Millicom Hans-Holger Albrecht, President & CEO · 2016. 6. 30. · m, Millicom mobile footprint,...
Transcript of Millicom Hans-Holger Albrecht, President & CEO · 2016. 6. 30. · m, Millicom mobile footprint,...
Millicom
Hans-Holger Albrecht, President & CEO
A diversifying Digital Lifestyle leader in
Internet, Media and Mobile Financing
Revenues $bn
3,6
4,8
2009 2012
EBITDA $bn
1,5
2,1
2009 2012
+35% +36%
Cash Flow $m
456
981
2009 2012
+115%
273m population coverage with 47m mobile
customers
#1 or #2 market position in 12 out of 13
countries in Latin America & Africa
Leading Cable and Broadband companies
in 5 countries
Largest Internet company in Paraguay
Leading Internet company in Latin America
and Africa
This is Millicom
Millicom: Long standing track record in execution
Voice ARPU erosion
Little voice market penetration gain left
Expensive handset subsidies on post-paid data/smartphones
Consumer demand for digital services (music, video, apps)
Trends
Market changes challenge our growth prospects so we have to
accelerate our transformation
Exploding demand for mobile internet
24
47
2012 2015
Mobile BB subscribers
m
+97%
Exploding demand for mobile payments
Strong demand growth for Pay TV Strong macro environment
17
70
2012 2015
MFS subscribers
m
+307%
7
10
2012 2015
Pay TV subscribers
m
+45%
7%
12%
Population
GDP percapita
GDP per capita, Population growth ‘12-‘15
In %
Source: IMF, Millicom
Good news is that we have huge, immediate opportunities for growth
in our markets
Elevate Tigo from a telecommunications to a digital
lifestyle brand by becoming an integral part of our
consumers’ lives in a complete, helpful and
delightful way
Source: Millicom
The Tigo brand
Feature phone
Old world Telco
Fixed & mobile
internet
Content &
Entertainment Digital commerce
& services
Tablet & PC
Connected
TV
Smartphone
New world: Digital Lifestyle company
Increased stickiness
Higher share of wallet
Millicom has the payment mechanism
Increasing our focus on consumer demand for a digital lifestyle
Communication 72%
Information 11%
Entertainment 5%
Solutions 3%
MFS 1%
Cable 8%
Revenue contribution by category %, 2008
Revenue contribution by category %, 2012
Communication 95%
Information 1%
Entertainment 3%
Cable 1%
Millicom's DNA is an enabler of Digital Lifestyle in emerging countries
This is an evolution not a revolution
Cable
Building a
$2bn
Business
Tapping into
unique LatAm
TV and
Broadband
opportunity
MFS
Creating a
Blockbuster
Leveraging
consumer reach
to lead in high
growth mobile
financial
services
Mobile
From Volume
to Value
Building a
sophisticated,
value-oriented
mobile access
business
Commerce
& Services
Investing in
Growth
Investing in
high growth
internet
models in the
developing
world
Cost &
Capex
Optimization
Maximizing
efficiency
Relentless
focus on
streamlining
opex & capex
at central and
country level
$4,8bn $9bn
2012 2017
+ $0.9-1.3bn + $1.6-2.4bn + $0.6-1bn + >$1bn
Our mid-term strategy will rest on 5 pillars
Mobile
Source: Millicom
Macroeconomic and
Demographic Growth
Population, urbanization and GDP per capita are growing in every region
Both the addressable market and services penetration are expected to
expand
Shift from Voice to
Data
Changing customer
behaviour
We are consumer-centric and our customers are demanding an
increasingly diversified product offering
Trade channels are evolving and we reach customers anytime,
anywhere
Evolution of our
business model
A new world with larger than ever offer of devices running applications,
services, entertainment, financial and multiple other services
Data monetization is the key to future success
Demand for data is expected to increase; to some extent at the expense
of voice ARPU
1
2
3
4
There are 4 key drivers for the mobile business going forward
CAM 179
203
64 69
29 32
2012 2013 2014 2015 2016 2017
SAM
CAM
Africa
1,0
2012 2013 2014 2015 2016 2017
SAM
Africa
m, Millicom mobile footprint, 2012-2017
Note: Weighted average for countries in which Millicom has mobile
