Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q1 2009 Earnings Presentation
48 slides from Millicom International Cellular's earnings presentation, June 2009
Slide 1: Investor Presentation
Millicom International Cellular S.A. Investor Presentation June 2009
Slide 2: Overview
: : Overview Millicom is: • A leading operator of mobile telephony services in emerging markets with 34m customers • Operating in 16 countries with 294 million potential customers under license • Strong market positions having successfully grown its market share through investment • Mainly pre-paid
Slide 3: Overview
: : Overview Amnet: 38m Guatemala 14m Central America: South America: Africa*: Asia: Mobile El Salvador 6m 28 m 61 m 164 m 41 m operations’ Honduras 8m pops under Costa Rica 4m license*: 294m Nicaragua 6m Guatemala 14m El Salvador 6m Senegal 12m Chad 10m Laos 6m Cambodia 14m Ownership: 55.0% Ownersh
Slide 4: Penetration rates
: : Penetration rates Asia CAM SAM Africa MIC Avg penetration Avg penetration Avg penetration Avg penetration Avg penetration 33% 80% 84% 21% 41% 120 96 93 100 84 79 71 75 80 60 45 43 45 38 41 40 31 18 23 15 11 20 9 0 Ca M El C Pa C Se Sr G H B D M G R Ta M ol ha on ol R w ill ua ha au IC iL Sa ra n
Slide 5: Market share evolution: Q1 09 – Q4 08
: : Market share evolution: Q1 09 – Q4 08 Asia CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share Avg Market Share 34% 53% 15% 29% 28% % 80.0 66 70.0 55 60.0 51 46 48 45 43 50.0 35 37 40.0 22 26 27 29 28 30.0 21 20.0 8 10.0 0.0 Q4 08 Q1 09 Market C M El G vad C Pa
Slide 6: Affordability
: : Affordability Best Value Low denomination for money reloads Affordability Price Per second leadership billing 6
Slide 7: Accessibility
: : Accessibility Accessibility 250 8% 0% 200 1% 200 192 174 150 Growth vs Q4 08 (%) 100 18% No of outlets Q1 09 70 50 0 Asia CAM SAM Africa Number of Outlets (‘000) Total number of Outlets : 636 K 7
Slide 8: Availability
: : Availability Availability Asia CAM SAM Africa Avg Population Avg Population Avg Population Avg Population coverage coverage coverage coverage 68% 92% 77% 42% 120 94 91 91 99 81 89 88 100 73 73 68 67 80 52 58 60 26 40 15 20 0 C M El G C Pa D M G Ta Sr H B C Se am ua ol RC ha ill au on ol ha y iL
Slide 9: Highlights
: : Highlights Significant Strong negative VAS pressure Margins growth from Forex, improving Market share especially in in Q1 09 stabilization Africa Positive Slow down Operating of growth Lower Free in Local churn Cash currency Flow Economic Drivers Management Drivers 9
Slide 10: Financial Highlights
: : Financial Highlights US$m Q1 09 Q1 08 Change Subscribers ('000) 33,621 26,075 29% Revenues 846 799 6% EBITDA 376 338 11% EBITDA margin 44.5% 42.3% +219 bp Net Profit 140 158 -12% Capex 210 261 -20% Capex% of revenues 25% 33% Free Cash Flow * 48 18 167% * EBITDA - CAPEX - WC movements - Interest
Slide 11: Revenue growth – Forex impact
: : Revenue growth – Forex impact US$m 950 6% - 9% 900 9% 45 -70 6% 850 72 800 750 800 847 700 08 ce t 09 1 n E GA p ac 1 eQ ma AV im e Q u rf or N re x u ven pe ET / o ven Re N F Re l yin g AM r de Un Revenue growth from Forex loss of 9% underlying performance of 9% 11
Slide 12: Revenue growth – Forex effect by region
: : Revenue growth – Forex effect by region Revenue Revenue Local currency growth Forex Acquisitions Growth US$m Q1 08 Q1 09 $m growth $m growth $m growth Central America 340 -11 -3% -4 -1% 2 327 -4% South America 232 37 16% -32 -14% 237 2% Africa 164 41 25% -33 -20% 172 5% Asia 64 5 6% -1 -2% 68 7%
Slide 13: EBITDA growth – Forex impact
: : EBITDA growth – Forex impact US$m 5% -8% 400 14% -25 11% 46 17 300 376 337 200 8 e GA t 9 10 anc E pac 10 Q V m Q A orm NA x i A BIT D p e rf ET/ ore IT D E N F EB l ying AM e r d Un EBITDA growth from underlying Forex loss of 8% performance of 14% 13
Slide 14: EBITDA growth – Forex effect by region
: : EBITDA growth – Forex effect by region EBITDA EBITDA Local currency Forex Acquisitions Growth US$m Q1 08 Q1 09 $m growth $m growth $m growth Central America 187 -2 -1% -3 -2% 1 183 -2% South America 72 30 42% -8 -11% 94 31% Africa 53 19 36% -13 -25% 59 11% Asia 25 -1 -2% 0 -1% 24 -3% AMNET 16 6%
