2018 Q2 results. Millicom International Cellular S.A. Growth continues to accelerate. Mauricio Ramos, CEO Tim Pennington, CFO July 20 th, 2018

Transcription

1 2018 Q2 results Growth continues to accelerate Mauricio Ramos, CEO Tim Pennington, CFO July 20 th, 2018 Millicom International Cellular S.A.

2 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 future could differ materially from those anticipated in the forward-looking statements depending on various important factors. All forward-looking statements in this presentation are based on information available to Millicom on the date hereof. All written or oral forward-looking statements attributable to Millicom International Cellular S.A., any Millicom International Cellular S.A. employees or representatives acting on Millicom s behalf are expressly qualified in their entirety by the factors referred to above. Millicom does not intend to update these forward-looking statements. This information was prior to this release inside information and is information that Millicom is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the contact person set out above, at 22:00 CET on July 19 th

3 1. CEO review Mauricio Ramos

4 Q2 Highlights Growth continues to accelerate Latam service revenue growth accelerated to 5.5% on continued strong net adds All revenue lines contributing to growth - Mobile back above 2% Home growth accelerated to almost 13% with 140k new HFC homes Continued margin expansion and double-digit FCF growth 5 Additional listing on U.S. Stock Exchange next year 4

5 1 Revenue growth accelerated to 5.5% in Q2 Latam %YoY growth, Q % 2.9% 3.1% 3.9% 2.3% 0.9% -0.5% -2.0% -2.3% -1.3% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 5

6 1 Accelerating performance in our main Latam markets El Salvador Service revenue, year-on-year (%), Q % 2.1% 0.3% -1.6% -3.6% -1.4% -3.7% -4.8% -6.4% -8.7% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Guatemala 6.4% 5.7% 3.5% 3.4% 2.7% -0.8% -2.5% -3.9% -4.8% -4.3% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Honduras 0.3% 0.0% -0.1% -0.6% 0.0% -0.7% -0.8% -1.0% -1.6% -2.5% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Bolivia Colombia Paraguay 15.7% 9.1% 6.5% 5.5% 6.1% 4.7% 2.0% 2.6% 0.5% -0.8% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q % 2.3% 0.3% 2.2% 0.6% -0.3% -0.2% -1.9% -2.9% -2.5% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q % 7.8% 7.1% 6.5% 6.2% 6.2% 4.5% 3.3% 2.9% 2.1% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 6

7 2 All three business units growing Mobile B2C (56% of service rev) Mobile B2C service revenue LC %YoY, Q1 17 Home (24% of service revenue) Home service revenue LC %YoY, Q1 17 B2B (18% of service revenue) B2B service revenue LC %YoY, Q % 0.9% 0.2% 12.6% -0.9% 8.8% 8.9% 7.3% 7.3% 7.1% 7.6% 5.7% 6.4% 7.1% -3.8% 2.5% -5.3% 1.4% Q117 Q217 Q317 Q417 Q118 Q218 Q117 Q217 Q317 Q417 Q118 Q218 Q117 Q217 Q317 Q417 Q118 Q218 7

8 2 Mobile growth back above 2% Mobile data now generating 50% of mobile service revenue and driving better ARPU Build Population coverage and points of presence (PoP), 4G subscribers (millions), Q1 17 Connect Coverage PoP 7, ,257 50% 60% 4.7 Q217 Q218 Mobile data penetration Mobile data service revenue as % of mobile B2C service revenue, Q % 45% 46% 47% 48% 50% +2.1% YoY LC growth Q117 Q217 Q317 Q417 Q118 Q218 ARPU YoY% growth in local currency, Q % -2.3% -2.7% -1.7% Q117 Q217 Q317 Q417 Q118 Q % Q % Q217 Q317 Q417 Q118 Q218 8

9 2 B2B continues to perform well 110,000 kilometers of fibre in Latin America Expanding fibre Building datacenters Tier III data centers launched in Colombia, Paraguay and Bolivia Solutions revenue grows Aprox. 25% YoY Small and medium business SMBs remain a key source for growth as we continue to develop B2B solutions and expand our coverage in our markets. ~250,000 SMBs customers ~40% of B2B revenue +7.1% YoY LC growth Colombia contributes over 50% The first half of 2018 has seen in Colombia an accelerated revenue thanks to the contract to provide communications for the elections 9

