Millicom International Cellular S.A. (STO: MIC) (NASDAQ:
MICC)
Key highlights of Q1 2016 (i)
· Revenue of $1.53 billion - organic service revenue up 4.1%
(ii)
· Adjusted EBITDA (iii) at $550 million, organic growth of
7.0%
· Adjusted EBITDA margin at 36.0% - increased by 1.8 percentage
points
· LTE launch in Paraguay, DTH launch in Colombia
· Disposal of DRC mobile business completed
· Refinancing of the SEK bond – maturity profile extended,
improved terms
Key financial indicators
$m
Q1 2016 Q1 2015
% change Revenue 1,528 1,670 (8.5%) Organic growth
2.1% 9.3% Service revenue 1,435 1,534 (6.4%) Organic growth 4.1%
5.1% Adjusted EBITDA 550 571 (3.6%) Adjusted EBITDA margin 36.0%
34.2% Capex (iv) 195 186 4.7% Net debt 4,419 3,941 12.1% Adjusted
EPS ($) (v) 0.22 0.38 (42.1%)
· Latam: Q1 reported organic revenue growth of 0.7% to $1,308
million due to lower handset sales whilst service revenue grew 2.9%
as data continued to grow strongly partially offset by competitive
intensity on mobile pricing and slower fixed B2B in Colombia, as
well as some seasonal effect from Easter holidays falling in Q1
this year. The cable rollout continued strongly with a further
132,000 new HFC homes passed in the quarter. EBITDA was
$525 million including $8 million one-off charges
relating to a bad debt expense.
· Africa: Q1 reported organic revenue growth of 11.9% to $220
million with service revenue growing 12.1%. All countries with the
exception of Rwanda reported double digit growth. Benefiting from
actions to improve margins, EBITDA grew strongly, 11.8% on Q4 and
13.5% year-on-year to $57 million at a margin of 25.8%. DRC is
now treated as a discontinued operation.
· Corporate costs: Reduction to $41 million compared to $45
million in Q4 15 and $59 million in Q1 15.
(i) This financial information presented in this earnings
release is with Guatemala (55% owned) & Honduras (66.7% owned)
as if fully consolidated. See page 16 for reconciliation with IFRS
numbers. The comparative 2015 financial information in this
earnings release has been represented as a result of the
classification of our operations in DRC as discontinued operations
(in accordance with IFRS 5)
(ii) Organic growth represents year-on year-growth in local
currency (includes regulatory changes) Service revenue is defined
as Group revenue excluding telephone & equipment sales
(iii) Adjusted EBITDA is defined as reported EBITDA
excluding restructuring and integration costs and other one-off
items – See page 7 for reconciliation
(iv) Balance sheet capital expenditure, excludes spectrum
and license costs
(v) Basic EPS adjusted for non-operating items see page 15
for reconciliation
CEO’s Statement
Luxembourg, 26 April 2016
“We are squarely focused on improving operational leverage and
delivering profitable and responsible growth. During the first
quarter of 2016, organic adjusted EBITDA grew by 7.0% ahead of a
4.1% increase in service revenue, in line with our outlook for
2016. This quarter has seen a continuation of the macro headwinds
which we forecast earlier in the year and this economic environment
has continued to significantly impact our headline performance.
However, it is pleasing to see greater resilience and performance
improvements in our revenue mix, both by geography and by business
unit.
In our Mobile business, growth continued driven by data uptake.
Our focus on “volume to value” has delivered rapid improvements in
data profitability. We will continue to drive our commercial
strategy to optimise investments in 4G.
Momentum is robust in Cable, with the Home segment growing
organically by 13.6%. The expansion of our HFC footprint continues
as we added 132,000 homes passed, 31,000 new homes connected and
117,000 RGUs. Fixed B2B revenue also delivered a 7.3% increase
although this was slower than in Q4 as we saw delays in new
contract signings in Colombia. However, we continue to see this as
a very promising sector and we have opened new data centres in
Paraguay, Tanzania, Ghana and Chad with additional ones coming up
in Colombia and Senegal. This will allow us to expand our services
to more business customers and to further leverage the Tigo
network.
In Latin America revenue grew by 0.7%, reflecting a significant
decline in handset sales in Colombia as new third party channels
were opened. Service revenue growth was stronger at 2.9% but held
back by slightly slower growth in Colombia. Paraguay demonstrated
concrete signs of revenue recovery and margin stability. We have
further strengthened our service offer in Paraguay with a bolt-on
cable acquisition, which is subject to regulatory approval, and
launched LTE.
In Africa, we had a strong quarter as actions to improve our
profitability started to take effect. Revenue grew almost 12% with
Ghana growth accelerating and Chad recovering. We also saw a
recovery in adjusted EBITDA which, excluding DRC, increased 11.8%
compared to Q4 15. We opened our Fintech centre of excellence in
Tanzania to capitalize on our leadership of Mobile Financial
Services in the country and announced full mobile money
interoperability – a world first.
We continue to deliver reductions in our cost base at all levels
of the business and this quarter we once again brought down
corporate costs from $59 million a year ago to $41 million, and
also commenced a number of transformation activities and
outsourcing projects at the local level to focus on cost control
and optimizing the way we work.
Meanwhile, our investment strategy is concentrated on our most
promising markets and on investments which add value to our core
business. Whilst we have also set about rebalancing the capital
structure through decisive steps to strengthen our balance sheet
and reorientate our portfolio. Last week we completed the sale of
our mobile business in DRC, whilst the week before we refinanced
our Swedish bond on improved terms. We now have only around $400
million of debt maturing before 2018 and sit on a comfortable level
of liquidity.
