Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q4 2009 Earnings Presentation
45 slides from Millicom International Cellular's earnings presentation, Feb 10, 2010
Slide 1: Financial results Q4 09
Millicom International Cellular S.A. Financial results Q4 09 Mikael Grahne 10th February, 2010 François –Xavier Roger
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, revenues, earnings and other trend information. It is important to note that Millicom’s actual results in
Slide 3: Caveat
: : Caveat All figures presented exclude discontinued operations (Cambodia, Laos, Sri Lanka and Sierra Leone), except where otherwise stated. Historical figures have been restated to provide a comparable base, where necessary. 3
Slide 4: Q4 Highlights
: : Q4 Highlights • Record EBITDA margin at 46.6% • Record Cash Flow (FCF at 23.8% of revenues) • Consistent revenue growth in local currency at +9.5% • VAS/3G revenue exceeding 21% of recurring revenue • Completion of two Asian disposals • Introduction of a dividend policy reflecting sustainable ca
Slide 5: Financial Highlights Q4 YoY
: : Financial Highlights Q4 YoY US$m Q4 09 Q4 08 Change YoY Customers ('000) 33,920 27,691 22% Revenues 924 841 10% EBITDA 431 382 13% % of revenues 46.6% 45.4% +1.2 pt Capex 252 423 -40% % of revenues 27.3% 50.3% -23.0 pt Operating Free Cash Flow * 290 -44 % of revenues 31.4% -5.3% +36.7 pt * EBITD
Slide 6: Financial Highlights Full Year
: : Financial Highlights Full Year US$m FY 09 FY 08 Change YoY Customers ('000) 33,920 27,691 22% Revenues 3,373 3,151 7% EBITDA 1,545 1,366 13% % of revenues 45.8% 43.4% +2.4pt Capex 737 1,277 -42% % of revenues 21.9% 40.5% -18.6pt Operating Free Cash Flow * 658 -42 % of revenues 19.5% -1.3% +20.9p
Slide 7: Customers: from quantity to quality
: : Customers: from quantity to quality Focus on customer quality Prepaid customers 09 Arpu in Local Currency ARPU Q3 Q4 QoQ QoQ > $ 20 13.3% 14.0% +0.7 pt $ 5-20 29.8% 32.0% +2.2 pt Q1 -8.5% <$5 56.9% 54.0% -2.9 pt Q2 -2.4% 100.0% 100.0% Q3 -1.4% Q4 +1.4% Improved quality of 7 revenues
Slide 8: More balanced regional portfolio
: : More balanced regional portfolio Revenues Q4 09 Q4 08 5% 5% 22% 25% 36% 42% 31% 34% Q4 08 EBITDA Q4 09 5% 6% 17% 21% 42% 52% 26% 31% 8
Slide 9: Revenue growth – limited Forex impact in Q4
: : Revenue growth – limited Forex impact in Q4 US$m 950 9.5% 3 0.3% 9.8% 900 80 921 924 850 841 841 800 * Including Navega and Forex impact Revenue growth from underlying performance of 9.5% 9
Slide 10: Revenue growth – external factors Q4
: : Revenue growth – external factors Q4 - - * Including Navega and Forex impact External factors such as new taxes and ICX cuts putting pressure on top line growth 10
Slide 11: Revenue split by category
: : Revenue split by category US$m Q4 09 Q4 08 $ Local growth currency Airtime 628 600 5% 5% % of recurring mobile revenues 78.9% 83.9% VAS/SMS/3G 168 115 45% 47% % of recurring mobile revenues 21.1% 16.1% Other * 127 125 1% 3% Total Revenues 924 841 10% 10% * Telephone & Equipment + Amnet-Navega VA
Slide 12: VAS and 3G/data revenue growing
