Millicom International Cellular: Cable Expansion Accelerating Q3 2018 Highlights (i)

Millicom International Cellular: Cable Expansion Accelerating Q3 2018 Highlights (i)

PR Newswire

LEUDELANGE, Luxembourg, Oct. 23, 2018

LEUDELANGE, Luxembourg, Oct. 23, 2018 /PRNewswire/ --

Group (Underlying(i)) $m

Q3 2018

Q3 2017

% change

9M 2018

9M 2017

% change

Revenue

1,498

1,494

0.3%

4,498

4,423

1.7%

Service Revenue

1,399

1,408

(0.7%)

4,200

4,159

1.0%

     Organic growth(1)

4.2%

1.8%


4.2%

(0.4%)


EBITDA

564

553

2.2%

1,670

1,618

3.2%

     Organic growth

2.6%

0.5%


2.9%

1.7%


EBITDA Margin

37.7%

37.0%


37.1%

36.6%


Capex(2)

255

244

4.6%

629

622

1.1%

OCF (EBITDA – Capex)

309

309

0.2%

1,041

996

4.5%

Notes: (1) Organic growth excludes impact of changes in FX rates, consolidation perimeter, and accounting (IFRS 15). See page 17 for full impact of IFRS 15 adoption on our Income Statement. (2) Excludes spectrum as well as finance lease capitalizations from tower sale-leaseback transactions.

(i) The "underlying" financial information presented in this earnings release is based on Alternative Performance Measures which the Executive Management (Chief Operating Decision Maker) use to manage the performance and resource allocation of the Group. It includes Guatemala (55% owned) & Honduras (66.67% owned) as if fully consolidated. With the exception of balance sheet items, the comparative 2017 financial information in this earnings release has been adjusted for the classification of our operations in Senegal, Ghana and Rwanda as discontinued operations. See page 19 for a reconciliation to the IFRS numbers.

Millicom Chief Executive Officer Mauricio Ramos commented:

"Our strategic focus on 4G and cable network deployment continued to deliver solid organic growth in Q3, and this leaves us well on track to meet our goals for the year. I am particularly pleased to see that our Latam Home unit sustained growth of more than 12% for a second consecutive quarter, thanks to impressive growth in developing cable markets such as Bolivia and Guatemala, as well as solid performance in Colombia. It should be increasingly clear for you that our strategy is working in Colombia, and we are starting to see this reflected in revenue and EBITDA growth in the country. Our solid organic growth is also generating healthy cash flow and providing us with the financial capacity that allowed us to capitalize on the opportunity to acquire Cable Onda, the premier cable asset in Latam. This acquisition fits perfectly with our strategy: it accelerates our expansion into cable, it completes our footprint in Central America, and it gives us a strong market leadership position in Panama, a fast-growing, dollarized, and investment grade economy. Subject to closing planned for Q4, I look forward to reporting on the performance of our new operations in Panama in early 2019."

Subsequent Events

On October 7th, 2018, we announced an agreement to acquire a controlling 80% stake in Cable Onda, the largest cable and fixed telecommunications services provider in Panama, Latin America's fastest-growing economy. The transaction values 100% of Cable Onda at an enterprise value of $1,460 million, we will pay a cash consideration of approximately $1,002 million (subject to customary adjustments) for our 80% stake. The selling shareholders will retain a 20% equity stake in the company. The transaction is subject to customary closing conditions and consent from Cable Onda's bondholders, and it is expected to close in Q4 2018.

In October 2018, we entered into a $1 billion term loan "bridge" facility agreement with a consortium of banks. The bridge matures in October 2019, and can be extended for a period of up to six months. Interest on amounts drawn under the bridge facility is payable at LIBOR plus a variable margin. In addition, on October 16th2018, we issued $500 million aggregate principal amount of 6.625% Senior Notes due 2026. We intend to use the net proceeds of the above facilities to finance the acquisition of Cable Onda and associated costs.

