Key highlights of Q3 2015
· Emerging market currency volatility intensified
· Revenue of $1.64 billion, down 2.0%
· Impact from Colombia FX
· Organic growth(a) of 7.2%
· Service revenue growth of 5.8%
· EBITDA at $560 million, up 2.1% – margin of 34.1%
· Organic EBITDA up 7.9%(a)
· Ex-UNE, margin up 0.6% year-on-year, the third consecutive quarter of
improvement
· Mobile customer base exceeds 60 million
· Cable footprint increases by 243,000 to 7.5 million
Key financial indicators
$m Q3 2015 Q3 2014 % change 9M 2015 9M 2014 % change
Revenue 1,641 1,675 (2.0) 5,054 4,527 11.6
Organic 7.2% 8.6% 8.6% 8.7%
revenue
growth (a)
EBITDA 560 549 2.1 1,687 1,506 12.0
EBITDA margin 34.1% 32.8% 1.3 ppt 33.4% 33.3% 0.1 ppt
Capex 351 311 12.8 831 841 (1.3)
Net debt 4,268 4,187 1.9 4,268 4,187 1.9
Adjusted EPS 0.17 0.79 (78.0) 0.38 1.41 (72.8)
($) (b)
· Latam: Reported revenue declined 1.4% to $1,400 million mainly due to
currency movements and lower growth from mobile handset sales in Colombia.
Organic revenue grew 6.2%. EBITDA was $561 million, 0.6% higher than Q3 2014.
Excluding currency movements, EBITDA grew 3.8% year-on-year. Mobile data and
Cable were again the main growth drivers with revenue growth of 38% and 25%
respectively. Smartphone adoption increased 3.3 percentage points in the quarter
to 46.2% and demand for fixed broadband and DTH both grew at a healthy pace.
· Africa: Currency also affected Africa where reported revenue fell 5.3% to
$241 million. Adjusting for currency movements, organic revenue grew by 11.9%
which was 3.8% higher than Q2 2015. EBITDA was $48 million, a year-on-year fall
of 12.0% largely due to stronger currency movements in Tanzania and Ghana plus
continued difficult trading conditions in Chad. Excluding currency movements
EBITDA grew by 9.6%.
· Corporate Costs: Reduction in corporate costs to $50 million compared to $55
million in Q2 and $59 million in Q1.
(a)Organic growth represents year-on year-growth in local currency (includes
regulatory changes, excludes the impact of exchange rate changes and excludes
UNE)
(b) Basic EPS adjusted for non-operating items see page 14 for reconciliation
CEO’s Statement
Major milestones - Mobile reaches 60 million whilst Cable passes 7.5 million
homes
Stockholm, 22 October 2015
“The third quarter saw increased currency volatility across many emerging
markets. We experienced significant currency devaluations in some of our key
markets such as Colombia, Paraguay and Tanzania. However we made some solid
progress in converting our potential into profitable growth. Whilst reported
revenue was down 2.0% in US dollars the underlying organic growth was 7.2%.
EBITDA grew 2.1% in US dollars and 7.9% on an organic basis.
A major milestone was reached in Q3 when we passed the 60 million mobile
customers. Furthermore our brand tracker confirms our brand’s increasing
strength and affinity: Tigo is going from strength to strength, bringing the
internet to new customers, driving smartphone penetration and increasing data
consumption. Since the start of the year, we have added nearly 4 million new
mobile customers.
I am also pleased with the progress we are making in Home, our pay-TV, fixed
broadband and telephony business. We are bringing the digital lifestyle into
customers’ homes. Our target is to reach 10 million homes in the medium term.
This quarter, we delivered an accelerated cable build-out with 304,000 new homes
passed in HFC, nearly tripling that of the second quarter. We continued to add
new customers at a strong rate across our DTH and cable footprint with pay-TV
contributing most to the growth. One of our core strengths continues to be our
ability to provide relevant local content for customers. In Colombia we now
offer the local football league (“DIMAYOR”) on our fixed network and exclusively
on mobile via the Tigo Sports app.
This quarter, we saw mixed results from Colombia. On the one hand, the UNE cable
business accelerated its revenue growth based on higher average revenue per line
whilst good results from the integration plan were achieved. The Tigo mobile
business on the other hand continued to see a more challenging environment and
organic revenue growth slowed to 9% on changing consumer behaviour and price
competition.
