Regulatory News:
Millicom (NASDAQ:MICC) (STO:MIC):
Key highlights of Q2 2015
· Revenue of $1.70 billion, up 17.8%
· Excluding UNE, Group revenue of $1.43 billion - organic
growth(a) of 9.0%,
· Adverse currency movements impact growth
· Excluding UNE, reported revenue 1.3% lower
· EBITDA at $561 million – margin of 32.9%
· Service revenue margin of 35.7%
· Excluding UNE, EBITDA of $480 million – 33.6% margin
· Reduction of Group corporate costs for the fourth consecutive
quarter
· Increased synergies identified in Colombia business – upgraded
NPV from $600 million to $750 million
· Strong quarter for mobile net adds: mobile customer base up
1.9 million
· Strategy refocused on monetizing the Digital Lifestyle, cable
expansion and profitable growth
Key financial indicators
$m Q2 2015 Q2 2014 %
change H1 2015 H1 2014 %
change Revenue 1,704 1,447 17.8 3,413 2,852 19.7 Organic
revenue growth ( a ) 9.00% 9.00% 9.40% 8.80% EBITDA 561 479 17.2
1,126 957 17.7 EBITDA margin 32.9% 33.10% 33.00% 33.50% Capex 290
287 1.3 480 449 6.9 Net debt 4,281 3,047 40.5 4,281 3,047 40.5
Adjusted EPS ($)(b) -0.05 0.27 0.21 0.62
· Latam: Revenue at $1,464 million grew by 21.7% (7.7% organic
ex UNE) compared to Q2 2014 and 1.6% up on Q1 2015. EBITDA of $564
million was up 16.1% (11.1% organic ex UNE) on strong performance
from Colombia, Guatemala and Bolivia. Latam EBITDA grew 1.2%
sequentially. Mobile data (+37%) and Cable (+25%) were the main
growth drivers respectively supported by smartphone adoption and
demand for fixed broadband and DTH.
· Africa: Revenue grew to $240 million, an organic growth rate
of 15.3% on Q2 2014 and 2.4% up on Q1 2015. EBITDA was $52 million,
a year on year fall of 17.5%, primarily on difficult trading
conditions in Chad and adverse currency movement particularly in
Tanzania. Excluding the currency impact, EBITDA was 1.8% lower than
in the same quarter last year.
· Corporate Costs: A continued reduction in the corporate costs
to $55 million in Q2 compared to $59 million in Q1 and $73 million
in Q2 2014.
(a) Organic growth represents year-on year-growth in local
currency (excludes the impact of exchange rate changes) and
excludes UNE (b) Basic EPS adjusted for non-operating items see
page 14 for reconciliation
President’s Statement
Good performance, focus on profitable growth
Stockholm, 21 July 2015
“Millicom is a growth story and in the second quarter we
delivered strong underlying organic revenue and EBITDA, which rose
9.0% and 9.3% respectively. We continue to demonstrate excellent
momentum within our key markets. Mobile saw growth driven by data
whilst both Cable and MFS performed very strongly.
Smartphone adoption is our winning card and drives increasing
levels of data usage. In this quarter, we added 1.9 million new
mobile customers and we now have a total of almost 60 million
mobile subscribers. Yet barely more than just over a quarter of our
customers have switched to smartphones. So our prize is to continue
to expand our customer base and convert customers who have yet to
upgrade to smartphones and data packages.
In our fast-growing Cable business, we continue to see very
positive trends in all key metrics and importantly in the adoption
of multiple services per household. For example, more than half of
our households now take two or three services from us. We closed Q2
with over 7.2 million homes passed and 4.9 million cable RGUs. And
we have only just begun. We are swiftly seizing the opportunity to
grow to 10 million homes passed in Latin America over the next
three years, largely through organic growth, to become the second
largest cable operator in the region.
Since joining Millicom I have been impressed by the range of
Digital Lifestyle services we offer to our customers. For instance,
Mobile Financial Services is another key component of our Digital
Lifestyle offer, strengthening customer loyalty whilst supporting
wider financial inclusion targets. In this quarter, we reached the
milestone of more than ten million MFS customers.
We have some excellent businesses. The Latin America businesses
move from strength to strength; we saw strong performances from
Colombia, Guatemala and Bolivia which drove another quarter of
headline revenue growth. Further progress has been made in the
recovery in Paraguay returning to revenue and EBITDA growth
although, like many of our businesses, this was adversely affected
by currency movements.
