2); like-for-like1 revenue growth accelerated to 10% YoY  Mobile is proving resilient with 3.3% growth in LC, 5.2% like-for-like with record recruitment of new data users. YTD 5.7% of mobile ba

  5. Slide 5: Growth resting on four pillars

    Growth resting on four pillars Revenue growth Contribution to Recurring Revenue growth (LC) USD million, Q3 2012-Q3 2013 %, Q3 2012-Q3 2013 1,290 +7.6% Other1 Online 29% MFS 13% 1,199 Cable & Digital Media 15% Mobile 43% Q3 2012 Q3 2013  First double digit growth since Q4 2011: like-for-like revenu

  6. Slide 6: Digital is now over one third of revenues

    Digital is now over one third of revenues Contribution to revenues %, Q3 2012-Q3 2013 +$72 m in incremental revenue Digital 28% 30% 32% 33% 33% Voice & SMS 72% 70% 68% 67% 67% Q3-12 Q4-12 Q1-13 Q2-13 Q3-13  33% of recurring revenues come from Digital (non voice/sms)  Stable contribution from Voice

  7. Slide 7: Agenda

    Agenda Q3 at a glance Operational Performance Q3 Financial Results Q&A Appendix 7

  8. Slide 8: Resilient mobile business

    Resilient mobile business Mobile Data Penetration %, Q3 2012-Q3 2013  Mobile revenues growing 3.3% YoY in LC and 20% 5.2% on a like-for-like basis  Over 1 million new mobile data customers obtained 16% in the quarter  Regulatory pressure starting to abate on usage elasticity in Q3: 12%  1.9 poin

  9. Slide 9: Strong growth in mobile data traffic and revenues

    Strong growth in mobile data traffic and revenues Mobile data traffic growth (x factor) Subsidies (Net) Multiple (Q1 10=1), Q1 2010-Q3 2013 USD M, Q3 2012-Q3 2013 6 Revenue Traffic +26% 56.1 5 46.1 4 3 2 1 Q1 10 Q1 11 Q1 12 Q1 13 Q3 12 Q3 13  Mobile information revenue growth at 28% supported by hi

  10. Slide 10: Cable & digital media – Building momentum organically

    Cable & digital media – Building momentum organically Homes connected by region and homes passed Pay TV and Fixed BB RGUs thousands, Q3 2012-Q3 2013 thousands and %, Q3 2012-Q3 2013 900 3,000 1,100 45% 2,500 1,000 800 43% 900 2,000 700 800 41% 1,500 600 700 39% 1,000 600 500 37% 500 500 400 0 400 35

  11. Slide 11: Creating a leading integrated player in Colombia

    Creating a leading integrated player in Colombia: In-market consolidation & Fixed/Mobile convergence 1 UNE owns the best fixed  Colombia is an attractive & fast growing economy infrastructure in  UNE has 2.6m homes passed with HFC & a nationwide backbone Colombia  Index perception surveys of 79.6

  12. Slide 12: MFS – on the right track

    MFS – on the right track MFS Penetration % of mobile customers, Q2 2010-Q2 2013 50%  MFS penetration at 14% across footprint1, 45% TZ 11% over total mobile base 40%  ARPU at $1.4 for users and increasing 12.6% 35% RW Y-o-Y in LC 30% PY 25%  Chad became our most successful launch to date with pene

  13. Slide 13: Online - New launches and synergies

    Online - New launches and synergies Business update New Q3 Launches  Gearing up towards the Christmas season  Jovago – Hotel booking expanded from Nigeria to  New warehouses for Kenya, Tanzania, Rwanda and Uganda in Q3  Kanui and Tricae in Brazil  Jumia in Nigeria and Morocco  Kaymu – Online m

  14. Slide 14: Agenda

    Agenda Q3 at a glance Operational Performance Q3 Financial Results Q&A Appendix 14

  15. Slide 15: Financial results reflect opportunities and challenges

    Financial results reflect opportunities and challenges Like-for-like % Q3 13 Q3 12 % growth growth Mobile 48,919 46,031 6.3% Customers Cable & Digital Media 846 632 33.8% (000s) MFS 5,491 3,321 65.3% Mobile 7.9 8.3 (0.6%) ARPU (USD) Cable & Digital Media 33 31 3.1% MFS 1.4 1.3 12.6% Revenue (USD m)

