Millicom International Cellular S.a. · NASDAQ:TIGO

Millicom International Cellular — Q1 2014 Earnings Presentation

35 slides from Millicom International Cellular's earnings presentation, 2014

  1. Slide 1: 2014 Q1 Results Presentation

    2014 Q1 Results Presentation Hans-Holger Albrecht, President and CEO Marc Zagar, Deputy CFO

  2. 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

  3. Slide 3: Agenda

    Agenda Q1 at a glance Operational Performance Q1 Financial Results Q&A Appendix 3

  4. Slide 4: This is Millicom

    This is Millicom • 2013 Revenues: $5.2bn (new perimeter: $5.6bn), EBITDA: $1.9bn (new perimeter: $2.0bn) • Market capitalization 31/03/14: SEK65bn (~$10bn) • >51.6 million mobile subscribers, >3.0 million homes passed, >7.3 million MFS customers 1 1 1) Mauritius, AIH & LIH are equity accounted from

  5. Slide 5: Targeting growth through four pillars

    Targeting growth through four pillars Cable & Digital Commerce & Mobile MFS Media Services Drive data Grow Grow MFS E-commerce penetration addressable penetration high growth market potential Focus on Bundle to Expand number Leverage bundling increase TV & of services existing services Broadband off

  6. Slide 6: Announcements

    Announcements  Launched Tigo Star in Bolivia with the company’s first DTH service that will be rolled out elsewhere across Latin America in the coming months o The services will be promoted under the new “Tigo Star” brand which highlights the company’s range of cable and broadband services across L

  7. Slide 7: Delivering key performance drivers

    Delivering key performance drivers Revenues Mobile data penetration MFS penetration EBITDA margin2 34.0% in line with guidance in an investment phase 8.5% growth1 in local 20.9% for the group 18.2% reached in currency Q1 14 at the end of the first MFS footprint quarter 4.0% reported growth1 in Q1 Al

  8. Slide 8: Revenue by regions and by business unit – Q1 2014

    Revenue by regions and by business unit – Q1 2014 USD m Central America South America Africa Millicom growth at local currency Q1 14 Q1 13 y/y Q1 14 Q1 13 y/y Q1 14 Q1 13 y/y Q1 14 Q1 13 y/y Mobile 463 471 -1% 469 446 14% 221 213 8% 1,154 1,131 7% Cable & Digital Media 89 85 7% 36 29 30% 0 0 NA 125

  9. Slide 9: Pursuing growth across our strategic pillars

    Pursuing growth across our strategic pillars • Accelerating revenue growth: growth 8.5% in LC • Mobile delivering mid-single digit growth, on the back of strong net adds in both voice and data • Double digit growth for Cable backed by the launch of Tigo Star and Tigo Sports, focus on growing HFC cov

  10. Slide 10: Seizing multiple market opportunities

    Seizing multiple market opportunities Mobile customer base Smartphone penetration in Latin America Millions of subscribers, Q1 2013 – Q1 2014 % of subscribers, Q1 2013 – Q1 2014 +87% +10.1% % of double play1 Volumes transacted by MFS (excl. self top-up) % of subscribers, Q1 2013 – Q1 2014 USD Millio

  11. Slide 11: Agenda

    Agenda Q1 at a glance Operational Performance Q1 Financial Results Q&A Appendix 11

  12. Slide 12: Mobile - solid growth driven by mobile data

    Mobile - solid growth driven by mobile data  Growing 6.6% YoY in LC and 7.7% excluding regulatory  Mobile information growth at 29.8% supported by high net adds of close to 0.7 million in Q1 impact  Voice and SMS users grew over 1.5 million in Q1  Subsidy grew at +14% in LC with a mix moving tow

  13. Slide 13: Cable & Digital Media - building momentum organically

    Cable & Digital Media - building momentum organically  Cable & Digital Media growing at around 13% YoY  We pass over 3.0 million homes in our markets, and 2.2 million are covered with HFC  Strong commercial focus on the Q1 2014 launch of Tigo Star and Tigo Sports HFC households connected RGUs per

