Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q3 2012 Earnings Presentation
48 slides from Millicom International Cellular's earnings presentation, Oct 17, 2012
Slide 1: Q3 2012 Results Presentation
Millicom International Cellular S.A. Q3 2012 Results Presentation October 17, 2012 Mikael Grahne, CEO François-Xavier Roger, 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: Definitions
Definitions 1- Underlying local currency growth: is the growth excluding the contribution from the Online category in Q3, one off events like the reclassification in Colombia impacting revenue and EBITDA, and in local currency 2- Recurring revenue: is in Q3 revenue from Communication, Information, E
Slide 4: Agenda
Agenda Q3 Results at a Glance Update on Categories Financial Results Millicom International Cellular S.A. 4
Slide 5: Q3 Results at a Glance
Q3 Results at a Glance
Slide 6: Q3 2012 - Key Events
Q3 2012- Key Events Underlying local currency growth at 8.4%, EBITDA margin at 42.3% in Q3, FY 2012 Guidance reiterated Innovation: Key enabler of growth and churn reduction Strong customer intake in Q3 in South America and Africa Reinforcing the Group’s growth profile externally Cablevisi
Slide 7: Q3 Highlights - Revenue Growth
Q3 Highlights- Revenue Growth US$m 1,250 Underlying LC growth +8.4% 1,200 1,150 1,100 1,050 1,000 Q3 11 Q3 12 8.4% underlying local currency revenue growth in Q3 Millicom International Cellular S.A. 7
Slide 8: Focus on VAS Delivering Results
Focus on VAS Delivering Results 45,0% 40,0% 38,8% 36,5% 35,1% 35,0% 33,5% 31,8% 30,0% 28,4% Q3 2011 25,0% Q3 2012 20,0% 19,0% 15,0% 11,4% 10,0% Central America South America Africa Group 34% of recurring revenue from Value Added Services in Q3 2012 Communication revenue still growing Millicom Intern
Slide 9: Q3 Highlights - EBITDA Margin
Q3 Highlights- EBITDA Margin 47.0% 0 46.0% 0.9% 45.0% 1.7% 44.0% 43.0% 46.0% 0.6% 45.1% 0.5% 42.0% 43.3% 42.8% 42.3% 42.3% 41.0% 40.0% EBITDA % Q3 11 Pricing Investment for Colombia Other EBITDA % Q3 12 Growth Adjustment Investment for growth includes notably subsidies, network costs, category staff
Slide 10: Shareholder Remuneration
Shareholder Remuneration Total shareholder remuneration** and FCF (US$m) 954 992 785 982 747* 300 498 734 190 456 Share buyback 500 300 305 Special dividends Ordinary dividends 189 244 135 154 FCF 2009 2010 2011 2012E Net debt / LTM EBITDA 0.4x 0.7x 0.7x 0.8x M&A ($ million) 49 NS 9 $257m Steady gro
Slide 11: Update on Categories
J O “eo we Update on Categories
Slide 12: Innovation: Key Enabler of Growth
Innovation: Key Enabler of Growth Recurring revenue growth YoY (US$M at constant forex) 100 90 80 70 60 59 50 73 77 66 59 40 30 20 33 10 16 16 14 13 0 Q311 Q411 Q112 Q212 Q312 Communication Information, Entertainment, Solutions, MFS Record absolute growth from innovation in Q3 2012 Millicom Internat
Slide 13: Innovation: Key Enabler of Churn Reduction
Innovation: Key Enabler of Churn Reduction 5,2% 5,0% 5,0% 5,0% 4,8% 4,7% 4,6% 4,6% 4,5% Churn rate 4,5% 4,4% 4,2% 4,2% 4,0% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Innovative products contribute to increase loyalty & reduce churn Millicom International Cellular S.A. 13
Slide 14: 86% of Growth from New Categories
86% of Growth from New Categories Contribution US$m Q3 12 Q3 11 Underlying LC to recurr. rev.* growth growth Q3 12 Communication (voice, SMS) 816 840 1.6% 14% Voice 705 737 0.0% 0% SMS 111 103 12.7% 14% Information (Data services) 172 131 36.7% 53% of which Mobile Data 130 95 42.4% 45% 86% Entertain
