Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q2 2014 Earnings Presentation
31 slides from Millicom International Cellular's earnings presentation, Sep 12, 2014
Slide 1: 2014 Q2 Results Presentation
2014 Q2 Results Presentation Hans-Holger Albrecht, President and CEO Tim Pennington, Group CFO
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: Second quarter results 2014: Operating Review
action Second quarter results 2014 Operating Review ms 3 We believe in better. We believe in tico
Slide 4: Delivering key performance drivers
Delivering key performance drivers Mobile data Revenues MFS penetration EBITDA margin2 penetration 9.0% growth1 in local 18.1% reached in MFS 33.1%, down 3.5 points currency Q2 14 22.7% for the group footprint 3 (in line with guidance) 6.6% reported growth1 in Q2 Above 1.0 million new 114,000 new us
Slide 5: Targeting growth through four pillars
Targeting growth through four pillars Cable & Commerce & Mobile MFS Digital Media Services Drive data Grow Grow MFS E-commerce penetration addressable penetration high growth market potential Focus on Bundle to Expand Leverage bundling increase TV & number of existing services Broadband services inf
Slide 6: Pursuing growth across our strategic pillars
Pursuing growth across our strategic pillars Quarterly revenue growth Q1 2013 – Q2 2014 Mobile +5.9% Cable +16.0% 9.0% MFS +41.1% 8.5% 8.2% 6.1% Growth in local 4.2% currency 3.6% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 6
Slide 7: Seizing multiple market opportunities
Seizing multiple market opportunities Mobile data Volumes 2Play & 3Play Mobile transacted by customers penetration customer base* MFS Latam & Africa 52.3 million 22.7 % 2,165 M$ 282,000 46.9 million 16.8 % 1,587 M$ 235,000 Q2 14 vs. Q2 13 1) Excluding Mauritius in 2013. 7
Slide 8: Mobile - solid growth driven by mobile data
Mobile - solid growth driven by mobile data Mobile quarterly revenue growth (local currency) Acceleration of mobile data growth: +32.4% 6.6% vs. +29.8% in 5.9% Q1 5.4% 3.4% 2.1% 2.0% 1.3% 0.8% Mobile 0.8% o/w Voice & SMS -1.0% -1.3% -1.5% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 8
Slide 9: Cable & Digital Media - building momentum
Cable & Digital Media - building momentum RGUs per homes connected HFC only Our footprint (HFC & others, June 2014) 1.42x 1.39x 1.38x Central America 3.1 MILLION HOMES PASSED South America 1.24x 985K homes connected June 2013 282K 2/3play customers Q2 13 Q2 14 2.4 MILLION HOMES PASSED 829K homes con
Slide 10: MFS - accelerating penetration in our markets
MFS - accelerating penetration in our markets 46.6% 42.5% 39.5% Q2 13 Q2 14 32.7% 30.2% 27.6% 20.7% 16.2% 15.9% 6.3% 5.7% 4.1% 4.4% 3.6% 3.6% 3.4% 2.8% 2.1% 2.3% 0.4% 0.0% 0.3% Tanzania Rwanda Paraguay El Salvador Chad Honduras Ghana DRC Guatemala Bolivia Senegal Active product portfolio Money Self
Slide 11: Costs & Capex optimization: leveraging the review of our Guatemala ops
Costs & Capex optimization: leveraging the review of our Guatemala ops Mobile / B2B Organization commercial efficiencies dynamic 27 opex efficiency opportunities found in 12 weeks Network Contact Operation Center Sales 11
Slide 12: Capital Markets Day 2014
ts Day 2014 Save the date! Millicom to host a Capital Markets Day in Miami on 24 September 2014. Full details and agenda will follow in due course.
Slide 13: Second quarter results 2014: Financial Review
action Second quarter results 2014 Financial Review 13 We believe in better. We believe in tico
Slide 14: Transformation delivering strong organic growth
Transformation delivering strong organic growth • Revenue growth (LC) accelerates to 9.0% • Strong growth in Africa (+15%) • Excellent momentum in Colombia (+27%) • Double digit growth for Cable & Digital Media (+16%) • EBITDA $479 million (flat vs. Q1) • margin of 33.1% • H1 margin of 33.5% • Capex
Slide 15: Regional revenue growth driven by South America and Africa in Q2
Regional revenue growth driven by South America and Africa in Q2 Revenue evolution by Region USD Million, Q2 2013 – Q2 2014 33 37 78 17 1 447 1 356 Q2 13 CAM SAM Africa FX Q2 14 Revenue evolution by Business Unit USD Million, Q2 2013 – Q2 2014 37 67 23 8 30 1 447 1 356 Q2 13 Mobile Cable MFS Other 1
Slide 16: EBITDA progression in CAM and SAM
EBITDA progression in CAM and SAM EBITDA evolution by Region USD Million, Q2 2013 – Q2 2014 USDm Q2 14 Q1 14 Q2 13 YoY % change EBITDA (US$ millions) Central America 291 283 284 2% South America 198 198 189 5% Africa 63 56 67 -6% Central -72 -59 -45 60% Total EBITDA 479 478 496 -3% EBITDA margin 33.
