Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q2 2009 Earnings Presentation
45 slides from Millicom International Cellular's earnings presentation, 2009
Slide 1: Millicom International Cellular S.A Q2 2009 Investor Presentation
Millicom International Cellular S.A Q2 2009 Investor Presentation
Slide 2: Overview
: : Overview Millicom is: • A leading operator of mobile telephony services in emerging markets with 31m customers • Operating in 13 countries with 260 million potential customers under license • Strong market positions having successfully grown its market share through investment • Mainly pre-paid
Slide 3: Overview: operations by region
: : Overview Amnet: 38m Guatemala 13m Central America: South America: Africa*: Mobile El Salvador 7m 28 m 63 m 169 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% Ownership: 100% O
Slide 4: Penetration rates
: : Penetration rates CAM SAM Africa MIC Avg penetration Avg penetration Avg penetration Avg penetration 83% 85% 21% 43% 120 97 94 89 100 74 79 76 80 60 49 45 47 43 Average 40 25 15 15 MIC 20 8 0 El C Pa C Se G H B D M G R Ta M ol ha on ol R w ua ha au IC Sa ra ne nz C an om iv d te du na rit gu (a
Slide 5: Market share evolution QoQ
: : Market share evolution QoQ CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share 52.4% 15.4% 30.2% 27.9% 70 63 60 55 47 48 50 45 43 36 38 40 31 30 26 Average 24 MIC 20 8 10 Q1 09 Q2 09 0 Market E G C P D M G T H B C S an lS ar ua ol R en ha au on ol ha share% C o
Slide 6: Affordability
: : Affordability Best Value Low denomination for money reloads Affordability Price Per second leadership billing 6
Slide 7: Number of Outlets
: : Number of Outlets (‘000) 4% Change vs Q1 09 (%) 200 -21% 180 -27% No of outlets Q2 09 158 150 141 100 50 0 CAM SAM Africa Total number of Outlets : 561 K New Distribution Management System under implementation in Central and South America 7
Slide 8: Highlights
: : Highlights Economic conditions pushing Further Strong ARPUs EBITDA VAS/Data Market share down improvement growth increase No improvement Accelerating Declining of Cash Flow churn environment generation Economic Drivers Management Drivers 8
Slide 9: Financial Highlights YoY
: : Financial Highlights YoY US$m Q2 09 Q2 08 Change YoY Subscribers ('000) 30,758 24,664 25% Revenues 814 774 5% EBITDA 371 326 14% % of revenues 45.6% 42.2% +340 bp Net Profit 114 132 -13% Capex 157 342 -54% % of revenues 19% 44% Operating Free Cash Flow * 120 -88 % of revenues 14.7% -11.4% Free C
Slide 10: Revenue growth – Forex impact
: : Revenue growth – Forex impact US$m 950 6% - 12% 900 50 11% 850 -92 5% 800 82 750 814 774 700 08 t 09 2 ance VE G A pac 2 eQ rm A i m eQ venu erfo T/ N ore x venu Re n g p AM N E F Re d erlyi Un Revenue growth from underlying performance of Forex loss of 12% 11% 10
Slide 11: Revenue growth – Forex effect by region
: : Revenue growth – Forex effect by region Revenue Revenue Local currency Forex Acquisitions Growth US$m Q2 08 Q2 09 growth growth growth Central America 342 0% -3% 332 -3% South America 254 16% -18% 249 -2% Africa 178 23% -20% 183 3% Non Cellular 6% 50 Total MIC 774 11% -12% 6% 814 5% Strong growt
Slide 12: Revenue split by category
: : Revenue split by category US$m Q2 09 Q2 08 $ Local currency growth growth Airtime 572 598 -4% 7% % of Mobile Revenues 82% 86% VAS/SMS/3G 130 100 30% 47% % of Mobile Revenues 18% 14% Other * 112 76 48% 63% Total Revenues 814 774 5% 11% * Telephone & Equipment + Amnet-Navega VAS/SMS/3G revenue VAS
Slide 13: Churn evolution
