Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q2 2018 Earnings Presentation
31 slides from Millicom International Cellular's earnings presentation, Jul 20, 2018
Slide 1: 2018 Q2 results
2018 Q2 results Growth continues to accelerate Mauricio Ramos, CEO Tim Pennington, CFO July 20th, 2018 Millicom International Cellular S.A.
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: 1. CEO review
¥ MILLICOM 1. CEO review THE DIGITAL LIFESTYLE Mauricio Ramos
Slide 4: Q2 Highlights
Q2 Highlights Growth continues to accelerate 1 Latam service revenue growth accelerated to 5.5% on continued strong net adds 2 All revenue lines contributing to growth - Mobile back above 2% 3 Home growth accelerated to almost 13% with 140k new HFC homes 4 Continued margin expansion and double-digit
Slide 5: Revenue growth accelerated to 5.5% in Q2
1 Revenue growth accelerated to 5.5% in Q2 Latam %YoY growth, Q1 16 – Q2 18 5.5% 2.9% 3.1% 3.9% 2.3% 0.9% -0.5% -1.3% -2.0% -2.3% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 5
Slide 6: Accelerating performance in our main Latam markets
1 Accelerating performance in our main Latam markets El Salvador Guatemala Honduras Service revenue, year-on-year (%), Q1 16 – Q2 18 5.4% 6.4% 0.3% 5.7% 0.0% -0.1% 2.1% 3.5% 3.4% 0.3% 2.7% -0.6% 0.0% -1.6% -0.7% -0.8% -3.6% -1.0% -1.4% -3.7% -0.8% -1.6% -4.8% -6.4% -2.5% -3.9%-4.3% -8.7% -4.8% -2.5%
Slide 7: All three business units growing…
2 All three business units growing… Mobile B2C (56% of service rev) Home (24% of service revenue) B2B (18% of service revenue) Mobile B2C service revenue LC %YoY, Q1 17 – Q2 18 Home service revenue LC %YoY, Q1 17 – Q2 18 B2B service revenue LC %YoY, Q1 17 – Q2 18 2.1% 0.9% 0.2% 12.6% 8.9% -0.9% 8.8%
Slide 8: Mobile growth back above 2%
2 Mobile growth back above 2% Mobile data now generating 50% of mobile service revenue and driving better ARPU Build Connect Population coverage and points of presence (PoP), 4G subscribers (millions), Q1 17 – Q2 18 Q2 17 – Q2 18 +3.2 Coverage PoP 7,744 8.0 5,257 60% 4.7 50% Q217 Q218 Q117 Q217 Q317
Slide 9: B2B continues to perform well
2 B2B continues to perform well Expanding fibre Building datacenters Tier III data centers 110,000 launched in Colombia, kilometers of Paraguay and Bolivia fibre in Latin America Solutions revenue grows Aprox. 25% YoY +7.1% Small and medium business YoY LC Colombia contributes over 50% growth SMBs r
Slide 10: Home net adds accelerating with ARPU growth
2 Home net adds accelerating with ARPU growth Raising our 2018 target to 400k homes connected net additions Build Connect HFC homes passed (000), Q2 15 – Q2 18 HFC homes connected net additions (000), H1 16 – H1 18 +15.6% 231 9,076 Organic Inorganic 52 7,850 6,667 +3,203 5,873 132 15 179 56 117 Q2 1
Slide 11: Home contributed half of the growth in Q2
3 Home contributed half of the growth in Q2 Home is 24% of revenue but 50% of growth Contribution to growth by business unit Contribution to Latam service revenue growth year-on-year, Q2 2018 5.5% Mobile B2C B2B Home Q2 18 Growth 2% 7% 13% Weight* 56% 18% 24% * Does not tie to 100% as revenue catego
Slide 12: Colombia key to Latam Home acceleration in Q2
3 Colombia key to Latam Home acceleration in Q2 Planting the seeds for sustainable and profitable long term growth HFC homes connected growth accelerating Passed the inflection point Colombia - LTM homes connected net additions, HFC and Other, Q216 – Q218 Colombia - Growth YoY in homes connected, Q1
Slide 13: FCF growth continues
4 FCF growth continues Solid FCF generation while we invest to drive faster growth EFCF up 16% YTD $m, H1 16 – H2 18 15.7% 149 129 39 H1 16 H1 17 H1 18 13
Slide 14: 2. CFO review
¥ MILLICOM 2. CFO review THE DIGITAL LIFESTYLE Tim Pennington
Slide 15: Financial Highlights
Financial Highlights Well positioned to face the future 1 Strong KPI’s driving through to key financial metrics 2 EBITDA growth driven by core Latam businesses…and cost control 3 All P&L profit metrics improving… 4 …and cashflow continues to strengthen 5 Balance sheet in good shape 15
Slide 16: Key financial metrics – Q2 2018
1 Key financial metrics – Q2 2018 Group service revenue up 5.3% Service Revenuea EBITDAa and Margins Q2 OCF and Marginsb $m, Q2 17 – Q2 18 $m and %, Q2 17 – Q2 18 $m and margin, Q2 17 – Q2 18 5.3% 4.6% $41m 1,437 551 335 1,365 527 294 Q2 17 Q2 18 Q2 17 Q2 18 Q2 17 Q2 18 35.7% 35.8% 20.0% 21.7% a) Q2
