Millicom International Cellular S.A.

Hello, everyone, and welcome to our fourth quarter 2023 results call. This event is being recorded. Our speakers today will be our CEO, Mauricio Ramos, our President and COO, Maximiliano Baldini, and our CFO, Sheldon Bruja. The slides for today's presentation are available on our website, along with the earnings release and our financial statements. Now, please turn to slide two for the Safe Harbor disclosure. We will be making forward-looking statements which involve risks and uncertainties and could have a material impact on our results. And on slide three, we defined the non-IFRS metrics that we will reference throughout the presentation, and you can find reconciliation tables in the back of our earnings release and on our website. With those disclaimers out of the way, let me turn the call over to our CEO, Maui Sotamos.

Good morning and good afternoon, everyone. Thanks for joining us today. As you likely recall, we set four key priorities at the beginning of 2023. We will update you in detail on each of these priorities in the next several slides, but here are the key highlights. First, we continue to make very meaningful strides in executing Project Everest to improve our operational efficiency across the business. During the fourth quarter, we implemented phase two of the project in each of the nine countries where we operate. The headline is that we are exceeding our own expectations for cost savings. Second, in Colombia, the strategy we laid out some years ago and our increased focus on driving profitability are now really paying off in a combined manner. EBITDA was up more than 24% year-on-year excluding severance, and the margin reached 38%, which is another record for this business. This, even as we continue to build our mobile subscriber base. We are achieving this while also optimizing our CapEx because we're now harvesting the very significant investments we have made in Colombia over the past several years. As I told you during our Q3 call, we're not done yet in improving Colombia. In fact, our performance in Q4 does not yet reflect the additional actions we have taken in the quarter and in January of this year. So stay tuned for more on Colombia. Third, in Guatemala, the strategic initiatives we put in place over the past couple of years to protect our business are also now paying off. During Q4, we were able to build on the progress we made throughout the year, and we had strong prepaid service revenue growth on a sequential basis compared to Q3, much higher than what we have seen in the last few years. You will recall that we raised prices on our most popular prepaid plans in mid-September. The market has reacted positively, and we have decided to put through a price increase on all of our remaining plans in early February of this year. So we continue to feel cautiously optimistic about the outlook for top-line growth in Guatemala going forward. Fourth, on LATI, our regional tower portfolio, we launched the monetization process during Q4. Because this is an ongoing M&A process, that's all we can say about this for now. So again, stay tuned on LATI. And finally, here's a combined effect of all these initiatives put together. The punchline, if you will. We are raising our outlook, and we're now targeting equity-free cash flow of around $550 million for 2024. As a result, for the three-year period between 2022 and 2024, the cumulative outlook is now for around $700 million of equity-free cash flow. Often, you have heard us say that our equity-free cash flow for the 2022-2024 period would be back-ended. and that 2024 would be the year of the cash flow. We're now ready to deliver on that promise. The strategic initiatives initiated over the past few years, combined with a revamped and reinforced focus on profitability, are making this happen. Now, let's review each of these points in more detail, beginning with Project Everest on slide six. For this, I have asked our COO, Maxime Lombardini, to share with you the key components of the extensive program.

Thank you, Mauricio, and hello, everyone. As many of you recall, Millicom began implementing its efficiency program at the beginning of 2023 and initially communicated an ambition of achieving run-rate savings of more than $100 million by year end 24. Shortly after I joined the company in early September, We increased the scope of phase two of the program to include deeper headcount reductions and cost savings initiatives in our centralized functions. During Q4, we extended phase two to each one of our country operations, unlocking total savings of more than $250 million. And it is important to emphasize that we have already implemented a vast majority of the initiatives that are needed to deliver those savings this year. So the achievability of our targeted savings is not only largely in our control, but also already in the bank. You can start to see some of the savings in our Q4 results with EBITDA excluding severance reaching almost $600 million, which is a record high for the company. And I'm pleased to tell you today that we are off to an excellent start in the first two months of the year on both service revenue and profitability. On this slide, we have summarized for you the most important action that we have taken and the areas where we have focused our efforts. I won't discuss of each points, but suffice to say that the efficiency program is not just about reducing headcount. Yes, headcount is an important contributor, and close to 5,000 employees left the group But as I told you on the Q3 call, we have been reviewing all of our spending. Strong control on OPEX, employee recurring costs, contents, external services, real estate optimization, IT and network OPEX. And the huge work on optimizing CapEx has been done too. We invest where and when it has a strong impact on quality and sales. This cost control is backed by an ambitious simplification plan. We are simplifying the legacy of our portfolio and streamlining the IT to make it more flexible and less expensive. And even though we are still in February, I'm already beginning to work with the teams to identify the next round of opportunities that will allow us to reduce costs further in 2025. without sacrificing any of the investments that are needed to grow our customer base and revenues and sustain our network quality and market leadership. And one more thing, being back to profitability is a good news for the shareholders, but it is important for the employees and managers too. I feel a strong support for the strategy. Mauricio, back to you.