Millicom International Cellular SA (TIGO) 2003 Q4 法說會逐字稿

Ladies and gentlemen, thank you for holding, and welcome to the Millicom International Cellular Earnings Conference Call for the fourth quarter and full year ended December 31, 2003. [Operator Instructions]

I must advise you that this conference is being recorded today. May I also remind you that this call is being audio streamed over the web, and is accessible at www.millicom.com, together with a presentation summarizing the key features of the results. I will now hand over to Mr. Marc Beuls, MIC's President and CEO, thank you sir, please go ahead.

Thank you operator, and welcome to everyone who has joined me today to discuss the results of the quarter and the full year ended December 31, 2003. Tom Radskirt (ph) and Bruno Newround (ph) are with me, we will be happy to answer any questions you may have after first making some comments about the results. But before I do so, I would like to highlight the good news from Vietnam of last week. Welcome signs (ph) memorandum of understanding with it's partner under the current business corporation contract called VMS or Vietnam Mobile Services to incorporate in the long term, that means beyond July 2005.

This confirms the verbal assurances we have been receiving since the second half of last year, about the attention of the Vietnamese posted telecom sole shareholder of VMS to continue the successful relation with Combic (ph) International Vietnam, Millicom Subsidiary in Vietnam. This MOU allows Millicom to plan for the long term in Vietnam, a market that has been producing exponential subscriber growth, with Millicom adding more than 280,000 subscribers over the last three months. So, let's look at the main features of the results, excluding the divested operations.

Continued subscriber intake has resulted in a 42% increase in gross cellular subscribers year on year, to just under $5.7 million at the end of December 2003. Proportional seller subscribers increased by 44% to over four million at December 2003. Sustained increase in minutes of use has continued. The total sellers of minutes for the 12-month period to December 31, 2003 increasing by 35%.

Revenue for the year was $641 million, up 23% from December 2002, and EBITDA increased by 32% to $318 million. EBITDA margin was at 50% for the year. The emphasis on upstream in cash from our operation continues. We exceeded our original target for the year of up streaming 100 million by October 2003. And by the end of the year, a total of $129 million have been up streamed from 14 out of the 16 operations.

In 2003, we spent $94 million on CAPEX. The opportunity to grow our business by migrating to GSM at a faster rate than we had originally, this means that the CAPEX for 2004 will be significantly (inaudible) in 2003 level, meaning, $150 million. The company now believes that it's important to expedite the additional investments so that Millicom will be able to sustain strong growth rate and maximize it's current market opportunity.

Moving on to the general, operating and financial overview of Millicom, I would like to cover five key areas. First, subscriber growth, followed by revenue growth, EBITDA growth, financing, and then (inaudible) the listing on the stock exchange, as well as the proposed stock split. So, let's start with subscriber growth. During the twelve-month period ended December 31, 2003, mixed worldwide, some of the subscriber base grew by 42% to $5.7 million.

Proportional subscribers grew by 44% on an annual basis to four million, and 88% of whom are pre paid today. Some 386,000 net new seller ware subscribers were added in the fourth quarter. Total underlying subscriber additions, excluding El Salvador for the fourth quarter were the highest on record. Let's talk about revenue growth; (inaudible) produce total revenues of $201 million for the three months up to December 31, 2003. An increase of 47% from the fourth quarter of 2002, and revenues for the full year were $641 million.

Mixed operations in Africa recorded quarterly revenue growth of 61% from the fourth quarter of 2002, with java (ph) producing a growth of 134% over the same period. The equivalent increase for MIC Asia was 32%, and in Latin America, revenue increased by 62% or by 3% if El Salvador is to have demonstrated the increase stabilization of the region. Third point I would like to cover is EBITDA.

EBITDA for the three months ended to December 31, 2003 was $93 million, an increase of 42% from December 2002, and for the full year, EBITDA was $318 million, an increase of 32% over 2002. Quarterly EBITDA for Africa was $11.5 million, increasing by a record 826% from the fourth quarter of 2002. Latin America recorded EBITDA growth of 56% to $41.4 million, and Asia recorded growth of 8% to $40.2 million. The amount being hit by a backdated charge in Cambodia.

