Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q3 2016 Earnings Presentation
25 slides from Millicom International Cellular's earnings presentation, Oct 25, 2016
Slide 1: 2016 Q3 results
2016 Q3 results Mauricio Ramos, CEO Tim Pennington, CFO 25 October 2016
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: CEO review
CEO review Mauricio Ramos, We believe in better. We believe in ticd
Slide 4: Key messages
Key messages Quarter in brief 1 Q3 in brief Strong strategy execution Strategic focus 2 Twofold reconfiguration on revenue and cost In place and working 3 Mobile data >20% Latam mobile data growth YoY 4 Cable Heading to 8m homes passed 5 “Heat” On track…bringing it on Outlook 6 2016 Outlook No chang
Slide 5: 2016 – Q3 in brief
1 2016 – Q3 in brief Strong subscriber intake in both mobile data and cable Mobile Smartphone users 24,570 +1,352 thousands Thousands in Q3 4G users in Latam 2,587 +679 thousands Thousands in Q3 Cable Total Homes Passed 7,915 +126 thousands Thousands in Q3 HFC Homes Passed 6,848 +180 thousands Thous
Slide 6: 2016 – Q3 in brief
1 2016 – Q3 in brief Margin and cash flows continue to improve Financials Service revenue 1,466 -0.2% US$ million Q3 16 vs Q3 15 Adjusted EBITDA 562 +4.0% US$ million Q3 16 vs Q3 15 Margin 36.1% +1.9ppts Q3 16 vs Q3 15 Equity FCF 130 +$49 million $ million Q3 16 vs Q3 15 Note: % variation are organi
Slide 7: Our strategic journey
2 Our strategic journey Twofold reconfiguration of the business Legacy voice & sms Revenue 1 Mobile data Cable (Home & B2B) Cost structure 1 Synergies 2 Corporate costs 2 3 Operational leverage 4 Heat transformation and efficiency program Page 7
Slide 8: Revenue reconfiguration
2 Revenue reconfiguration Strategy execution results now visible in mix evolution Mix evolution 2016 Q3 YoY growth Legacy Latam voice & sms -16.8% Latam mobile data 20.8% Strategic focus 44% 49% Home Latam cable 8.3% (home + B2B fixed) 4.8% -0.5% B2B Other Africa and other 2015Q3 2016Q3 Page 8
Slide 9: Monetizing mobile data in Latam
3 Monetizing mobile data in Latam Continued Latam mobile data revenue growth Data users Data ARPU Latam only, million subscribers Latam only, LC growth +13.1% 1 3 +1.0 12.3 8.7 11.3 7.9 >20% YoY Latam mobile data growth Q3 15 Q3 16 Data usage Latam only, GB/user/month Q3 15 Q3 16 +17.4% 1.3 Q3 15 2
Slide 10: Monetize mobile data in Latam
3 Monetize mobile data in Latam Our strategy to monetize mobile data in Latam Penetrate base “up” Grow data “need” Maintain price/GB +679 Disciplined Pricing discipline into product and offer design Faster & better – data is our future +566 Customers with high demand for data, leading LTE 2,587 3 to
Slide 11: Home
4 Home Ramping up 1 2 +671k HFC Homes built YoY +186k HFC Homes connected YoY 3 4 +534k Additional HFC RGUs YoY +8.3% Home revenue growth YoY Page 11
Slide 12: Reconfiguring the cost structure
5 Reconfiguring the cost structure All levers contributing to margin progression Program Cost structure reconfiguration 1 Synergies HEAT $200m 2 Corporate costs 3 Operational leverage 4 Heat transformation and efficiency program Adjusted EBITDA margin, OCF margin, QTD QTD 36.1% 21.7% 34.2% 13.5% Q3
