Millicom International Cellular S.A. · NASDAQ:TIGO

Millicom International Cellular — Investor Day (November 2019)

48 slides from Millicom International Cellular's investor day presentation, November 2019

  1. Slide 1: Investor Presentation - Stockholm

    Investor Presentation - Stockholm November 2019

  2. Slide 2: Safe Harbor

    Safe Harbor Cautionary Language Concerning Forward-Looking Statements Statements included herein that are not historical facts, including without limitation statements concerning future strategy, plans, objectives, expectations and intentions, projected financial results, liquidity, growth and prosp

  3. Slide 3: Non-IFRS Measures

    Non-IFRS Measures This presentation contains financial measures not prepared in accordance with IFRS. These measures are referred to as “non-IFRS” measures and include: non-IFRS service revenue, non-IFRS EBITDA, and non-IFRS Capex, among others defined below. Annual growth rates for these non-IFRS m

  4. Slide 4: Agenda

    Agenda 1. Our Journey 2. Our Stakeholders 3. Our Team 4. Financials 5. Wrap up 4

  5. Slide 5: Mauricio Ramos, CEO

    Mauricio Ramos, CEO November 2019 5

  6. Slide 6: Our Purpose

    Our Purpose 6

  7. Slide 7: Tigo in Latin America

    Tigo in Latin America LTM Service Revenue* Prepaid Postpaid Fixed Guatemala $5.3b Honduras El Salvador Costa Rica Nicaragua Panama Colombia 68% 4G population coverage LTM EBITDA* +13.5m 4G clients 2% 6% 2% +11.2m HFC homes passed Bolivia 6% Guatemala 30% Colombia +3.4m HFC homes connected 10% Paragu

  8. Slide 8: Leader in our markets

    Honduras Mobile #1 BBI #1 Leader Guatemala Mobile #1 Pay TV #2 BBI #2 Nicaragua Pay TV #1 Mobile #1 Pay TV #2 El Salvador 1 Mobile #2 BBI #2 Pay TV #2 in our markets Colombia Costa Rica 2 Mobile #3 Mobile #2 Panama BBI #2 BBI #2 Mobile #1 Pay TV #2 Pay TV #1 BBI #1 Pay TV #1 Bolivia Mobile #2 BBI #1

  9. Slide 9: Our opportunity: underpenetrated Latin American markets

    Our opportunity... Latin American markets are underpenetrated, representing an attractive opportunity Penetration Potential 4G Penetration of Customer Base Fixed Broadband Penetration Average 4G penetration rates (%) Fixed Broadband penetration rates (%) 1. Low penetration rates 55% 50% < 35% of our

  10. Slide 10: Successful execution of our operating strategy since 2016

    Successful execution of our operating strategy since 2016 1. Monetize Data 2. Build Cable Prepare for 5. 6. 3. Convergence GO Best Digital Customer Experience 4. Accelerate B2B 10

  11. Slide 11: Our equity story

    Our equity story Broadband Networks Customers Revenue EBITDA Cash Flow Latam 4G Latam 4G Customers Latam Service Revenue Latam EBITDA margin Latam OCF organic growth (%) 1 Coverage (mm) organic growth (%) 1 (%) 2 1.4x 3.9x 1.4 pp 2.8 pp 68% 13.5 49% 3.5 2016 Q3 19 2016 Q3 19 Latam HFC HP Latam HFC C

  12. Slide 12: Agenda

    Agenda 1. Our Journey 2. Our Stakeholders 3. Our Team 4. Financials 5. Wrap up 12

  13. Slide 13: Our Stakeholders

    Our Our Investors Customers Our Our Communities People 13

  14. Slide 14: Our Investors

    Our Investors 14

  15. Slide 15: Improved Free Cash Flow Generation

    Improved Free Cash Flow Generation Equity Free Cash Flow* ($m) Equity EquityFree FreeCash CashFlow* Flow*YTD FY ($m) ($m) Dividend • eFCF down YTD on : • Debt financing costs 375 243 • M&A, US listing and SOX related 356 banking and legal advisory fees • Chad disposal 269 235 143 -43 9M 18 9M19 2014

  16. Slide 16: Our Customers

    Our Our Investors Customers 16

  17. Slide 17: Focus on customer base management

    Focus on customer base management Our NPS System 18- 19- 19- 19- 19- 19- 19- 19- 19- 19- Dec Jan Feb Mar Apr May Jun Jul Aug Sep High quality products 17

  18. Slide 18: Our People

    Our Our Investors Customers Our People 18

  19. Slide 19: TOP 25 - 2nd Year, +21,000 employees

    Ranking TOP 25 - 2nd Year Consecutively 2018: # 21 Latam. # 11 Central America Female +21,000 employees 41% Male 59% 19 #SangreTigo