: : VAS and 3G/data revenue growing 19% 21% 17% 16% VAS revenue 21.1% of recurring mobile revenues Latin America – 3G/data • 1.6% of mobile customers using data • 2.3% of recurring mobile revenues 12
Slide 13: Market share evolution
: : Market share evolution 2007 2008 2009 30% 28.7% 29% 27.9% 28.7% 28% 27.0% 27.1% 27.2%27.2% 27% 26% 25.4% 26.6% 25% 24% 24.6% 24.9% 23% 22% 21.8% 21% 20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 MIC Market Share * * for DRC , Market Share of Kinshasa/ BAS Congo, only region where Millicom operates Sta
Slide 14: Churn evolution
: : Churn evolution MIC TOTAL 5.6% 5.4% 5.4% 5.2% 5.1% 5.0% 5.0% 4.8% 4.7% 4.6% 4.4% 4.2% Q1 09 Q2 09 Q3 09 Q4 09 Q3 vs Q4 09 Q3 Q4 7.7% 8.0% Q3 Q4 6.9% 7.0% 6.0% Q3 Q4 5.0% 5.0% 5.0% 3.6% 3.4% 4.0% 3.0% 2.0% CAM SAM Africa 14 Focus on higher quality customers and loyalty
Slide 15: Regional review
Click to add title Regional review
Slide 16: Quarterly Highlights – Central America YoY
: : Quarterly Highlights – Central America YoY US$m Q4 09 Q4 08 Reported Local currency growth growth Customers ('000) 12,902 11,181 15% Revenues 330 355 -7% -4% EBITDA 181 199 -9% -6% % of revenues 54.9% 56.1% -1.2pt Capex 45 87 -48% % of revenues 13.7% 24.5% -10.8pt Operating Free Cash Flow 152 18
Slide 17: Revenue growth – external factors CAM Q4
: : Revenue growth – external factors CAM Q4 US$m 0 - 1% 370 - 2% -3% 350 - 1% - 7% 330 3 6.5 310 12 3 355 352 345 290 334 334 330 270 250 Declining revenues because of new taxes and reduction of interconnect rates in Honduras and El Salvador 17
Slide 18: Quarterly Highlights – South America YoY
: : Quarterly Highlights – South America YoY US$m Q4 09 Q4 08 Reported Local currency growth growth Customers ('000) 8,815 7,461 18% Revenues 313 260 20% 15% EBITDA 135 100 34% 32% % of revenues 43.0% 38.5% +4.5pt Capex 52 100 -49% % of revenues 16.5% 38.6% -22.1pt Operating Free Cash Flow 109 8 % o
Slide 19: Quarterly Highlights – Africa YoY
: : Quarterly Highlights – Africa YoY US$m Q4 09 Q4 08 Reported Local currency growth growth Customers ('000) 12,203 9,049 35% Revenues 227 183 24% 27%* EBITDA 89 64 39% 42% % of revenues 39.3% 35.2% +4.1 pt Capex 137 224 -39% % of revenues 60.3% 122.3% -62.0 pt Operating Free Cash Flow 20 -180 % of
Slide 20: Quarterly Highlights – Amnet
: : Quarterly Highlights – Amnet US$m Q4 09 Q4 08 Reported Local currency growth growth Revenue Generating Units 631 534 18% Revenues 47 43 9% 11% EBITDA 18 18 2% 5% % of revenues 39.3% 42.0% -2.6 pt Capex 8 12 -27% % of revenues 18.0% 26.8% -8.8 pt Operating Free Cash Flow 0 -29 % of revenues -0.3%
Slide 21: Amnet
: : Amnet Confirmed growth opportunity in a difficult environment • GDP Honduras/Costa Rica/ El Salvador -2% • Mobile Millicom Central America Local Currency -1% 2009 • Amnet Total +9% • Residential broadband +24% “Tigotization” well advanced • Tigo brand in El Salvador • Focus on marketing , distri
Slide 22: Financial review
Financial review
Slide 23: Quarterly EPS – increasing EPS