Source: IMF, Millicom
+ 4-5pp increases in urbanization
Market growth
&
Service penetration growth
Market growth
&
ARPU growth
Population development
Indexed to 100, Millicom mobile footprint, 2012-
2017
GDP per capita development
Macro economic and Demographic Growth
Shift from Voice to Data
95
100
119
70
80
90
100
110
120
130
Q1-12 Q2-12 Q3-12 Q4-12 Q1-13
Mobile
Digital
Mobile
Voice
Q1 10=1
Traffic growth (x factor)
1
2
3
4
5
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Revenue Traffic
Mobile revenue growth (year on year)
Acceleration of the Voice to Data transition- Record mobile data growth customers’ growth in Q1 2013
Good monetization of traffic growth: Data revenue and traffic growth are highly correlated
0,0%
0,2%
0,4%
0,6%
0,8%
1,0%
1,2%
Q2 2012 Q4 2012
Changing customer behavior
Audio streaming traffic as % of total traffic
Video streaming traffic as % of total traffic
App download traffic as % of total traffic
80%
0%
5%
10%
15%
20%
25%
30%
Q4 2011 Q4 2012
50%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
Q2 2012 Q4 2012
228%
1/3 of total data
traffic +/-
Source: Millicom
Evolution of our Business Model
Evolving mass market shopping experience Serving the rising middle class
From mobile top-up to…
Pre-paid service bundles
Electronic mobile top up
Tigo Cash
Rising Middle class
Below $60 quality smartphones are available
Millicom provides technology and education to
new customers
1 2 3
1
2
3
Smartphone fairs
Mobile smartphone showcase
Cable &
Digital Media
Further development of our cable business can be a major driver
of Millicom’s growth
High-growth markets
Strong growth of cable businesses, driven by both the uptake of i) Pay TV and ii)
fixed broadband access
Under-served markets with only low quality/high price fixed line telco offers
Highly fragmented cable TV markets, offering possibilities for consolidation. No
strong competition
High strategic fit
with existing
business
Realizable synergies between fixed and mobile businesses
Offer a complete end-user product portfolio with both cable and mobile
Opportunity to grow the corporate business through the addition of fixed
Significant expertise in the management of cable, cable deployment, content and
sales already within the business
Initial success
clearly indicates we
can do much more
Healthy growth of the cable business since 2010
Successful integration of new acquisitions in Paraguay and Guatemala
Proven successful green field expansion in Guatemala
Source: Millicom
And our existing cable business is already delivering strong growth
Revenue and EBITDA development1
m$, 2010-2012
Cable home revenue has grown at
18% CAGR over the last three years
Growth is driven by the expansion of
the customer base
Low existing fixed penetration provides
ample opportunity for further growth
Current focus on customer growth,
which has been achieved with stable
margins
Notes: 1) Excludes corporate revenues, pro forma data
Source: Millicom
Revenue
EBITDA
166 185 231
2010 2011 2012
Customer and ARPU development1
k subs, $, 2010-2012
453 471
685
26 29 27
2010 2011 2012
Subs ARPU
Cross selling and churn reduction opportunity between
cable and mobile
Source: Company information, Millicom, Solon
Early results of conversion offers encouraging,
although testing and optimization of offers ongoing
685k Tigo cable HHs
19m Tigo mobile subs
1.2m Tigo cable & non-
Tigo mobile users
500k Tigo mobile & non-
Tigo cable subs in
HPs
1. Cross-selling opportunity between mobile &
cable
2. Churn reduction opportunity
from multiplay
33,0%
18,5% 16,5%
7,8%
1-play 2-play 3-play 4-play
76% churn
reduction
Churn levels of different product
bundles % annualized churn
Bundling increases lock-in effect of
customers: decreases churn
Source of significant opportunity for
both our mobile and cable businesses
Addressable
market Potential gains
for MIC
Sell mobile
to cable
subs
Sell cable
to mobile
HHs
Cable & Digital Media- Pay TV and broadband access provide strong
growth opportunities
