Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q2 2006 Earnings Presentation
43 slides from Millicom International Cellular's earnings presentation, Oct 15, 2006
Slide 1: Millicom International Cellular S.A. Investor Presentation Results for Q2 2006
Millicom International Cellular S.A. Investor Presentation Results for Q2 2006
Slide 2: 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
Slide 3: Millicom – Leading Cellular Provider
MILLICOM – LEADING CELLULAR PROVIDER PROVEN PREPAID, MASS MARKET DISTRIBUTION & PRICE LEADERSHIP 24 YEAR HISTORY 10.9M SUBSCRIBERS (6/06) 16 COUNTRIES: LATIN AMERICA 390M POPS AFRICA UNDER LICENSE ASIA LOW PENETRATION, LOW-COST HIGH GROWTH BUSINESS MODEL MARKETS DELIVERING DIVERSIFIED GROWTH 3
Slide 4: 390m Population Under License
390m POPULATION UNDER LICENSE (POL) Guatemala 12.7m* El Salvador 6.7m* Senegal 11.1m* Ghana 21.0m* Pakistan I 162.4m* Pakistan II Comcel (55.0%) Telemovil (100%) SentelGSM (100%) Mobitel (100%) SOLD TO THE ARFEEN Paktel (88.9%) #2 of 3 #1 of 5 #2 of 2 #2 of 4 GROUP (June 2006) #5 of 6 Total of 1,588
Slide 5: Developing Telecoms Markets
DEVELOPING TELECOMS MARKETS Low Telecom Penetration…High Growth Potential EU 380m US 290m Mauritius 1.2m El Salvador 6.7m Bolivia 8.9m Guatemala 14.7m Paraguay 6.3m Sri Lanka 20.1m Senegal 11.1m Honduras 7.0m Population Ghana 21.0m Cambodia 13.6m Vietnam 82.7m Laos 6.2m Tanzania 36.8m Pakistan 162.4
Slide 6: Proven Prepaid Strategy
PROVEN PREPAID STRATEGY Focus on Prepaid Growth… … And Profitability Total subscribers in ‘000 10,903 9,892 10,000 8,000 6,000 95% z No credit risk 4,000 z Low acquisition costs 2,000 z Fast payback time 0 Q106 Q206 z And we also love our postpaid Prepaid Postpaid Total customers ! z Leading to incr
Slide 7: Customer Focused Model: Affordable
CUSTOMER FOCUSED MODEL z Well recognised mass market brands Affordable z Keeping costs low and quality high to offer consumers best value through low tariffs – ‘perceived price leadership’ z Micro pre-payment and e-pin drive entry prices down z Per second billing TIGOPACKS with affordable financing
Slide 8: Customer Focused Model: Accessible
CUSTOMER FOCUSED MODEL z Most extensive and efficient distribution network in our markets – based on POS for consumer goods Accessible z Non traditional distribution channels to increase mass- market reach (freelance distributors, street vendors, e-pin / OTA top-up) z Accessible locally at all hours
Slide 9: Customer Focused Model: E-pin
CUSTOMER FOCUSED MODEL Accessible z E- pin – An over-the-air method of selling airtime Poster Brochure 9
Slide 10: Customer Focused Model: Available
CUSTOMER FOCUSED MODEL z Wide network coverage – we are where people live Available z Focus on network capacity to ensure quality z Future roll-out is demand driven Honduras – Network Coverage 10
Slide 11: Our Business Model
OUR BUSINESS MODEL We believe the lowest cost operator will ultimately be the most successful • Lowest Opex and Capex per unit in the industry through… • ‘off the shelf’ purchasing /procurement synergies with Tele2 AB • maximisation of synergies between operations within and beyond clusters… • …and
Slide 12: Conclusion: Key Strengths
CONCLUSION: KEY STRENGTHS • 16 attractive high growth markets • Mass market distribution for pre-paid • Affordable • Accessible • Available • Experienced leadership • Low cost operations • Local management • Increased capex creates new momentum in business • Delivering diversified and profitable gro
Slide 13: Financial Results
FINANCIAL RESULTS FINANCIAL RESULTS 13
Slide 14: Key Data
KEY DATA Pro Forma US$m Q2 06 Q2 05 Growth Q2 Growth Total Subscribers ('000) 10,903 7,206 51% 62% Revenues 362 261 39% 54% EBITDA 157 122 28% 53% Capex 146 43 14
Slide 15: Pro Forma Total Subscribers Growth