Slide 15: Room for Product Penetration Growth
Room for Product Penetration Growth Highest Lowest Total MIC Q3 12 Q3 11 Change market market (pts) Q3 12 Q3 12 SMS 53.4% 54.3% -0.9 79.7% 14.2% (com m unication) Ring Back Tone 22.4% 25.7% -3.3 36.0% 5.9% (entertainm ent) Data (2G+3G) 12.7% 9.5% +3.2 31.2% 2.5% (inform ation) Tigo Lends You 37.2% 3
Slide 16: Information - Strong Growth in Mobile
Information- Strong Growth in Mobile 4 Traffic and Revenue growth 3 2 Q1 10=1 1 Q 1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Trafic PB Revenue Revenue and traffic growth highly correlated Acceleration of traffic growth supported by decline in production co
Slide 17: Information - Accelerated Investment in Subsidies
Information- Accelerated Investment in Subsidies 100 Growth in LC 90 22.1% 80 70 60 Subsidy cost US$m 50 91 40 77 30 20 10 0 Q3 11 Q3 12 Further acceleration of investments in subsidies to capture growth in data at the right time Millicom International Cellular S.A. 17
Slide 18: Information - Increasing Usage & Penetration
Information- Increasing Usage & Penetration Latin America Q3 12 Q2 12 QoQ growth Total data users* 2G+3G (millions) 4.4 4.2 7% % of total cus tomers 16.1% 15.5% 0.6pt Total Data Revenue 2G+3G 120.6 113.6 6% of which: Handsets (US$) 75.8 67.4 12% Datacards (US$) 44.8 46.2 -3% Data revenues 2G+3G as %
Slide 19: MFS - Accelerating Momentum
MFS– Accelerating Momentum Tigo Cash penetration % (as a % of mobile customers) 35.0% 30.0% Paraguay 25.0% Tanzania 20.0% Rwanda 15.0% El Salvador 10.0% 5.0% 0.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 MFS penetration at 11% across footprint* * Footprint cons
Slide 20: Online - update
Online- update Transaction completed on August 29, 2012 Consolidated from 1st September only: Revenue: $2.5 million EBITDA: - $2.3 million Net income: - $2.3 million ($0.5 our share) Reported in Others in Q3 Online to be reported as a separate 6th Category from Q4 2012 Millicom Interna
Slide 21: Online - LatAm Roll-Out Schedule
Online- LatAm Roll-Out Schedule Launched in Countries Category Products/Services FTE Art and Handicraft, 4Q'2011 Brazil Market place Jewels and Fashion ~35 people items 3Q'2011 Brazil E-Commerce Sports goods ~250 people Baby food, furniture 4Q'2011 Brazil E- Commerce ~250 people and clothes One stop
Slide 22: Online - Africa Roll-Out Schedule
Online- Africa Roll-Out Schedule Launched in Category Products/Services Countries FTE 4Q'2011 E-Commerce Fashion/Lifestyle* South Africa ~200 people ~100 people in General Morocco, Nigeria, 2Q'2012 E-Commerce Merchandise** / Nigeria, ~ 80 people in fashion Egypt Morocco, ~ 80 people in Egypt Ghana,
Slide 23: Financial Results
Financial Results Millicom International Cellular S.A. 23
Slide 24: Financial Highlights Q3 YoY
Financial Highlights Q3 YoY US$m Q3 12 Q3 11 US$ Underlying LC growth growth Mobile customers (million) 46.0 42.2 9.0% Mobile ARPU (US$) 8.9 9.3 -4.6% 0.0% Revenue 1,199 1,151 4.2% 8.4% EBITDA 507 529 -4.0% 2.8% % of revenues 42.3% 46.0% -3.7pt -3.3 pt Capex* 183 217 -15.5% % of revenues 15.3% 18.8%
Slide 25: Quarterly Highlights - Central America YoY
Quarterly Highlights – Central America YoY US$m Q3 12 Q3 11 US$ Underlying LC growth growth Mobile customers (million) 15.3 14.2 7.8% Mobile ARPU (US$) 11.1 11.8 -6.4% -4.7% Revenue 469 460 1.9% 3.3% EBITDA 236 235 0.6% 2.4% % of revenues 50.3% 51.0% -0.7 pt Capex 41 66 -37.4% % of revenues 8.8% 14.