Pay TV market potential % of HH with Pay TV subscription, 2012
Fixed broadband market potential % of HH with broadband subscription, 2012
Source: Millicom, Dataxis
Target range Target range
10%
17% 21% 21%
29% 30%
44%
49%
62%
BO PY GT SV HN BR CR CH AR
3% 5%
7% 8%
10%
30%
43% 44% 47%
PY BO HN GT SV BR CR AR CHCR BO SV GT HN PY BO PY GT HN SV CR AR CL BR
BR AR CL
MIC
weighted
average
Strong penetration growth potential with Pay TV penetration at ~20%, Fixed broadband
penetration at ~10%
Mobile
Financial
Services
Key messages
All focus now on replicating success in all markets
Speed and penetration growth is now number one priority
In lead markets, gross margins are improving each quarter
3
We are on track to building a blockbuster
MFS is already a huge success in Tanzania and further success stories are emerging in
Paraguay and Rwanda
We have already captured a higher market share than in mobile voice
MFS could be a $1bn revenue opportunity
2
MFS is a huge opportunity for us
In Millicom markets, 80% of the population is unbanked
MFS penetration is 8% of Millicom mobile customers’ base at YE2012
1
The MFS market is growing strongly, especially in Africa
Notes :1) 2017 own projection based on growth implied by Gartner projection Source: Gartner, World Bank, Innopay, Solon
Global MFS users1
m, 2011-2016
Global MFS transaction volume1
$bn, 2011-2016
106 172
244 347
494
617
878
2011 2012 2013 2014 2015 2016 2017
CAGR
42%
161 212
261 320
393 448
550
2011 2012 2013 2014 2015 2016 2017
CAGR
23% MFS market is in a very early stage of
development – especially in Africa the
market is expected to grow
exponentially
Key growth drivers
Focus of mobile operators and
other players developing MFS
market
Low density of banking
infrastructure
International remittance flows
Opportunity is to bank the
unbanked populations
Africa
“Mobile money could become a general
platform that transforms entire economies.”
Kevin Donovan, World Bank
Mobile Financial Services - To bank the unbanked
MFS market size Millicom countries
bn$, at market maturity
30%
Notes: 1) In constant USD
Source: Economist, Safaricom, Millicom,
Market-
share
Micro-
insurance
Microcredit
Salary
payments
Saving accounts
Merchant
payments
Utility
bills
Aid
payments
Online
payments
International
remittances
Self top up Money transfer
Millicom MFS revenue
potential in 2017:
$600-1,000m1
Online
Our Online business will reach over $1bn in revenues
Source: Company information, Millicom, Solon
Latam Africa
Launched businesses
eCommerce in Latin America and Africa could be worth
over $50bn if they develop similarly to the US
eCommerce market development
in the US 10 years ago… bn$1, 2002-2007
1) Retail only, excl. travel; 2) For translation of the market potential also population and GDP per
capita were accounted for besides internet penetration rates
Source: Worldbank, IMF, Comscore, eMarketer, Millicom, Solon
…could translate into a >50bn$
market opportunity in LatAm and
Africa2 bn$, 2012-2017
42 53
67 82
102
123
2002 2003 2004 2005 2006 2007
15 20
28 35
46 56
2012 2013 2014 2015 2016 2017
From US and European examples we know:
The market segments and business
models that work best and are most
attractive
How to run e-commerce businesses and
what their key success factors are
Ultimate success in the e-commerce market in
Africa and Latin America will depend on
Selecting the right segments / business
models
Executing fast and in the right way
Having a first mover advantage
E-Commerce will be an enormous opportunity in all our markets
Source: Millicom, Solon
Everyone will buy
online
In mature markets currently mainly via PC
In emerging and mature markets development will happen soon,
and mainly via smartphone and other mobile devices
Retail opportunity
in developing
markets is huge
People have less choice than in mature markets - less offline
retail, fewer category killers offline, fewer chains, fewer malls
Online retail will take a bigger market share of total retail than