The group EBITDA margin was 50% for the year, and 46 for the quarter. Margins have dropped in the fourth quarter because of the incorporation of El Salvador, a country that we are currently aligning to the Millicom operating principals. Moving on to financing; in November 2003, MIC began the third and final stage of its financial restructuring process to the offering of $550 million, 10% senior note 2013. The proceeds were used to repay the remaining $137 million 13.5% senior subordinated note due 2006, and the outstanding $395 million, 11% senior note due 2006.

Both amounts were fully retired by the end of December 2003. As of December 31, 2003, MIC reports total net debt after cash and time deposits, excluding the 5% mandatory changeable bond, and the 2% paper notes of $613 million, which would represent a reduction of 47% compared with the total net debt of $1,140,000,000 at the end of December 2002.

Included in the interest expense of $43 million for the fourth quarter is $24.3 million irrespective of the 13.5% senior subordinated north view (ph) 2006, and the 11% senior note due 2006, which were fully repaid in December 2003. MIC also recorded a book non-cash exchange loss in the quarter of $41.8 million, in respect of the 5% mandatory exchangeable notes.

The last thing I would like to talk about, the Stockholm listing and the proposed stock split. Investors in the Nordic region are familiar with the Chilidic (ph) Group, our largest shareholder, have for sometime been expressing significant interest in Millicom. The secondary listing of Stockholm will make it easier for them to buy Millicom shares and will provide greater market visibility.

There's also been demand for a stock split, which is possible following the 1300% increase in the share price since the end of December 2002. North view an ETM, at which we will propose a stock split of one existing share of par (ph) value of $6.00, into four shares with a par value of 1.5 dollars. We expect that both initiatives will increase liquidity in the Millicom stock.

So, let's look at the results of each region in a bit more detail starting with Asia. Year on year growth in proportional cellular subscribers was 45% in Asia, which contributed to the region's increase in revenue of 26% to $280 million, and an EBITDA of 27% to $157 million. Revenue and EBITDA for the fourth quarter of 2003 was $79.3 million, and $40.2 million, respectively.

EBITDA margin for Asia for the full year is 56%. Vietnam, which remains the group's largest revenue and EBITDA contributor, recorded year on year increases in revenue and EBITDA of 27%, and 30% respectively. As I mentioned earlier, we are please to have recently signed an MOU with VMS, our partner in Vietnam, which indicated their intention to extend their cooperation with us for the long term.

Our cooperation through Combic International Vietnam is seen as the most successful business corporation contract in the telecommunications sector, and this has been recognized by the recent Golden Dragon award as the best company in the field of telecommunications, granted by the Vietnamese Ministry of Planning and Industry. In Pakistan, Pactel was allocated GSM frequency under and existing license in October 2003.

We believe that a GSM offering which was filed June of this year will increase the growth rate of Pakistan substantially in 2004. Moving on to Latin America; revenues for Latin America for the fourth quarter increased by 62% from December 2002, to $93 .4 million, or by 17% to $264.7 million for the full year. In El Salvador (inaudible) quarterly growth is three percent to the fourth quarter 2002. This is the fourth consecutive quarter of growth, which demonstrates the increased amortization of the region.

South America continued to demonstrate recovery with Bolivia and Paraguay reporting their highest revenue since the fourth quarter of 2001, and the third quarter of 2002, respectively. EBITDA increased by 56% to $41.4 million for the fourth quarter of 2003, or by 22% to $123.1 million for the full year. These increases are two percent of five percent respectively, if El Salvador is tripped (ph) out. The EBITDA margin was 44% for the quarter and 46 for the full year.

Out planned migration to GSM services has continued pace in Latin America. We have selected a supplier to overlay existing TDMA networks in Guatemala, Paraguay and El Salvador, and the CDMA network in Honduras, with GSM 800 networks, which will become operational in the second quarter of 2004. The reconsolidation of El Salvador, which happened in the third quarter of 2003, is very encouraging for our Central American operations, and this facilitates further operational synergies across the region.

