Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q3 2019 Earnings Presentation
37 slides from Millicom International Cellular's earnings presentation, Oct 24, 2019
Slide 1: Strengthening our leadership in Central America
Strengthening our leadership in Central America Third Quarter 2019 Mauricio Ramos, CEO Tim Pennington, CFO October 24th, 2019 Millicom International Cellular S.A.
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
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
Slide 4: Significant strategic progress year-to-date
Significant strategic progress year-to-date Q1 19 Q2 19 Q3 19 Q4 19 • US NASDAQ Listing • Closed Nicaragua • Closed Panama • Planned completion of acquisition Acquisition Costa Rica acquisition • Announced acquisition of Panama, Costa Rica and • Closed sale of Chad • Listed HTA • Expected Kinnevik N
Slide 5: Home continues to drive growth
Home continues to drive growth Latam Service Revenue Organic Growth*, year-on-year Q3 19 Q3 Latam Service Revenue Organic Growth 1.0% Prepaid Postpaid 7.2% -0.5% -1.7% Mobile B2B Home *Non-IFRS measure. Please refer to the non-IFRS disclosures in this presentation for a description of non-IFRS measu
Slide 6: Strong KPIs in Q3 2019
Strong KPIs in Q3 2019 Latam KPIs Q3 19 Net Adds* Total +858,000 13.5 million 4G Customers 4G Customers +500 11,100 Mobile Points of Presence Points of Presence +254,000 11.2 million HFC Homes Passed HFC Homes Passed +99,000 3.4 million Cable HFC Customer Relationships HFC Customer Relationships * A
Slide 7: Home: Record net adds
Home: Record net adds Record HFC Customer Relationships in Q3 and 9M 2019 Improving Penetration Rates Latam HFC Customer Relationships Net Adds (‘000)*, Latam Penetration Rates and HFC Homes Passed (m), 9M 16 – 9M 19 Q3 16 – Q3 19 288 30.3% 261 29.8% 99 82 188 28.1% 28.1% 11.2 9.4 70 8.1 88 94 115 6
Slide 8: Bolivia
Bolivia 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 19 Q3 19 Q1 18 Q2 18 Q3 18 Q4
Slide 9: Paraguay
Paraguay Home growing steadily Mobile stabilized in Q3 Paraguay GDP growth has slowed Paraguay HFC Customers Paraguay Mobile Net Adds (‘000) & B2C Mobile Paraguay GDP Growth Year-on-Year, Q3 18 – Q3 19 ARPU USD/month, Q1 18 – Q2 19 Q3 18 – Q3 19 Mobile Net Adds 13% ARPU 6.1% 5.3% 4.6% 116 3.6% 9 9 -
Slide 10: Colombia
Colombia 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% Colombia B2B Revenue (LC) B2B revenue 1,436 498 20
Slide 11: Panama – Synergies Driving OCF
Panama – Synergies Driving OCF Stable service revenue Cross selling and mix shift with steady ARPU Panama Service Revenue Home Customer Relationships by Technology and ARPU Q1 19- Q3 19 115 Q1 19 – Q3 19 ARPU 99 99 Home HFC Customers B2B Other Customers Mobile Q1 2019 Q2 2019 Q3 2019 Q1 19 Q2 19 Q3
Slide 12: Acquisitions are on track…
Acquisitions are on track… Status Team Culture Strategy Synergies Panama Closed Fixed December 2018 Nicaragua Closed Mobile May 2019 Panama Closed Mobile August 2019 Costa Rica In Process Mobile Expected Q4 12
Slide 13: 2. Q3 financial highlights
2. Q3 financial highlights
Slide 14: 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 Latam Segment Latam Region Paraguay Quarterly GDP Growth** 3.8 6.1% 3.6 5.3% 4.6% 3.4 3.6% 3.2 3.0 2.8 2.6 2.4 -2.1% -2.5% 2.2 Q1 18 Q2 18 Q3 18 Q4 18
Slide 15: 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 AFR AFR 6% 15% 43% 47% 51% 37% 15
Slide 16: Group P&L – Q3 2019
Group P&L – Q3 2019 Selected P&L data Revenue bridge 4 1,097 US$ million Q3 19 Q3 18 % Var Revenue 1,097 990 10.8% Cost of sales (302) (281) 7.4% Operating expenses (392) (386) 1.4% 111 Depreciation & amortization (270) (196) (38.0)% Share of profit in GT & HN 46 44 5.5% Other operating (1) 39 (103.