Slide 15: Revenue split by category
: : Revenue split by category US$m Q1 09 Q1 08 $ Local currency growth growth Airtime 622 621 0% 7% % of Mobile Revenues 78% 88% VAS/SMS/3G 119 88 36% 45% % of Mobile Revenues 15% 12% Other (*) 104 89 17% 66% Total Revenues 846 799 6% 15% (*) Telephone & Equipment + Broadband VAS/SMS/3G revenue VAS/
Slide 16: Total Subscriber growth
: : Total Subscriber growth 40.000 35.000 59% 58% 30.000 53% Closing 25.000 Subscribers 38% YoY change 20.000 29% 15.000 10.000 1049 5.000 0.000 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Subscribers +29% YoY 16
Slide 17: Churn evolution
: : Churn evolution 10.0% 8.0% 8.0% 7.1% 5.4% 4.9% 5.5% 4.9% 6.0% 4.2% 3.7%3.9% Q4 08 3.5% 4.0% Q1 09 2.0% 0.0% CA SA Africa Asia MIC TOTAL Churn decreasing by 0.6 percent 17
Slide 18: Impact of economic crisis
: : Impact of economic crisis EM Economies affected: - slow-down of remittances in Central America (-8% in Jan-Feb 09 YoY) - drop in raw material prices - decline in tourism Change in consumer behavior : - more on-net calls - fewer cross-net calls - less roaming - reduced incoming international call
Slide 19: Managing through the crisis
: : Managing through the crisis • Subscriber segmentation with differentiated service offerings • Deeper affordability through lower denominations for reloads / scratch cards • Development of loyalty programs • Reload promotions with free benefits (airtime, SMS…) 19
Slide 20: Quarterly Highlights
Click to add title Quarterly Highlights
Slide 21: Quarterly Highlights – Central America
: : Quarterly Highlights – Central America US$m Q1 09 Q1 08 $ Local currency growth growth Subscribers ('000) 11,534 9,787 18% % of total MIC 34% 38% Revenues 327 340 -4% -3% % of total MIC 39% 43% EBITDA 183 187 -2% -1% % of total MIC 49% 55% EBITDA margin 56% 55% +91 bp Capex 27 67 -59% Capex% of
Slide 22: Quarterly Highlights – South America
: : Quarterly Highlights – South America US$m Q1 09 Q1 08 $ Local currency growth growth Subscribers ('000) 7,735 6,464 20% % of total MIC 23% 25% Revenues 237 232 2% 16% % of total MIC 28% 29% EBITDA 94 72 29% 42% % of total MIC 25% 21% EBITDA margin 40% 31% 826 bp Capex 37 69 -46% Capex% of revenu
Slide 23: Quarterly Highlights – Africa
: : Quarterly Highlights – Africa US$m Q1 09 Q1 08 $ Local currency growth growth Subscribers ('000) 9,813 6,441 52% % of total MIC 29% 25% Revenues 171 164 4% 25% % of total MIC 20% 21% EBITDA 59 53 12% 36% % of total MIC 16% 16% EBITDA margin 34% 32% 242 bp Capex 107 87 23% Capex% of revenues 62%
Slide 24: Quarterly Highlights – Asia
: : Quarterly Highlights – Asia US$m Q1 09 Q1 08 $ Local currency growth growth Subscribers ('000) 4,539 3,383 34% % of total MIC 14% 12% Revenues 68 63 7% 8% % of total MIC 8% 8% EBITDA 24 25 -7% -2% % of total MIC 6% 8% EBITDA margin 36% 40% -407 bp Capex * 25 43 -41% Capex% of revenues 38% 68% Fr
Slide 25: Quarterly Highlights – Amnet
: : Quarterly Highlights – Amnet US$m Q1 09 Q1 08 $ growth Revenues 43 0 #DIV/0! % of total MIC 5% 0% EBITDA 16 0 #DIV/0! % of total MIC 4% 0% EBITDA margin * 37% #DIV/0! #DIV/0! Capex ** 14 0 #DIV/0! Capex% of revenues 32% #DIV/0! Free Cash Flow 1 * EBITDA margin depressed by one-off restructuring
Slide 26: Amnet - Highlights
: : Amnet - Highlights '000 Q1 09 Q3 08 Growth Broadband Subscribers - Cable TV 417 397 5% subscribers growth of 22% Subscribers- Broadband 111 91 22% Total Revenue Generating Units 556 510 9% Homes passed Homes Passed 1,206 1,081 12% growth of Bidirectional Home Passed % 73% 61% 12% Market Share Ca
Slide 27: Financial review
Financial review
Slide 28: Quarterly Capex
: : Quarterly Capex 500 51% 450 45% Capex 400 38% Capex % of rev 350 33% 300 25% 250 200 150 100 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Active management of Capex 28
Slide 29: Quarterly Depreciation
: : Quarterly Depreciation 200 149 147 134 150 110 123 100 50 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Total Depreciation (USD m) Depreciation stabilizing through control of Capex 29
Slide 30: Quarterly Net Debt/EBITDA ratio