  14. Slide 14: MFS - accelerating penetration in our markets

    MFS - accelerating penetration in our markets  MFS penetration at 18.2% across footprint1, 14.2% of total mobile base MFS Financial ecosystem  Net additions in Q1 14 were 1.0 million, 35% higher than our best quarter last year (Q4)  ARPU at $1.13, due in part to the high number of new registratio

  15. Slide 15: Online - new launches and synergies

    Online - new launches and synergies  In Q1, the Online category generated revenue of $31 million  MFS has been enabled for payment for Easy Taxi for our customers in Bolivia  Jumia had double digit growth in Q1 and Tricae had its best quarter ever.  MTN approval for AIH is expected in Q2 2014 15

  16. Slide 16: Agenda

    Agenda Q1 at a glance Operational Performance Q1 Financial Results Q&A Appendix 16

  17. Slide 17: Passing the 51.6 million mobile subscriber mark

    Passing the 51.6 million mobile subscriber mark Mobile Cable and MFS Subscribers (000s) Subscribers (000s) Digital Media Homes passed (000s) 51,629 7,341 3,051 2,192 4,352 46,872 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 13 13 13 13 14 13 13 13 13 14 13 13 13 13 14 Cable and Mobile 1,202 Digital

  18. Slide 18: Solid growth within margin guidance

    Solid growth within margin guidance Group EBITDA1 Capex (LTM) Revenue USD Million and % (as% of revenue) USD Million 1,400 50 .0% 1,465 1,351 1,357 1,383 1,405 1,200 45 .0% 257 246 244 Africa 228 225 38.3% 40 .0% 36.5% 1,000 35.3% 34.0% 34.0% 35 .0% 23% 24% 23% 22% 800 589 21% 529 532 542 560 19% 20

  19. Slide 19: Regional growth driven by South America and Africa in Q1

    Regional growth driven by South America and Africa in Q1 Revenue evolution by Region USD Million, Q1 2013 - Q1 2014 26 65 12 81 1,405 1,351 Q1 13 CAM SAM Africa FX Q1 14 Revenue evolution by Business Unit USD Million, Q1 2013 – Q1 2014 8 18 19 65 74 1,405 1,351 1 Q1 13 Mobile Cable MFS Other FX Q1 1

  20. Slide 20: EBITDA margin driven by commercial investments

    EBITDA margin driven by commercial investments EBITDA margin %, Q1 2013 – Q1 2014 0.8% 1.6% 0.8% 0.8% 0.3% Investment for growth 38.3% 34.0% EBITDA% Regulatory and Pricing Commercial Business Development Corporate Costs Others Underlying Q1 13 Pressures EBITDA% Q1 14 20

  21. Slide 21: Normalized EPS down on business development, higher gross debt and network amortization

    Normalized EPS Q1 2014 Q1 13 USDm Q1 14 % change Remarks (proforma) EBITDA 537 562 -4% Corporate costs -53 -40 33% Employee related and consultancy costs Share-based compensation -6 -5 20% D&A -250 -223 12% Increased network amortization Gain (loss) in assets disposal, write-downs 6 -1 NA Net financ

  22. Slide 22: Free cash flow reflects investment for growth

    Free cash flow1 reflects investment for growth FCF USD m and % of revenues, Q1 2013 – Q1 2014 200 100.00% Q1 13 USDm Q1 14 % change (proforma) 124 80.00% 91 EBITDA before corporate costs 537 562 -4% 100 6.0% 50 60.00% Corporate Costs (excl non-cash) -53 -40 33% 6.2% 3.6% Movements in working capital

  23. Slide 23: Moderate leverage and well spread maturities

    Moderate leverage and well spread maturities USD m Q1 14 Q4 13 proforma Gross Debt 1 4,521 4,327 Cash 2 1,899 1,840 Net Debt 2,622 2,487 Net Debt / EBITDA after corporate costs 3 1.34 1.24 Debt maturity (excluding finance leases) USDm, Q1 2014 1,899 2,000 1,575 1,500 1,000 642 460 495 500 325 298 14