The Nomination Committee announced proposals for a new Chairman
and new Members of the Board of Directors and we welcomed our new
Chief Human Resources Officer, Daniel Loria, into the group.
Looking forward, we will continue to execute our strategy to
build The Digital Lifestyle for our customers and monetise it for
our shareholders and staying focused on improving profitability. We
are driving our cash flow through increasing margins and lower
capex whilst being disciplined in our capital allocation. We are
well positioned to use our infrastructure, our network, our talent
and our customer understanding to harness the strong fundamentals
presented in our markets. ”
Mauricio Ramos
CEO, Millicom
Outlook
Millicom outlook for 2016 remains:
Basis Outlook Service revenue (a) To
grow mid-single digit Adjusted EBITDA (b) To grow mid to
high-single digit Capex (c) Between $1.15 and $1.25 billion
(a) Service revenue is Group revenue excluding telephone and
equipment sales
(b) Adjusted EBITDA excludes restructuring and integration costs
and other one-off items
(c) Capex excludes the impact of spectrum and licence costs
The outlook for 2016 is based on constant currency, at a
constant perimeter with Guatemala and Honduras fully consolidated
and on our current assessment of the emerging markets macroeconomic
outlook. For service revenue this is a 2015 currency adjusted basis
(using February 2016 exchange rates) of $5.73 billion and for
Adjusted EBITDA a currency adjusted basis of $2.09 billion.
Shareholder remuneration
At the AGM to be convened on 17 May 2016, the Board will propose
an ordinary dividend payment of $2.64 per share.
We reiterate our dividend policy for no less than $2 per share,
and at least 30% of adjusted net profit (vi).
(vi) Adjusted net profit is defined as reported net profit
excluding non-operating items and similar items classified under
‘other non-operating income (expenses)’.
Guatemala and Honduras
On 31 December 2015, the existing call options with local
partners lapsed and under IFRS 10 and 11, Millicom deconsolidated
its investments in Comcel (Guatemala) and Celtel (Honduras).
From 31 December 2015 onwards, Millicom accounts for its
investments in Comcel and Celtel under the equity method and thus
reports its share of the net income of each of these businesses in
the income statement in the caption “Income (loss) from joint
ventures” starting 1 January 2016. For the purpose of comparison
and to provide users of this report a full understanding of the
financial condition of the Group, the financial information
presented in this earnings release is and will continue to be as if
the Honduran and Guatemalan businesses continue to be fully
consolidated, in line with our segmental reporting established in
accordance with IFRS 8.
Further information on the accounting implications of the
deconsolidation are provided in the notes to the financial
statements as of 31 December 2015.
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 Tuesday 26April 2016. For those
unable to attend, Millicom will also provide a conference call.
Dial-in numbers: + 46 (0) 850 65 3931, + 352 2088 1429, + 44 203
427 1920, +1 646 254 3374. Access code: 6047515
A live audio stream of the analyst presentation 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
8 Feb 2016: Millicom to sell its Democratic Republic of Congo
business to Orange
15 Feb 2016: Millicom signs agreement to acquire TV Cable Parana
in Paraguay
11 Mar 2016: The Nomination Committee proposes new Board
Directors
30 Mar 2016: Millicom appoints Daniel Loria as EVP of HR
Business news
12 Jan 2016: Tigo Paraguay to offer customers 4G internet
accessible on all enabled smartphones
19 Jan 2016: Tigo announces the construction of Paraguay’s first
UPTIME Tier 3 Certified Data Centre
18 Feb 2016: Airtel, Tigo and Vodacom agree on mobile money
interoperability in Tanzania
Financial news
8 Jan 2016: Fitch affirms Millicom at BB+
10 Feb 2016: Millicom Q4 and FY 2015 results
29 Feb 2016: Millicom and Comcel senior ratings maintained at
Ba1 by Moody’s, with negative outlook
Subsequent events
4 Apr 2016: Publication of Millicom 2015 Annual Report and CR
…
12 Apr 2016: Millicom announces tender offer for its 2017 SEK
bond
13 Apr 2016: The Nomination Committee proposes additional new
Board Director
18 Apr 2016: Millicom announces success of its Early Tender
Offer and new bond placement
21 Apr 2016: Millicom announces closing of DRC sale to
Orange
Agenda
17 May 2016: 2016 AGM
21 Jul 2016: Q2 16 results
25 Oct 2016: Q3 16 results
Risks and uncertainty factors
Millicom operates in a dynamic industry characterized by rapid
evolution in technology, consumer demand, and business
opportunities. Combined 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 2015 Annual
Report
(http://www.millicom.com/media/4562100/full-annual-report-millicom-2015.pdf).
In addition to the information in the 2015 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 63 million customers. Founded in 1990, Millicom
International Cellular SA is headquartered in Luxembourg and listed
on NASDAQ OMX Stockholm under the symbol MIC. In 2015, Millicom
generated revenue of USD 6.7 billion and EBITDA of USD 2.2
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.
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Millicom International Cellular S.A.Press EnquiriesTabitha
Aldrich-Smith, Interim Communications DirectorTel: +352 277 59084
(Luxembourg) / +44 7971 919 610press@millicom.comorInvestor
RelationsNicolas Didio, VP, Head of Investor RelationsTel: +352 277
59125 (Luxembourg) / +44 203 249 2220investors@millicom.com
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