Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q3 2015 Earnings Presentation
30 slides from Millicom International Cellular's earnings presentation, Oct 22, 2015
Slide 1: 2015 Q3 Results
2015 Q3 Results Mauricio Ramos, CEO Tim Pennington, CFO 22 October 2015
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: Self-Reporting to US and Swedish authorities
Self-Reporting to US and Swedish authorities Page 3
Slide 4: Q3 Key Messages
Q3 Key Messages 1 Good underlying growth against stronger FX headwinds 2 EBITDA margin improving 3 Growth potential on cable materializing 4 Colombia: sustained underlying growth 5 Optimization continues Page 4
Slide 5: Good underlying growth against stronger FX headwinds
1. Good underlying growth against stronger FX headwinds Solid performance despite stronger FX pressure -2.0% YoY reported in USD, including UNE Revenue 1,641 +7% US$ million YoY organic -6.3% YoY growth in USD, excluding UNE +2.1% YoY reported in USD, including UNE EBITDA 560 +8% US$ million YoY org
Slide 6: Good underlying growth against stronger FX headwinds
1. Good underlying growth against stronger FX headwinds Mobile: over 60 million customers Q3 net YTD net Total end of 000s additions additions Sep. 15 Mobile subscribers 816 3,869 60,146 Mobile data users 668 2,154 17,412 Cable: reaching 7.5 m Homes Passed Q3 net YTD net Total end of 000s additions
Slide 7: EBITDA margin improving
2. EBITDA margin improving Excluding UNE, the margin is improving for the third quarter in a row EBITDA margin variation year on year Percentage point 1.3 EBITDA margin group EBITDA margin ex-UNE 0.5 0.6 0.2 -0.2 -1.0 -1.3 -1.8 -2.4 -2.6 -3.5 -4.2 -4.9 -5.6 -5.8 -6.0 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2
Slide 8: Growth potential of cable is materializing
3. Growth potential of cable is materializing Our cable strategy is delivering promising results 1 BUILD 2 FILL 3 MONETIZE HFC Homes Passed, Homes connected / Homes passed, ARP Home, Thousands % after x months of roll out HFC only US$ at Q3 2015 FX Other technologies LC growth HFC Homes Passed 10,00
Slide 9: Colombia: sustained underlying growth
4. Colombia: sustained underlying growth Combined businesses service revenue growth accelerating in local currency Service revenue growth Tigo / UNE / TigoUNE Year-on-year in local currency 8.7% 6.3% 6.1% 5.8% 4.9% 4.7% 4.6% 3.9% 3.2% Tigo UNE TigoUNE Q1 15 Q2 15 Q3 15 Page 9
Slide 10: Optimization continues
5. Optimization continues Focus on corporate costs trending in the right direction Corporate costs, US$ million 75 300 64 63 59 60 55 260 50 45 220 30 180 15 140 0 100 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Corporate Costs (lhs) Implied annual run rate (rhs) % Revenue 3.8% 3.4% 3.4% 3.2% 3.0% % EBITDA 11.7%
Slide 11: Conclusion
Conclusion During Q3 we delivered strong organic growth … we expanded our footprint & customer base in both mobile and cable … whilst increasing our efforts to enhance the margins … and improving cash flow generation Page 11
Slide 12: Financial review
Financial review Tim Pennington 22 October 2015
Slide 13: Key metrics
Key metrics Good organic performance Revenue 1 EBITDA EBITDA - CAPEX Net debt $4.27 billion 7.2% organic growth in $560 million (+2.1%) $856 million YTD Q3 15 ($209 million Q3) 1.9x net debt / EBITDA 34.1% Group margin (2.2x proportionate) 5.8% service revenue Up 14% YoY YTD growth 34.0% (+0.6% ex U
Slide 14: Operating performance
Operating performance Service revenue and margin continue to grow US$ million Q3 15 Reported Organic • Solid revenue growth growth % growth% • 7.2% organic growth Revenue 1,641 -2.0% 7.2% • Service revenue growth Service revenue 1 improves to 5.8% 1,521 -2.0% 5.8% • Reported EBITDA includes EBITDA 5
Slide 15: Earnings
Earnings Lower EPS on FX adjustments US$ million Q3 15 Q3 14 % change EBITDA 560 549 +2 • EPS decline mainly due to F/X losses Depreciation & Amortisation (323) (308) +5 • Higher D&A due to UNE PPA adjustment (13M$) Operating profit 227 239 (5) • Net financial charge includes $3 Net Finance Charge (
Slide 16: Revenue growth trend
Revenue growth trend Consistent service revenue trend, handsets trading down due to FX Quarterly revenue growth Q3 2014 – Q3 2015 Mobile +3% 12% 10.8% Cable +25% 9.7% 10% 9.0% MFS +23% 8.6% 8% 7.2% Handsets & CPE +22% 6% Group revenue 5.9% 5.7% 5.6% 5.7% 5.8% growth 4% Service revenue growth (1) 2%