Slide 13: In summary
In summary 1 We monetize data 2 We build cable 3 We bring our costs down Page 13
Slide 14: Financial review
Financial review Tim Pennington 25 October 2016
Slide 15: Key messages
Key messages 1 Revenue transitioning Data growth, voice decline 2 Cost control Continued focus 3 Margin delivery Further improvement 4 Capital focus Disciplined investment 5 Cash flow strong Equity FCF up, net debt down Page 15
Slide 16: Key financial metrics
Key financial metrics Stronger margins and cashflow Service revenue a dddddddddd Adjusted EBITDA a Capex b Organic growth -0.2% Organic growth 4.0% Lower by $181 million 1,481 1,466 547 562 812 631 Q3 15 Q3 16 Q3 15 Q3 16 9M 15 9M 16 34.2% 36.1% 16.4% 13.5% US$ million a) Q3 15 numbers FX adjusted a
Slide 17: Latin America
Latin America Transforming revenue… protecting margins YTD OCF Service revenue ($m) (EBITDA – Capex) $m and margin -2.0% 1 3 1,284 1,242 1,021 1,015 23.5% 25.1% EBITDA Q3 15 Q3 16 $m and margin 9M 15 9M 16 2 -5.9% 561 522 40.1% 39.3% Q3 15 Q3 16 Q3 15 numbers FX adjusted Capex excludes spectrum and
Slide 18: Africa
Africa Delivering profitable growth and cash flow YTD OCF Service revenue ($m) (EBITDA – Capex) $m and margin 11.2% 1 3 223 96 197 27 14.4% 4.5% EBITDA Q3 15 Q3 16 $m and margin 9M 15 9M 16 +30.9% 2 64 50 28.5% 24.8% Q3 15 Q3 16 Q3 15 numbers FX adjusted and excluding DRC Capex excludes spectrum and
Slide 19: Focus on Costs
Focus on Costs Total operating costs lower Opex evolution US$ million, Q3 2015 – Q3 2016 -4.0% • Operating costs $25m lower • 50 bps better than Q3 15 617 592 • Corporate costs down to $37m • $13m lower than Q3 15 Q3 15 Q3 16 • $164m for the LTM 38.6% 38.1% as % of revenue Page 19
Slide 20: EBITDA
EBITDA Further margin progression EBITDA evolution by Region US$ million, Q3 2015 – Q3 2016 +4.0% 15 8 1 17 10 562 547 540 Adjusted FX Zantel Rebased LatAm Africa Corporate Adjusted EBITDA Q3 15 EBITDA Q3 15 and other EBITDA Q3 16 34.2% 36.1% Page 20
Slide 21: P&L review
P&L review Earnings improvement US$ million Q3 16 Q3 15 % Var Revenue 1,555 1,600 (3) EBITDA 552 562 (2) A• Higher rates in Colombia D&A (325) (313) 4 Operating profit 227 241 (6) B• Includes $11 million gain due to FX Net Finance Charge (112) A (103) 9 Others 9 B (46) N/M C• Reflects a $5 million s
Slide 22: 9M cash flow
9M cash flow On track 9M Cash flow US$ million 1,659 1,636 23 798 107 730 207 308 215 48 167 Adjusted One-off EBITDA Cash capex Working Cash OCF Tax paid Interest FCF Dividends to EFCF EBITDA charges (ex- Capital Paid minorities spectrum & license) 35.6% 15.7% 4.6% as % of revenue Page 22
Slide 23: Net debt
Net debt Net debt reduced by c. $143 million Net debt evolution US$ million, 31 December 2015 – 30 September 2016 167 102 265 39 178 4,295 4,152 Net debt 2015 Equity FCF Spectrum M&A Dividend FX & others Net debt Q3 16 1.94x Net debt/LTM EBITDA 1.95x 2.29x Proportionate Net debt/ Proportionate LTM E
Slide 24: What we are focusing on
What we are focusing on 1 Reconfiguring the topline 2 Cost discipline 3 Cash flow generation Page 24
Slide 25: Q&A
Q&A We believe in better. We believe in ticd
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