Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — Q1 2010 Earnings Presentation
40 slides from Millicom International Cellular's earnings presentation, Apr 20, 2010
Slide 1: Financial results Q1 10
Millicom International Cellular S.A. Financial results Q1 10 Mikael Grahne 20th April, 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: Q1 Highlights
: : Q1 Highlights • Group revenues up 16% • Constant currency revenue growth accelerating to +11.5% • Further market share gains • New record level for EBITDA at 46.8% • Continued strong cash flow generation • Solid EPS growth +11% • Exceptional dividend and share buy back plan confirm strong commit
Slide 5: Financial Highlights Q1 YoY
: : Financial Highlights Q1 YoY US$m Q1 10 Q1 09 $ Local growth currency Customers ('000) 35,094 29,082 21% Revenues 905 779 16% 11.5% EBITDA 424 352 20% % of revenues 46.8% 45.2% +1.6 pt Capex 99 185 -46% % of revenues 11.0% 23.8% -12.8 pt Operating Free Cash Flow * 234 105 123% % of revenues 25.8%
Slide 6: Stabilization of customer growth
: : Stabilization of customer growth 1,000 900 800 700 600 500 reported net additions ('000) 400 12 months moving 300 average of net additions 200 100 0 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Stable customer growth when excluding the seasonal effects and
Slide 7: Financial Highlights Q1 10 vs Q4 09
: : Financial Highlights Q1 10 vs Q4 09 US$m Q1 10 Q4 09 $ Local growth currency Customers ('000) 35,094 33,920 3% Revenues 905 924 -2% -1.7% EBITDA 424 431 -2% % of revenues 46.8% 46.6% +0.2 pt Capex 99 252 -60.5% % of revenues 11.0% 27.3% -16 pt Operating Free Cash Flow * 234 290 -19% % of revenue
Slide 8: ARPU decline reducing steadily quarter on quarter
: : ARPU decline reducing steadily quarter on quarter 30% 20% YoY growth 10% Customers 0% Recurring revenue growth * Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 ARPU in local currency -10% -20% -30% * Recurring revenue = customers x ARPU in local currency 8
Slide 9: Revenue growth – positive Forex impact in Q1
: : Revenue growth – positive Forex impact in Q1 US$m 950 4.0% 0.8% 16.3% 900 11.5% 31.1 899.1 905 850 89.5 868 0.0 5.9 800 750 779 779 700 Local currency growth at 11.5% despite additional taxes in Central America and Africa 9
Slide 10: Revenue split by category
: : Revenue split by category US$m Q1 10 Q1 09 $ Local growth currency Airtime 613 561 9% 5% % of recurring mobile revenues 78.7% 83.2% VAS 166 114 47% 40% % of recurring mobile revenues 21.3% 16.8% +4.5 pt Other * 126 104 21% 18% Total Revenues 905 779 16% 11% * Telephone & Equipment + Cable busine
Slide 11: VAS and 3G/data revenue growing
: : VAS and 3G/data revenue growing VAS 25% 21% 21% 19% 20% 18% 16% 15% 10% 10% 9% Other VAS as a % of recurr. rev 6% 8% 10% SMS as % of recurr. rev. 5% 10% 10% 10% 11% 11% 0% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 VAS revenue 21.4% of Note: Other VAS includes Ringback tones / Data (web browsing)/ recurring
Slide 12: Market share evolution
: : Market share evolution 2007 2008 2009 2010 31% 30% 29.2% 28.7% 28.7% 29% 27.9% 28% 27.0% 27.1% 27.2% 27.2% 27% 26.6% 26% 25.4% 24.9% 25% 24.6% 24% 23% 21.8% 22% 21% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Further market share growth in all regions 12
Slide 13: Stable churn
: : Stable churn MIC TOTAL 5.6% 5.4% 5.4% 5.1% 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 Q1 10 Q4 09 vs Q1 10 Q4 09 Q1 10 8.0% 6.9% 7.0% 7.0% Q4 09 Q1 10 6.0% 5.0% 5.1% Q4 09 Q1 10 5.0% 3.4% 3.4% 4.0% 3.0% 2.0% CAM SAM Africa 13 Stabilization of churn in all clusters