These are exciting businesses and we anticipate further strong growth from them in the future. Let's move to our star region, Africa. Annual revenues for MIC Africa were $84.9 million, and increase of 37%, and EBITDA rose by 143% to $35.7 million. For the fourth quarter, revenue was $27.2 million, an increase of 61% from the fourth quarter of 2002, and 28% from the third quarter of 2003, which every African operation reporting, with every African operating reporting record quarterly results.

EBITDA was $11.5 million, up an inspiring 826% as I stated earlier, and the EBITDA margin was 42% for both the quarter and the full year, up markedly from the 24% recorded in 2002. This is very impressive growth, as a result of strong subscriber intake in Africa over the course of the year. And December 31, 2003, MIC Africa have over 463,000 proportional subscribers, an increase of 72% from December 2002.

Earlier this month, we acquired 26% of Millicom Tanzania, from the government of Tanzania, bringing our ownership of this operation to 84%. This acquisition is part of our strategy of buying our partners in order to increase our ownership of existing businesses. As we look forward, in summary, 2003 was a very successful and momentous year for Millicom. We have exceeded four million proportional subscribers, and our operating companies have continued to perform strongly, generating increased revenue and EBITDA growth, and enabling strong cash up streaming to the parent company.

Both significant of course, 2003 was characterized by successful restructuring of the company's balance sheet. The result of this restructuring process, together with the disposal of selected assets earlier in the year was a reduction of total net debt of 47% from the total as of December 31, 2002. This helps create more (inaudible) restraints and has enabled the company actively to pursue its strategy of delivering profitable growth.

And so going forward, we'll (inaudible) focus on first , increased top line growth by increasing the margins. Those will come from the low penetration regions of Asia and Africa, and for continued recovery in Latin America. We will focus on consolidating our position in these markets through a combination of organic growth and opportunistic buyouts of local partners.

Secondly, we will focus on lowering the debt and lower the cost of our debt both at the corporate level as well at the subsidiary level. Thirdly, destroying cash flow generation and stronger free cash flow generation is a top priority for us. Fourth, devaluation of opportunities to develop in an adjacent new markets which offer the potential to strengthen group wide synergies. This concludes my comments and we would now be happy to take your questions. So, operator, may I have the first question please?

[Operator Instructions]

Your first question comes from Steven Flynn of Morgan Stanley, please ask your question, Mr. Flynn.

Good morning, I have a couple questions, number one, I'm sorry I missed it at the very beginning, but could you discuss capital expenditures for the fourth quarter, and what you plan on spending for 2004, whether that's on a consolidated basis or proportionate basis? And a little more color on the charge in Cambodia would be great. Thank you.

So the cap x numbers we give are proportional cap x numbers, and the number for 2004 we anticipate to be $150 million, for the full year 2003 was $94 million. I don't know, Bruno, whether you have the number for the fourth quarter, the cap x number?

Yes, that was $33 million in the fourth quarter of 2003.

So, you can see it's an increase from the previous quarter's last year, which is in line with our saying a few minutes ago. Secondly, Cambodia, we have a charge of $5.5 million in Cambodia as a result of an incorrect application of the accounting of a certain contract which could be read as a contract related to certain cap x. That's the way our local management had read it.

We after the advice of the auditors corrected that, and that's why there is a charge of $5.5 million. This will, ongoing, mean a reduction of the EBITDA margin of Cambodia. It will however, not have an impact on the cash flow generation of Cambodia, nor will it have an impact on the bottom line of Cambodia.

OK. Just a follow-up question. The cash upstreamed through the whole (ph) in 2003, you know, looks even higher than we were expecting a couple of months ago, almost 130 million. Could you talk about your expectations for 2004, whether you believe you can continue to grow off of what you did in 2003?

