Millicom International Cellular S.a. · NASDAQ:TIGO
Millicom International Cellular — FY2018 Earnings Presentation
37 slides from Millicom International Cellular's earnings presentation, Feb 8, 2019
Slide 1: Solid 2018 underpins strong medium-term outlook
Solid 2018 underpins strong medium-term outlook Mauricio Ramos, CEO Tim Pennington, CFO February 8th, 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: Agenda
Agenda Solid 2018 underpins strong medium-term outlook 1• Group financials 2• 2018 performance 3• Latam review 4• Latam medium–term outlook 4
Slide 5: 1. Group financials
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Slide 6: Reporting changes
1 Reporting changes We have made reporting changes to conform with US listing requirements Service revenue 1,734 To conform with 20-F presentation: 5,595 3,861 • IFRS numbers – exclude Guatemala and Honduras – and are on a reported basis (not like for like) 2018 Guatemala Underlying IFRS & Honduras
Slide 7: Group P&L – 2018
1 Group P&L –2018 Operating profit improved as Net income affected by non-cash items Selected P&L data Key Observations US$ million 2018 2017 % Var A• Guatemala and Honduras equity Revenue 4,074 A 4,076 0.0% accounted – shows share of net profit Cost of sales (1,146) (1,205) (4.9%) Operating expense
Slide 8: Group Cash flow – 2018
1 Group Cash flow –2018 We generated $326 million of equity FCF in 2018 2018 cash flow $ million 243 298 626 2 383 326 Operating free Dividends and Operating free cash Net Dividend Equity free cash flow advances flow and advances Finance to NCI cash flow* from Guatemala from Guatemala charges 9.4% a
Slide 9: 2. 2018 performance
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Slide 10: We delivered on all our 2018 targets...
2 We delivered on all our 2018 targets... Initial Revised Latam segment 2018 results Outlook Outlook 4G data customers Add 3 million Add 3 million 3.2 million HFC homes passed Add 1 million Add 1.2 million 1.3 million HFC customer relationships Add 300k Add 400k 406k Service revenue* Slightly above
Slide 11: ... with significant strategic accomplishments
2 ... with significant strategic accomplishments 11
Slide 12: Millicom is now a US listed company
2 Millicom is now a US listed company Making it easier to own and trade our shares and compare us to Latam peers 12
Slide 13: 3. Latam review
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Slide 14: Latam growth accelerated in 2018
3 Latam growth accelerated in 2018 At 4.3% in 2018, Latam is approaching its cruising speed Latam segment service revenue organic growth* %YoY, 2016 – 2018 4.3% 0.9% -0.2% 2016 2017 2018 * Service revenue organic growth is non-IFRS measures. Please refer to the non-IFRS disclosures in this presentat
Slide 15: Latam growth stronger in Mobile and Cable
3 Latam growth stronger in Mobile and Cable Mobile (63% of Latam) Cable & other fixed (36% of Latam) Mobile service revenue organic* growth %YoY, 2016 – 2018 Cable service revenue organic* growth %YoY, 2016 – 2018 1.3% 10.0% 7.2% 7.3% -2.3% -3.6% 2016 2017 2018 2016 2017 2018 * Organic growth and se
Slide 16: Mobile growth driven by 4G and postpaid
3 Mobile growth driven by 4G and postpaid Strongly growing our 4G customer base Improved performance in postpaid Latam B2C Mobile 4G customers (millions), 2016 – 2018 Latam B2C Mobile postpaid net additions, (000)s, 2016 – 2018 +46% +67% 228 10.1 137 6.9 3.4 -69 2016 2017 2018 2016 2017 2018 16
Slide 17: Cable growth drivers trending higher
3 Cable growth drivers trending higher Connecting more HFC Homes Adding more HFC RGUs ARPU rising Latam HFC customer relationships net adds* (000) Latam HFC RGU net additions* (000) Latam Home ARPU* ($/month) 2016 –2018 2016 – 2018 2016 – 2018 +1.4% +60% +36% 406 913 28.7 28.3 673 26.9 253 450 153 2
Slide 18: Latam service revenue
3 Latam service revenue Cable drove 80% of the growth in 2018, but both businesses contributed Service revenue* ($m) and growth* contribution YoY, 2017 – 2018 +4.3% 5,078 5,069 FX 96 161 IFRS 15 116 4,866 42 Service FX and IFRS 15 Mobile Cable & Service revenue 2017 other fixed revenue 2018 *Service
Slide 19: Latam service revenue by country
3 Latam service revenue by country Colombia (30% of Latam) Paraguay (12% of Latam) Guatemala (25% of Latam) Service revenue YoY organic growth*, FY16 – FY18 6.2% 3.5% 5.7% 5.5% 4.6% 0.0% -0.5% -0.7% -1.7% 2016 2017 2018 2016 2017 2018 2016 2017 2018 Bolivia (11% of Latam) El Salvador (7% of Latam) H
Slide 20: Latam EBITDA by country
3 Latam EBITDA by country Colombia (23% of Latam) Paraguay (15% of Latam) Guatemala (32% of Latam) EBITDA ($m), margin and year-on-year organic growth*, 2017 – 2018 +4.4% +5.1% +5.6% 469 494 318 332 665 689 2017 2018 2017 2018 2017 2018 27.0% 29.7% 48.0% 48.8% 50.1% 50.2% Bolivia (11% of Latam) El S
Slide 21: Latam EBITDA growth improved in 2018
3 Latam EBITDA growth improved in 2018 Latam EBITDA growth was 4.5% excluding one-offs in both years Latam segment EBITDA organic* growth %YoY, 2016 – 2018 Organic EBITDA growth One-offs impact 4.5% 2.8% 3.5% -2.2% 2016 2017 2018 *EBITDA and organic growth are non-IFRS measures. Please refer to the
Slide 22: 4. Latam medium-term outlook
4. Latam medium-term outlook
Slide 23: Our financial model...