: : Quarterly Net Debt/EBITDA ratio 1600 1400 1.00 0.99 1200 Net Debt 1000 0.64 Net Debt/EBITDA 0.70 800 0.39 600 400 200 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Stabilization of debt at low level 30
Slide 31: Debt maturity as at 31.03.2009
: : Debt maturity as at 31.03.2009 1000 660 900 800 700 10% notes 600 548 454 500 400 355 308 300 245 200 103 100 206 0 Less than 1 1-2 years 2-3- years 3-4 years 4-5 years more than 5 year Debt maturity (USD m) Average maturity above 3 years 31
Slide 32: Quarterly Interest expense
: : Quarterly Interest expense 60 50 50 10% 10% 43 9% 9% 43 Total interest cost 41 41 40 8% Effective rate 13 * 30 20 10 28 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Total Interest expense (USD m) * Due to change of estimate of HY notes early redemption costs Benefit of declining rates on variable rate debt p
Slide 33: Taxes
: : Taxes US$m Q1 09 Q1 08 PBT 173 190 Taxes 43 42 Effective tax rate 25% 22% Positive country mix and tax planning 33
Slide 34: Quarterly EPS
: : Quarterly EPS 1.47 1.48 1.48 1.28 1.49 1.33 1.22 1.29 1.40 1.12 EPS 0.90 0.61 Normalized EPS * 0.40 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 * excluding discontinued operations and impact of DTA in Colombia Normalized EPS increase of 19% vs Q408 34
Slide 35: Free Cash flow
: : Free Cash flow 150 Free Cash Flow (US$m)* 48 50 18 -15 -130 -113 (50) (150) Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 * E BI T DA - Cap ex + /- W C- In terests - T axes - C orp orate costs Positive Free Cash Flow: 5.7% of revenues in Q1 09 35
Slide 36: Free Cash Flow by region
: : Free Cash Flow by region 150 131 89 100 50 23 Q108 0 Q109 (10) (19) -50 (26) (24) -100 (64) Central South Africa Asia America America Africa still in investment position 36
Slide 37: Cash flow
: : Cash flow US$m Q1 09 Q1 08 Net cash provided by operating activities 322 252 Cash used by investing activities -339 -241 Cash (used) provided by financing activities 87 24 Net cash from continuing operations 70 35 Discontinued operations -3 -6 Exchange rate changes -13 8 Net (decrease) increase
Slide 38: Outlook Full Year 2009
: : Outlook Full Year 2009 Stabilization of EBITDA Margin at current level Capex around Positive Free Cash US$m Flow 850 38
Slide 39: Strategic review of Asian assets
A strategic review of Asian assets will be carried out and could lead to the disposal of part or all of these operations 39
Slide 40: Subscribers contribution by region
: : Subscribers contribution by region Q1 09 Africa Asia 29% 14% CAM 34% SAM 23% Africa From 25% to 29% of total MIC Asia subscribers Q1 08 CAM 13% 37% Africa 25% SAM 25% 40
Slide 41: Revenue contribution by region
: : Revenue contribution by region Q1 09 Asia CAM 8% 39% Africa 20% AMNET SAM 5% 28% Q1 08 Asia 8% Africa CAM 21% 42% SAM 29% 41
Slide 42: EBITDA contribution by region
: : EBITDA contribution by region Q1 09 Asia Africa 6% 16% CAM 49% SAM SAM AMNET 25% Increasing 4% contribution Q1 08 in Q1 09 Asia Africa 7% 16% CAM SAM 56% 21% 42
Slide 43: Capex contribution by region
: : Capex contribution by region Q1 09 Asia CAM 12% 13% AMNET 7% Africa SAM Africa 18% 50% From 33% to 50% of total Capex Q1 08 Asia CAM 16% 25% Africa 33% SAM 26% 43
Slide 44: Q1 09 Market Overview – by Segment
: : Q1 09 Market Overview – by Segment Central South Millicom Segments Africa† Asia Amnet Total America America Market Overview Population (million)* 28 61 164 41 294 Mobile Penetration** 80.1% 84.0% 21.0% 32.7% 41.3% Operational Data Total Subs. (000) 11,534 7,735 9,813 4,539 33,621 Attributable Su
Slide 45: Market Overview – by Country
: : 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 46: Market Overview – by Country
: : 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 47: Market Overview – by Country
: : Market Overview – by Country Asia Cambodia Laos Sri Lanka Shareholding 58.4% (p) 74.1% 100.0% License Period (yrs) 35 yrs from 1996 20 yrs from 2002 10 yrs fr 2008* Date of Expiry 2031 2022 2018 Market Overview Population (million) 14 6 21 GDP per pop (PPP) $ 2,100 2,100 4,400 Mobile Penetration
Slide 48: Thank You!
Thank You!
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