  20. Slide 20: Our Communities

    Our Our Investors Customers Our Our Communities People 20

  21. Slide 21: Our business is a social good

    Our business is a social good We actively work to generate a Child rights positive impact and online protection Digital inclusion Our daily work makes our #Financialinclusion purpose a reality 21

  22. Slide 22: Agenda

    Agenda 1. Our Journey 2. Our Stakeholders 3. Our Team 4. Financials 5. Wrap up 22

  23. Slide 23: Our Executive Team

    Our Executive Team Mauricio Ramos Tim Pennington Esteban Iriarte Xavier Rocoplan Susy Bobenrieth HL Rogers Rachel Samrén Salvador Escalon CEO CFO COO CTIO Chief Human Chief Ethics & Chief External General Counsel Resources Officer Compliance Officer Affairs Officer 23

  24. Slide 24: Agenda

    Agenda 1. Our Journey 2. Our Stakeholders 3. Our Team 4. Financials 5. Wrap up 24

  25. Slide 25: Growing in Latam markets

    Growing in Latam markets Favorable macro outlook GDP Growth CPI Inflation CAGR % GDP growth, 2018-2028 Average % CPI Inflation, 2018-2028 Growing economies 4.8% 5.9% 5.0% 4.8% 3.7% 3.7% 3.7% 3.2% 3.1% 4.1% 3.9% 3.8% 3.1% 2.9% 3.6% Stable inflation 2.7% 3.1% 2.9% 2.2% 2.1% 2.2% 1.7% Low Fx volatility

  26. Slide 26: Positive long-term demographic rise of the middle class

    Positive long-term demographic… rise of the middle class Households by income band for Tigo countries in Latam Households by income band (‘000) Forecast 40,000 35,000 30,000 25,000 ~25m households 20,000 by 2028 15,000 10,000 5,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2

  27. Slide 27: Positive long-term macro outlook, short term challenges

    Positive long-term macro outlook …short term challenges Economic growth in 2019 slowing sharply in several markets…long term outlook remains positive Paraguay Quarterly GDP Growth Tigo Latam Segment 3.8 Latam Region 3.5 3.3 6.1% 5.3% 4.6% 3.6% 3.0 2.8 -2.1% -2.5% 2.5 2.3 Q1 18 Q2 18 Q3 18 Q4 18 Q1 1

  28. Slide 28: More US-dollar linked currency exposure

    More US-dollar linked currency exposure Q3 2015 Revenue by Region Q3 2019 Revenue by Region Underlying Revenue by Region, Q3 2015 Underlying Revenue by Region, Q3 2019 SAM SAM CAM CAM 6% 15% AFR AFR 43% 47% 51% 37% 28

  29. Slide 29: Colombia

    Colombia 25% of Latam service revenue Service Revenue*… … and EBITDA* growing… …in Mobile and Home Service Revenue and Organic Growth** EBITDA and Organic Growth** Organic Service Revenue Growth (%) by business** LTM Q3 17 – LTM Q3 19 LTM Q3 17- LTM Q3 19 2018 and LTM 2.0% 3.4% 1,436 2018 Colombia B

  30. Slide 30: Guatemala

    Guatemala 22% of Latam service revenue Steady revenue growth Growing EBITDA Guatemala Service Revenue* ($) and Service Revenue Organic Growth* (%), Guatemala EBITDA ($) and EBITDA Organic Growth*, Q1 18 – Q3 19 Q1 18 – Q3 190 Service Revenue (US$m) EBITDA (US$m) Organic Growth (%) Organic Growth (%)

  31. Slide 31: Bolivia

    Bolivia 11% of Latam service revenue Steady growth in home Defending Mobile market share Bolivia Home Service Revenue* ($), Bolivia Mobile Subs. (‘000) and ARPU*, Q1 18 – Q3 19 Home revenue Q1 18 – Q3 19 Mobile Subs. ARPU ~2x 3,528 3,541 3,534 3,604 3,610 3,550 3,638 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2

  32. Slide 32: Paraguay

    Paraguay 11% of Latam service revenue Home growing steadily Strong margins Home growing steadily Paraguay HFC Customers Paraguay EBITDA Margin* (%), Q3 18 – Q3 19 Q1 18 – Q3 19 13% #1 Mobile 50.5 50.0 49.5 49.0 48.5 48.0 #1 Broadband 47.5 47.0 46.5 46.0 45.5 45.0 #1 Pay TV 44.5 ex IFRS 16 2.0 1.5 1.