Slide 17: Group P&L – Q3 2019
Group P&L – Q3 2019 Selected P&L data Key Observations US$ million Q3 19 Q3 18 % Var A• Increased D&A due to Nicaragua and Revenue 1,097 990 10.8% Panama acquisitions and IFRS 16 Cost of sales (302) (281) 7.4% Operating expenses (392) (386) 1.4% B• Increased financial expenses due to Depreciation &
Slide 18: Latam segment bridge
Latam segment bridge Group revenue to Latam service revenue bridge, Q3 19 1,598 98 1,500 117 1,383 501 1,097 Revenue Guatemala Underlying * Africa Latam Telephone and Latam service and Honduras revenue revenue revenue equipment revenue* Group operating profit to Latam EBITDA* bridge, Q3 19 620 350 2
Slide 19: Latam service revenue
Latam service revenue Service revenue* ($m) and YoY organic growth*, Q3 18 – Q3 19 Mobile B2B Home +9.0% -67 1,383 169 +1.0% 13 1,268 2018 Organic Growth 2019 Perimeter** FX and Others 2019 Reported Organic Reported *Non-IFRS measure. Please refer to the non-IFRS disclosures in this presentation for
Slide 20: Latam service revenue by country
Latam service revenue by country Service revenue ($m), and YoY organic growth*, Q3 18 – Q3 19 Guatemala (22% of Latam) Honduras (10% of Latam) Panama (8% of Latam) El Salvador (6% of Latam) +3.2% +2.0% -2.9% -4.9% 304 136 115 86 Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 Colombia (25% of Latam)
Slide 21: Latam EBITDA
Latam EBITDA EBITDA* ($m) and YoY organic growth*, Q3 18 – Q3 19 +18.2% 620 44 -26 74 0.7% 525 4 2018 Organic Growth 2019 Perimeter** FX and Others IFRS 16 2019 Reported Organic Reported EBITDA 38.4% 41.4% Margin Margin excluding 38.4% IFRS16 impact *Non-IFRS measure. Please refer to the non-IFRS di
Slide 22: Latam EBITDA by country
Latam EBITDA by country EBITDA($m), and YoY organic growth*, Q3 18 – Q3 19 Guatemala (28% of Latam) Honduras (11% of Latam) Panama (9% of Latam) El Salvador (5% of Latam) +4.0% -1.9% +5.0% +8.2% 186 72 59 35 Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 50.2% 51.8% 49.2% 49.1% 50.5% 30.2% 36.8% 48
Slide 23: Latam OCF
Latam OCF OCF (EBITDA-Capex)* ($m) and YoY organic growth*, Q3 18 – Q3 19 +33.9% 373 44 -22 45 +10.0% 28 278 2018 2019 Perimeter** FX and Others IFRS 16 2019 Reported Organic Organic Reported OCF 20.4% 24.9% Margin *OCF and organic growth are non-IFRS measures. Please refer to the non-IFRS disclosur
Slide 24: Group eFCF
Group eFCF Group eFCF($m)*, Capex phasing, 9M 18 – 9M 19 One-off costs, FX impacts Acquisition financing, IFRS 16 211 -28 -118 20 -12 73 9M 2018 Equity Operating Cash Flow Finance Charges Taxes Paid Dividends to Non- 9M 2019 Equity Free Cash Flow controlling Interests Free Cash Flow *Non-IFRS measur
Slide 25: Net debt evolution
Net debt evolution Underlying Net debt evolution $ million, December 31, 2018 – September 30, 2019 Period Underlying Net Proportionate Net Debt/ LTM Debt/ EBITDA* Proportionate LTM EBITDA* YE 2018 2.18x 2.52x 1,270 Q3 2019 2.63x 3.14x 37 882 73 43 133 7,055 5,785 4,763 Net Financial Underlying Spect
Slide 26: 3. Looking Ahead
3. Looking Ahead
Slide 27: Tigo shareholder structure
