Millicom International Cellular S.a. · NASDAQ:TIGO

Millicom International Cellular — Q1 2013 Earnings Presentation

42 slides from Millicom International Cellular's earnings presentation, 2013

  1. Slide 1: 2013 Q1 Results Presentation

    2013 Q1 Results Presentation Hans-Holger Albrecht, President and CEO François-Xavier Roger, CFO

  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 for today

    Agenda for today Results at a glance  Key Events  Highlights Operational Performance  Mobile  Mobile Financial Services  Home  Online Financial Results Closing remarks Q&A

  4. Slide 4: Our success will rest on five pillars

    Our success will rest on five pillars Mobile Cable & MFS Online Cost & Capex Digital Media Optimization From Volume Building a Creating a Investing in Maximizing to Value $2bn Business Blockbuster Growth efficiency Building a Tapping into Leveraging Investing in Relentless sophisticated, unique LatA

  5. Slide 5: Results at a glance

    Results at a glance Maintaining momentum, building foundations

  6. Slide 6: Q1 2013 – Maintaining momentum, building foundations

    Q1 2013 – Maintaining momentum, building foundations  Maintaining momentum: Like-for-like* growth at 8.3% YoY  In line with expectations: EBITDA margin of 39.7%, 40.5% excluding Online  Mobile growth at 1.3% in LC, marked regulatory pressure (like-for-like growth at 5%)  Mobile Data: Q1 a record

  7. Slide 7: 8.3% Like-for-like revenue growth

    8.3% Like-for-like revenue growth Revenue Contribution to Growth (LC) $1.3 bn Online 19% MFS 16% $1.2 bn Cable & Digital 13% Media $1.1 bn Mobile 52% $1.0 bn Q1 2012 Q1 2013  Like-for-Like growth at 8.3% was an acceleration versus Q4  Reported growth negatively impacted by Easter season, February

  8. Slide 8: Digital contributing to close to 40% of recurring revenues

    Digital contributing to close to 40% of recurring revenues +$99 m in incremental revenue $500 m 2% 2% 3% Online 3% $400 m 3% 2% 23% MFS 23% 2% 21% 22% 22% Cable and $300 m Digital Media 72% 72% 75% Mobile VAS 76% 76% $0m $200 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13  Close to 40% of recurring revenues come fr

  9. Slide 9: Operational performance

    Operational performance We believe in better. We believe in ticd

  10. Slide 10: Mobile: acceleration in transition from voice to data

    Mobile: acceleration in transition from voice to data 1.74 RGU per user $13 ARPU ($) $12 1.72 $11 1.70 $10 1.68 $9 $8 1.66 $7 CAM SAM Africa 1.64 $6 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 800 Mobile data net adds (k)  Mobile revenues growing 1.3% YoY in LC and 5% on a 600 like-

  11. Slide 11: Strong growth in mobile data traffic and revenues

    Strong growth in mobile data traffic and revenues Traffic growth (x factor) 105 Subsidies (Net) 5 Revenue Traffic 100 4 95 LC growth 17.1% 3 90 85 2 80 Q1 10=1 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 75 10 10 10 10 11 11 11 11 12 12 12 12 13 Q1 12 Q1 13  Revenue and traffic growth highly correlate

  12. Slide 12: Cable & digital media – Building momentum

    Cable & digital media – Building momentum 1,100 RGUs by region (000s) $31 2,200 ARPU ($) 1,000 2,000 $30 900 1,800 1,600 $29 800 1,400 700 $28 1,200 600 1,000 $27 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 SAM CAM Homes passed (right axis)  Cable & Digital media growing at around 1

  13. Slide 13: MFS transferred over $500m of cash through our platforms

    MFS transferred over $500m of cash through our platforms 45% $1.4 MFS ARPU ($) MFS Penetration (%) as percentage of mobile customers 40% $1.4 35% TZ 30% PY $1.3 25% $1.3 20% RW 15% $1.2 10% SV $1.2 5% 0% $1.1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 11 11 11 11 12 12 12 12 13 Q1 12 Q2 12 Q3 12 Q

  14. Slide 14: Online- New launches and first synergies

    Online- New launches and first synergies  In Q1, the Online category generated revenue of $10.7 million and EBITDA losses of $6.2 million.  Business update:  Both Kanui and Tricae in Brazil continued to perform strongly.  Jumia in Nigeria has also performed very well and has early taken a strong

  15. Slide 15: Financial results

    We believe in better. We believe in iGO

  16. Slide 16: Financial results in line with the guidance

    Financial results in line with the guidance Like-for-like Q1 13 Q1 12 $ growth growth Mobile 47,404 43,798 8% Customers Cable & Digital Media 796 594 34% (000s) MFS 4,352 2,901 50% Mobile 7.9 8.5 (6.8%) (3.3%) ARPU ($) Cable & Digital Media 32.8 31.8 3.1% (1.1%) MFS 1.3 1.2 8.3% 10.3% Revenue ($m) 1

