Q3 2008 Investor Presentation 1.78MB 1 Jan 2009

Millicom International Cellular S.A.
Investor Presentation, January 2009
Diversified emerging market operator with a global footprint...
Central America:
28 m
Guatemala
13m
South America:
61 m
El Salvador
7m
Ownership: 55.0%
Ownership: 100%
#1 of 3
Total of 4.3 m subscribers
#1 of 5
Total of 2.5 m subscribers
Africa:
160 m
Senegal
13m
Total pops
under license:
291 m
Chad
10m
Laos
7m
Cambodia
38m
13m
7m
8m
4m
6m
14m
Ownership: 100%
Ownership: 87.5%
Ownership: 74.1%
Ownership: 58.4%
#2 of 2
Total of 1,8 m subscribers
#2 of 2
Total of 0.4 m subscribers
#2 of 4
Total of 0.2 m subscribers
#1 of 4
Total of 2 m subscribers
Sierra Leone
Honduras
Asia:
42 m
Amnet:
Guatemala
El Salvador
Honduras
Costa Rica
Nicaragua
6m
Ownership: 100%
#4 of 4
Total of 0.1 m subscribers
8m
Ownership: 66.7%
#1 of 4
Total of 4.1 subscribers
Ghana
Bolivia
Ownership: 100%
#2 of 5
Total of 2.7 m subscribers
9m
23m
Mauritius
1m
Ownership: 50.0%
#2 of 3
Total of 0.4 m subscribers
Ownership: 100%
Sri Lanka
21m
Ownership: 100%
#2 of 4
Total of 1.7 m subscribers
#2 of 3
Total of 1.3 m subscribers
Colombia
Paraguay
Ownership: 100%
#1 of 4
Total of 2.6 m subscribers
7m
45m
Ownership: 50% + 1 share
#3 of 3
Total of 3.3 m subscribers
Democratic Republic
of the Congo 67m
Tanzania
Ownership: 100%
#3 of 4
Total of 1 m subscribers
Ownership: 100%
#3 of 5
Total of 2 m subscribers
40m
...Millicom
2
Millicom: well positioned in attractive markets
•
Emerging market opportunity
– Low penetration = high growth potential
•
Potential growth opportunities for Millicom
– ‘Triple A’ business model
– Strength of consumer brand ‘Tigo’ in voice market
•
Broadband opportunity
•
Efficient low cost operator
– Lean structure a competitive advantage
•
Focus on cash generation
– Strong cashflow generation capability as capex to sales ratio falls in 2009 onwards
and margins improve - especially in Africa and Colombia
•
Strong Balance Sheet
– net debt to EBITDA ˂ 1x
3
Low Telecom Penetration = High Growth Potential
Wireless penetration*
120%
100%
80%
60%
40%
20%
0%
*Penetration rates for Millicom markets derived from Interconnect
Figures shown in brackets :
Country population
Millicom well set to exploit J curve in penetration growth
4
Market share opportunity
• Low market share in highly populated markets
• ‘Triple A’ strategy outperforms competitors’ business models
• Reaping benefit of past capex
100%
75%
50%
25%
0%
73m pops under license
218m pops under license
5
The Broadband Opportunity
•
Customers in more mature markets showing strong demand for
broadband services
– Pyramid research has identified fixed broadband as fastest growing segment within
communications sector in Latin America
•
Demand met with 3 pronged approach:
1. 3G – mobile broadband services launched across Latin America in Sept /Oct 2008
2. WiMAX – a successful niche alternative to cable and DSL in several markets
3. AMNET – a leading provider of cable and fixed broadband services in Central
America acquired in October 2008
•
Opportunity to deploy the Tigo marketing machine to sell broadband
services to:
1.
2.