Tigo shareholder structure Current Structure Post-Distribution Structure(1) 62.8% 37.2% 100.0% Float Kinnevik AB Float 59% increase in float Results of this distribution Strong Corporate Governance Independent Board of US, Swedish, Luxembourg Directors Governance Standards • Kinnevik EGM on November
Slide 28: Under-penetrated and stable Latam markets
Under-penetrated and stable Latam markets Latin American markets are growing and remain underpenetrated, representing an attractive opportunity Penetration Potential GDP Growth CPI Inflation CAGR % GDP growth, 2018-2028 Average % CPI Inflation, 2018-2028 1. Low penetration rates 4.8% 5.9% 3.7% 3.7%
Slide 29: Investing in broadband networks
Investing in broadband networks Consistent investment Stable capex / sales ratio Latam Capex (US$mm) Capex Latam capex/ sales % 9M16 – 9M19 Acquisition Related Capex LTM Q3 16 – LTM Q3 19 NPS 607 639 17.4% 570 16.6% 17.1% 17.1% 541 9M 16 9M 17 9M 18 9M 19 LTM Q3 16 LTM Q3 17 LTM Q3 18 LTM Q3 19 4G c
Slide 30: Focus on Latam organic cash flow growth…
Focus on Latam organic cash flow growth… HSD Networks Users Revenue EBITDA Cash Flow 4G Coverage 4G Customers Service Revenue EBITDA margin OCF organic growth (%) 1 (mm) organic growth (%) 1 (%) 2 1.4x 3.9x 2.8 pp 1.4 pp 68% 13.5 49% 3.5 2016 Q3 19 2016 Q3 19 2.6% ~10.0% HFC HP HFC Customer (mm) Rel
Slide 31: In Summary
In Summary 1 Sustained growth in subscription-based businesses 1. 2. 2 Attractive long-term opportunity 3. 3 Integrating recent acquisitions and extracting synergies 4. 4 Focus on accelerating organic OCF growth 31
Slide 32: Q&A
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Slide 33: Capital structure
Capital structure Debt profile 30 September 2019 Latam HQ Africa Geography 61% 35% 4% Fin. Bonds Banks Source Leases 54% 30% 16% Interest Fixed or Swapped Variable rates 78% 22% FX Local Hard currency exposure 40% 60% Less than 5y 5Y or more Maturity** 24% 76% *Proforma to LTM EBITDA from Cable Onda
Slide 34: Debt profile
Debt profile Well spread debt profile Debt maturity profile** $ million Average life of 5.7 years* 1,588 982 948 Comcel (GT) 632 $800m 536 549 6.875% SEK 2bn 404 29s 370 4.913%* $750m 282 25s 26s 28s 6.25% 231 $500m $500m Telecel $500m 151 6.625% (PY) 5.125% 6.0% $300m 5.875% 2019 2020 2021 2022 202
Slide 35: Gross debt by country
Gross debt by country Central America: South America: Africa: Corporate: Total MIC Debt: Total debt $2,767m Total debt $2,112m Total debt $288m Total debt $2,774m $7,941m 15% guaranteed 3% guaranteed 23% guaranteed 0% guaranteed 7% Guaranteed Guatemala: $1,176m (0% guaranteed) Honduras: $433m (0% gu
Slide 36: Net debt by country
Net debt by country Central America: South America: Africa: Total MIC : Corporate: $1,900m $1,568m $139m $6,137m $2,530m Leverage: 1.28x Leverage: 1.58x Leverage: 1.50x Leverage: 2.63x Guatemala: $701m Leverage: 1.01x Honduras: $335m Leverage: 1.24x El Salvador: $288m Leverage: 2.34x Nicaragua: $-24
Slide 37: Millicom – The Digital Lifestyle
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