Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q4 2015 Earnings Presentation
33 slides from Millicom International Cellular's earnings presentation, Feb 10, 2016
Slide 1: 2015 Q4 and FY Results
2015 Q4 and FY Results Mauricio Ramos, CEO Tim Pennington, CFO 10 February 2016
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: Operating review
Operating review Mauricio Ramos, CEO 10 February 2016
Slide 4: Key Messages
Key Messages 1 We delivered strong organic growth 2 We generated strong and positive cashflow to cover dividend 3 Our operational momentum continued 4 Our long term strategy is working 5 We are taking decisive steps in capital allocation 6 We are positive on our long term outlook Page 4
Slide 5: 2015 results
1 2015 results Strong underlying organic growth Reported US$ Organic growth growth Revenue 6,730 +7.4% +5.4% US$ million Adjusted 2,266 EBITDA (i) US$ million +9.2% +7.4% Capex (ii) 1,273 +5.5% US$ million Adjusted 993 +9.8% OCF (iii) US$ million i. Adjusted from $87 million of one-off items – detai
Slide 6: On track in delivering our long term cash flow model
1 2015 results On track in delivering our long term cash flow model Strategic Actual objective 2015 Long term Delivered Revenue growth High single digit 7.4% Operating leverage ~ 50% 45.6%* EBITDA Margin trending up towards ~ 35% 33.7%* Capex to Sales trending down towards ~ 15% 18.9% OCF Margin tre
Slide 7: We generated strong and positive cashflow to cover dividend
We generated strong and positive cashflow to 2 cover dividend Strong improvement in cash flow generation: 89% dividend cover Equity Free Cash Flow bridge 2015 vs. 2014 US$ million +278m USD 235 264 -43 89% Dividend cover -16% Dividend cover 264 eFCF 14 Dividend 14 eFCF 15 Dividend 15 Page 7 EFCF exc
Slide 8: Operational momentum continued
3 Operational momentum continued Service revenue trending upwards throughout 2015 Quarterly group organic service revenue growth Q1 2013 – Q4 2015 (a) 1 Growth momentum remains robust 7.5% 7.2% 6.3% 6.6% 5.9% 5.8% 5.9% 5.7% 5.6% 5.7% 2 UNE positive contribution to the group 4.6% 3.8% Tough macro eco
Slide 9: Our strategy is working: Mobile data monetization
4 Our strategy is working Mobile: Data monetization strategy is paying off 1 Building the digital lifestyle 2 Monetizing the digital lifestyle 3 Driving data revenue Data users, Data ARPU, Data revenue, million US$, 2014 restated US$ million, 2014 restated +37% +19% +3% (+280) 12.0 1,035 7.9 755 7.6
Slide 10: Pivoting our model for higher Data Monetization
4 Our strategy is working Pivoting our model for higher Data Monetization Current Model Pivoted Model selling Megabytes selling Application Packages. Page 10
Slide 11: Cable: our footprint expansion is on track
4 Our strategy is working Cable: our footprint expansion is on track 1 Building 2 Filling Homes Passed Homes Connected Thousands +548 Thousands 7,632 +139 3,020 7,084 2,881 2014 2015 2014 2015 3 Monetizing 4 Monetizing RGU per Home Connected, Home connected ARPU growth HFC RGU/HC +0.08x US$, 2014 re
Slide 12: The opportunity remaining to seize in our markets is significant
4 Our strategy is working The opportunity remaining to seize in our markets is significant Our markets are under penetrated, Opportunity Owning more households in our markets to expand our fixed platform Current penetration Broadband penetration & opportunity Current penetration in our markets vs mo
Slide 13: Merger in Colombia delivers strong momentum
4 Our strategy is working Merger in Colombia delivers strong momentum despite difficult market conditions 1 Outperforming a declining market 2 Better Mobile Market Position in Revenue Share Mobile service revenue – Tigo vs. Market (a) Mobile service revenue market share YoY growth Tigo % of market r
Slide 14: We are taking decisive steps in capital allocation
5 We are taking decisive steps in capital allocation DRC disposal announced Announced sale of DRC to Orange Tigo DRC Cash consideration US$ 160 million Page 14
Slide 15: We are positive on our 2016 outlook
6 We are positive on our 2016 outlook Focus on 4G, footprint roll-out, B2B, pay-TV 1 Mobile coverage 2 and footprint expansion Latam 3G and 4G coverage evolution Homes Passed 2015 and 2016e Million, 2015 and 2016e 10.0 2015 2016 5 ~8.0 70% 7.6 3G +3pp 7.1 73% 33% 2014 2015 2016e Medium 4G +8pp term
Slide 16: Financial review
Financial review Tim Pennington 10 February 2016
Slide 17: Key Messages
Key Messages 1 Solid organic growth 2 EBITDA improvement 3 Capital discipline 4 Cash generation is improving 5 Reducing leverage and improving dividend cover Page 17
Slide 18: Revenue by region