  16. Slide 16: Regional growth driven by South America and Africa in Q3

    Regional growth driven by South America and Africa in Q3 Revenue evolution by Region USD m, Q3 2012-Q3 2013 1,350 17 25 23 1,290 1,300 12 61 1,250 1,199 4 1,200 1,150 1,298 1,290 1,264 1,275 1,100 1,199 1,203 1,050 1,000 Q3 12 CAM SAM Africa Online Cablevision FX Q3 13 16 Source: Millicom

  17. Slide 17: All four pillars contribute to Growth

    All four pillars contribute to Growth Revenue evolution by Business Unit USD m, Q3 2012-Q3 2013 1,350 19 25 23 1,290 1,300 11 29 1,250 34 1,199 1,200 1,150 1,296 1,290 1,263 1,273 1,233 1,100 1,199 1,050 1,000 1 2 Total Revenue Mobile Cable MFS Online Other FX Total Revenue Q3 12 Q3 13 1) Includes C

  18. Slide 18: EBITDA margin under pressure

    EBITDA margin under pressure EBITDA margin %, Q3 2012-Q3 2013 0.8% 1.4% 1.0% 0.5% 0.8% 2.2% Investment for growth 42.3% 38.6% 35.6% EBITDA% Regulatory and Commercial Category Others Underlying One-Offs Online Dilution EBITDA% Q3 12 Pricing Building EBITDA% Effect Q3 13 Pressures Q3 13 18 Source: Mil

  19. Slide 19: Normalized EPS Q3

    Normalized EPS Q3 Q3 13 Q3 12 % growth Remarks EBITDA 459 507 (10%) Corporate Costs (51) (38) 35% Employee related costs and consultancy fees Depreciation (215) (206) 5% Increased network amortization Net Finance Costs (67) (54) 24% Gross debt increased by $548m Taxes (48) (55) (14%) Others 21 11 NA

  20. Slide 20: Tax rate below 30%

    Tax rate below 30% USD m Q2 13 Q2 13 Q1 13 Q4 12 Q3 12 PBT 19 116 216 224 178 Normalized PBT1 162 186 189 222 227 Reported Taxes (54) (61) (68) (156) (60) of which Non recurring items1 (6) (11) (16) (102) (5) Normalized tax expenses2 (48) (50) (52) (54) (55) Normalized tax rate 29.4% 26.8% 27.5% 24.

  21. Slide 21: Free cash flow reflects investment for growth

    Free cash flow1 reflects investment for growth FCF USD m and % of revenues, Q3 2012-Q3 2013 300 100.00% $m Q3 13 Q3 12 Change 80.00% EBITDA 459 507 (9.5%) 204 200 171 Movements in WC (21) 26 NA 60.00% Capex (net of disposals) (201) (218) (7.8%) 100 81 40.00% Taxes paid (67) (63) 6.3% 6.9% 14.3% 6 6.

  22. Slide 22: Moderate leverage and well spread maturities

    Moderate leverage and well spread maturities USD m Q3 13 Q3 12 Gross Debt1 3,375 2,827 Cash2 1,109 1,205 Net Debt 2,264 1,622 Net Debt / EBITDA3 1.2 0.8 Debt maturity (excluding finance leases) USD m, Q3 2013 1,109 1,200 1,000 877 800 600 498 528 445 400 298 208 210 200 52 3 0 Cash <1 1-2 y 2-3 y 3-

  23. Slide 23: Diversified debt sources

    Diversified debt sources Debt Sources (excluding finance leases) USD m, Q3 2012 USD m, Q3 2013 $ 2,626 $ 3,118 152 40 Banks 267 329 Bonds 1,216 1,402 628 1,710 Development Financial Institutions Shareholder Loans + Others  Public debt (bonds) is now our largest source of funding offering a better b

  24. Slide 24: Debt management provides natural hedges

    Debt1 management provides natural hedges Currency Interest rate USD m Local2 USD Fixed Float Total Central America 603 426 695 334 1,029 % 59% 41% 68% 32% South America 507 374 536 345 881 % 58% 42% 61% 39% Africa 29 180 65 144 209 % 14% 86% 31% 69% Corporate 859 140 800 199 999 % 86% 14% 80% 20% To

  25. Slide 25: Growing share of corporate debt

    Growing share of corporate debt Central America: South America: Africa: Corporate: TOTAL MIC DEBT: Total debt: $1,029m Total debt: $881m Total debt: $209m Total debt: $999 m1 $3,118m 8% guaranteed 1% guaranteed 95% guaranteed 100% guaranteed 41% guaranteed Honduras: $270m Senegal: $0m Ghana: $0m (0%