Slide 14: Regional review
Click to add title Regional review
Slide 15: Quarterly Highlights – Central America YoY
: : Quarterly Highlights – Central America YoY US$m Q1 10 Q1 09 Reported Local currency growth growth Customers ('000) 13,221 11,534 15% Revenues 322 326 -1% 0% EBITDA 182 182 0% 1% % of revenues 56.7% 55.8% +0.8pt Capex 23 23 -1% % of revenues 7.0% 7.0% +0.0 pt Operating Free Cash Flow 142 135 5% %
Slide 16: Quarterly Highlights – South America YoY
: : Quarterly Highlights – South America YoY US$m Q1 10 Q1 09 Reported Local currency growth growth Customers ('000) 9,027 7,735 17% Revenues 312 237 32% 17% EBITDA 132 94 41% 29% % of revenues 42.4% 39.5% +2.9 pt Capex 22 37 -40% % of revenues 7.2% 15.7% -8.5 pt Operating Free Cash Flow 74 32 130%
Slide 17: Quarterly Highlights – Africa YoY
: : Quarterly Highlights – Africa YoY US$m Q1 10 Q1 09 Reported Local currency growth growth Customers ('000) 12,846 9,813 31% Revenues 217 171 27% 26% EBITDA 83 59 41% 47% % of revenues 38.4% 34.4% +4.0 pt Capex 43 107 -59% % of revenues 20.0% 62.3% -42.3 pt Operating Free Cash Flow 17 -51 % of rev
Slide 18: Quarterly Highlights – Cable YoY
: : Quarterly Highlights – Cable YoY US$m Q1 10 Q1 09 Reported Local currency growth growth Revenues 54 44 - Amnet 47 43 9% 9% - Navega 7 1 EBITDA 26 17 - Amnet 18 16 14% 14% - Navega 8 1 % of revenues 47.7% 38.9% +8.8pt Capex 10 18 -45% % of revenues 18.5% 41.0% -22.5pt Operating Free Cash Flow 8 -
Slide 19: Financial review
Financial review
Slide 20: Quarterly EPS – solid EPS growth
: : Quarterly EPS – solid EPS growth US$m Q1 10 Q1 09 $ growth EBITDA 424 352 20% Depreciation -166 -133 24% High Capex for growth % of revenues 18.3% 17.1% +1.2 pt Net Finance Costs -41 -37 10% % of revenues 4.5% 4.8% -0.3pt Higher WHT on stronger Taxes -60 -41 46% cash upstream % of revenues 6.6%
Slide 21: Taxes
: : Taxes US$m Q1 10 Q1 09 Change PBT 202 166 22% Taxes 60 41 46% Effective tax rate 29.8% 24.9% 4.9 pt Higher tax rate in Q1 due to withholding tax on stronger cash upstream ($246m vs $86m in Q1 09) 21
Slide 22: Low leverage
: : Low leverage US$m Q1 10 Gross Debt 2,355 Cash * (1,633) Net Debt 722 Net Debt/EBITDA 0.4 * including pledged deposits and time deposits ND/EBITDA will remain less than 1 after dividend 22 payment and share buy back completion
Slide 23: All regions Cash Flow positive
: : All regions Cash Flow positive OFCF US$m Q1 10 Q1 09 Change Central America 142 135 7 South America 74 32 42 Africa 17 -51 68 Cable 8 -2 10 Other (incl. Corporate) -7 -9 2 OFCF 234 105 129 Positive Cash Flow for all cellular clusters in Q1 10 23 Less dependence on Central America
Slide 24: Free Cash Flow
US$m : : Free Cash Flow* 250 223 200 200 150 US$m Q1 10 Q1 09 108 OFCF 234 105 100 Net Interest Paid -20 -21 66 59 Corporate Costs -14 -17 50 FCF 200 66 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 * EBITDA - Capex +/- WC- Interests - Taxes - Corporate costs Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 FCF as % 8.5% 7.2% 12.6%
Slide 25: Gross Debt maturity
: : Gross Debt maturity US$m 800 700 600 500 455 454 400 300 476 577 373 200 100 220 107 147 0 < 1 year 1-2 years 2-3 years 3-4 years 4-5 years > 5 years Average maturity at 2 years and 6 months 25
Slide 26: 2010 guidance confirmed