online retail in mature markets
Every market
develops
From craigslist, free online classifieds, where no payment or
complex infrastructure is needed
To eBay, the more advanced online flea market model with
integrated payment
To organized online retail, where people value reliable delivery,
convenience and choice
Core beliefs
The biggest opportunities in our JV with Rocket Internet are
e-commerce, marketplaces, and lead generation
Everyone will buy
online
Underserved and rapidly developing markets
Fragmented market landscape, no dominant players yet
Rocket Internet is a proven expert in launching e-Commerce
platforms
Retail opportunity
in developing
markets is huge
Synergies with mobile business through expanded customer reach
via SMS, care, BTL cross-promotion
High margin business as no costs related to inventory or supply
chain
Very scalable business model
Every market
develops
High margin business as no costs related to inventory or supply
chain
Allows for C2C business, which represents a large share of
commercial interaction in developing countries
Likely to benefit from trend towards social online activity
E-Commerce
Lead generation
Marketplaces
The opportunity
Source: Company information, Millicom, Solon
Two Rocket Internet ventures show how successful we are
at growing new businesses
Outdoor and sports retailer
Founded in 2011
Already #1 online outdoor sports
retailer in Brazil
Boost from football World Cup 2014
and Olympics 2016
26 173
430
724
1 022
Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
Avg daily orders Net revenue
Net revenue and average daily orders # of orders, Q4 2011-2012
KANUI
Fashion and merchandise
retailer – Zalando and
Amazon model
Founded in 2012
20 147
348 497
Q1 2012 Q2 2012 Q3 2012 Q4 2012
Avg daily orders Net revenue
Net revenue and average daily orders # of orders, 2012
Jumia
Source: Millicom, Solon
Avg growth
pm
150%
Avg growth
pm
142%
Significant synergy potential among Millicom’s pillars
MFS
Commerce
& Services
Mobile
Cable
Synergy potential among
Millicom’s pillars
Source: Millicom
1 2
4 5
3
Leveragable assets & capabilities
1 Brand, customer base, distribution network,
CRM, billing, backhaul, content
2 Brand, customer base, distribution network,
CRM, billing, mobile network
3 Customer base, distribution network, CRM,
billing, mobile network
4 Connectivity drives commerce, Commerce &
Services customer reach
5 Billing, Commerce & Services customer reach
Cost & Capex Optimization
Ambition level 2017- excluding Online
Source: Millicom
Achievement 2012 Ambition 2017
Revenue 8pp growth > $9bn
EBITDA margin 40% after Corporate
Costs
Stabilize above 35%
after Corporate Costs
Capex/revenues 19% Below 15% from
2016 and onwards
ROIC 24.7% >25%
Share of non
voice/digital ~ 30% Over 50%
Cash generation $750m > 1.2 bn
How we do it: The basic principles behind realizing our growth ambitions
Guiding Principles
Provide a clear long-term vision and strategy
Set long term financial and non-financial goals
Set and define investment priorities
Structure follows strategy: Business unit
organization
Enable support and value creation at the
operations
Empowerment of GM in countries
Professionalize talent management
Invest in a new and more diverse set
of skills and expertise
Entrepreneurship, agility, speed
Follow the “Golden Rules”
Focus on long-term value
creation
Strategy
Organization
Structure Role of the HQ
Culture
Incentives Mode of work
People
Skills Expertise
Source: Millicom
This is Millicom
Millicom strategy rests on five pillars: mobile, cable & digital media, MFS,
Online, supported by continued focus on costs and capex optimization
3
Millicom empowers its markets, invests in new skills and builds further on its
entrepreneurial roots
4
Millicom has the ambition to double revenues over 5 five years to $9 billion,
with an EBITDA margin around 35%
2
Millicom is evolving from a mobile voice company into a digital lifestyle leader
dedicated to emerging markets
1
Thank You!
Questions & Answers