Millicom International Cellular S.A. · NASDAQ:TIGO
Millicom International Cellular — Q4 2004 Earnings Presentation
31 slides from Millicom International Cellular's earnings presentation, February 2005
Slide 1: Millicom International Cellular S.A. Investor Presentation
Millicom International Cellular S.A. Investor Presentation February 2005
Slide 2: Forward-looking statements
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 the future cou
Slide 3: MIC – Leading Cellular Provider
MIC – LEADING CELLULAR PROVIDER l Leading cellular provider l 20-year operating history in emerging markets l 17 cellular operations in 16 countries in Asia, Latin America and Africa l 400 MM population under license l Leading market positions in most of our markets with a total of 7.7 million subsc
Slide 4: Geographic Footprint of MIC
GEOGRAPHIC FOOTPRINT OF MIC Guatemala El Salvador Senegal Ghana Pakistan I Pakistan II Comcel Telemovil SentelGSM Mobitel Pakcom Paktel #2 of 4 #1 of 4 #2 of 2 #2 of 4 #3 of 3 #3 of 3 Total of 672,734 subscribers Total of 534,288 subscribers Total of 339,884 subscribers Total of 277,045 subscribers
Slide 5: Developing Telecoms Markets
DEVELOPING TELECOMS MARKETS Low Telecom Penetration… …High Growth Potential Penetration % Population in m EU 380m l Record subscriber growth US 290m Mauritius 1.2m l Markets with low fixed line and El Salvador Bolivia 6.6m 8.7m cellular penetration levels Guatemala 14.3m Paraguay 6.2m l Substitution
Slide 6: Proven Prepaid Strategy
PROVEN PREPAID STRATEGY Focus on Prepaid Growth… … And Profitability Proportional Subscribers in ‘000 l No credit risk 6,000 5,332 l Low acquisition costs 5,000 576 l Fast payback time 4,025 4,000 475 3,000 l And we also love our postpaid 4,756 (89%) customers ! 2,000 3,550 (88%) 1,000 0 Q403 Q404 L
Slide 7: Our Business Model
OUR BUSINESS MODEL l Well recognised mass market brands Mass Market Distribution l Superior distribution network… l …based on PoS for consumer goods l …and new distribution methods such as e-pin l First to introduce branded prepaid services in nearly all of our markets Innovative Approach l Introduc
Slide 8: Low Cost Operations
LOW COST OPERATIONS l Low investment per capacity minute Low l Purchasing synergies across the group Cost Base l Regional synergies in adjacent geographies l GSM migration will enable further cost reductions l Rapid and effective decision-making through… Tight l ...centralised reporting, cash flow m
Slide 9: Delivering Profitable Growth: Subscribers
DELIVERING PROFITABLE GROWTH SUBSCRIBERS(1) Quarterly absolute growth ‘000 5,500 5,332 594,538 600,000 500,000 5,000 4,738 400,000 4,500 4,421 4,128 316,536 300,000 4,026 293,155 4,000 218,931 200,000 3,500 100,000 102,453 3,000 0 4Q03 1Q04 2Q04 3Q04 4Q04 Subscribers Quarterly absolute grow th Notes
Slide 10: Delivering Profitable Growth: Revenue
DELIVERING PROFITABLE GROWTH REVENUE $MM (1) 260 256 240 235 220 215 213 201 200 180 4Q03 1Q04 2Q04 3Q04 4Q04 Revenue Notes: 1. Consolidated under IFRS – Excluding Divested Operations 10