PRO FORMA TOTAL SUBSCRIBERS GROWTH Pro Forma Total Subscribers ('000) Quarterly YoY Growth 12,000 62% 70% 11,000 60% 58% 10,903 10,000 60% 50% 9,000 9,497 8,000 58% 8,508 40% 51% 7,000 44% 7,478 30% 6,000 6,752 6,017 20% 5,000 4,000 10% 3,000 0% Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 15
Slide 16: Pro Forma Revenues Growth
PRO FORMA REVENUES GROWTH Pro Forma Revenues (US$m) Quarterly YoY Growth 400 40% 54% 350 30% 356 48% 20% 300 40% 316 37% 287 10% 250 36% 33% 253 0% 231 200 214 -10% 150 -20% Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 16
Slide 17: Pro Forma EBITDA Growth
PRO FORMA EBITDA GROWTH Pro Forma EBITDA (US$m) Quarterly YoY Growth 160 53% 50% 150 55% 156 140 30% 34% 142 130 10% 120 127 32% -10% 110 35% 111 -30% 100 24% 102 90 -50% 91 80 -70% Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 17
Slide 18: Pro Forma Central America
PRO FORMA CENTRAL AMERICA Pro Forma US$m Q2 06 Q2 05 Q2 Growth Subscribers ('000) 3,648 2,063 77% Revenues 181 106 71% EBITDA 94 54 75% EBITDA Margin 52% 51% 18
Slide 19: Pro Forma South America
PRO FORMA SOUTH AMERICA Pro Forma US$m Q2 06 Q2 05 Q2 Growth Subscribers ('000) 1,715 1,056 62% Revenues 51 33 54% EBITDA 22 14 62% EBITDA Margin 44% 42% 19
Slide 20: Pro Forma Africa
PRO FORMA AFRICA Pro Forma US$m Q2 06 Q2 05 Q2 Growth Subscribers ('000) 2,690 1,425 89% Revenues 73 48 52% EBITDA 29 24 23% EBITDA Margin 40% 49% 20
Slide 21: Pro Forma South Asia
PRO FORMA SOUTH ASIA Pro Forma US$m Q2 06 Q2 05 Q2 Growth Subscribers ('000) 1,856 1,469 26% Revenues 24 22 11% EBITDA 1 3 -51% EBITDA Margin 6% 13% 21
Slide 22: Pro Forma South East Asia
PRO FORMA SOUTH EAST ASIA Pro Forma US$m Q2 06 Q2 05 Q2 Growth Subscribers ('000) 994 738 35% Revenues 26 21 22% EBITDA 9 8 19% EBITDA Margin 37% 38% 22
Slide 23: Pro Forma Financial Highlights
PRO FORMA FINANCIAL HIGHLIGHTS US$m Q2 2006 Q2 2005 Change Revenues 356 231 54% GM % 72% 71% S&M % -16% -15% G&A % -12% -12% EBITDA 156 102 53% EBITDA % 44% 44% 23
Slide 24: Composition of Quarterly Revenues
COMPOSITION OF QUARTERLY REVENUES Composition of Quarterly Pro Forma Revenues 400 350 28% 300 28% 29% 250 US$m 29% 16% 29% 15% 200 29% 15% 12% 15% 12% 150 15% 12% 16% 12% 12% 12% 100 44% 45% 44% 43% 44% 44% 50 0 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 EBITDA G&A and Other S&M COS 24
Slide 25: Quarterly Capex
QUARTERLY CAPEX Quarterly Capex (US$m) 180 170 160 146 140 120 95 100 Avg Capex 2005: US$ 88 89 80 60 50 43 40 20 0 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 25
Slide 26: Profit & Loss
PROFIT & LOSS Key US$m H1 06 H1 05 DIFF EBITDA 299 249 50 Corporate costs and stock compensation (26) (14) (12) Depreciation and amortisation (101) (116) 15 Write downs 10 (28) 38 Interest Expense (76) (69) (7) Interest Income 13 11 2 Other (1) (12) 11 Profit before tax 118 21 97 Taxes (49) 41% (27)
Slide 27: Write Downs
WRITE DOWNS US$m H1 06 H1 05 DIFF Pakcom 9 (5) 14 Paktel 0 (5) 5 Vietnam 0 (17) 17 Other 1 (1) 2 TOTAL 10 (28) 38 27
Slide 28: Other Income / Costs
OTHER INCOME / COSTS US$m H1 06 H1 05 Variance Gain on exchange and disposal of investments 5 2 3 Valuation movement on investment in securities (17) (99) 82 Fair value result on financial instruments 43 35 8 Exchange (33) 50 (83) Other 1 0 1 TOTAL (1) (12) 11 28
Slide 29: Taxes
TAXES US$m H1 06 H1 05 PBT Rates PBT Rates Operations 162 27% 75 33% Costs Not Costs Not Corporate (44) Deductible (54) Deductible TOTAL 118 41% 21 127% 29
Slide 30: Cash Flow
CASH FLOW US$m H1 06 H1 05 EBITDA 299 249 Change in Working Capital 16 16 Cash generated from Operations 315 105% 265 107% Corporate Costs (19) (13) Net Interest paid (41) (46) Total taxes (56) (44) Total Investments (336) (142) Total Financing 45 187 Currency Adjustments 2 0 Net Cashflow (90) 207 O
Slide 31: Investments
INVESTMENTS US$m H1 06 H1 05 CAPEX (241) (93) Change in Capex Advances/Payable (17) 4 Acquisitions, net (57) (17) License Payments (22) (33) Time Deposits & Other 1 (3) Investments (336) (142) 31