Slide 17: Organic growth vs. FX variation
Organic growth vs. FX variation Growth pattern broadly unchanged compared to previous quarters Africa Latam 18.8% Revenue growth 17.1% 15.8% 13.7% in local currency 9.4% 8.8% (YoY) 7.7% 7.6% 7.2% 4.7% 4.2% 2.0% 2.0% (0.8%) 0.9% 1.3% - - - FX variation (4.2%) (5.4%) (quarterly average (18.6%) (13.5%)
Slide 18: Revenue by business units
Revenue by business units Cable and MFS growing strongly Revenue evolution by Business Unit US$ million, Q3 2014 – Q3 2015 • Mobile up 2.9% organically 36 • Colombia and Africa driving 35 34 7 • Voice & SMS -6.8% 243 (201) • Data growing 38.8% (Q2: 39.3%) • Cable growth continues to be strong 1,599
Slide 19: Revenue by region
Revenue by region FX headwinds offset solid organic growth Revenue evolution by Region US$ million, Q3 2014 – Q3 2015 • Hit by a 13.5% negative FX impact 30 • Major devaluations in Colombia, 82 (201) 243 Tanzania, Paraguay, Ghana (even the € in Chad / Senegal) • Strong growth in Latam 1,641 1,599 •
Slide 20: EBITDA
EBITDA Central America and lower Corporate Costs drive EBITDA EBITDA evolution by Region US$ million, Q3 2014 – Q3 2015 • EBITDA growth of 2.1% • Organic growth 7.9%1 • FX impact 8 15 • Latam up 0.6% 5 19 (61) 77 • Organic growth ex UNE 3.8% • $8 million positive one-offs at UNE 560 • $5 million neg
Slide 21: EBITDA - Latam
EBITDA - Latam Underlying performance remains strong EBITDA evolution - LATAM US$ million, Q3 2014 – Q3 2015 • Positive organic growth in all countries but Costa Rica • Central America steady progress – up 4% 8 • Guatemala maintained good growth 8 • South America 11 77 (49) • Paraguay up 3% organic,
Slide 22: EBITDA - Africa
EBITDA - Africa Significant FX impact – Tanzania strong EBITDA evolution - AFRICA US$ million, Q3 2014 – Q3 2015 • Significant FX impact in Q3 • 22% adverse currency movement 2 • Growth from Tanzania remains high but 3 (1) (12) EBITDA hit by opex in US$ • EBITDA organic growth of 10%, margin declini
Slide 23: FCF – YTD 2015
FCF – YTD 2015 Cash generation profile is improving 10% YoY change 12% 41% NM • YTD cashflow showing positive signs • OCF up 10% • Working capital inflow of $66 million in Q3 (824) • Cash capex represents US$ million 99% of capex booked 1,687 (102) (190) • Taxes lower than last year due to timing of
Slide 24: Capex
Capex Our capex dedicated to cable is mostly success based • The majority of our capex is mobile, Capex split YTD Capex split pattern Group level Cable unit with Cable representing around 1/3. Success • Capex intensity on cable (excluding 41% driven shared capex mobile / fixed) around 34% 54% Footpr
Slide 25: Net debt variation
Net debt variation Net debt increased due to dividend distribution Net debt evolution • Net debt broadly flat at $4.27bn US$ million, 31 December 2014 – 30 September 2015 • 6.2 year maturity • Average cost of debt 6.1% 54 • 25% gross debt in local currency 264 • M&A activity: • Rwanda minority inter
Slide 26: Conclusion
Conclusion 1 Underlying trends robust 2 Managing growth in margins 3 Balancing cable with cash generation 4 Leverage stable and good liquidity Page 26
Slide 27: Appendix
Appendix We believe in better. We believe in ticd
Slide 28: Appendix – Below EBITDA
Appendix – Below EBITDA Depreciation and amortisation Interest 59 57 13 22 20 3 308 323 107 101 103 D&A Q3 14 Underlying FX UNE PPA D&A Q3 15 Interest Q3 Underlying FX UNE PPA Interest Q3 Adj. 14 Adj. 15 Tax 5 7 4 39 30 Tax Q3 14 Underlying FX UNE PPA Tax Q3 15 Adj. Page 28
Slide 29: Gross debt by country
Gross debt by country Gross debt broadly flat compared to previous quarter Central America: South America: Africa: Corporate: Total Gross Debt: $1,457m $1,210m $442m $2,014m $5,122m 17% guaranteed 1% guaranteed 63% guaranteed 0% guaranteed 11% guaranteed Honduras: $362m Senegal: $13m Ghana: $58m (68
Slide 30: Currency exposure of the debt
Currency exposure of the debt Our aim is to increase the proportion of debt in local currency Sep-15 Debt including finance leases Cash Net debt US$ Local Total Total US$ Local Total Central America 1,150 307 1,457 222 1,039 195 1,235 79% 21% 100% 84% 16% 100% South America 347 863 1,210 270 246 694
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