Slide 26: Quarterly Highlights - South America YoY
Quarterly Highlights – South America YoY US$m Q3 12 Q3 11 US$ Underlying LC growth growth Mobile customers (million) 12.3 10.9 12.9% Mobile ARPU (US$) 13.2 13.5 -2.6% 3.3% Revenue 480 444 8.2% 14.6% EBITDA 181 190 -4.6% 5.3% % of revenues 37.8% 42.9% -5.1pt -4.2 pt Capex* 76 74 2.6% % of revenues 15
Slide 27: Quarterly Highlights - Africa YoY
Quarterly Highlights – Africa YoY US$m Q3 12 Q3 11 US$ Underlying LC growth growth Mobile customers (million) 18.5 17.2 7.5% Mobile ARPU (US$) 4.5 4.9 -7.9% -0.8% Revenue 247 247 0.1% 6.8% EBITDA 92 104 -11.4% -1.2% % of revenues 37.3% 42.1% -4.8 pt Capex* 81 76 6.9% % of revenues 32.8% 30.9% +1.9 p
Slide 28: Normalised EPS
Normalised EPS US$m Q3 12 Q3 11 US$ growth EBITDA 507 529 -4% Forex Corporate costs -38 -26 47% Category building Depreciation -196 -179 9% Net Finance Costs -54 -43 26% Higher gross debt Taxes -55 -64 -14% Others 1 -7 Normalized Net Profit * 165 210 -21% No. of shares (million) 100.2 103.7 Normaliz
Slide 29: Evolution of Taxes
Evolution of Taxes US$m Q3 12 Q2 12 Q1 12 Q4 11 Q3 11 PBT 179 294 200 243 304 Normalized PBT** 231 242 260 281 284 Reported taxes -60 -85 -91 -9 166 of w hich: Non recurring items * -5 -30 -10 58 231 Normalized tax expenses** -55 -55 -81 -67 -64 Normalized tax rate 23.9% 22.7% 31.2% 24.0% 22.6% * su
Slide 30: Free Cash Flow
Free Cash Flow US$m350 328 300 249 244 US$m Q3 12 Q3 11 Change 250 OFCF 252 387 -35% 200 172 Net Interest paid -46 -38 23% 150 Corporate Costs paid -34 -21 57% 100 82 FCF 172 328 -48% 50 0 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 FCF* as % 28.5% 21.1% 20.8% 6.9% 14.3% of revenue *
Slide 31: Releveraging through External Growth
Releveraging through External Growth US$m Q3 12 Q2 12 Gross Debt 2,827 2,655 Cash* 1,205 981 Net Debt 1,622 1,674 Net Debt/EBITDA 0.8 0.8 Net Debt/EBITDA expected at circa 1x at YE 2012 * Including pledged deposits +time deposits Millicom International Cellular S.A. 31
Slide 32: Refinancing Short Term, Initiatives Ongoing
Refinancing Short Term, Initiatives Ongoing 800 700 150 Cablevision Paraguay Bridge loan 600 500 400 300 605 522 200 375 333 339 238 100 0 32 32 <1y 1-2 y 2-3y 3-4 y 4-5 y 5-6 y 6-7 y 7y Average maturity of 2.8 years * Excluding finance leases Millicom International Cellular S.A. 32
Slide 33: Sources of Funds - Increasing Diversification
Sources of Funds*- Increasing Diversification 267 Banks 329 Bonds 1402 Development Financial Institutions 628 Shareholder loans + Others Current focus on growing the share of public debt (bonds) * Excluding finance leases Millicom International Cellular S.A. 33
Slide 34: Debt Split by Currency and Interest Rate
Debt* Split by Currency and Interest Rate Currency Interest rate AREA LOCAL** USD FIXED FLOAT TOTAL CENTRAL AMERICA 611 502 742 371 1,113 % 55% 45% 67% 33% SOUTH AMERICA 605 307 225 687 912 % 66% 34% 25% 75% AFRICA 240 361 291 310 601 % 40% 60% 48% 52% TOTAL MIC 1,456 1,170 1,258 1,368 2,626 % 55% 4
Slide 35: Debt by Geography & Corporate Guarantees
Debt by Geography & Corporate Guarantees* Central America: South America: Africa: Total debt: $1,113m Total debt: $912m Total debt: $601 m 9% guaranteed 31% guaranteed 92% guaranteed Guatemala-$290m El Salvador-$438m Senegal-$20m Chad – $97m m guaranteed 0% 0% guaranteed 0% guaranteed 81% guaranteed
Slide 36: Shareholder Remuneration 2012