Yes. We expect that we will be able to continue growing that number and (inaudible) our presentation, you know, we keep increasing the percentage of EBITDA that is paid to us in the form of cash. As we expect the EBITDA to continue growing, going forward, we would expect, you know, cash flow at least, you know, to grow at the same proportion, maybe even slightly higher. And so we will be generating substantial cash surpluses in the course of this year at the MIC corporate level.

Great. Thank you.

Thank you.

Your next question comes from Bill Miller of J. M. Hartwell. Please as your question, Mr. Miller.

Marc, hi. I just am curious if you could give us a little bit more of a future look on El Salvador in terms of the revenue growth you may expect and how soon you'll be able to turn the margins into the more normal Millicom margins.

I think the business is doing well at this point in time in El Salvador. We've had the consultants in there. They came up with a plan of downsizing the company and also some, you know, structural changes in the company. But at the same time, we have already taken the next step and I think this week there's another team in the region that will be looking at creating synergies between the three operating companies we have in the region - Honduras, El Salvador and Guatemala.

So, as a result of that effort, I would expect that El Salvador will get up to the same EBITDA margins which we see in Honduras and Guatemala. Both operations are operating both a 50% EBITDA margin. I would expect El Salvador to be there in the second part of this year because, as you know, for every restructuring you do in a company, there are certain charges that have to be taken to the P&L and those will continue to impact us - our results in El Salvador in the first quarter and probably still somewhat in the second quarter.

Thank you.

Thank you, Bill.

Your next question comes from Erwin Van Ziden (ph). Please ask your question, sir.

Yes. Good afternoon. Erwin Van Ziden speaking from Austrich (ph). I have a couple of questions. First of all, I would like to know what the write down is of efforts (ph) in the P&L, which is around $6 million. Secondly, concerning marketing course, what are your plans going forward for the coming year. Do you expect them to be on this level? And thirdly, could you give me some information about Backstrom (ph)? What will the impact be of the rollout of GSM and especially on the subscriber growth and marketing efforts during the first half of this year?

OK. So, let me first answer the questions two and three and then I'll pass onto Bruno and John to answer the first questions. In terms of the marketing costs, we don't expect that our marketing costs will go up going forward, so I would expect, percentage-wise, it to be at the same level. We should have an easier time selling products in markets like Latin America and also in Pakistan, given that we sell or we will be selling, in the course of this year, I would say more - a newer, better technology GSM than the technologies we are currently using. And that will allow us to, you know, compete easier with some of our competitors. So, slight, I would say, a percentage-wise marketing cost at the same level.

In terms of Pakistan and GSM, we expect to switch on the network - the trial will be, I think, in March of this year already. Full commercial launch, we expect May, June of this year. The target we have set for management is a million net new subscribers in the first 12 months from the start of the operation, which, I think, is a very achievable numbers, judging from the numbers I just quoted in Vietnam, where they added 280,000 subscribers in the three months started first of November of last year. So a million is what have set for - for Pakistan. So, Bruno (ph), can you answer the first question on the six million and balance in the P&L?

Yes. For the write down of assets represents impairment, for we have done our impairment testing and the first point of our analogies was on the analog equipment and the acceleration of further conversion to GSM, which led to an impairment of three million. And the second portion is due to the impairment of license in Peru for another amount of three million, totaling an amount (inaudible) six (ph) million.

OK. And I have another question on Pakistan. Are you also going to supply your handsets or what are you going to do to launch this new product in the markets that will increase your acquisitions costs?

We are not going to subsidize handsets going forward. The only thing we might do is maybe - and this is a couple of thousand subscribers - some of our better subscribers, you know, actively move them aware from our PDA analog networks to our GSM network. Given that we are operating with the older technology in Pakistan, we have the lower end of the market subscribers where subsidies are definitely not a practice.

Going forward, you know, we will take then new growth in the GSM network and our strategy is going to be the same as it is today. That means we will not be providing subsidies on assets. We want to be in the minutes (ph) business, not the hardware business.

OK. Thank you.

Thank you, Erwin.

Your next question comes from Kevin Rowe (ph) of Rowe Equity Research (ph). Please ask your question, Mr. Rowe.