In Africa, we have strengthened the management team with the appointment of
Cynthia Gordon, as Africa Division CEO. We have begun the roll out of a new
brand awareness programme across all our African markets to attract more
digitally active customers, increase smartphone sales and drive data
penetration. Tanzania is on the verge of a major milestone as it reaches 10
million customers and the World Bank recently recognized the country as the
global leader in mobile financial services, recognizing Tigo’s contribution to
this achievement.
As we grow, we have also continued to develop our social responsibility
strategy. In September we led the industry in creating a joint declaration to
champion Child Online Protection, hosting events in El Salvador and Costa Rica
in collaboration with UNICEF.
Looking towards the end of the year, we expect external market conditions to
become more challenging. Whilst we have not seen any significant slowdown in the
demand for our products and services as a result of currency volatility we saw
over the summer, GDP growth forecasts were dampened across many of the countries
we operate in. We therefore remain focussed on protecting margins and improving
cashflow generation. In this respect I am pleased to note that corporate costs
have declined for the fifth consecutive quarter. Further as a result of our
actions, whilst we don’t have full visibility on the revenue growth because of
currency volatility, we are comfortable with the EBITDA guidance range we
provided in July and now expect capital expenditure to be at the lower end of
the guidance range.
In addition, as noted in the press release we issued yesterday, we have self
-reported to relevant authorities potential improper payments made on behalf of
our joint-venture operations in Guatemala. We will cooperate fully with the
authorities and are dedicated to ensuring that we resolve this matter as swiftly
as possible and in the most appropriate manner. While we cannot speculate as to
the possible outcome or the potential impact on our business, we are currently
thoroughly reviewing and assessing strategic options and have initiated a
thorough external review of our compliance program, supported by the Executive
Committee and our Compliance and Business Ethics team, to further strengthen the
practices we already have in place.”
Mauricio Ramos
CEO, Millicom International Cellular S.A.
2015 guidance
In July, we rebased the guidance(1) provided in February 2015 to reflect the
impact of devaluation in the currency basket. No further changes to guidance
have been made despite further significant currency volatility. With the
exception of currency impact, the group’s guidance remains unchanged:
Guidance with FX rates prevailing in July 2015
Revenue Between $6.8 and $7.2 billion
EBITDA Between $2.12 and $2.26 billion
Capex(2) Between $1.25 and $1.35 billion
(1) At constant foreign exchange rates and constant perimeter. July guidance
rebased revenue from $7.1 billion to $7.5 billion and EBITDA from $2.20 billion
to $2.35 billion. Capex remains unchanged as most capex is in US dollars.
(2) Capex excludes spectrum and license cost.
Honduras & Guatemala call and put options
No agreements have been made with our partners in Honduras and Guatemala to
extend the call and put options. It is now the Board’s view that both these
options will expire on 31 December 2015 unexercised. One consequence of the
lapse and non-renewal is that under IFRS 10 and 11 we will be required to
account for the group’s operations in Honduras and Guatemala as joint ventures
from 31 December 2015.
This would require Millicom’s 66.7% investment in Honduras and 55% investment in
Guatemala to be revalued to fair value.
The deconsolidation of Honduras and Guatemala would have minimal impact on the
Group’s net income, dividends, and covenant compliance. See additional
information on page 16 and in the IAS 34 statements.
UNE purchase price allocation (“PPA”) adjustment
During the three month period ended 30 September 2015, the purchase accounting
for the acquisition of UNE was finalised. Compared to the provisional values
recorded on date of acquisition, the property, plant and equipment was revalued
to $1,571 million (from $1,417 million), mainly as a result of the reassessment
of economic lives of the network and recognition of assets under finance leases.
At acquisition date, finance lease liabilities of $118 million were recorded
($71 million at 30 September 2015), provisions of $18 million related to onerous
contracts of the 4G business, and deferred tax liabilities of $9 million related
to the fair value adjustments. Goodwill increased by $10 million. The effects of
the above mentioned adjustments and related to the first and second quarter of
2015 were an $8 million increase in the EBITDA of this quarter.