Slide 17: Latam
1 Latam Solid growth returning to Latam Latam service revenue Latam OCF $m, Q2 17 – Q2 18 $m and margin, Q2 17 – Q2 18 +7.2% +5.5% 304 Latam EBITDA $m and margin, Q2 17 – Q2 18 +4.4% 1,308 21.5% 20.9% 1,240 514 492 Q2 17 Q2 18 Q2 17 Q2 18 Q2 17 Q2 18 Capex / 36.5% 36.4% Revenue 15.6% 14.8% Notes: Gr
Slide 18: EBITDA – Q2 2018
2 EBITDA – Q2 2018 Latam biggest contributor to EBITDA growth EBITDA evolution by region $ million, Q2 17 – Q2 18 +4.6% 2 0 23 +0.6% 3 551 524 527 Ebitda Q2 17 FX and other Ebitda Q2 17 LatAm Africa Corporate Ebitda Q2 18 (constant currency) 35.7% as % of revenue 35.8% Q2 17 numbers are adjusted to
Slide 19: EBITDA progression by country
2 EBITDA progression by country Strong performance in Bolivia and a return to EBITDA growth in Colombia El Salvador Guatemala Honduras EBITDA ($m), margin and year-on-year growth, Q2 17 – Q2 18 (16.8%) +5.7% (3.4%) 38 165 172 63 60 32 Q2 17 Q2 18 Q2 17 Q2 18 Q2 17 Q2 18 35.6% 30.7% 50.6% 50.6% 42.8%
Slide 20: Cost review and margin progression
2 Cost review and margin progression Steady upward margin trend continues Group total OPEX base Last 12 month Group EBITDA margin OPEX and growth* YoY, Q2 17 – Q2 18 Last 12-month EBITDA margin, Q2 2015 – Q2 2018 3.3% 558 +370 bps Sales and +4.2% Marketing 36.3% 35.3% 32.6% 33.3% General and +2.4% A
Slide 21: P&L review – Q2 2018
3 P&L review – Q2 2018 Significant profit improvement below EBITDA P&L Summary Key Observations US$ million Q2 18 Q2 17 % Var • IFRS 15 had small impact on Service A Revenue (-1.3%) and EBITDA (+0.5%) Revenue 1,541 1,470 4.8% A EBITDA 551 524 5.2% • Interest savings from re-financing B Depreciation
Slide 22: Cash flow – H1 2018
4 Cash flow – H1 2018 We generated $149 million of equity FCF in H1 H1 2018 cash flow $ million 476 91 1,111 135 180 544 79 229 149 Ebitda including Cash capex Working capital Cash flow from Taxes paid Finance charges FCF Dividend to eFCF discontinued (ex-spectrum and others operations minorities op
Slide 23: Capital structure
5 Capital structure In H1 net debt reduced by $90m and proportionate leverage below 2.0x Net debt evolution in 2018 Debt profile $ million, 31 December 2017 – 30 June 2018 30 June 2018 149 21 52 49 Latam HQ Africa 196 Geography 72% 23% 5% 133 Fin. Bonds Banks Source Leases 4,071 55% 38% 7% 3,981 Int
Slide 24: Outlook
Outlook Updating our full year targets Target Update 1 +231k HFC homes connected (+179k organic) 10m total homes passed by year-end +300k ~400k 2 +1.1m 4G customer net additions 10m 4G customers by year-end +3m 3 Service revenue growth in Latam +2-4% Top-end of range 4 EBITDA growth on track +3-6%
Slide 25: Recap
Recap 1 Our strategy is working 2 Growth is accelerating 3 Solid first half on financials and KPIs 4 2018 outlook improving 5 Strengthened balance sheet and growing cash flow 6 U.S. listing in 2019 25
Slide 26: Q&A
¥ MILLICOM Q&A THE DIGITAL LIFESTYLE
Slide 27: Debt profile
Debt profile Comfortable capital structure and liquidity with no major maturities until 2024 Debt maturity profile $ million Average life of 5.1 years 988 44 796 40 737 708 39 86 546 25 457 400 47 GT 26 347 $800m 32 25s 28s $500m $500m PY 149 101 SEK $300m 28 10 $224m 2018 2019 2020 2021 2022 2023 2
Slide 28: Gross debt by country
Gross debt by country Central America: South America: Africa: Corporate: Total MIC Debt: Total debt $1,774m Total debt $1,964m Total debt $285m Total debt $1,205m $5,228m 32% guaranteed 4% guaranteed 54% guaranteed 0% guaranteed 15% Guaranteed Honduras: $390m (51% guaranteed) Guatemala: $993m Chad:
Slide 29: Net debt by country
Net debt by country Central America: South America: Africa: Total Net Debt: $1,330m $1,585m $124m Corporate $3,981m Leverage 1.15x Leverage 1.55x Leverage 0.76x $942m Leverage 1.80x Honduras: $371m Leverage 1.4x Guatemala: $650m Leverage 1.0x Chad: $43m El Salvador: $218m Leverage 1.4x Costa Rica: $
Slide 30: Currency exposure of debt
Currency exposure of debt June 2018 Debt including finance leases Cash Net debt US$ Local Total Total USD Local Total 1,766 1,972 3,738 823 1,372 1,544 2,915 Latin America* 47% 53% 100% 47% 53% 100% 110 175 285 161 105 19 124 Africa 38% 62% 100% 85% 15% 100% 1,205 0 1,205 264 950 -9 942 Corporate 10
Slide 31: * \LLICoM
* \LLICoM r ) THE DIGITAL LIFESTYLE
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