Slide 32: Appendices: Cluster Results
APPENDICES CLUSTER RESULTS 32
Slide 33: Revenue and EBITDA Breakdown – Q2 2006
REVENUE AND EBITDA BREAKDOWN – Q2 2006 Revenue Split (Q2 2006) EBITDA Split (Q2 2006) MIC MIC South East Asia South East Asia MIC 7.3% MIC MIC 5.6% Africa South Asia South Asia MIC 1.6% 20.1% 8% MIC Africa 18.5% South MIC America South America 14.3% 14.3% MIC Central America MIC 50.3% Central Americ
Slide 34: Central America Update
CENTRAL AMERICA Update EL SALVADOR, GUATEMALA, HONDURAS z The key driver of growth is the successful, unified brand, Tigo, rolled out on the back of new and extended GSM networks z Enhanced regional synergies z Deeper market penetration and price elasticity z Extensive range of Tigo value added serv
Slide 35: Revenue & Profitability: Central America
REVENUE & PROFITABILITY: CENTRAL AMERICA Revenue $MM(1),(3) # Subs. (‘000)(2) EBITDA $MM(1),(3) Margin % 240 60 52 51 51 51 500 453 3,647 4,000 200 50 450 3,500 400 305 338 3,000 350 2,737 160 40 300 165 2,500 250 1,697 2,000 120 30 200 1,500 150 1,413 100 1,000 80 20 50 500 0 0 40 10 2003 2004 2005
Slide 36: South America Update
SOUTH AMERICA Update BOLIVIA, PARAGUAY z Stabilizing macroeconomic outlook provides basis for renewed growth z Complete migration to GSM and roll-out of Tigo brand enhance MIC’s competitiveness z Acquisition of minority stake in Paraguay completed in July 2006 Per second billing 36
Slide 37: Revenue & Profitability Trends: S. America
REVENUE & PROFITABILITY TRENDS: S. AMERICA Revenue $MM(1) # Subs. (‘000)(2) EBITDA $MM(1) Margin % 57 141 60 50 150 2,000 45 43 114 1,715 1,750 50 39 40 41 99 96 38 40 1,337 1,500 37 100 1,250 40 30 937 1,000 939 30 50 750 20 500 20 250 10 0 0 10 2003 2004 2005 2006 0 0 2003 2004 2005 2006 Q1 Q2 Q3
Slide 38: Africa Update
AFRICA Update CHAD, DEM. REP. OF THE CONGO, GHANA, MAURITIUS, SENEGAL, SIERRA LEONE, TANZANIA z Repeating Latin American success story with roll-out of Tigo brand z Fastest subscriber growth in Millicom z Under-penetrated markets and growing economies z Acceleration of investments to fuel growth z I
Slide 39: Revenue & Profitability Trends in Africa
REVENUE & PROFITABILITY TRENDS IN AFRICA Revenue $MM(1) # Subs. (‘000)(2) EBITDA $MM(1) Margin % 88 225 204 3,000 90 50 200 2,690 2,500 80 42 44 45 175 70 66 8 8 43 42 40 150 150 2,006 140 2,000 60 59 35 125 50 30 100 1,500 40 36 25 84 1,121 30 20 75 662 1,000 6 15 50 20 6 10 25 500 10 5 0 0 0 5 9 0
Slide 40: South Asia Update
SOUTH ASIA Update PAKISTAN, SRI LANKA, (IRAN) z Sale of Pakcom business z Investment in GSM network in Paktel z Upgrade license spectrum in Paktel z Strong economic development in Sri Lanka despite natural disasters in 2004 and 2005 40
Slide 41: Revenue & Profitability: South Asia
REVENUE & PROFITABILITY: SOUTH ASIA Revenue $MM(1) # Subs. (‘000)(2) EBITDA $MM(1) Margin % 121 125 113 2,250 106 1,997 2,000 60 55 60 100 1,856 1,750 53 49 1,459 1,500 50 50 75 1,192 1,250 40 43 40 57 50 1,000 30 25 30 750 20 21 20 25 500 13 250 10 7 10 0 0 0 0 2003 2004 2005 2006 2003 2004 2005 20
Slide 42: South East Asia Update
SOUTH EAST ASIA Update CAMBODIA, LAOS, (VIETNAM) z Cambodia success story repeated in Laos z Synergies in contiguous markets enhance margins z Expiration of BCC in Vietnam on May 18, 2005. The contacts continue with VMS/VNPT regarding a future cooperation 42
Slide 43: Revenue & Profitability: S E Asia
REVENUE & PROFIBITABILITY: S E ASIA Revenue $MM(1) # Subs. (‘000)(2) EBITDA $MM(1) Margin % 250 2,499 2,500 231 141 225 160 70 200 2,000 140 59 61 60 55 175 174 120 102 50 150 1,485 162 1,500 100 80 89 37 40 125 30 100 1,000 60 75 850 925 40 20 50 51 500 20 19 10 25 0 0 0 0 2003 2004 2005 2006 2003
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