Thanks. Marc, in your opening comments, you highlight the Vietnamese government's desire to - their intent to discuss the - a new BCC (ph) contract. The market's concern is not Millicom's ability to renegotiate a new contract, but what the terms of that contract will be versus the old contract, specifically what do you believe the IRR (ph) will be versus the old tenure contract? And is it safe to assume that the IRR on a new tenure contract will be lower and how would that impact 2005 results and beyond.

And also on Vietnam, SK Telecom (ph) has successfully introduced a new CDMA (ph) operator, which you're aware of - S Phone (ph). How has your business responded to that in terms of pricing and when do you expect the next GSM entrant to launch service in Vietnam.

OK. Thank you, Kevin. Let me start with the second question because I don't know what your definition of successful is. But the numbers I heard in Vietnam - and I was in Vietnam a full week last week - was that that's one is (ph) exactly 27,000 subscribers in their launch in the first of July. We added 280,000 subscribers since the first of November of last year. So I think you can hardly talk about a successful launch of S Phone (ph) in Vietnam.

Secondly, the GSM - the third (ph) GSM operator, other than ourselves and Veniform (ph), where which as DSL is expected to come to the markets the middle of this year. But there's a speculation we don't have any clear indication there.

To the first point, I did not mention that we are renegotiating a new BCC. What I've said is that we are - we have agreed to corporate it long-term with a partner PMS (ph) Vietnam. The form this corporation is going to take as well as the terms and conditions have not been set. In terms of the form, I expect that going forward we will operate in the form of joint venture or joint stock company, as they sometimes call it locally, which has a fantastic upside in the sense that a BCC, which we're currently operating under, is not only kind of a license and frequency - use frequency agreement, but it is also, you know, discusses the economics between the partners.

When you move to - which have to renegotiate as of 10 years. When you go to joint venture, you have one off negotiation in terms of the terms and conditions. That means ownership of the business and how much money is each going to invest in that joint venture. And then there becomes an operating company that, like any other telephone company, we have another operator's half. And so, you know, a negotiator's license and entry (inaudible) that, you know, with the government. So it's a much better form to call (inaudible) going forward.

We, at this point in time, have not given any guidance in terms of what the terms and conditions are going to be, whether it's going to be better or worse than what we have today. But I can say that, you know, we clearly see a role there for us as an operator, not as a financial partner. So we would expect to work, you know, in a similar way than the way we have been working with GMS (ph) very successfully over the last eight-and-a-half years.

Is there any precedence for a joint venture arrangement in Vietnam or will this be something that's never been done before?

But whatever we've done in Vietnam so far was never done before. We ...

There are other - there are other BCCs. Is there ...

No, no, no.

... business of any other entity operating, telecom or not in Vietnam?

We were the first BCC in the mobile telephony sector. So there wasn't any before. Others followed, you know, which was SK (ph) and that was the second one that followed seven years later. Again and this appears we are looking at, you know, establishing, you know, or creating certain precedents in terms of creating joint ventures in the telephony sector. Something that, up to today, was not possible. But Vietnam is planning to join WTO (ph) as of 2005 and those agreements in our joint ventures in the telecom sector will be allowed, will even be, you know, necessary. So I see a very similar process than what we did 10 years ago, where we set the first BCC in mobile telephony, so we might well, you know, creating the first joint venture in mobile telephony in that country.

The first joint venture in the entire economy, I assume.

No, no, no. We have joint ventures in textiles, you know, in fishing ...

I see.

... motorcycles, you just name it. Because the telecommunication sector is a very sensitive sector. It is (inaudible) for the joint ventures at this point in time.

I see. When should we expect or the market expect some type of indication as to the economics of that new arrangement?

I think what I've been saying before, what I said - and this last year, was that I see the, you know, between 12-18 month's time in order to find (inaudible) agreements.

From today.

Yes. I mean, that means from today and another 12 months - 12-15 months. Yes.

Very good. Thanks, Marc.

Thank you, Kevin (ph).

Your next question comes from Bill Miller (ph) of J. M. Hartwell (ph). Please ask your question, Mr. Miller (ph).