: : Quarterly EPS – increasing EPS US$m Q4 09 Q4 08 Change EBITDA 431 382 13% Depreciation -178 -134 33% High Capex for growth % of revenues 19.3% 15.9% +3.4pt Finance Costs -46 -48 -5% Benefit of variable rates % of revenues 5.0% 5.7% -0.8pt Interest and other financial income 4 7 -51% One-off Item
Slide 24: Full Year EPS
: : Full Year EPS US$m FY 09 FY 08 Change EBITDA 1,545 1,366 13% Depreciation -611 -464 32% High Capex for growth % of revenues 18.1% 14.7% +3.4pt Finance Costs -173 -165 5% Higher Debt (Amnet) % of revenues 5.1% 5.2% -0.1 pt Interest and other financial income 12 33 -64% One-off Items 341 -16 Asia
Slide 25: Low leverage
: : Low leverage US$m 31.12.09 Gross Debt 2,347 Cash * (1,614) Net Debt 732 Net Debt/Ebitda 0.5 * including pledged deposits and time deposits 25
Slide 26: More balanced Cash Flow generation
: : More balanced Cash Flow generation OFCF US$m Q4 09 Q4 08 Change Central America 152 180 -28 South America 109 8 +101 Africa 20 -180 +200 Cable -8 -29 +21 Other (incl. Corporate) 17 -24 +42 Total 290 -44 335 Positive Cash Flow for all cellular regions in Q4 09 26 Less dependence on Central Americ
Slide 27: Free Cash Flow
: : Free Cash Flow* US$m 250 220 200 150 108 100 69 59 50 0 US$m FY08 FY09 (50) OFCF -42 658 (100) Net Interest Paid -105 -137 (109) Corporate Costs -61 -66 (150) Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 FCF -209 456 FCF as % -13.0% 8.9% 7.2% 12.6% 23.8% of revenue * EBITDA - Capex +/- WC- Interests - Taxes -
Slide 28: Gross Debt maturity as at 31.12.09
: : Gross Debt maturity as at 31.12.09 US$m 800 576 700 600 500 454 400 300 565 429 403 200 237 100 122 137 0 2010 2011 2012 2013 2014 after 2014 Average maturity at 2 years and 9 months 28 28
Slide 29: Asset productivity
: : Asset productivity Ghana • Transaction signed in January 2010 • Sale and lease-back of 742 towers to a JV with Helios, with a minority stake for Millicom Benefits • Cash upfront • Opex savings NPV > $100m • Capex reduction • Equity Similar tower transactions targeted in other markets in 2010 29
Slide 30: Outlook 2010
: : Outlook 2010 Stabilization of EBITDA margin at mid 40’s OFCF* as Capex around a % of $700m revenue in mid-teens •OFCF= Operating Free Cash Flow: 30 EBITDA - CAPEX - WC movements - Taxes 30
Slide 31: Use of Cash
: : Use of Cash • Excess cash of $1.1b (with $500m of liquidity) • Millicom Board proposes a dividend* of $1.40 per share • $152m to be paid in May after AGM approval • payout of 30% • +12.9% increase over 2008 dividend • Millicom is well positioned in the short term to pursue external growth opport
Slide 32: Appendix
Click to add title Appendix
Slide 33: Overview
: : Overview Central America: South America: Africa*: Mobile Amnet: 38m 28 m 63 m 169 m operations’ pops Guatemala 13m under license*†: El Salvador 7m 260m Honduras 8m Costa Rica 4m Guatemala 13m El Salvador 7m Senegal 14m Chad 10m Nicaragua 6m Ownership: 55.0% Ownership: 100% Ownership: 100% Owners
Slide 34: ARPU in Local currency
: : ARPU in Local currency Currency Q4 09 Q3 09 Change QoQ Central America El Salvador USD 12 12 0.0% Guatemala GTQ 104 113 -8.0% Honduras HNL 197 194 1.5% South America Bolivia BOB 82 77 6.5% Colombia COP 22,632 21,541 5.1% Paraguay PYG 53,699 51,464 4.3% Africa Chad XAF 4,787 4,342 10.2% DRC USD 7