Slide 17: EBITDA margin driven by commercial investments
EBITDA margin driven by commercial investments EBITDA margin External Services 0.4% %, Q2 2013 – Q2 2014 Employee related costs 0.3% A&P 0.2% Commissions & Subsidies 0.4% 0.6% 1.3% 1.8% 0.2% 33.1% 36.6% EBITDA% Costs of sales Commercial & Corporate Costs Others EBITDA% Q2 13 Business Q2 13 Developme
Slide 18: Below EBITDA impacted by non-cash items
Below EBITDA impacted by non-cash items USDm Q2 14 Q2 13 change EBITDA 479 496 -3% Depreciation & Amortization and other (254) (231) 10% Operating profit 224 265 -15% Net financial expense (89) (59) 49% Other non-operating income (expenses) 159 (17) Ns Losses from associates 16 (7) Ns Profit before
Slide 19: Some catch up in cash spend in Q2
Some catch up in cash spend in Q2 USDm Q2 14 Q1 14 Q2 13 YoY % change EBITDA 479 478 496 -3.4% Net Capex (including spectrum & license) (321) (273) (219) 46.6% Change in working capital and others 63 (42) (62) Ns Operating Cash Flow 221 163 215 2.8% Taxes paid (115) (54) (166) -30.7% Operating Free
Slide 20: Net debt increasing due to investment and UNE
Net debt increasing due to investment and UNE ~4,300 / 4,400 860 89 3,047 32 264 2,622 40 Net debt Q1 14 Equity FCF Dividends to MIC Acquisitions, Cash F/X and others Net debt Q2 14 UNE transaction Net debt UNE Net debt pro forma shareholders for LIH Q2 14 20
Slide 21: In conclusion
In conclusion • Organic revenue growth continues to gather pace • We see significant growth potential in South America and Africa • We continue to invest across the business to implement our Digital Lifestyle • We look forward to optimize our cost structure via the cost optimization programme we jus
Slide 22: Operating Review, Financial Review, Q&A
Operating Review Financial Review Q&A Appendix 1 22
Slide 23: Appendix
Operating Review Financial Review Q&A Appendix 1 23
Slide 24: This is Millicom
This is Millicom • 2013 Revenues: $5.2bn (new perimeter: $5.6bn), EBITDA: $1.9bn (new perimeter: $2.0bn) • Market capitalization 14/07/14: SEK62bn (~$9.2bn) • >52.3 million mobile subscribers, >3.0 million homes passed, >7.4 million MFS customers 1 1 1) Mauritius, AIH & LIH are equity accounted from
Slide 25: Mobile Voice - Penetration rates
Mobile Voice - Penetration rates CAM SAM Africa Av. Penetration 95.5% Av. Penetration 99.2% Av. Penetration 56.2% MIC Av. Penetration 73.5% 116.0% 104.8% 95.8% 95.2% 80.2% 79.5% 81.2% 73.1% 49.1% 49.7% 47.3% 40.2% 1 1) For DRC , only penetration in Kinshasa-BAS Congo and Kivu area is considered 25 S
Slide 26: Mobile Voice – Market Shares
Mobile Voice – Market Shares CAM SAM Africa Average 51.6% Average 22.0% Average 29.1% MIC 66.2% Av. Penetration 30.2% 56.4% 53.8% 52.3% 40.5% 36.4% 36.4% 30.4% 31.3% 29.8% 14.5% 17.6% 1 1) For DRC , only penetration in Kinshasa-BAS Congo and Kivu area is considered 26 Source: Millicom
Slide 27: Movements of currencies vs USD QoQ
Movements of currencies vs USD QoQ Closing Rate Average Rate Q2 14 Q1 14 Change Q2 13 Change Q2 14 Q1 14 Change Q2 13 Change Guatemala GTQ 7.78 7.73 (1%) 7.78 0% 7.75 7.78 0% 7.82 (1%) Honduras HNL 21.05 20.82 (1%) 20.25 4% 20.92 20.74 (1%) 20.26 3% Nicaragua NIO 25.95 25.64 (1%) 24.41 6% 25.77 25.4
Slide 28: Market overview – by region for Q2 2014
Market overview – by region for Q2 2014 Millicom Regions Central America South America Africa Group Market Overview Population (m) 30 64 190 284 Mobile Penetration 95.5% 99.2% 56.2% 73.5% Operational Data Total Mobile Customers (m) 15,417 14,406 22,491 52,315 Capex ($m -excl Corporate) 124 105 127 3
Slide 29: Market overview – LATAM
Market overview – LATAM Latin America Central America South America El Salvador Guatemala Honduras Bolivia Colombia Paraguay Shareholding 100% 55% 66.70% 100% 50% + 1 share 100% License 20y from 1998 15y from 2003 25y from 1996 20y from 1995 10Y from 2013 5y renewal Date of Expiry 2018 2032 2021 201
Slide 30: Market overview – Africa
Market overview – Africa Africa Chad DRC Ghana Rwanda Senegal Tanzania Shareholding 100% 100% 100% 87.50% 100% 100% License 10 y from 2014 12y from 2012 15y from 2004 15y from 2008 16y from 2012 25y from 2007 Date of Expiry 2024 2024 2019 2022 2028 2032 Market Overview Population (m) 11 77 26 12 14
Slide 31: Moderate leverage and well spread maturities
Moderate leverage and well spread maturities USD m Q2 14 Q1 14 Gross Debt 1 4,484 4,521 Cash 2 1,437 1,899 Net Debt 3,047 2,622 Net Debt / EBITDA after corporate costs 3 1.57 1.34 Debt maturity (excluding finance leases) USDm, Q2 2014 1,437 1,600 1,400 1,200 1,000 800 758 779 800 648 600 400 256 299
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