Slide 11: Delivering Profitable Growth: EBITDA
DELIVERING PROFITABLE GROWTH EBITDA $MM (1) EBITDA Margin % 125 124 60 117 50 115 50 50 50 48 46 107 108 40 105 30 95 93 20 85 10 75 0 4Q03 1Q04 2Q04 3Q04 4Q04 EBITDA EBITDA Margin Notes: 1. Consolidated under IFRS – Excluding Divested Operations 11
Slide 12: Operating Overview: MIC's Strategy
OPERATING OVERVIEW MIC’S STRATEGY l MIC is currently focused on enhancing its position in its 16 existing markets l Main alternatives considered include organic growth, opportunistic buy-outs of local partners and consolidation in selected geographies l The management may also evaluate opportunities
Slide 13: Our Operations in Asia
OUR OPERATIONS IN ASIA Operating Profile 281.3 Million PoPs under License Sri Lanka Pakistan (Pakcom) Pakistan (Paktel) #2 of 4 #3 of 3 #3 of 3 442.5k Subscribers 534.7k Subscribers 481.6k Subscribers Vietnam Cambodia Laos #2 of 4 #1 of 4 #2 of 4 1,849.3k Subscribers 609.7k Subscribers 40.3k Subscri
Slide 14: Revenue and EBITDA Breakdown: Asia
REVENUE AND EBITDA BREAKDOWN: ASIA Revenue Split (Q4 2004) EBITDA Split (Q4 2004) MIC MIC MIC Africa MIC Africa South East Asia South East Asia 25.4% 32.6% MIC MIC South Asia South Asia MIC MIC 9.8% 4.0% Latin America Latin America 14
Slide 15: Revenue Trends in South East Asia
REVENUE TRENDS IN SOUTH EAST ASIA Revenue $MM(1) # Subs. (‘000)(2) Trends 232 250 2,500 VIETNAM, CAMBODIA, LAOS 2,499 225 2,250 200 2,000 l MOU signed expressing wish of 175 175 1,750 Comvik and VMS to continue working together in the future in the form of a 150 139 1,500 Joint Stock Company. 120 1,
Slide 16: Profitability Trends in South East Asia
PROFITABILITY TRENDS IN SOUTH EAST ASIA EBITDA $MM(1) Margin % Trends 160 70 VIETNAM, CAMBODIA, LAOS 141 140 58 59 61 60 54 120 103 50 l Synergies in contiguous markets 100 enhance margins 82 40 80 65 30 60 l High levels of free cash flow in 20 Vietnam and Cambodia 40 20 10 0 0 2001 2002 2003 2004 Q
Slide 17: Revenue Trends in South Asia
REVENUE TRENDS IN SOUTH ASIA Revenue $MM(1) # Subs. (‘000)(2) Trends 125 1,500 PAKISTAN, SRI LANKA, (IRAN) 1,459 113 106 1,250 100 l Investment in GSM network in Paktel 1,192 83 76 1,000 l TDMA networks to be repositioned to 75 830 target mass market 750 50 568 l MIC license renewals process 500 ong
Slide 18: Profitability Trends in South Asia
PROFITABILITY TRENDS IN SOUTH ASIA EBITDA $MM(1) Margin % Trends PAKISTAN, SRI LANKA, (IRAN) 60 56 60 l GSM network gives potential for 50 49 greater profitability (Paktel) 50 53 50 41 43 41 40 40 l Synergies from operating two licenses in Pakistan 31 30 30 l Strong economic development in Sri 20 20
Slide 19: Our Operations in Latin America
OUR OPERATIONS IN LATIN AMERICA Operating Profile Guatemala El Salvador #2 of 4 #1 of 4 672.7 Subscribers 534.3 Subscribers Honduras #1 of 2 490.0 Subscribers Bolivia 42.6 Million #2 of 3 PoPs under License 414.1 Subscribers Paraguay Central America #1 of 4 South America 523.3 Subscribers Notes: 1.