Slide 35: QoQ Local currency ARPU growth
: : QoQ Local currency ARPU growth Quarter-on-quarter local currency ARPU growth (%) Total Central Am. South Am. Africa Q4 09 1% (1%) 5% 3% Q3 09 (1%) (5%) 2% 3% Q2 09 (2%) (2%) (2%) 0% Q1 09 (9%) (8%) (7%) (9%) Q4 08 1% 1% 6% (4%) 35
Slide 36: Mobile revenues at constant Forex rates
: : Mobile revenues at constant Forex rates US$m Q4 08 Q4 09 growth % El Salvador 116 105 -9.3% Guatemala 130 140 7.2% Honduras 108 98 -9.4% Central America 355 343 -3.3% Bolivia 55 70 27.6% Colombia 101 116 14.4% Paraguay 104 113 8.8% South America 260 299 14.9% Chad 14 27 97.3% DRC 24 28 17.0% Gha
Slide 37: Penetration rates
: : Penetration rates CAM SAM Africa MIC Avg penetration Avg penetration Avg penetration Avg penetration 87.6% 87.7% 23.8% 45.5% 120% 102% 95% 89% 86% 100% 81% 80% 80% 54% 51% 60% 42% Average 40% 20% 28% 17% MIC 20% 8% 0% * * Population adjusted in Oct 09 Low penetration in Africa = future growth op
Slide 38: Market Share evolution QoQ
: : Market Share evolution QoQ CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share 53.0% 16.3% 30.7% 28.7% 70.0% 65.4% 60.0% 56.4% 50.4% 50.0% 45.9%48.9% 42.5% 40.0% 36.4% 35.7% 32.0% 30.0% 26.4%25.2% Average MIC 20.0% 8.7% 10.0% 0.0% Q3 09 Q4 09 Increase (>0.2%) S
Slide 39: Movements of main currencies vs USD YoY
: : Movements of main currencies vs USD YoY Closing rate Closing rate Change Q4 09 Q4 08 Guatemala GTQ 8.35 7.78 -7% Central America Honduras HNL 18.90 18.90 0% Bolivia BOB 7.02 7.03 0% South America Colombia COP 2,043.00 2,249.50 9% Paraguay PYG 4,695.00 4,885.00 4% DRC CDF 907.19 640.29 -42% Ghana
Slide 40: Q4 09 Market Overview – by Segment
: : Q4 09 Market Overview – by Segment Central South Amnet/ Millicom Segments Africa Total America America Navega Market Overview Population (million)* 28 63 169 260 Mobile Penetration** 87.60% 87.70% 23.80% 45.50% Operational Data Total Customers (000) 12,902 8,815 12,203 33,920 Attrib. Customers (
Slide 41: Market Overview LATAM - Amnet
: : Market Overview LATAM - Amnet 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 yr
Slide 42: 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% (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 2014 2017
Slide 43: Quarterly Interest expense
: : Quarterly Interest expense 52 50 50 26% fixed rate 48 47 74% variable rate 46 46 46 Interest rate hedging in 44 43 progress 42 40 Benefit of Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 declining Total Interest expense (US$m) variable rates Effective rate 10.0% 7.9% 8.4% 7.9% 7.8% Not restated for Asian dispos
Slide 44: Taxes
: : Taxes US$m Q4 09 Q4 08 2009 2008 FY FY PBT 181 159 691 671 Taxes (*) 44 47 188 178 Effective tax rate 24.4% 29.7% 27.2% 26.6% (*) for 2008 excluding Colombian Deferred Tax Asset Marginal increase in 2009 tax rate due to higher remittances (withholding tax on dividends) 44
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