2018 Outlook

Our Latam operations have performed strongly through the first nine months of 2018. In B2C Mobile, we are on track to meet our full year target of adding 3 million 4G customers, and our post-paid net adds are the strongest since 2015. In Home, we raised our target for HFC Homes Connected to 400,000 net additions from 300,000, and we now also look to add approximately 1.2 million HFC homes passed, up from 1.0 million previously. As a result of this strong commercial and network expansion activity, we continue to expect Latam service revenue growth near the top end of our full year range of 2-4%, and Latam EBITDA growth remains in the 3-6% range. Our Latam Capex outlook is unchanged at approximately 1.0 billion.

2018 Outlook

Initial Outlook

Revised Outlook

YTD

Latam




Service revenue growth (organic YoY)

2-4%

Top end of 2-4% range

4.5%

EBITDA growth (organic YoY)

3-6%

3-6%

3.3%

Capex

~$1.0 billion

~$1.0 billion

$607 million 

HFC homes passed net additions

1.0 million

1.2 million

941,000

HFC homes connected net additions

300,000

400,000

313,000

4G smartphone data user net additions

3.0 million

3.0 million

1.7 million

Africa

FCF positive

FCF positive

$48 million

IFRS 15 - Contracts with customers

The implementation of IFRS 15 has had a modest impact on the Group financials, as shown in the reconciliation table on page 17. In Colombia, implementation of the standard had an impact on how we present the results of wholesale international traffic. Beginning with these Q3 2018 results and effective from January 1st 2018, revenues for a portion of this business are presented on a net basis. This change in presentation had no impact on EBITDA, but it produced a reduction in revenue of $13 million in Q3 2018 and of $70 million year-to-date.

IFRS 16 - Leases  

IFRS 16 will be effective from January 1, 2019 and will affect primarily the accounting for operating leases. As of December 31, 2017, Millicom had underlying operating lease commitments of $808 million. We have started the implementation of the new standard and are currently assessing to what extent these commitments will result in the recognition of an asset and a liability for future payments. Although we have not yet completed our analysis, our preliminary assessment is that application of the standard will likely increase our reported EBITDA by 6% to 8%, net debt by 15% to 20%, and the net debt-to-EBITDA ratio will increase by 0.1x to 0.3x. The application of this standard will have no impact on our underlying cash generation.

Conference call details

A presentation and conference call to discuss these results will take place on October 24th, 2018 at 2:00 PM (Stockholm/Luxembourg) / 1:00 PM (London) / 8:00 AM (New York). Please dial in 5-10 minutes before the scheduled start time to register your attendance. Dial-in numbers for the call are as follows:

Luxembourg:         

+352 2786-1336 

Sweden:

 +46 (0) 8 5033-6574                            

UK: 

+44 (0) 330 336 9105

US:

 +1 323 794-2423

The access code is: 2980751.

A live audio stream, presentation slides, and replay information can be accessed at www.millicom.com.

Financial calendar

Quarterly results

Earnings release

Conference call

Q4 2018

Feb 7, 2019

Feb 8, 2019

Last day for shareholders to add items to the AGM/EGM agenda

Apr 10, 2019


Q1 2019

Apr 23, 2019

Apr 24, 2019 

AGM

May 2, 2019


Q2 2019

Jul 18, 2019

Jul 19, 2019

Q3 2019

Oct 23, 2019

Oct 24, 2019 

CONTACT:

For further information, please contact

Press:
Vivian Kobeh, Corporate Communications Director
+1-305-476-7352 / +1-305-302-2858
press@millicom.com

Investors: 
Michel Morin, VP Investor Relations
+352-277-59094
investors@millicom.com

Mauricio Pinzon, Investor Relations Manager
Tel: +44-20-3249-2460
investors@millicom.com

This information was brought to you by Cision http://news.cision.com

http://news.cision.com/millicom-international-cellular/r/luxembourg--october-23rd--2018-cable-expansion-accelerating,c2652877

The following files are available for download:

http://mb.cision.com/Main/950/2652877/931718.pdf

Millicom Q3 2018 Release

http://mb.cision.com/Public/950/2652877/9ef94c98717660e2.pdf

Millicom Presentation Q3 2018 Results

http://mb.cision.com/Public/950/2652877/8c2f9a59b20b0731.xlsx

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