Slide 20: Revenue and EBITDA Breakdown: Latin America
REVENUE AND EBITDA BREAKDOWN: LATIN AMERICA Revenue Split (Q4 2004) EBITDA Split (Q4 2004) MIC Africa MIC Africa MIC MIC Asia MIC Asia South America MIC 12.7% South America 10.4% MIC Central America MIC 34.6% Central America 35.9% 20
Slide 21: Revenue Trends in Central America
REVENUE TRENDS IN CENTRAL AMERICA Revenue $MM(1),(3) # Subs. (‘000)(2) Trends 325 2,000 305 300 1,697 275 1,750 EL SALVADOR, GUATEMALA, HONDURAS 250 1,413 1,500 225 l Migration to GSM to enhance Millicom’s 200 1,250 competitiveness 175 165 1,000 l AMPS/TDMA networks to be 150 794 125 116 repositione
Slide 22: Profitability Trends in Central America
PROFITABILITY TRENDS IN CENTRAL AMERICA EBITDA $MM(1),(2) Margin % Trends 156 160 52 51 47 50 EL SALVADOR, GUATEMALA, HONDURAS 140 43 120 40 l Stable or growing profitability during 100 macroeconomic difficulties 86 30 80 l Migrating to GSM intended to enhance 60 54 54 20 operating margins 40 10 l E
Slide 23: Revenue Trends in South America
REVENUE TRENDS IN SOUTH AMERICA Revenue $MM(1) # Subs. (‘000)(2) Trends 144 BOLIVIA, PARAGUAY 150 1,000 961 939 937 l Stabilizing macroeconomic outlook 913 provides basis for renewed growth 125 114 111 750 99 l Migration to GSM in Paraguay in 100 2004 and in Bolivia in 2005 to enhance MIC’s competit
Slide 24: Profitability Trends in South America
PROFITABILITY TRENDS IN SOUTH AMERICA EBITDA $MM(1) Margin % Trends 65 70 50 45 60 41 BOLIVIA, PARAGUAY 38 39 40 50 46 45 l Stable or growing profitability 40 37 30 following macroeconomic difficulties 30 20 20 l Migration to GSM in Paraguay (and 10 in Bolivia in 2005) intended to 10 enhance operati
Slide 25: Our Operations in Africa
OUR OPERATIONS IN AFRICA Operating Profile 75.4 Million Senegal Ghana PoPs under License #2 of 2 #2 of 4 339.9 Subscribers 277.0 Subscribers Chad Tanzania GSM License awarded #3 of 4 November 2004 302.7 Subscribers Sierra Leone Mauritius #2 of 2 #2 of 2 33.4 Subscribers 167.6k Subscribers Notes: 1.
Slide 26: Revenue and EBITDA Breakdown: Africa
REVENUE AND EBITDA BREAKDOWN: AFRICA Revenue Split (Q4 2004) EBITDA Split (Q4 2004) MIC Africa MIC Africa MIC Asia 17.5% 17.5% MIC Asia MIC MIC Latin America Latin America 26
Slide 27: Revenue Trends in Africa
REVENUE TRENDS IN AFRICA Revenue $MM(1) # Subs. (‘000)(2) Trends 175 1,200 1,121 1,100 GHANA, MAURITIUS, SENEGAL, 150 SIERRA LEONE, TANZANIA 150 1,000 900 125 l Repeating Asian success story 800 100 85 700 662 l Under-penetrated markets and 600 75 62 500 growing economies 53 406 353 400 50 l Acceler
Slide 28: Profitability Trends in Africa
PROFITABILITY TRENDS IN AFRICA EBITDA $MM(1) Margin % Trends 66 44 GHANA, MAURITIUS, SENEGAL, 70 42 45 SIERRA LEONE, TANZANIA 60 40 35 50 l Transferring Asian best practices to 27 30 Africa 40 24 25 36 30 20 l Increasing scale 15 20 15 15 l Fast growth in margins 10 10 5 l Free cash flow generation
Slide 29: Revenue Growth
REVENUE GROWTH REVENUE $MM(1) 1,000 919.2 900 CAGR 20% 800 638.6 700 600 +44% 522.8 520.9 450.3 YOY 500 369.1 400 300 200 100 0 1999 2000 2001 2002 2003 2004 Notes: 1. Consolidated under IFRS, excluding divested operations 29
Slide 30: Profitability Growth
PROFITABILITY GROWTH EBITDA $MM(1) EBITDA MARGIN % 500 60.00 CAGR +22% 455.3 450 50.00 49.50 50.00 400 46.00 46.00 44.00 43.00 317.8 350 40.00 300 227.7 241.7 250 30.00 199.3 +43% 169.3 200 YOY 20.00 150 100 10.00 50 0 0.00 1999 2000 2001 2002 2003 2004 EBITDA Margin Notes: 1. Consolidated under IFR
Slide 31: Conclusion: Key Strengths
CONCLUSION: KEY STRENGTHS l Operating in attractive high growth markets l Proven prepaid, mass market distribution and perceived price leadership strategy l Experienced leadership l Successful business model and low-cost operations l Delivering diversified and profitable growth l Sound balance sheet
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