10 2 Home net adds accelerating with ARPU growth Raising our 2018 target to 400k homes connected net additions HFC homes passed (000), Q2 15 Build Connect HFC homes connected net additions (000), H1 16 H1 18 5,873 6,667 7, % 9,076 +3,203 Organic Inorganic Q2 15 Q2 16 Penetration HFC homes connected/hfc homes passed, Q % YoY LC growth H1 16 H1 17 H1 18 ARPU $ per month, Q % 30.9% 29.7% 28.1% 28.2% Q2 15 Q2 16 Q

11 3 Home contributed half of the growth in Q2 Contribution to Latam service revenue growth year-on-year, Q Home is 24% of revenue but 50% of growth Contribution to growth by business unit 5.5% Mobile B2C B2B Home Growth Weight* 2% 13% 7% 56% 24% 18% * Does not tie to 100% as revenue categories exclude Other, equal to 1% of total 11

12 3 Colombia key to Latam Home acceleration in Q2 Planting the seeds for sustainable and profitable long term growth HFC homes connected growth accelerating Colombia - LTM homes connected net additions, HFC and Other, Q216 Q218 Passed the inflection point Colombia - Growth YoY in homes connected, Q % 1.5% % -1.1% % % HFC Other Net Q2 16 Q1 17 Q3 17 Q4 17 Q

13 4 FCF growth continues Solid FCF generation while we invest to drive faster growth $m, H1 16 H2 18 EFCF up 16% YTD 15.7% H1 16 H1 17 H

14 2. CFO review Tim Pennington

15 Financial Highlights Well positioned to face the future Strong KPI s driving through to key financial metrics EBITDA growth driven by core Latam businesses and cost control All P&L profit metrics improving and cashflow continues to strengthen 5 Balance sheet in good shape 15

16 1 Key financial metrics Q Group service revenue up 5.3% Service Revenue a EBITDA a and Margins $m, $m and %, Q2 OCF and Margins b $m and margin, 5.3% 4.6% $41m 1,365 1, % 35.8% 20.0% 21.7% a) numbers are adjusted to FX rates and exclude Senegal, Rwanda and Ghana b) Excluding Senegal, Rwanda and Ghana, spectrum & license costs 16

17 1 Latam Solid growth returning to Latam Latam service revenue $m, Latam OCF $m and margin, +5.5% +7.2% 304 Latam EBITDA $m and margin, +4.4% 1, % 21.5% 1, % 36.4% Capex / Revenue 15.6% 14.8% Notes: Growth rates are organic and exclude the impact of changes in FX rates, accounting, and new segmental presentation. Q figures have been adjusted to reflect these organic growth rates. Capex/revenue excludes spectrum & license costs 17

18 2 EBITDA Q Latam biggest contributor to EBITDA growth $ million, EBITDA evolution by region +4.6% % Ebitda FX and other Ebitda (constant currency) LatAm Africa Corporate Ebitda 35.7% as % of revenue 35.8% numbers are adjusted to FX rates and exclude Senegal, Rwanda and Ghana 18

19 2 EBITDA progression by country Strong performance in Bolivia and a return to EBITDA growth in Colombia El Salvador EBITDA ($m), margin and year-on-year growth, 38 (16.8%) Guatemala +5.7% Honduras (3.4%) % 30.7% 50.6% 50.6% 42.8% 41.2% Bolivia Colombia Paraguay +17.5% 6.9% +8.1% % 38.6% 26.6% 27.5% 46.5% 48.4% EBITDA Margins 19

20 2 Cost review and margin progression Steady upward margin trend continues OPEX and growth* YoY, Group total OPEX base Last 12 month Group EBITDA margin Last 12-month EBITDA margin, Q Q % bps Sales and Marketing +4.2% 35.3% 36.3% 32.6% 33.3% General and Adminstration +2.4% Q2 15 Q2 16 * Excludes IFRS 15 20