  17. Slide 17: Regional growth driven by South America in Q1

    Regional growth driven by South America in Q1 $1,300 m Revenue evolution by region $1,250 m 4 16 11 7 $1,200 m 39 1,241 1,246 1 1,225 1,208 1,214 $1,150 m 1,168 1,168 1,169 $1,100 m Q1 12 CAM SAM Africa Online Cablevision FX Q1 13 Millicom International Cellular S. A. 17

  18. Slide 18: Growth resting equally on our four pillars

    Growth resting equally on our four pillars $1,300 m Revenue evolution by category $1,250 m 4 16 14 11 $1,200 m 10 10 13 1,246 1,242 1,226 1,212 $1,150 m 1,201 1,192 1,182 1,168 1,168 $1,100 m Q1 12 Mobile Cable MFS Online Other* Cablevision FX Q1 13 *includes visitor roaming, MVNO/DVNO, and Telephon

  19. Slide 19: EBITDA margin in line with expectations

    EBITDA margin in line with expectations 45% 44% 0.5% 1.0% 1.1% 0.9% 43% 42% 1.5% 41% 0.9% Efficiencies in GM% to offset 44.2% part of the pricing pressures 40% 0.8% 39% Investment for growth 40.5% 40.5% 39.7% 39.7% 38% 37% EBITDA% Africa Pricing LatAm Gross Commercial Category Others Underlying Onli

  20. Slide 20: Normalized EPS Q4

    Normalized EPS Q4 Q1 13 Q1 12 $ growth EBITDA 494 517 (8%) Corporate Costs (45) (27) 70% Category building Depreciation (209) (196) 7% Increased network amortization – Cablevision Net Finance Costs (61) (43) 42% Releverage Taxes (52) (70) (40%) Others (17) 6 Normalized Net Profit* 143 175 (18%) No.

  21. Slide 21: Sustained tax rate well below 30%

    Sustained tax rate well below 30% $m Q1 13 Q4 12 Q3 12 Q2 12 Q1 12 PBT 218 224 179 294 200 Normalized PBT** 195 223 231 242 262 Reported Taxes (68) (156) (60) (85) (91) of which Non recurring items* (16) (102) (5) (30) (21) Normalized tax expenses** (52) (54) (55) (55) (70) Normalized tax rate 26.5%

  22. Slide 22: Free cash flow negatively impacted by increased seasonality in working capital changes

    Free cash flow* negatively impacted by increased seasonality in working capital changes $300 m 244 100.00% 204 80.00% $200 m 172 60.00% $100 m 82 40.00% 21.1% 20.8% 6.9% 14.3% 20.00% $0 m -4.6% 0.00% -$100 m -57 -20.00% Q1 12 Q2 12 Q3 12 Q4 12* Q1 13 EBITDA – Capex +/- WC –Interests– Taxes – Corpora

  23. Slide 23: Net Debt/EBITDA stable at around 1x

    Net Debt/EBITDA stable at around 1x $m Q1 13 Q1 12 Gross Debt* 3,303 2,478 Cash** 1,228 1,170 Net Debt 2,075 1,308 Net Debt / EBITDA*** 1.0 0.6 * Including mark to market of bonds **Including pledged deposits, time deposits and restricted cash *** Net Debt / LTM EBITDA Millicom International Cellula

  24. Slide 24: Debt management provides natural hedges

    Debt* management provides natural hedges Currency Interest rate US$ m Local** USD Fixed Float Total Central America 610 445 718 336 1,055 % 58% 42% 68% 32% South America 669 425 519 576 1,095 % 61% 39% 47% 53% Africa 166 469 213 421 635 % 26% 74% 33% 66% Corporate 304 304 304 % 100% 100% Total MIC 1

  25. Slide 25: Limited share of guaranteed debt

    Limited share of guaranteed debt Central America: South America: Africa: Corporate: Total debt: $1,055m Total debt: $1,095m Total debt: $634m Total debt: $304 m 9% guaranteed 11% guaranteed 91% guaranteed 100% guaranteed Guatemala-$256m El Salvador-$441m Senegal-$130m Chad – $88m m guaranteed 0% 0%

  26. Slide 26: 2013 Guidance fully reiterated

    2013 Guidance fully reiterated  2013 Group EBITDA margin expected to be above 40% (excluding Online) and to decline at a lower rate than over the past twelve months  Capex / revenues to peak around 20% (not including spectrum or asset acquisitions)  Online division expected to deliver in excess o

  27. Slide 27: Shareholder remuneration for 2013

    Shareholder remuneration for 2013  AGM will take place on May 28, 2013 in Luxembourg  To the AGM a dividend of USD2.64/ share will be proposed:  Shares to trade ex-dividend on May 29  Dividend to be paid on June 7, 2013  We reiterate our dividend policy going forward:  Progressive dividend  N