Shareholder Remuneration 2012 $2.40 dividend per share was paid in June to shareholders $190m worth of shares were bought back to date EGM to be convened in December to propose an extraordinary dividend of $3.00 per share No further share buy back in Q4 2012 Millicom International Cellular S
Slide 37: Deregistration and Financial Disclosure
Deregistration and Financial Disclosure Deregistration effective upon filing on October 12, 2012 Future disclosure will follow European Directive and NASDAQ OMX requirements Intention to maintain similar level of disclosure Millicom International Cellular S.A. 37
Slide 38: 2012 Guidance - Reiterated
2012 Guidance – Reiterated* EBITDA margin around 43% Capex to revenue below 20% OFCF to revenue around 20% * Excluding Online consolidation and Cablevision Paraguay in Q4 Millicom International Cellular S.A. 38
Slide 39: Appendix
Appendix
Slide 40: LATAM - Revenue by Category
LATAM - Revenue by Category Contribution US$m Q3 12 Q3 11 Underlying LC to recurr. rev. growth growth Q3 12 Communication (voice, SMS) 608 617 2.4% 19% Voice 513 524 1.4% 9% SMS 96 93 8.3% 10% Information (Data services) 164 126 34.9% 57% of which Mobile Data 122 90 40.1% 47% Entertainment (TV, Ring
Slide 41: AFRICA - Revenue by Category
AFRICA - Revenue by Category Contribution US$m Q3 12 Q3 11 Underlying LC to recurr. rev. growth growth Q3 12 Communication (voice, SMS) 208 223 -0.8% -14% Voice 193 213 -3.3% -56% SMS 15 10 52.9% 42% Information (Data services) 8 5 84.7% 32% of which Mobile Data 8 5 86.8% 32% Entertainment (TV, Ring
Slide 42: Penetration Rates
Penetration Rates CAM SAM Africa * MIC Avg penetration Avg penetration Avg penetration Avg penetration 93.4% 98.6% 51.6% 71.6% 140.0% 116.5% 120.0% 105.4% 99.1% 95.0% 91.4% 100.0% 79.7% 80.0% 70.8% 72.3% 64.9% 59.3% 60.0% 42.3% 30.7% 40.0% 32.7% 20.0% 0.0% * For DRC , only penetration in Kinshasa-BA
Slide 43: Market Share
Market Share CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share 54.6% 19.2% 29.7% 29.9% 80.0% 70.4% 70.0% 53.9% 56.7% 55.2% 60.0% 50.0% 41.6% 41.9% 37.0% 37.2% 40.0% 33.8% 31.3% 31.9% 30.0% 17.6% 20.0% 11.2% 10.0% 0.0% Increase QoQ in: Honduras, Bolivia, Decrease
Slide 44: Movements of Currencies vs USD YoY
Movements of Currencies vs USD YoY Closing rate Closing rate Change Average rate Average rate Change Q3 12 Q3 11 Q3 12 Q3 11 Guatemala GTQ 7.96 7.87 -1% 7.90 7.83 -1% Honduras HNL 19.80 18.90 -5% 19.68 18.87 -4% Central America Nicaragua NIO 23.83 22.70 -5% 23.67 22.56 -5% Costa Rica CRC 503.31 514.
Slide 45: Market Overview - by Region
Market Overview – by Region Central South Millicom Segments Africa Total America America Market Overview Population (million) 28 62 183 273 Mobile Penetration 93.4% 98.6% 51.6% 71.6% Operational Data Total Mobile customers (million) 15.3 12.3 18.5 46.0 Attrib. Customers (million) 11.9 12.3 18.2 42.4
Slide 46: Market Overview - LATAM
Market Overview – LATAM Latin America Central America South America El Salvador Guatemala Honduras Bolivia Colombia Paraguay Shareholding 100.0% 55% (p) 66.7% 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 fr 2003 5 yrs renewal Dat
Slide 47: Market Overview - Africa
Market Overview – Africa Africa Chad DRC Ghana Mauritius Rwanda Senegal Tanzania Shareholding 100.0% 100.0% 100.0% 50% (p) 87.5% 100.0% 100.0% License Period (yrs) 10 yrs fr 2004 20 yrs fr 2012 15 yrs fr 2004 15 yrs fr 2000* 15 yrs fr 2008 16 yrs fr 2012 25 yrs fr 2007 Date of Expiry 2014 2032 2019
Slide 48: Millicom International Cellular S.A.
Millicom International Cellular S.A. 48
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