Marc, just for a second back to El Salvador. It looks as thought there are revenues of about $33 million in the fourth quarter. Is that approximately the right number?

I don't have the exact number here in front of me, but, you know, we were looking at a business of over $100 million, $110 million of revenue. Bruno, do you have a number for the fourth quarter?

Yes. That's 33 million.

Secondly, you had approximately - I looked at the numbers - $130 million of depreciation in 2003. That may not be right, but that's what I saw. I wondered if you could give us that number or what you estimate that number would be for 2004. I also noted that, historically, you had to write off all of Vietnam to the 6-30-2005 termination on your previous contract. Will this new arrangement you have allow you to write everything off to that date or will you be restarting or how would the depreciation number for Vietnam be affected by the new - not current arrangement you have, which seems to have a high likelihood of being extended. Or will it have any impact?

Yes. First of all, the net (ph) position overall, you should, going forward, make the assumption that the depreciation will be close to, you know, new CAPEX we make. We will continue to write off everything we invest in Vietnam between now and third July, 2005. So a very short period of time, which will, in a way, you know, create an impact on the depreciation number, a more than proportional impact on the depreciation number.

The terms and the condition of the corporation are not known at this point in time - are under negotiation. So hate to speculate that until you know how that is going to impact our P&L or balance sheet going forward. So, with that question unanswered at this point in time or until such time that we know what form and shape and, you know, terms and conditions there are going to be.

Thank you.

Thank you, Bill.

Your next question comes from Tom Freidburg (ph) from Jenco (ph). Please ask your question.

Yes. Hi, Marc. You know, I want to go back to Cambodia for a second and I agree it doesn't have any cash impact, but is this going to be a situation where, if we were looking at X million in EBITDA beforehand, you know, from Asia, that we would simply move $5 million out of CAPEX and - as a recurring charge against EBITDA going forward? Or is this a one-time catch-up?

That is a catch-up of over two years. So the impact you see is roughly three million on an annual basis, which from a P&L point of view, we were writing off over three years. And so now it's coming, you know, on both the EBITDA line.

So it's really only, you know, on a going-forward basis, it's only something on the order of a million a year?

Something like that.

OK. Great. Just want to be clear on Pakistan. You said a million subscribers over 12 months. I'm assuming you are talking on a consolidated basis.

Yes. I mean, gross numbers. You know, net gross additions to Parktel (ph) network in Pakistan.

OK. Now, I think the most of the rest of my questions have already been answered. Thank you.

OK. Thank you, Tom.

Your next question comes from Diane Keefe (ph) from PAX World Funds (ph).

Hi. That's PAX World Funds. Could you go over where you're going to be spending the CAPEX - do kind of a bridge analysis between last year's and this year's, talking about, geographically, where are you going to be putting your investment?

Yes. But investments will be put where the growth is coming from. And of course, the two growth areas, they are Asia and Africa. So that's where the bulk of the CAPEX is going to spent with the two big markets in Asia, Vietnam and Pakistan taking a big chunk. For instance, Pakistan - the one million number, you know, will cost us about $40 million, I think, in CAPEX. But of course also, given the GSM migration in Latin America, you know, we will be spending, you know, a fair amount of money in that part of the world. And we have - nobody's spending that much in, especially, South America, over the last two years, given the economic slowdown in that part of the world.

But given that things have started picking up again, you know, we're very happy, you know, to spend the money again there in order to cope with what we expect, you know, increase growth going forward. So, it is going to be fairly well spread across, you know, our operations with, of course, the two big ones being Vietnam and Pakistan.

And speaking of Pakistan, I just have one more question. There was concern, I think there was an announcement that more competitors were going to be entering Pakistan. How do you feel about the competitive environment there going forward?

Well, let me first say this. I'm very happy with a competitive environment and I'm also very happy with what the Pakistan government is running as a process. Because six months ago we were about a year-and-a-half away from the expiring date of our two licenses. Both of them expire in April, 2005. And there as no process whatsoever, you know, known to us as to how that - how those licenses were going to be extended beyond April, 2005. To this new telecommunications that the government introduced very recently, that renewal process has now been defined, so we know that it's going to be a level playing field. We know how it is going to work.