Existing 2G customers
Amnet cable customers
6
Amnet
Amnet footprint and
subscribers
Business overview
•
•
•
•
•
Amnet founded in 1997
Owned by Michael Kazma and private
investors
Amnet is leading Pay-TV service provider
in Central America
– Leading provider of cable and
broadband internet services in El
Salvador, Costa Rica and Honduras
– Offers fixed telephony services in El
Salvador and Honduras
– Provides corporate data services in
all five Central American countries
Amnet Network
– 11,426 km co-axial network
– 4,870 km fibre optic network
Total homes passed: 1.1 million
(El Salvador, Costa Rica and Honduras)
– 64% two-way network
Source: Amnet (August 2008)
MIC footprint
Guatemala
Corporate
Services
El Salvador
Cable subs:
169,738 (80%)*
Tel. subs: 17,081
BB Internet subs:
24,174 (37%)*
Corporate
Services
New footprint
Nicaragua
Corporate Services
Costa Rica
Cable subs:
138,477 (40%)*
BB Internet subs:
39,177 (21%)*
Corporate Services
Honduras
Cable subs:
44,917 (21%)*
Tel. subs: 1,695
BB Internet subs:
19,868 (28%)*
Corporate
Services
Subscriber numbers as at 30 June 2008
* Market share based on subscribers as at 31 December 2007
7
Value Added Services (VAS)
•
Include SMS, Ring-Back tones,
music downloads, Balance
transfers etc
•
VAS revenues growing faster than
voice revenues
– VAS accounts for over 30% of
recurring revenues in Paraguay
•
Moving subscribers up the value
chain and increasing ‘share of
wallet’
8
Short term positioning...
•
Capex reduction
– capex for 2008 to be slightly below $1.4bn
– capex for 2009 to be around $1bn
•
Cash generation
•
Strong EBITDA margins and market share gains in 2008
•
Managing currency translation effect
– Data herein presented on constant exchange rate
•
Focus on existing businesses
...ensuring long term prospects
9
Capex peaks in 2008
• Capex to sales ratio falls from 39% to mid teens in medium term
• Continuing to reap benefits of past investment
2,700
2,600
2,500
2,400
2,300
2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
Capex to Sales:
2,631
1,500
1,400
1,300
1,200
1,100
1,000
1,576
900
800
700
Capex US$m
Revenue US$m
Capex of less than
$1.5 bn proposed for
2008
600
923
500
665
400
300
420
200
100
0
2003
2004
2005
2006
2007
2008
26%
36%
38%
39%
39%
39%
Q1
Q2
Q3
Q4
Capex
10
Capex by Region vs. YoY Revenue Growth
Q3 07
CAM
27%
Asia
6%
SAM
35%
Africa
32%
CAM SAM
14% 27%
Q3 08
Asia
11%
Africa
48%
Revenue Growth Q3 07 to Q3 08
Central America
13%
South America
27%
Africa
55%
Asia
34%
Capex shifting from
Latin America to
Africa and Asia
11
Strong Balance Sheet
• Q3: $1 billion of cash
• Net debt to EBITDA ˂ 1x
• Cashflow positive in 2009
Well managed debt maturities - as at 30/9/08 (US$ ‘000)
700,000
600,000
500,000
10 % Notes*
400,000
300,000
200,000
100,000
0
within
1 year
within
1-2 years
within
2-3 years
within
3-4 years
within
4-5 years
after
5 years
*Option of early redemption of $453m 10% Notes not taken in 2008, runs to 2013
12
Currency translation vs. $ masks better underlying performance
Q3 08
Revenue
EBITDA
Reported numbers
Q2 average
exchange rate
applied
Reported numbers
Q2 average
exchange rate
applied
Central America
339,773
339,037
184,876
184,441
South America
273,418
276,857
96,596
94,802
Africa
189,226
196,821
62,452
65,772
Asia
66,691
66,638
25,061
25,038
Total
869,198
879,353
368,985
370,053
US$’000
• Most significant top line variations in Africa and South America
13