  28. Slide 28: Closing remarks

    Closing remarks We believe in better. We believe in ticd

  29. Slide 29: Q1 2013 – Maintaining momentum, building foundations

    Q1 2013 – Maintaining momentum, building foundations  Maintaining momentum: Like-for-like* growth at 8.3% YoY  In line with expectations: EBITDA margin of 39.7%, 40.5% excluding Online  Mobile growth at 1.3% in LC, marked regulatory pressure (like-for-like growth at 5%)  Mobile Data: Q1 a record

  30. Slide 30: We believe in better. We believe in tiGO

    We believe in better. We believe in tiGO

  31. Slide 31: Thank You

    Thank You We believe in better. We believe in ticd

  32. Slide 32: New reporting structure

    New reporting structure Communications Voice Mobile Data Information Other VAS Entertainment Fixed Telephony Cable & Digital Fixed Broadband Media Pay TV Solutions MFS MFS Online Online Millicom International Cellular S. A. 32

  33. Slide 33: BU by region

    BU by region $m Central South Africa Online Millicom America America Mobile 363 446 222 1,031 Cable & Digital 78 29 1 108 Media MFS 1 5 10 16 Online 11 11 Others 26 39 6 71 Millicom 468 519 239 11 1,246 33

  34. Slide 34: Penetration rates

    Penetration rates CAM SAM Africa MIC Av. Penetration Av. Penetration Av. Penetration Av. Penetration 95.8% 97.6% 53.2% 72.5% 120% 109.5% 104.4% 98.7% 98.4% 97.1% 100% 80.4% 80% 74.8% 69.6% 68.8% 58.5% 60% 43.5% 37.9% 40% 29.9% 20% 0% * For DRC , only penetration in Kinshasa-BAS Congo area is conside

  35. Slide 35: Market share

    Market share CAM SAM Africa MIC Av. Market Share Av. Market Share Av. Market Share Av. Market Share 53.6% 19.9% 28.9% 29.8% 80% 69.2% 70% 60% 58.2% 55.4% 52.7% 50% 41.9% 40.0% 40% 35.4% 35.1% 36.6% 29.7% 30.7% 30% 20% 12.1% 16.7% 10% 0% 35

  36. Slide 36: Movements of currencies vs USD YoY

    Movements of currencies vs USD YoY Closing Rate Average Rate Q1 13 Q4 12 Change Q1 13 Q4 12 Change Guatemala GTQ 7.78 7.90 -2% 7.84 7.90 -1% Honduras HNL 20.25 20.03 1% 20.14 19.92 1% Nicaragua NIO 24.41 24.13 1% 24.27 23.98 1% Costa Rica CRC 504.65 514.32 -2% 508.20 506.01 0% Bolivia BOB 6.91 6.91

  37. Slide 37: Market overview – by region

    Market overview – by region Central South Millicom Segments Africa Online Total America America Market Overview Population (million) 28 63 187 278 Mobile Penetration 95.1% 99.3% 52.8% 72.7% Operational Data Total Mobile customers (million) 15.8 12.8 18.8 47.4 Attrib. Customers (million) 12.1 12.8 18

  38. Slide 38: Market overview – LATAM

    Market overview – LATAM Latin America Central America South America El Salvador Guatemala Honduras Bolivia Colombia Paraguay Shareholding 100.0% 55% (p) 66.7% 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 fr 2013 5 yrs renewal Dat

  39. Slide 39: Market overview – Africa

    Market overview – Africa Africa Chad DRC Ghana Mauritius Rwanda Senegal Tanzania Shareholding 100.0% 100.0% 100.0% 50% (p) 87.5% 100.0% 100.0% License Period (yrs) 10 yrs fr 2004 12 yrs fr 2012 15 yrs fr 2004 15 yrs fr 2000* 15 yrs fr 2008 16 yrs fr 2012 25 yrs fr 2007 Date of Expiry 2014 2024 2019

  40. Slide 40: Information- Increasing usage & penetration

    Information- Increasing usage & penetration Latin America Q4 12 Q1 13 QoQ Total Data Users* 2G+3G (m) 4.9 5.5 12% % of total customers (penetration) 17.3% 19.1% +1.8 pt. Total data Revenue 2G+3G (US$ m) 128 138 8% of which Handsets 86 99 15% Datacards 42 39 (5%) Data Revenues 2G+3G as % of total mob

  41. Slide 41: Diversified debt sourcing

    Diversified debt sourcing 2012 Q1 2013 ($3,022m) ($3,088m) 266 242 Banks 315 313 Bonds 1,238 1,303 Development Financial Institutions Shareholder Loans + Others 1,220 1,230  Current focus on growing the share of public debt (bonds) at operating level to improve liquidity * Excluding finance leases

  42. Slide 42: Extended maturity with recent bond issuances

    Extended maturity with recent bond issuances $1,400 m 1,228 $1,200 m $1,000 m 872 $800 m 733 $600 m 457 $400 m 354 298 248 $200 m 58 35 34 - $0 m Cash < 1y 1-2 y 2-3 y 3-4 y 4-5 y 5-6 y 6-7 y 7-8 y 8-9 y 9-10 y  Average maturity of 3.4 years * Excluding finance leases Millicom International Cellula

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