Revenue by region Solid organic growth Revenue evolution by Region US$ million, Q4 2014 – Q4 2015 Q4 organic growth 4.4% 2015 Full year growth at 7.4% +4.4% • Colombia mobile service revenue 34 3 9 slowed down on market issues but we 45 keep outperforming peers • Paraguay impacted by macro & (274) e
Slide 19: Service revenue growth
Service revenue growth Robust growth trends in service revenues Service revenue (a) growth by country Africa Colombia growth at 5.4% Latam Q4 15, year-on-year local currency variation • Cable growing 12.0% Costa Rica 17.4% • Tigo Mobile declining by 0.8% Rest of Africa 14.2% Africa (ex Zantel) 13.5%
Slide 20: Drivers of revenue growth
Drivers of revenue growth Robust growth trends in service revenues 1 Mobile data subscriber growth (000s) 2 Mobile data revenues ($ million, growth at constant FX) +20.9% +38.8% +51.7% +33.6% 18,448 1,127 15,258 912 10,058 639 2013 2014 2015 2013 2014 2015 3 Home RGUs (000s) 4 B2B growth ($ million)
Slide 21: EBITDA
EBITDA EBITDA improvements EBITDA evolution by Region US$ million, Q4 2014 – Q4 2015 Adjusted EBITDA +4.6% at constant FX +4.6% • Latam +1.2% 623 • Large impact from FX in Colombia 3 22 595 7 and Paraguay 71 • Bolivia performing well 551 • Africa -5.6% • Corporate costs down for the sixth consecutiv
Slide 22: Capex
Capex Capital discipline Capex by region $ million (excluding spectrum & licence costs) FY capex at $1.27 billion • Lower half of the guidance range ($1.25- 1.35 billion) UNE 88 270 • Includes $28 million of integration capex in Colombia Latam 805 Capex intensity at 18.9% 766 • Large FX impact on re
Slide 23: Non cash items
Non cash items Large non cash movements US$ million FY 15 FY 14 % Var •A Other non-operating expenses mainly composed by Revenue 6,730 6,386 5.4 Adjusted EBITDA 2,266 2,110 7.4 • $391 million relates to the deconsolidation of Guatemala & D&A (1,321) (1,158) 14.1 C Honduras (Q4 & FY) Other operating
Slide 24: Cash generation improving
Cash generation improving Equity FCF covers 90% of the 2015 dividend YoY +157 +142 +247 +86 +278 Change ($ million) 2,266 Equity Free Cash Flow improved 2,178 87 by $278 million • Cash OCF up 15% 1,149 • Taxes lower than last year due to Colombia and change in the US$ million 81 1,110 profit mix • L
Slide 25: Net debt variation
Net debt variation Net debt stable over the last 3 quarters Net debt evolution US$ million, 31 December 2014 – 31 December 2015 Net debt increased by $0.3bn • Average cost of debt 6.1% 33 47 • M&A activity 189 • Rwanda minority interests buy out • Final payments to AIH • Minority interests in UNE 4,
Slide 26: Debt profile
Debt profile Long average maturity to debt profile Debt maturity profile a Average life of 5.8 years US$ million 903 861 855 790 Low maturities in 2016 373 344 354 225 222 122 2016 2017 2018 2019 2020 2021 2022 2023 2024 >2024 Page 26 a) excluding financial leases
Slide 27: 2016 Outlook
2016 Outlook Our cash flow model will keep improving in 2016 Service revenue to grow mid single digit (a) Adjusted EBITDA to grow mid to high single digit (b) Group CAPEX between $1.15 and $1.25 billion (c) Our 2016 outlook is in constant currency, at constant perimeter (with our JV in Guatema
Slide 28: Q&A
Q&A We believe in better. We believe in ticd
Slide 29: Appendix
Appendix We believe in better. We believe in ticd
Slide 30: Adjusted EBITDA – Back up
Adjusted EBITDA – Back up US$ million Q1 14 Q2 14 Q3 14 Q4 14 FY 14 Q1 15 Q2 15 Q3 15 Q4 15 FY 15 EBITDA 478 479 549 588 2,093 565 561 560 492 2,178 EBITDA margin 34.0% 33.1% 32.8% 31.6% 32.8% 33.1% 32.9% 34.1% 29.3% 32.4% Restructuring 0 0 (4) (8) (12) (7) (12) (2) (27) (48) Litigations & taxes 0 0
Slide 31: Appendix – Below EBITDA
Appendix – Below EBITDA Depreciation and amortisation Interest 32 9 1 6 347 111 321 103 D&A Q4 14 Underlying FX D&A Q4 15 Interest Q4 14 Underlying FX Interest Q4 15 Tax 3 37 123 89 Tax Q4 14 Underlying FX Tax Q4 15 Page 31
Slide 32: Gross debt by country
Gross debt by country Central America: South America: Africa: Corporate: Total MIC Debt: Total debt $1,486m Total debt $1,324m Total debt $571m Total debt $2,003m $5,384m Honduras: $391m Senegal: $17m Guatemala: $985m Chad: $109m El Salvador: $6m Ghana: $61m Costa Rica: $104m Rwanda: $131m Colombia
Slide 33: Currency exposure of the debt
Currency exposure of the debt Dec-15 Debt including finance leases Cash Net debt US$ Local Total Total USD Local Total 1,482 1,328 2,810 501 1,338 971 2,309 Latin America 53% 47% 100% 58% 42% 100% 307 264 571 243 275 54 328 Africa 54% 46% 100% 84% 16% 100% 2,003 0 2,003 346 1,671 -13 1,657 Corporate
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