Click
to on
addAfrica
title
Focus
Add Title
The engine of growth
14
New market added in Africa
•
Millicom has won tender for 3rd national license in Rwanda
•
New JV created between Millicom (87.5%) and local company
Marathon Corporation (12.5%) - paying US$ 60m for 15 year
license
•
Attractive market characteristics:
–
–
–
–
A small and densely populated country with 10m predominantly young inhabitants
Mobile penetration around 9%
2 market operators
Well developed road and grid infrastructure
•
Strategic position between existing markets of DRC and Tanzania
gives potential to create synergies
•
Launch of operations expected by end of 2009
15
Africa’s Growth Story – implementing Triple A strategy
Affordability - Accessibility - Availability
• Committed to bringing Africa to Millicom average margin
600,000
500,000
US $ ('000s)
400,000
300,000
200,000
100,000
0
2003
2004
2005
Revenue
2006
2007
9m 2008
EBITDA
16
Africa – Millicom’s fastest growing region
• 160 million people under license / 55% of Millicom’s potential market
• Weighted average penetration of 18.5%
• Seven countries: focus on leading positions
•
•
•
number 2 market position in Chad, Ghana, Mauritius and Senegal
number 3 in DRC and Tanzania
number 4 in Sierra Leone
• Africa accounted for 48% of capex and
22% of Group revenue in Q3 08
• Investment in ‘Triple A’ strategy – focus on:
brand - “Affordability”
distribution - “Accessibility”
network - “Availability”
17
Africa – Millicom’s fastest growing region
Capex and network expansion in Africa
USD (000’s)
386
340
264
111
Growth (%) Dec 06 – Sept 08
Cells
Chad
280%
DRC
214%
Ghana
132%
Mauritius
41%
Senegal
107%
Sierra Leone
102%
Tanzania
106%
18
Africa – Millicom’s fastest growing region
Network expansion in Ghana
2006
No. of sites
Network capacity
2007
2008
Dec 06
Dec 07
Dec 08
390
703
1,320
31,292
56,932
142,299
19
• Well positioned in attractive markets
• Strong balance sheet
• Short term positioning ensuring long term prospects
Quarterly Results
21
Group Revenue, EBITDA and Total Subscribers by
Cluster – Q3 2008
EBITDA
Revenue
7%
8%
17%
39%
22%
50%
31%
Total Subscribers
26%
13%
35%
28%
Central America
South America
Africa
24%
Asia
22
Central America
US$m
Q3 08
Q3 07 Growth
Revenues
340
300
13%
EBITDA
185
161
15%
EBITDA Margin
54%
54%
Total Subscribers*
(‘000)
10,846
7,404
46%
* Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest
23
South America
US$m
Q3 08
Q3 07
Growth
Revenues
273
215
27%
EBITDA
97
80
21%
EBITDA Margin
35%
37%
Total Subscribers*
(‘000)
7,192
5,305
36%
* Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest
24
Africa
US$m
Q3 08
Q3 07
Growth
Revenues
189
122
55%
EBITDA
62
34
85%
EBITDA Margin
33%
28%
Total Subscribers*
(‘000)
8,569
4,618
86%
* Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest
25
Asia
US$m
Q3 08
Q3 07
Growth
Revenues
67
50
34%
EBITDA
25
21
17%
EBITDA Margin
38%
42%
Total Subscribers*
(‘000)
3,981
2,625
52%
* Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest
26
Strong Underlying Growth for the Group
US$m
Q3 08
Q3 07
Growth
Revenues
869
686
27%
EBITDA
369
296
25%
EBITDA Margin
42%
43%
Total Subscribers* (‘000)
30,588
19,952
53%
Capex $m
328
354
-7%
* Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest
27
Strong Underlying Growth
Total Subscribers* ('000) Quarterly YoY Growth rate
33,000
100%
30,588
28,000
28,451
80%
26,184
23,000
18,000
70%
23,355
55%
19,952
56%
90%
60%
59%