21 3 P&L review Q Significant profit improvement below EBITDA P&L Summary US$ million % Var Revenue 1,541 A 1, % EBITDA % Depreciation & amortization (315) (326) (3.3%) Other operating 20 (1) NM Operating profit % Net financial expense (107) B (120) (10.5%) Others non operating (20) (17) 18.1% Associates (48) C (25) 96.3% A Key Observations IFRS 15 had small impact on Service Revenue (-1.3%) and EBITDA (+0.5%) Interest savings from re-financing activity, offset by higher financial lease expense B C D One-off non-cash adjustment in Ghana Improved profitability in Colombia Profit before tax % Taxes (61) (60) 0.6% Minority interests (19) D (9) NM Discontinued operations (2) 6 NM Net income (1) (27) NM EPS ($ per share) (0.01) (0.27) NM 21

22 4 Cash flow H We generated $149 million of equity FCF in H1 $ million H cash flow 476 1, Ebitda including discontinued operations Cash capex (ex-spectrum and licenses) Working capital and others Cash flow from operations Taxes paid Finance charges FCF Dividend to minorities efcf 36.4% 17.8% 7.5% as % of revenue 22

23 5 Capital structure In H1 net debt reduced by $90m and proportionate leverage below 2.0x Net debt evolution in 2018 $ million, 31 December June June 2018 Debt profile Geography Latam 72% HQ 23% Africa 5% 4,071 3,981 Source Bonds 55% Banks 38% Fin. Leases 7% Interest rates Fixed or Swapped 70% Variable 30% Net debt YE 2017 Equity FCF Spectrum Lease M&A capitalization and towers Dividend FX and others Net debt Q FX exposure Local 41% Hard currency 59% 1.86x Net debt/ltm EBITDA 1.80x 2.02x Proportionate Net debt/ Proportionate LTM EBITDA 1.95x Maturity Less than 5y 40% 5Y or more 60% 23

24 Outlook Updating our full year targets Target Update k HFC homes connected (+179k organic) 10m total homes passed by year-end +300k ~400k m 4G customer net additions 10m 4G customers by year-end +3m 3 Service revenue growth in Latam +2-4% Top-end of range 4 EBITDA growth on track +3-6% 24

25 Recap Our strategy is working Growth is accelerating Solid first half on financials and KPIs 2018 outlook improving 5 Strengthened balance sheet and growing cash flow 6 U.S. listing in

26 Q&A

27 Debt profile Comfortable capital structure and liquidity with no major maturities until 2024 $ million Debt maturity profile Average life of 5.1 years SEK $224m PY $300m GT $800m 25s $500m s $500m >2027 International Bonds Local Bonds (Colombia & Bolivia) Bank and DFI Finance leases 27

28 Gross debt by country Central America: Total debt $1,774m 32% guaranteed South America: Total debt $1,964m 4% guaranteed Africa: Total debt $285m 54% guaranteed Corporate: Total debt $1,205m 0% guaranteed Total MIC Debt: $5,228m 15% Guaranteed Honduras: $390m (51% guaranteed) Guatemala: $993m (0% guaranteed) Chad: $64m (96% guaranteed) El Salvador: $245m (92% guaranteed) Costa Rica: $147m (100% guaranteed) Colombia $1,119m (0% guaranteed) Bolivia: $343m (4% guaranteed) Paraguay: $501m (13% guaranteed) Tanzania: $113m (0% guaranteed) Zantel: $108m (86% guaranteed) Including finance leases 28

29 Net debt by country Central America: $1,330m Leverage 1.15x South America: $1,585m Leverage 1.55x Africa: $124m Leverage 0.76x Corporate $942m Total Net Debt: $3,981m Leverage 1.80x Honduras: $371m Leverage 1.4x Guatemala: $650m Leverage 1.0x Chad: $43m El Salvador: $218m Leverage 1.4x Costa Rica: $96m Leverage 1.7x Tanzania: $(15)m Zantel: $97m Colombia: $933m Leverage 2.0x Bolivia: $261m Leverage 1.2x Paraguay: $392m Leverage 1.2x Including finance leases; Leverage is Net debt / LTM EBITDA 29

30 Currency exposure of debt June 2018 Debt including finance leases Cash Net debt US$ Local Total Total USD Local Total Latin America* 1,766 1,972 3, ,372 1,544 2,915 47% 53% 100% 47% 53% 100% Africa % 62% 100% 85% 15% 100% Corporate 1, , % 0% 100% 101% -1% 100% Millicom 3,081 2,147 5,228 1,247 2,427 1,554 3,981 59% 41% 100% 61% 39% 100% *El Salvador has USD as functional currency (treated as local.) 30

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