Conference call details
A presentation and conference call to discuss results of the quarter will take
place at 14.00 Stockholm / 14.00 Luxembourg / 13.00 London / 08.00 New York, on
Thursday 22October 2015. Dial-in numbers: + 46 (0) 858 536965, + 352 342 080
8654, + 44 203 427 1904, +1 718 971 5738. Access code: 3892654
A live audio stream of the conference call can also be accessed at
www.millicom.com. Please dial in / log on 10 minutes prior to the start of the
conference call to allow time for registration. Slides to accompany the
conference call are available at www.millicom.com.
Significant events of the quarter
Corporate news
19 Aug Tigo and WorldRemit enable easy
2015: international money transfers for the
Tanzanian diaspora
26 Aug Millicom appoints Cynthia Gordon as EVP, CEO
2015: Africa Division
Business news
30 Jul Tigo El Salvador awarded "Best Mobile
2015: Service for Financial Inclusion 2015"
11 Sep Tigo DRC launched free Facebook
2015: campaign
21 Sep Agreement on the deployment of TiVo
2015: products on our pay-TV platform in
Latam
22 Sep Tigo Business forum in Guatemala with
2015: 1,300 business leaders
23 Sep UNE and Tigo ranked respectively 8th
2015: and 10th most valued brand in Colombia
28 Sep TigoSports app launched in Colombia
2015:
Financial news
21 Jul Q2 15 results
2015:
31 Jul Successful completion of consent
2015: solicitation on 2020 and 2021 US$
bonds
Subsequent events
6 Oct New Nomination Committee is announced
2015:
6 Oct Millicom receives a 24% stake in leading African towers company (HTA)
2015:
19 Oct Tigo launches online remittance service in UK, European Union and
2015: Canada
20 Oct Tigo Rwanda is first to offer customers 4G internet accessible on all
2015: enabled smartphones
20 Oct Mobile licence renewed in Bolivia for 15 years
2015:
21 Oct Millicom reports to authorities potential improper payments on behalf
2015: of its Guatemalan joint venture
Agenda
10 Feb 2016: FY 2015 results
26 Apr 2016: Q1 2016 results
13 May 2016: 2015 AGM
Contacts
Press Enquiries
Tabitha Aldrich-Smith, Interim Communications Director
Tel: +352 277 59084 (Luxembourg) / +44 7971 919 610 / press@millicom.com
Investor Relations
Nicolas Didio, Director, Head of Investor Relations
Tel: +352 277 59125 (Luxembourg) / +44 203 249 2220 / investors@millicom.com
Risks and uncertainty factors
Millicom operates in a dynamic industry characterized by rapid evolution in
technology, consumer demand, and business opportunities. Combine with a focus on
emerging markets in various geographic locations, the Group has a proactive
approach to identifying, understanding, assessing, monitoring and acting on
balancing risks and opportunities. For a description of risks and Millicom’s
approach to risk management, refer to the 2014 Annual Report
(http://www.millicom.com/media/2379621/Millicom-Annual-Report-2014.pdf). In
addition to the information in the 2014 Annual Report and the information
provided in this release, please refer to Millicom’s press release, dated
October 21, 2015, entitled “Millicom reports to authorities potential improper
payments on behalf of its Guatemalan joint venture.” At this time, Millicom’s
investigation remains on-going, and Millicom cannot predict the outcome or
consequences of this matter.
Millicom is a leading telecom and media company dedicated to emerging markets in
Latin America and Africa. Millicom sets the pace when it comes to providing
innovative and customer-centric digital lifestyle services to the world’s
emerging markets. The Millicom Group employs more than 16,000 people and
provides mobile services to over 60 million customers. Founded in 1990, Millicom
International Cellular SA is headquartered in Luxembourg and listed on NASDAQ
OMX Stockholm under the symbol MIC. In 2014, Millicom generated revenue of USD
6.4 billion and EBITDA of USD 2.1 billion.
This press release 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 forward-looking statements depending on
various important factors, including those included in this release.
All forward-looking statements in this press release 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., and 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.
Major milestones - Mobile reaches 60 million whilst Cable passes 7.5 million homes
| Source: Millicom International Cellular S.A.
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