58%
53%
50%
40%
13,000
30%
20%
8,000
10%
3,000
0%
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q3 2007 Growth rate excluding Colombia
* Total subscriber figures represent the total number of subscribers of mobile systems in which Millicom has an ownership interest
28
Strong Underlying Growth
Revenues (US$m) Quarterly YoY Growth rate
950
100%
850
90%
843
750
650
768
869
80%
801
70%
686
60%
50%
550
450
46%
41%
42%
40%
37%
350
30%
27%
20%
250
10%
150
0%
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q3 2007 Growth rate excluding Colombia
29
Strong Underlying Growth
EBITDA (US$m) Quarterly YoY Growth rate
90%
400
369
350
336
300
352
70%
307
296
60%
250
200
80%
50%
40%
44%
34%
150
36%
30%
34%
25%
100
20%
10%
50
0%
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q3 2007 Growth rate excluding Colombia
30
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to add title
Appendices
31
Balance Sheet
Asse ts
Se p. 30 2008 De c. 31 2007
Equity & Liabilitie s
Se p. 30 2008 De c. 31 2007
Non-curre nt asse ts
Intangible
Property, Plant and Equipment
Other non-current assets
Tota l non-curre nt a sse ts
412.8
2,654.2
135.5
3,202.5
467.5
2,066.1
128.7
2,662.3
Equity
Share capital & premium
Net profit for the period
Other reserves/P&L brought forward
Minority Interest
Tota l e quity
642.5
451.3
593.0
26.5
1,713.3
417.4
697.1
173.4
80.4
1,368.3
Curre nt
Cash and Cash Equivalents
Other current assets
Tota l curre nt a ssets
1,001.4
650.6
1,652.0
1,174.6
577.0
1,751.6
Liabilites
Non-curre nt lia bilite s
Debt and other financing
Other non-current liabilites
Tota l non-curre nt lia bilitie s
1,552.9
111.0
1,663.9
945.2
98.0
1,043.2
Curre nt liabilites
Corporate debt
Debt and other financing
Capex accruals and payables
Other current liabilites
Tota l curre nt lia bilite s
Tota l liabilitie s
Tota l e quity and liabilitie s
274.1
527.4
675.8
1,477.3
3,141.2
4,854.5
658.8
230.3
460.5
652.8
2,002.4
3,045.6
4,413.9
Tota l a sse ts
4,854.5
4,413.9
32
Quarterly Capex
400
350
300
250
200
150
100
382
354
302
Q3 07
Q4 07
328
265
Q1 08
Q2 08
Q3 08
Total Capex (USD m)
33
Quarterly Depreciation
150
105
110
124
136
87
100
50
0
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Total Depreciation (USD m)
34
Quarterly Debt
1,834
1,900
1,800
1,805
1,735
1,827
1,642
1,700
1,600
1,500
1,400
1,300
1,200
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Total Debt (USD m)
35
Quarterly Interest expense
72
80
70
60
31
43
44
42
50
41*
40
30
20
42
10%
10
9%
28
10%
10%
9% 14**
0
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Total Interest expense (USD m)
Simple effective rate
* Cost of early redemption of HY Bonds
** Due to change of estimate of HY notes early redemption costs
36
Q3 08 Market Overview – by Cluster
Millicom Clusters
Central
America
South
America
Africa
Asia
Total
Market Overview
Population (million)*
28
61
160
42
291
Mobile Penetration**
77.3%
76.1%
28.6%
26.9%
37.6%
Operational Data
Total Subscribers
10,846,076
7,191,863
8,568,926
3,980,685
30,587,550
7,552,128
7,191,863
8,370,749
3,124,713
26,239,453
2,891
3,131
2,164
1,678
9,864
143,472
128,277
160,693
48,589
481,031
Revenue
339,773
273.418
189,226
66,691
869,108
EBITDA
184.876
96,596
62,452
25,061
368,985
Attributable Subscribers
Cell sites (Dec-07)
Outlets (Dec-07)
Key Financials (Attributable)
EBITDA Margin
54%
35%
33%
38%
42%
* Population figures - CIA The World Fact Book (2007 est.)