  24. Slide 24: Debt details

    Debt details Debt (excluding finance leases) USD m, Q1 2014 Currency Interest Rate Net Debt Float 786 Local 18% 1,247 Local 29% 864 37% USD USD 1,495 3,012 63% Fixed 71% 3,472 82% • By maintaining its cash balances in hard currencies, Millicom hedges part of the debt currency risk • Cash breakdown:

  25. Slide 25: 2014 Guidance re-cap

    2014 Guidance re-cap  Revenue growth at constant exchange rate mid to high single digit pro forma for the new consolidation* scope (vs. 5.5% in 2013)  Reported revenue growth at constant exchange rate vs. 2013 over 15%  EBITDA margin to stabilize around mid 30s% after corporate costs  CAPEX to R

  26. Slide 26: In conclusion

    In conclusion • Growth pattern in line with our expectation • Fast mover on Digital opportunities • Foundations for long term growth start delivering 26

  27. Slide 27: Agenda

    Agenda Q1 at a glance Operational Performance Q1 Financial Results Q&A Appendix 27

  28. Slide 28: Agenda

    Agenda Q1 at a glance Operational Performance Q1 Financial Results Q&A Appendix 28

  29. Slide 29: Mobile Voice - Penetration rates

    Mobile Voice - Penetration rates CAM SAM Africa Av. Penetration 94.9% Av. Penetration 99.3% Av. Penetration 54.4% MIC Av. Penetration 108.7% 105.0% 72.3% 94.8% 94.7% 85.0% 79.3% 76.9% 73.9% 47.0% 47.2% 45.6% 39.1% 1 1) For DRC , only penetration in Kinshasa-BAS Congo and Kivu area is considered 29 S

  30. Slide 30: Mobile Voice - Market shares

    Mobile Voice - Market shares CAM SAM Africa Av. Market Share 52.9% Av. Market Share 21.6% Av. Market Share 29.2% MIC Av. Market 67.1% Share 30.3% 57.3% 52.5% 54.0% 38.4% 39.8% 36.1% 30.8% 32.5% 29.6% 14.0% 17.9% 30 Source: Millicom

  31. Slide 31: Movements of currencies vs USD QoQ

    Movements of currencies vs USD QoQ Closing Rate Average Rate Q1 14 Q4 13 Change Q1 14 Q4 13 Change Guatemala GTQ 7.73 7.84 1% 7.78 7.89 1% Honduras HNL 20.82 20.67 (1%) 20.74 20.65 (0%) Nicaragua NIO 25.64 25.33 (1%) 25.47 25.23 (1%) Costa Rica CRC 553.63 507.90 (9%) 533.68 506.33 (5%) Bolivia BOB 6

  32. Slide 32: Market overview – by region for Q1 2014

    Market overview – by region for Q1 2014 Millicom Regions Central America South America Africa Group Market Overview Population (m) 30 64 190 284 Mobile Penetration 94.9% 99.3% 54.4% 72.3% Operational Data Total Mobile Customers (m) 15,629 14,152 21,847 51,629 Capex ($m -excl Corporate) 54 70 38 162

  33. Slide 33: 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

  34. Slide 34: 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 2004 12y from 2012 15y from 2004 15y from 2008 16y from 2012 25y from 2007 Date of Expiry 2014 2024 2019 2022 2028 2032 Market Overview Population (m) 11 77 26 12 14

  35. Slide 35: Millicom Corporate Responsibility 2013 Report

    Millicom Corporate Responsibility 2013 Report  Economic impact in our communities: how we engage with customers, create an inclusive business environment, how we contribute to the local economy  Millicom as an employer: key employment policies and data regarding workforce  Responsible business pr

Millicom International Cellular — Q1 2014 Earnings Presentation on 6ix