: : 2010 guidance confirmed Stabilization of EBITDA margin at mid 40’s OFCF* as Capex around a % of $700m revenue in mid-teens •OFCF= Operating Free Cash Flow: 26 EBITDA - CAPEX - WC movements - Taxes 26
Slide 27: Capital structure
: : Capital structure • $800m returned to shareholders with $500m as exceptional dividends (on top of the normal dividend) and up to $300m of share buy back • Exceptional dividend of $4.60 to be paid in June (+ $1.40 of regular dividend) • Share repurchase to be executed on Nasdaq by year end 2010 •
Slide 28: Appendix
Click to add title Appendix
Slide 29: 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 30: ARPU in Local currency
: : ARPU in Local currency Q1 10 Q4 09 Q3 09 Q2 09 Central America El Salvador 11 12 12 13 Guatemala 104 104 113 115 Honduras 190 197 194 216 South America Bolivia 76 82 77 75 Colombia 22,159 22,632 21,541 21,488 Paraguay 49,557 53,699 51,464 49,301 Africa Chad 4,176 4,787 4,342 4,686 DRC 6 7 7 6 Gh
Slide 31: YoY Local currency ARPU growth
: : YoY Local currency ARPU growth Year-on-Year local currency ARPU growth (%) Total Central Am. South Am. Africa Q1 10 (9%) (13%) 0% (3%) Q4 09 (10%) (20%) (4%) (9%) Q3 09 (12%) (19%) (3%) (15%) Q2 09 (16%) (20%) (3%) (23%) Q1 09 (19%) (24%) (4%) (23%) 31
Slide 32: Mobile revenues in local currency
: : Mobile revenues in local currency LC million Q1 10 Q1 09 Growth % Central America El Salvador 98 103 -5.1% Guatemala 1,891 1,762 7.3% Honduras 2,770 2,877 -3.7% South America Bolivia 483 378 28.0% Colombia 267,738 225,640 18.7% Paraguay 506,372 463,011 9.4% Africa Chad 13,504 8,552 57.9% DRC 29
Slide 33: Penetration rates
: : Penetration rates CAM SAM Africa MIC Avg penetration Avg penetration Avg penetration Avg penetration 88.7% 86.8% 25.7% 47.9% 120.0% 102.0% 92.0% 93.9% 100.0% 86.4% 81.0% 80.4% 80.0% 55.8% 60.0% 51.8% 48.0% Average 31.5% MIC 40.0% 19.5% 21.0% 20.0% 8.6% 0.0% 33
Slide 34: Market Share evolution QoQ
: : Market Share evolution QoQ CAM SAM Africa MIC Avg Market Share Avg Market Share Avg Market Share Avg Market Share 53.4% 16.8% 31.0% 29.2% 70.0% 66.1% 57.3% 60.0% 52.1% 50.0% 46.3% 49.0% 43.0% 40.0% 36.4% 35.7% 31.6% 27.2% 24.8% Average 30.0% MIC 20.0% 8.9% 10.0% 0.0% Increase (>0.2%) El Salvador
Slide 35: Movements of currencies vs USD YoY
: : Movements of currencies vs USD YoY Closing rate Closing rate Change Average rate Average rate Change Q1 10 Q1 09 Q1 10 Q1 09 Guatemala GTQ 7.99 8.11 2% 8.22 7.98 -3% Honduras HNL 18.90 18.90 0% 18.90 18.89 0% Central America Nicaragua NIO 21.09 20.09 -5% 20.96 19.96 -5% Costa Rica CRC 523.65 564
Slide 36: Q1 10 Market Overview – by Segment
: : Q1 10 Market Overview – by Segment Central South Amnet/ Millicom Segments Africa Total America America Navega Market Overview Population (million) 28 63 169 260 Mobile Penetration 88.7% 86.8% 25.7% 47.9% Operational Data Total Customers (000) 13,221 9,027 12,846 35,094 Attrib. Customers (000) 9,
Slide 37: 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 38: 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 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 201
Slide 39: Quarterly Interest expense
: : Quarterly Interest expense 47 46 46 45 45 44 28% fixed rate 43 43 43 72% variable rate 42 Target of 50% 41 variable/ 50% fixed 40 40 39 38 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Total Interest expense (US$m) Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Effective 7.6% 8.1% 7.4% 7.8% 7.3% rate 39
Slide 40: Merci
Merci 40
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