In Africa, we focus on growing both volume and value. Underlying
revenues have shown further improvements and there is positive
momentum, although we saw challenging trading conditions in some
markets, especially Chad where the security situation and economic
condition has deteriorated. In this quarter we agreed to acquire an
85% stake in Zanzibar’s leading mobile operator, complementing our
existing business. This acquisition will strengthen our overall
position in Tanzania, delivering further growth prospects for the
Group. We are currently awaiting regulatory approval on this
transaction.
Despite strong underlying growth, there were severe foreign
exchange devaluations across many of our countries and this
negatively impacted our reported growth. Whilst this is a fact of
life working in emerging markets, Q2 was particularly severe,
reducing like for like revenue growth by more than 10%. We are
taking firm actions to mitigate the impact of the currency
fluctuations by continuing to focus on operational efficiencies and
tightly managing the Group’s margins, which is why we were still
able to post positive like for like EBITDA growth despite the
currency impact on our revenues. We have also continued our focus
on reducing corporate costs, which fell for the fourth consecutive
quarter.
Having completed my first 100 days as CEO I am convinced we are
on the right track. The Digital Lifestyle is a great concept and we
have articulated it further by more clearly defining an inspiring
vision: to empower our customers to advance and enjoy life. We have
mapped out a clear and detailed operational strategy for how we
will achieve our goals, converting potential into profits and
increasing the cash flow.
We now have a roadmap to focus on two phases of opportunity in
our fast growth emerging markets; building customer focused mobile
products and services that can be monetised; and expanding our
cable footprint to capture the emerging opportunity.
Our strong and improving business performance demonstrated in
this period and throughout the first half of the year is testament
to the drive and commitment of our people.
Millicom couldn’t be better placed to provide every aspects of
the Digital Lifestyle to our customers who have an ever-expanding
appetite and enjoyment of innovative mobile, social and content
services. This opportunity, combined with our clear strategic plan
to build and monetise the Digital Lifestyle, will deliver
profitable growth. We have the firm foundations in place to
continue to deliver customer and shareholder value.”
Mauricio Ramos
CEO, Millicom International Cellular S.A.
2015 guidance confirmed, adjusted for FX
We have rebased the guidance(1) provided in February 2015 to
reflect the impact of the 7% devaluation in the currency basket.
With the exception of currency impact, the group’s guidance remains
unchanged:
FX 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 costs.
Honduras call option
On 19 June 2015 Millicom reached agreement with its local
partner to extend until 31 December 2015 Millicom’s five year
unconditional call option to acquire the remaining 33.3% of the
Honduran business and in return extend the local partners
conditional put option over the 33.3% stake for the same period. As
a result Millicom will continue to consolidate the Honduras
business (see Note 3 of the IAS 34 Interim Consolidated Financial
Statements).
If the call option is not exercised or extended beyond its 31
December 2015 expiry date, and in the absence of any other changes
to the shareholders agreement with our local partner, the Honduran
business will be deconsolidated and accounted for as a joint
venture in 2016. This would require Millicom’s 66.7% investment in
Honduras to be revalued to fair value.
The deconsolidation would not be expected to have a material
impact on Millicom’s share of the results of the Honduran business,
receipt of dividends, or covenant compliance.
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).
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 21July 2015. Dial-in
numbers: + 46 (0) 853 526 408, + 352 342 080 8654, + 44 203 427
1904, +1 646 254 3360. Access code: 5391811
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
2 Apr 2015: Publication of our 2014 Corporate Responsibility
Report
13 Apr 2015: Nomination Committee proposal for the Board
29 Apr 2015: Millicom statement about proposed merger with
Telecable in Costa Rica
15 May 2015: 2014 Millicom Annual Meeting of Shareholders
5 Jun 2015: Millicom signs agreement to acquire Zanzibar
Telecom
9 Jun 2015: Cablesur acquisition approved by Conatel in
Paraguay
Business news
24 Apr 2015: 4G goes live in Tanzania
Financial news
20 Apr 2015: El Salvador 8% Senior Notes Buy Back 22 Apr 2015:
Publication of Q1 2015 results 24 May 2015: Distribution of the
$2.64 dividend
Subsequent events
1 Jul 2015: Two LIH ventures (Kanui and Tricae) merged into
Global Fashion Group
Agenda
22nd Oct 2015: Q3 2015 results
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 56 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.
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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MillicomPress Enquiries:Tabitha Aldrich-Smith, Interim
Communications DirectorTel: +352 277 59084 (Luxembourg) / +44 7971
919 610 / press@millicom.comorInvestor Relations:Nicolas Didio,
Director, Head of Investor RelationsTel: +352 277 59125
(Luxembourg) / +44 203 249 2220 / investors@millicom.com
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