** Penetration based on interconnect
37
Market Overview – by Country
Latin America
Shareholding
License Period (yrs)
Date of Expiry
Central America
South America
El Salvador
Guatemala
Honduras
Bolivia
Colombia
Paraguay
100.0%
55% (p)
66.7% (p)
100.0%
50% + 1 share
100.0%
10 yrs fr 2003
5 yrs renewal
20 yrs fr 1998 15 yrs fr 2003 25 yrs fr 1996 20 yrs fr 1995
2018
2018
2021
2015
2013
2011
7
13
8
9
44
7
GDP per Pop (PPP) $
5,200
5,400
3,300
4,400
7,200
4,000
Mobile Penetration
91%
72%
73%
40%
84%
75%
One of Five
One of Three
One of Four
Two of Three
Three of Three
One of Four
46%
43%
72%
33%
9%
54%
America Movil
Personal
Telefonica
America Movil
Market Overview
Population (M)
Market Position
Market Share
Other Operators
America Movil America Movil America Movil Movil de Entel
Telefonica
Telefonica
Digicel
Tegucel
NuevaTel
Digicel
Vox
Intelfon
Tigo
Yes
Yes
Yes
Yes
Yes
Yes
Per Second Billing
Feb-07
Feb-07
Feb-07
Dec-05
Not launched
Dec-05
E-PIN
Sep-05
Aug-05
Oct-05
Apr-07
Dec-07
Nov-05
2,455,389
4,260,451
4,130,236
1,312,851
3,275,605
2,603,407
Cell sites at y-e 06
368
879
458
198
1,509
259
Cell sites at y-e 07
Pop coverage at y-e 07
634
86%
1356
86%
901
80%
367
64%
2,309
70%
455
87%
Operational Data
Total Subscribers
(p): proportionally consolidated
38
Market Overview – by Country
Africa
Chad
DRC
Ghana
Mauritius
Senegal
Sierra Leone
Tanzania
Shareholding
87.5%
100.0%
100.0%
50% (p)
100.0%
100.0%
100.0%
15 yrs fr 2000*
20 yrs fr 1998
15 yrs fr 2000
25 yrs fr 2007
License Period (yrs)
Date of Expiry
10 yrs fr 2004 20 yrs fr 1997 15 yrs fr 2004
2014
2017
2019
2016
2018
2015
2032
10
67
23
1
13
6
39
GDP per pop (PPP) $
1,600
300
1,400
11,900
1,700
800
1,100
Mobile Penetration
11%
7%
38%
71%
39%
12%
21%
Two of Two
Three of Four
Two of Five
Two of Three
Two of Two
Four of Four
Three of Five
40%
19%
31%
42%
38%
19%
25%
MTN
Cellplus
France Telecom
Celtel
Vodacom
Comium
Celtel Tanzania
Africell
Zantel
Market Overview
Population (million)
Market Position
Market Share
Other Operators
Celtel Tchad Celtel Congo
Vodacom
CCT
Ghana Telecom Mahanagar Tele.