4 Our financial model... ... seeks to accelerate growth and enhance returns… 1 2 Organic Capital growth Allocation & FCF Discipline 4 3 Strategic Healthy Optionality balance sheet 23
Slide 24: ...by tapping into an attractive opportunity
4 …by tapping into an attractive opportunity Low penetration rates Favorable socio-economic drivers Fixed broadband penetration Real GDP growth 2019e Bolivia 9% Panama 4.7% Honduras 10% Bolivia 4.1% Paraguay 4.0% Nicaragua 12% Honduras 3.7% Guatemala 14% Tigo Avg. 3.5% Paraguay 20% Guatemala 3.3% El
Slide 25: In the past 3 years our strategy has delivered...
4 In the past 3 years our strategy has delivered... What we have accomplished in Latam thus far HSD Users ARPU Revenue EBITDA OCF networks 4G 4G SP data Mobile ARPU Service Revenue EBITDA OCF coverage users (m) organic growth growth Margin% Margin% 2x 200bps 1 Penetration plan >20% 4% Network driven
Slide 26: ...and will continue to accelerate growth...
4 ...and will continue to accelerate growth… …and enhance Tigo’s position as a convergence leader in Latam HSD Users ARPU Revenue EBITDA OCF networks 4G 4G SP data Mobile ARPU Service Revenue EBITDA OCF coverage users (m) organic growth growth growth ~10% 2x Mid-to-high >75% single 1 Mid digit Penet
Slide 27: Financial outlook
4 Financial outlook 1 Faster growth in 2019 compared to 2018 2 Further acceleration in Medium-term plan 3 Management compensation aligned with plan delivery Latam (Organic YoY) 2019 Medium-term Service revenue growth* 3-5% Mid-single digit Mid-to-high EBITDA growth* 4-6% single digit OCF growth* Mid
Slide 28: Capital allocation discipline
4 Capital allocation discipline 1 Organic growth first – fully funded • High speed data networks 2 Centralized allocation • Fixed-mobile convergence • IT + customer premise equipment 3 Focus on Latam 4 Countries compete for capital – growth capital prioritized ~$ 800 million 28
Slide 29: Healthy balance sheet
4 Healthy balance sheet 1 Shift to subscription-based revenues and to Central American region enhances predictability of our business Medium-term target leverage of 2.0x reflects EM risks 2 while retaining flexibility to pursue strategic goals 3 Dividend proposal $2.64 – covered by free cash flow Un
Slide 30: Optionality to pursue inorganic opportunities
4 Optionality to pursue inorganic opportunities 1 Core competencies only – fixed and mobile broadband 2 Focused on accelerating transformation towards fixed- mobile convergence 3 Accretive to operational growth 4 Value accretive: IRR > WACC 3 Buckets Minorities In-market Adjacent markets consolidati
Slide 31: Recap
4 Recap Solid 2018 underpins strong medium-term outlook 1 Growth accelerated both at service revenue and EBITDA 2 Cash flow continues to improve year-on-year 3 Cable Onda accelerates Millicom’s transformation adding subscription based cable revenues and reduces FX risks 4 Our healthy balance sheet a
Slide 32: Q&A
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Slide 33: Debt profile
Debt profile Well spread debt profile Debt maturity profile $ million 982 990 Average life of 5.2 years 39 40 696 638 67 591 46 543 33 16 489 442 41 424 22 GT 26 800 25s 26s 28s 500 500 500 PY 300 94 23 2019 2020 2021 2022 2023 2024 2025 2026 2027 >2028 International Bonds Local Bonds (Colombia & Bo
Slide 34: Gross debt by country
Gross debt by country Central America*: South America: Africa: Corporate: Total MIC Debt*: Total debt $2,018m Total debt $1,837m Total debt $265m Total debt $1,770m $5,890m 27% guaranteed 4% guaranteed 57% guaranteed 0% guaranteed 13% Guaranteed Honduras: $383m (34% guaranteed) Guatemala: $927m Chad
Slide 35: Net debt by country
Net debt by country Central America*: South America: Africa: Total MIC* : Corporate: $1,714m $1,553m $223m $5,116m $1,625m Leverage: 1.30x Leverage: 1.47x Leverage: 1.37x Leverage: 2.18x Honduras: $358m Leverage: 1.33x Guatemala: $706m Chad: $49m Leverage: 1.03x El Salvador: $272m Leverage: 2.04x Co
Slide 36: Currency exposure of debt
Currency exposure of debt* December 2018 Debt including finance leases Cash*** Net debt US$ Local Total Total USD Local Total Latin 1,735 2,119 3,855 587 1,530 1,738 3,267 America** 45% 55% 100% 47% 53% 100% 91 174 265 42 85 138 223 Africa 34% 66% 100% 38% 62% 100% 1,727 43 1,770 145 1,590 35 1,625
Slide 37: Millicom - The Digital Lifestyle
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Millicom International Cellular — FY2018 Earnings Presentation on 6ix