  26. Slide 26: 2013 Guidance amended for Online losses

    2013 Guidance amended for Online losses  2013 Group EBITDA margin expected to be around 40% excluding Online (unchanged)  Capex / revenues to peak around 20% not including spectrum or asset acquisitions (unchanged)  Online division expected to deliver revenue in excess of $80 million (from close

  27. Slide 27: Agenda

    Agenda Q3 at a glance Operational Performance Q3 Financial Results Q&A Appendix 27

  28. Slide 28: Agenda

    Agenda Q3 at a glance Operational Performance Q3 Financial Results Q&A Appendix 28

  29. Slide 29: Revenues by regions and by business unit

    Revenues by regions and by business unit Central South Africa Online Millicom America America Mobile ($m) 357 456 234 - 1,047 Cable & Digital 80 34 - - 114 Media ($m) MFS ($m) 1 6 15 - 22 Online ($m) - - - 25 25 Others ($m) 28 46 8 - 82 Millicom 466 542 257 25 1,290 29 Source: Millicom

  30. Slide 30: Mobile Voice- Penetration rates

    Mobile Voice- Penetration rates CAM SAM Africa Av. Penetration 93.6% Av. Penetration 98.5% Av. Penetration 52.4% MIC Av. Penetration 105.2% 102.0% 70.8% 96.8% 97.2% 98.8% 81.9% 78.8% 72.2% 68.9% 43.0% 45.7% 43.6% 32.5% 1 1) For DRC , only penetration in Kinshasa-BAS Congo and Kivu area is considered

  31. Slide 31: Mobile Voice-Market shares

    Mobile Voice-Market shares CAM SAM Africa Av. Market Share 53.8% Av. Market Share 20.4% Av. Market Share 28.2% MIC Av. Market Share 29.5% 66.3% 58.1% 53.7% 53.0% 40.4% 41.2% 34.5% 36.5% 31.1% 29.3% 28.8% 17.6% 12.9% 31 Source: Millicom

  32. Slide 32: Movements of currencies vs USD QoQ

    Movements of currencies vs USD QoQ Closing Rate Average Rate Q3 13 Q2 13 Change Q3 13 Q2 13 Change Guatemala GTQ 7.93 7.83 1% 7.91 7.82 1% Honduras HNL 20.62 20.49 1% 20.57 20.26 2% Nicaragua NIO 24.50 24.71 (1%) 24.75 24.42 1% Costa Rica CRC 505.57 504.53 0% 505.63 506.57 (0%) Bolivia BOB 6.91 6.91

  33. Slide 33: Market overview – by region

    Market overview – by region Millicom Regions Central America South America Africa Online Total Market Overview Population (m) 28 63 186 277 Mobile Penetration 93.6% 98.5% 52.4% 70.8% Operational Data Total Mobile Customers (m) 15,584 13,239 20,097 48,920 Attri. Customers (m) 11,832 13,239 19,833 44,

  34. Slide 34: Market overview – LATAM

    Market overview – LATAM Latin America Central America South America El Salvador Guatemala Honduras Bolivia Colombia Paraguay Shareholding 100% 55% (p) 66.70% 100% 50% + 1 share 100% License 20y from 1998 15y from 2003 25y from 1996 20y from 1995 10Y from 2013 5y renewal Date of Expiry 2018 2018 2021

  35. Slide 35: Market overview – Africa

    Market overview – Africa Africa Chad DRC Ghana Mauritius Rwanda Senegal Tanzania Shareholding 100% 100% 100% 50% 4 87.5% 100% 100% Licence 10 y from 2004 12y from 2012 15y from 2004 15y from 20001 15y from 2008 16y from 2012 25y from 2007 Date of Expiry 2014 2024 2019 2016 2022 2028 2032 Market Over

  36. Slide 36: Information- Increasing usage & penetration

    Information- Increasing usage & penetration Latin America Q2 13 Q3 13 QoQ Total Data Users1 (m) 6.0 6.5 8% % of total customers (penetration) 21.0% 22.4% 1.4 pts Total data Revenue (US$ m) 142.9 147.4 3% of which Handsets 106 114 8% Datacards 37 33 (10%) Data Revenues as % of total mobile recurring

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