And we know that the existing operators will have to pay a similar amount for the renewal of the licenses as the price that is going to be paid for fifth and the sixth license that might eventually, you know, be awarded in the country. So, I think this is very positive for us because there is a process, now we know that, you know, how it is going to work and it's no longer going to be an arbitrary process because that's always, you know, a scary thing to have. So, I think that it is positive.

In terms of the competitive environment, I think, going forward, Pakistan, like any other market of that size, is probably going to be four operators market. I don't believe that that market can sustain, in the long term, six operators. And so therefore, there will be entrance. Are they going to be successful? We will see. What I can say is that, you know, we are, you know, we're putting our foot to the pedal and we're investing, as I just said, you know, to create the capacity of a million subscribers for the time being and probably much more than that.

So, we will definitely have a bit head start for any new entrant coming to the market. We've well established brands in the market. We have well established distribution and so for any newcomer, it's going to be a tough battle. But we will see. But ...

Thank you.

... we're not afraid of competition. We coped with competition in all of our markets in the past.

Thank you.

Thank you.

[Operator Instructions] Your first question comes from Bernard Salz (ph) of Salz (ph) Capital. Please ask your question.

Can you tell us what you think interest costs might be for '04, based on the December 31 balance sheet? And I noticed that, in the fourth quarter, subscribers in Latin America dipped a tiny bit.

The interest costs can be broken down going forwards as follows. First of all, we have interest cost at the corporate level of $55 million, being 10% on the new $550 million note. And secondly on the operating company level, I would think that we were going to have interest costs of give or take $25 million. So you look at an overall interest cost of about $8 million.

In terms of the reduction of the subscribers in Latin America, I think we explained that you know, when we put our subscriber release out a couple of weeks ago, had to do with certain, you know, disconnections, which we did amongst in Bolivia and also cleaning up of our data base in El Salvador, following the acquisition of that company at the end of the third quarter.

Thank you.

Thank you.

Your next question comes from William Kadak (ph) from Capital Equities. Please ask your question.

Yes, hi Marc, this is William.

Hello.

Nowadays, so, that's good. I mean the earlier question already focused on Latin America, I mean you already basically hinted to the fact why it only grew by 3% organically, but could you maybe, something say, I mean you're going to expense some more of, can we pencil in something like 10% for this year or would that be by far too ambitious?

No, I would be personally looking at the double-digit growth number for Latin America. We come from, especially South America low point, so that I think is going to be a good performer and then also Central America and Guatemala, El Salvador, I would expect very strong results again this year.

OK, and a question on Pakistan, the timing on the awarding of that license, but that's one thing, and secondly, what's going to be the accountant treatment of said license, and thirdly, you first, some sales people also very, I mean what do we know, some are talking about amounts, which the highest bidder will pay something like 100 to $250 million U.S. dollar, would that be by far too far-fetched, because I mean, two times 150 will be 300 million.

Yes, I think, I don't have the crystal ball, so what the outcome is going to be, I don't think anybody has a crystal ball in this world. What I can say is that there are four operators in Pakistan today, so that I think is ultimately know the number of operators that that market should have.

Secondly the spectrum that is being auctioned off is not the best spectrum, it's 1800 spectrum, is only very little, you know, 900 spectrum available, so that always puts a damper on, you know, what people are ready to pay for the one or the other frequency.

And then thirdly, it is a big country with a massive built out and knowing that, you know, the other operators have been building out over many years and have very well established networks already.

So it's not going to be an easy job for any new entrant coming into the markets. But we will see. I know that some people have been, you know, in the market, have been drawing comparisons with markets like Algeria, for instance. I would however, like to point out that the GDP per capital in Algeria is five to six times higher than it is at Pakistan. So, I think we should be very careful drawing those comparison, sorry, Algeria is half an hour away you know, from Europe. So, it's a completely different environment, much, you know, wealthier country than Pakistan is today.