: : Churn evolution MIC TOTAL 5.6% 5.5% 5.4% 5.2% 5.1% Churn decreasing 5.0% 4.8% 4.7% by 0.4% 4.6% 4.4% 4.2% Q4 08 Q1 09 Q2 09 Churn by Region QoQ 8.0% 7.1% 7.1% 6.0% 4.9% 4.7% Q1 09 3.5% 4.0% 2.5% Q2 09 2.0% 0.0% CAM SAM Africa 13
Slide 14: Impact of economic crisis
: : Impact of economic crisis EM Economies affected: - slow-down of remittances in Central America (-13% in Q2 09 YoY) - decline in tourism - return of inflation (Ghana) Change in consumer behavior : - more on-net calls - fewer cross-net calls - less roaming - reduced incoming international calls -
Slide 15: Managing through the crisis
: : Managing through the crisis • increased customer understanding and segmentation • secure affordability • review cost structure • adapt Capex to reduced needs 15
Slide 16: Quarterly Highlights
Click to add title Quarterly Highlights
Slide 17: Quarterly Highlights – Central America YoY
: : Quarterly Highlights – Central America YoY US$m Q2 09 Q2 08 $ Local currency growth growth Subscribers ('000) 12,123 10,276 18% Revenues 332 342 -3% 0% EBITDA 187 187 0% 3% % of revenues 56% 55% 190 bp Capex 20 93 -79% % of revenues 6% 27% Operating Free Cash Flow 100 20 400% % of revenues 30% 6
Slide 18: Quarterly Highlights – South America YoY
: : Quarterly Highlights – South America YoY US$m Q2 09 Q2 08 $ Local currency growth growth Subscribers ('000) 8,060 6,912 17% Revenues 249 254 -2% 16% EBITDA 97 82 17% 41% % of revenues 39% 32% 641 bp Capex 45 110 -59% % of revenues 18% 43% Operating Free Cash Flow 48 -19 % of revenues 19% -7% 18
Slide 19: Quarterly Highlights – Africa YoY
: : Quarterly Highlights – Africa YoY US$m Q2 09 Q2 08 $ Local currency growth growth Subscribers ('000) 10,575 7,476 41% Revenues 183 178 3% 23% EBITDA 62 57 9% 35% % of revenues 34% 32% 189 bp Capex 72 139 -48% % of revenues 39% 78% Operating Free Cash Flow 1 -70 % of revenues 1% -39% 19
Slide 20: Quarterly Highlights – Amnet + Navega
: : Quarterly Highlights – Amnet + Navega US$m Q2 09 Q1 09 Growth QoQ Gross Revenues 53 44 20% Intercompany revenues -3 -1 Net Revenues 50 43 16% EBITDA 25 17 44% % of revenues * 47% 38% 850 bp Capex ** 20 18 10% % of revenues 38% 41% Operating Free Cash Flow -9 1 % of revenues -17% 2% * EBITDA marg
Slide 21: Amnet - Highlights
: : Amnet - Highlights Revenue Generating Units +87K (+18%) vs Q2 08 Broadband revenues up by 24% vs Q2 08 Homes passed growth of 12% vs Q2 08 Cable revenues up by 5% vs Q2 08 21
Slide 22: Financial review
Financial review
Slide 23: Quarterly Capex
: : Quarterly Capex 450 422 400 CAPEX (US$m) 50% 350 44% Capex% of rev 37% 300 342 293 24% 250 19% 200 185 157 150 100 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 CAPEX adjusted to growth 23
Slide 24: Quarterly Depreciation
: : Quarterly Depreciation 200 145 134 133 150 111 120 100 50 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Total Depreciation (US$m) 24
Slide 25: Quarterly Net Debt/EBITDA ratio
: : Quarterly Net Debt/EBITDA ratio 1600 1500 1.0 1.0 1400 1.0 1300 0.7 1200 0.6 NET DEBT (US$m) 1100 NET DEBT/ EBITDA (*) 1000 900 800 700 600 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 (*) Net Debt/EBITDA= Closing Net Debt/(Q2*4) Not restated for Asian disposal Stabilization of debt at low level 25
Slide 26: Debt maturity as at 30.06.2009
: : Debt maturity as at 30.06.2009 900 652 800 700 10% notes 600 500 454 400 300 537 359 200 283 276 100 198 172 0 Less than 1 1-2 years 2-3- years 3-4 years 4-5 years more than 5 year Debt maturity (US$m) Average maturity above 3 years Post-closing, commitment from 4 banks to refinance Amnet bridge