  33. Slide 33: Panama – Synergies Driving OCF

    Panama – Synergies Driving OCF 8% of Latam service revenue Biggest Telco in Panama Slowing GDP Growth2 Market Share1 Panama Quarterly GDP Growth Q1 18 – Q2 19 4.0% 4.0% #1 Pay TV ~80% 3.6% 3.1% 3.1% #1 Broadband ~75% 2.9% #1 Mobile ~35% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Growing EBITDA Robust OCF G

  34. Slide 34: Honduras and El Salvador

    Honduras and El Salvador 10% and 6%, respectively, of Latam service revenue Honduras El Salvador Honduras Organic Service Revenue Growth* (%) Q1 17 – Q3 19 El Salvador Organic Service Revenue Growth* (%), Q1 18 – Q3 19 2.5% Change in management team Change in management team 1.8% 2.1% -3.6% -4.9% -7

  35. Slide 35: Net debt evolution

    Net debt evolution Underlying Net Debt Evolution Debt Profile $ million, December 31, 2018 – September 30, 2019 $ million, December 31, 2018 – September 30, 2019 Period Underlying Net Proportionate Net Debt/ LTM Debt/ Proportionate EBITDA* LTM EBITDA4 YE 2018 2.18x 2.52x Latam HQ Africa Geography Q3

  36. Slide 36: Debt profile

    Debt profile Debt maturity schedule as of Q3 20191 $ million Average life of 6.2 years2 1,588 Average cost of debt2 of 6.1% 982 948 Comcel (GT) $800m 632 6.875% 536 549 404 29s 370 $750m 282 25s 26s 28s 6.25% 231 $500m $500m Telecel $500m 151 6.625% (PY) 5.125% 6.0% SEK 2bn $300m 4.913%3 5.875% 2019

  37. Slide 37: Medium-term Targets

    Medium-term Targets Latam Guidance How? • Mobile: Low-single-digit Service revenue Mid-single-digit • Home: High-single-digit growth* • B2B: Mid-single-digit • Digital Mid-to-high single- EBITDA growth* • Business transformation digit • Cost control • Leveraging fixed network OCF growth* Around 10%

  38. Slide 38: Agenda

    Agenda 1. Our Journey 2. Our Stakeholders 3. Our Team 4. Financials 5. Wrap up 38

  39. Slide 39: Our operational strategy

    Our operational strategy... 1. Monetize Data 2. Build Cable Prepare for 5. 6. 3. Convergence GO Best Digital Customer Experience 4. Accelerate B2B 39

  40. Slide 40: Organic growth & FCF

    … aimed at generating organic cash flow growth… 1 Organic growth & FCF 40

  41. Slide 41: Disposing of assets to reinvest in Latam where returns are higher

    … as we maintain capital allocation discipline… Disposing of assets to reinvest in Latam where returns are higher Disposing non-strategic assets Strengthening Latam leadership DRC Disposal – Q1 16 Senegal Disposal – Q1 17 Cable Onda Q4 18 Ghana JV with Airtel – Q1 17 TEF Nicaragua Q2 19 Paraguay ($1

  42. Slide 42: Capital Allocation Discipline

    2 1 Capital Organic growth Allocation & FCF Discipline 42

  43. Slide 43: Commitment to a healthy balance sheet

    … and our commitment to a healthy balance sheet… Debt Profile 30 September 2019 Geography Latam 61% HQ 35% Africa 4% Bonds 54% Banks 30% Fin. Leases 16% Source Interest Rates Fixed or Swapped 78% Variable 22% FX Exposure Local 40% USD / SEK 60% Less than 5y Maturity 24% 5Y or more 76% Target leverag

  44. Slide 44: Healthy balance sheet

    2 1 Capital Organic growth Allocation & FCF Discipline 3 Healthy balance sheet 44

  45. Slide 45: …to retain strategic optionality…

    …to retain strategic optionality… Guatemala Honduras El Salvador Nicaragua Costa Rica Panama Colombia Bolivia Paraguay TEF CAM Mobile Internet Pay TV

  46. Slide 46: Strategic Optionality

    … to accelerate growth and enhance returns 2 1 Capital Organic growth Allocation & FCF Discipline 4 3 Strategic Healthy Optionality balance sheet 46

  47. Slide 47: Strong governance standards, rare in Emerging Markets

    Strong governance standards, rare in Emerging Markets US, Swedish, Luxembourg Independent Board Governance Standards of Directors Millicom is expected to be 100% Float Post Distribution(1) Alignment of Mgmt. Single Class of Stock Compensation 1 share, 1 vote structure Stock-based compensation aligne

  48. Slide 48: Thank you

    Thank you Investor Presentation - Stockholm November 2019

Millicom International Cellular — Investor Day (November 2019) on 6ix