H. Whampoa
Zain
Tigo
TTCL Mobile
Yes
Yes
Yes
No
Yes
Yes
Yes
Per Second Billing
Sep-08
Jan-07
Jan-05
Dec-06
Nov-05
Nov-06
Sep-04
E-PIN
Oct-05
Jan-07
Nov-05
Jul-06
May-05
Feb-07
Sep-06
442,313
951,487
2,741,122
396,355
1,821,713
131,058
2,084,878
Cell sites at y-e 06
51
155
278
139
281
57
404
Cell sites at y-e 07
152
383
452
181
383
76
537
Pop coverage at y-e 07
16%
38%
61%
92%
80%
21%
50%
Operational Data
Total Subscribers
(p): proportionally consolidated
* Amended and extended by one year in 2006
39
Market Overview – by Country
Asia
Ca mbodia
La os
Sri La nka
58.4% (p)
74.1%
100.0%
35 yrs from 1996
20 yrs from 2002
10 yrs fr 2008*
2031
2022
2018
14
7
21
GDP per pop (PPP) $
1,800
1,900
4,100
Mobile Penetration
24%
24%
30%
One of Four
Three of Four
Two of Four
64%
19%
27%
CamShin
Lao Telecom
Dialog
Shinawatra
ETL
Mobitel
Appliphone
LAT Mobile
Hutchison Telecom
No
Yes
Yes
Per Second Billing
Jan-07
Not launched
Dec-07
E-PIN
Jan-05
Nov-05
Dec-06
2,058,861
549
866
77%
199,281
109
175
55%
1,722,543
440
637
64%
Shareholding
License Period (yrs)
Date of Expiry
Marke t Overview
Population (million)
Market Position
Market Share
Other Operators
Tigo
Ope ra tional Data
Total Subscribers
Cell sites at y-e 06
Cell sites at y-e 07
Pop coverage at y-e 07
(p): proportionally consolidated
* Already renewed
40
Amnet
Financial performance FYE
2005
2006
2007
6mths
30/6/2008
Revenue
80,294
121,259
142,875
79,617
Adjusted EBITDA*
34,807
48,592
65,381
36,307
EBITDA margin
43.3%
40.1%
45.8%
45.6%
PBT
-6,549
13,575
27,357
18,046
Tax
-4,898
-5,395
-8,132
-4,758
PAT
-11,447
8,180
19,225
13,288
127,679
157,990
133,771
138,599
69,162
59,296
47,431
40,305
-10,779
26,852
38,512
49,324
US$’000
Income statement
Balance sheet
Total assets
Net debt
Net assets
GROWTH POTENTIAL
•
Amnet has grown rapidly in last 3 years
– 33% 2005-07 CAGR growth in revenue
– 37% 2005-07 CAGR growth in EBITDA
Source: Amnet accounts 2005 – 2007 ; Amnet management accounts 6 months to 30 June 2008
Note: *EBITDA is adjusted by adding back install activation costs to align the accounting policy
with peers
CAPITAL EXPENDITURE
•
Amnet network already extensive
•
Capital expenditure in 2007 equivalent to
US$ 17.3m, excluding installation costs
(12% of sales)
– MIC budgeting for capex of approx.
15% of sales
41
Exchange Rate Analysis
Average YTD
Exchange Rates per Dollar Sep-08
Sep-07
Bolivia/Boliviano
7.32
7.90
Colombia/Peso
1897.87 2104.56
Ghana/Cedi
10459.27 9287.16
Guatemala/Quetzal
7.56
7.71
Honduras/Lempira
18.90
18.90
Laos/Kip
8936.50 9749.50
Mauritius/Rupee
27.45
31.84
Paraguay/Guarani
4247.50 5123.50
Senagal & Chad/Franc
433.07
486.70
Sierra Leone/Leoni
2972.72 2984.76
Sri Lanka/Rupee
107.92
110.50
Tanzania/Shilling
1175.96 1260.83
EU/Euro
0.66
0.74
% var
-7%
-10%
13%
-2%
0%
-8%
-14%
-17%
-11%
0%
-2%
-7%
-11%
Closing
Sep-08
Sep-07 % var
7.02
7.72 -9%
2190.70 2029.76
8%
11595.00 9523.81 22%
7.47
7.79 -4%
18.90
18.90
0%
8651.00 9735.00 -11%
28.29
30.53 -7%
3990.00 5050.00 -21%
465.78
461.24
1%
2981.20 2983.63
0%
108.15
113.44 -5%
1160.00 1233.05 -6%
0.71
0.70
1%
42
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 could differ materially from those
anticipated in the forward-looking statements depending on various important factors.
Please refer to the documents that Millicom has filed with the U.S. Securities and
Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended,
including Millicom’s most recent annual report on Form 20-F, for a discussion of certain
of these 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.
MILLICOM INTERNATIONAL CELLULAR
43