In terms of the timing, we know that there's going to be a meeting called for the end of this month and I don't know exactly how fast the government would like to go, I guess they would like to go fast. Whether they will be able to do so, we will see.

And thirdly, the accounting, in know that the rates with now is at the license fee, you know, is going to paid 50% upfront and then the other 50% is going to be paid over the life of the license, which is 15 years. So we will put, you know, an asset, book in assets at least for the 50% we paid up front.

OK, that's great, but then me not being a specialist, what was being paid for license in Algeria.

I don't know exactly I think it was three or $400 million, I think, but for the third license and in the country, that, you know, as I said, GDP is five to six times more or wealthier than Pakistan is.

OK, thanks, great and I hope to be (inaudible) this year, yes.

OK.

Bye.

Your next question comes from Bob Vickers (ph) from VD Partners (ph). Please ask your question.

Hi Marc, just ...

Hello.

Just following up on the last gentleman's question. If the bidding process in Pakistan gets out of hand and the licenses are being bid for in the $100 million plus range, is that a situation where you would consider walking away?

I mean I don't want to speculate, especially where I don't think it is out of hand at this point in time. I know there are a lot of people registered interest, you know, but it only cost them $1500 not to do so, for the (inaudible) was very low, just to put your nose into the door and see, you know, between the doors and see what is going on there. So we'll see what is going to happen, so I don't want to speculate as to prices you know, that are going to be offered by us. We will see.

OK, thank you.

Thank you Bob.

Your next question comes from Quincy Lee of Teeton Capital. Please ask your question.

Yes, hi, on the acquisition of your partner shares, I guess, what kind of multiples are you paying for those consolidating acquisitions?

Yes, the way you should look at it as is that when we buy our minority holdings, those holdings always come with a huge, you know, liquidity discount, because typically a minority shareholders can only sell their shares to a minority shareholder given that other operators don't intend to buy those shares and financial investors don't buy the (inaudible), because they typically want to, are looking for an exit. But it means that, you know, we are in a lot of cases, the buyer of last resort, which allows us to buy those shares as attractive stands or conditions that will be way below what, you know, the public market value would be of those shares.

OK, but, I guess, but you don't want to give, kind of ...

No, I can't give you a precise number, we said that we would not disclose that number, but we, as I said, you know, we bought, you know, an asset that was not very liquid to the current, to the previous holder.

Thanks a lot.

Thank you.

Once again, if you wish to ask a question, please press star-one on your telephone keypad. If you wish to cancel your request, please press star-two. That's star-one on your telephone to ask a question.

Your next question comes from Eric Rubble (ph) of Mittleback Roberts (ph). Please as, your question.

Good afternoon gentlemen. For the year just completed, what was gross interest expense? You mentioned some, there's a note of the 24 million that was paid, relating to the refinancing, but the total gross interest for '03.

Total expense for the whole year 2003 was 135 million.

Great and with respect to an EBITDA target for 2004, can you quantify what percentage growth, could you give a range for '04?

We don't give projections for revenue or for EBITDA, but as I've been saying and as it also shows from the numbers we are producing over the last 12 months, we're clearly looking at, a continued acceleration of the growth or that the revenue as one of the EBITDA levels.

Would the growth levels achieved last year be a good indicator?

I think it's difficult to double your growth every year. You know, we went from 11% growth in the first quarter to 22% in the fourth quarter. I don't think we could expect that we bring from 22 to 44% at the end of this year. If we clearly look at the further acceleration of growth.

OK, thank you.

Thank you.

Mr. Beuls, there are no further questions at this time. Are you there any other points you wish to raise?

Thank you Operator. So once again, I would like to thank everybody for participating in today's conference call. If there are any further issues you wish to discuss, I will be happy to deal with those on a one-to-one basis. If you wish to contact us directly or alternatively, you can call Shared Value at plus 44-207-321-5010. Thank you very much and have a great day. Good-bye.

That does conclude our conference for today. Thank you for participating, you may all disconnect.