Slide 27: Quarterly Interest expense
: : Quarterly Interest expense 55 10% 50 9% 9% Total interest cost 50 Effective rate 8% 8% 45 43 45 41 41 * 40 Target 35 50% variable rates 30 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 50% fixed rates Total Interest expense (US$m) * Of which 13 m due to change of estimate of HY notes early redemption costs Not
Slide 28: Taxes
: : Taxes US$m Q2 09 Q2 08 PBT 160 164 Taxes 51 63 Effective tax rate 32% 38% Increased tax rate due to zero tax base in Colombia and DRC 28
Slide 29: Quarterly EPS
: : Quarterly EPS EPS Normalized EPS * 1.43 1.20 1.49 1.40 1.22 1.13 1.28 1.29 1.11 1.05 0.90 0.61 0.40 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 * excluding discontinued operations and impact of DTA in Colombia 29
Slide 30: Free Cash flow
: : Free Cash flow Free Cash Flow (US$m)* 100 70 59 50 1 0 (50) (100) (101) (130) (150) Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 * EBITDA - Capex +/- WC- Interests - Taxes - Corporate costs Positive Free Cash Flow: 14% of revenues in Q2 09 30
Slide 31: Operating Free Cash Flow by region
: : Operating Free Cash Flow by region OFCF by Region QoQ (US$m) Q2 08 120 Q2 09 100 100 80 60 48 40 20 20 1 0 -20 -3 -40 -19 -60 -70 -80 Central America South America Africa Non Cellular Positive OFCF in Central America, South America and Africa 31
Slide 32: Cash flow
: : Cash flow US$m H1 09 H1 08 Net cash provided by operating activities 559 456 Cash used by investing activities -492 -553 Cash (used) provided by financing activities 126 -156 Net cash from continuing operations 193 -253 Discontinued operations -32 -29 Exchange rate changes -2 11 Net (decrease) i
Slide 33: Outlook Full Year 2009
: : Outlook Full Year 2009 Stabilization of EBITDA Margin at current level Capex around OFCF* as US$m 750 (adjusted a % of for Asia around revenue in 100m) mid-teens * OFCF= Operating Free Cash Flow (before Interests and Corporate Costs) 33
Slide 34: Asia
: : Asia Sales process of Asia in progress Completion expected by Q1 2010 34
Slide 35: Use of cash proceeds from Asia
: : Use of cash proceeds from Asia 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 35
Slide 36: Appendix
Click to add title Appendix 36
Slide 37: Subscribers contribution by region
: : Subscribers contribution by region Q2 09 Africa CAM 34% 40% Africa SAM 26% From 30% to 34% of total MIC Q2 08 subscribers Africa 30% CAM 42% SAM 28% 37
Slide 38: Revenue contribution by region
: : Revenue contribution by region Q2 09 Africa 23% CAM 40% SAM Non Cellular 31% 6% Q2 08 Africa 23% CAM 44% SAM 33% 38
Slide 39: EBITDA contribution by region
: : EBITDA contribution by region Q2 09 Africa 17% CAM SAM 50% 26% SAM Non Cellular 7% Increasing contribution in Q2 09 Q2 08 Africa 17% SAM CAM 25% 58% 39
Slide 40: Capex contribution by region
: : Capex contribution by region Q2 09 CAM 13% Non Cellular Africa 13% 45% Africa SAM 29% From 41% to 45% of total Capex Q2 08 CAM Africa 27% 41% SAM 32% 40
Slide 41: Q2 09 Market Overview – by Segment
: : Q2 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** 83% 85% 21% 45% Operational Data Total Subs. (000) 12,122 8,060 10,575 30,758 Attributable Sub (000) 8,410 8,060
Slide 42: Market Overview – by Country (Latin America)
: : 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 43: Market Overview – by Country (Africa)
: : 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 44: 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 45: Thank You!
Thank You!
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